Silicon Laboratories, Inc. (SLAB)

Silicon Labs reported second-quarter 2026 revenue of $228 million on 11 August, up 18 percent from a year earlier 2. Industrial & Commercial revenue rose 23 percent to $135 million, and Home & Life rose 12 percent to $93 million 2.

Gross margin, the share of revenue left after the cost of making the chips, was 61.6 percent against 56.1 percent a year earlier 1. The quarter still ended in a net loss of $10.6 million, about half the $21.8 million loss of the year before 1.

The news that frames everything else is a pending sale: on 4 February 2026 Silicon Labs agreed to be bought by Texas Instruments in an all-cash deal with an enterprise value of about $7.5 billion 4.

Stockholders approved the merger on 30 April 2026 1. The US antitrust waiting period ended on 22 May 2026, which satisfied one closing condition 7.

Closing still needs other regulatory approvals, and Texas Instruments' report for the period ended 30 September 2026 says it is expected in the first half of 2027 5. ION Analytics reported on 20 August that China's market regulator had formally accepted the filing, citing two sources 6.

Because of the deal, Silicon Labs has stopped giving guidance, its own outlook for coming quarters 2. The open question is when the remaining approvals arrive 5.

Silicon Labs began as a chip designer and has long made its money from wireless chips for connected devices, the Internet of Things 3. Its engineers design the chips in standard CMOS, a low-cost manufacturing process, and outside factories make them 3.

Two deals shaped the business in earlier years: in April 2018 it bought the Z-Wave business of Sigma Designs, a smart-home networking technology, for $240 million in cash, with about 100 employees 10.

The company said Z-Wave added to a smart-home line that already held Wi-Fi, Zigbee, Thread, Bluetooth and proprietary protocols 10. In 2019 it introduced its Series 2 chips, which put more weight on security that can be updated after a product ships 3.

In April 2021 it agreed to sell its Infrastructure & Automotive business to Skyworks Solutions for $2.75 billion in cash 8. That business covered power, timing and broadcast chips, and about 350 employees were expected to move with it 8.

Skyworks said on 26 July 2021 that the sale was complete 9. What stayed was the wireless IoT business that is now Silicon Labs 3.

Revenue then swung with its customers' stock levels: it was $782.3 million in fiscal 2023, fell to $584.4 million in fiscal 2024, and recovered to $784.8 million in fiscal 2025 3.

The company said the drop came as customers slowed purchases to cut down inventories they had built up during the supply-chain disruptions 3. In its fiscal 2025 report it called demand improved, with higher unit volumes and higher average selling prices 3.

Fiscal 2025 revenue grew $200.4 million, or 34.3 percent 3. Gross margin rose to 58.2 percent from 53.4 percent, and the operating loss narrowed to $70.5 million from $165.5 million 3. Fiscal 2025 had 53 weeks, one more than the year before 3.

It also spent on its own shares once in this stretch: it bought back 1.5 million shares for $213.0 million in fiscal 2023 and none in 2024 or 2025 3. Research and development cost $353.2 million in fiscal 2025 3.

Sales take a long time to turn into revenue: the cycle for its chips can run 12 months or more 3. A customer then needs another three to six months before shipping large volumes 3.

It ended fiscal 2025 with $443.6 million in cash, cash equivalents and short-term investments, and its operations produced $95.7 million of cash that year 3. Texas Instruments describes Silicon Labs' record as approximately 15 percent compound annual revenue growth since 2014 4.

The first half of 2026 continued the recovery, with revenue of $441.7 million against $370.6 million in the first half of 2025 1.

In 2025 it released the first chip of its Series 3 line, built on a 22 nm process, a finer manufacturing technology 3. On 4 February 2026 it signed the merger agreement with Texas Instruments 3.

Industrial & Commercial

This group sells chips that put wireless links into factory equipment, smart electricity and water meters, street lights, solar and electric-vehicle charging gear, shop shelf labels and building controls 3. Revenue was $444.9 million in fiscal 2025, up 31.4 percent, and 56.7 percent of the total (computed) 3.

In the second quarter of 2026 the group brought in $135.0 million, up 23.0 percent from the second quarter of 2025 1. The company said the rise came from higher unit volumes 1.

Home & Life

This group serves the smart home (locks, cameras, lighting, thermostats, gateways and appliances) and connected health devices such as glucose monitors and insulin pumps 3. It supports home standards such as Matter and Amazon Sidewalk 3.

Revenue was $339.9 million in fiscal 2025, up 38.2 percent, and 43.3 percent of the total (computed) 3. In the second quarter of 2026 it was $93.2 million, up 12.2 percent 1.

The company said its medical revenue set a record in the second quarter of 2026, up 78 percent from the year before 2.

