Qualcomm bypasses logic gate with $2 bln UK deal
09/06/2025 16:00
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. By Karen Kwok LONDON, June 9 (Reuters Breakingviews) - Artificial intelligence is so fast-moving and potentially all-encompassing that it makes sense for technology giants to pay up just to stay relevant. Look at all the money Microsoft MSFT.O and Amazon.com AMZN.O have poured into large language model developers OpenAI and Anthropic. That helps to explain why $162 billion semiconductor behemoth Qualcomm QCOM.O agreed to buy $2.4 billion UK-based Alphawave AWE.L on Monday. Overpaying to have a chance at cracking the massive AI data centre market is worthwhile for CEO Cristiano Amon. The deal has been a while in the making. Reuters reported in April that $140 billion chip architecture licenser Arm ARM.O had considered buying Alphawave, which has a range of intellectual property related to semiconductors, with the aim of developing AI processors. That deal didn’t happen, but Qualcomm’s now has. The two sides agreed a price that implies a 96% premium to Alphawave’s March 31 undisturbed level. Amon is giving the target’s investors the option of receiving cash, shares or a special new security that will eventually turn into Qualcomm stock. The latter consideration seems designed to allow Alphawave’s founders, who own a special type of share, to participate on the same economic terms as everyone else. On the surface, the price looks punchy. The offered enterprise value is $2.4 billion, according to a joint statement. With analysts pencilling in just $46 million of EBITDA this year for Alphawave, based on estimates gathered by LSEG, the implied multiple exceeds 50, compared with about 35 on average for peers Marvell Technology MRVL.O, Credo Technology CRDO.O, InterDigital IDCC.O and Astera Labs ALAB.O. Still, Amon isn’t buying Alphawave for near-term earnings. The deal gives Qualcomm a shot at growing into the massive data-centre market, which is all the more important because the company needs to diversify away from smartphones. Key customer Apple is seeking to reduce its reliance on Qualcomm kit for iPhones. The market for AI data centre central processing units – or CPUs, which are like the brain of a computing system – is growing at a handy 10% compound annual rate, according to figures cited by JPMorgan analysts. Marvell, Broadcom AVGO.O and others are already making moves and laying claim to turf that Qualcomm might like to own. Alphawave’s high-speed intellectual property helps connect chips and move data around quickly, which could boost Amon’s product offering as he seeks to build on the recent success of signing up a major Saudi Arabian data-centre customer. The good news is that this is a manageable bet relative to Qualcomm’s size. The outlay is equivalent to less than one quarter’s free cash flow, according to forecasts gathered by Visible Alpha. Given that, and the chance to unlock the next leg of growth, Amon arguably can’t afford not to try. Follow Karen Kwok on LinkedIn and X. CONTEXT NEWS U.S. chipmaker Qualcomm on June 9 said it had agreed to acquire British semiconductor company Alphawave for about $2.4 billion. Alphawave shareholders have the option of receiving $2.48 per share in cash, a nearly 96% premium to the price on March 31, which was immediately before Qualcomm disclosed its interest in the company. The U.S. bidder has also offered two alternative offers with an equivalent paper value. The first comprises new Qualcomm shares and the second comprises new "exchangeable securities". Founders Tony Pialis, Rajeevan Mahadevan and Jonathan Rogers will take the second alternative offer. Shares in Alphawave rose 24% to 186 pence as of 0953 GMT on June 9. Analysts are forecasting a rebound in Alphawave's growth https://www.reuters.com/graphics/BRV-BRV/dwvkjxobnpm/chart.png (Editing by Liam Proud; Production by Streisand Neto) ((For previous columns by the author, Reuters customers can click on KWOK/karen.kwok@thomsonreuters.com))