Texas chip company Silicon Labs plans to focus on the IoT market after selling its infrastructure and automotive business to California-based Skyworks for $2.75bn.

The transaction includes Silicon Labs’ power, isolation, timing and broadcast products, intellectual property and associated employees. Silicon Labs and Skyworks say they will collaborate to ensure a seamless transition for customers, suppliers and employees.

Silicon Labs expects total Q1 revenue to be approximately $255m. This represents an increase of roughly five per cent sequentially and 19 per cent year-over-year with the forecasted upside primarily due to solid growth in IoT, continued strength in bookings and durable demand trends.

After executing the infrastructure and automotive divestiture, Silicon Labs will be a pure-play company providing intelligent, wireless connectivity for the IoT. The company’s resulting focus on IoT comes at a time when the overall market and Silicon Labs’ growth opportunities are accelerating, as industry projections anticipate a multi-year ramp in connected devices.

“The massive growth in connected devices makes this the right time for us to exclusively focus on the large, diverse, growing IoT opportunity,” said Silicon Labs CFO John Hollister. “Our updated operating model for the IoT business indicates a long-term revenue growth rate of 20 per cent, outpacing the forecasted industry CAGR of mid-teens for our combined target IoT end markets of industrial and commercial and home and life.” 

With the investments Silicon Labs is making in the IoT business, the company expects to drive sustainable growth and deliver long-term 20 to 25 per cent non-GAAP operating margin, demonstrating the inherent leverage potential as a standalone IoT-focused company.

The firm’s wireless portfolio supports protocols including Bluetooth, proprietary, Thread, Wi-Sun, wifi, Zigbee and Z-Wave, and ecosystems, such as Amazon, Google, Tuya and Xfinity. Built on an integrated hardware and software platform designed for IoT development, the company’s connectivity is said to be the only wireless IoT offering to achieve Arm’s security PSA Level Three certification.

“We’re more than a semiconductor company,” said Silicon Labs president Matt Johnson. “Our hardware, software, tools and partnerships are designed to help IoT businesses get to market quickly with the world’s most secure, intelligent, energy-efficient edge devices. Focusing efforts and resources on IoT enables Silicon Labs to gain valuable operating efficiencies and RoI. Our team will develop advanced innovations faster and provide a superior user experience no matter the customer’s wireless protocol, ecosystem, application or embedded expertise level.” 

Silicon Labs has developed a comprehensive IoT ecosystem, serving tens of thousands of users, thousands of applications and hundreds of partners, including organisations defining the next wave of technology such as Project Connected Home over IP and Amazon Sidewalk.

“We believe the growing demand indicates the power of the IoT to deliver real, measurable value, transforming industries, growing economies and improving lives,” said CEO Tyson Tuttle.