The newest chip family

Series 3 is the company's newest chip family, built on a 22 nm process, and its first product came out in 2025 3. The trade site CNX Software reported on 22 May 2025 that the SiXG301 chips were in production for select customers 11.

CNX Software added that general availability was slated for the third quarter of 2025 and that sampling of the SiXG302 was planned for 2026 11.

How the chips are made and sold

Silicon Labs designs its chips and does not own factories, which the annual report calls a fabless model 3. It works mainly with Taiwan Semiconductor Manufacturing (TSMC) and SMIC to make the wafers, and outside firms assemble and test them 3.

Two distributors, Arrow Electronics and Edom Technology, accounted for 28 percent and 21 percent of fiscal 2025 revenue, and no end customer was above 10 percent 3. Revenue from outside the United States was 91 percent 3.

Revenue from end customers in China was 15 percent, and 33 percent when counted by the place chips were shipped 3.

People and places

Matt Johnson is president and chief executive 2. As of 3 January 2026 the company employed 1,930 people, and 72 percent worked in engineering 3.

Its headquarters in Austin, Texas, are two owned buildings on land leased through 2099, with about 441,000 square feet of floor space 3. It leases smaller sites in countries including Canada, China, Finland, Germany, India, Japan and Taiwan 3.

Rivals

The annual report names Espressif, Infineon, MediaTek, Microchip, Nordic Semiconductor, NXP, Qualcomm, Renesas, STMicroelectronics, Synaptics, Telink and Texas Instruments among its competitors 3. Texas Instruments is also the buyer 4.

Current problems

The merger agreement restricts what Silicon Labs can do while it is pending, and the company warned that staff and customers could be unsettled 1. Merger costs were $9.6 million in the second quarter of 2026 and $20.8 million for six months 1.

If the board changed its recommendation, the company would owe Texas Instruments a termination fee of $259 million 1. The annual report also warns that tension between China and Taiwan could disrupt TSMC and hurt supply 3.

The umbrella, in words

Silicon Labs sells under its own name, with Simplicity Studio as its developer tool suite and Z-Wave as a technology it owns after the 2018 purchase 310. Exhibit 21 to the annual report lists its subsidiaries 12.

They sit in Canada, China, Denmark, Finland, France, Germany, Hong Kong, Hungary, India, Italy, Japan, Norway, Singapore and the United Kingdom 12. The Singapore unit is the base for operations outside the US 3.

BlackRock reported owning 4,046,624 shares, 12.5 percent of the common stock, as of 31 March 2025 13. Vanguard Portfolio Management reported 6.57 percent as of 31 March 2026 14.

If the merger closes, Silicon Labs would survive as a wholly owned direct subsidiary of Texas Instruments 3.

Texas Instruments and Silicon Labs say the deal is expected to close in the first half of 2027, subject to regulatory approvals and other customary conditions 5. The company and its buyer both give that window 14.

Texas Instruments said it expects about $450 million a year of manufacturing and operating savings within three years after closing 4. It plans to move Silicon Labs' manufacturing from outside foundries to its own plants, which include 300mm wafer fabs in the US 4.

Texas Instruments said it will pay with cash on hand and debt 5. In June 2026 it arranged a 364-day delayed draw term loan of up to $5 billion for the deal, available only if the deal closes 5.

Texas Instruments said the deal adds approximately 1,200 products supporting a variety of wireless standards, and that it is not subject to any financing contingency 4. It also said it expects to use its own direct customer relationships, sales force and website to reach more customers with the Silicon Labs line 4.

Texas Instruments also said its defined process technologies, including 28nm, are optimized for the Silicon Labs wireless line, which it expects to speed later chip design cycles 4.

Silicon Labs said it expects to keep paying advisory, legal and accounting costs until the merger is done 1. It has suspended its own guidance while the deal is pending 2.

The pending steps are the remaining regulatory approvals 7. ION Analytics reported that the parties filed with China's regulator in April and that it accepted the filing in early August 6.

On the product side, CNX Software reported that sampling of the SiXG302 chips was planned for 2026 11. The company has not said how the merger would change its product roadmap 1.

How it operates

Silicon Labs designs the chips that let small devices connect wirelessly, for what the industry calls the Internet of Things (IoT). Its main products are wireless microcontrollers and systems-on-chip (SoCs): single chips that combine processor cores, analog and digital circuits, security hardware and a radio, work that rival products often spread across many separate parts. They come as chips or ready-made modules speaking Bluetooth, Wi-Fi, Zigbee, Z-Wave, Thread, Wi-SUN and proprietary sub-GHz radio, backed by its Simplicity Studio software tools. It sorts them into two groups by market. Industrial & Commercial covers uses such as industrial automation, smart meters, street lighting, electric vehicle charging, smart buildings, asset tracking, electronic shelf labels in shops and power tools. Home & Life covers the smart home (cameras, locks, lighting, heating and cooling, and the Matter and Amazon Sidewalk standards) and connected health, such as continuous glucose monitors and insulin pumps. 2324252627282930313233

