Intel buys iPhone 4/3GS and iPad chipmaker, Infineon

By Richi Jennings. August 31, 2010, 6am EDT.

Now Intel is buying a communications chip business. Not just any chips though, these are Infineon Technologies’ wireless baseband chips — the ones used by the iPad, iPhone 4, iPhone 3GS, many Android smartphones, and other portable devices. In IT Blogwatch, bloggers consider Apple’s strategic position and its love/hate relationship with Intel.

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Life gives us Sumner Lemon:

Intel will acquire Infineon Technologies’ wireless division for US$1.4 billion. … The acquisition of Infineon’s wireless division could help Intel grow faster in the high-volume smartphone market.

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Most smartphones today carry chips designed by rival ARM, and Intel has had its eye on the smartphone market as the volume of chips for mobile devices outpaces traditional CPUs that go into PCs.

Jonny Evans reminds us which smartphones use Infineon:

Intel has confirmed weeks of rumor, filing a $1.4 billion takeover offer for iPhone component supplier, Infineon’s Wireless Solutions. … Infineon ranked fourth in cellular-baseband shipments last year with a 10.7 percent unit share. These are the chips which enable 3G on these devices. The company also supplies Nokia and Samsung.

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Apple has a previous relationship with Intel, and currently depends on Infineon chips — open to question is whether Apple may invest in development of its own baseband technology as part of its effort to develop its own breed of ARM-based mobile processors.

But Stephen Grocer has déjà vu:

During the Internet bubble, Intel used acquisitions to build cellphone expertise, buying rights to make microprocessors based on technology licensed by ARM Holdings PLC of Britain and, later, “baseband” chips, which help manage cellular connections, in a $1.6 billion purchase of DSP Communications Inc. in 1999.

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It sold both product lines to Marvell Technology Group Ltd. in 2006 for $600 million.

And Kevin Fitchard sees Intel swimming against the tide:

You’d think with companies like Freescale and TI exiting the baseband chipset space, Intel wouldn’t be so eager to jump in. But then again, Intel seems to have the opposite problem of TI. That company left basebands so it could focus on its OMAP processors. Intel is getting into basebands in order to focus attention on its processors.

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By buying the chip-maker that supplies the fastest-growing smartphone in the world (iPhone), Intel is taking a page from Qualcomm’s book. If you’re going to buy the baseband, why not buy the processor platform integrated with it?

Meanwhile, BardHaven ponders Apple’s strategic intent:

I would not be surprised if there are steps underway at Apple to begin producing their own wireless chips, just as they opted to create their own processors for the iPhone/iPad with the iPhone. Look for Apple to be buying a communications chip vendor in the near future in order to keep from making he next iPhone dependent on Intel.

And Finally…

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Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. A cross-functional IT geek since 1985, you can follow him as @richi on Twitter, pretend to be richij‘s friend on Facebook, or just use good old email: itbw@richij.com.

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