Alphawave Semi is the global leader in high-speed connectivity and compute silicon for the world's technology infrastructure.
You are now onto your third startup in a career spanning over 20 years in this sector. You could be doing anything right now, but you have decided to grow AlphaWave Semi, which IPO'd a few years ago in London. Why?
The first two businesses I founded were significant learning opportunities that have brought me to where I am today. When I founded AlphaWave Semi, my goal was clear—to build the next great semiconductor company, something on the scale of Broadcom. Broadcom has been a reference point for me since the beginning, and I’m passionate about the vision of creating a trillion-dollar semiconductor company. This vision is not just a business goal; it is a driving force that shapes what we are building. This company represents my legacy and life’s work.
There is a significant increase in demand in the data center space, especially for more efficient data transmission. What is the differentiator when it comes to your IP?
Data centers function by converging data from various sources like cell phones, sensors, and users streaming content. This data travels, sometimes wirelessly or through cabling, into data centers where it needs to be processed, and this is where connectivity plays a crucial role. Think of data centers like the human body: the brain represents the compute engine, while the nervous system, which transmits information to and from the brain, is akin to connectivity within the data center.
We develop the technology that drives this “nervous system.” Our solutions are delivered in the form of IP and silicon, enabling the transfer of data into and out of the compute engines within data centers. We also partner with ARM to develop next-generation compute chips. In essence, we are creating the connectivity and compute infrastructure that allows data centers to function as the brains and nervous systems of the digital world, driving all interactions between humans and technology.
AlphaWave Semi recently reported record performance with 27% year-on-year growth in Q2 2024. What is driving this growing demand, and what is your outlook?
Following our IPO three years ago, we strategically expanded our business by raising half a billion dollars of primary capital, which we invested in new product development. These new products, both in the form of silicon and IP, are now driving our growth. Some of these developments were organic, while others came from mergers and acquisitions, but all have contributed to our expansion in the market.
The demand for connectivity is growing faster than ever, with bandwidths doubling in less than two years, driven by the massive influx of data that needs to be managed, especially with the rise of AI. This is why companies like Microsoft are investing heavily in data center infrastructure. Our growth is fueled by delivering the necessary connectivity products and custom silicon solutions to meet these increasing demands, particularly to hyperscalers and network operators. Additionally, our introduction of chiplets, new building blocks for next-generation AI and compute, is also contributing significantly to our success.
Most semiconductor companies are based on the U.S. West Coast. Why did you choose to IPO in London?
London was a strategic choice because it has a strong history with Silicon IP companies. Historically, there were only two publicly traded Silicon IP companies before our IPO—ARM and Imagination Technologies—both of which were based in the UK. These companies had a profound impact on the industry, and investors in the UK and Europe are well-versed in the value and importance of the Silicon IP business. This understanding made London the ideal venue for our IPO. While our roots are in Silicon IP, we have used the IPO as a platform to expand into semiconductor delivery as well. Regarding Europe’s role in the semiconductor industry, it’s important to recognize that semiconductors require a global supply chain, with different regions excelling in various aspects—from design and software to manufacturing and testing. Europe, particularly through companies like ASML, plays a critical role in this ecosystem. So, while the Bay Area may lead in design and Asia in manufacturing, Europe remains a vital part of this global supply chain, and I do not foresee any significant shifts in this balance in the near future.
You made some bold predictions for 2024 including that AI will face large-scale reckoning, semiconductor and hardware industries will be top of the list of the most in-demand tech and that 2024 will kick start the optical revolution. Do you still stand by those predictions, and what do you foresee for the second half of this year and 2025?
I am not ready to take a definitive stand on those predictions just yet, as we still have half of the year to go. However, the trends remain consistent with what I anticipated. The growing importance of hardware can be clearly illustrated through the example of ChatGPT. When ChatGPT 3 first launched, it finished in the 35th percentile on the LSATs. Just six months later, with the release of ChatGPT 3.5, which trained on over 2 billion data points using 20 times more hardware, it reached the 80th percentile. This rapid improvement highlights that the greatest limitation to AI’s advancement is not in algorithms or software but in the hardware used. Moreover, the current limitation isn't even in compute, as most focus on companies like NVIDIA. Instead, a significant bottleneck is in the connectivity within data centers. It is estimated that 40 to 50% of the time data spends in data centers is wasted simply moving back and forth rather than being processed. Regarding the optical revolution, the explosion in data demand is outpacing the capacity of traditional electrical wires, which are akin to pipes that can only carry so much water. As the need for higher bandwidth increases—driven by more data-intensive activities like streaming videos—fiber optics are becoming essential.
One of the most significant factors that will impact next year is the outcome of the U.S. election, which I believe will have a substantial influence on the timeline for the further separation of the U.S. and Chinese economies. In addition to this, continued investment in semiconductors and the regulation of AI are macro-level geopolitical factors that could greatly affect the future of our industry. As we look forward to 2025, I anticipate these trends will continue to shape the landscape, with the upcoming U.S. election playing a particularly crucial role.
What keeps you motivated at AlphaWave Semi, especially considering the rapid growth the company has experienced?
The growth we have experienced has been nothing short of meteoric. When we IPO’d, we had around 120 engineers and generated $33 million in revenue. Fast forward three years, and we've grown to almost 1,000 engineers and $350 million in revenue. This tenfold increase in both headcount and revenue in such a short time has been a thrilling journey, but it also brings challenges. Navigating this rapid growth while continuing to deliver value and delight to our customers is my top priority. Additionally, expanding our investor base and ensuring that the investment community fully understands the opportunities and our commitment to growth is crucial. My focus remains on making AlphaWave Semi the next great semiconductor company, and this mission drives everything we do.
What can we expect from AlphaWave Semi over the next couple of years? Are there any key milestones you can share?
Two years ago, we confidently asserted that we would surpass a billion dollars in revenue by 2027, and I still stand by that prediction. By the end of this decade, we aim to be generating multiple billions in revenue. Although headquartered in London, we are a multinational company, and our global presence is essential to our strategy, much like the rest of the semiconductor industry. Our primary mission is to drive the evolution of AI and ensure that everyone understands the critical role of connectivity alongside compute. While compute, the brain, is vital, connectivity is equally important in this equation, and that's where our focus lies.