Silicon Laboratories is doubling down on the “Internet of Things” market with its recent $282 million acquisition of California-based Sigma Designs.
Austin-based Silicon Labs has continued to notch higher sales growth thanks in part to its efforts to pivot toward high-growth areas such as Internet of Things products, electric vehicles and renewable energy.
The Internet of Things -- or IoT -- is a chip industry term for non-computing devices that are connected to the Internet.
Silicon Labs will be acquiring Sigma Design’s Z-Wave-related intellectual property and product portfolio, which it said expands its range of wireless communication solutions for smart homes.
Sigma Designs, based in Fremont, Calif., provides integrated system-on-chip solutions that are used to deliver multimedia entertainment throughout the home.
“The connected home represents one of the largest market opportunities in the IoT,” Tyson Tuttle, CEO of Silicon Labs, said in a written statement. “Today, there is no single dominant wireless technology for home automation. By adding Z-Wave technology to Silicon Labs’ connectivity portfolio, we will be better positioned to serve this fast-growing market.”
Silicon Labs will pay Sigma’s shareholders $7.05 per share in cash, which is a 26 percent premium over Sigma’s closing price of $5.60 per share on Dec. 6.
In addition to Z-Wave technology, Sigma Designs also provides solutions for Media Connectivity and Smart TV. Sigma Designs plans to divest or wind down its Smart TV business.
In the event that certain closing conditions are not met, the parties have agreed that Sigma Designs would instead sell its Z-Wave business to Silicon Labs for $240 million, contingent upon approval by Sigma Designs' stockholders.
Silicon Labs makes a variety of chips, sensors and software that can be used in a wide range of devices, from televisions to smart energy meters and data centers. Its major customers include Cisco, Fitbit, LG Electronics and Samsung.
Founded in 1996, Silicon Labs employs about 1,300 people and is headquartered in downtown Austin.
The company’s Internet of Things division continues to drive sales growth for the chipmaker. In the third quarter, that division reported revenue of $100 million, a 23 percent increase from the same quarter a year ago. Revenue from its IoT division now makes up 50 percent of its sales.
Silicon Labs and Sigma Designs expect the transaction to close in the first quarter of 2018.
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