Texas Instruments Inc (TXN.N) in April 2011 decided to buy National Semiconductor Corp (NSM.N) for $6.5 billion. The company agreed to pay 78 percent premium to merge two of the oldest firms into a dominant force in analog microchips which are used in products ranging from phones to cars.
The acquisition will extend TI's lead in the analog chips market. NatSemi has a strong portfolio of power management microchips for industrial uses as well as for wireless telephones. It however lacks stronger long-term growth prospects.
Analog chips translate real-world phenomena like sound, temperature and light into the 1s and 0s that comprise digital computer language. These chips are instrumental in regulating electricity consumption -- a crucial point for smartphones and tablets and their battery lives.
Apple Inc's (AAPL.O) iPod Touch MP3 player and Motorola Inc's (MMI.N) Xoom tablet computer both use power-related analog chips made by Texas Instruments.
The deal was brokered by Silicon Valley dealmaker Frank Quattrone.
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