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Texas Instruments is in advanced talks to buy chip designer Silicon Laboratories for about $7bn as a wave of consolidation sweeps across the semiconductor industry.
Talks between the two companies were at an advanced stage and a deal could come together in the coming days, said people familiar with the matter. A deal is likely to value Silicon Labs at roughly $7bn, a premium to its market capitalisation of $4.4bn, as of Tuesday afternoon.
Silicon Labs shares soared 36 per cent in after-hours trading in New York on Tuesday.
The exact terms of the potential tie-up, which would be Texas Instruments’ largest acquisition in more than a decade, were not immediately clear, and it was possible the timeline would slip or talks fall apart, the people cautioned.
Texas Instruments, one of the biggest US chipmakers with a market value of $202bn, is focused on so-called analogue semiconductors used in controlling power and signals in industrial and automotive products, as well as in consumer electronics, where it is a crucial supplier for Apple.
Its focus on analogue chips distinguishes Texas Instruments from more cutting-edge digital semiconductor companies such as Nvidia and AMD, which provide the most advanced graphics processors at the heart of the AI data-centre boom and have generated the highest returns. Silicon Labs shares are roughly flat over the past year, compared with a 20 per cent gain for the tech-heavy Nasdaq Composite.
In 2024, Texas Instruments faced pressure from Elliott Management over its capital expenditures, with the activist investor agitating for the group to increase cash available for shareholder distributions.
Silicon Labs would mark Texas Instruments’ biggest acquisition since its $6.5bn takeover of National Semiconductor in 2011.
Texas Instruments and Silicon Labs did not immediately respond to multiple requests for comment.
Since divesting its infrastructure and automotive division in 2021, Silicon Labs has focused on producing chips that power wireless devices used in the so-called Internet of Things, adding a potential new frontier to Texas Instruments’ business.
Texas Instruments last week offered a bullish outlook for the current quarter that came in above Wall Street’s estimates. It forecasts a growing opportunity from data centre sales, lifting its stock about 14 per cent since the start of last week.
A manufacturer as well as a designer of chips, in 2024 Texas Instruments was awarded $1.6bn in federal grants to support its efforts to build out facilities in Texas and Utah.
In June, it said it would spend more than $60bn on US manufacturing across seven factories, reflecting an industry-wide response to the Trump administration’s aggressive efforts to build out advanced manufacturing that has included similar commitments from the likes of Taiwan Semiconductor Manufacturing Company and Nvidia.
The semiconductor industry is in the middle of a period of consolidation as chipmakers pursue deals in order to secure an advantage in the AI boom and as a ballast against the upheaval caused by the technology. Last year, SoftBank acquired Ampere Computing for $6.5bn and private equity group Silver Lake bought a 51 per cent stake in Intel’s Altera unit, valuing the division at $8.75bn.