TLDR
- Texas Instruments is buying Silicon Laboratories for $231 per share in a $7.5 billion all-cash deal
- The acquisition price represents a 69% premium to Silicon Labs’ Tuesday closing price
- Silicon Labs shares jumped 51% in premarket trading while Texas Instruments fell 3.5%
- The deal is expected to generate $450 million in annual cost savings within three years
- This marks Texas Instruments’ largest acquisition since the $6.5 billion National Semiconductor deal in 2011
Texas Instruments announced Wednesday it will acquire Silicon Laboratories in a $7.5 billion all-cash transaction. The deal marks the chipmaker’s largest purchase in 15 years.
The acquisition price of $231 per share represents a 69% premium to Silicon Labs’ closing price on Tuesday. Silicon Labs shares surged 51% in premarket trading to $206.73. Texas Instruments shares dropped 3.5% as investors digested the news.
Silicon Laboratories Inc., SLAB
Silicon Laboratories specializes in wireless connectivity chips for industrial and consumer applications. The company focuses on chips for connected devices like smart home products and power meters. It also makes chips for connected industrial equipment that collects data to improve efficiency.
Texas Instruments CEO Haviv Ilan said the deal enhances the company’s technology portfolio. “Silicon Labs’ leading embedded wireless connectivity portfolio enhances our technology and IP, enabling greater scale,” Ilan stated. The acquisition allows Texas Instruments to better serve customers with dependable supply worldwide.
Manufacturing Synergies Drive Cost Savings
The deal is expected to generate $450 million in combined annual manufacturing and operational cost savings. These savings should materialize within three years of closing. Texas Instruments plans to bring Silicon Labs chip manufacturing in-house to its existing facilities.
Texas Instruments operates 300mm wafer fab facilities in the U.S. The company also has internal assembly and test capabilities. Last year, Texas Instruments announced plans to spend $60 billion across three manufacturing sites in Texas and Utah.
The company will finance the acquisition through cash on hand and debt. Goldman Sachs is serving as exclusive financial advisor on the transaction. The deal is expected to close in the first half of 2027.
Strategic Focus on Analog and Connectivity
Texas Instruments focuses on analog semiconductors that control power and signals in electronic equipment. This differs from AI chip makers like Nvidia and AMD. The company’s chips are used in everyday devices including smartphones, cars, and medical devices.
The company serves a large client base including Apple, SpaceX, and Ford Motor. Silicon Labs sold its automotive chip assets to Skyworks Solutions for $2.75 billion in 2021. That divestment helped Silicon Labs sharpen its focus on connectivity chips.
Stifel analyst Tore Svanberg noted the deal could create one of the most formidable wireless-analog portfolios in the industry. The combination pairs Texas Instruments’ foundational capacity with Silicon Labs’ specialized connectivity layer.
The deal includes termination fees for both parties. Silicon Labs would pay $259 million if it walks away. Texas Instruments would pay $499 million if it abandons the transaction.
Texas Instruments said the deal would add to its earnings per share in the first full year after closing. Silicon Laboratories is based in Austin, Texas. The purchase price represents a premium to Silicon Labs’ estimated market value of about $4.7 billion at Tuesday’s close.
Texas Instruments recently hit an all-time high after reporting upbeat earnings. Silicon Labs shares traded at $203.74 in morning trading Wednesday following the announcement.
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