Infineon courts private equity, but why?

Both NXP and Freescale have experienced problems since they entered the private sector and both have seen their balance sheets loaded with so called leveraged debt. So the news that Infineon is pursuing a similar route is surprising. Firstly, it's something of a shock that any private equity company would be considering buying a semiconductor company – because that's what Apollo Global Management may well be doing – at the moment. But it's also a shock – bearing in mind what's happened at NXP and Freescale – that Infineon would, effectively, volunteer to go private. Infineon is, by its own admission, in a bit of a shaky financial position. It has taken a hit – like all other companies – from the current drop in demand for parts. But it has also taken a hit from the woes of Qimonda, its memory subsidiary. What Infineon needs at the moment is cash. The rights issue will raise some €750million, with another €250m coming from the sale the other day of its wireline communications business, putting €1billion in the pot. Paying down debt would appear to be top of the spending list, rather than any investment. Apollo doesn't appear to have any experience of the semiconductor industry, so the question has to be asked why Infineon and why now? Is Apollo going to asset strip in order to get a return or will it attempt to nurse Infineon back to health ready for the return of growth in the industry, then try to sell it public again?