Silicon Laboratories, Inc.
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Item 1. Business
Overview
Silicon Laboratories Inc. is a leader in secure, intelligent wireless technology for a more connected world. Our integrated hardware and software platforms, intuitive development tools, industry-leading ecosystem, and robust support help customers build advanced devices for industrial, commercial, home, and life applications. We make it easy for developers to solve complex wireless challenges throughout the product lifecycle and get to market quickly with innovative solutions that transform industries, grow economies, and improve lives.
We are pioneers in wireless innovation and have spent over two decades simplifying the complexity of radio frequency (“RF”) from silicon to cloud. Our leading platform, purpose-built for the Internet of Things (“IoT”), helps customers quickly create secure, intelligent, wireless connected devices. Our team and technology assist customers in solving development challenges, including energy efficiency, to build connected devices for applications that support better health, innovative infrastructure, and sustainable cities.
Our semiconductor devices leverage standard complementary metal oxide semiconductor (“CMOS”), a low-cost, widely available process technology. CMOS technology enables smaller, more cost-effective, and energy-efficient solutions. Our software expertise allows us to develop products for markets where intelligent data capture, high-performance processing, and communication are increasingly important product differentiators. We also focus design and engineering efforts on technologies that simplify and accelerate customer adoption of security features engineered into our silicon chips. Our expertise in analog-intensive, mixed-signal integrated chip (“IC”) design in CMOS, as well as in software development allows us to create new and innovative products that are highly integrated and secure, simplifying our customers’ designs and improving their time-to-market.
Pending Merger with Texas Instruments
On February 4, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Texas Instruments Incorporated, a Delaware corporation (“Parent”), and Caldwell Merger Corp., a Delaware corporation and wholly-owned direct subsidiary of Parent (“Merger Subsidiary”), pursuant to which Merger Subsidiary will merge with and into Silicon Laboratories Inc. (the “Merger”), and we will survive the Merger as a wholly-owned direct subsidiary of Parent. At the effective time of the Merger, each share of our common stock outstanding as of immediately prior to the effective time (other than dissenting shares or any shares of our common stock held by us as treasury stock or owned by Parent or any of our or Parent’s subsidiaries) will be cancelled and converted into the right to receive $231.00 in cash, without interest. The transactions contemplated by the Merger Agreement were unanimously approved by our board of directors, and the Merger is expected to close in the first half of 2027, subject to customary closing conditions, including approval by our stockholders and the receipt of required regulatory approvals.
Industry Background
The Internet of Things is about connecting embedded applications to the Internet. The phrase IoT describes the myriad of smart, connected devices that surround us today, deployed in a variety of home, life, commercial, and industrial applications. When MIT’s Kevin Ashton first used the phrase in 1999, he was promoting the possibilities of RFID, but today, the IoT describes an impressive array of devices and capabilities. Machine learning is bringing greater intelligence to the edge on battery-powered devices. The IoT is monitoring patients’ health 24/7 to send rich data to doctors miles away. Smart, connected devices detect water leaks to improve sustainability. It’s an industry of variety and impact. Whether in a door lock or a heart monitor, a smart home thermostat, or a municipal energy grid, our solutions are improving life and the planet’s sustainability.
The IoT requires interaction between the analog world we live in and the digital world of computing, which drives the need for analog-intensive, mixed-signal circuits in a wide range of electronic products. Traditional mixed-signal designs relied upon solutions built with numerous, complex discrete analog and digital components. While these traditional designs provide the required functionality, they are often inefficient and inadequate for use in markets where size, cost, power consumption, performance, and security are increasingly important product differentiators. To improve their competitive position, electronics manufacturers must reduce the cost and complexity of their systems and enable new features or functionality to differentiate themselves from their competitors.
