Intel, Infineon Near Deal for Mobile Chip Business: Reports

Several months after rumors surfaced that Intel was interested in buying Infineon's mobile chip business, the two sides could be close to a deal, according to reports.

Intel reportedly is on the verge of buying Infineon's wireless chip business, several months after rumors of such a deal began surfacing and a week after the giant chip maker surprised the industry with its proposed $7.68 billion acquisition of security software vendor McAfee.

Citing unnamed people close to the negotiations, Bloomberg and the Wall Street Journal both reported Aug. 26 that negotiations between Intel and Infineon have advanced to the point where a deal could be announced before the end of the month.

The sources put the price around $1.9 billion, according to the reports.

Intel executives are pushing to expand the company's reach beyond the core PC and server businesses. Infineon's wireless technology, which can be found in such devices as Apple's iPhone and Samsung's Galaxy S smartphone, would give Intel a way into the booming mobile phone market, where Intel is virtually absent.

Intel officials have been looking to position its Atom processors, initially developed for such devices as netbooks, as a possible wireless platform, but Infineon's business would give Intel a quicker path into the space.

Advanced Micro Devices traditionally has been Intel's key competitor in the PC and server markets. However, some Intel executives point to ARM, which designs processors that are built by the likes of Texas Instruments and Qualcomm and are found in a large percentage of mobile phones and embedded devices, a market Intel wants to get into.

Samsung, which also builds processors using ARM's chip designs, also has been rumored to be interested in Infineon's mobile chip business, but according to the Wall Street Journal, Infineon prefers Intel's offer because it would "bring more money than a joint venture with Samsung," one of the newspaper's sources said.

A deal would come on the heels of Intel's announcement last week that it wants to buy McAfee to help bring greater security features to its processor portfolio.