World’s largest chipmaker, Intel Corp will acquire the wireless unit of Infineon Technologies AG in a deal worth $1.4 billion.

The acquisition will help Intel consolidate its position in the wireless device market, where it has struggled to compete. Infineon is the second-largest chipmaker in Europe and intends to sell its wireless unit.

By acquiring the unit, Intel will gain access to the wireless chip company's customers such as Apple and will be able to offer a complete portfolio of wireless products. Experts say that Intel will have to be innovative in the segment in order to perform well. Both the companies did not comment on the reports about the deal.

Experts say even through it will have access to a range of products; Intel will have to make some investments in the company as they point out that Infineon didn't dedicate research and development for fourth-generation technology.

Intel will have to introduce forth generation technology to Infineon's baseband radio chip business or it could see a fall in revenues when the new technology becomes widely used. Intel officials have affirmed that the company will make available resources and will make the wireless company a leader in the market.

In order to expand its presence in the wireless domain, Intel is also jointly working with the leading mobile handset maker, Nokia Corp on a new mobile operating system called MeeGo. It also acquired a software company called Wind River Systems, which provides services cell phones and other related systems.

Meanwhile, Intel is also expanding the Atom chips, which are used in netbooks. The segment is dominated by British company that licenses microprocessor designs to other chip makers called ARM Holdings PLC. Ironically, Infineon produces chips based on ARM architecture and Intel will have to promote the technology used by Atom.

The shares of the company dropped 1.9% to $18.02.