Silicon maker Alphawave Semi reports lower royalty revenues on ‘accelerated transition away from China’
Silicon manufacturer Alphawave Semi has said that licensing fees for its semiconductor technology rose to $154m (£124.6m) in 2023, marking a 222 per cent year on year increase as demand continues to bubble up.
But in the first quarter of 2024, also reported today, the Canadian computer chip-designer said royalties dropped 75 per cent year on year to $9m (£7.3m), reflecting its “accelerated transition away from China.“
Total revenue for the full year reached $322m (£260.5m), up 74 per cent from 2022, as new bookings soared. But Alphawave posted an operating loss of $19m (£15m) in 2023, compared to a profit of $38m (£31m) in the previous year.
The London-listed company, which specialises in creating the silicon needed for high-speed connectivity in technology infrastructure, has actively deprioritised its legacy lower-margin silicon business with Chinese customers, redirecting its focus towards other regions. Silicon orders in the quarter mainly came from EMEA and North American customers.
Alphawave said it scored nine new design wins in the first quarter, mainly in APAC and North America. New bookings rose from $98m (£79m) in the first quarter of 2023 to $118m (£95m) in the same period this year which the company said shows the scalability of its technology through intellectual property licensing.
The stock rose nearly three per cent on Tuesday morning but the stock is down 11.5 per cent year to date.
Jefferies analysts said: “While Alphawave’s underlying business is expected to continue to see strong demand from hyperscalers and chip vendors fueled by the adoption of AI, with confidence shaken the market is likely to take a wait-and-watch approach to the timeline of bookings conversion into revenue and earnings.”
The company has forecasted 2024 revenue growth of 10 per cent at the midpoint.
Tony Pialis, president and chief executive officer of Alphawave Semi said: “We started the year with another strong quarter of bookings in excess of $110m. We achieved several exciting new wins during the quarter, including two 5nm AI custom silicon designs, for a Korean and a North American customer. We also signed a 4nm IP licencing deal for a leading North American automotive company.
“Customers’ demand for our high-performance custom silicon and IP remains strong and the level of Q1 bookings underpins our confidence for the year. We are excited about the year ahead and 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 strong quarterly bookings.
“Following our updated revenue outlook guidance last week that reflects our transition away from China and changes in expected revenue recognition of long-term contracts in advanced nodes, we are entering 2024 with strong business momentum and remain focused on execution and long-term value creation.”