CEO interview: Silicon Labs’ Matt Johnson on balancing breadth and focus
Matt Johnson took over as CEO Silicon Laboratories’ at the beginning of 2022. We grasped an opportunity to ask what’s new and what stays the same for the wireless IoT [Internet of Things] company.
Johnson has succeeded previous CEO Tyson Tuttle after joining Silicon Labs in 2018 as senior vice president and general manager of IoT products and being promoted to president in April 2021. And Johnson eased into the CEO’s chair six months after the company divested its infrastructure and automotive businesses.
The sale to Skyworks Solutions Inc. completed in July 2021 and yielded $2.3 billion after taxes and transactions costs (see Skyworks buys Silicon Labs business unit for $2.75 billion). So it seems clear then that a focus down from wireless applications more broadly to the IoT is a long-term plan and that Johnson was identified as the best person to follow through on that plan.
“Silicon Labs is a remarkably different company to what it was five years ago when it was working on diverse applications. IoT wasn’t half the company then. We have divested everything not related to IoT,” observed Johnson. “Our position has continued to improve within the IoT space. It’s a large multi-decade growth market,” he asserted.
“We need to focus on IoT at the ‘edge’. We offer complete solutions and that includes silicon, I/O, tools, software and service: a complete turn-key solution for IoT.”
That approach – starting with the customers’ applications and working back to determine all that is required – is something that has marked Silicon Labs out for many years. It did lead to the enormous diversity that the company has now partially cashed in on.
“There is still a very broad range of wireless technologies we provide plus hundreds of proprietary and standard overlays we support, such as Matter and Sidewalk,” said Johnson.
Matter, previously known as the Connected Home over IP (CHIP) project is a home automation connectivity standard based on the Internet Protocol. It was launched by Amazon, Apple, Google, Comcast and the Zigbee Alliance in December 2019. Similarly Sidewalk is a low-bandwidth long-range wireless communication protocol developed by Amazon. It uses Bluetooth Low Energy (BLE) for short distance communication and 900MHz LoRA and for long distance.
“We’ve got 10,000s of customers, support 1,000s of applications and 100s of ecosystems,” Johnson claims. “The IoT is already meaningful with 10 billion units selling per year. We wear them, use them in HVAC [heating, ventilation, air conditioning], medical equipment, industry, everywhere. The market could be 40 to 50 billion units per year within the next decade.”
Don’t force-fit the wireless
Johnson carries on painting the picture of a market that has come through its wild-west phase and is coming into its own as standards allow for growth. But diverse distance, energy requirements and applications require many technologies and standards, he points out.
“This market is so big that everyone has an IoT position. Other companies have one or two wireless positions and then they try to push those at everything.”
Supporting a broad range of wireless technologies and overlaid protocols is demanding Johnson admits. “People, team and culture. Without them you can’t do it. The supply chain crisis has distracted us. The next crisis is talent shortage,” he predicts.
For all that Silicon Labs has pioneered wireless microcontrollers – it acquired the original developer of the Gecko microcontroller range Energy Micro in 2013 – it is not necessarily riding Moore’s Law particularly hard. “Our Series One devices were on 90nm. Series Two is on 40nm. Series 3, on 22nm, is in development,” said Johnson.
But there’s reason for that. Johnson points out that hardware and the hardware node and the basic energy efficiency of computation is only part of the picture. Software support and ease-of-use of development tend to dominate design-in and many applications require low-cost silicon he said.
We also challenged Johnson on Silicon Labs adoption of machine learning and artificial intelligence around IoT. It is notable that a great number of startups are hitting the market with artificial intelligence and machine learning inference engines for the edge. Most of the claim IoT as a target market. So where is Silicon Labs?
Johnson states that in January of 2022 Silicon Labs added an added an accelerator to its multiprotocol 2.4GHz wireless chips to provide machine learning capabilities to battery-powered designs. The accelerator in the BG24 and MG24 Gecko natively supports TensorFlow models and is good for ‘wake word’ recognition as well as recognizing sounds such as glass-break detection. Again, the emphasis is on the complete development environment rather than just throwing silicon at a problem. “I always have a sense of urgency and I feel good about where we are,” said Johnson.
Latching on to his discussion of battery-operation we asked whether energy-harvesting to augment, or avoid, the use of batteries is something Silicon Labs will be offering? “Energy harvesting will happen. We are starting to see it come up. But we don’t see the need for custom solutions,” he said.
For Johnson’s the bigger frontier in IoT is security. “We’ve been doing work on this for a long time but things are changing. It’s no longer a choice. Security is becoming critical.” He adds that this is because of the interconnectedness of modern technology, which could include cellular, WiFi and short-range wireless in the same node. “IoT is not a point solution. It is a platform play – flexible, scalable, agile.”
Focus means sometimes saying no
We also asked Johnson about sensors. This is an area that Silicon Labs addresses in a limited way; temperature, humidity, position. But it is also an area that is rich with developments that can be key enablers of applications. These sensor types include inertial measurement units (IMUs) for positioning, gesture recognition through ultrasound, imaging, microphones and so on.
Johnson responded: “Silicon labs stopped investing in stand-alone sensors years ago to enable increased focus on integrated IoT connectivity and compute solutions. This has served us well as wireless is by far our largest and fastest-growing area. We continue to support existing sensor products as well as partner with multiple companies in the space.”
However, the chiplet design and manufacturing revolution that is coming down from the high-performance end of semiconductors is another matter. Indeed, providing multi-die components and system-in-package (SiP) components are things Silicon Laboratories is already familiar with.
“As wireless products are getting widely adopted in a large number of IoT applications, we are seeing increasing demand for integrated and certified SiP and PCB modules as they reduce the time to market for the customers. They also significantly reduce the cost of development and risk as several of these customers do not have the wireless expertise,” said Johnson. He added: “Silicon Labs has driven low-power wireless modules for the IoT for years and we continue to see the demand for these applications grow. Moving forward we will continue to integrate features into silicon as well as modules for cost, performance, and power reduction.”
Fabless and geopolitics
Silicon Labs is a fabless chip company. The move away from standard building block components and towards application-specific ICs has largely ended the practice of multi-sourced manufacturing. But we are now facing times of great geopolitical uncertainty – not least in China and Taiwan. We asked if Silicon Labs is diversifying its manufacturing sources.
“Given the supply-constrained environment, we have been working with existing suppliers to increase volume and new suppliers to add more overall capacity, so yes, we’ve been diversifying our manufacturing sources. We have deep, strong relationships with our suppliers going back decades in some cases. Through leveraging our strong relationships and working collaboratively with suppliers and customers we have been able to meaningfully increase our unit output in fiscal 2021 by nearly 40 percent over 2020.”
Finally, we returned to the cash boost Silicon Labs recently received through its divestuture.
“Silicon Labs has a long history of successful capital deployment which has been centered around returning capital through share repurchases and also investing in our growth through strategic M&A,” said Johnson. “Since the transaction, we have already returned nearly $1.2 billion [to shareholders] and going forward we expect to continue to return capital through share repurchases and also maintain dry powder for M&A.”
That answer suggests that Silicon Labs is interested in smaller strategic “tuck-in” acquisitions rather than getting involved in a mega merger. The strategy also suggests a high degree of continuity between Tuttle’s time and Johnson’s.
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