TI to Acquire Silicon Labs for $7.5 Billion

Texas Instruments has agreed to acquire Silicon Labs in an all-cash deal valued at about $7.5 billion, a move that TI believes will enhance its position in embedded wireless connectivity and expand its presence across industrial, smart home, and other connected-device markets. The companies made the announcement in a joint news release, outlining the details of the transaction.

As per the terms of the agreement, Silicon Labs shareholders will receive $231.00 per share in cash. TI plans to finance the acquisition using cash reserves along with debt financing that has been secured prior to the closing of the deal. The acquisition is not contingent on financing and is expected to be finalized in the first half of 2027, pending regulatory approvals and approval from Silicon Labs shareholders.

Enhancing Product Portfolio

TI views the acquisition of Silicon Labs as an opportunity to combine Silicon Labs’ portfolio of “secure, intelligent wireless” products with TI’s expertise in analog and embedded processing, as well as its internal manufacturing capabilities. The merger is set to incorporate approximately 1,200 Silicon Labs products covering various wireless standards and protocols, aligning well with TI’s established process nodes, including 28 nm.

Central to the acquisition is the aspect of manufacturing. TI has positioned the deal as a chance to bring Silicon Labs’ production in-house, moving it from external foundries to TI’s own 300 mm wafer fabs and internal assembly and test operations. This strategic shift aims to ensure a more reliable supply chain and reduce costs at scale.

Financial Implications and Strategic Context

TI anticipates that the acquisition will generate approximately $450 million in annual manufacturing and operational synergies within three years of completion. The purchase price, as reported by Reuters, represents a significant premium over Silicon Labs’ previous unaffected share price, marking TI’s largest acquisition since National Semiconductor in 2011.

Moreover, the acquisition aligns with TI’s ongoing efforts to expand its manufacturing presence in the United States. The company has reaffirmed and expanded its investment plans in US fabs, emphasizing the importance of scaling supply and cost structures in sectors where reliability, availability, and cost efficiency are paramount.

Commenting on the transaction, Haviv Ilan, TI’s chairman, president, and CEO, emphasized that the acquisition bolsters TI’s long-term embedded processing strategy. Silicon Labs CEO Matt Johnson highlighted the shared Texas roots of the two companies and the growth opportunities stemming from the increasing connectivity of devices.