Texas Instruments is set to acquire Silicon Labs to the tune of $7.5 billion following regulatory approvals and customary closing positions, including approval by Silicon Labs stockholders, with the transaction expected to close in the first half of 2027.
Why This Matters for Integrators
As the current owners of the Z-Wave business, Silicon Labs owns the Z-Wave brand, technology and intellectual property, developing the chips used to power Z-Wave products like the 700 and 800 series in addition to providing the innovations that improve upon the Z-Wave standard, such as sub-GHz mesh networking and long range communication.
Silicon Labs also provides the development kits, software stacks and tools for manufacturers to build certified Z-Wave products.
Currently, there are an estimated 4,500 certified Z-Wave products on the market with more than 100 million devices installed globally.
Some Extra Clarification
While Silicon Labs owns the Z-Wave business and produces the technology, the Z-Wave standard operates as an open alliance, allowing other companies to freely join and produce their Z-Wave hardware.
Over the years, this has helped promote competition within the space, while also enabling greater interoperability among members of the Alliance. This has also decentralized the decision-making process for the standard, somewhat, as the Alliance, of whom Silicon Labs is still a member, helps formulate the technical specifications of Z-Wave while providing a roadmap of improvements to the technology.
Why Texas Instruments Sought to Buy Out Silicon Labs
In a press release announcing the acquisition, Texas Instruments stated the move as one to strengthen its wireless connectivity solutions, as the company itself is already well established in creating analog and embedded processing solutions in addition to possessing its own technology and manufacturing capabilities.
“Texas Instruments’ industry-leading and internally owned technology and manufacturing is optimized for Silicon Labs’ portfolio, and will provide customers dependable supply worldwide,” said Haviv Ilan, chairman, president and chief executive officer of Texas Instruments.
“The Texas Instruments and Silicon Labs teams share a high-performing culture focused on excellence, engineering and innovation, and I am highly confident this transaction positions the combined company to deliver sustained value creation for Texas Instruments’ shareholders.”
Acquisition Seen as Boosting Silicon Labs Manufacturing Capacity
According to Texas Instruments, the transaction is expected to generate roughly $450 million in annual manufacturing and operational synergies within three years post-close.
In general, the transaction looks to leverage Texas Instruments’ internally owned manufacturing capacity to help reshore some of Silicon Labs fabrication capabilities and provide low-cost capacity at scale for Silicon Labs’ products.
In particular, Texas Instruments asserts that its defined process technologies, including 28nm, are optimized for Silicon Labs’ wireless connectivity portfolio, and should enable more efficient and faster future process technology design cycles.
The Growth of Wireless
Another element of the purchase mentioned in the press release is Texas Instruments’ own acknowledgement of the growing market demand for wireless connectivity solutions, which has been reflected in the custom integration industry as well.
Clients gravitate towards wireless solutions for the flexibility and convenience while integrators themselves have begun to favor wireless for its easier setup, lending itself heavily to retrofit applications that would otherwise balloon project budgets.
Final Takeaways
It’s not entirely clear at the moment how the Silicon Labs acquisition by Texas Instruments might affect Z-Wave products or other wireless solutions produced by the company, however, initial statements by Texas Instruments seem to point towards cheapening the cost of production by bringing manufacturing in-house, in addition to speeding up delivery times and gaining greater quality control over the final product.
The transaction is expected to close in the first half of 2027, subject to receipt of regulatory approvals and other customary closing conditions, including approval by Silicon Labs stockholders.
Integrators will want to keep tabs on developments, however, given Silicon Labs’ connection to the CI industry, as well as the growing importance of wireless, interoperability in the smart home.
