Dialog Semiconductor has agreed to buy Atmel in a deal worth $4.6bn.
London-based, Frankfurt-listed Dialog Semiconductor is acquiring its US rival to broaden its customer base, the company said on Sunday.
Dialog is "heavily exposed to Apple and Samsung", according to Reuters. By acquiring Atmel, the company will be able to expand its customer base in the sectors including the Internet of Things.
While smartphone growth is slowing - at 13.5 percent for the most recent quarter, according to analysts Gartner, it's dropped back to levels last seen two years ago - predictions for the value of the IoT market have been bullish: Gartner is predicting the IoT chip market will grow 30 percent through 2020, and that there will be 25 billion connected objects by then.
"Our new, enlarged company will be a diversified, high-growth market leader in mobile power, IoT and automotive. We firmly believe that by combining power management, micro controllers, connectivity and security technologies, we will create a strong platform for innovation and growth in the large and attractive market segments we serve," Jalal Bagherli, Dialog's CEO, said.
The combined company will generate $2.7bn in annual revenues, Dialog said, and will make $150m of cost savings from 2017.
The transaction is expected to close in the first quarter of next year, subject to regulatory approvals.
The deal comes against a background of sizeable mergers and acquisitions in the chip market: NXP announced in March it would acquire Freescale for $40bn, Avago acquired Broadcom for $37bn in May, and June saw Intel offer $16.7bn for Altera.