Alphawave Semi is in Play!

We started working with Alphawave at the end of 2020 with a CEO Interview. I had met Tony Pialis before and found him to be a brilliant and charismatic leader so I knew it would be a great collaboration. Tony was already an IP legend after his company was acquired by Intel. After 4+ years at Intel Tony co-founded Alphawave in 2017. Today, Alphawave Semi is a global leader in high-speed connectivity and compute silicon for the world’s technology infrastructure. They are a publicly on the London Stock Exchange (LSE) with a recent stock price spike for obvious reasons. I have nothing but great things to say about Alphawave, absolutely.

When I first read about the exclusive OEM deal between Siemens and Alphawave I immediately thought: Why was this not an acquisition?

Siemens to accelerate customer time to market with advanced silicon IP through new Alphawave Semi partnership

“Siemens Digital Industries Software is a key and trusted partner for AI and hyperscaler developers, and our agreement simplifies and speeds the process of developing SoCs for these, and other leading-edge technologies, to incorporate Alphawave Semi’s IP,” said Tony Pialis, president and CEO, Alphawave Semi. “Our technologies play a critical role in reducing interconnect bottlenecks and this collaboration greatly expands our customer reach, allowing more companies to deliver next-level data processing.”

Ever since Siemens acquired Mentor Graphics in 2017 for $4.5B they have implemented an aggressive acquisition strategy acquiring dozens of companies. We track them on the EDA Merger and Acquisition Wiki. During the day I help emerging companies with exits so I have M&A experience with the big EDA companies including Siemens. They all do it differently but I can tell you the Siemens M&A team is VERY good and they do not take being out bid lightly. I was with Solido Design and Fractal when they were acquired by Siemens and I was with Tanner EDA and Berkely Design when they were acquired by Mentor Graphics. It was a night versus day difference for the M&A processes.

The only answer I came up with as to why it was on OEM agreement versus an outright acquisition was price, Tony wanted more money. Purely speculation on my part but now that I have read that both Qualcomm and Arm might be interested in acquiring Alphawave it is more than speculation.

Qualcomm considers buying UK semiconductor firm Alphawave

Exclusive-Arm recently sought to acquire Alphawave for AI chip tech, sources say

Given that Alphawave has a lot of Intel experience inside and Lip-Bu Tan knows the importance of IP and ASIC design, maybe Intel will make an offer as well?

To be clear, Alphawave is not just an IP licensing company, they also do Chiplets and custom ASICs. In 2022 they acquired SiFive’s ASIC business for $210M. This was the former Open-Silicon that SiFive acquired in 2018 for an undisclosed amount. I worked with both Open-Silicon and eSilicon at the time. The ASIC business is a whole lot easier if you have the best IP money can buy and Alphawave does.

I remember trying to talk Mentor into entering the IP business 15 years ago but they would not budge, which was clearly a mistake. Synopsys and Cadence leverage their IP for EDA business and that puts Siemens EDA at a distinct disadvantage, thus the OEM agreement with Alphawave. IP is a big driver in the semiconductor ecosystem, just ask TSMC.

Also, Broadcom has an ASIC business, Marvell has an ASIC business, MediaTek has an ASIC business, Qualcomm does not have an ASIC business, Arm does not have an ASIC business, there is more than IP in play here.

I would bet that Siemens has some kind of Right of First Refusal tied to the OEM agreement and Tony getting offers from Qualcomm and Arm will pull that trigger. I really do not see Siemens having much of a choice but to pay a premium for Alphawave.

Exciting times in the semiconductor industry!

Also Read:

Podcast EP276: How Alphawave Semi is Fueling the Next Generation of AI Systems with Letizia Giuliano

Scaling AI Data Centers: The Role of Chiplets and Connectivity

How AI is Redefining Data Center Infrastructure: Key Innovations for the Future