Chip giant Intel could be angling to position itself as a cellular powerhouse if there’s any truth to the speculation that it is sizing up Infineon as an acquisition target.

Intel’s assets in the mobile market consist of its Atom media processor business which targets portable devices and smartphones. However, the semiconductor giant lacks cellular chipset assets including basebands and RF chips and Intel is presently understood to have its eye on Infineon’s wireless business, which would complement its Atom business.

But according to Malik Kamal Saadi, principal analyst at Informa Telecoms & Media, the acquisition, if it materialises, could be interpreted in two ways: Firstly Intel could be reviewing its strategy in the mobile market away from WiMAX in favour of adopting cellular technologies which would enable the company to compete more aggressively in the mobile and portable market. The acquisition of Infineon’s wireless business could help Intel to serve all segments of the mobile market and could enable the company to position itself as a key mobile chipset supplier competing with the likes Qualcomm.

Alternatively, Intel could be mainly interested in Infineon’s HSPA/LTE baseband assets that currently power a number of successful smartphones including Apple’s iPhone. These assets, aligned with Intel’s Atom mobile business, could enable the company to offer more integrated chipsets similar to Snapdragon offered by Qualcomm. This could also be an opportunity for Intel to convert a number of its OFDM patent assets used so far for WiMAX to LTE. This wealth combined with Infineon’s know-how, could enable the company to better position itself in the LTE IPR landscape and create innovative LTE basebands for powering next generation connected devices.

But if this really is Intel’s aim, it will have to find a way to utilise Infineon’s low-end chipsets which form the bulk of Infineon’s wireless portfolio, Saadi said.

However, the analyst also noted that Infineon has a number of other assets that could potentially be of interest to Intel. The Comneon unit, a communication software company which creates architecture design for chipsets, could be a possibility.  Also, Agere Wireless and LSI Mobility businesses which were acquired by Infineon two years ago, could also represent and opportunity for Intel after Infineon failed to capitalise on this acquisition.

“Intel is willing to heavily invest, in order to gain a foothold in the mobile market and the acquisition of Infineon’s wireless business could be the step it needs to take to achieve this,” Saadi said.

“However, Intel could face some technical and strategic issues while integrating Infineon’s wireless business with its mobile media processor portfolio. Firstly, Infineon chips are based on the ARM architecture while Intel is determined to position its X86 architecture, which forms the core technology for Atom processors, as contender to ARM in the mobile business. The migration of Infineon’s wireless business from ARM to x86 could require significant time and effort, which could significantly delay time-to-market of new products as a result of this acquisition. Secondly, Intel is a new entrant in the mobile market and it will take the company sometime to establish its distribution channels and brand.”