Tue, May 23, 2006 - Page 11 News List

Infineon reaches deal with Microsoft

BLOOMBERG

Infineon Technologies AG, Europe's second-largest maker of semiconductors, said it reached an agreement with Microsoft Corp to supply chips that help make financial transactions secure.

"Under the agreement, Infineon is working with Microsoft to develop specialized security chips that incorporate key technologies from Infineon," the Munich-based semiconductor company said in an e-mailed statement yesterday.

The chips will be used by Microsoft, the world's largest software maker, for its plans to expand personal-computer ownership in emerging markets.

The computers will be sold at half price up front, with the rest on a monthly subscription or pre-paid plan, according to Microsoft.

Infineon is moving the company away from memory chips used in personal computers to focus on semiconductors which are tailor-made for customers from a wide range of industries such as mobile phone makers and car manufacturers.

The deal with Microsoft "reflects the success" of Infineon's strategy, said Peter Bauer, head of the company's automotive, industrial and multimarket unit.

The chips will help to "develop easy-to-use and secure access rights to subscription and prepaid computing devices," the company said. Financial details of the agreement between Infineon and Microsoft weren't disclosed.

Infineon plans an initial sale of shares in its memory-chip unit on the New York Stock Exchange in the second half. The memory-chip division has been hurt by demand swings in past years, leading the company to report its fifth straight quarterly loss last month.

Microsoft is trying to seed new markets as PC sales slow in the US and western Europe. Typically less than 5 percent of households in emerging markets have PCs, according to Will Poole, a senior vice president of Redmond, Washington-based Microsoft. Microsoft would like to get its software on computers in such countries, where piracy rates are high and governments push the free Linux software as a Window alternative.

The subscription system with Infineon components is "expected to be available in the second quarter of next year," the chip maker said.

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