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Simultaneously, these manufacturers face accelerating time-to-market demands and must rapidly adapt to evolving industry standards and new technologies. Because analog-intensive, mixed-signal design expertise is difficult to find, these manufacturers increasingly are turning to third parties, like us, to provide advanced mixed-signal solutions. Mixed-signal design requires specific expertise and relies on creative, experienced engineers to deliver solutions that optimize speed, power, and performance despite the noisy digital environment and within the constraints of standard manufacturing processes. The development of this design expertise typically requires years of practical analog design experience under the guidance of a senior engineer, and engineers with the required level of skill and expertise are in short supply.
Many IC solution providers lack sufficient analog expertise to develop compelling mixed-signal products. As a result, manufacturers of electronic devices value providers that can supply them with mixed-signal solutions offering greater functionality, smaller size, and lower power requirements at a reduced cost and shorter time-to-market. We have the breadth in our portfolio, depth of wireless connectivity expertise, and the focus on IoT to help our customers quickly bring their innovative ideas to market.
Products
We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the IoT. We have built a leading wireless development platform and product portfolio for the IoT based on Bluetooth®, sub-GHz proprietary technologies, Wi - SUN, Thread, Wi-Fi®, Zigbee®, and Z-Wave®. Our products integrate complex mixed-signal functions that are frequently performed by numerous discrete components in competing products into a single chip, chipset or system-on-chip (“SoC”). By doing so, we create products that, when compared to many competing products, offer the following benefits:
•Require less printed circuit board (“PCB”) space;
•Reduce the use of external components lowering the system cost and simplifying design;
•Offer superior performance improving our customers’ end products;
•Provide increased reliability and manufacturability, improving customer yields; and/or
•Reduce system power requirements enabling smaller form factors and/or longer battery life.
We have continued to diversify our product portfolio and introduce new products and solutions through both organic investment and acquisitions. The life cycles of our products are relatively long, given the amount of effort and time required in the design-in process for our customers.
Revenues during fiscal 2025, 2024 and 2023 were generated predominately by sales of our mixed-signal products. The following summarizes the products that we have introduced to customers:
Wireless Microcontrollers
Our EFM32™, EFM8™, 8051, wireless MCUs and wireless SoCs are based on numerous wireless protocols, including Bluetooth, sub-GHz proprietary technologies, Thread, Wi-Fi, Zigbee, and Z-Wave technologies. Our family of products are ideally suited to ultra-low power IoT embedded systems that include energy-friendly 8-bit mixed-signal microcontrollers, ultra-low power 32-bit microcontrollers, and wireless MCU connectivity solutions using the ARM® Cortex-M0+/M3/M4 and newer M33 cores. Single and multi-protocol SoC devices and modules provide flexible, highly integrated solutions designed to meet demanding requirements of IoT applications. The introduction of our Series 2 portfolio in 2019 provided a greater focus on updatable device security which is becoming vital to the evolution and success of IoT. Now, our Series 3 portfolio, which released its first product in 2025, leverages the 22 nm process node to provide greater compute, interoperability, and energy efficiency for even more advanced workloads. We bring enhanced capability to the industry, protecting user data, system keys, and manufacturer brands from malicious threats, both hands-on and internet-based. Our broad portfolio addresses a variety of target markets.
Our products are supported by Simplicity Studio™, which provides one-click access to design tools, documentation, software, and support resources, and help simplify software development for IoT developers by coordinating and prioritizing multiprotocol connectivity, SoC peripherals and other system-level activities.
