SoftBank-owned semiconductor architect Arm recently looked to acquire Britain’s Alphawave to gain critical technology needed to build AI accelerators, three independent sources “familiar with the matter” told Reuters.
Alphawave owns intellectual property related to semiconductor technology and even discussed selling it to investment bankers after Arm and other potential buyers expressed interest in acquiring the company. However, the deal was ultimately abandoned, according to two sources.
Arm was counting on Alphawave to provide the technology for creating SerDes (serializer-deserializer) blocks, which determine the speed at which data is transferred to and from a chip. This technology is critical for AI systems like ChatGPT, where thousands of chips must work together in unison. SerDes, for example, is a key advantage for Broadcom, helping the company attract clients like Google and OpenAI.
On the news, Alphawave shares soared 21%, their highest since September 2021. The company’s market cap was £707 million ($914 million) at the close of trading on Monday, with a share price of 93.5 pence.
Image Source: Arm
Arm, headquartered in the UK, is 90% owned by Japan’s SoftBank Group. The company doesn’t design chips itself, but sells the “basic building blocks” for creating them, as well as other intellectual property. Arm makes most of its revenue from licensing fees from other businesses, as well as royalties on each chip sold that uses its technology. It was recently reported that it expects its architecture to take up 50% of the data center chip market by the end of 2025. AWS, Google Cloud, and Microsoft Azure already have their own Arm server processors: Graviton, Axion, and Cobalt 100.
Of course, the company was looking to increase profits and revenue, including developing chips on its own and competing directly with its own customers. The plans were partially revealed in December 2024 during a lawsuit with Qualcomm. However, Arm management said that it was a routine exchange of ideas between managers. However, during the same process in February, it became known that the company was looking for specialists who could bring a chip of its own design to market.
Arm doesn’t have Alphawave’s advanced SerDes technology (which converts parallel data streams to serial and back to speed up transmission). While details are scarce, SerDes is the foundation of multibillion-dollar semiconductor businesses at Broadcom and Marvell Technology, a market that Bernstein predicts will grow to $60 billion by 2028.
NVIDIA has also developed its own version of SerDes and has already announced its intention to sell licenses for it to other companies. Creating advanced solutions in this area is critical for the release of AI chips that can stand out from competitors’ products. At the same time, according to experts, developing SerDes from scratch requires specific skills and about two years. Buying Alphawave could save Arm a significant amount of time and resources.