Silicon Labs to buy Ember for $72M for Internet of things

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The over-a-decade-old company that makes the building blocks — chips, gear and software — for ZigBee-based wireless networks is finally being acquired. Austin-based chip company Silicon Labs announced on Monday that it has acquired Boston-based Ember for $72 million.

Ember was founded back in 2001 and backed by Ethernet inventor Bob Metcalfe, with the idea to help build a low power wireless standard and chip technology to create sensor networks and the Internet of Things. More recently ZigBee has gained traction as the dominant wireless tech for smart meters and home energy devices.

Ember has raised at least $81 million over its lifetime, so the $72 million price tag isn’t exactly a win. Investors in Ember have included Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, DFJ ePlanet Ventures, DFJ New England, WestLB Mellon Asset Management (formerly West AM), ChevronTexaco Technology Ventures, Hitachi Corporation, Stata Venture Partners and MIT.

Silicon Labs says the acquisition will put it in a good place for the increasing “demand for low-power, small-footprint wireless technology” “as more and more IP-enabled end points are being connected to the Internet of Things.” The acquisition is expected to contribute between $10 million to $12 million to Silicon Lab’s revenue in the second half of 2012, and will be accretive on a non-GAAP basis in 2013. Ember says it has shipped 25 million units.

I’ve been hearing about a potential acquisition of Ember for months. The company has played an important role in the development of ZigBee and the Internet of Things. But as pioneers in a sector, it can be difficult to build a business in creating building blocks for an ecosystem.

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