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Infineon Entering Home Gateway Market

By Sean Michael Kerner

Infineon Technologies AG Wednesday said it is positioning itself to move into the lucrative home gateway market.

Best known for its DRAM products, the Munich, Germany -based chipmaker said it has entered into an agreement to acquire ADMtek, a fabless, integrated circuit (IC) design company based in Taiwan. Infineon execs said the deal should be legally finalized by April 2004.

Under the terms of the agreement, ADMtek will be merged into a new Taiwan based company, Infineon-ADMtek and will be focused on developing broadband customer premise equipment and IC's. Infineon also expects that the new company will further enhance the access segment of its Wireline business group and help it to generate new business in the burgeoning voice over IP (VoIP) and ADSL markets.

"The broadband access market tops 100 million users according to recent studies. These users want advanced broadband services and delivering these services requires a single, easy-to-use and inexpensive home gateway," said Thomas Seifert, CEO of Infineon's Wireline Communications business group in a statement. "Thanks to this acquisition, Infineon can provide its growing customer base fully functioning, end-to-end broadband access technologies including central office and CPE [customer premise equipment] products."

According to Infineon's announcement they expect the xDSL market to continue to grow between 2003-2007 at a compound annual growth rate of 12 per cent. The CPE sector of the xDSL market, which the ADMtek acquisition further strengthens, is expected to represent two thirds of the xDSL market in 2007.

Ranked the world's sixth largest semiconductor manufacturer, Infineon has been expanding its horizons beyond its fabled DRAM products of late. Earlier this month the company jumped into the Flash Memory melee with its first NAND flash memory chip.

The acquisition of ADMtek also further plays into Infineon growth strategy in Asia. Barely two weeks ago, Infineon expanded its China operations and set up a new IC design center in Xian.

Founded in 1997, ADMtek is headquartered in Hsinchu Science-Based Industrial Park, the "Silicon Valley" of Taiwan. The company has approximately 175 employees, most of them in R&D. In 2003, the company said its un-audited revenues hit approximately USD$43.2 million and USD$12.4 million in the fourth quarter of the same year. Neither company disclosed how much of ADMtek's team would be staying on after the purchase finalized.

In related news, New York Governor George E. Pataki Wednesday said Infineon is one of three companies that will work with the UAlbany Center of Excellence in Nanoelectronics on a $12 million, three-year partnership to develop next-generation computer chip memory devices at the nanoscale .