India, Sept. 10 -- AI is now moving beyond chatbots and data centers and into the machines we use in the real world. The next step is to make these systems understand their surroundings and respond quickly. This is where Analog Devices' planned $1.35 billion acquisition of Alif Semiconductor comes in.

The two companies have signed an agreement for ADI to acquire Alif in an all-cash deal also the acquisition is expected to close before the end of the year, pending regulatory approval and other standard closing conditions.

ADI describes its approach as Physical Intelligence. In simple terms, this means creating systems that can understand what is happening in the real world instead of only working with text, images, or cloud-based informa...