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Silicon Labs to acquire Sigma Designs’ Z-Wave business at lower price

Silicon Labs to acquire Sigma Designs’ Z-Wave business at lower price
IoT semiconductor company Sigma Designs said it will sell the company’s Z-Wave business to Silicon Labs for US$240 million, and liquidate other company assets including Smart TV and Media Connectivity businesses.

“While Sigma Designs has built a strong Z-Wave business and established itself as a leader in the home automation market, it became increasingly apparent that the significant investment needed to maintain our strong position would have been challenging against much larger competitors in a consolidating semiconductor industry,” said Thinh Tran, CEO of Sigma Designs.

Last year Silicon Labs and Sigma Designs had reached a definitive agreement under which the former company will acquire the latter in a cash transaction valued at about US$282 million.

“With the initial closing conditions for the sale of the entire company not met, our definitive agreement with Silicon Labs reverts to the asset sale of the Z-Wave business,” Tran explained.

The new plan will not only enable Sigma Designs to capture the value of the Z-Wave business, but also provide the company’s shareholders certainty of value, Tran added.

Sigma Designs is exploring alternatives to increase the cash available for shareholder distribution. The company plans to divest its Home Connectivity, Mobile IoT, Smart TV and Set-top Box businesses.

About 295 Sigma employees in the company’s smart TV and set-up box businesses will be laid off. “Sigma Designs intends to work with its advisers to confirm its plan of liquidation,” the company stated in a press release.

The importance of Z-Wave protocol

The budding IoT industry has many semiconductor companies that offer intelligent chips to enable smart solutions. Besides Silicon Labs, there are ARM, NXP Semiconductors, Qualcomm and DSP Group, just to name a few.

Silicon Labs appears to be one of the strongest players in the space. The company’s clients know Silicon Labs is serving the IoT industry for the long term, the company’s CEO Tyson Tuttle told media outlet EE Times at CES 2018. Silicon Labs expects its IoT business to grow 25 percent annually.

Half of the IoT business’ growth comes from wireless products, which is growing at a whopping 40 percent annually.

Acquiring Z-Wave – which is a wireless mesh technology using low-energy radio waves for smart home devices – will broaden Silicon Labs’ product portfolio that currently include Bluetooth, Thread and Zigbee solutions.

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