AUSTIN, Texas – Silicon Labs CEO Tyson Tuttle calls his company’s $72 million purchase of Ember Corp. “the ultimate play in terms of home automation and wireless mesh networking.” But he says it’s just one part of a larger picture for Silicon Labs (SLAB). “We’ve got lots of internal plans and this is part of the unfolding of a larger story,” says Tuttle. He believes the market for embedded processors in the “Internet of things,” will eventually be the largest market for semiconductors, and says that Silicon Labs is well positioned to play an important role. “We’ve got a pretty diverse range of businesses,” says Tuttle, “and this acquisition is one piece of that and one where we’ve got multiple products we can offer.”
Markets addressed by Silicon Labs and Ember include wireless security systems, energy management systems, smoke detectors, lighting systems and smart meters. Tuttle says the two companies have a few common customers already in the smart meter space. He believes success in machine-to-machine will involve marketing to “a cross section of companies. This is more in line with a broad-based business than it is with just one killer application.” Of course wireless carriers will be important customers in the home automation space, and Tuttle says that cable companies will also be major players.
Silicon Labs is buying Ember for roughly three times revenue. Tuttle says that at $25 million in annual revenue and 60 employees, Ember has slightly less revenue per employee than Silicon Labs. “It is still an investment business,” he says, “but it will be accretive in 2013.”
“Sometimes companies do acquisitions for talent and sometimes for the technology,” says James Brehm, senior strategist at Compass Intelligence, a consulting firm focused on M2M. “This looks like it hits on both areas; a typical ‘technology acquisition’ where it will expand Silicon Labs’ portfolio into areas it previously did not serve and a ‘talent acquisition’ giving it know how to serve the market.”
Follow me on Twitter.
