TIDMAWE
RNS Number : 5852E
Alphawave IP Group PLC
14 March 2022
CONTAINS INSIDE INFORMATION
Alphawave IP Announces Definitive Agreement to Acquire Entire
OpenFive Business Unit from SiFive for US$210m in cash
Transaction will accelerate Alphawave's connectivity leadership,
product offerings and customer base while driving higher scale and
revenue growth from an expanded total addressable market
LONDON, UK, TORONTO, Ontario, Canada and San Mateo, CA, USA Mar
14, 2022 - Alphawave IP Group plc ("Alphawave" or "Company")
(LN:AWE), a global leader in high-speed connectivity for the
world's technology infrastructure is pleased to announce the
acquisition of the entire OpenFive business unit from SiFive Inc.
("SiFive"). SiFive is the founder and leader of RISC-V computing
based in San Mateo, California. All definitive agreements have been
completed and the transaction is expected to close in H2 2022
pending customary regulatory approvals.
Key highlights
Alphawave has agreed to acquire OpenFive, a SiFive business
unit, bringing OpenFive's high-speed connectivity system-on-chip
(SoC) IP portfolio and a proven team based in India and Silicon
Valley that has been delivering custom silicon solutions for over
15 years. The acquisition significantly increases Alphawave's
customer base globally from 20 currently to over 75, especially in
North America, and adds an additional hyperscaler customer based in
North America.
-- This acquisition will nearly double the number of
connectivity-focused IPs available to Alphawave customers from 80
to over 155 and will provide customers with a one-stop-shop for
their bundled connectivity needs in the most advanced technologies
at 5nm, 4nm, 3nm and beyond. This will include an expanded
die-to-die connectivity portfolio that will accelerate chiplet
delivery capabilities to customers. Alphawave has also licensed
RISC-V processor IPs from SiFive as part of the transaction.
-- OpenFive's proven silicon development team enables Alphawave
to offer leading edge data centre and networking custom silicon
solutions as well as enhancing its chiplet design capabilities.
This accelerates Alphawave's strategic goal to scale revenues by
monetising its leading connectivity IP not only through IP
licensing but advanced custom silicon design.
-- The combination of Alphawave's leading high-speed
connectivity with OpenFive's IP portfolio is expected to generate
material revenue synergies through bundling of IP and integrated IP
sub-systems as well as leveraging the two companies' respective
strengths to win complex custom silicon design wins at leading edge
process nodes.
-- The transaction will be immediately EPS accretive to
Alphawave. Forecast FY 2023 revenue for the combined group is
anticipated to reach between US$325m to US$360m with a path to a
yearly revenue run rate of over US$500m in 2024. 2023 adjusted
EBITDA margins for the group are expected to be between 32-36% with
2025 adjusted EBITDA margins between 40-45% as revenues exceed
US$500m.
Background to the transaction
The Alphawave and OpenFive teams have worked together for over a
decade. Over the last two decades, OpenFive has developed a broad
and deep capability for the delivery of high-end SoC IP
technologies to both RISC-V and ARM-based customers. Historically,
the OpenFive team has successfully delivered to over 280 customers
globally in some of the most advanced process technologies. Over 70
of these customers are pure IP customers. Their extensive custom
silicon know-how has established OpenFive as a leading provider of
custom silicon solutions globally and with a strong focus on the
North American market. As part of the acquisition, Alphawave will
be acquiring a 300+ person team, primarily in India, which will
significantly expand Alphawave's delivery capabilities.
This transaction has been signed at an inflection point in the
semiconductor industry, as the importance and adoption of RISC-V
technology has grown significantly in recent years. Against this
backdrop, SiFive will continue to focus on its highly successful
RISC-V business. As part of the transaction, Alphawave will also
become a licensee of RISC-V processor technology and will continue
to work with SiFive on opportunities for RISC-V collaboration,
particularly in North America.
Strategic rationale
The acquisition of OpenFive will accelerate Alphawave's existing
high-growth and successful connectivity business in three ways.