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We group our products as Industrial & Commercial or Home & Life based on the target markets they address. These markets and their corresponding applications are described below:
| Target Market | Applications | |||||||
| Industrial & Commercial | ||||||||
| Industrial IoT | ||||||||
| The Industrial IoT market supports a diverse array of products and applications. Utilizing Industrial IoT enables companies to enhance production and efficiency, gain insights into processes, and predict faults before they lead to downtime. Our Industrial IoT solutions drive energy efficiency, operational excellence, and enables the intelligent and secure use of industrial assets. They simplify human-machine interfaces, improve convenience for electrical providers and consumers through smart metering, drives operational efficiency by adding wireless connectivity to street lights, sensors, and controls, optimize maintenance routines with IoT predictive maintenance, and enhance energy efficiency by allowing renewable energy integration in both residential and utility setting. | –Industrial automation and control –Smart metering –Smart street lighting –Renewable energy –Electric vehicle supply equipment –Industrial wearables –Industrial equipment –Smart agriculture | |||||||
| Commercial IoT | ||||||||
| Commercial IoT, such as smart retail solutions, can increase retailer efficiency, reduce labor costs, and provide consumer insights by merging digital online e-commerce and physical stores into an omnichannel experience. Our smart retail solutions, such as electronic shelf labels, increase productivity and profitability via centralized and dynamic price management without the labor-intensive manual price updates. Our smart lighting solutions use wireless access points to enable indoor location services which track assets and consumer behavior and speed up click-and-collect ordering. | –Smart buildings –Access controls –Asset tracking –Smart lighting –Electronic shelf labels –Theft protection –Power tools –Enterprise access points | |||||||
| Home & Life | ||||||||
| Smart Home | ||||||||
| The Smart Home market is transforming everyday living through greater comfort, efficiency, and peace of mind. Consumers are embracing connected devices that make homes safer, more energy-efficient, and easier to manage, from lighting and climate control to security and entertainment. As smart technology becomes more intelligent, intuitive, and interoperable, it enables seamless automation that enhances quality of life while supporting sustainability and cost savings. Our secure, reliable, and robust smart home solutions also include support for emerging applications like Matter and Amazon Sidewalk that are designed to streamline customer adoption while providing functionality that reinforces privacy, simplicity, and performance. | –Home cameras –Locks –Gateways –Residential lighting –Window shades/blinds –HVAC (heating, ventilation, and air conditioning) –Appliances | |||||||
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements. Please see the “Cautionary Statement” above and “Risk Factors” below for discussions of the uncertainties, risks and assumptions associated with these statements. Our fiscal year-end financial reporting periods are a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2026 will have 52 weeks. Fiscal 2025 had 53 weeks with the extra week occurring in the first quarter of the year. Our second quarter of fiscal 2026 ended July 4, 2026 and our second quarter of fiscal 2025 ended July 5, 2025.
Proposed Merger
As announced on February 4, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Texas Instruments Incorporated (“Parent”) and Caldwell Merger Corp., a wholly-owned direct subsidiary of Parent (“Merger Subsidiary”), pursuant to which Merger Subsidiary will merge with and into Silicon Laboratories Inc. (the “Merger”), and we will survive the Merger as a wholly-owned direct subsidiary of Parent. At the effective time of the Merger, each share of our common stock outstanding as of immediately prior to the effective time (other than dissenting shares or any shares of our common stock held by us as treasury stock or owned by Parent or any of our or Parent’s subsidiaries) will be cancelled and converted into the right to receive $231.00 in cash, without interest. The transactions contemplated by the Merger Agreement were unanimously approved by our board of directors, and on April 30, 2026 we obtained the approval of our stockholders required to adopt the Merger Agreement. The Merger is expected to close in the first half of 2027, subject to customary closing conditions, including approval by our stockholders and the receipt of required regulatory approvals.
In connection with the proposed Merger, for the three and six months ended July 4, 2026 we have incurred $9.6 million and $20.8 million of costs, respectively, and expect to continue to incur financial advisory, legal, accounting, and other related costs prior to the completion of the Merger, which could be significant.
