Intel Considers Infineon Acquisition, Sources Say

FRANKFURT Aug 29 (Reuters) – U.S. chipmaker Intel (NASDAQ:INTC) is near a deal to buy German chipmaker Infineon’s (IFXGn) wireless business and could pay more than 1 billion euros ($1.27 billion), people familiar with the matter said on Sunday.

Intel and Infineon were hammering out final details of an agreement and the deal was expected to be consummated in the next two days, three people familiar with the matter had told Reuters on Friday.

Based near Munich, Infineon competes with U.S. companies Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:BRCM) in the chipset industry and supplies chips to top phone manufacturers such as Nokia (NOK1V), LG (003550) and Apple (NASDAQ:AAPL).

Buying Infineon’s mobile chip unit would make Intel a much bigger player in the booming smartphone and mobile device market and could save it years of research and development.

An Intel spokesman declined to comment.

Intel’s Atom mobile chips took the low-cost, no-frills netbook market by storm but are rarely found in smartphones where other chipmakers dominate.

Infineon’s wireless unit is widely recognized for its chipset technology, but is seen lacking the necessary funds to invest into research and development needed to keep up with rivals.

Infineon’s mobile unit had annual revenue of 917 million euros ($1.2 billion) in its 2008-09 fiscal year and generates around 30 percent of the company’s total sales. ($1=.7852 Euro)