SAN FRANCISCO — Texas Instruments Inc. is buying National Semiconductor for $6.5 billion in a marriage of two of the world’s premier makers of analog chips, which are widely used in electronics to transform signals such as sound into digital form that computers can understand.
In scooping up National Semiconductor, TI is getting a storied Silicon Valley company whose history stretches back more than 50 years and is known for its power-management chips.
National Semiconductor is one of South Portland’s largest employers, with 550 workers at its fabrication facility. The plant underwent a $58 million expansion in 2004 to meet increased demand for its analog chip products.
The deal is the latest example of consolidation among big players in the technology world as trends such as the explosion in smartphones have shaken up the competitive landscape. Longtime foes have joined forces while friendships have frayed as the boundaries between companies’ business lines have blurred.
TI has agreed to pay $25 per share. The all-cash transaction represents a 78 percent premium over National Semiconductor’s stock price before the deal was announced.
Shares of National Semiconductor surged $10.20, or 72.5 percent, to $24.27 in extended trading, after the deal was announced. TI shares fell 62 cents, or 1.8 percent, to $33.49. In the regular session, before the announcement, National Semiconductor shares lost 16 cents to close at $14.07.
TI and National Semiconductor have been long-running rivals.
TI, a leader in chips for cell phones, said swallowing National Semiconductor would be good for both companies’ sales. TI’s CEO Rich Templeton said the combined companies’ sales team will be 10 times bigger than National Semiconductor’s current sales force.
“This acquisition is about strength and growth,” Templeton said in a statement. “National has an excellent development team, and its products combined with our own can offer customers an analog portfolio of unmatched depth and breadth.”
Dallas-based TI noted that it makes some 30,000 types of analog chips, while National, based in Santa Clara, Calif., makes 12,000. TI said that it owned about 14 percent of the $42 billion analog market last year while National Semiconductor owned about 3 percent.
TI said the analog business will rise to about half of the company’s overall revenue when the deal closes, which TI expects will be within the next six to nine months.