Market Insight

Silicon Labs’ acquisition of Zentri shows how a semiconductor company can transform itself into a growing IoT company

January 27, 2017

Christian Kim Christian Kim Senior Analyst, IoT & Connectivity

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On Monday January 23rd, Silicon Labs announced the acquisition of Zentri, a 20-person module and software vendor, for an undisclosed amount. This insight will provide summary and analysis of Silicon Lab’s recent acquisition.

Zentri’s products:

Below are the list of Zentri’s product offerings:

  • Wi-Fi IoT modules, Bluetooth Low Energy (BLE) IoT modules and development tools
  • Zentri Cloud Connector: API libraries for connecting to major cloud service providers
  • Zentri Device Management Service (DMS): Cloud service provided by Zentri
  • Zentri Mobile: Standard development kit (SDK) and libraries that allow developers to create apps on mobile devices

Silicon Labs: Background

Silicon Labs is an Austin, Texas based company that provides silicon, software and system solutions for the internet of things (IoT), internet infrastructure, industrial automation, consumer and automotive markets.

The company has been a leading semiconductor supplier for broadcast, infrastructure, access products and IoT applications. In order to expand its IoT product offerings, Silicon Labs has been continuously acquiring small size technology companies since 2012. The summary of Silicon Labs acquisitions for the past 5 years are shown below:

 

 

 

 

 

During 2013, revenue from the IoT segment comprised 31% of Silicon Labs’ total annual revenue. Since 2013, Silicon Labs’ revenue from the IoT segment has been steadily growing. Most recently, 46% of its revenue during the third quarter of 2016 came from the IoT segment.

IHS Analysis

Below are the key benefits from the Silicon Labs’ acquisition of Zentri:

  • Addition of Wi-Fi modules: Similar to the Bluegiga acquisition in 2015, Zentri offers both Wi-Fi and BLE modules. However, Zentri offers ten different pre-certified Wi-Fi modules and development kits while it offers only two BLE modules – This is in contrast to the Bluegiga acquisition where majority of its IoT modules were BLE modules.
  • Zentri’s cloud APIs make it easier to connect to the cloud: Zentri offers APIs to leading cloud service providers which includes Amazon Web Services (AWS), Microsoft Azure and Salesforce.
  • New software development tools for mobile devices and own cloud computing service: Zentri Mobile software enables developers to create apps for mobile devices that can receive and transmit information to the IoT products. Zentri also offers its own cloud service that can manage and store data for the connected IoT products.

Conclusion

Thus far, Silicon Labs has demonstrated a great example on how a semiconductor company can transform itself into a growing IoT company through making timely acquisitions.

Starting from 2012, Silicon Labs added capabilities on basic semiconductor building blocks used in IoT modules – such as low-power MCUs, connectivity chips and analog ICs. Since adding the necessary semiconductor building blocks, it has been adding expertise in modules with different connectivity protocols. With the latest addition of Zentri’s Wi-Fi module business, Silicon Labs now offers IoT modules with wide range of wireless protocols which include ZigBee, BLE, Sigfox and Wi-Fi. In addition to adding the Wi-Fi modules, the Zentri acquisition adds software tools that will enable Silicon Labs’ customers to quickly design IoT modules to communicate with the cloud service provider of their choice. Also, the customers will have the software tools to create applications for the associated mobile devices that will enable these mobile devices to control and receive data from the IoT products.

Shortly after the acquisition of Zentri, Tyson Tuttle, CEO of Silicon Labs said the following: “This acquisition builds upon our strategy to deliver comprehensive, multiprotocol silicon and software solutions to securely connect IoT products to the cloud.” Just like Tyson mentioned, the acquisition of Zentri’s Wi-Fi module products and cloud APIs is a great fit and well aligned with Silicon Labs’ current strategy.

Geography
USA
Organization
Silicon Laboratories
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