SAN FRANCISCO — Silicon Labs announced a deal to acquire fellow chip vendor Sigma Designs for $282 million in cash.
The acquisition broadens Silicon Labs' IoT connectivity product portfolio to include Z-Wave, a mesh networking technology using low-energy radio waves for Internet of Things (IoT) smart home devices. There are currently more than 2,100 certified, interoperable Z-Wave devices available from more than 600 manufacturers. Sigma Designs is one of two chip vendors that provides Z-Wave chips.
Silicon Labs plans to shutter or divest Sigma Designs other product lines, which include chips for smart TV and media connectivity. The company will wind down or sell Sigma Designs smart TV business and is in activity discussions with prospective buyers of the media connectivity business.
Tyson Tuttle, CEO of Silicon Labs, said in a conference call following the announcement of the deal that there is no single dominant wireless technology for home automation, which relies on a number of protocols including Wi-Fi, Bluetooth, Zigbee, Thread and proprietary technologies.
"With more than 70 million Z-Wave devices deployed to date, adding Z-Wave technology to Silicon Labs' IoT portfolio better positions us to serve this growing market," Tuttle said. He said Silicon Labs would collaborate with the Z-Wave Alliance to drive further development and adoption of Z-Wave technology.
Asked to compare Z-Wave with Zigbee, another wireless networking protocol that Silicon Labs markets products for, Tuttle said striking the deal with Sigma Designs would enable the company to provide a choice to customers.
"I see this as actually being, hopefully, additive and to bring those ecosystems together and those device makers together so that we can offer the complete portfolio of parts to them as opposed to cannibalizing one standard versus the other," Tuttle said.
Sigma Designs announced a restructuring in October, including the elimination of more than 200 jobs, intended to refocus the company's expenses and accelerate a return to profitability.
About 100 Sigma Designs employees will join Silicon Labs after the company winds down or sells the smart TV and media connectivity business, according to the company. Sigma Designs had roughly 700 employees at the close of the third quarter.
The deal, which has been approved by both companies boards of directors, remains subject to customary closing conditions. It is expected to close in early 2018.
— Dylan McGrath is the editor-in-chief of EE Times.