Renesas in Talks to Buy U.S. Chip Maker for $3 Billion

“We are considering various possibilities, including this deal, to achieve further growth”, Renesas said in a statement.

“Our policy is not to comment on rumors or speculation”, Intersil spokeswoman Shannon Pleasant wrote in an e-mail to Bloomberg.

The major Japanese chipmaker is expected to spend up to 300 billion yen ($3 billion) on the deal.

Renesas has confirmed it is in talks, according to reports, and is considering paying up to 300 billion yen (about $3 billion). As of Friday’s close, Intersil has a market cap of $2.1 billion.

As of Friday, Intersil’s market capitalization was nearly $2.1 billion and Renesas plans to add a premium by buying majority of the former’s shares.

Renesas plans to use cash on hand and may also consider borrowing funds from banks, the report added.

Demand for cheaper chips and new products to power internet-connected gadgets has also driven consolidation in the industry. A year ago the company revealed that it had allocated several billion dollars for possible acquisitions.

Tokyo-based Renesas was a year ago the world’s third-largest chipmaker by market share, with 9.1 per cent, according to research firm Gartner.

Renesas has recently restructured its unprofitable operations, and is now planning to boost its automotive chip business since automakers are seeking to develop more advanced fuel-efficient cars and automated driving technology.

The Japanese company lost its second-place spot after Dutch rival (NXPI.O) bought US chipmaker Freescale Semiconductor Ltd in a $12 billion deal in December.