MaxLinear, Inc. announced its acquisition of cutting-edge wireless technology startup NanoSemi, Inc. on Thursday. The chipmaker intends to use its new subsidiary’s staffers and intellectual property (IP) to enhance its wireless component portfolio.
In a press release, MaxLinear said it would give NanoSemi’s stakeholders $10 million and over 800,000 of its common stock to buy the Boston-based firm. At present, the corporation’s shares are trading for $21.45, which means around $27.1 million will be changing hands this year. The Carlsbad, California-headquartered company will compensate the startup’s investors with $35 million in deferred payments in 2021.
In addition, MaxLinear also agreed to reward NanoSemi’s securityholders with another $35 million if unspecified performance thresholds are reached.
Based on its current market capitalization, the California chipmaker could end up spending about $87.1 million to expand and improve its wireless catalog.
Why MaxLinear Bought NanoSemi
As a private company, NanoSemi’s pre-acquisition earnings and assets are unknown. However, its background and current offerings shed light on the size of its buyout.
In 2014, NanoSemi became an independent entity after spinning off from the Massachusetts Institute of Technology. Since then, the firm has directed its resources to develop products that optimize the performance of radiofrequency (RF), analog, and data conversion integrated circuits (ICs). The company found success in creating solutions that improve Wi-Fi and 5G throughput and provide greater energy efficiency.
As MaxLinear is a vendor of analog, RF, and mixed-signal chips, NanoSemi is a logical purchase. The corporation can improve its existing offerings and design new ones using the startup’s technology. the brand can also expand its share of the fifth-generation networking component market, which will reach an estimated value of $47 billion by 2027.
On the one hand, MaxLinear’s decision to invest tens of millions of dollars on the promise of an emerging market is risky. In the post-pandemic era, there’s no telling when high dollar corporate acquisitions will post a return on investment. Also, the brand just committed $150 million in capital to expand its smart home lineup.
On the other hand, 5G is a rare technological advancement that has the potential to transform broad swaths of society.
With wireless carriers aggressively expanding their fifth-generation network coverage in regions like the United States, MaxLinear’s $87.1 million bet on NanoSemi seems worthwhile.