The move is widely seen as the PS4 maker stepping up its investment in chip technology after strong sales of camera sensors in the last few years helped turnaround the business.
Altair Semiconductor has developed technology to allow small devices such as security alarms and electricity meters to connect to mobile networks, told Reuters last year that it was considering an initial public offering. The sudden buy out then is surprising but a sensible move for Sony.
There has been a lot of consolidation in the chip industry of late and it is fast getting difficult to find someone to consolidate with. It is thought that those who can merge with other companies have already done so and will spend the rest of this year restructuring ready for next year.
Sony said it expects to close the deal in early February.