|Infineon to Buy TI Broadband Chip Unit|
By Alexei Oreskovic
TheStreet.com Senior Writer
6/25/2007 4:00 PM EDT
Infineon Technologies (IFX) announced plans Monday to acquire a broadband communications chip business from Texas Instruments (TXN) .
The deal gives Infineon another piece in a broad catalog of DSL products that the German chipmaker is pitching to telecommunications carriers.
Infineon will acquire TI's so-called DSL customer premises equipment business for an undisclosed sum. The business consists of chips contained in the broadband modems and gateways that many businesses and consumers use to access the Internet.
TI spokesman Gary Silcott would not comment on the division's revenue. He said that TI's overall broadband business, which includes various other businesses such as cable, is less than 5% of TI's overall revenue, which totaled $14.2 billion in 2006.
Silcott said the decision to divest the company of the CPE business was part of TI's "regular evaluation of which businesses we want to continue to invest in and where we should be spending more time."
While TI does not disclose whether the CPE business is profitable, Silcott said the company has consistently said CPE margins are challenging in such a competitive and cost-sensitive business.
Shares of TI were up 0.1%, or 4 cents, at $37.15. Infineon shares were off 0.9% at $16.53.
According to Infineon, the deal is expected to close in the summer.
"Combining Texas Instruments' DSL CPE products with Infineon's innovative roadmap leads to a unique end-to-end offering for DSL customers," said Hermann Eul, head of Infineon's communications solutions group in a statement.