In a statement issued Wednesday, Infineon said it will acquire ADMtek for 80 million euros ($100 million). A further 20 million euros ($25 million) will be paid out to the Taiwan-based company if it meets "certain performance and development milestones" in the next two years, Infineon said.
Under the pact, the two companies will form a venture called Infineon-ADMtek, which will be based in Hsinchu, Taiwan. The new entity will focus on developing chips for consumer broadband networking products, a segment where Infineon is currently weak.
While it is well known as a manufacturer of dynamic RAM for PCs, Infineon has been expanding its horizons of late. Recently, it began producing flash memory chips,, for handheld devices such as music players. The company also designs and manufactures a wide range of other chips, including hard drive controllers and . It even has a .
With the ADMtek buyout, Infineon claimed it will benefit from having a strong research and development center in Asia and also expects to see cost savings. In addition, the German company said it will have convenient access to Taiwanese original design manufacturers (ODMs)--which currently account for 70 percent of the global broadband modem and router supply--as well as booming broadband markets like China and Japan.
As part of the transaction, Infineon said it will continue to supply chips to ODM Accton Technology, a majority shareholder of ADMtek.
This is Infineon's first acquisition in Asia. The deal is expected to be completed in April, subject to approval from ADMtek shareholders and Taiwanese authorities.
Zen Lee of CNET Asia reported from Singapore. CNET News.com's John Spooner contributed to this report.