Silicon Laboratories Reaches Agreement with NXP to Sell Aero™ Product Lines

February 11, 2007 by Jeff Shepard

Silicon Laboratories Inc. announced a definitive agreement with NXP, formerly Philips Semiconductor. NXP will purchase the Aero transceiver, AeroFONE™ single-chip phone and power amplifier product lines, for $285 million in cash, with additional earn-out potential of up to an aggregate of $65 million over the next three years.

"This transaction transfers a one of a kind business in the mobile handset market to NXP, a company with the necessary scale and resources to effectively compete long-term," stated Necip Sayiner, President and CEO of Silicon Labs. "By placing the business in the hands of those best able to capitalize on it, our stockholders are realizing a premium for the RF technology leadership we have created. Strategically, this will enable us to focus on the most profitable and highest growth segment of our business, our core mixed-signal products. With this transaction, Silicon Labs is transformed into a focused mixed-signal semiconductor company with major product initiatives in Broadcast, VoIP, Wireline and Microcontroller applications. These businesses enjoy higher margins, exciting growth potential and more sustainable competitive advantages for the company. We believe this transaction will allow us to achieve our target operating model more quickly and provide a platform for acquisitions that are aligned with our core mixed-signal strategy."

"Silicon Labs has established leadership in RF CMOS technology and was the first-to-market with an innovative, truly single-chip phone," stated Frans van Houten, President and CEO of NXP. "I am very pleased to bring on board Silicon Labs’ highly competent engineering team and its excellent RF and cellular technologies. This innovative technology, combined with NXP’s strengths in system solutions for 2G and 3G phones, will allow NXP to further strengthen our position in global mobile communications."

Each company’s board of directors has approved the definitive agreement. The transaction, which is subject to regulatory review and other customary conditions, is expected to close by the end of the first quarter of 2007.