I thought Silicon Labs (NASDAQ:SLAB) looked like an interesting prospect at the start of the year, back when the markets where in the midst of one of their "Run! Flee for your lives!" periods of panic. Since then, the shares are up about 20%, beating STMicroelectronics (NYSE:STM) and keeping pace with NXP (NASDAQ:NXPI), but lagging the likes of Texas Instruments (NASDAQ:TXN) and Microchip (NASDAQ:MCHP).
Silicon Labs is largely delivering what it said it would for its investors. The company has made a big commitment to opportunities in the Internet of Things (IoT), and those commitments are generating double-digit revenue growth, while management continues to harvest the fading Access and Broadcast businesses for cash.
I don't see a lot of amazing bargains within the chip space now, and that goes for Silicon Labs too. While the IoT opportunity seems to be delivering, competition is increasing, and there are any number of examples from the semiconductor industry history that show that market saturation and competition eventually drag down the growth of even the best opportunities (smartphones being the latest example). While I think Silicon Labs is an okay hold today, at least on a relative basis, I'd need to see a pullback or find a valid reason to expect even better growth before getting more bullish again.
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Silicon Labs Delivers On Some Of Its Promises, But Not On Sale