Texas Instruments (NASDAQ:TXN) on Tuesday outlined its agreement to acquire Silicon Labs, describing the deal as a strategic move to accelerate TI’s embedded processing strategy and expand its presence in embedded wireless connectivity. Executives from both companies emphasized portfolio breadth, manufacturing advantages, and expected cost synergies, while noting that revenue synergies were not included in TI’s financial modeling.
Strategic rationale: expanding embedded wireless connectivity
TI Chairman, President, and CEO Haviv Ilan said the acquisition would strengthen TI’s “global leadership in embedded wireless connectivity solutions” by adding Silicon Labs’ wireless connectivity intellectual property and engineering expertise to TI’s manufacturing scale and market channels. Ilan said the transaction would expand TI’s portfolio with “1,200 additional products” supporting multiple wireless standards.
Silicon Labs CEO Matt Johnson echoed that view, calling TI an “ideal partner” to accelerate Silicon Labs’ growth. Johnson said roughly 70% of Silicon Labs employees are engineers and emphasized the company’s focus on industrial applications and a “high-quality revenue base across thousands of customers.”
Manufacturing shift and synergy targets
TI framed manufacturing as a key value driver. Ilan highlighted TI’s internal manufacturing footprint, including low-cost 300-millimeter wafer fabs and internal assembly and test, and said TI plans to transfer Silicon Labs manufacturing from external foundries and outsourced assembly/test into TI facilities over time. He added that TI’s defined process technologies are optimized for Silicon Labs’ portfolio, including TI’s 28-nanometer node.
TI expects more than $450 million in annual manufacturing and operational synergies within three years after closing. Ilan said the synergy estimate does not include any revenue synergies, describing the $450 million figure as built on tangible execution plans rather than harder-to-measure revenue assumptions.
In the Q&A, Ilan provided additional color on the synergy mix and timing:
- More than 50% of the synergies are expected to come from cost of goods sold (COGS) improvements.
- COGS benefits are expected to build over time as products are ported, qualified, and customer approvals are obtained, with Ilan indicating most transition work would be completed by around 2030, and potentially fully complete in 2031 or 2032.
- Operational expense synergies were described as “more immediate,” reflecting TI’s larger scale and opportunities across SG&A and certain fixed R&D functions.
Revenue synergies discussed, but excluded from the model
Asked directly about revenue synergies, Ilan said TI’s $450 million synergy target excludes them, but he sees opportunity through TI’s sales force and ti.com to cross-sell. He described wireless connectivity as an “alpha socket”—often an early and central component in a customer’s system design—which could provide opportunities to add power, sensing signal chain components, battery management, and other TI content around the wireless device.
Johnson added that Silicon Labs has historically had more opportunity than it could address in core wireless, leaving adjacent opportunities on the board underexploited. He cited examples including continuous glucose monitors, electronic shelf labels, and metering (gas, water, electric), where combining wireless compute with supporting analog and power management could enable more complete customer solutions.
Portfolio positioning, overlap, and roadmap
Responding to questions about fit with TI’s strategy and potential overlap, Ilan described TI’s multi-year transition in embedded toward mixed-signal-centric offerings—low-power MCUs with more analog content, real-time control with DSPs, radar sensing, and wireless connectivity. He argued wireless connectivity “is dominated by a lot of analog, RF, power management, and yes, some digital,” making it consistent with TI’s direction.
He differentiated the two companies’ wireless focus, saying TI’s current wireless connectivity momentum is largely automotive-focused, while Silicon Labs’ automotive business is “less than 5%” of revenue and Silicon Labs has stronger industrial momentum. Ilan said Silicon Labs has built stacks of chips, software, firmware, and application support across “hundreds of end equipment” types, which he said would take TI “decades to replicate.”
On product roadmap impact, Ilan said TI does not expect to discontinue its organic connectivity efforts after the deal closes. Instead, he described the combination as an acceleration in addressing a broad set of industrial and IoT applications, including leveraging Silicon Labs’ software capabilities beyond basic wireless stacks.
Deal terms, funding plan, and timing
TI CFO Rafael Lizardi said Silicon Labs shareholders will receive $231 per share in cash. TI plans to fund the acquisition with cash on hand and additional debt, while reiterating its capital return strategy to return 100% of free cash flow to shareholders over time through dividends and share repurchases.
Lizardi said TI expects to issue incremental debt “probably in the neighborhood of $7 billion,” using a mix of investment-grade bonds and commercial paper. He also said the combined entity is expected to be “leverage neutral within 18–24 months post-close.”
The companies expect to close in the first half of 2027, subject to regulatory approvals (including multiple countries), Silicon Labs shareholder approval, and other customary conditions. Lizardi said Silicon Labs shareholder approval should occur “within a few months.” Executives also acknowledged that China is expected to be among the jurisdictions requiring regulatory approval.
On manufacturing integration, Ilan said TI expects the “vast majority” of the portfolio to be brought in-house over time, and later indicated that about 75% of projected 2030 revenue would be manufactured inside TI. He also said the porting effort would be focused on “somewhere between 10 and 15 dies,” which he described as more efficient than prior TI transitions involving hundreds of dies.
About Texas Instruments (NASDAQ:TXN)
Texas Instruments Inc (NASDAQ: TXN) is a global semiconductor company headquartered in Dallas, Texas, that designs and manufactures analog and embedded processing chips. The company’s products are used across a wide range of end markets, including industrial, automotive, personal electronics, communications and enterprise equipment. TI’s business emphasizes components that condition, convert, manage and move electrical signals—capabilities that are foundational to modern electronic systems.
TI’s product portfolio includes a broad array of analog integrated circuits—such as power management, amplifiers, data converters and interface devices—as well as embedded processors and microcontrollers used to control systems and run real-time applications.
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