February 8, 2007 – Silicon Laboratories Inc. has agreed to sell its cellular communications business to NXP Semiconductors (nee Philips’ chip business) for $285 million in cash, in what NXP’s top exec deemed a first step in the upcoming wireless industry consolidation.”

The deal involves the Aero RF CMOS technology-based transceivers for cell phones, as well as monolithic cellular systems chips (the AeroFONE single-chip phone and power amplifier product lines). The business generated about $176 million in revenues in 2006, about 38% of Silicon Labs’ overall sales. About 160 employees will be absorbed by NXP, which could pay an additional $65 million if the unit achieves certain performance metrics during the next three years.

Combining the RF-CMOS capabilities for transceivers and cellular system chips will help NXP “accelerate the uptake” of 3G technologies, said Frans van Houten, president/CEO of NXP, in a statement. The deal also beefs up NXP’s cellular operations, with Silicon Labs’ chips in over 380 million mobile phones and 600 handset models.

For Silicon Labs, the deal narrows its focus to its most profitable and highest-growth business of core mixed-signal product, and provides a new home for the cellular unit in NXP, “a company with the necessary scale and resources to effectively compete long-term,” noted Necip Sayiner, president and CEO.

The acquisition also “represents a first step in the upcoming wireless industry consolidation,” noted van Houten, adding that the deal is “a step forward to achieve the scale and innovation needed towards leadership in mobile communications.

The transaction has been approved by both companies’ board of directors, and pending regulatory approval should be completed by the end of 1Q07.