Intel picks up Infenion AG’s wireless business after McAfee

Fresh on the heels of its $7.86 billion McAfee acquisition, world’s top chip-maker, Intel, on August 30, 2010, announced that it finalized a deal with Europe’s second largest chip-maker, Infineon Technology AG, to acquire its wireless business for about $1.4 billion in cash. Intel hopes to complete the deal in the first quarter of 2011.

The wireless unit of Infenion produces chips for laptops, netbooks, and smartphones including the iconic Apple iPhone.

Intel CEO, Paul Otellini, said that the “wireless connectivity” sector is the next big market for the company as more and more devices are now featuring internet connection capabilities.

Currently, Intel dominates the PC market. Its chips can be found in more than 80 percent of the PCs around the world but it does not have a strong presence in the smartphone industry which is currently observing “double-digit annual growth.”

Intel tried to enter the wireless market with its Atom processor but it did not succeed. The company currently provides wireless chips to LG and Nokia. Through this acquisition, Intel would be able to strengthen its 3G, 4G Wimax and Wi-Fi product offerings.

According to Infenion, its wireless unit accounted for $1.17 billion, a third of the company’s revenue in the last fiscal year and sales in third quarter increased by 38 percent.

Bernd Laux, Research analyst, Chevreux in Frankfurt, said that the price tag for the acquisition was “fair” and the deal was “smart and well-timed.”