Intel has agreed to purchase the wireless business of Infineon Technologies in a $1.4bn deal giving the chipmaker control over Infineon's wireless hardware division and possibly paving the way for a push into the mobile handset space.
The two companies said that the wireless business will operate independently under the name and contribute strategically to Intel's own operations. The deal is expected to close early next year.
A deal between the two companies had been rumoured for weeks, and speculation picked up late last week. Intel has long stated its interest in moving further into a mobile chip market currently dominated by rival ARM.
"The acquisition of Infineon's WLS business strengthens the second pillar of our computing strategy, internet connectivity, and enables us to offer a portfolio of products that covers the full range of wireless options from Wi-Fi and 3G to WiMax and LTE," said Intel president and chief executive Paul Otellini.
"As more devices compute and connect to the internet, we are committed to positioning Intel to take advantage of the growth potential in every computing segment, from laptops to handhelds and beyond."
The deal will allow Infineon to narrow its focus to several core areas of business.
"We can now fully concentrate our resources towards strong growth in our core segments of automotive, industrial and multi-market and chip card and security, " said Infineon chief executive Peter Bauer.
"This creates a great perspective for all Infineon customers, employees and shareholders."
Gartner research vice president Leslie Fiering told V3.co.uk that the deal could further Intel's competition with mobile chipmakers such as ARM and Qualcomm.
"Infineon has a lot of technology that fills gaps in the Intel portfolio," he said. "What they have to do is come up with a compelling platform for OEMs that provides better price or better feature sets to go against the incumbents. "
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