STOCKS NEWS EUROPE-ARM rises after Intel-Infineon deal

Shares in ARM (ARM.L: ) rise 5 percent to a one-month high, heading the UK
top-flight gainers, after Intel (INTC.O: ) buys Infineon’s (IFXGN.DE: ) wireless
unit.

The $1.7 billion deal is seen as shining an M&A spotlight on the sector and
good news for the British company in the short-term as Intel indicates it will
continue to support the ARM chip designs as used by Infineon.

“Today’s reaction is generally around the fact there’s a potential M&A cycle
happening, and one of the clear architectures you’d want in this space is
probably ARM’s,” says analyst Lee Simpson at Jefferies & Co, who has “sell”
recommendation on ARM.

“It’s erroneous to think anybody would buy it, however, because it comes
with a lot of traps in the valuation.”

He also says some observers will think this is an admission by Intel that
they can’t compete in the smartphone arena without using some ARM technology.

However, he says Intel will probably be in a position to dispense with some
ARM services in the next two to three years.

Nick James at Panmure Gordon says there is relief Intel has indicated it
will support existing Infineon products for the time being at least.

“The existing Infineon products are the ARM based ones, so it doesn’t
necessarily mean suddenly a load of stuff is going to be switched off. But there
is still a long-term threat … So it’s broadly it’s an OK outcome.”

He adds that ARM is also a defensive play, and as a supplier gives exposure
to the Apple (APPL.O: ) success story.

For more on the Infineon-Intel deal, click on [ID:nLDE67P1WH]

Reuters messaging rm://[email protected]

STOCKS NEWS EUROPE-ARM rises after Intel-Infineon deal