FRANKFURT/MUNICH (Reuters) - U.S. chipmaker Intel and Infineon are likely to announce an agreement on the future of the German chipmaker’s wireless business this weekend, three people familiar with the matter said.
The deal is likely to happen within the next two days, the people told Reuters on Friday, adding talks were close to conclusion but could hinge on a detail.
It was not clear whether the deal would involve a sale of the whole unit, generating more than 1 billion euros ($1.27 billion), or just a stake in the business.
Both Infineon and Intel declined to comment.
Infineon shares were down 3.9 percent at 4.475 euros by 1416 GMT, recouping some of the losses they posted after Intel warned that its third-quarter revenue would fall short of expectations.
Intel shares were largely flat at $18.182.
Based in Neubiberg near Munich, Infineon said earlier this month it was in advanced talks with interested parties about the future of its mobile chip unit, which had annual revenue of 917 million euros in Infineon’s 2008/2009 fiscal year and now generates around 30 percent of the company’s total revenue.
The business had been loss-making for years but Infineon Chief Executive Peter Bauer, who took the helm in mid-2008, managed to turn the unit around.
It ranks No. 5 in the chipset industry, far behind sector giants Qualcomm, Texas Instruments and Broadcom, and supplies chips to top manufacturers such as Nokia, LG and Apple.
Getting access to Infineon’s mobile chips would help Intel expand in the booming smartphone market.
Intels’ Atom mobile chips took the low-cost, no-frills netbook market by storm but are rarely found in smartphones where other chipmakers dominate.
“Infineon would make Intel an instant heavyweight (in the mobile space) and buy them three, four years in R&D (research and development),” IDC analyst Flint Pulskamp has said.
Investors would welcome any proceeds from asset sales because they open the door for a special dividend, a gladly received option for Infineon’s shareholders, who have not seen a payout in years.
In addition, Infineon could use the money to invest in its other businesses: automotive, industrial and chip card security.
Additional reporting by Alexander Huebner; Editing by Erica Billingham