On Friday of last week Silicon Labs signed an agreement to purchase Sigma Designs for $282M.
The question is: is this good for Z-Wave or bad?
Silicon Labs is a well respected semiconductor manufacturer with an array of microcontroller products from 8-bit 8051s thru modern low-power ARM CPUs. Silicon Labs has been chasing the IoT market since before IoT was a “thing”. Their low power micros have industry leading features often integrating the latest connectivity solutions like USB, Zigbee and now Z-Wave. With a market cap of nearly $4B, Silicon Labs (SLAB) has a lot more financial muscle than Sigmas (SIGM) mere $265M could provide. All Z-Wave licensees should rejoice that a much larger company is now supporting Z-Wave with the accompanying increase (we hope) of resources.
In my opinion, the most interesting part of the announcement is that SiLabs is buying Z-Wave and not Sigmas primary business of Set-Top-Box processors. The announcement states: “Sigma Designs is in active discussions with prospective buyers to divest its Media Connectivity business”. The announcement goes on to say that if Sigma can’t unload its “Media Connectivity business” then SiLabs will buy just the Z-Wave portfolio for $240M thus making the rest of Sigma worth only $42M assuming someone is willing to pay that much for it.
Z-Wave was originally invented by Zensys based in Copenhagen Denmark in 1999. Originally the Z-Wave protocol used Chipcon radios (acquired by TI) and Atmel processors (acquired by Microchip). In 2003 Zensys announced its own custom designed “100 series” Z-Wave transceiver which was a complete Z-Wave capable IoT System-On-Chip. In 2008 Zensys was struggling financially. Fortunately Sigma stepped in an purchased Zensys for an “undisclosed amount”. Nine years later, Sigma has sold Z-Wave for a very nice ROI of perhaps 100X. Mergers and acquisitions in the semiconductor industry are frequent as technology and markets shift in unforeseen ways.
Z-Wave is growing like crazy as the number of 100% inter-operable mesh networked Z-Wave devices on the market continues to increase. There are now over 600 Z-Wave licensees with over 2100 products already on the market. With the recent addition of the AES-128 encrypted Security S2 communication and SmartStart to simplify the building of the Z-Wave network, Z-Wave shows it is continuing to evolve while still being completely backwards compatible with all the existing devices all the way back to the 100 series.
The future is nearly impossible to predict. I certainly don’t claim to have a clearer crystal ball than the next guy. But this acquisition bodes well for the future of Z-Wave. The additional resources should accelerate the introduction of the ARM Z-Wave microcontrollers which in turn will bring more Z-Wave products to market faster and cheaper. The soon to be announced next generation transceivers are expected to utilize modern ARM processors and make a significant leap forward in debug capabilities that are not present in the current 8051 8-bit CPUs. Z-Wave developers will finally be able to single step through their code instead of relying on printf to output a few cryptic characters giving you meager clues where your code has gone wonky.
The acquisition of the Z-Wave portfolio by a financially strong IoT silicon manufacturer is a “good thing” for the future of Z-Wave.