Reuters has reported, thanks to three sources, that Arm looked into buying a UK-based firm called Alphawave, but ultimately backed out for an unknown reason. The main reason given for Arm’s interest in Alphawave was a technology the latter has developed related to SerDes technology - short for serializer-deserializer - Arm currently doesn’t have SerDes tech that matches what Alphawave has developed.
SerDes technology is becoming increasingly important due to the emergence of artificial intelligence bots like ChatGPT and Gemini. It is used for converting parallel data to serial data and vice versa to enable high-speed communication. Companies like OpenAI have lots of computers linked together to deliver their services so SerDes technology is crucial for delivering smooth operations. Broadcom is one of the leaders in this field and has famous clients including Google and OpenAI.
While the Alphawave acquisition was being seriously considered by Arm, two sources told Reuters that after initial discussions, Arm decided not to follow up with further talks or an acquisition. Alphawave has a market value of more than $913 million and is exploring potential sales after getting interest from Arm and others.
One reason given for Arm backing away from an acquisition is that Alphawave has a joint venture in China called WiseWave. That company has links to a Chinese investment firm called Wise Road Capital, which is on a US blacklist over national security concerns. Arm’s connections to China led to difficulties when it IPOed in 2023 - it may not want similar issues from buying Alphawave.
In light of the news that Arm is no longer seeking to acquire Alphawave, the latter’s stock price jump sharply from 93.20 pence to 133.9 pence, at the time of writing.
Source: Reuters