Microchip Technology Inc., the giant chipmaker based in Chandler, Arizona, has recently announced that it is acquiring its rival Atmel Corp. of San Jose, Calif. for a massive deal amounting to $3.56 Billion. The deal will be negotiated in cash and stock.

Previously, Atmel was negotiating with Dialog Semiconductor since September. But the talks fell off because Atmel said the offer of Microchip is "superior."

The deal calls for Microchip to pay Atmel $8.15 per share, and $7 of those will be paid in cash. Included in the deal is a fraction of a share of the company's common stock valued at $1.15 based on a 10-day average closing price.

In a company statement, Steve Sanghi, Microchip CEO stated: "As the semiconductor industry consolidates, Microchip continues to execute a highly successful consolidation strategy with a string of acquisitions that have helped to double our revenue growth rate compared to our organic revenue growth rate over the last few years."

This announcement is the final step in the bidding process that involved Atmel, a small chip maker. It could impact the small company's future in a business climate where significant mergers were made in 2015. A number of chipmakers are combining their efforts at a faster rate in their bid to mitigate their diminishing customer base and the rising costs of production.

Steven Laub, Atmel CEO is positive about the recent acquisition of his company by Microchip. "Under the Microchip transaction, Atmel stockholders will receive a much higher cash consideration per share compared to the Dialog deal, as well as the opportunity for further upside through the ownership of stock of Microchip," he explained.

This massive deal was approved by the board of directors of both companies. But it still requires the support of Atmel's stockholders. The merger is expected to generate savings of $170 million and increase revenues starting in the 2019 fiscal year.