Is it time for Steve Jobs to loosen the purse strings? There are reports that Intel (Nasdaq: INTC) is closing in on purchasing Infineon's wireless chip unit for as much as $2 billion, and in the spirit of full-contact technology merger-and-acquisition wars, there are already calls for Apple (Nasdaq: AAPL) to join the bidding fray. While a good old bidding battle between two technology titans sounds fun, does it actually make any sense?

Not your typical industry titan
Unlike its high-tech peers, Apple has been notoriously tight with its M&A spending. The company has preferred to nibble on smaller deals that integrate small teams. In semiconductors, the company purchased PA Semiconductor in 2008 for $278 million. Earlier this year, it purchased Intrinsity for what's reported to be as much as $121 million. Again, small acquisitions, but in both cases, Apple focused on purchasing design talent that allowed it to create its own custom A4 processor.

That acquisition strategy makes sense. Apple's long had a unique culture and vision for its design process. Swallowing up a large company would be far more difficult than integrating a small team of specialists that Apple can quickly get up to speed on its next project.

Why Infineon?
The current trend is making smartphone components smaller and more power-efficient; integrate multiple functions onto a single piece of silicon to save space and power.

What's the best way to achieve this? Companies have so far had a lot of success integrating the communication functions needed in smartphones -- mobile broadband, Wi-Fi, Bluetooth, and GPS features -- with the central processor that's at the center of the phone. Qualcomm's (Nasdaq: QCOM) Snapdragon processor is the poster child for the trend. It combines these features with a central processor and has scored major victories on a host of big-name Google (Nasdaq: GOOG) Android phones.

After giving up on smartphones four years ago, Intel is now ferociously trying to get back into the market. Its upcoming Moorestown processor finally brings Intel's power consumption to a level that's competitive with ARM (Nasdaq: ARMH)-based processors like those seen in the iPhone. However, integrating communications chips like Infineon's baseband processors and radio frequency (RF) chips could make Intel even more competitive.

Why Apple should be interested, and why it shouldn't
As Apple continues looking for ways to make its iPad and iPhone lines stand above the competition, it will no doubt be attracted to the benefits of integrating these communications chips with its processor. However, Infineon's unit comes with some other less desirable components.

For one, the deal price is well above what Apple is used to paying. Not that Apple doesn't have the money, but it's a larger acquisition than Apple has pursued recently. Second, while Infineon has been expanding its use of outsourced chip production, it still possesses quite a bit of manufacturing capability. This would lead to Apple branching into new areas. As mentioned earlier, the company has pursued companies in the past for their design know-how; in-house manufacturing is an area Apple has avoided.

And that's really the crux of the deal: Would Apple dare move into manufacturing? Sure, communication chips are an increasingly important part of the mobile world, but an integration of Infineon's unit would likely shift baseband production back to Apple and away from other customers. Apple would likely need to devote Infineon's full production to its own phones. Furthermore, Infineon's chips are an important part of the iPhone, but still account for only 7.5% of total materials costs. Baseband chips have relatively low margins, so Apple isn't saving a ton by eliminating the extra "layer of costs" Infineon passes on.

Combine having to devote full production to its own phones with an already low-margin business and I don't see how Apple would save enough costs producing its own baseband and RF chips to justify a $2 billion price tag.

So for my two cents, this isn't the best way for Apple to start spending its massive cash hoard. It's an interesting idea, but Apple is best steering clear of Infineon. Let Intel and other reported bidders Samsung and Broadcom (Nasdaq: BRCM) duke it out.

Of course, if you care to disagree, the comments box awaits below.

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Eric Bleeker owns shares of no companies listed above. Intel is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor selection. The Fool owns shares of and has written puts on Intel. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Google and Qualcomm. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.