Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward

Chipmaker Intersil Set to Pick Renesas over Maxim as Acquirer

August 31, 2016, 10:26 PM UTC
Images of Renesas Electronics Microcontrollers As The Company Holds AGM
Renesas Electronics Corp. microcontrollers are arranged for a photograph in Soka City, Saitama Prefecture, Japan, on Saturday, June 23, 2012. Renesas said it reached a basic agreement to receive support from its largest shareholders, while the company's major lenders will provide additional funding, as it seeks to recover from losses. Photographer: Kiyoshi Ota/Bloomberg via Getty Images
Photograph by Kiyoshi Ota/Bloomberg/Getty Images

Intersil may announce a sale to Renesas Electronics as early as next week, choosing the Japanese semiconductor company over U.S. suitor Maxim Integrated Products, people familiar with the matter said.

Intersil’s (ISIL) talks with Maxim (MXIM) illustrate the competitive nature of the sale process for the Milpitas, California-based company, whose chips are used in industrial, mobile and infrastructure applications. Intersil also has a growing automotive and aerospace semiconductor business.

In opting to go with Renesas as an acquirer, Intersil has had to weigh the attractiveness of its roughly $3 billion offer versus the risk of a protracted review by the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security issues, the people said.

This is because some of Intersil’s chips have military applications and are on the munitions list of the International Traffic in Arms Regulations (ITAR) of the U.S. government. While the United States considers Japan a friendly nation, a CFIUS review with Renesas as an acquirer could present more complications than a sale to San Jose, California-based Maxim, the people said.

Get Data Sheet, Fortune’s technology newsletter.

An agreement between Intersil and Renesas is not certain, and Maxim could still seek to disrupt the deal with a new offer, the people said. The Nikkei business daily first reported last week on Intersil’s talks with Renesas.

The sources, who spoke this week, asked not to be identified because the discussions are private. Representatives for Intersil, Maxim and Renesas declined to comment.

Intersil shares rose as much as 10% on the news to $20.18, giving the company a market capitalization of $2.75 billion.

Consolidation has been rife in the fragmented market for analog chips, which process signals such as sound, light and temperature before converting them into digital signals.

How Qualcomm Chips Are Making Cities Smarter

However, slowing growth in computers and smartphones—the traditional mainstays of the industry—has fueled a wave of mergers, with chipmakers turning to areas such as auto electronics for sales growth.

Last month, Analog Devices agreed to buy Linear Technology for about $14.8 billion.

At the end of last year, Tokyo-based Renesas was the world’s third-largest chipmaker by market share, with 9.1%, data from technology research firm Gartner showed.

Renesas lost its second-place spot after Dutch rival NXP Semiconductors NV bought U.S. chipmaker Freescale Semiconductor in a $12 billion deal last year.

Maxim has been on the hunt for a deal for some time, according to the sources.