TOKYO/NEW YORK (Reuters) - Japan's Renesas Electronics Corp (T:6723) is in the final stages of negotiations to acquire U.S. chipmaker Intersil Corp (O:ISIL) for as much as 300 billion yen (£2.2 billion), the Nikkei business daily reported on Monday.
A basic agreement could be reached as early as this month, the paper said, in what would be the latest deal in a trend of consolidation among global chipmakers.
Renesas said in a statement it was considering various options to grow including the reported deal, but that nothing had been decided. Intersil could not be reached for comment outside business hours in the United States.
Renesas shares rose as much as 4.2 percent in early morning trade before turning negative, and in mid-morning trade were down 2.4 percent.
Some investors have doubts about how much the deal could boost Renesas's profits, said Gavin Parry, managing director of Parry International Trading Ltd in Hong Kong.
Renesas Chief Financial Officer Hidetoshi Shibata told Reuters in an interview late last year that the company had earmarked billions of dollars for acquisitions to defend an industry lead under threat from merging peers. He noted that Renesas had over 300 billion yen in cash to fund potential acquisitions.
Intersil had a market capitalisation of more than $2.1 billion (£1.6 billion) as of Friday. Renesas will add a premium to buy Intersil shares, seeking to take full control of the Milpitas, California-based company, the Nikkei said.
Renesas plans to use cash on hand and may also consider borrowing funds from banks, the report added.
Slowing growth in computers and smartphones - the traditional mainstays of the industry - fuelled a wave of mergers last year, with chipmakers turned to areas such as auto electronics for sales growth.
Demand for cheaper chips and new products to power internet-connected gadgets has also driven consolidation in the industry.
Worldwide semiconductor M&A topped $80 billion last year, Thomson Reuters data showed.
At the end of last year, Tokyo-based Renesas was the world's third-largest chipmaker by market share, with 9.1 percent, data from technology research firm Gartner showed.
The Japanese company lost its second-place spot after Dutch rival (O:NXPI) bought U.S. chipmaker Freescale Semiconductor Ltd in a $12 billion deal in December.