Nearly doubles the total number of IPs available and accelerates
the Alphawave roadmap
The acquisition will significantly expand Alphawave's total
number of connectivity and SoC IPs, providing a comprehensive
portfolio for customers' entire high-end connectivity needs. The
acquisition will also accelerate Alphawave's existing
industry-leading roadmap for advanced connectivity solutions in
4nm, 3nm and beyond. Alphawave is already the global connectivity
leader with over 80 IPs offered in the most advanced process
technologies. With the acquisition of OpenFive, this portfolio of
IPs will nearly double to over 155 IPs. These IPs can then be
bundled to expand the design penetration and stickiness of
Alphawave IPs into key new and existing customers globally,
primarily in the North American market.
Accelerates Alphawave's capability to deliver custom silicon
solutions for connectivity, including chiplets
The adoption of chiplets by the semiconductor industry is
rapidly expanding the total addressable market for Alphawave's
technology and driving design wins faster than expected. This trend
was first reported in the Company's Q4 2021 trading update, where
the Company announced chiplet design wins ahead of expectations.
This was also reinforced by the recent announcement from the UCIe
consortium. By adding capabilities to deliver custom silicon,
including chiplets, Alphawave will be a leading provider of
connectivity solutions globally, as the only pure-play provider of
connectivity solutions in both IP and silicon form-factors to the
most sophisticated customers globally including hyperscalers and
major semiconductor companies. Alphawave already has deep and broad
experience with many of these customers today.
Expands the customer base and total addressable market -
especially with North American customers - and adds a new North
American hyperscaler to Alphawave's customer base
The acquisition of OpenFive will significantly increase the
total Alphawave global customer base from 20 to over 75. This will
provide a broader platform from which Alphawave can continue to
execute its successful "land and expand" sales strategy. More
importantly, the acquisition will add significant key customers in
North America including a new hyperscaler customer in North
America. The acquisition also positions Alphawave to become a
leading provider of high-performance connectivity-focused custom
silicon, a market that is estimated to exceed $20 billion by
2026[1].
Transaction Details, Financing & Financial Effects
The total consideration payable by Alphawave is US$210m in cash,
funded from existing cash resources, and the transaction is subject
to customary closing conditions and regulatory approvals.
Post-acquisition, Alphawave will continue to have significant
capacity to invest in further growth opportunities across the
enlarged group. Post-closing the OpenFive team will receive
customary retention incentives. The transaction is expected to
close in H2 2022 and will contribute significant revenues and
profit immediately after closing.
Key transaction details are as follows:
-- Acquisition is expected to be immediately accretive to EPS
-- Total IPs available to customers will increase from 80 to over 155
-- Total number of customers globally will increase from 20[2] to over 75
-- Alphawave revenues in 2023 are expected to increase to
between US$325m and US$360m with a run rate to over US$500m in
2024. This growth is expected to continue in the mid-term
-- 2023 adjusted EBITDA margins for the group are expected to be
between 32-36% with 2025 adjusted EBITDA margins between 40-45% as
revenues exceed US$500m.
-- High levels of profitability will continue with significant growth expected beyond 2024
John Lofton Holt, Executive Chairman of Alphawave stated: "When
we completed our IPO in 2021, we committed to continuing to grow
and accelerate our business by deploying the capital we raised.
This began with the acquisition of Precise-ITC in 2021, and the
addition of the OpenFive team will further accelerate Alphawave's
business. Alphawave can now deliver bundled connectivity-focused IP
solutions and custom silicon solutions like chiplets to global
customers. This will enable a scale and top-line growth that we
envisioned, but much faster than we expected, while continuing to
deliver high growth and profit margins for years to come."
Tony Pialis, President and Chief Executive Officer of Alphawave
stated: "We have known and worked with the OpenFive team for many
years as they have established their credibility in delivering
leading-edge SoC IP and custom silicon solutions in the world's
most advanced technology, and to the world's most advanced
customers. This acquisition is important for Alphawave, but also
for our industry, as we will now be the leading pure-play provider
of connectivity solutions in the world in whatever form-factor our
customers need it - as silicon IP or in custom silicon solutions
like chiplets. As we look to the future, we expect to develop and
acquire additional capabilities to further expand and accelerate
our leadership in connectivity. In our core business, the first
quarter of 2022 is very strong and the outlook for 2022 is also
strong. We expect this transaction to meaningfully impact revenues
in H2 2022, pending regulatory approval of the transaction."
