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business newsWhy Intel Won't Buy Infineon
By
Bob Faulkner Jun 15, 2010 3:00 pm
The company's wireless chip operations are up for sale, but a good bid from anyone is unlikely.
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To give you an idea as to Infineon’s struggles in the wireless industry, its operations haven't been able to generate more than €300 million in revenue per quarter since 2006. For the 12 months just ended, Infineon’s WLS revenue increased 18% year over year and, as you can see in the graph below, that’s nicely ahead of Qualcomm’s (QCOM) QCT growth of 7%. However, QCT is nearly seven times larger. The more troubling aspect for Infineon is operating margin for the unit. At only 6% following its “restructuring,” it pales in comparison to QCT’s 28%.
So, would Intel be interested in such a “golden” opportunity? I doubt it for a number of reasons.
First and foremost, Intel didn’t spend many millions on the development of its Atom family of microprocessors just to go, “Wait a minute, let’s buy a marginally successful product line from Infineon!” Atom is the horse Intel road in on and it’s the hand it will play. That’s why it ported the Android operating system to the Atom platform.
Second, a number of Infineon’s solutions are mixed signal; e.g. they include digital as well as analog circuits. Last time I looked, Intel didn’t do any analog and, given the “black magic” nature of analog development, I don’t expect it to start at this point. And because it doesn't do analog, it doesn't have any analog fabs either.
Lastly, Infineon’s wireless solutions are based upon ARM cores, like just about everyone else. At one time many moons ago, Intel was an ARM licensee but that’s long since passed. Again, Intel didn’t spend all that money developing Atom so that it could start paying royalties to ARM once again.There's a price for everything, or at least there was before Motorola (MOT) attempted to sell its wireless assets a couple of years back. The question for Infineon is: Will it take what a prospective buyer is willing to offer?
The competition in handset semiconductors isn’t getting any easier so it’s not likely an offer will be particularly attractive. But the company can hope!
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