It sells mostly through distributors, which brought in 71% of fiscal 2025 revenue; two of them, Arrow Electronics and Edom Technology, accounted for 28% and 21%, Edom up from 15% two years earlier. The buyers behind them are spread out: no end customer reached 10% of revenue, and the ten largest together took 25%. They buy on individual purchase orders rather than long-term contracts. What keeps them is the design win, the point at which a customer builds a chip into its product and orders it: reaching one takes from about three months to two years of engineering work alongside the customer, and once a design is in volume production customers are reluctant to change it, so product lives run long. 3435363738394041

Nine tenths of revenue, 91%, comes from outside the United States, counted by where the chips are shipped, and all of it is in US dollars. By that count China took 257.1 million dollars, 32.8% of fiscal 2025 revenue; Taiwan 130.5 million, 16.6%, up 68.6% on the year; the United States 68.5 million, 8.7%; and the rest of the world 328.6 million, 41.9%. Shipments are not the same as buyers: end customers in China accounted for 15% of revenue. The company is run from Austin, Texas, where it owns its two headquarters buildings on land leased through 2099, and it has a headquarters in Singapore for its operations outside the United States. 424344454647

It owns no chip factory. It is fabless, meaning it designs the chips and sends the designs electronically to outside foundries, mainly Taiwan Semiconductor Manufacturing Co. (TSMC) and Semiconductor Manufacturing International Corporation (SMIC), which make most of its silicon wafers. Subcontractors in Asia assemble and package the chips; testing can be done by them, by other test houses or in its own facilities, and most units shipped in fiscal 2025 were tested by offshore subcontractors. Its chips use CMOS, a low-cost and widely available chipmaking process, which the company says makes it more likely that capacity stays available through its products' lives. 484950515253

The specifics

On February 4, 2026 Silicon Labs agreed to be acquired by Texas Instruments, one of the rivals it names: a Texas Instruments subsidiary would merge into it, leaving it a wholly owned subsidiary, with a fixed amount of cash paid for each share and the stock delisted from the Nasdaq. The board approved the deal unanimously and stockholders approved it on April 30, 2026; the company expects it to close in the first half of 2027, subject to the required regulatory approvals. Until then the agreement restricts what it may do on its own, including buying other businesses, selling assets, paying dividends and some capital spending, and it would owe Texas Instruments a termination fee of 259 million dollars if the agreement ended in certain ways, such as its board changing its recommendation. Its merger costs came to 20.8 million dollars in the first half of fiscal 2026. 1554555657585960

Its core skill, in its own words, is analog and radio design in CMOS. It designs nearly all its chips in that standard process, and most now carry a radio on the chip. Analog circuits are harder to design in CMOS, but the company says it brings lower cost, less technology risk and more foundry capacity worldwide. Its Series 2 chips, introduced in 2019, put more weight on security that can be updated; its Series 3, whose first product came out in 2025, moves to the 22 nm process for more computing power and energy efficiency. It protects the work with more than 1,575 issued or pending patents in the United States and abroad, and with trade secrets it calls difficult for competitors to duplicate. 6162636465

It names a long list of rivals: Espressif, Infineon, MediaTek, Microchip, Nordic Semiconductor, NXP, Qualcomm, Renesas, STMicroelectronics, Synaptics, Telink and Texas Instruments, its would-be buyer. It also counts its own customers, who could develop the technology themselves, and module makers among possible competitors, and it warns that China's promotion of its home chip industry, along with China-U.S. trade barriers, may restrict its part in the Chinese market. 54156667

Trade rules could cut it off from customers and raise its costs. If the US Commerce Department adds a company to its Entity List, Silicon Labs may have to suspend business with it, and the department has opened an investigation into semiconductor imports. It also receives government incentives, mostly cash grants and refundable tax credits, in the United States, Singapore, France and Canada; in fiscal 2025 they offset 8.5 million dollars of research spending. And it changed auditors: Ernst & Young, which audited it from 1996, the year it was founded, to 2024, gave way to Deloitte & Touche from 2025. 686970717273874

What drives growth, line by line

Revenue rose 34.3% in fiscal 2025 to 784.8 million dollars, after falling for two years from 1.0 billion in fiscal 2022 to 584.4 million. The filing credits higher unit volumes and higher average selling prices, as demand improved on a year hurt by customers cutting the inventories they had built up during the supply chain disruptions. The year also had an extra week, 53 against 52. Gross margin rose to 58.2% from 53.4% as overhead costs were spread over more sales, and the operating loss narrowed to 70.5 million dollars from 165.5 million. 75767778

