Intel Corporation, the firm that claims to be the “Sponsors of Tomorrow” definitely wants to prove so with another acquisition up its sleeve and the incumbent takeover would be of Infineon – an organization whose primary segments include automotive, industrial, chip card and security solutions with wireless system solutions and applications in communications encompassing its major market offerings. Intel, lately is undergoing a buying spree as far as acquisitions are concerned and its recent buy out was of McAfee that resulted in Intel shelling out an amount of 7.7 billion dollars. Intel would be purchasing the wireless unit of Infineon named WLS for 1.4 billion dollars hoping that it could bolster its position in the Smartphone market.
WLS is a mobile phone chip maker and its mobile chips are majorly found in Apple Inc’s iPhones as well as cell phones made by Nokia and LG. Intel had achieved superior sales in the low – cost, no – frills netbook market with its Atom mobile chips, however could not capture the Smartphone market. This merger could prove fruitful for Intel whereby it can compete with Qualcomm and Broadcom Corp with the hope of becoming a leader in the mobile chip manufacturing industry. Both companies are said to have agreed to the fact that the mobile unit WLS would remain as a standalone business. Albeit, Infineon shall not be kept completely isolated from Intel.
Intel’s rival firm ARM whose product offerings are allegedly more power-efficient than Intel’s products and services has apparently created a dent in Intel’s third-quarter revenue reports along with weakening consumer demand for PCs. Infineon will prove to be the best thing that happened to Intel in the mobile space, but there are always two sides to a coin and the catch here is that there would be consumption of a lot of time (three or even four years) that need be spent in R&D. The acquisition is also seen as a way for 4G lift-off wherein Intel’s wireless offerings, Wi-Fi and WiMax are enhanced through Infineon’s 2G and 3G cellular capabilities.
There has apparently been close to 200 billion dollars worth of mergers and acquisitions that has taken place in the last one month. But it is essential to mention that no matter what the amount spent, an acquisition deal would prove to be profitable only if it serves the purpose of filling an existing gap. In this case, the acquiring firm Intel’s primary aim was to expand into the Mobile Chip manufacturing market and hence diversify. However, it needs to be seen if Intel’s purchase of Infineon is a match made in heaven or not.
