Japan's Fujitsuis close to selling its mirocontroller chip business to Spansion.
According to Reuters, the deal will broaden the US semiconductor company's product line-up so it can better cater to automotive clients.
The car industry is being seen as the saviour of many chip industry companies as cars become more intelligent and computers less so.
Reuters did not get details of the deal, which apparently will include Fujitsu's microcontroller design and development business as well as a Japanese plant.
It is also a coming of age for Spansion which was set up as a joint venture between Fujitsu and Advanced Micro Devices in 2003. The outfit specialises in flash memory and has been trying to diversify its product range.
Semiconductors were once a key business for Fujitsu, but the company could not keep up with rivals like Samsung. Fujitsu also plans to merge its LSI chip business with that of Panasonic this fiscal year, Reuters claims.
Microcontrollers are an important part of Fujitsu's device solutions business, which also includes LSI chips. The division made $6 billion in sales in the year ended March 2012, accounting for 12 percent of Fujitsu's total cash take.
Fujitsu insisted that nothing had been decided with regards to its microcontroller chip business, but the news was reported by Japanese media, including the Nikkei business daily.