Infineon and Intel in talks on wireless sale: sources

FRANKFURT/MUNICH Thu Jul 29, 2010 10:47am EDT

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FRANKFURT/MUNICH (Reuters) - Negotiations between Infineon (IFXGn.DE) and U.S. chipmaker Intel Corp (INTC.O) over the sale of the German chipmaker's wireless business have reached an advanced stage, several people familiar with the matter said.

"An agreement appears to be more and more likely," one of the people told Reuters.

Infineon has mandated J.P. Morgan to sound out options for the unit, the sources said, adding the business is valued at around 1 billion euros.

Infineon, whose supervisory board is scheduled to meet on Wednesday, and Intel, declined to comment.

Infineon's wireless unit makes chips, which are used in mobile phones manufactured by companies such as Samsung (005930.KS), LG (066570.KS), Nokia (NOK1V.HE) and Apple (AAPL.O).

Infineon Chief Executive Peter Bauer managed to turn around the unit, which had been loss-making for years.

It is now expected to generate around 30 percent of Infineon's total revenue this quarter but it ranks No. 5 in the chipset industry, far behind Qualcomm (QCOM.O), Texas Instruments TXN.N and Broadcom (BRCM.O).

Some analysts have said the move could make sense for Intel as a way to expand into the booming smartphone market.

But Bauer has repeatedly said he saw no reason to sell the mobile chips unit and on Wednesday said: "We are very happy with the wireless business."

(Reporting by Philipp Halstrick and Nicola Leske in Frankfurt, Jens Hack in Munich; Additional reporting by Edwin Chan)

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