Wireless Was More Than 2/3 of Silicon Labs' Q3 IoT Business; It's the Future, Says CEO
Wireless was more than two-thirds of Silicon Labs’ IoT business in Q3, helping to drive overall revenue to the high end of guidance at $221.3 million, down from $223 million in the year-ago quarter but up from $207.5 million in Q2. Revenue from IoT products set a record at $133 million, up 16% from Q2, said Chief Financial Officer John Hollister on a Wednesday investor call.
Revenue from industrial and consumer segments was up Q3 due to strong growth in IoT; automotive was flat and communications revenue dropped significantly on the stoppage of shipments to Huawei. Silicon Labs had strength from ramp ups in smart home and lighting products, with sales from wireless connectivity technologies growing 29% sequentially.
Silicon Labs is forecasting 30% growth in wireless next year as its mix shifts. Customers are moving from separate microcontrollers to connected devices that add wireless or that integrate the two, said CEO Tyson Tuttle. The company expects to gain traction in smart home, industrial and proprietary and consumer segments via its Zigbee, Thread and Bluetooth business. Z-Wave continues to get momentum from security companies in the smart home category, and the company is continuing to develop next-generation product for Wi-Fi.
The company is looking for share gains in Bluetooth -- where it had 100% year-on-year design wins and 49% sequentially -- as a stand-alone or in combination with another communications protocol such as Zigbee, Thread or Z-Wave. In many cases, a product will connect to a network with Wi-Fi or Zigbee but be commissioned via Bluetooth, which allows connectivity to a mobile phone as a way to onboard devices to a network, Tuttle said.
The executive referenced trends in “smart retail”: an uptick on online shopping since the COVID-19 pandemic began, and for customers shopping in stores, the desire to shop safely with minimal time spent indoors and with minimal physical contact. Silicon Labs’ connected solutions are “are at the heart of this omnichannel strategy,” Tuttle said: “We facilitate online shopping by bolstering backend bandwidth infrastructure and helping to manage stock in stores and warehouses.” Electronic shelf labels reduce the need for store staff to touch inventory while allowing customers to locate products online and see how much they cost. The company’s location technology guides shoppers and store staff to products at a precise location in the store, Tuttle said. Smart tags allow customers to buy products securely without having to go through a checkout lane.
Commenting on the company's September Works With developer conference, Tuttle said the company expected 1,200 developers when the event was scheduled to take place in its Austin headquarters. The virtual conference drew over 6,000 people from the Americas, Europe and Asia, he said.
IoT has a “long path,” Tuttle said, saying momentum is “starting to build” in the consumer market. “You are going to continue to see new technologies and new capabilities added,” he said, “but I think the ease of use is also something that must get addressed for it to scale.” Silicon Labs is expecting Q4 revenue of $221 million-$231 million, led by increases in IoT, infrastructure and automotive. The stock closed 3% lower Wednesday at $96.89.