German chipmaker Infineon has agreed to sell its wireless unit to Intel for $1.4 billion, enabling the U.S.chipmaker to boost its pesence in the smartphone market. The cash transaction is expected to close in the first quarter of 2011, Infineon said in a statement on Monday. The wireless unit will remain as a standalone business, Intel said. “The acquisition of Infineon's WLS business strengthens the second pillar of our computing strategy – Internet connectivity – and enables us to offer a portfolio of products,” Intel Chief Executive Paul Otellini said.
Three people familiar with the matter had told Reuters on Friday that Intel and Infineon would likely reach an agreement on the future of Infineon's wireless operations within the next few days. Infineon shares closed down 0.9 percent at 4.61 euros ($5.86) in Frankfurt on Friday, recouping some of the losses they posted after Intel warned that its third-quarter revenue would fall short of its own expectations due to weak consumer demand on personal computers. Intel shares closed largely flat at $18.37. The move comes just over a week after Intel announced its $7.7-billion offer for McAfee Inc,its largest acqusition.