Feb. 7 (Bloomberg) -- Infineon Technologies AG, Europe's second-biggest maker of semiconductors, won an order to supply mobile-phone chips to Nokia Oyj, spurring the shares to their biggest gain in four years.

Nokia, the world's largest maker of handsets, will use Infineon's products in some of its lower-priced ``entry-level'' phones, the companies said in a statement today. No financial details of the deal were given.

The chipmaker is seeking new orders for its cellular-phone division after Benq Mobile, Infineon's largest client, ran out of cash last year and started liquidating in January. The collapse forced Infineon, based in Neubiberg near Munich, to cut 400 jobs and delay some profit goals. Nokia has increased sales in China and India, the world's fastest growing mobile-phone markets, spurring orders for chips used in lower-priced cellular phones.

The Nokia deal is a ``major inflection point for Infineon's wireless communications business'' and ``increases the chances'' to win other ``significant'' mobile-phone chip contracts in the next 12 months, UBS analysts Jonathan Dutton and Ashish Jain wrote in a note to clients today. They raised their rating on Infineon shares to ``buy'' from ``neutral'' and their price target to 14.30 euros from 12.50 euros.

Shares of Infineon rose 1.16 euros, or 11 percent, to 11.96 euros in Frankfurt, valuing the company at 8.94 billion euros. It was the biggest gain since March 2003 and the highest price since April 2004.

Texas Instruments Concern

Infineon's competitors in supplying mobile-phone chips to Nokia include STMicroelectronics NV, Europe's biggest maker of semiconductors, and Texas Instruments Inc., the world's largest maker of mobile-phone chips.

Infineon ``competes directly'' with Texas Instruments' lower-cost platform for mobile phones and ``is obviously making substantial progress into Texas Instruments biggest customer,'' Stifel Nicolaus & Co. analysts Cody Acree and Patrick Newton said in a note to clients today. ``We do see this announcement as a major negative catalyst to Texas Instruments's shares.''

Shares of Dallas-based Texas Instruments fell 18 cents to $31.04 at 4:01 p.m. in New York Stock Exchange composite trading.

`Power Performance'

Infineon said today the chips for Nokia will combine a baseband processor, a radio frequency transceiver and a power management unit to perform the basic phone functions. Nokia said in the statement that the deal with Infineon will help the company to further ``improve the power performance in our entry level phones and reduce their size.''

Last year, Infineon won orders from LG Electronics Inc., the world's fourth-largest mobile-phone maker, and Ningbo Bird Co., China's biggest handset maker, in an effort to lessen the fallout from the Benq collapse. Infineon's communications unit, which makes chips used in phones, lost 57 million euros in the three months through December, the company said on Jan. 29.

New orders for Infineon's mobile-phone chips are crucial for Chief Executive Officer Wolfgang Ziebart, who plans to focus on tailor-made semiconductors for cellular phones and cars after he split off the memory-chip division last year.

Benq became Infineon's biggest mobile-phone client after Siemens AG, Infineon's former parent, handed its unprofitable handset division to Benq in 2005.

To contact the reporter on this story: Simon Thiel in Munich at sthiel1@bloomberg.net;

Last Updated: February 7, 2007 16:10 EST