After the news of Arm's intention to acquire this Serdes giant, reports also emerged in the market about Qualcomm evaluating the acquisition of Alphawave. Qualcomm subsequently released a statement indicating that the company has noted the recent stock price trends of Alphawave IP Group PLC (“Alphawave”) and confirmed that it is considering making a proposal to acquire all issued and to-be-issued equity of Alphawave. However, Qualcomm emphasized that it is uncertain whether it will make any definitive offer and cannot determine the terms of any definitive offer. Alphawave IP Group also responded to Qualcomm's announcement regarding a potential offer, emphasizing its confidence in its strategic direction and advising shareholders not to take any action. Alphawave stressed that it is still uncertain whether Qualcomm will make a definitive offer, and any developments will be announced in a timely manner. Industry insiders have stated that Qualcomm's acquisition would bring a significant leap in the company's chip capabilities. To analyze the reasons behind this potential acquisition, we must start with the core product of this potential acquisition, Serdes. What is Serdes? The main work of Alphawave is to provide SerDes, or Serializer/Deserializer, for advanced manufacturing, which is a circuit that converts data into a serial stream and back. It is well known that bits (data) are typically transmitted simultaneously across different channels, but sometimes it makes sense to put all signals on one channel. This means placing data in the form of serial bits on a single channel. It is best to compare this metaphorically to a highway versus local streets. Typically, data is transmitted in parallel, sending the signals or data to various parts of the chip. However, when data needs to be offloaded, connecting each branch to the chip externally can be inefficient. In contrast, it makes sense to connect a large data highway into one channel, transmitting all small data bits into a single channel. This is serialization; in this metaphor, cars (data bits) leave the local roads and then enter the highway, traveling faster and further. They are deserialized at the destination and then move in parallel again. Serialization refers to a single car entering the highway, while deserialization refers to the vehicle exiting the highway to the local destination. Highways are typically built for the densest information flows and are faster, such as when all data in a GPU enters memory or vice versa. As we move towards a world with increasing connections between different packages, these data highways are becoming increasingly important. In the past, when we manufactured monolithic chips, data primarily moved locally on the chip (a series of closely connected bypasses); now, when we connect two chips together, we must create a highway to connect the packages. This is why Serdes is becoming increasingly important As the future develops towards heterogeneity, the specialization of SerDes is a quite correct move; as chips now need to transfer parallel data to serial data outside the package, SerDes is beginning to increase. SerDes is a core IP product, and due to its leverage on advanced packaging, it is growing rapidly. If NVIDIA can achieve such outstanding performance on GPUs, the contribution of its SerDes product NVIDIA NVLink-C2C cannot be overlooked, and AMD also has its unique advantages in this regard. Manufacturers such as Broadcom, Marvell, and even MTK have gained so much business in the wave of self-developed AI chips, which is greatly related to their accumulation in SerDes. Vijay Nagarajan, Vice President of Strategy and Marketing at Broadcom Semiconductor Solutions Group, stated in a previous interview that SerDes technology plays a crucial role in AI infrastructure, helping to achieve fast and reliable communication between components. These high-speed connections help maintain a strong signal-to-noise ratio, ensuring data integrity between various products. “SerDes needs to ensure that signals are transmitted from one end of the link to the other, despite the presence of many noises in the circuit,” Nagarajan said. “Every silicon chip we produce requires SerDes, and the quality of SerDes makes these products more impactful and valuable.” In summary, there is no doubt that Alphawave's IP must have some advantages, such as high performance, to explain the interest of other chip experts, or that its stock price has shrunk to such a low level that it has become an attractive acquisition target. Based on the company's stock price trends over the past five years and the background of the company team, it may have both. Why Alphawave? As mentioned at the beginning of the article, Alphawave is an expert in the SerDes field. Their story begins with the company's CEO and co-founder Tony Pialis. Tony has extensive entrepreneurial experience in the semiconductor industry and has co-founded three semiconductor IP companies, including Snowbush Microelectronics Inc., which was sold to Gennum/Semtech in 2007 and is now part of Rambus. He also founded V Semiconductor Inc. and served as President and CEO, which was acquired by Intel Corporation in 2012. Tony also served as Vice President of Analog and Mixed Signal IP at Intel Corporation from 2012 to 2017 During his tenure at Intel, Tony and his team were awarded the prestigious Intel Achievement Award for successfully delivering next-generation Ethernet and PCI-Express SerDes solutions based on Intel's 22nm and 14nm process technologies. Specifically, Tony and his team provided Intel with SerDes solutions at 22nm and 14nm. It is certain that cutting-edge development is not easy; it is very tricky, especially for mixed-signal design. With the expansion of EDA tools, designing digital circuits has become a challenging task, but EDA has met this demand. The extent of analog design expansion is not entirely the same as that of digital design, and worse, mixed-signal is even more complex. The cross-design from analog signals (continuous functions) to digital signals is very difficult, and many digital designers consider it black magic. Therefore, mixed-signal design is difficult; winning in the mixed-signal field is even more challenging. This is exactly what Tony Pialis and his team have accomplished. From past information, it can be seen that Alphawave is one of the first companies to achieve 112 NRZ/PAM4 on TSMC's N3E process and is generally the first vendor