Intel to buy Infineon's wireless unit for $1.4 billion

Less than two weeks after announcing its planned McAfee acquisition, the largest in the company's history, Intel has agreed to buy Infineon Technologies' Wireless Solutions business for approximately $1.4 billion. The Germany-based maker of 3G, 4G, WiMAX and Wi-Fi products will reportedly give Intel up to four years of research and development time as well as a powerful foothold in the fast growing market for smartphone chips.

Infineon said its wireless unit accounted for $1.17 billion in earnings last fiscal year, about a third of their revenue. The company provides chips for Apple's iPad and iPhone 4, along with several other high-profile handsets. According to a statement offered by Intel CEO Paul Otellini, "The acquisition of Infineon's wireless business strengthens the second pillar of [Intel's] computing strategy -- Internet connectivity -- and enables it to offer a portfolio of products that covers the full range of wireless options." The deal is expected to close in the first quarter of next year, pending regulatory approval.

Intel is a semiconductor hardware company at its heart. But while its chips run more than 80% of the world's personal computers, they are currently absent from the cell phone market. Infineon's baseband chips could potentially be paired to work with Intel's handset-centric processing chips, like the upcoming 32nm Medfield which is posed to outclass ARM in power efficiency, making the world's largest chipmaker a compelling option for smartphone manufacturers.