Impact of Macroeconomic Conditions
The global economic environment has experienced inflationary pressure, high interest rates, and geopolitical tensions. There continues to be uncertainty regarding international trade relations and trade policy, including those related to tariffs. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions continues to evolve, and we cannot be certain of the outcome, which could adversely impact demand for our products, costs, customers, suppliers, and general economic conditions. Continued geopolitical instability, including the ongoing war in Ukraine and the war in Iran and other conflicts in the Middle East, volatility in energy markets and recent increases in oil prices driven by geopolitical conflicts, the risk of inflation, slower GDP growth, or recession, and variations in the relative strength of the U.S. dollar, have added to the uncertainty. The extent of the impact of the macroeconomic and geopolitical environment on our operational and financial performance will depend on future developments, their impact to the business of our suppliers and/or customers, and other items identified under “Risk Factors” below, all of which are uncertain and cannot be predicted, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. See the section entitled “Risk Factors” in Part II, Item 1A of the Form 10-Q for further discussion.
Overview
We are a leader in secure, intelligent wireless technology for a more connected world. Our integrated hardware and software platform, intuitive development tools, industry leading ecosystem and robust support enable customers in building advanced industrial, commercial, home and life applications. We make it easy for developers to solve complex wireless challenges throughout the product lifecycle and get to market quickly with innovative solutions that transform industries, grow economies and improve lives. We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the Internet of Things (“IoT”) including connected home and security, industrial automation and control, smart metering, smart lighting, commercial building automation, consumer electronics, asset tracking and medical instrumentation. We group our products as Industrial & Commercial or Home & Life based on the target markets they address.
As a fabless semiconductor company, we rely on third-party semiconductor fabricators in Asia, and to a lesser extent the United States and Europe, to manufacture the silicon wafers that reflect our integrated circuit (“IC”) designs. Each wafer contains numerous die, which are cut from the wafer to create a chip for an IC. We rely on third parties in Asia to
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assemble, package, and, in most cases, test these devices and ship these units to our customers. Testing performed by such third parties facilitates faster delivery of products to our customers (particularly those located in Asia), shorter production cycle times, lower inventory requirements, lower costs and increased flexibility of test capacity.
The sales cycle for our ICs can be as long as 12 months or more. An additional three to six months or more are usually required before a customer ships a significant volume of devices that incorporate our ICs. Due to this lengthy sales cycle, we typically experience a significant delay between incurring research and development and selling, general and administrative expenses, and the corresponding sales. Consequently, if sales in any quarter do not occur when expected, expenses and inventory levels could be disproportionately high, and our operating results for that quarter and, potentially, future quarters, would be adversely affected. Moreover, the amount of time between initial research and development and commercialization of a product, if ever, can be substantially longer than the sales cycle for the product. Accordingly, if we incur substantial research and development costs without developing a commercially successful product, our operating results, as well as our growth prospects, could be adversely affected.
Because some of our ICs are designed for use in consumer products, we expect that the demand for our products will be typically subject to some degree of seasonal demand. However, rapid changes in our markets and across our product areas make it difficult for us to accurately estimate the impact of seasonal factors on our business.
Current Period Highlights
Revenues increased $35.3 million in the recent quarter compared to the second quarter of fiscal 2025 due to increased revenues from our Industrial & Commercial products and our Home & Life products. Gross profit increased $32.6 million during the same period primarily as a result of the increase in revenues. Gross margin increased to 61.6% in the recent quarter compared to 56.1% in the second quarter of fiscal 2025 as our indirect and overhead expenses decreased as a percentage of revenues. Operating expenses increased by $20.4 million in the recent quarter compared to the second quarter of fiscal 2025 primarily due to higher personnel-related costs and costs related to the Merger. Operating loss in the recent quarter was $10.7 million compared to operating loss of $22.9 million in the second quarter of fiscal 2025. Refer to “Results of Operations” below for further discussion.
We ended the second quarter of fiscal 2026 with $397.2 million in cash, cash equivalents, and short-term investments. Net cash used in operating activities was $9.6 million during the current year six-month period. Accounts receivable were $79.8 million at July 4, 2026, representing 31 days sales outstanding (“DSO”). Inventory was $123.3 million at July 4, 2026, representing 127 days of inventory (“DOI”).
