By Liana B. Baker and Makiko Yamazaki

(Reuters) - Intersil Corp <ISIL.O> may announce a sale to Renesas Electronics Corp <6723.T.> as early as next week, choosing the Japanese semiconductor company over U.S. suitor Maxim Integrated Products Inc <MXIM.O>, people familiar with the matter said.

Intersil's talks with Maxim illustrate the competitive nature of the sale process for the Milpitas, California-based company, whose chips are used in industrial, mobile and infrastructure applications. Intersil also has a growing automotive and aerospace semiconductor business.

In opting to go with Renesas as an acquirer, Intersil has had to weigh the attractiveness of its roughly $3 billion offer versus the risk of a protracted review by the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security issues, the people said.

This is because some of Intersil's chips have military applications and are on the munitions list of the International Traffic in Arms Regulations (ITAR) of the U.S. government. While the United States considers Japan a friendly nation, a CFIUS review with Renesas as an acquirer could present more complications than a sale to San Jose, California-based Maxim, the people said.

An agreement between Intersil and Renesas is not certain, and Maxim could still seek to disrupt the deal with a new offer, the people said. The Nikkei business daily first reported last week on Intersil's talks with Renesas.

The sources, who spoke this week, asked not to be identified because the discussions are private. Representatives for Intersil, Maxim and Renesas declined to comment.

Intersil shares rose as much as 10 percent on the news to $20.18, giving the company a market capitalization of $2.75 billion.

Consolidation has been rife in the fragmented market for analog chips, which process signals such as sound, light and temperature before converting them into digital signals.

However, slowing growth in computers and smartphones - the traditional mainstays of the industry - has fueled a wave of mergers, with chipmakers turning to areas such as auto electronics for sales growth.

Last month, Analog Devices Inc <ADI.O> agreed to buy Linear Technology Corp <LLTC.O> for about $14.8 billion.

At the end of last year, Tokyo-based Renesas was the world's third-largest chipmaker by market share, with 9.1 percent, data from technology research firm Gartner showed.

Renesas lost its second-place spot after Dutch rival NXP Semiconductors NV <NXPI.O> bought U.S. chipmaker Freescale Semiconductor Ltd in a $12 billion deal last year.

Maxim has been on the hunt for a deal for some time, according to the sources.

(Reporting by Liana B. Baker in New York and Makiko Yamazaki in Tokyo; Editing by Matthew Lewis and Alan Crosby)