They have agreed in an all-cash handshake deal that Qualcomm will pay $110 a share for NXP, sources told CNBC, in a deal that would be close to $40 billion.
But the deal is not completed, and additional deal specifics are being worked on. NXP had been asking for $120 a share but it appears they are willing to take $110, the sources said.
Qualcomm and NXP declined to comment, citing company policy.
The companies are currently going over the contracts, which are very complex and the companies must ensure it is being adhered to, sources said. But they are on track to have a deal announcement as soon as next week, sources said.
Bloomberg reported Thursday that the two chip companies were said to be near a deal that would be announced next week, and that the deal was inching toward $110.
Qualcomm shares were up about 2.4 percent at $68.97 on Friday morning, and NXP shares were down about 2.5 percent at nearly $102.
NXP works on chips for cars, security and the internet of things, all emerging business for Qualcomm, which specializes in wireless technology like mobile phones.
This story is developing. Please check back for further updates.