During the six months ended July 4, 2026, we had no customer that represented more than 10% of our revenues. In addition to direct sales to customers, some of our end customers purchase products indirectly from us through distributors and contract manufacturers. An end customer purchasing through a contract manufacturer typically instructs such contract manufacturer to obtain our products and incorporate such products with other components for sale by such contract manufacturer to the end customer. Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, each represented more than 10% of our revenues during the six months ended July 4, 2026.
The percentage of our revenues derived from outside of the United States was 90% during the six months ended July 4, 2026. All of our revenues to date have been denominated in U.S. dollars. We believe that a majority of our revenues will continue to be derived from customers outside of the United States.
Results of Operations
The following describes the line items set forth in our Condensed Consolidated Statements of Operations:
Revenues. Revenues are generated predominately by sales of our products. Our revenues are subject to variation from period to period due to the volume of shipments made within a period, the mix of products we sell, and the prices we charge for our products.
Cost of Revenues. Cost of revenues includes the cost of purchasing finished silicon wafers processed by independent foundries; costs associated with assembly, test and shipping of those products; costs of personnel and equipment associated with manufacturing support, logistics, and quality assurance; costs of royalties, other intellectual property license costs, and
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certain acquired intangible assets; and an allocated portion of our occupancy costs. Our gross margin fluctuates depending on product mix, manufacturing yields, inventory valuation adjustments, average selling prices, and other factors.
Research and Development. Research and development expense consists primarily of personnel-related expenses, including stock-based compensation, as well as new product masks, external consulting and services costs, equipment tooling, equipment depreciation, amortization of intangible assets, and an allocated portion of our occupancy costs. Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications.
Selling, General and Administrative. Selling, general and administrative expense consists primarily of personnel-related expenses, including stock-based compensation, as well as costs incurred due to the Merger, an allocated portion of our occupancy costs, sales commissions to independent sales representatives, amortization of intangible assets, professional fees, legal fees, and promotional and marketing expenses.
Interest Income and Other, Net. Interest income and other, net reflects interest earned on our cash, cash equivalents and investment balances, foreign currency remeasurement adjustments, and other non-operating income and expenses.
Interest Expense. Interest expense consists of interest on our short and long-term obligations, our credit facility, and amortization of debt issuance costs.
Provision for Income Taxes. Provision for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits, deemed foreign income inclusions, and other permanent differences. See Note 11, Income Taxes, to the Condensed Consolidated Financial Statements.
The following table sets forth our Condensed Consolidated Statements of Operations data as a percentage of revenues for the periods indicated:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| July 4, 2026 | July 5, 2025 | July 4, 2026 | July 5, 2025 | |||||||||||||||||||
| Revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||
| Cost of revenues | 38.4 | 43.9 | 39.4 | 44.4 | ||||||||||||||||||
| Gross profit | 61.6 | 56.1 | 60.6 | 55.6 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Research and development | 41.6 | 45.5 | 41.6 | 47.5 | ||||||||||||||||||
| Selling, general and administrative | 24.7 | 22.4 | 25.3 | 22.9 | ||||||||||||||||||
| Operating expenses | 66.3 | 67.9 | 66.9 | 70.4 | ||||||||||||||||||
| Operating loss | (4.7) | (11.9) | (6.3) | (14.8) | ||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income and other, net | 1.1 | 2.0 | 1.4 | 2.1 | ||||||||||||||||||
| Interest expense | (0.1) | (0.1) | (0.1) | (0.1) | ||||||||||||||||||
