EXCLUSIVE - Japan's TDK in talks to buy iPhone supplier InvenSense - sources

By Liana B. Baker

REUTERS - Japanese electronic parts maker TDK Corp is in talks to acquire InvenSense Inc, a U.S. chip maker that produces motion sensors for Apple Inc and Samsung Electronics Co, people familiar with the matter said on Friday.

The deal would allow TDK, already a major smartphone components supplier, to boost its sensor technology offerings. InvenSense designs gyroscopes which help smartphones calculate motion, enabling augmented reality games such as Pokemon Go.

TDK has offered $12 per share to acquire InvenSense, one of the people said, cautioning that negotiations are ongoing and that terms could still change before a potential deal is reached. The companies hope to conclude negotiations by the end of the month, the people added.

The sources asked not to be identified because the deliberations are confidential. TDK and InvenSense did not immediately respond to requests for comment.

InvenSense shares surged 28 percent on the news to $10.57 in afternoon trading on Friday, giving the company a market capitalization of approximately $1 billion.

Based in San Jose, California, InvenSense said in October it had hired a financial advisor to evaluate indications of interest, confirming a report by Reuters.

If it succeeds in selling itself, InvenSense would be the latest company to be swept up by a wave of consolidation in the industry, as makers of chips for smartphones face intense price competition and seek scale.

Smartphone chip maker Qualcomm Inc agreed to buy NXP Semiconductors NV for about $38 billion earlier this year.

InvenSense, which competes with STMicroelectronics NV and Bosch Sensortech, has said it believes demand for its gyroscope products would grow as more consumers play games that involve moving around with their phones.

TDK, once a successful audio tape maker, prospered in magnetic heads for hard disk drives until demand for personal computers peaked.

Over the last few years, it has revamped itself into a key smartphone supplier, with products that include rechargeable batteries, high-frequency filters that sort out radio signals, and tiny parts called capacitors that control the flow of electricity.

TDK has also been seeking to boost its sensors portfolio through other acquisitions, including Tronics Microsystems SA, a French company it agreed to acquire in August for 48.65 million euros ($51.3 million).

Last year, TDK agreed to acquire Micronas Semiconductor Holding AG, another Swiss chip maker specializing in sensors, for up to 214 million Swiss francs ($210 million).

(Reporting by Liana B. Baker in Vail, Colorado; Editing by David Gregorio)