Patrick Little, Chairman and CEO of SiFive stated: "It has been
a pleasure working with the Alphawave team on this transaction, and
I am sure that we will continue to work together as SiFive focuses
on its core RISC-V business. We were also pleased that Alphawave
licensed SiFive's RISC-V processor IP as part of the transaction,
which further demonstrates the importance of SiFive RISC-V
technology to high-end customers globally in a variety of end
markets."
Webcast and Conference Call Information for Investors and
Media
The Company will host a webcast, conference call and Q&A
session on March 14, 2022 at 1600GMT. Details of this call will be
posted on the Company website.
Related Party Disclosures
SiFive and OpenFive are not related parties of Alphawave.
###
Trademarks
All registered trademarks and other trademarks belong to their
respective owners.
Contact Information:
Alphawave IP Group John Lofton Holt, Executive ir@awaveip.com
plc Chairman +44 (0) 20 7717 5877
Daniel Aharoni, CFO
--------------------- ------------------------------ -----------------------------
Brunswick Group Simone Selzer alphawave@brunswickgroup.com
Sarah West +44 (0) 20 7404 5959
------------------- ------------------------------ -------------------------------
Gravitate PR Anna Bolender alphawave@gravitatepr.com
Wynton Yu +1 415 528 0468
===================== ============================== =============================
About Alphawave IP Group plc (LSE:AWE)
Faced with the exponential growth of data, Alphawave IP's
technology services a critical need: enabling data to travel
faster, more reliably and with higher performance at lower power.
Alphawave IP is a global leader in high-speed connectivity for the
world's technology infrastructure. Our IP solutions therefore meet
the needs of global tier-one customers in data centers, compute,
networking, AI, 5G, autonomous vehicles, and storage. Founded in
Toronto, Canada in 2017, by an expert technical team with a proven
track record in licensing semiconductor IP, our mission is to focus
on the hardest-to-solve connectivity challenges. To find out more
about Alphawave IP, visit: awaveip.com
Glossary
IP / Silicon IP Intellectual property core, IP core or IP block is a reusable building block of a semiconductor
chip that can be licensed or purchased from a third-party provider. Some examples of third-party
providers are Alphawave IP, ARM and Imagination Technologies.
================ ====================================================================================================
Bookings Is the total value of licence fees, non-recurring engineering fees (NRE) and support and
maintenance
contractually committed by customers together with an estimate of expected royalties from
those contracts (unless stated otherwise). Bookings are stated since Alphawave IP's founding
(referred to as cumulative or lifetime bookings) or in a given period.
================ ====================================================================================================
Hyperscaler Hyperscalers are technology companies that provide cloud, networking and internet services
at scale. Some examples of hyperscalers include Google, Facebook, Baidu, Alibaba, Microsoft,
and Amazon.
================ ====================================================================================================
Foundry Also commonly known as a 'fab' or wafer fabrication facility, a semiconductor foundry is a
manufacturer of semiconductors for other companies. The two largest foundries in the world
are TSMC and Samsung.
================ ====================================================================================================
End customer Alphawave IP's end customers include semiconductor OEMs, ASIC providers, and hyperscalers.
These are companies that provide and build technology infrastructure, from data centres,
networking,
and storage to AI, autonomous vehicles and 5G wireless.
================ ====================================================================================================
OEM Original equipment manufacturer that produces systems, parts or equipment utilised in the
production of another device or product.
================ ====================================================================================================
[1]
https://www.globenewswire.com/news-release/2021/06/15/2247389/0/en/High-End-FinFet-ASIC-Market-To-Approach-20-Billion.html
[2] As of end of FY 2021, not including VeriSilicon, which is a reseller
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