German newspapers, fed by a leaky supervisory board at Infineon Technologies, are saying that Infineon and NXP are in 'intensive' talks about merging their operating businesses.

The Infineon management board is said to be opposed to the deal. The leaks from the supervisory board say that the CEO of the company, Wolfgang Ziebart, will be ousted next week.

The touted replacement for Ziebart is Klaus Wucherer who was dismissed from Siemens' management board last year following the Siemens slush funds and bribery scandal.

Ziebart's contract runs to September 2009. Official sources at Infineon are 'no-commenting' all the rumours.

Apparently the deal under discussion between Infineon and NXP is that they will merge their operations, but not the two companies, and will leave the DRAM manufacturing operation, Qimonda, out of the deal.

The supervisory board at Infineon has been urging Infineon to get rid of its 77 per cent stake in Qimonda which is separately listed on the New York stock exchange.

So, if the rumoured deal with NXP goes ahead, it will mean that instead of Infineon divesting Qimonda, it could be Infineon that will be divesting itself from Qimonda.

Ziebart has had great success with Infineon's main business areas: wireless chips and chips for cars. In wireless chips Infineon is the world's fourth largest supplier, and in automotive chips Infineon is the second largest worldwide player. In analogue, Infineon is the world No.3.