Silicon Labs Buys Energy Micro

Silicon Labs has announced their intention to acquire microcontroller company Energy Micro, based in Oslo, Norway for $170 Million.

Silicon labs has an impressive portfolio of 8-bit 8051-based microcontrollers and 32-bit ARM-based microcontrollers. Unlike most microcontroller companies, Silicon Labs' focus is on high accuracy analog semiconductors. Applying that technology to their microcontroller portfolio has allowed Silicon Labs to create a roadmap of truly mixed-signal microcontrollers that is among the lowest power microcontrollers in the industry; for example, their 8-bit with integrated sub-GHz RF transceiver offers a 10nA sleep mode.

The Silicon Labs Cortex-M3 microcontroller product line is probably the lowest power Cortex-M3 in the industry. Their Precision32 Cortex-M3 family has a sleep current of only 85nA with 4KB RAM active.

Silicon Labs has an extensive portfolio of mixed-signal microcontrollers. External analog signals are processed by high accuracy ADCs and DACs and the actual analog processing is done on-chip using DSP technology.

While Energy Micro's Gecko product line has had an extensive marketing focus on "low power" Cortex-M4, Cortex-M3, and Cortex-M0+, they have had a tough time competing with similar offerings from Silicon Labs, Microchip, and STMicroelectronics.

Last year, Silicon Labs purchased ZigBee chip manufacturer Ember, instantly making Silicon Labs a major player in the ZigBee market, although the real benefit to Silabs was obtaining 2.4GHz technology.

Energy Micro and their 85 employees will continue to operate as a separate Silabs business unit based out of Norway.

Analysis
Silicon Labs annual microcontroller sales for 2011 was around $250 Million. Energy Micro sales is roughly estimated to be $10 Million for 2013.

The purchase of Energy Micro for $170 Million appears to be a lot for a $10 Million product line; in contrast, Zilog recently made the shrewd purchase of a $337 Million microcontroller product line from Samsung Electronics for $50 Million.

Silicon Labs revenue for FY2012 was $563 Million, according to their 2012 annual report.

The purchase allows Silicon Labs to quickly and dramatically increase their microcontroller portfolio. Applying their design methods to the Energy Micro Gecko family will allow these microcontrollers to finally see the low power numbers they have dreamed of. In addition, the benefit of Silab's sales channels can result in significantly increased revenues. This, then, may be the real benefit.

Financial Stuff
"Under the agreement, the shareholders of Energy Micro will receive an up-front payment of $115 million in cash, plus approximately $55 million in deferred and earn-out consideration. The acquisition is being funded from balance sheet cash resources and will require no borrowing. Energy Micro is expected to contribute approximately $7 million in revenue in the second half of 2013. Anticipated growth is expected to allow the transaction to be accretive on a non-GAAP basis by the end of 2014. The boards of each company have approved the acquisition, which awaits the satisfaction of customary closing conditions. The deal is expected to close in July 2013. Additional financial details and guidance will be provided in the Silicon Labs’ second quarter earnings call planned for July 25, 2013."

About Silicon Labs
"Silicon Labs is an industry leader in the innovation of high-performance, analog-intensive, mixed-signal ICs. Developed by a world-class engineering team with unsurpassed expertise in mixed-signal design, Silicon Labs’ diverse portfolio of patented semiconductor solutions offers customers significant advantages in performance, size and power consumption"

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