| Loss before income taxes | (3.7) | (10.0) | (5.0) | (12.9) | ||||||||||||||||||
| Provision for income taxes | 0.9 | 1.3 | 1.0 | 1.2 | ||||||||||||||||||
| Net loss | (4.6) | % | (11.3) | % | (6.0) | % | (14.1) | % | ||||||||||||||
Revenues
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | July 4, 2026 | July 5, 2025 | Change | % Change | July 4, 2026 | July 5, 2025 | Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Industrial & Commercial | $ | 135.0 | $ | 109.8 | $ | 25.2 | 23.0 | % | $ | 262.9 | $ | 205.8 | $ | 57.1 | 27.8 | % | ||||||||||||||||||||||||||||||||
| Home & Life | 93.2 | 83.1 | 10.1 | 12.2 | % | 178.8 | 164.8 | 14.0 | 8.5 | % | ||||||||||||||||||||||||||||||||||||||
| $ | 228.2 | $ | 192.8 | $ | 35.3 | 18.3 | % | $ | 441.7 | $ | 370.6 | $ | 71.1 | 19.2 | % | |||||||||||||||||||||||||||||||||
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The increase in revenues in the recent three-month period was due to increased revenues of $25.2 million from our Industrial & Commercial products and increased revenues of $10.1 million from our Home & Life products. The increase in revenues in the recent six-month period was due to increased revenues of $57.1 million from our Industrial & Commercial products and increased revenues of $14.0 million from our Home & Life products. Revenues increased in the recent three and six-month periods as a result of increases in unit volumes of our products relative to the prior year. The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, pricing decisions and other factors. In general, as our products become more mature, we expect to experience decreases in average selling prices.
Gross Profit
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||
| (in millions) | July 4, 2026 | July 5, 2025 | Change | July 4, 2026 | July 5, 2025 | Change | ||||||||||||||||||||||||||||||
| Gross profit | $ | 140.7 | $ | 108.1 | $ | 32.6 | $ | 267.7 | $ | 205.9 | $ | 61.8 | ||||||||||||||||||||||||
| Gross margin | 61.6 | % | 56.1 | % | 5.5 | % | 60.6 | % | 55.6 | % | 5.0 | % | ||||||||||||||||||||||||
Gross profit increased during the recent three and six-month period primarily as a result of increases in revenues in the periods. Gross margin increased as our indirect and overhead expenses decreased as a percentage of revenues in the recent three and six-month period as a result of the increase in revenues. Increased product demand and production capacity constraints may affect the costs of our products, and the prices we pay for inventory may increase in future periods which could reduce our gross margins.
We may experience variations in the average selling prices of certain of our products. Increases in average selling prices may occur during periods of increased demand, but such demand may be short-lived and could be accompanied by higher product costs. Declines in average selling prices create downward pressure on gross margin and may be offset to the extent we are able to introduce higher margin new products and gain market share with our products; reduce costs of existing products through improved design; achieve lower production costs from our wafer suppliers and third-party assembly and test subcontractors; achieve lower production costs per unit as a result of improved yields throughout the manufacturing process; or reduce logistics costs.
Research and Development
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | July 4, 2026 | July 5, 2025 | Change | % Change | July 4, 2026 | July 5, 2025 | Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 95.0 | $ | 87.8 | $ | 7.2 | 8.2 | % | $ | 183.6 | $ | 176.0 | $ | 7.6 | 4.3 | % | ||||||||||||||||||||||||||||||||
| Percent of revenue | 41.6 | % | 45.5 | % | 41.6 | % | 47.5 | % | ||||||||||||||||||||||||||||||||||||||||
Research and development expense in the recent three-month period increased, with increases of $3.3 million from costs incurred due to the Merger, $2.7 million from personnel-related costs, and $1.0 million from lower government incentives. Research and development expense in the recent six-month period increased, with increases of $3.3 million from costs incurred due to the Merger, $2.8 million from personnel-related costs, $2.1 million for new product introduction costs, $2.0 million from lower government incentives, and $0.8 million for IT-related costs, partially offset by a decrease of $4.2 million for amortization of intangible assets.
