German chip maker Infineon Technologies has agreed to sell its wired communications chip business to Golden Gate Capital for $347 million.
The division makes wired communications chips, such as those used by telecommunications companies to set up broadband communications lines for Internet subscribers. Infineon needs the cash from the deal since it has been losing money for nine straight quarters as a result of the prolonged recession and chip downturn.
The Neubiberg, Germany-based company says it will focus on four chip markets: autos, industrial and multimarket, chip cards and security, and wireless. Infineon chief executive Peter Bauer said the transaction will significantly improve its finances. In a conference call, Bauer said there are no plans to sell more divisions.
The deal is expected to close this fall. The so-called Wireline Communications Business unit has been operating independently from the rest of the company.
Christian Wolff, head of the division, will be its chief executive under the new ownership. He has held positions in the division for 14 years. The division has grown its market share in wired communication chips by 20 percent in the past few years. About 800 series of patents will be transferred to the new company.
John Knoll is managing director of San Francisco-based Golden Gate Capital, which has more than $9 billion in private equity funds under management.
The division employs about 600 people, and they will be joined by 300 more from Infineon's headquarters who will continue to do work on behalf of the division. Overall, Infineon Technologies has 29,100 employees.