IBM has agreed to buy chip maker ARM Holdings for $13.6 billion.
The chipmaker is expected to close the transaction in the first half of next year.
The deal will create a global market leader in mobile processor design and production for customers ranging from businesses to enterprises and governments.
ARM, which has operations in more than 200 countries, has shipped more than 1 billion processors since 2007, according to the company.
ARM chief executive Vishal Sikka said ARM’s business model was built around mobile devices and the ability to leverage the power of a chip design and assembly facility.
ARM has been profitable for six years.
In the deal, ARM will use the proceeds to expand its product portfolio and expand its research and development efforts.
The company also plans to expand the business to other markets, Sikka added.
ARM was founded in 1971 by a group of engineers at Texas Instruments and has more than 80,000 employees worldwide.
ARM chips are used in computers, servers and embedded systems, including the $2.5 trillion Samsung Galaxy S5.