Q4 2022 Trading and Business Update

It won 8 new designs, including two new high-end semiconductor companies
Strong Q4 design wins in the quarter reflect our hybrid business model combining IP and silicon
The second design was won by Opto Electronics Products
Capturing multiple leading next-generation products for solutions in 224G, PCI-Express Gen6, CXL3.0, HBM 3.0 and UCIE.
OpenFive’s first full quarter integration into the group
Management continues to be confident in its outlook for the business
The company has changed to Alphawave semi-brands to reflect the expanded business model

London And Toronto, January 13, 2023 /CNW/ – Alphawave IP Group plc (LSE: AWE) (“Alphawave Semi”, “Alphawave”, the “Company”), a leader in high-speed communications for the world’s technology infrastructure, is pleased to announce the transaction. Three months of business reform is over December 31, 2022.

Alphawave IP Logo (CNW Group/Alphawave IP Group Plc)

US$m	Q4 2022	Q4 2021	Change
License and NRE	35.1	18.5	90%
Royalties and silicon orders	59.7	7.0	nm
New bookings (except VeriSilicon and WiseWave multi-year subscription licenses)	94.8	25.5	272 %

More pattern winning activity – FSA drawdowns and Chinese resale permits¹	–	–	nm

WiseWave multi-year subscription licenses	–	–	nm

Number of end customers (at end of period)²	69	20	nm

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

Tony PialisAlphaWave IP President and CEO said: “We ended 2022 with strong design wins and a rapidly expanding customer base. By building on a broad product portfolio, our design win pipeline remains strong as we can now address more of our customers’ connectivity needs using silicon IP and custom silicon. In Q4 2022, we will continue our hybrid business model.” We see the potential to generate more revenue in silicon with advantages and high-performance IP. We have also recently completed several major taps for new generation products based on 224G, HBM and UCIE chiplets. All of this makes us very excited about the coming year and confident in the long-term growth potential of our business. .

John Lofton HoltAlphaWave IP CEO said: “The level of bookings recorded in the last quarter of the year reflects the growth potential of our communications technology and the continued strong performance of our team. Our talented team and leadership in cutting-edge technologies support our long-term ambitions and value creation for our shareholders and other stakeholders.”

Key highlights

In Q4 2022, license and non-recurring engineering (“NRE”) enrollments increased 90% year over year. including an estimate of future royalty payments³ And silicon orders, excluding WiseWave’s multi-year subscription license, increased 272 percent year-over-year. License and NRE subscriptions in the fourth quarter were primarily driven by North American and APAC customers, with less than 10% coming from China⁴.

In Q4 2022, we secured our second design win for our opto-electronic products targeting next-generation 800G Ethernet applications. This design win leverages our strong electro-optic IP portfolio and demonstrates its ability to create value by meeting many of our customers’ communication needs.

Cumulative registrations during the life of the company⁵ It has passed 580 million dollars.

Expanding technology leadership and strong customer attraction

Since 2017, the company has shown leadership in communication technology with core technology, now at 3nm. Licensing and NRE bookings in Q4 2022 were mostly at 7nm, 5nm and 4nm. The company expects to win more designs at 3nm and continues to work with its communications partners on 3nm and beyond.

In addition, in Q4, the company introduced silicon tapes for the next generation 224G, PCI-Express Gen6, HBM3 and UCIe interface IP in both 5nm and 4nm processes. 224G, PCI-Express Gen6, CXL3.0, HBM3 and UCIe and next-generation network, memory and chiplet interfaces for AI, server, storage and networking devices deployed in high-end hyperscalers. With our expanded IP portfolio, we are in a strong position to provide a complete range of connectivity solutions to our IP and custom silicon customers.

In Q4 2022, Alphawave joined TSMC’s Open Innovation Platform (OIP) 3DFabric Alliance. As a founding member, AlphaWave supports TSMC’s OIP to drive a new chiplet-based ecosystem to accelerate next-generation semiconductor developments.

In relation to the previous year, there were no variable expense accounts in Q4 2022^⁶ (“FSA”) fall or China (VeriSilicon) Vendor discounts^⁷. Both FSA and vendor agreements represent the transformation of customer commitments into design wins.

Design win activity was strong during the quarter with 8 new design wins, 4 from new clients and 4 from repeat clients. During the quarter, we built on the benefits of our hybrid business model with four new custom silicon wins in September. Our hybrid model allows the business to capture significant revenue streams by capturing the full value embedded in custom silicon offerings.

AlphaWave now has seven out of ten semiconductor device companies as customers⁸A reflection of the continued strength in information infrastructure markets that require the world’s most advanced communications technology.

Outlook

AlphaWave expects 2023 revenue. 340 million dollars to the 360 million dollars and adjusted EBITDA of approx 87 million dollars At the midpoint of the income guidance range.

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

AlphaWave IP to AlphaWave Semi Brands

Alphawave IP has been renamed to Alphawave Semi to reflect its expansion into a vertically integrated semiconductor company. Bringing IP and silicon capabilities together adds enhanced value to customers and their services for their high-speed connectivity needs. The new identity maintains the AlphaWave brand that customers have come to trust. AlphaWave Semi continues to expand its technology leadership built on mission-critical high-speed communications IP to accelerate the critical data infrastructure at the heart of the digital world.

About Alphawave Semi

AlphaWave Semi is a global leader in high-speed communications for the world’s technological infrastructure. In the face of massive data growth, AlphaWave Semi’s technology services a critical need: enabling data to travel faster, more reliably, and with high performance at low power. We are a vertically integrated semiconductor company, and our IP, custom silicon and connectivity products are deployed by world-class-one customers in data centers, computing, networking, AI, 5G, autonomous vehicles and storage. Founded in 2017 by a professional technical team with proven experience in licensing semiconductor IP, our mission is to accelerate the critical information infrastructure at the heart of our digital world. To learn more about Alphawave Semi, visit awavesemi.com

Related party statements

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

Trade marks

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¹ Both FSA losses and Chinese resale licenses convert contractual obligations included in prior registrations that are recognized as revenue over time into new product design wins.

² Includes OpenFive customers who are not already AlphaWave customers and have signed more than 1 contract^St September 2022

³ Our reservations, in some cases, include estimates of future royalty payments. Our royalties are estimated based on contractual royalty advances or, in certain instances, estimates of the amount of insights provided by customers.

⁴ These Chinese customers are excluded from the WiseWave and VeriSilicon agreement.

⁵ Since its establishment in 2017.

⁶ FSAs, or flexible spending accounts, represent contracts with customers that promise regular periodic payments. These fees are not in respect of specific licences, but may be used as a credit against future ones. FSA drawings represent the winning price of transactions signed during the period, whereby FSA fees are paid and converted into income over time.

⁷ In the year In February 2021, Alphawave IP signed a three-year exclusive subscription reseller agreement with VeriSilicon for a minimum price of US$54 million. The reseller agreements represent the licensing of IP by VeriSilicon to third parties in China and are part of a US$54 million minimum commitment to the company’s additional bonds.

⁸ Semiconductor equipment companies are ranked by market capitalization.