NEW YORK / LONDON, March 19 (Reuters) - Germany's Elmos Semiconductor is exploring a sale as its founders consider exiting the business, according to three people familiar with the matter.  

Elmos, which has a market value of around 2.3 billion euros ($2.5 billion), has hired Morgan Stanley to advise on the process, the people said, requesting anonymity because the deliberations are confidential.

Elmos and Morgan Stanley declined to comment. The company has begun early-stage discussions with potential buyers, including global semiconductor firms, two of the people said.

German chipmaker Infineon Technologies and U.S.-based Qualcomm ( QCOM ) would be logical suitors for Elmos, one of the sources said, as both are looking to expand their automotive chip capabilities and broaden their product offerings.

Infineon declined to comment, while Qualcomm ( QCOM ) did not immediately respond to requests for comment.

FOUNDERS AND THEIR ENTITIES CONTROL MAJORITY OF COMPANY

The sources cautioned Elmos could choose not to proceed with a transaction, and added that any deal for Elmos would likely draw close scrutiny from German regulators. 

Founded in 1984 by management consultant and physicist Klaus Weyer, university professor Gunter Zimmer, and Norbert Ellenberger, Elmos designs semiconductors used in vehicle safety, lighting and powertrain systems.

Co-founder Weyer, through his private investment vehicle Weyer Beteiligungsgesellschaft, holds a 20.7% stake, with other founder-linked entities controlling a majority of the company, giving insiders effective control over any potential deal, according to company filings.

The semiconductor firm sold its Dortmund wafer fab to U.S. industrial technology company Littelfuse in late 2024, allowing it to focus on chip design while outsourcing manufacturing.

Elmos posted record 2025 sales of 582.6 million euros, slightly above the previous year, while earnings before interest and tax fell about 13% to 125.7 million euros. The company said it expects revenue to grow around 11% in 2026, with margins improving to about 24%.

SEMICONDUCTOR INDUSTRY CONSOLIDATING

The deliberations come as deal activity in the semiconductor sector picks up, driven by consolidation and demand for scale across the sector as companies seek to expand capabilities in areas such as automotive and industrial chips.

Amsterdam-listed chip equipment maker BE Semiconductor Industries has attracted takeover interest from U.S. chip-equipment makers Lam Research and Applied Materials, Reuters reported earlier this month. 

Qualcomm ( QCOM ) last year bought British company Alphawave for $2.4 billion, while Infineon bought Marvell Technology's automotive ethernet business for about $2.5 billion in cash.

($1 = 0.8653 euros)