Avago Technologies, one of the world's biggest manufacturers of semiconductors, is buying its California-based rival Broadcom for $37bn (£24bn).
Between them, the two firms employ more than 20,000 staff worldwide with combined annual sales of £15bn (£10bn).
Avago, based in both the US and Singapore, said the deal was a "landmark" transaction.
It is using a combination of cash and shares to pay for Broadcom.
"The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors," said Hock Tan, Avago's chief executive.
Broadcom makes semiconductors for set-top boxes, mobile phones and network equipment, and its chips are used in smartphones made by Apple and Samsung.
Avago has been expanding rapidly. Broadcom is the sixth company to be bought by Avago since the start of 2013
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