Intel, Infineon Wireless Chip Talks Subject of Rumors

A German publication has reported that Intel and Infineon are talking about a deal that would have Infineon selling its mobile chip business to Intel. However, a source told Dow Jones that Infineon isn't talking with Intel, despite Intel's general interest in the idea.

Intel and Infineon Technologies are the subjects of conflicting acquisition rumors.

In a report May 17, the German daily newspaper Financial Times Deustchland said that Intel is pursuing buying Infineon's wireless chip business.

Citing unnamed sources, the newspaper said executives with the two companies are in talks on a deal.

However, hours later, Dow Jones reported that an unnamed "person familiar with the matter" said Infineon is not negotiating with Intel, though the chip giant has shown "general interest."

According to the unnamed source, Infineon officials aren't willing to sell their wireless division to Intel. Because Infineon is in a better position to make chips for 4G-for fourth-generation-mobile networks, the deal would favor Intel much more than Infineon, the person said.

Intel and Infineon officials aren't commenting on the rumors.

Infineon CEO Peter Bauer reportedly told Reuters in March that he expected his company to continue to develop wireless chips, competing against the likes of Qualcomm and ST Ericsson.

The rumors come as wireless carriers are beginning to ramp up new fourth-generation-or 4G-mobile networks. Currently, Infineon's chips can be found in a host of popular mobile devices, including Apple's iPad and offerings from Nokia, Samsung and BlackBerry maker Research In Motion.

Intel's 4G technology play includes an investment in Clearwire, which is building out its WiMax network that is scheduled to be deployed in more than 50 cities and 120 million users throughout the country.

The competing 4G technology is LTE (Long-Term Evolution). In early May, Intel and Clearwire reportedly changed the terms of their deal to enable either party to exit the agreement within 30 days. Because the prior agreement forced Clearwire to use WiMax into next year, the change could enable Clearwire to switch from WiMax to LTE.

During a conference call with reporters May 6 to discuss earnings, Clearwire CEO Erik Prusch appeared to keep that option open, saying that the ecosystems for 4G technologies was converging.

Other vendors, including Verizon Wireless, are planning rollouts of LTE 4G networks.