Dialog has a market value of about 1.15 billion euros (1.01 billion pounds) while Synaptics, the shares of which jumped as much as 15 percent after the report, is valued at $1.6 billion.

Dialog and Synaptics declined to comment on the report.

Any deal could make Dialog less dependent on orders from Apple. Analysts estimate that Dialog derives more than half its revenue from supplying Apple with power management chips.

The company's stock has lost nearly 20 percent of its value so far this month after is said that Apple had cut orders for chips for its new iPhone models.

(Reporting by Maria Sheahan; Additional reporting by Sonam Rai; Editing by David Goodman)