FPGA chip and eFPGA IP vendor Achronix is to list on Nasdaq, though the company has eschewed the traditional IPO route and instead elected to merge with a special purpose acquisition company (SPAC), ACE Convergence Acquisition Corp.
A SPAC is a publicly listed investment vehicle designed to take companies public quickly by merging with them. In this case, the combined Achronix-ACE company would be worth around $2.1 billion, with Achronix receiving capital of around $330 million. The deal positions Achronix to capitalize on non-cancellable backlog of more than $160 million and over $1.1 billion in identified pipeline opportunities driven by its Speedster and Speedcore FPGAs.
Why would Achronix choose to merge with a SPAC instead of going for a more conventional IPO?
“Towards the end of last year, we started down the normal public markets path,” Robert Blake, CEO of Achronix, told EE Times. “And then we got interest from multiple SPAC entities asking us to consider this as an alternative. My initial reaction was no, I thought we would continue down the normal path, but when we met the folks at ACE, I was impressed that they had semiconductor domain experience on the management team, both in communications infrastructure and FPGAs.”
ACE’s chairman and CEO Behrooz Abdi was formerly the CEO of InvenSense, managing its IPO and subsequent acquisition by TDK. He stepped down from that position in February 2020. ACE’s board also includes such industry veterans as Kenneth Klein, who was CEO of Wind River during its takeover by Intel, and Ryan Benton, who was CEO of Exar during its acquisition by Maxlinear.
Blake said that ACE would continue to provide advice to Achronix post-merger and that a representative of ACE would likely join Achronix’ board.
“We talked to some different SPAC companies, and some of them really didn’t have domain knowledge, so they weren’t a good fit,” Blake said. “[ACE] was a good fit because they understood the space that we’re in and what we’re trying to do, the customers that we’re going after, the markets and applications… They would much more likely understand our story than some of the other SPACs out there that could be really quite diverse and not in the technology space.”
Another reason to go the SPAC route, Blake said, was the ability to take the company public much faster than going down the conventional IPO route.
“I feel very bullish about what the outlook is from an economy standpoint,” Blake said, noting the forthcoming change in administration in the US and the recent development of a Covid-19 vaccine. “With all these pieces coming together, now felt like a very good time to pull the trigger and raise some additional capital and accelerate what we’re doing.”
Achronix was founded in 2004 with technology from Cornell University based on asynchronous FPGA chip designs. Since then, the company has pivoted towards more conventional synchronous FPGAs and branched out into supplying IP. The company was Intel’s first foundry customer back in 2010, and partnered with TSMC in 2016 to sell its IP, a partnership which resulted in 10 million cores shipped. Today, Achronix supplies chips and IP for the acceleration of 5G, AI, networking and automotive driver assistance systems. Its chip business has secured over $400 million in production orders and its estimated revenue in 2020 is $105 million.
The company’s last round of funding in 2016 brought its total capital raised to a little over $150m, though it has been funded by revenue since then. The company has 134 employees, mostly split across key sites in Santa Clara, Calif. and Bangalore, India.
Achronix was one of a crop of a dozen or more programmable logic startups from the early 2000s – today it is the only one that hasn’t folded or been acquired. This leaves Achronix as a leading independent player in the high-end FPGA market (since both Altera and Xilinx have been acquired, by Intel and AMD, respectively).
Blake put a portion of the company’s success down to early recognition of FPGAs’ transition away from tasks such as protoyping and glue logic towards compute acceleration for new growth fields like AI and 5G infrastructure.
“We recognized more than five years ago that this is where the products were going and there was going to be a very different opportunity,” said Blake. “It’s taken us time to build a comprehensive and compelling set of products. But the market has changed too, FPGAs have grown up, and they’re being used as a compute acceleration technology. That represents potentially a $10 billion market opportunity for us going forward. So that’s why the time is right [for Achronix to go public].”
The merger will mean a cash infusion of around $330 million for Achronix; Blake has a long list of plans for the money. Top of the list is accelerating the rollout of the company’s products and investing in R&D, hopefully enabling products to get to market faster. Secondly, Blake wants to invest in software, specifically Achronix’ CAD Environment (the software tool that maps designs into the Achronix architecture) to make it easier to use. Blake also wants to invest in the eFPGA side of the business, specifically to expand the technologies that the eFPGA IP is available on. And finally, some of the money will go towards expanding Achronix’ global sales and technical support network, particularly on providing hands-on support to customers.
“It’s a very exciting time for us,” Blake said. “Our employees have worked very hard for a very long period of time. Our investors have stuck by us. This exciting new phase will cause additional excitement and energy inside the company.”
The transaction is expected to close in the first half of 2021. After the merger completes, the combined company will be called Achronix Semiconductor and it is expected to be listed under the ticker symbol ACHX.
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