Selling, General and Administrative
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | July 4, 2026 | July 5, 2025 | Change | % Change | July 4, 2026 | July 5, 2025 | Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 56.3 | $ | 43.2 | $ | 13.1 | 30.3 | % | $ | 111.8 | $ | 84.8 | $ | 27.0 | 31.8 | % | ||||||||||||||||||||||||||||||||
| Percent of revenue | 24.7 | % | 22.4 | % | 25.3 | % | 22.9 | % | ||||||||||||||||||||||||||||||||||||||||
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The increase in selling, general and administrative expense in the recent three-month period was primarily due to a $6.4 million increase in personnel-related costs and $6.3 million from costs incurred due to the Merger. The increase in selling, general and administrative expense in the recent six-month period was primarily due to $17.5 million from costs incurred due to the Merger, and a $9.2 million increase in personnel-related costs.
Interest Income and Other, Net
Interest income and other, net for the three and six months ended July 4, 2026 was $2.5 million and $6.1 million, respectively, compared to $3.8 million and $7.6 million, respectively, for the three and six months ended July 5, 2025.
Interest Expense
Interest expense for the three and six months ended July 4, 2026 was $0.3 million and $0.5 million, respectively, compared to $0.3 million and $0.5 million, respectively, for the three and six months ended July 5, 2025.
Provision for Income Taxes
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||
| (in millions) | July 4, 2026 | July 5, 2025 | Change | July 4, 2026 | July 5, 2025 | Change | ||||||||||||||||||||||||||||||
| Provision for income taxes | $ | 2.2 | $ | 2.5 | $ | (0.3) | $ | 4.4 | $ | 4.4 | $ | — | ||||||||||||||||||||||||
| Effective tax rate | (25.7) | % | (13.1) | % | (19.8) | % | (9.3) | % | ||||||||||||||||||||||||||||
The decrease in the effective tax rate for the three and six months ended July 4, 2026 is primarily due to a decrease in pre-tax book loss, as the impact of permanent items is relatively greater when the pre-tax loss is smaller.
Liquidity and Capital Resources
Our principal sources of liquidity as of July 4, 2026 consisted of $397.2 million in cash, cash equivalents and short-term investments, of which $243.8 million was held by our U.S. entities. The remaining balance was held by our foreign subsidiaries. Our cash equivalents and short-term investments consisted of government debt securities, which include U.S. government securities and money market funds.
Operating Activities
Net cash used in operating activities was $9.6 million during the six months ended July 4, 2026, compared to net cash provided of $53.0 million during the six months ended July 5, 2025. Operating cash flows during the six months ended July 4, 2026 reflect our net loss of $26.5 million, adjustments of $65.1 million for depreciation, amortization, stock-based compensation, and deferred income taxes, and a net cash outflow of $48.2 million due to changes in our operating assets and liabilities.
Accounts receivable increased to $79.8 million at July 4, 2026 from $64.5 million at January 3, 2026. The increase in accounts receivable resulted primarily from normal variations in the timing of collections and billings. Our DSO was 31 days at July 4, 2026 and 28 days at January 3, 2026.
Inventory increased to $123.3 million at July 4, 2026 from $95.6 million at January 3, 2026. Inventory has increased in order to minimize potential supply disruptions and meet forecasted future demand. Our inventory levels will vary based on the availability of supply and the impact of variations between forecasted demand used for purchasing inventory and actual demand. Our DOI was 127 days at July 4, 2026 and 113 days at January 3, 2026.
Investing Activities
Net cash provided by investing activities was $27.2 million during the six months ended July 4, 2026, compared to net cash used of $14.1 million during the six months ended July 5, 2025. The increase in cash inflows was principally due to cash proceeds from maturities of marketable securities of $44.1 million compared to a net cash outflow of $0.5 million from purchases, sales, and maturities of marketable securities in the prior year, and the receipt of $5.3 million of proceeds from capital-related government incentives in the current period. Purchases of property and equipment increased $8.6 million during the six months ended July 4, 2026 compared to the six months ended July 5, 2025.
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Financing Activities
Net cash used in financing activities was $19.7 million during the six months ended July 4, 2026, compared to $6.1 million during the six months ended July 5, 2025. The increase in cash outflows was principally due to an increase in payment of taxes withheld for vested stock awards of $13.7 million.