Industrial Commercial. The larger line: 444.9 million dollars, 56.7% of fiscal 2025 revenue, up 31.4%, or 106.4 million, from 338.5 million. It holds the industrial and commercial uses, from smart meters and street lighting to electronic shelf labels. It finished the year strongest, with fourth-quarter revenue up about 37% on a year earlier, yet for the full year it stayed below its level of two years before. 44798081

Home Life. 339.9 million dollars, 43.3% of revenue, and the faster grower, up 38.2%, or 94.0 million, from 245.9 million. It holds the smart home and connected health devices. Unlike the larger line it ended the year above its level of two years before, though its fourth-quarter growth, about 12% on a year earlier, ran below the pace for the year. 44798180

Since then, the quarterly report for the first half of fiscal 2026 shows revenue up 19.2% on a year earlier, to 441.7 million dollars, again on higher unit volumes. Industrial & Commercial led, up 27.8% to 262.9 million; Home & Life rose 8.5% to 178.8 million. 8283

What comes next, in the company's own words: it expects the merger with Texas Instruments to close in the first half of 2027 and, until then, to keep paying advisory, legal and accounting fees that could be significant; it expects average selling prices to decline as its products mature; and, because some of its chips go into consumer products, it expects some seasonality in demand. 57848586

The read's section on the people who run it is on the People tab.

What the desk infers Inferred

1. Inferred

   Most of the chips Silicon Labs ships to China are built into products there for companies based elsewhere, so the third of revenue shipped to China overstates how much it relies on Chinese buyers.

   Because

   • Revenue attributed to China by where the chips were shipped was 33% of fiscal 2025 revenue, while revenue from end customers in China was 15%. 45
   • Revenue is counted by the shipped-to location, and on that count China was the largest single country, at 257.1 million dollars. 4244
   • The company counts the end customer, not the distributor or contract manufacturer that pays it, as its customer. 87
   • Many end customers buy through contract manufacturers, which obtain its chips and build them into products for those customers. 88
   Confidence 70 of 100Wrong if A filing showing that the gap between shipments to China and revenue from end customers there comes mainly from distributors moving stock back out of China, rather than from chips built into products in China.
2. Inferred

   The swings in Silicon Labs' revenue are mostly inventory cycles that pass through its distributors: when customers cut the stock they had built up, sales through distributors fell far more than sales to direct customers, and they led the recovery.

   Because

   • Sales through distributors fell sharply in fiscal 2024 and recovered in fiscal 2025, while sales to direct customers rose in each of the three years. 8934
   • The filing says the weak year was hurt by customers reducing the inventories they had built up during the supply chain disruptions. 76
   • Its backlog counts distributors' stocking orders, which can typically be cancelled without penalty, and its distributor agreements often carry price protection and return rights. 9091
   • In the first half of fiscal 2026 the two channels moved apart again: sales through distributors rose while sales to direct customers fell. 92
   Confidence 60 of 100Wrong if A downturn in which sales to direct customers fall by as large a share as sales through distributors, or a filing showing that the fall in distributor sales in fiscal 2024 came from lost end customers rather than from inventory cuts.
3. Inferred

   Silicon Labs holds its research budget steady through the cycle, so its operating results turn on the level of revenue rather than on cost cuts: research spending barely moved while revenue fell by a quarter and then rose by a third.

   Because

   • Research and development cost 337.7 million, 332.2 million and 353.2 million dollars in fiscal 2023, 2024 and 2025. 93
   • Over the same three years revenue went from 782.3 million to 584.4 million and back to 784.8 million dollars. 75
   • Research took 45.0% of revenue in fiscal 2025 against 56.9% the year before, and the operating loss narrowed from 165.5 million to 70.5 million dollars. 9478
   • The filing gives the reason for the lag: the sales cycle can run 12 months or more, with three to six months more before customers ship in volume, so research and selling costs come well before the sales they produce. 95
   Confidence 70 of 100Wrong if A year in which revenue falls and the company cuts research spending by a similar share, showing that the budget follows revenue after all.
4. Inferred

   Sales through distributors probably earn Silicon Labs a higher gross margin than sales to its direct customers, so the mix between the two channels moves its margin alongside the spreading of overhead that its reports cite.

   Because

   • The proxy statement credits the rise in gross margin, from 53% in 2024 to 58% in 2025, to more sales through the distribution channel and to product mix. 96
   • In fiscal 2025 sales through distributors grew faster than sales to direct customers, and distributors brought in 71% of revenue. 8934
   • In the first half of fiscal 2026 distributor sales rose while direct sales fell, and gross margin in the second quarter reached 61.6% against 56.1% a year earlier. 9297
   Confidence 55 of 100Wrong if A filing that reports gross margin by sales channel and shows direct sales earning as much as distributor sales, or a period in which distributors' share of revenue rises while gross margin falls.