We don’t often take things down to the chip level here at Connected Planet, but Intel’s $1.4 billion acquisition today of the wireless business of chip-maker Infineon has a potentially big impact on the entire mobile ecosystem. The unit in question makes so-called baseband chips, the silicon that phone-makers use to deliver communications links — things like 3G, WiFi, Bluetooth, etc. — and competes with Qualcomm and Texas Instruments.
The Wall Street Journal has the details:
During the Internet bubble, Intel used acquisitions to build cellphone expertise, but found mobile handset chips a drag on its earnings. It sold the product lines to Marvell Technology Group Ltd. in 2006 for $600 million.
In acquiring Infineon’s baseband radio chip business, Intel gains an important foothold in the ever-growing mobile market with access to a wide range of the wireless chip company’s customers. Infineon’s baseband chips could also potentially be paired to work with Intel’s handset-focused processing chips, analysts say, making the world’s largest chip-maker a compelling option for smartphone manufacturers.
Connected Planet’s take,
Kevin Fitchard:
You’d think with companies like Freescale and TI exiting the baseband chipset space, Intel wouldn’t be so eager to jump in. But then again, Intel seems to have the opposite problem of TI. That company left basebands so it could focus on its OMAP processors. Intel is getting into basebands in order to focus attention on its processors.
Its new Atom processor line is still a foreigner in the insular would of wireless device design. Built on the X86 core that powered Intel’s first PC motherboards, Atom hasn’t had much pull in the mobile device category, which has traditionally looked toward ARM cores. Intel has touted some wins in the netbook space, but every smartphone emerging is coming embedded with an OMAP or Qualcomm Snapdragon processor.
By buying the chip-maker that supplies the fastest-growing smartphone in the world (iPhone), Intel is taking a page from Qualcomm’s book. If you’re going to buy the baseband, why not buy the processor platform integrated with it? I’m not saying it will work. Intel’s previous attempts to claim a stake in wireless haven’t exactly panned out. It’s attempt to build its own ARM-based processor, XScale, flopped. Intel next tried to build market share by creating a new technology market, WiMax, which isn’t doing as well as its early proponents hoped.
That’s our take on this. Let us know what you think in the comments section below: