REG - Alphawave IP Group - Q4 2023 Trading and Business Update

Alphawave IPAnnouncement

22/01/2024 07:00

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RNS Number : 3722A  Alphawave IP Group PLC  22 January 2024

Q4 2023 Trading and Business Update

 

·      Record quarterly bookings of US$128.7m

·      Record quarterly licence and NRE bookings of US$121.1m up 245%
over Q4 2022

·      Approximately 90% of licence & NRE bookings in advanced
nodes, 7nm and below

·      Major extension of IP development and licencing deal with leading
APAC customer including UCIe, PCIeGen7, 224G and 2nm technology

·      3nm HPC 1  chiplet-based custom silicon design win for a leading
European HPC supplier

·      7 new design wins, mainly in APAC, Europe and North America

·      Partnership with ARM expands addressable market

·      Strong pipeline of opportunities in Q1 2024 and FY 2024

·      Management remains confident in the outlook for the business

LONDON, United Kingdom and TORONTO, Ontario, Canada 22 January 2024
- Alphawave IP Group plc (LN: AWE, the "Company" or "Alphawave Semi"), a
global leader in high-speed connectivity for the world's technology
infrastructure, is pleased to publish its trading and business update for the
three months ended 31 December 2023.

 

 US$m                                                                          Q4 2023  Q4 2022  Change
   Licence and NRE                                                             121.1    35.1     245%
   Royalties and Silicon Orders                                                7.6      59.7     (87)%
 New Bookings                                                                  128.7    94.8     36%

 Additional design win activity - FSA drawdowns and China re-sale licences 2   0.4      -        nm

 

Due to rounding, numbers presented in the table may not add up to the totals
provided and percentages may not precisely reflect the absolute figures.

 

Tony Pialis, President and Chief Executive Officer of Alphawave Semi said: "In
the past quarter we achieved record quarterly bookings of US$128.7m,
predominantly in our high margin IP and custom silicon NRE business. We
continued to increase our market share in advanced nodes with a major IP
extension with a leading APAC customer and our second 3nm custom silicon
design win. Our Q1 2024 pipeline remains strong with continued high demand
from customers for our high-performance IP and products. We are excited about
the long-term growth potential of our business."

 

John Lofton Holt, Executive Chairman of Alphawave Semi said: "Our technology
leadership in the most advanced technologies is driving the ongoing momentum
of design wins and record quarterly bookings. This momentum is driven by the
leading hyperscalers and AI companies in North America.  We enter 2024 with
strong business momentum and remain focused on execution and long-term value
creation."

 

 

Key Highlights

 

New bookings in Q4 2023 were 36% above the prior period at US$128.7m (Q4 2022:
US$94.8m).

 

Licence and Non-recurring Engineering ("NRE") bookings in Q4 2023 were 245%
above Q4 2022 at a quarterly record of US$121.1m. EMEA, APAC (excluding China)
and North American customers represented 99% of these bookings and
approximately 90% of the licence & NRE bookings were in advanced nodes,
7nm and below.

 

As anticipated, Royalties and Silicon orders were down significantly over Q4
2022 at US$7.6m, as we actively de-prioritised the legacy lower margin silicon
business from Chinese customers. Silicon orders in the quarter were from EMEA
and North American customers. We expect further silicon orders from Chinese
customers in 2024, albeit at a lower level than in 2023.

 

Our pipeline of opportunities in Q1 2024 remains strong. The level of bookings
in the quarter and our growing pipeline reflects the scalability of our
technology through IP licensing and custom silicon.

 

Our Connectivity Products Group continues to make made good progress toward
our plan to start generating revenue in 2024.

 

The combined custom silicon design wins in 2023 will support our mid- and
long-term revenue targets as we start to generate revenue from the production
phase. These wins currently have a potential lifetime revenue from silicon
production of approximately US$500m which is not yet reflected in our bookings
or backlog. The first silicon production orders are expected in 2025 which is
when they will start contributing to revenue 3 .

 

 

Expanding Technology Leadership and Strong Customer Traction

 

Alphawave Semi's customers include leading semiconductor device companies, as
well as data center module makers and hyperscalers.

 

Overall, design win activity in the quarter was strong with 7 new design wins,
mainly from existing end-customers. These wins reflect Alphawave Semi's
continued strength in AI and the data infrastructure markets that require the
world's most advanced connectivity technology.

 

Since 2017, Alphawave Semi has demonstrated connectivity technology leadership
in leading-edge technologies. In Q4 2023 we signed a major IP licence deal
extension with a leading APAC customer, including UCIe, PCIeGen7, 224G and 2nm
technology and a 5nm IP Licence deal with a leading North American customer.
These design wins reflect the ongoing market momentum of leading-edge
connectivity. The Company expects further design wins in 3nm and continues to
work with its foundry partners in 3nm, 2nm and beyond.

 

With our expanded IP portfolio and silicon expertise, we are strongly
positioned to deliver the most advanced connectivity solutions for our custom
silicon customers. In Q4 2023, we won further 3nm custom silicon business. We
signed an HPC 4  chiplet-based custom silicon design win with a leading
European HPC company driving an EU-wide HPC initiative driven by Alphawave
Semi's next generation 32G UCIe and HBM3 technologies. Furthermore, during the
quarter we won additional 3nm business with a leading North American module
maker.

 

In Q4 2023, there were US$nil Flexible Spending Accounts(( 5 )) ("FSA")
drawdowns (Q4 2022: US$nil) and US$0.4m China (VeriSilicon) reseller
deals(( 6 )) (Q4 2022: US$nil). Both FSA and reseller deals represent the
conversion of customer commitments to design wins.

 

During the quarter Alphawave Semi announced that it had joined Arm Total
Design (https://www.arm.com/company/news/2023/10/arm-total-design-ecosystem) ,
an ecosystem to make specialised solutions based on Arm® Neoverse™ Compute
Subsystems (CSS) widely available across the infrastructure. Generative AI has
fundamentally transformed data center compute and connectivity by creating a
surge in demand for compute, memory bandwidth, I/O speeds, and energy
efficiency. Customers gain a significant time to market advantage by
integrating Alphawave Semi's Universal Chiplet Express (UCIe(TM)) enabled
custom silicon and pre-built connectivity chiplets with Arm Neoverse CSS
compute.

 

 

Outlook

 

The outlook for 2023 remains unchanged. Alphawave Semi expects 2023 revenue of
US$340m to US$360m and adjusted EBITDA of approximately US$87m (or
approximately 25% of revenue), which is at the mid-point of the revenue
guidance range.

 

Despite the uncertain macroeconomic environment, our growing pipeline reflects
positive secular growth trends in data infrastructure markets and the
continued investment in next-generation AI- centric connectivity solutions.
This, combined with our talented team and strong balance sheet, give us
confidence in our future.

 

 

The Company will report audited results for the year ended 31 December 2023,
in April 2024. Further details will be provided near the time.

 

 

About Alphawave Semi

 

Alphawave Semi is a global leader in high-speed connectivity for the world's
technology infrastructure. Faced with the exponential growth of data,
Alphawave Semi's technology services a critical need: enabling data to travel
faster, more reliably and with higher performance at lower power. We are a
vertically integrated semiconductor company, and our IP, custom silicon, and
connectivity products are deployed by global tier-one customers in data
centers, compute, networking, AI, 5G, autonomous vehicles, and storage.
Founded in 2017 by an expert technical team with a proven track record in
licensing semiconductor IP, our mission is to accelerate the critical data
infrastructure at the heart of our digital world. To find out more about
Alphawave Semi, visit: awavesemi.com (http://www.awaveip.com/)

 

Related Party Disclosures

There are no new related parties disclosed in this press release.

 

###

 

Trademarks

Alphawave Semi and the Alphawave Semi logo are trademarks of Alphawave IP
Group plc. All rights reserved. All registered trademarks and other trademarks
belong to their respective owners.

 

 

Contact Information:

 

 Alphawave Semi plc           John Lofton Holt, Executive Chairman      ir@awavesemi.com

                              Jose Cano, Head of IR                     +44 (0) 20 7717 5877
 Brunswick Group  Simone Selzer                    alphawave@brunswickgroup.com

                  Sarah West                       +44 (0) 20 7404 5959
 Gravitate PR                 Lisette Paras                             alphawave@gravitatepr.com

                              Michael Terry Caraher                     +1 415 420 8420

 

 

 

LEI: 213800ZXTO21EU4VMH37

 1  High Performance Computing

 2  Both FSA (Flexible Spending Account) drawdowns and China re-sale licences
convert previously announced contractual commitments included within bookings
reported in prior periods to new product design wins which will be recognised
as revenue over time.

 3  Silicon orders typically convert to revenue in 3-6 months

 4  High Performance Computing

 5  FSAs or Flexible Spending Accounts represent contracts with customers who
have committed to regular periodic payments. These payments are not in respect
of specific licences but can be used as credit against future deliverables.
FSA drawdowns represent the design win value of transactions signed during the
period, against which FSA payments will be credited and will convert to
revenue over time.

 6  In February 2021, Alphawave IP signed a three-year exclusive subscription
reseller agreement with VeriSilicon with a minimum value of US$54 million.
Reseller deals represent the subsequent licensing of IP by VeriSilicon to
third parties in China and do not constitute additional bookings for the
Company as they are part of the US$54 million minimum commitment.

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