Silicon Labs Divests Infrastructure and Auto Business
Silicon Labs will sell its infrastructure and automotive unit for $2.75 billion, redirecting growth targets towards its IoT and wireless connectivity business.
Texas-based semiconductor firm Silicon Laboratories recently announced it’s selling its infrastructure and automotive business in an all-cash transaction valued at $2.75 billion. Through the deal, the company’s power/isolation, timing and broadcast product lines, intellectual property and 350 employees will be transferred to California-based chipmaker Skyworks Solutions.
The sale will allow Silicon Labs to focus on growing its other business unit: Intelligent wireless connectivity for Internet of Things applications. Its wireless portfolio spans Bluetooth, Thread, Wi-SUN, Wi-Fi, Zigbee and Z-Wave protocols, used in the development of smart home, commercial, consumer and industrial applications.
“Focusing efforts and resources on IoT enables Silicon Labs to gain valuable operating efficiencies and ROI,” Silicon Labs President Matt Johnson stated in the announcement. “Our team will develop advanced innovations faster and provide a superior user experience no matter the customer's wireless protocol, ecosystem, application or embedded expertise level.”
For Skyworks Solutions, which specializes in high-performance analog semiconductors, the deal will open new opportunities in the automotive, communications and industrial markets, allowing the company to diversify its revenue across segments with high growth potential.
Both companies reported record revenue growth in the first quarter of this year. Silicon Labs’ Q1 2021 revenue totaled $255.5 million, driven by record growth in its IoT business, which generated $158.2 million—up 7% from the previous quarter and 34% year-over-year. The company’s infrastructure and automotive revenue also rose to $97.3 million, up 2% sequentially.
Skyworks Solutions’ first-quarter 2021 results showed record revenue totaling $1.5 billion, up 58% from last quarter and nearly 70% year-over-year.
News of the deal on April 22 prompted a decent stock surge for both companies. From April 22 and April 23, Silicon Labs (SLAB) shares jumped from $144.65 to $154.60 at market close, while Skyworks Solutions (SWKS) shares climbed $183.42 to $190.92.
The transaction is slated to close in the third quarter of this year, pending regulatory approval.