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Monday, December 18, 2017

Silicon Labs buys Sigma Designs for its Z-Wave mesh wireless technology

By Nick Flaherty

Silicon Labs to to buy chip designer Sigma Designs for $282m to gain access to its expertise in the proprietary Z-Wave mesh wireless technology.

The proprietary Z-Wave technology is used in over 2,100 certified, interoperable devices available from more than 600 manufacturers. The addition of Z-Wave will expand Silicon Labs' wireless connectivity portfolio and worldwide customer base for the connected home and allow quad protocol devices.
Sigma Designs bought the founder of Z-Wave, Zensys, in 2008 which is used in the US for Internet of Things (IoT) and smart home applications, although it started out designing video compression chips for set top boxes. 

"The connected home represents one of the largest market opportunities in the IoT. Today, there is no single dominant wireless technology for home automation, and protocols include Wi-Fi, Bluetooth, Zigbee, Thread and proprietary," said Tyson Tuttle, CEO of Silicon Labs. "By adding Z-Wave technology to Silicon Labs' connectivity portfolio, we will be better positioned to serve this fast-growing market. Ecosystem providers and developers will have a one-stop shop for wireless connectivity solutions for the home."

The addition of Z-Wave extends connectivity options for developers and ecosystem providers and delivers alternatives to customers and markets for secure, interoperable IoT devices. Silicon Labs intends to work in collaboration with the Z-Wave Alliance to drive adoption and development of Z-Wave technology.

"This is an exciting day for Sigma Designs, and we are pleased to be joining forces with Silicon Labs," said Thinh Tran, President and CEO of Sigma Designs. "Silicon Labs and Z-Wave share a vision of secure, interoperable smart homes. This transaction provides immediate value to our shareholders, and offers new growth opportunities for our employees and customers to develop a wider range of leading-edge solutions."

In addition to Z-Wave technology, Sigma Designs also provides solutions for Media Connectivity and Smart TVs but the company plans to divest or wind down its Smart TV business. In addition, Sigma Designs is in active discussions with prospective buyers to divest its Media Connectivity business. 

In the event that certain closing conditions are not met, the parties have agreed that Sigma Designs would instead sell its Z-Wave business to Silicon Labs for $240m, which would value the other divisions at $42m. 

Sigma bought Z-Wave developer Zensys in 2008 for an undisclosed sum, although it had raised $15m in venture capital since it started in 1999. Sigma also bought Gennum's image processing business earlier that year and in 2009 bought Israeli home-networking chip maker CopperGate for $160m in 2009 for its HomePNA and HomePlug AV networking technologies. 

Silicon Labs expects the transaction to close by March 2018.

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