If the rumours are right, a deal could be announced this week, although negotiations are still on-going.
Shares of Broadcom soared almost 20 percent to $56.40 while Avago’s rose nine percent to $143.29 as news of the deal leaked out. Avago has a market capitalisations of $36 billion and Broadcom has $34 billion respectively.
Broadcom makes semiconductors for a variety of products, including set-top boxes, cell phones and network equipment. It is best known for its connectivity chips which integrate Wi-Fi and Bluetooth technology, which are used widely in top-tier smartphones made by Apple and Samsung.
After losing ground to Qualcomm in modem technology, Broadcom shut that unit and cut a fifth of its workforce last year. Avago could be looking to work with Broadcom’s storage business.
Avago had been seeking to buy a large chipmaker and approached companies including Xilinx, Japan’s Renesas Electronics and Maxim Integrated Products.
Avago, which develops semiconductor devices for the wireless and industrial markets, has been looking at expanding in areas ranging from analogue semiconductors to radio frequency technology.
The company bid for Freescale earlier this year, before NXP Semiconductors bought it for $11.8 billion.