“This week’s rumors that Intel is about to acquire Infineon’s wireless chip business to make a run at the smartphone market bring this question front and center. Infineon is Apple’s sole supplier for cellular basebands, the core chipsets used in mobile phones to handle voice and data communications,” Steve Cheney writes for TechCrunch. “Based on Apple’s deep relationship with Infineon, and its famed secrecy around M&A, it is a pretty safe bet that Steve Jobs is analyzing the implications of a deal.”
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“We are re-entering a period where companies are integrating vertically instead of horizontally,” Cheney writes. “In addition to having supplied every cellular baseband chip that Apple has ever bought, Infineon is one of only four companies with an ARM architectural license (Qualcomm, Marvell, and now Microsoft are the other three). This allows Infineon to extend ARM’s basic capabilities, and is clearly synergistic with the charter of PA Semi and Intrinsity, which were acquired by Apple for their respective ARM expertise.”
Cheney writes, “But below the surface, the rationale for Apple owning wireless technology runs even deeper… Let’s compare this to the ridiculous rumor in April that Apple was going to buy ARM, the maker of semiconductor IP that goes into all of the world’s cell phones. At that time I outlined why buying ARM for more than $5 billion made zero sense. Clearly acquiring Infineon for around $2 billion absolutely does make sense… If Apple misses out, it will likely never get another chance to acquire the wireless technology necessary to do so because the entire mobile component value-chain is consolidating and the remaining players are giants.”
Read more in the full article here.