Semiconductor company Microchip Technology Inc raised its offer for Silicon Storage Technology to about $287.6 million, after the smaller chipmaker received a rival offer from an unnamed private equity firm.

Microchip said it will now buy Silicon Storage for $3 a share, a premium of 11.5 percent to Silicon Storage's closing price of $2.69 on Feb. 2 -- the day before the companies announced the merger.

Its previous offer of $2.85 represented a premium of 6 percent.

In November, Silicon Storage had agreed to a merger with Technology Resource Holdings, controlled by Prophet Equity LP, but the company terminated the bid after Microchip approached it with a higher offer earlier this month.

Silicon Storage's chips are used in a wide array of consumer electronics products such as PCs, digital still cameras and MP3 players and its customers include Apple, Cisco, Dell and IBM.

The deal, expected to close in the second quarter of 2010, gives Microchip access to Silicon Storage's flash chip technology and patent portfolio, both key building blocks for advanced microcontrollers.

The amended termination fee remains at 3.5 percent of the total equity consideration, Silicon Storage said in a separate statement.

Shares of Microchip closed at $27.08, while shares of Silicon Storage closed at $2.89 Monday on Nasdaq. (Reporting by Manasi Phadke in Bangalore; Editing by Aradhana Aravindan)