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, TORONTO and SAN
MATEO, Calif., March 14, 2022
/PRNewswire/ -- 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 20261.
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
202 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.
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
|
Alphawave IP Group plc: John Lofton
Holt, Executive Chairman, Daniel
Aharoni, CFO, ir@awaveip.com, +44 (0) 20 7717 5877;
Brunswick Group: Simone Selzer,
Sarah West,
alphawave@brunswickgroup.com, +44 (0) 20 7404 5959; Gravitate PR:
Anna Bolender, Wynton Yu, alphawave@gravitatepr.com, +1 415 528
0468
Logo -
https://mma.prnewswire.com/media/1765340/Alphawave_IP_Alphawave_IP_Announces_Definitive_Agreement_to_Acqu.jpg