Hard-disk drive maker Western Digital said it would buy SanDisk for about $19 billion, giving it better access to flash memory storage chips used in smartphones and mobile devices.
The semiconductor industry has seen a record number of deals this year as demand for cheaper chips and products to power Internet-connected gadgets push technology companies to consolidate suppliers.
Analysts have said while Western Digital is a major player in the traditional storage industry, it needs access to SanDisk's NAND technology to better compete in the solid-state drive (SSD) market.
SSDs are used in cloud computing, data centres, smartphones and laptops.
The value of the deal depends on the closing of an investment from Unisplendour, a unit of China's state-backed Tsinghua Holdings, in Western Digital.
The deal is expected to draw intense scrutiny from both US and Chinese regulators as accusations of cyber snooping increase between the two countries.
If the Unisplendour investment closes before the SanDisk acquisition, Western Digital will pay $85.10 in cash and 0.0176 of its shares for each SanDisk share held, the companies said today.
However, if the Unisplendour investment does not close or is terminated, Western Digital will pay $67.50 in cash and 0.2387 of its shares for each SanDisk share held.
SanDisk may also need Toshiba's approval to complete the deal, as it uses the Japanese conglomerate's foundries for making chips, apart from having an important intellectual property-sharing joint venture.
The joint venture with Toshiba will be ongoing, Sandisk and Western Digital said in a statement.
The deal is expected to add to Western Digital's adjusted earnings within the first 12 months of its closing.
