NXP To Pay $285 Million For Silicon Labs' Cellular Unit

LONDON — NXP Semiconductors said it will acquire Silicon Laboratories' AeroFONE single-chip phone and power amplifier product lines for $285 million in cash.

NXP (Eindhoven, Netherlands) could pay an additional $65 million on the operation reaching defined performance criteria over the next three years.

The operations being acquired—including RF CMOS based transceivers and monolithic cellular system chips—generated sales of approximately $176 million in 2006. The transaction is expected to close by the end of the first quarter, subject to closing conditions, including regulatory approvals.

"This is a very positive move for us and leapfrogs us in the mobile phone space. I have always said we want and need to have a leadership position there, and acquiring complementary RF technologies like Silicon Labs' is also an indication of the consolidation that is happening in the industry," Frans van Houten, president and CEO of NXP, told EE Times Europe.

"We will integrate Silicon Labs' RF CMOS technology into our platform for one chip solutions and expect to be shipping silicon for GSM/GPRS phones by the summer and follow up with a single chip option for Edge/3G next year," said van Houten.

He added that while the company had RF technology in house, "we realized Silicon Labs' transceiver technology was more advanced and really complementary, and extends our roadmap quicker than we could by in house development."

The Silicon Labs team will be incorporated into NXP's Mobile and Personal Business. Van Houten said all 160 employees at Silicon Labs—spread among sites in Austin, Texas, France, India and China. He added that Dan Rabinovitsj, Silicon Labs vice president, would head NXP's Cellular Systems business line, subject to closing of the deal.

This is NXP's first significant acquisition since the spin out from Philips Semiconductors last year. "I always said we are open to the right kind of merger or acquisition, and this shows I am putting my actions into where my mouth is," van Houten said.

Asked whether he feels there are other gaps to fill to make NXP a leader in the chips for cellular phones business, van Houten responded: "I won't speculate now about future moves, but I can reiterate that we intend to be a leader in this space."

For Silicon Labs, the move signals a shift to higher margin mixed-signal chip development. The business being sold off represented about a third of the company's turnover last year.

"By placing the business in the hands of those best able to capitalize on it, our stockholders are realizing a premium for the RF technology leadership we have created. Strategically, this will enable us to focus on the most profitable and highest growth segment of our business, our core mixed-signal products," commented Necip Sayiner, president and CEO of Silicon Labs.