As the semiconductor industry experiences a new wave of consolidation, Texas Instruments (NASDAQ:TXN) announced that it has reached an agreement to acquire chip design company Silicon Labs (NASDAQ:SLAB) for $7.5 billion.
On Wednesday (February 4), Texas Instruments released a press statement confirming that both parties had signed a definitive agreement for a cash acquisition of Silicon Labs at $231 per share, totaling approximately $7.5 billion. The transaction is expected to be completed in the first half of 2027.
Following the announcement, Silicon Labs (NASDAQ:SLAB) saw its stock surge by 48.89% on Wednesday, returning to historical highs last seen in early 2022, while Texas Instruments (NASDAQ:TXN) dropped by 1.02%.
Silicon Labs’ chips are widely used in products such as smart home devices, industrial automation, battery storage, and commercial lighting. Since spinning off its infrastructure and automotive business in 2021, Silicon Labs has focused on manufacturing chips for IoT (Internet of Things) wireless devices, which presents new growth opportunities for Texas Instruments.
This acquisition is the largest since Texas Instruments’ $6.5 billion purchase of National Semiconductor in 2011. With this move, Texas Instruments signals that its strategic focus remains on its core business.
Currently, Texas Instruments serves end markets including industrial, automotive, data centers, personal electronics, and communications equipment. Last week, it issued a quarterly revenue forecast that exceeded market expectations, reflecting a recovery in demand from industrial clients and automakers.
Due to its key role in the global supply chain (with factory equipment and automakers typically placing chip orders months in advance), Texas Instruments’ order trends are often seen as a leading indicator of economic conditions and sales expectations.
In its latest statement, Texas Instruments stated that the acquisition would enable it to become a global leader in embedded wireless connectivity solutions by combining resources. The merged company will be able to better serve both existing and new customers by enhancing its innovation capacity and expanding market channels, accelerating growth.
Texas Instruments CEO Haviv Ilan stated that the wireless connectivity product portfolio from Silicon Labs “will enhance our technology and intellectual property, enabling greater economies of scale.”
As both a chip designer and manufacturer, Texas Instruments received a $1.6 billion federal subsidy in 2024 to support the expansion of its production facilities in Texas and Utah. In June of the previous year, Texas Instruments also announced it would invest over $60 billion in manufacturing expansions across seven U.S. plants.
Currently, the semiconductor industry is in a consolidation phase, with chip manufacturers making acquisitions to gain an advantage in the AI (Artificial Intelligence) boom while also hedging against the turbulence caused by technological changes.
Last year, SoftBank acquired Ampere Computing for $6.5 billion, and private equity firm Silver Lake Partners bought a 51% stake in Intel’s Altera division, valuing the business at $8.75 billion.