Debt
As of July 4, 2026, we had a $400 million revolving credit facility. We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions. The credit facility contains various conditions, covenants, and representations with which we must be in compliance in order to borrow funds, including financial covenants that we must maintain a consolidated net leverage ratio (funded indebtedness less cash and cash equivalents up to $750 million and divided by EBITDA) of no more than 4.25 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. As of July 4, 2026, we were in compliance with all of the covenants and no amounts were outstanding on the revolving credit facility.
Capital Requirements
Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities. We believe our existing cash, cash equivalents, investments, credit under our credit facility, and cash generated from operations are sufficient to meet our short-term (i.e., over at least the next twelve months) and long-term capital requirements, although we could be required, or could elect, to seek additional funding prior to that time. We may enter into acquisitions or strategic arrangements in the future which also could require us to seek additional equity or debt financing.
Critical Accounting Estimates
Our critical accounting estimates are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Form 10-K for the fiscal year ended January 3, 2026. There have been no material subsequent changes to our critical accounting estimates.
Quantitative and Qualitative Disclosures about Market Risk
Interest Income
Our investment portfolio includes cash, cash equivalents and short-term investments. Our main investment objective is the preservation of investment capital. Our interest income is sensitive to changes in the general level of U.S. interest rates. A 100 basis point decline in yield on our investment portfolio holdings as of July 4, 2026 would decrease our future annual interest income by approximately $2.7 million. We believe that our investment policy, which defines the duration, concentration, and minimum credit quality of the allowable investments, meets our investment objectives.
Interest Expense
We are exposed to interest rate fluctuations in the normal course of our business, including through our credit facility. The interest rate on the credit facility consists of a variable-rate of interest and an applicable margin. While we have drawn from the credit facility in the past, we had no borrowings as of July 4, 2026. If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations.
Foreign currency exchange rate risk
We are exposed to foreign currency exchange rate risk primarily through assets, liabilities and operating expenses of our subsidiaries denominated in currencies other than the U.S. dollar. Our foreign subsidiaries are considered to be extensions of the U.S. parent. The functional currency of the foreign subsidiaries is the U.S. dollar. Accordingly, gains and losses resulting from remeasuring transactions denominated in currencies other than U.S. dollars are recorded in the Condensed Consolidated Statements of Operations. We may use foreign currency forward contracts to manage exposure to
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foreign exchange risk. Gains and losses on foreign currency forward contracts designated as hedging instruments are recognized in earnings in the same period during which the hedged transaction is recognized.
Available Information
Our website address is www.silabs.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available through the investor relations page of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). Our website and the information contained therein or connected thereto are not intended to be incorporated into this Quarterly Report on Form 10-Q.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-08-14 | CONRAD ROBERT J | Sr VP and General Manager | Sell | -6,581 | $218.21 | -$1,436,040 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-08 10-Q expected by 2026-11-17 (in 75 days)
- ~2027-02-09 10-K expected by 2027-03-09 (in 168 days)
- ~2027-05-09 10-Q expected by 2027-05-18 (in 257 days)
- ~2027-08-15 10-Q expected by 2027-08-24 (in 355 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-11 8-K Earnings Release; Financial Statements and Exhibits
- 2026-08-11 10-Q Quarterly Report
- 2026-05-26 8-K Other Events
- 2026-05-05 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-05 10-Q Quarterly Report
- 2026-02-10 10-K Annual Report
- 2026-02-04 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-04 8-K Material Agreement Entered; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-04 10-Q Quarterly Report
- 2025-11-04 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-05 10-Q Quarterly Report
- 2025-08-05 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-13 10-Q Quarterly Report
- 2025-05-13 8-K Earnings Release; Financial Statements and Exhibits
- 2025-03-06 8-K Changes in Auditor; Financial Statements and Exhibits