TOKYO -- Renesas Electronics is in the final stages of negotiations to acquire Intersil, an American chipmaker strong in products offering power-saving solutions.
The major Japanese chipmaker is expected to spend up to 300 billion yen ($3 billion) on the deal. A basic agreement could be reached as early as this month.
While the semiconductor market will likely remain flat as a whole globally, the market for automotive chips is expected to grow, underpinned by demand in such new fields as self-driving cars.
Nasdaq-listed Intersil's market capitalization came to more than $2.1 billion as of Friday. Renesas intends to add a premium to buy Intersil shares, seeking to take full control of the California company. It plans to use cash on hand, which totaled some 400 billion yen at the end of June, and may also consider borrowing funds from banks.
Intersil makes chips essential to regulating power in such products as automobiles, industrial machinery and smartphones. It supplies automakers in the U.S., Europe and Asia, and more of its offerings are expected to find their way into electric cars and fuel cell vehicles. Intersil also handles communications chips.
With the purchase, Renesas aims to bolster its lineup of automotive chips.
Renesas had led the global market for automotive chips until 2014 but has since slipped to third place, behind NXP Semiconductors of the Netherlands and German concern Infineon Technologies.
The Japanese chipmaker was born in 2010 from the merger of Renesas Technology and NEC Electronics. Battered by the strong yen and in the aftermath of the March 2011 earthquake and tsunami, Renesas resorted to large-scale restructuring measures. It finally turned a net profit in the year ended March 2015. As a result of withdrawing from unprofitable operations, the company's sales shrank roughly 40% over five years.