Japanese microchip manufacturer Renesas Electronics Corporation is issuing $1.99bn in new shares to help fund its acquisition of Dialog Semiconductor.

Renesas announced in February that it would acquire UK-headquartered Dialog, a mixed-signal integrated circuit supplier, for approximately €4.9bn.

Dialog designs power, connectivity, memory and other parts for automotive, internet of things, mobile, storage and other industrial appliances.

This complements Renesas’ business, which manufactures semiconductors for a similar customer base but with differing portfolios. Renesas has a particular focus on the automotive sector.

Dialog is a fabless company, which means it designs semiconductor technologies that are made at factories operated by another company. Conversely Renesas is a foundry, which means it manufactures the physical chips and as such can produce Dialog technology on its own production lines.

The acquisition was unanimously approved by the Renesas board of directors and approved by Dialog shareholders earlier this year. The deal is expected to close by the end of the year, subject to regulatory approvals.

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“By bringing Dialog’s talented team and expertise into Renesas, together, we will accelerate innovation for customers and create sustainable value for our shareholders,” said Hidetoshi Shibata, president and CEO of Renesas at the time of the announcement.

A fire at a Renesas factory in Hitachinaka in March halted production of automotive chips for months, compounding the global semiconductor shortage affecting multiple sectors. At the time Renesas said the downtime would cost it $156.3m per month.

Since 2007 Dialog has been a major supplier of power management technology to Apple, with the iPhone maker spending $600m in 2018 to license patents and gain 300 of its employees to work in-house. This saw Dialog refocus its client base to the automotive and industrial tech sectors.

Dialog itself has made a number of acquisitions in recent years, including Germany’s Creative Chips GmbH and Adesto Technologies.

Renesas microprocessors are based on designs by Cambridge-headquartered Arm, which is in the process of being acquired by American GPU designer Nvidia.