Texas Instruments makes a $7.5B deal no one saw coming

In a move that caught Wall Street off guard, semiconductor giant Texas Instruments (TI) revealed that it is acquiringSilicon Labs. The news comes a week after TI announced its fourth-quarter earnings on Jan. 27, and coincides with Silicon Labs’ Q4 report, released Feb. 4.

Post-acquisition, TI stock declined by around 2% intraday, while SLAB skyrocketed 49% to a new 52-week high of $207.50 and closed at $203.41.

The move signals a major shift for TI, known for industry-leading analog and embedded processing chips. While you may know the company as the maker of the calculator you used in school, today it has transitioned into the backbone of automotive and industrial power.

SLAB, meanwhile, offers a world-class wireless connectivity portfolio for the Internet of Things (IoT), with clients such as Samsung, Google, and Amazon.

Texas Instruments: strengthening the "connect" in connectivity

For years, Texas Instruments has been a reliable name in the analog chip market. Now, with the growing connectivity of everything (think: your smartwatch, headphones, health monitor, or robot vacuum), low-power communication needs for the Internet of Things have also skyrocketed.

According to data from Fortune Business Insights, the global wearable medical devices market size, valued at $103.04 billion in 2025, is expected to grow at a CAGR (Compound Annual Growth Rate) of 20%. This translates to $117.41 billion in 2026 to $505.28 billion by 2034.

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Add to this that North America currently dominates this market, with 45.70% in market share as of 2025. These devices range from health and activity trackers to smartwatches used to collect real-time data on health and fitness. 

The acquisition thus comes at a timely moment, and TI hopes to significantly add to the combined revenue and its existing client base. 

Texas Instruments-Silicon Labs acquisition 

Under the deal, Texas Instruments will pay $231 per share to Silicon Labs, in an all-cash transaction valued at $7.5 billion. The deal is expected to close in the first half of 2027, pending regulatory and shareholder approval.

SLAB is a specialist in the field; its chips enable electronics to communicate securely over Bluetooth, Wi-Fi, and Zigbee while consuming minimal battery power. With the acquisition in place, TI will be able to offer its customers a fully integrated solution that includes chips that power the device, as well as the wireless technology to connect it to the cloud.

This deal will add around 1,200 new products to TI’s existing portfolio, supporting “a variety of wireless connectivity standards and protocols.”

As such, TI expects the transaction to boost the company’s earnings per share, and it is committed to returning 100% of free cash flow to “shareholders over time via dividends and share repurchases,” regardless of the size of the transaction.

Additionally, TI expects to “generate $450 million in annual manufacturing and operational synergies within three years post-close.” One way would be by reshoring SLAB’s existing manufacturing to its 300mm wafer fab facilities in the U.S., ensuring “low-cost capacity available at scale for Silicon Lab’s products.”

The claims accompany SLAB’s earnings report, which posted a solid quarter and increases in both revenue streams. 

SLAB's Q4 earnings highlight:

• Totalrevenue: $785 million, up 34% year over year
• Industrial & Commercial revenue: $445 million, up 31%
• Home & Life revenue: $340 million, up 38%

While it benefited more from the growing industrial use of wireless communications, home device revenue was not far behind.

• GAAP diluted EPS was $1.98.
• Gross margin was 58.2%.
• GAAP Operating expenses totaled $528 million and operating loss was $71 million, but non-GAAP operating income was positive $25 million.

Analyst sentiment

Following the news, analysts at Needham downgraded Silicon Labs to hold from buy and removed its $150 price target. The firm sees Texas Instruments to be “uniquely positioned to generate significant deal synergies” through this acquisition and does not expect any additional bidders, according to TheFly.

Benchmark also downgraded SLAB to hold from buy following the acquisition, removing its $160 price target. The firm sees the deal as beneficial for both companies, noting that TI gains “a unique growth business that would have taken it years to try to develop on its own.” It reiterated a buy rating and a $250 price target on Texas Instruments, adding that it does not expect any outside suitors to bid higher than that, TheFly reported.

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