LONDON (The Deal) -- U.K. chipmaker CSR (CSRE) , which is best known for its Bluetooth devices, said on Thursday it had received and rejected a takeover proposal from acquisitive peer Microchip Technology(MCHP) - Get Report .

CSR didn't say what Microchip had offered. Its shares by early afternoon in London on Thursday were up more than 36% at 784.50 pence, giving the company's equity a price tag of just under 1.3 billion pounds ($2.15 billion). People familiar with the situation told the Financial Times the company could fetch $3 billion.

The target said that "the board is considering its options for the company."

The U.S. takeover interest comes as dealmaking among chipmakers picks up. Last week Germany's Infineon Technologies AG agreed to buy El Segundo, Calif. rival International Rectifier Corp. for $3 billion to broaden its portfolio and expand in the U.S. and China. Other transactions in the sector include Intel Corp.'s planned $650 million purchase of Axxia chip business from Avago Technologies Ltd. for $650 million.

The disclosure of Microchip's interest means the Chandler, Ariz. bidder now faces a Sept. 25 Takeover Panel deadline to decide whether to formalize an offer or to retreat, unless it can convince CSR to ask regulators to give it more time.

CSR had cash of $236.8 million at the end of the second quarter and has been pulling out of lower margin businesses including operations inherited from its troubled 2011 purchase of Sunnyvale, Calif.-based Zoran. In 2012 CSR sold its handset unit to Samsung Electronics Co. for $310 million.

CSR had first-half sales of $374.5 million, down from $500.4 million a year earlier as it wound down "legacy businesses." Profit fell to $41 million from $58.4 million.

CSR defines its five markets as: automotive infotainment; Bluetooth smart; document imaging; voice and music, and indoor location.

Microchip Technology last month completed a 8.2 billion new Taiwan dollar ($255.8 million) deal to acquire 83.46% of the outstanding shares of Taiwan's ISSC Technologies Corp., a developer of wireless solutions. The purchase was its first major overseas acquisition. On Aug. 2 Microchip Technology completed its $722 million acquisition of Standard Microsytems, a developer of connectivity chips for a variety of applications.

Microchip Technology had a market value of almost $9.6 billion as of Wednesday's close.

An out-of-hours message was sent to Microchip representatives seeking further comment, while CSR representatives weren't immediately available.

JPMorgan Cazenove Ltd.'s Rupert Sadler, Madhu Namburi, Dwayne Lysaght and James Robinson are advising CSR, whose law firm is Slaughter and May.