NETWORKING CHIPS Infineon Acquisition Could Preface More Optical Chip Deals.(A)

Byline: James DeTar

The Europeans have shown up for the latest round of mergers in the network chip market.

Germany's Infineon Technologies AG announced Monday that it would buy San Jose, Calif.-based chipmaker Catamaran Communications Inc. for $250 million in stock. The move pushes Infineon to the forefront in the optical networking field.

Catamaran will be Infineon's third communications company purchase in the last year. But it's significant in that it's one of the first optical network chip purchases by a non-U.S. company.

More such acquisitions are likely to follow, analysts say. Even with a slowdown in the growth of optical networks, the chips used to run these speedy networks are a hot commodity.

"We may see a wave of European and Japanese semiconductor makers trying to get a position in this market through acquisitions," said analyst Bob Wheeler of the Linley Group in Mountain View, Calif.

Infineon officials say the purchase will give them a broad line of so-calledoptoelectronic products -- the electronics that go into fiber-optic networks.