Semiconductor maker Analog Devices said today it would buy rival Maxim Integrated Products for about $21 billion in the largest US deal this year.

Analog is aiming to boost its market share in automotive and 5G chipmaking. 

The deal, which is also Analog's biggest, will create a chipmaking force with a combined enterprise value of about $68 billion that will compete with larger rivals including Texas Instruments. 

The companies said the deal added Maxim's strength in automotive and data centre markets to ADI's across broad industrial, communications and digital healthcare segments. 

Based in Massachusetts, Analog Devices provides sensors, data converters, amplifiers and other signal processing products to a range of industries from transportation and healthcare to instrumentation and portable consumer devices. 

San Jose, California-based Maxim designs and manufactures analog chips that are used in cars, manufacturing, energy, communications, healthcare and connected devices. 

The offer values Maxim at $78.43 per share, a premium of about 22% to its Friday close and Maxim shares were up 17% at $75 in premarket trading. 

Analog shares rose just under 1%, suggesting investors tacitly approved. 

Under the terms, Maxim stockholders will receive 0.630 of Analog stock for each share they own, the companies said in a statement. 

The deal is expected to add to adjusted earnings of the combined entity in about 18 months following the close, with $275m in cost savings by the end of year two, the companies said. 

Two Maxim directors, including CEO Tunç Doluca, will join Analog Devices' board. 

Among its biggest deals, Analog acquired fellow chipmaker Linear Technology Corp for about $14.8 billion in 2016.