Intel is looking to make Atom-based systems-on-a-chip designs (SoCs) for use in smart phones.  (Source: Intel via The Register)

The popular iPhone uses a Infineon wireless chip.  (Source: ChangeWave)
Purchase would put Intel in a dominate position in the smart phone industry

Germany's Infineon Technologies AG, formed in 1999 from the spinoff of Siemens AG's semiconductor division, is among the most dominant forces in the smartphone industry.  While its CPU offerings have yet to take off and dominate, every iPhone and a large number of Android smartphones use some chip (such as wireless 3G modems) from Infineon's portfolio.

Now hot on the heels of its $7.68B USD acquisition of the world's top antivirus software vendor McAfee, 
Bloomberg reports that the world's top CPU maker Intel is preparing to purchase Infineon's wireless business.  The rumored purchase price would be 1.5B € ($1.91B USD).  Infineon's CPU unit and other businesses would presumably not be included in the sale.

Such a purchase would give Intel fuel for its upcoming planned campaign against the ARM architecture in the smartphone arena.  Intel, a firm proponent of x86 based designs, currently has no CPUs in smartphones currently on sale.  Intel is working to develop scaled-down variants of its Atom platform to compete in the smartphone sector.

With Infineon's mobile wireless expertise, Intel could design better x86-based system-on-a-chip (SoC) offerings to compete with similar packages from ARM.  Intel could also potentially look to package "hardware security" leveraging McAfee's experience into such a SoC design.

Infineon's wireless silicon designs both discrete and packaged with other system components (in SoCs) act as a broadband processor controlling the output of phones' radio device.

Infineon's smartphone plan presently looks bullish, with the company looking to "ramp-up of new smartphone and entry-level phone platforms at several major customers."  That kind of drive obviously has the potential for great financial profitability, a tempting proposition for Intel.

On the other hand, another implication of the purchase, if it goes through, would be to create uncertainty, for ARM-based smartphones like the iPhone or Android Galaxy S.  These phones use ARM CPUs, but currently rely on discrete Infineon wireless communication chips.  Presumably Intel would want to keep that business alive -- especially since it pulled in 346M € ($439M USD) last fiscal quarter.  A decision to slow development on discrete offerings in favor of x86 SoC designs, though, could be used to force x86 onto the smartphone market.

Neither company has officially acknowledge talks.  Infineon officials would only say their company has made "significant progress" with an unnamed buyer interested in the wireless unit.  Intel has not commented on the talks.

Samsung is also rumored to be interested in purchasing Infineon, but according to a report in
The Wall Street Journal, Infineon prefers Intel's current offer as it would "bring more money than a joint venture with Samsung."  A Samsung Hummingbird and Infineon broadband system-on-a-chip design would obviously be tempting for Android fans.

Reuters reports that an announcement could come as early as this weekend.

"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg

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