Intel Buying Infineon's Wireless Unit

NEW YORK (AP) -- Intel Corp. is buying the wireless communications unit of Germany's Infineon Technologies AG for $1.4 billion in cash, the second deal in as many weeks that allows the chipmaker to spread its wings beyond the struggling personal computer market.

Infineon's unit makes chips for smart phones including Apple's iPhone. Silicon Valley behemoth Intel scooped up security software maker McAfee Inc. earlier this month for $7.68 billion, marking the biggest acquisition in Intel's 42-year history.

Both deals signal a shift away from Intel's traditional market of providing chips to power personal computers. Intel's microprocessors are used in 80 percent of the world's PCs.

But the PC market is on shaky ground again after a robust comeback led by businesses making computer purchases they had resisted during the recession.

With its main business under pressure, Intel, which is based in Santa Clara, Calif., lowered its revenue expectation last week for the current quarter. It now expects to post revenue of $10.8 billion from a previous estimate of $11.2 billion. Analysts expect $11.3 billion. Two major computer makers, Hewlett-Packard Co. and Dell Inc., also raised red flags last week about what is normally a robust season for sales.

Intel's deal with Germany's Infineon, which still requires regulatory approval, is expected to close in the first quarter of next year.

Besides smart phones, Intel can use Infineon's technology in core processor-based laptops, netbooks and tablets like the iPad. Analysts think the iPad's success is chipping away at the normally strong back-to-school season for PCs.

Infineon says the deal will allow it to focus on its core automotive, industrial and chip card and security divisions.

The wireless unit had annual revenue of $1.17 billion (euro917 million) in the last fiscal year, which ended last September -- about one-third of Infineon's total revenue.

The Intel-Infineon deal comes weeks after an Aug. 2 announcement by Infineon that it was "in discussions with interested parties about a transaction" involving wireless technology.

Moulson reported from Berlin.

More in Industry 4.0