Qualcomm bets big on data centres with USD 2.4B Alphawave Semi acquisition

Qualcomm announced a definitive agreement to acquire London-listed Alphawave IP, known as Alphawave Semi, with an aim to accelerate its expansion into the data centre market. The recommended acquisition, valued at an implied enterprise value of approximately USD 2.4 billion.

The deal is expected to close in the first calendar quarter of 2026, pending regulatory and shareholder approvals. Qualcomm's indirect wholly-owned subsidiary, Aqua Acquisition Sub LLC, is making the offer for the entire issued and to be issued ordinary share capital of Alphawave Semi.

Strategic synergy: Powering the AI-driven data centre

Alphawave Semi is recognised for its high-speed wired connectivity and compute technologies, offering a crucial portfolio of IP, custom silicon, connectivity products, and chiplets. Their expertise in enabling faster, more reliable data transfer with higher performance and lower power consumption perfectly complements Qualcomm's next-generation custom Qualcomm Oryon CPU and Qualcomm Hexagon NPU processors.

This acquisition addresses a critical need in the rapidly evolving data centre landscape. The explosion of AI inferencing workloads demands high-performance, low-power computing solutions. Qualcomm's Oryon CPU and Hexagon NPU are designed for this very purpose, and Alphawave Semi's connectivity prowess will ensure seamless and efficient data flow within these power-hungry environments. Alphawave's DSP-based SerDes (serializer-deserializer) technology, critical for high-speed data transfer in AI applications, is particularly noteworthy, enabling higher data rates and scaling to smaller manufacturing processes than traditional analogue approaches. The company's recent successful tape-out of a UCIe IP subsystem on TSMC's N2 process further demonstrates its advanced capabilities in chiplet technology.

Qualcomm's diversification play

This acquisition seems like a clear signal of Qualcomm's pivot towards new markets. Historically dominant in smartphone processors, Qualcomm has been actively seeking diversification as the smartphone market matures and major customers like Apple increasingly develop in-house chip solutions. The data centre and AI segments represent massive growth opportunities, with the AI chips for the data centre and cloud market projected to exceed USD 400 billion by 2030, according to IDTechEx.

While the data centre CPU market is fiercely competitive, dominated by established players like Intel and AMD, and seeing custom silicon development by hyperscalers like Microsoft and Amazon, Qualcomm is aiming to carve out its niche through a focus on power efficiency and on-device AI capabilities. Its recent partnerships, including a collaboration with NVIDIA for NVLink Fusion to integrate its custom server CPUs with NVIDIA GPUs for AI workloads, demonstrate a strategic approach to entering this challenging arena.

For Alphawave Semi, this acquisition represents a significant opportunity to scale its operations and leverage Qualcomm's global reach and resources. The acquisition values Alphawave Semi at a premium, with the offer price of 183 pence per share representing a 96% premium over its closing price on March 31, before Qualcomm's interest was publicly known. However, it's worth noting that this valuation is less than half of Alphawave Semi's initial public offering valuation in 2021.