When two giants in the chip makers go head to head against each other, the only thing to be expected is tougher competition. If the recent pronouncements by Citigroup are anything to go by, then you just might be about to witness some toughening market competition which, obviously, will work to the advantage of the end users.

Tight Race

The world’s two biggest chip manufacturers are thought to be in a tight race for the takeover of Infineon Technologies AG’s mobile phone operations, Citigroup reported. Citigroup says the two chip giants may compete against each other for this acquisition and you can hope for nothing but tough and appealing bids. Intel Corp and Samsung are the two giant chip majors Citigroup is expecting to launch some tough bidding war for the phone business. However, according to Citigroup’s analysts, the two may choose go for a partnership which, as analysts hope, may work to the advantage of the German chipmaker’s business. As such, the Germany chipmaker might try to strike a partnership with Samsung rather than go head to head for the business, analysts added in a report. Remember, the South Korean firm, Samsung, is as well the second largest producer of mobile phones and its seeking Infineon’s technology to enable it widen its chip operations further and grow it.

PC Dominion Competition

On the other hand though, Intel chips are thought to run nearly over 80% of Global PCs and that makes Intel the largest producer of semiconductors globally. As such, chances are the company is keen on expanding on its domination on PCs into the phones market. Even so, Intel spokesman would not comment on the reports, terming them as conjecture and reiterating the fact that it is company policy not to comment on market speculation. So did the spokespeople from the other firms involved in the alleged business transaction. However though, Infineon’s chief executive officer reiterated his happiness with the performance of the Germany firm, saying the company was in a good position in terms of its wireless solutions business.

JPMorgan Chase Hired as Advisors

It is understood that the Germany firm hired JPMorgan Chase and Co. for the suspected business sale and even began a data center so that willing buyers can go through its books before making any move, sources confirmed. The Germany firm’s wireless solutions business is involved in the manufacture of baseband processors and chips that run radio functions in handsets. It is expected to clock sales of 1.26 billion Euros in 2010, representing about a 20% increase in its sales, according to the Citigroup report. Infineon’s biggest clients have always been Apple Inc, the American based iPhone manufacturer, and LG Electronics Inc that give the Germany firm about 30% respectively of its average sales. Infineon also supplies other firms such as Nokia Oyj, Samsung and Research in Motion Ltd, the Citigroup report revealed.

If statistics are anything to go by, the Germany firm must be doing great business. Estimates place mobile phone shipments in the first quarter of this year to have peaked at 315 million while PCs shipped over the same amount of time stood at about 84 million only.