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Intel Continues its Acquisition Spree, Purchasing Infineon’s WLS Business Unit for $1.4 Billion
| Sep 1, 2010 | Mobile Device Silicon
| Analyst: Jeff Ogle
Event Summary
August 30, 2010 – Intel Corporation has entered into a definitive agreement to acquire Infineon’s Wireless Solution (WLS) segment in a cash transaction valued at approximately $1.4 billion. WLS is a provider of cellular platforms to top tier global phone makers and will continue to operate as a standalone business serving its existing customers. WLS is considered strategic to Intel and the second pillar in its Internet Connectivity computing strategy. Both boards have approved the transaction and it’s expected to close in Q1 2011, subject to regulatory approval.
Quick Take
Analytical Summary
• Current Perspective: Very positive on Intel’s acquiring the WLS business unit of Infineon because it will give Intel critical baseband modem and RF technology that it lacked previously. The WLS will also contribute to the revenue stream in excess of $1 billion a year, since it currently generated 26% of Infineon’s revenue through Q3 2010, making the price of $1.4 billion seems reasonable when current and future market growth projections are considered. This acquisition will provide Intel ownership of all the technology pieces it needs to field a variety of MIDs.
• Vendor Importance: High to Intel because it fills a critical portion of Intel’s computing strategy, simply stated as “Internet connectivity,” and removes its Achilles’ heel. Previously, Intel’s main mobile device rivals, specifically, those possessing RF technology, positioned themselves as providing the complete integrated mobile device SoC/platform and solution to differentiate themselves against Intel within the mobile device silicon segment.
• Market Impact: Very high on the mobile device silicon market segment, because it clearly signals that Intel is going to take a serious run at this segment, and is willing to use its extensive war chest to acquire whatever technology and companies it needs. It’s no secret that Intel wants to target the market for smart mobile Internet devices, and acquiring Infineon’s WLS segment is major step toward accomplishing that goal with technology that it owns and controls.
CLIENTS ONLY
Competitive Positives and Concerns
Response & Recommendations
Buyer Actions
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