Intel (INTC) Is Buying Infineon For About $1.4 Billion In Cash

August 30, 2010, 4:03 PM

Intel Corporation (Nasdaq: INTC) already said they will buy McAfee for $7.68 billion in the last two weeks. Intel announced on Monday that they will also buy German chip maker Infineon for about $1.4 billion in cash.

This will be the second acquisition in two weeks for the U.S. chip maker. CEO of Intel Paul Otellini has said in a press release on Monday that “wireless connectivity continues to grow at an extraordinary rate.” Intel will operate the wireless unit as a standalone business, and the deal is expected to close in the first quarter of next year.

Infineon chips are used in devices that include smart phones and laptops that include iPad and iPhone. In the last fiscal year Infineon’s wireless unit earned about $1.17 billion. It accounted for 30% of the company’s overall revenue.

Intel has attempted to build its own wireless chip business around its Atom core processors but the results have been humdrum. Under CEO Paul Otellini, Intel has moved to expand beyond PC chips. The market for PC chips has been weak as there has been a sudden shift in demand for PCs. Intel and AMD both reported strong second quarters in July, but things shifted last month as analysts said PC manufacturers have begun to scale back their orders from suppliers. Intel has even warned last Friday that the slump in PC demand would cause Intel’s third quarter revenue to fall below its forecasts.

Intel shares closed Monday down over 2%, at $17.96.

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Tags: computer chips, Infineon, Intel, mcafee