to realize corresponding products at each node. Notably, their key competitor in this track is Synopsys, a global leader in EDA and a leading IP company worldwide. Alphawave focuses on a new approach to making SerDes—focusing on digital SerDes solutions rather than analog solutions. Their solutions are more digital than other digital DSP products, while traditional analog solutions are still widely used today. Importantly, Alphawave can leverage the appeal of digital design to provide better power, performance, and area solutions than previous analog designs. The following figure shows a comparison between analog and DSP solutions. Notably, digital DSP design can adapt more flexibly to different throughput rates and scale better as processes shrink. At a higher level, DSP has more noise correction, amplification, and other tricks that can scale better to higher performance levels as chips continue to shrink. This complex engineering solution is not just traditional analog design but a combination of mixed-signal. Especially with the increase of more digital processes, channel flattening, noise reduction, and reproduction techniques are also continuously expanding. The insensitivity to processes means the standardization of IP and a move towards smaller levels of semiconductor production, rather than adopting analog design at every new node. It is worth mentioning that Alphawave's IP has been incorporated into Lightmatter's latest silicon photonic interconnect products released this week, and they also showcased products including 224 Gbps PAM4 SerDes at the Optical Fiber Communication Conference (OFC) in San Francisco. Not Just Traditional SerDes For Qualcomm, acquiring Alphawave would provide not just its highly competitive SerDes products, but the company's other layouts would also serve as a guarantee for further advancement in the chip market. In 2022, Alphawave announced the acquisition of SiFive's OpenFive business for $210 million, marking a milestone in the company's development history. This acquisition transformed Alphawave from an IP company into a service company. Frankly, this may dilute the profits of its core SerDes IP business, but it could expand revenue opportunities and Alphawave's ambitions. Alphawave also stated: "By enhancing the capability to deliver customized silicon (including Chiplets), Alphawave will become a global leader in connectivity solutions and the only pure provider offering both IP and silicon-based connectivity solutions, serving the world's most mature customers such as hyperscale enterprises and major semiconductor companies." The company indicated that this acquisition would nearly double the number of connectivity-focused IP available to customers, increasing from 80 to over 155. As part of the deal, Alphawave also obtained a license for RISC-V processor IP from SiFive; in terms of customers, this deal will expand Alphawave's customer base from the current 20 to over 75, adding a hyperscale customer located in North America. Alphawave Executive Chairman John Lofton Holt stated: "When we completed our IPO in 2021, we committed to continue developing and accelerating our business through the deployment of the raised funds. This began with the acquisition of Precise-ITC in 2021, and the addition of the OpenFive team will further accelerate Alphawave's business." "Alphawave can now offer bundled connectivity-focused IP solutions and customized silicon solutions, such as chiplets, to global customers. This will achieve the scale and revenue growth we envisioned, but at a much faster pace than we expected, while continuing to achieve high growth and margins in the coming years." Alphawave President and CEO Tony Pialis added that the company hopes to develop and acquire "additional capabilities" for further expansion in the future It is worth mentioning that Alphawave also acquired optical DSP provider Banias Labs in the same year. This acquisition brought silicon-proven optical DSP technology to expand Alphawave's product portfolio and strengthen its product roadmap; Banias Labs' technology will expand Alphawave's market space and deepen its commercial partnerships with leading North American hyperscale data center customers; Alphawave also committed to becoming an industry leader in PAM4 and coherent DSP product portfolios for data center connectivity solutions and advanced technologies. Following the acquisition, the company launched its first products a week ago—3nm digital signal processors (DSPs), known for their excellent performance in PAM4 and emerging Coherent-lite modulation for 800G and 1.6T links and active copper cables. Alphawave Semi CEO Tony Pialis stated, "The establishment of the connectivity product group is a significant achievement as it enables us to collaborate with any leading hyperscale enterprise in the way they require." "If they need customized system IP subsystems or chips, we can provide that. If they want us to custom develop silicon products, we can do that. Now, if they want to purchase standard connectivity products powered by our cutting-edge technology, we can also provide that. This group is an important strategic asset, and I am pleased to mark this as a step forward in advancing Alphawave Semi's mission to become the next semiconductor leader in AI connectivity and computing." It can be seen that if the acquisition is successful, Qualcomm will be able to bring many critical technologies of its products in-house. SerDes chips help facilitate data transmission within smartphones, laptops, and many other devices for which Qualcomm provides silicon. These chips and technologies could even allow Qualcomm to make a comeback in the data center chip market. In Conclusion If the Alphawave acquisition is realized, it will be Qualcomm's third acquisition since the beginning of this year. Earlier this week, the chip giant announced the acquisition of the Vietnamese artificial intelligence research group MovianAI. Qualcomm had previously acquired the venture-backed AI model development software provider Edge Impulse Inc. Earlier, Qualcomm acquired NUVIA, enhancing the company's strength in chip design. With these acquisitions, this San Diego giant has gained the leverage to build more powerful chips and enter more markets. Their ambitions in chip development are evident. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial conditions, or needs of individual users. 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