Intel

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[INTC  Loading...      ()   ] has struggled to get its wireless chip business going during the smartphone surge. It’s also seen its netbook chip sales hurt by Apple’s surging iPad. So if you can’t beat them, join them.

With Intel’s purchase of the wireless communications unit of Germany-based Infineon Technologies

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[IFNNY  Loading...      ()   ], the world’s largest chipmaker gets inside Apple’s

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[AAPL  Loading...      ()   ] iPhone 4, with a Infineon’s radio chip used by the smartphone juggernaut. The deal, at $1.4 billion in cash, is much smaller than its proposed purchase two weeks ago of security software player McAfee

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[MFE  Loading...      ()   ] for $7.68 billion. It’s a smaller move, but definitely smarter, traders said.

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“Intel might have stolen this one because word of this deal had been out there for a while and investors, and even Infineon themselves, thought the unit would go for at least $2 billion,” said Pete Najarian, co-founder of TradeMonster.com.

It hasn’t been a great summer for Intel so perhaps by joining Apple’s customer base it can jumpstart this part of its business make-up. In early August, a Barclay’s analyst downgraded the chipmaker on concern Apple’s iPad was hurting sales of notebooks using Intel’s chips. If that wasn’t enough, after Intel decided to make a bold leap into security with its purchase of McAfee at a 60 percent premium, the stock tumbled into bear market territory (off 20 percent from its 52-week high) as the deal was widely panned.

The stock traded down today despite the perception by many that they got a good price. Some analysts worried if a bigger foray into mobile phones would hurt margins. After all, Apple isn’t known to be the friendliest of partners. Just ask AT&T

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[T  Loading...      ()   ].

“This transaction gives Intel a well executing, sizable presence in the cellular baseband market with top customers including Apple, Nokia

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[NOK  Loading...      ()   ], Samsung, and others,” wrote FBR’s Craig Berger. But the business “is mixing in at lower gross and operating margins, slightly negatively impacting Intel’s overall margins.”

With a forward price-earnings ratio of 8.8 times, the bulls will tell you that lower margins are already priced in and the McAffee and Infineon purchases represent a diversification plan Intel must undertake to stay atop the tech industry.

“The McAfee deal they probably overpaid for,” said Najarian, who is also a ‘Fast Money’ trader. “But this diversification should work well for the long term.”  

* For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.

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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.

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Trader disclosure: On Aug 30, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (AXP), (GS), (IBM), (QCOM), (AAPL), (GOOG), (BRCM), (TER), (MSFT), (C), (MRVL), (BMO), (V), (POT), (OXY), (GLD), (SU), (FCX), (APA), (XBI); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Pete Najarian owns (SCCO); Pete Najarian owns (TCK); Pete Najarian owns (PFE); Pete Najarian owns (CELG); Pete Najarian owns (CNI)

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