Alphawave acquires OpenFive business unit from SiFive for $210mn

Alphawave acquires OpenFive business unit from SiFive for $210mn

LONDON, UK: Alphawave IP Group plc (LON: AWE), a global leader in high-speed connectivity for the world’s technology infrastructure, has acquired the entire OpenFive business unit from SiFive Inc.

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.

The total consideration payable by Alphawave is $210 million 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.

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.

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.”

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