Analog Devices, Inc. (NASDAQ: ADI) announced an agreement to acquire Alif Semiconductor in an all-cash transaction valued at $1.35 billion, with an additional contingent consideration of up to $200 million.

Alif Semiconductor, headquartered in Pleasanton, California, develops AI-native microcontrollers and fusion processors featuring heterogeneous architecture designed for real-time sensor fusion, low-latency inference, and on-device AI processing.

According to the announcement, the deal is intended to expand ADI's capabilities in edge computing by combining its analog sensing, signal processing, and connectivity portfolio with Alif's digital processing platform. ADI describes the combined offering as supporting what it calls "Physical Intelligence," referring to systems that process real-world signals locally under power, latency, and reliability constraints.

ADI CEO and Chair Vincent Roche said in a statement: "By combining Alif's digital processing capabilities with our leadership in multi-modal sensing, signal processing, power, connectivity, and software, we can empower customers to create entirely new classes of secure, intelligent systems that sense, reason, and act locally in real time."

Alif Co-Founder and President Reza Kazerounian said the company "engineered a heterogeneous architecture from the start, integrating dedicated low-power neural processing with connectivity, security, and intelligent power management."

Alif's products are currently shipping in production, with design wins across consumer and industrial customers, according to the press release.

The transaction has been approved by the boards of both companies and is expected to close before the end of calendar year 2026, pending customary regulatory conditions including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. ADI reported revenue of more than $11 billion in fiscal year 2025.