Intel’s Acquisition
Intel Corp. has recently announced its acquisition of German-based firm Infineon Technologies AG according to a report by Associated Press, thus setting its sight to the ongoing trend of smart-phone use in the mainstream technology.
The deal, which was reportedly made at $1.4 billion, is likely to spur growth for the world’s premier computer chip maker, which has been severely affected by the growing demand for smart-phones.
Intel’s latest move has made itself a big name in the smart-phone market by owning the chip manufacture of Apple Inc.’s iPhone.
The all-cash deal, announced Monday, is an acknowledgment that Intel has missed the boat on mobile phones, and it gives the company an opportunity to correct its course.
The challenge is similar to the one Microsoft Corp. is facing with Google Inc. as software is increasingly being delivered over the Internet instead of being stored on PCs, the way Microsoft has long approached it. Like Microsoft, Intel is the undisputed leader in a market that’s under attack from a fast-rising force from the outside.
Intel is trying to play catch-up before it falls too far behind.
Intel bought mobile software maker Wind River Systems for $884 million last summer, and the company has spearheaded development of the open-source Moblin software, which is designed to run on mobile devices that use Intel chips.
Two weeks ago, it announced plans to buy computer-security software maker McAfee Inc. for $7.68 billion, which would be the biggest acquisition in Intel’s 42-year history once it gains the expected approvals.
As mobile phones become increasingly enticing targets for hackers, security companies have been developing ways to protect those devices.
With McAfee, Intel would be able to bake security into its mobile chips — including those from Infineon.
But even as Infineon’s products give Intel quick entry into the mobile-chip business, Intel is fighting its own history with the Infineon deal, which could prove to be a costly distraction. Many analysts aren’t optimistic about Intel’s chances, pointing to its spotty track record with acquisitions.
“We feel like we have seen this movie before,” analyst Craig Berger with FBR Capital Markets wrote in a research note to investors.
Berger said Intel would gain a strong business with a “sizable presence” among big cell-phone makers and the expertise in building chips based on a low-power design that is widely used in cell phones.
However, he said he is skeptical of Intel’s ability to execute outside of its core market, which is making microprocessors that act as the “brains” of PCs.
Intel needs to branch out because that market is under pressure. Last week, Intel lowered its forecast for the third quarter, blaming weaker-than-expected consumer demand for PCs. PC makers also have been cutting prices drastically in recent years, and in lean times have been buying cheaper chips from Intel just to maintain slim profits.
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Posted by Jhon
on Aug 31 2010. Filed under Technology.
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