Why Are Texas Instruments (TXN) Shares Falling? $7.5B Deal Announced

Texas Instruments Incorporated shares tumbled in premarket trading on Wednesday after the semiconductor giant announced a major acquisition deal. The company agreed to purchase Silicon Laboratories in an all-cash transaction valued at $7.5 billion, marking its largest acquisition since buying National Semiconductor for $6.5 billion in 2011.

The deal, which values Silicon Labs at $231 per share, a 69% premium over Tuesday’s closing price, aims to expand Texas Instruments’ presence in wireless connectivity chips for industrial and consumer applications.

Texas Instruments Targets Growth in Connected Devices

The Silicon Laboratories acquisition represents a strategic move by Texas Instruments to deepen its exposure to several established chip markets. Silicon Labs specializes in chips used in smart home devices, industrial automation, battery storage, commercial lighting, power meters, and connected medical equipment.

For Texas Instruments, whose core strength lies in analog chips that manage signals and power in electronic equipment, this deal provides complementary wireless connectivity technology that enhances its product portfolio.

The transaction is expected to close in the first half of 2027, subject to regulatory approvals and customary closing conditions. Goldman Sachs is serving as financial advisor to Texas Instruments, with A&O Shearman providing legal counsel. Silicon Labs is being advised by Qatalyst Partners with DLA Piper as legal counsel.

Under the agreement terms, Silicon Labs would pay a $259 million termination fee if it walks away from the deal, while Texas Instruments would owe $499 million if it abandons the transaction. The acquisition comes at a time when Texas Instruments has signaled recovering demand from industrial customers and carmakers, as evidenced by its surprisingly strong recent sales forecast.

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Market Reacts Cautiously to Acquisition Announcement

At 7:58:32 AM EST on February 4, 2026, Texas Instruments shares traded at $217.20 in premarket activity, down $8.01 or 3.56% from the previous close of $225.21. The decline comes despite the company’s recent strong performance, which included a 64% increase in data center revenue and a 94% surge in free cash flow.

Year-to-date, TXN has delivered impressive returns of 30.66%, significantly outpacing the S&P 500’s 1.06% gain over the same period.

The stock has demonstrated remarkable momentum over the past year, climbing 28.40% compared to the S&P 500’s 15.40% return. Texas Instruments currently trades with a market capitalization of $204.63 billion and a trailing P/E ratio of 41.32.

Analyst sentiment remains generally positive with a “Moderate Buy” consensus rating, though the average price target of $215.07 sits slightly below current levels, ranging from a low of $160 to a high of $270.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.