Demonstrating the high growth potential of mobility and smartphone as a business area, Intel has agreed to buy German chip company Infineon's Wireless Solutions Business, in a cash transaction valued at around $1.4 billion.

During Infineon's past financial year, it had revenues of €917 million (around $1.2 billion). The deal is expected to close in the first quarter of 2011.

Wireless Solutions Business makes the chips used for 2G and 3G mobile connections including in the iPhone and Samsung's Galaxy S.

The acquisition expands Intel's current wi-fi and 4G WiMAX business and will enable it to accelerate LTE solutions. The acquired technology will also be used in Intel's Core and Atom processors.

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"The global demand for wireless solutions continues to grow at an extraordinary rate," said Paul Otellini, Intel's president and CEO.

"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 that covers the full range of wireless options from wi-fi and 3G to WiMAX and LTE.

"As more devices compute and connect to the internet, we are committed to positioning Intel to take advantage of the growth potential in every computing segment, from laptops to handhelds and beyond."

WLS will operate as a standalone business and support its existing clients including Intel chip rivals such as ARM.

[source: Intel]