Avago Technologies Ltd has announced to buy chipmaker Broadcom Corp for about $37 billion. The deal could pose a challenge to American global semiconductor company Qualcomm and several other companies of the same sector. According to some experts, the deal could force San Diego headquartered Qualcomm to alter it strategies.

Avago has offered about US$17 billion in cash to Broadcom shareholders and shares of Avago that valued about US$20 billion. Broadcom is well known for its connectivity chips which are used in technology companies Apple’s smartphones and Samsung Electronics Co Ltd.

The merger deal is the biggest up to now by Hock Tan, Chief Executive Officer and a director of Avago. He has been CEO of the company since 2006 and during the time, he developed the small company into a US$36 billion company through acquisitions.

According to reports, now the combined company will be headquartered in Singapore and named as Broadcom. It will be the third-largest United States semiconductor maker by revenue, behind Intel Corp and Qualcomm Inc. Some analysts predicted that this will unlikely be the last megadeal in the year.

The merger deal between Avago and Broadcom followed an earlier offer by NXP Semiconductors to buy Freescale Semiconductor Ltd. As per the reports, NXP Semiconductors had offered US$11.8 billion. Before buying Broadcom, Avago had also bid to buy Freescale, as per people familiar with the matter.

Semiconductor manufacturing company Intel has also been in talks to acquire chipmaker Altera Corp. As per the analysts, the deal could top about US$10 billion. Before the recent deal with Broadcom, Avago's biggest deal was for chipmaker LSI Corp, which it acquired for about US$6.6billion in 2014.

The people familiar with the matter, “Avago and Broadcom first spoke about a potential merger in October 2014 but could not agree on a price”.