TIDMAWE
RNS Number : 7069C
Alphawave IP Group PLC
13 October 2022
This announcement contains inside information
Alphawave IP Acquires Optical DSP Chip Developer Banias Labs,
Advancing its Optical DSP Products for Data Centers
Alphawave IP Negotiates a Multi-Year Framework with a Leading
North American Hyperscaler for a Potential Roadmap Delivering Over
US$300 Million of Optical Products
LONDON, UK and HOD HASHARON, Israel 13 October 2022 - Alphawave
IP Group plc ("Alphawave" or "Company") (LN:AWE), a global leader
in high-speed connectivity for the world's technology
infrastructure today announced the acquisition of Banias Labs, an
Israel-based optical Digital Signal Processing ("DSP") chip
developer for data centers for approximately US$240 million. The
acquisition strengthens Alphawave's roadmap of optical DSP silicon
products for data centers, a core high growth market for
Alphawave.
Alongside the acquisition of Banias Labs, Alphawave has
negotiated a non-binding, multi-year purchasing framework with a
leading North American hyperscaler that proposes a multi-year
roadmap for Alphawave to develop and sell a portfolio of optical
products and DSPs, including coherent DSP technology from Banias
Labs, with sales potentially ramping to over US$300 million.
Tony Pialis, President and Chief Executive Officer of Alphawave
said: "Banias Labs optical DSP technology provides a strong
strategic advantage for Alphawave, strengthening our roadmap of DSP
silicon solutions for data centers. This acquisition enhances our
portfolio of electrical and optical solutions in the most advanced
process technologies. The multi-year purchasing framework includes
coherent optical solutions, and with the Banias acquisition,
Alphawave is expanding its total addressable market by delivering
next generation coherent optical solutions for the most advanced
data centers."
John Lofton Holt, Executive Chairman of Alphawave said: "We are
pleased to welcome the talented Banias Labs team to Alphawave. This
acquisition aligns with the strategic priorities that we
articulated at our IPO, expanding our technology portfolio in
high-speed connectivity to support long-term growth. Coherent
optics will enable the next level of efficiencies in data center
communications, addressing the increasing bandwidth and power
efficiency requirements."
About Coherent Optics
Coherent optics is the next evolution of optical solutions, the
cornerstone of the industry's efforts to achieve 800G and 1.6T
Ethernet speeds while maintaining the required reaches inside and
outside of data centers and also significantly reducing power
consumption. Coherent technology is predominantly used today in
long reaches of over 100km connecting data centers and in
telecommunications. Banias Labs' optical DSP technology strengthens
Alphawave's optical products roadmap by targeting a growing
opportunity for coherent optical technology intra-data center, as
shorter reaches adopt this technology.
Furthermore, Alphawave believes the significant engagement from
a leading North American hyperscaler reflects the importance of
this technology for the future of data center connectivity.
Key Acquisition Highlights
Key highlights are as follows:
-- This acquisition brings silicon-proven optical DSP
technology, expanding Alphawave's product portfolio and
strengthening its product roadmap.
-- Banias Labs' technology will expand Alphawave's addressable
market and deepen Alphawave's commercial partnership with a leading
North American hyperscaler.
-- Alphawave is committed to becoming an industry leader with a
broad portfolio of PAM4 and Coherent DSPs, in the most advanced
technologies, and for all forms of Data Center connectivity.
Background on Banias Labs
Founded in 2020, Banias Labs [1] is a leading provider of
coherent optical DSP semiconductor technology. Based near Tel Aviv,
Israel, the key core technology leaders have worked together for
over two decades and have a long track record of success in the
silicon, IP, and communications segments of semiconductors. Banias
Labs currently has approximately 50 employees the majority of whom
are R&D focused.
Banias Acquisition Closing Details
Alphawave has acquired 100% of the shares of Banias Labs for a
total cash consideration of US$240 million paid upon closing.
The acquisition is funded out of existing cash and additional
financing. Alphawave has obtained US$210 million of Senior Secured
Credit Facilities, comprising a five-year US$110 million Revolving
Credit Facility and a five-year US$100 million Term Loan. The
Company's Pro Forma net debt position after close is expected to be
approximately US$35 million. Alphawave expects to continue to have
a strong cash flow generation profile which combined with the
additional facilities provides a solid platform to navigate this
period of accelerated business expansion.
Outlook
The Company expects the ramp of new Optical products to start in
2024 and profitability to improve from 2023 levels as products go
into high-volume production and generate additional revenue.
Alphawave anticipates additional revenue synergies given the
complementary nature of the technology and its contribution to the
product roadmap. Alphawave reiterates its stand-alone outlook.
Further details on the pro forma 2023 outlook and the long-term
financial model will be communicated at the upcoming capital
markets day on 13 January 2023.
Trading for Q3 2022 has been strong and the Company will publish
its trading update for Q3 2022 next week, on 17 October 2022.
Non-Binding Purchasing Framework Details
The non-binding purchasing framework agreement defines a
potential portfolio of optical DSPs, including coherent solutions
based on Banias technology, that Alphawave intends to develop over
the next several years. The Company anticipates ramping up sales to
the leading hyperscaler over a multi-year period, with the
potential for aggregate sales to exceed US$300 million, subject to
the Company qualifying the products for use in the hyperscaler's
data centers on a timely basis and ensuring sufficient silicon
availability to meet its usage demands. The portfolio of optical
DSPs continues to build on the leading connectivity technology that
Alphawave has been delivering to the industry as silicon IPs. In
addition, the non-binding framework agreement contemplates the
Company issuing future stock warrants of up to 2.5% of the issued
share capital of the Company, with vesting based on purchases of
Alphawave silicon products of up to US$700 million over the same
period, and an exercise price based on the current trading price of
the Company's shares, subject to downward adjustment if the
Company's shares trade lower prior to issuance. The Company intends
to solicit all required shareholder approvals, ahead of finalizing
any warrant grants, which are not expected until at least 2024.
Presentation and webcast
A presentation for investors and analysts will be held today, 13
October 2022, at 8.30am BST. The webcast will be accessible
via:
https://awaveip.zoom.us/s/89082807240?pwd=ODdkSGxlNzZwb3JhR2w2a0pUQWxIUT09
Passcode: 747970
Or by phone:
US: +1 669 900 9128 / +1 719 359 4580 / +1 253 215 8782
United Kingdom: +44 203 901 7895 / +44 208 080 6591 / +44 330
088 5830
Webinar ID: 890 8280 7240
Full list of dial-in numbers available https://awaveip.zoom.us/u/kegS2efSIo
A recording of the webcast and the presentation will be
available later today on our website at Results, Reports &
Presentations (awaveip.com)
###
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
Jose Cano, Global Head
of IR
--------------------- ------------------------------- ---------------------------
Brunswick Group Simone Selzer alphawave@brunswickgroup.com
Sarah West +44 (0) 20 7404 5959
------------------- ----------------------------- -------------------------------
Gravitate PR Lisette Paras alphawave@gravitatepr.com
Wynton Yu +1 415 420 8420
===================== =============================== ===========================
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 and custom silicon
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
This announcement is issued by Alphawave IP Group plc (the
"Company") and contains information which is deemed by the Company
to constitute inside information as stipulated under the Market
Abuse Regulation (EU) No.596/2014 as amended by The Market Abuse
(Amendment) (EU Exit) Regulations 2019. By the publication of this
Announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain. The
person responsible for arranging for the release of this
Announcement on behalf of the Company is Link Company Matters
Limited, acting as Company Secretary.
[1] Banias Labs is the commercial name of Solanium Labs, the
name under which the entity is registered in Israel.
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