UPDATE 2-Infineon plans $1 bln capital hike, Apollo involved

* Apollo could take stake of up to 29 pct

* Apollo aims to have at least 15 pct

* Shares rise as much as 5.8 pct (adds analyst comment, CDS rally, updates shares)

By Nicola Leske

FRANKFURT, July 10 (Reuters) - Struggling German chipmaker Infineon (IFXGn.DE), working to ease its financing needs, plans to raise 725 million euros ($1.0 billion) in a capital increase with the backing of U.S. investor Apollo.

Infineon plans to launch a rights issue of up to 337 million shares with a subscription price of 2.15 euros, the company said in a statement on Friday.

U.S. activist investor Apollo Management LP [APOLO.UL] agreed to buy all shares in the rights issue that are not taken by existing shareholders.

Apollo could end up owning a stake of up to 29 percent, just under the threshold of 30 percent that by German law would force it to make a takeover offer for the entire company.

Infineon, which has been buffeted by a slump in global chip prices, said it would use the proceeds to repay debt and strengthen its liquidity position.