UPDATE 1-Infineon to increase capital-sources

* Apollo could take stake of up to 29 pct-source

* Apollo aims to have at least 15 pct-paper

* Infineon to raise about 700 mln euro in cap hike-paper (Releads on sources, adds details, background)

FRANKFURT, July 10 (Reuters) - Embattled German chipmaker Infineon (IFXGn.DE) is preparing a capital increase to shore up its finances, two people familiar with the plans told Reuters late on Thursday.

U.S. activist investor Apollo Management LP [APOLO.UL] is about to take a stake in Infineon of up to 29 percent as part of the capital injection, one of the sources said, adding the move would be officially announced early next week.

Infineon, which has been buffeted by a slump in global chip prices, said it would not comment on matters of refinancing, when contacted by Reuters.

Buyout firm Apollo agreed to snatch up all shares in a planned 325 million-share rights issue that are not taken by existing shareholders, one source said.

Financial Times Deutschland (FTD) had earlier reported the imminent capital increase in an excerpt of an article to be published on Friday, citing unspecified sources.

The paper said new shares would be offered at 2.15 euros apiece and that the proceeds from the share sale would amount to about 700 million euros ($980 million), providing a stronger financial safety net during the downturn.