Texas Instruments to buy chip designer Silicon Labs in $7.5 billion deal

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Feb 4 : Texas Instruments on Wednesday agreed to buy Silicon Laboratories in a deal valuing the chip designer at $7.5 billion, to expand its footprint in wireless connectivity chips used for industrial and consumer applications.

For Texas Instruments, whose core strength lies in analog chips that manage signals and power in electronic equipment, the acquisition marks its biggest since the $6.5 billion deal for National Semiconductor in 2011.

Unlike AI chip firms Nvidia and AMD, Texas Instruments focuses on foundational chips used in everyday devices such as smartphones, cars and medical devices, giving it a large client base that includes Apple, SpaceX and Ford Motor.

Texas Instruments will acquire Silicon Labs for $231 per share, implying a premium of about 69 per cent to the stock's last unaffected closing price on Tuesday, when the deal talks were first reported. Silicon shares jumped 51 per cent in premarket trading, while Texas was down 3.5 per cent.

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Silicon had sold some automotive chip assets and other lines of business to Skyworks Solutions for $2.75 billion in 2021.

The divestment was aimed at sharpening its focus on chips for connected devices such as smart home and power meter products as well as connected industrial equipment, which collect data to improve efficiency.

Under the terms of the latest agreement, Silicon would pay a $259 million termination fee if it walks away from the deal, while Texas would pay $499 million if it abandoned the transaction.

Goldman Sachs is serving as an exclusive financial advisor to Texas Instruments on the deal, which is expected to close in the first half of 2027.

Texas Instruments is planning to finance the acquisition through cash on hand and debt. The deal is expected to generate about $450 million in annual manufacturing and operational savings within three years of the deal close.

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