Achronix Semiconductor SPAC Merger With ACE Convergence Is a 5G and AI Gold Mine

What’s a semiconductor company implicated in AI, IoT, 5G and the future of chips? That would be Achronix. Santa Clara, California-based Achronix, founded in 2004 and led by Chief Executive Officer Robert Blake makes field programmable gate arrays, or FPGAs, a type of chip that’s unique because its function can be altered by software, even after it’s been installed in a device.

If semi companies are sexy to you, this SPAC to me is a really good deal. Beneath the flashy SPAC of SoFi, there’s another one of note in the works. Achronix, a semiconductor company, is merging with Ace Convergence Acquisition (NASDAQ: ACEV).

What I like about Achronix is the limited competitors they have. Other major FPGA suppliers include Intel Corp. and Xilinx Inc., which has a pending deal to be acquired by Advanced Micro Devices Inc. We all know that in 2021 Intel Corp is having a leadership, execution and business confidence crisis. This bodes well for Achronix also, seeing that 5G and IoT will roll out well in the 2021 to 2025 period.

Check out some of their documentation. Ticker $ACEV has a price of about $11.83 at the time of writing. That sounds like a reasonable price for a SPAC deal likely to go through soon. Let’s think about it:

  • Achronix is the only independent supplier of high-performance FPGAs and eFPGA IP based data acceleration solutions used in high-growth applications including AI, cloud computing, 5G, networking and automotive driver assistance.
  • Achronix expected to be listed on Nasdaq under the ticker symbol “ACHX” following an anticipated transaction close by the end of the first half of 2021.
  • Is it a good business? It has a highly differentiated financial profile with estimated 2020 revenues of approximately $105 million, 79% gross margins and 35% operating margins with migration to next-generation products driving an estimated revenue CAGR of 20% to 25% from 2020 to 2025.

At the Last Futurist we recognize many tech companies are making their own AI chips and NVIDIA, Taiwan Semi and AMD are really changing the game. For the retail investor getting in on a SPAC of this kind is a rare opportunity.

Achronix Semiconductor Corporation is a leader in both:

  • High-performance field-programmable gate arrays (FPGAs) and
  • Embedded FPGA (eFPGA)

Here’s the part to pay very special attention to:

As the only independent, high-end FPGA semiconductor company that offers both high-end stand alone FPGAs along with eFPGA IP technology, Achronix is uniquely positioned to address the needs of high-performance applications that require programmable hardware accelerators.

To conclude, demand for FPGA-based data accelerators is driven by the rapid expansion of high-growth markets, including AI, Cloud, 5G, and ADAS. Achronix’s semiconductor portfolio targets the nearly $10 billion data acceleration market, which is expected to have double-digit CAGR through 2025. (Data according to Semico Research). Clearly this is a company that belongs to the Future. Those are the kinds of long-term investments hopefully some of you will be making in 2021.

Achronix has a backlog of $160 million worth of deals and $1.1 billion in identified pipeline opportunities. I also like that this company has flown below the radar for quite some time. In some sense, this is a company that’s powering the future of artificial intelligence. Achronix FPGA and eFPGA IP offerings are further enhanced by ready-to-use PCIe accelerator cards targeting AI, ML, networking and data center applications. That sounds like a NVIDIA acquisition target in the making.

Achronix was originally self-funded by several million dollars of founder capital. Since 2006, Achronix has been funded by a combination of venture capital funding, private equity funding and debt from traditional lenders. According to Crunchbase, they’ve only had $136 million in funding. A lot of that funding came before 2013. So this has been a semi company that has had time to mature.

Read the official press release here.

There is an approximately $2.1 billion estimated post-transaction equity value based on current assumptions with up to $330 million in gross cash proceeds to the company. The company has about 130 listed employees on LinkedIn.

What else should you know?

  • Achronix’s data acceleration solutions provide optimal performance per watt compared to CPU- and GPU-based solutions with the additional benefits of hardware flexibility to support changing acceleration workloads.
  • There has already been $6.6 billion raised in 27 SPAC IPOs this first week of the new year, while $83 Billion was raised from SPACs alone in 2020.
  • You can view their Investor Presentation here.
  • The combination of AI/5G/Cloud relevance is really the trifecta that catches our attention at the Last Futurist. This can be represented as:

So, in conclusion, we believe this is a smart long-term investment at under $12. This is due to the accelerating demand in the space in the next five years and the relatively good market position of this company.

For SPACs I really want to see that the company is profitable. Achronix achieved profitability in 2016. Furthermore the growth prospects are excellent.

What more can you ask for from a real Unicorn SPAC in 2021? Get in on $ACEV or wait for confirmation with $ACHX but this is not one to wait on.

Also in case you were wondering, an embedded FPGA (eFPGA) is an FPGA IP core that is embedded within a custom SoC or ASIC device. Now you know 🙂 Finally, you can check out their videos here.

In 2021, SPACs are to IPOs what ICOs were to altcoins a few years ago.

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