Silicon Laboratories (SLAB) investor relations material

Market and demand trends

• Demand remains healthy across industrial, consumer, medical, and commercial sectors, with customers favoring short-term purchase orders for flexibility amid macroeconomic uncertainty.

• Industrial and commercial segments have outperformed home and life segments in recent quarters, with European industrial demand rebounding.

• Smart home demand is steady but sensitive to real estate trends, while medical applications are growing independently of macro factors.

• Macro factors like tariffs, Fed policy, and geopolitical shifts are causing customers to delay long-term commitments.

• New design ramps have been a key driver of recent revenue growth and are expected to continue supporting performance.

Growth drivers and product updates

• CGM (continuous glucose monitoring) is ramping from nearly zero to an expected 10% of revenue, with a dozen customers at various qualification stages.

• Only one top-tier CGM customer has been secured, but engagement with 60 potential customers suggests further design wins are likely.

• Electronic shelf labels (ESL) remain a fast-growing application, with broader deployments moving from trials to nationwide and global rollouts.

• ESL adoption is strongest in big box retailers in the Americas and grocers in Europe, with Asia Pacific lagging.

• Industry standards like Matter, Thread, and ZigBee are seeing accelerated adoption, especially in smart home applications.

Product platform evolution and financial outlook

• Series 3 platform offers higher compute and security than Series 2, addressing increasing software complexity and regulatory requirements.

• Series 3 is the first device globally to achieve PSA Level 4 security, with both Series 2 and 3 expected to coexist for years.

• Higher ASPs and gross margins are expected for Series 3, but Series 2 will remain relevant for less demanding applications.

• $10B design win pipeline equates to $2B–$2.5B in annual revenue potential over 4–5 years, with significant headroom for growth.

• Focus is shifting from heavy R&D investment to converting design wins into revenue and improving operating margins, with plans to grow opex at one-third the rate of revenue.