Atmel Corp., which agreed in September to sell itself to Dialog Semiconductor PLC, said an unsolicited offer from Microchip Technology Inc. constitutes a “superior proposal,” extending the bidding war for the chip maker.

Microchip’s cash-and-stock offer is valued at $8.15 a share, with $7 in cash and $1.15 in stock.

Later on Wednesday, Atmel cut its fourth-quarter revenue outlook to between $261 million and $262 million from its previous projection of $266 million to $286 million. The company attributed the reduced guidance to weaker-than-expected billings, mostly in Asia, as distributors reduced inventories amid uncertainties related to its acquisition process.

Atmel also expects to post per-share earnings of six cents, below estimates of analysts polled by Thomson Reuters for per-share profit of seven cents.

Atmel’s shares rose by a penny to $7.97 in recent after-hours trading after closing 3.7% higher in trading on Wednesday.

Dialog’s offer, made in September, includes $4.65 in cash and 0.112 of a Dialog American depositary share for each Atmel common share. That deal was valued at about $4.6 billion when it was announced. Since then, Dialog’s shares have slumped by nearly 40%.

Atmel said it has notified Dialog that it intends to terminate their merger agreement.

Dialog has until 5 p.m. Tuesday to raise its offer. If Atmel terminates its merger agreement, it will have to pay a termination fee of $137.3 million.

Atmel, which also had attracted an offer from fellow California chip maker Cypress Semiconductor Corp., is best known for chips called microcontrollers that provide computing power for many kinds of consumer and business hardware. U.K.-based Dialog has said the deal will help the company reduce dependence on a few smartphone makers.

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