It didn't take Intel
The mobile future
Explaining why this purchase makes sense requires a little background. Having a wireless unit isn't exactly new for Intel. Back in 2006, the company sold off its own wireless business to Marvell
At the time, the deal was praised as a way for Intel to get "back to the basics," as it allowed the company to focus on its core consumer and server markets. However, getting back to those basics also caused Intel to lose its toehold in a wireless industry that would soon take off with the release of Apple's
Intel belatedly tried to push into these markets, but its low-power Atom processor, while perfectly capable for netbook and other kinds of slimmed-down computers, takes up too much power for ultra-small smartphones and tablets with limited battery lives. A company named ARM
Intel returns fire
ARM processors are now dominant across small devices like smartphones. Apple has made several acquisitions related to improving its proprietary A4 processor, which is built off ARM technology. Likewise, the dominant and aspiring smartphone processor makers all rely heavily on ARM. Qualcomm
However, Intel (which it's worth noting, used to be an ARM licensee), is firing back now. The company has aggressively promoted its new "Moorestown" processor, which it claims can reach power levels as efficient as ARM processors. However, with an entire industry already backing ARM's designs, the battle will be extremely hard-fought
The Infineon special sauce
In the mobile processor world, aside from power consumption being a deciding factor on what designs win, there's one key difference: how well it integrates with all the communications devices needed to take in voice and data signals. Handling this process is a baseband processor, which takes in information from the phone's radio frequency chip and converts it to something the central processor can use.
Qualcomm has scored several large wins from its expertise combining these communications chipsets with the processor into a single design. Intel hopes that by combining Infineon's wireless unit with its own processor designs, it can create a superior product that better matches the needs of handset manufacturers like Motorola and HTC, and gets it back into the mobile race.
Dominating the mobile world is a tall order for Intel; it has a powerful row of companies that have poured significant design efforts into ARM's architecture. To incentivize companies to abandon their ARM-based processors and adopt its chips, it'll need a technology that's extremely powerful and well in excess of current offerings. Combining wireless capabilities and processing has been shown to be a winner in the wireless world, and might be necessary to jump-start Intel's efforts.
However, buyer beware, by Intel jumping into the segment and trying to package wireless capabilities with its processor, that's a shot across the bow of powerful wireless companies such as Qualcomm, Texas Instruments, and Broadcom.
Don't expect Intel's dominance of smartphones to be a foregone conclusion. With a number of large companies entrenched with ARM and risking loss of wireless business to Intel if it succeeds, they'll fight tooth and nail against Intel's ambitions.
So, the deal makes sense. Intel needs wireless to succeed; it's just already pretty late in the wireless game. If you're an Intel shareholder, get ready for a long, hard fight. This one is going to get ugly.
Eric Bleeker owns shares of NVIDIA. Intel is a Motley Fool Inside Value pick. Apple and NVIDIA are Motley Fool Stock Advisor recommendations. 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 Marvell Technology Group and Qualcomm. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.