Chip designer Alphawave picks London for $4.5bn IPO in boost for UK tech

By Robert Scammell

Silicon chip designer Alphawave IP has announced plans to float on the London Stock Exchange in an IPO valuing the company at up to $4.5bn.

The Toronto and London-headquartered company makes wired connectivity technology that is embedded in semiconductors. These chips are then used in data processing infrastructure such as data centres, networking, AI, 5G, autonomous vehicles and storage.

Its customers are semiconductor suppliers, original equipment manufacturers and hyperscale data centre operators who build their hardware in-house. It brings in revenue via licensing, maintenance fees and royalties. Among its partners are TSMC and Samsung, two of the largest chip foundries in the world.

In its IPO announcement document, Alphawave said it “believes it is able to develop these solutions more cost-effectively than internal teams at large semiconductor and system companies.”

Founded in 2017, the Anglo-Canadian company estimates the total addressable market for its future products to be up to $50bn by 2024.

The company plans to open an R&D headquarters in Cambridge, UK. The city is known for producing leading British chip companies such as Arm.

“We focus on developing IP to solve the most difficult connectivity challenges – that have been created by the enormous growth of data processing – in networks and infrastructure around the world,” said Alphawave IP executive chairman John Lofton Holt in a statement.

“Our growth is driven by continuous technological advances in smart devices and networks, which means all sorts of everyday products – from automobiles to 5G data networks – will require enhanced connectivity to communicate with each other and operate efficiently. Our solutions are built to help meet and support these ever-expanding data demands.”

The company’s intention to float in London follows the lacklustre listing of food delivery app Deliveroo, which has seen its value plummet by 19% in less than a month.

It was a blow to the UK’s tech sector, which has been seeking to reverse the trend of European companies listing in North America.

Cybersecurity unicorn Darktrace has also announced plans for a London IPO. The Alphawave IPO shows that companies have not been put off by the Deliveroo listing.

Stephen Kelly, chair of Tech Nation, tweeted: “Great to see an excellent Canadian deeptech semiconductor company choose London to go public.” 

Unlike Deliveroo and Darktrace, Alphawave has been profitable since its first full year of operation in 2018. In 2020 Alphawave generated $32.8m in revenue and says its revenue grew 200% year-on-year since 2018.

And while Deliveroo controversially opted for a dual-class share structure that gave its CEO Will Shu superior voting powers, Alphawave said it will list with a more traditional single-class structure that gives equal voting rights.

“We are a global business and proud to be taking Alphawave IP public here in the United Kingdom where the silicon IP business model was invented by great British companies like Arm and Imagination and where there is a deeply experienced semiconductor community,” added Lofton Holt.

“There is a long track record in the UK of investors who understand the value of licencing semiconductor IP.”

Alphawave has approached JP Morgan, Barclays and BMO Capital Markets to act as joint bookrunners, should the IPO go ahead.

Companies House records show that Alphawave submitted a trading certificate for a public company on 27 January 2021.