Infineon wants to keep its cash for opportunistic acquisitions

Article by Christian Andrei, on June 13, 2011

Infineon Technologies AG has more than 2 billion euros ($2.9 billion) in net cash. Europe's second largest maker of semiconductors said that a portion of this will be used for opportunistic acquisitions in its three main businesses: mobility, energy efficiency and security.

When CEO Peter Bauer was interviewed in Singapore, he said that the cash will be used for expansion and for M&A. It’s likely that Infineon will attempt to make deals in the areas of power, power conversion and power management.

It’s least likely that it will enter the automotive market since a majority of the companies here are “too large.”

The recovering economy and the boosted technology spending have benefited chipmakers. In early May, Infineon has raised its forecast for the entire year for five times since the start of 2010. Meanwhile, Intel Corp., the world's biggest semiconductor producer, posted its second dividend increase in six months on May 11.

So far, the recovery has prompted deals like Texas Instruments Inc.'s acquisition of National Semiconductor Corp. Bauer said that when possible, he doesn’t want to buy when peaking and there's a lot of premium.

He said that the company isn’t being pressured to buy other firms but it is observing the market for timing. He added that the company is looking for a strategic fit. Bauer cited the premium Texas Instruments will pay out to acquire National Semiconductor Corp. for $6.5 billion, which is 78% higher than the closing price before the announcement on April 4.

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