QUOTE AND NEWS
Motley Fool  Oct 23  Comment 
Analog/digital chip maker Silicon Labs beat analyst estimates in the third quarter and raised the bar for the year-end period. Shares rose more than 15% on the news.
Motley Fool  Oct 23  Comment 
The chip specialist beat Wall Street's expectations for this quarter and looks set to top them in the fourth quarter as well.
Market Intelligence Center  Oct 20  Comment 
Silicon Laboratories Inc (SLAB) presents a trading opportunity that offers a 3.18% return in just 89 days. A covered call on Silicon Labs. at the $35.00 level expiring on Jan. '15 offers an assigned return rate of 3.18% or 13.06% annualized....
TheStreet.com  Oct 13  Comment 
NEW YORK (TheStreet) -- Shares of Silicon Laboratories Inc. closed down 2.60% to $37.07 after the company was downgraded to "sector perform" from "outperform" at Pacific Crest today. The firm said it lowered the Austin, TX-based mixed signal...
Market Intelligence Center  Sep 15  Comment 
After Friday’s trading in Silicon Laboratories Inc (SLAB) the algorithms behind MarketIntelligenceCenter.com's Artifical Intelligence Center picked out a trade that offers a 4.28% or 12.58% (for comparison purposes only), while providing 10.08%...
Market Intelligence Center  Sep 8  Comment 
For a hedged play on Silicon Laboratories Inc (SLAB) MarketIntelligenceCenter.com’s patented trade-picking algorithms recommend the Jan. '15 $40.00 covered call for a net debit in the $38.61 area. That is also the break-even stock price for the...
Benzinga  Aug 8  Comment 
Analysts at Canaccord Genuity initiated coverage on Silicon Laboratories (NASDAQ: SLAB) with a Buy rating. The target price for Silicon Laboratories is set to $50. Silicon Laboratories shares have surged 6.64% over the past 52 weeks, while the...
SeekingAlpha  Jul 30  Comment 
By Andy Batts: Despite Silicon Labs (NASDAQ:SLAB) reported second quarter revenue and earnings per share that topped analyst expectations, its shares fell almost 15% since the company projected below consensus earnings for the third quarter. SLAB...




 

Silicon Laboratories (NASDAQ: SLAB) designs and develops analog-intensive, mixed-signal integrated circuits (mixed-signal ICs). These products are found in all types of electronic devices such as mobile phones, portable media players, and personal navigation devices. Growth the demand for faster devices and devices with more functions has benefited Silicon Labs because manufacturers like Samsung and Apple rely on the small niche of third part chip makers for chips.

Since 2007, the company has taken actions to focus on its mixed-signal IC business. As a result the company divested from its Aero® transceiver, AeroFONE™ single-chip phone, and power amplifier product lines, all of which previously accounted for about one-third of the company's entire revenue.[1] In 2009, the company's mixed-signal IC business accounted for all of the company's revenue.

Company Overview

About the Mixed-Signal IC Business

Integrated circuits are small, purpose-specific devices built from many smaller discreet components, usually transistors, and the layering and interconnects required to make the chip function. ICs are generally classified as digital (i.e., microprocessors) or analog (i.e., operational amplifiers). Silicon Labs produces mixed-signal ICs, which contain both digital and analog circuits on the same chip.

Mixed-signal ICs are often used to convert analog signals to digital signals so that digital devices can process them. For example, mixed-signal ICs are essential components for FM tuners in digital products such as media players, which have digital amplifiers. Any analog signal (such as an FM radio transmission, a light wave or a sound) can be digitized using a very basic analog-to-digital converter, and the smallest and most energy efficient of these would be in the form of mixed-signal ICs.

Mixed-signal ICs also enable technologies like power over Ethernet. The analog power "signal", in this case a 60 Hz, 120V AC current in the United States, is transmitted alongside a digital data signal (Ethernet) over the same wire. Mixed-signal ICs, such as the Si3400 Power over Ethernet Powered Device controller, are manufactured by Silicon Laboratories to enable this capability.

Mixed-signal ICs are more difficult to design and manufacture than analog-only or digital-only integrated circuits. For example, an efficient mixed-signal IC would have its digital and analog components share a common power supply. However, as one can imagine, analog and digital components have very different power needs and consumption characteristics that make this a non-trivial goal in chip design. Silicon Laboratories therefore has a strong niche in designing low-profile (small), power-efficient mixed-signal ICs.

Business Growth

FY 2009 (ended January 2, 2010)[2]

  • Net income more than doubled to $73 million in 2009. However, earnings were still substantially lower than the $205 million earned in FY 2008.
  • Net sales increased 6.1% to $441 million. Sales unit volume increased by 19.6% compared to levels in 2008, but was offset by a 10.8% decline in average selling prices during the period.

Trends and Forces

Silicon Valley Must Keep Up With the Pressures of Semiconductor Cyclicality

The semiconductor industry consistently moves in cycles. This highly cyclical industry can be illustrated by rapid changes in technology, rapid obsolescence in products, and evolving technological standards. High fluctuations in the industry are directly connected to maturing products, new product introductions, and the general economic conditions at the time. For Silicon Labs this means periods of high downturns and high upturns [3].

A Sluggish Economy Creates Credit Problems for Silicon's Customers

Although Silicon Labs does not have to directly worry about credit problems, the true concern lies with its customers and distributors. As Silicon Labs does not have many customers and distributors, each of the companies holds a substantial portion of the Silicon Labs’ accounts receivable. Any of the Silicon Labs' customers (ex. Samsung or Motorola) getting into credit problems would damage sales and substantially hurt the company's revenue. Any of Silicon Labs' distributers (ex. Edom Technology or Uniquest) getting into credit problems would also hurt revenue as it would be harder to get the product into the market. If credit problems were to hit any of these companies, Silicon Labs would suffer tremendously [4].

Competitors

Silicon Labs faces many competitors as the markets for semiconductors and mix-signal ICs are extremely competitive. An advantage that Silicon Labs has over its competitors is that its ICs are smaller in size and highly integrated, enabling the company to supply them on a rapid basis. A disadvantage however is that some customers need to redesign their products in order to incorporate the smaller ICs. [5] The company’s competitors include:

Texas Instruments (TXN)

Broadcom (BRCM)

Analog Devices (ADI)

RF Micro Devices (RFMD)

Skyworks Solutions (SWKS)

Notes

  1. SLAB 2009 10-K "Divestiture" pg. 6
  2. SLAB 2009 10-K "Selected Financial Data" pg. 31
  3. SLAB 2009 10-K "We are subject to the cyclical nature of the semiconductor industry, which has been subject to significant fluctuations" pg. 24
  4. SLAB 2009 10-K "We are subject to credit risks related to our accounts receivable" pg. 21
  5. SLAB 2009 10K "Competitors" pg. 10-11
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