Texas Instruments will snap up National Semiconductor in an all-cash transaction worth $6.5 billion, making it one of the biggest deals in the highly competitive microchip industry.
The two companies have good presence in India.
The deal would bolster Texas Instruments' (TI) capabilities in the segment of analog chips, which are widely used in mobile phones, among other gadgets.
Both companies have entered into a definitive agreement whereby TI would acquire National for $25 per share.
The deal has been approved by the boards of the two entities, Texas said in a statement on Monday.
The combined company would benefit from National's manufacturing operations in Scotland and Malaysia. Each site has additional capacity to increase production.
TI set up its R&D facility in Bangalore way back in 1985, while National has a regional design centre in that city. The two companies have thousands of analog products. National has a portfolio of 12,000 such products as well as strong presence in the industrial power market.
Apart from TI, other major players in the microchip market include Nvidia and Marvell Technology.