(Reuters) - Chipmaker Broadcom Corp plans to buy NetLogic Microsystems Inc for about $3.7 billion to expand its lineup of chips used in wireless network equipment to take advantage of growing demand for mobile data services on devices such as cellphones.

The $50-per-share deal, which represents a premium of 57 percent over NetLogic's Friday close of $31.91 on Nasdaq, sent NetLogic's shares soaring 50 percent in morning trading on Monday.

While some analysts questioned the steep price on a conference call on Monday, Broadcom executives said they expect strong earnings and revenue growth from NetLogic, whose chips process data traffic on wireless networks.

Chief Executive Scott McGregor said the deal is about "significantly expanding" the addressable market for Broadcom, which already sells different types of chips to the same network equipment makers that use NetLogic products.

It would cost a lot for Broadcom to build the NetLogic technology itself, Williams Financial analyst Cody Acree said.

"It's a high premium but it's a necessary premium. NetLogic has a huge amount potential," Acree said. "They've developed a portfolio of products that's unique and difficult for Broadcom to reproduce."

NetLogic rival Cavium Inc saw it shares rise 7 percent after the news as some investors hoped it could also attract a suitor. However, Acree said that a stronger NetLogic could make it more difficult for Cavium to compete.

The companies said the transaction has been approved by their respective boards and was expected to close in the first half of 2012.

Broadcom expects the deal to add 10 cents a share to its earnings on an adjusted basis in 2012. It kept its forecast for third-quarter revenue of $1.9 billion to $2 billion with product gross margins flat to slightly higher.

Broadcom said it expects to have around $4.2 billion in cash on hand by the end of third quarter, up from some $3.8 billion at the end of the second quarter.

In its latest quarterly report, NetLogic posted a 14.4 percent revenue increase to $98.7 million. Roughly 42 percent of its revenue depends on network equipment sales in China.

NetLogic already sells chips to Cisco and Alcatel-Lucent and said in May that it expects Hewlett Packard, Ericsson and ZTE to become major customers later this year as they increase spending on high-speed wireless technologies.

NetLogic shares were up $16 at $47.91 in morning trading on Nasdaq where Cavium shares rose $2.41, or 7 percent, to $33.32.

(Reporting by Yinka Adegoke and Sinead Carew in New York and Supantha Mukherjee in Bangalore; Editing by Derek Caney and Maureen Bavdek)

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