20 December 2021
AmpliTech completes acquisition of Spectrum Semiconductor Materials
AmpliTech Group Inc of Bohemia, NY, USA – which designs and makes signal-processing radio frequency (RF) components for satellite communications, telecoms (5G & IoT), space, defense and quantum computing markets – has completed the purchase of the assets and operations of Spectrum Semiconductor Materials Inc of San Jose, CA, a global distributor of components (packages and lids) for integrated circuit (IC) assembly in prototyping, testing and production.
The acquisition is expected to deliver significant strategic and top- and bottom-line benefits while also building on AmpliTech’s technical and management expertise and distribution reach. Spectrum’s unaudited 2021 revenue is expected to be $13m ($2m higher than previously announced), with pre-tax net income margin of about 25% of revenue. AmpliTech’s revenue for the past four quarters was $3.5m. AmpliTech and Spectrum have current order backlogs of $3.8m and $7.6m, respectively, for a record consolidated backlog for AmpliTech Group of $11.4m in orders expected to ship in first-half 2022.
AmpliTech says that Spectrum has achieved solid growth and attractive net margins by building strong customer relationships across a range of niche markets and supporting their specific needs by stocking a wide variety of specialty products, unmatched by larger competitors, it is claimed. Further, Spectrum leverages digital inventory practices to optimize its operating efficiency and to enhance its ability to meet customer needs.
The purchase price was $8m in cash plus $1.5m to be held in escrow through December 2022 (to fund any adjustments) plus the issuance of 188,442 restricted shares of AmpliTech common stock. The parties agreed to a purchase price adjustment of 25% of Spectrum’s cumulative net revenue above or below $20m in sales for calendar years 2021 and 2022 combined. Post-closing, AmpliTech had about $17m in cash, cash equivalents and marketable securities, and no long-term debt. AmpliTech says that it is well funded to execute on the growth opportunities of the combined business.
Spectrum has been building its radio frequency (RF)-focused semiconductor revenue base and is expected to provide a powerful distribution platform in the USA, Europe and Asia for AmpliTech’s new line of monolithic microwave integrated circuit (MMIC) chip designs. Spectrum is positioned to package these and future designs for high-volume applications.
AmpliTech’s MMIC chip designs integrate its low-noise signal amplification (LNA), signal filter and signal attenuator technologies into a much smaller and more flexible chip form factor. Foundry production of initial MMIC wafers has been completed, and they are now undergoing initial testing. MMIC chipsets remain on schedule for commercial availability and sampling during first-quarter 2022
“Through the Spectrum acquisition we have substantially increased our revenue base with a well-managed, growing business known for high quality and excellent customer service,” says AmpliTech’s CEO Fawad Maqbool. “This transaction will allow us to more than triple our current annual revenue run rate, while also being immediately accretive to our bottom line,” he adds.
“Of equal importance, Spectrum brings us a highly satisfied, long-term and global customer base with excellent penetration in our core end markets of aerospace, defense, automotive and computing, along with a deep Silicon Valley presence [building on AmpliTech’s existing East Coast and Texas teams], to support the launch of MMIC chip solutions [that] we plan to bring to market by the end of first-quarter 2022,” Maqbool continues. “We expect AmpliTech and Spectrum will play a key role in improving the speed and efficiency of communications systems around the world in high-growth applications such as 5G cellular, medium earth orbit (MEO) and low earth orbit (LEO) satellites, quantum computing and autonomous vehicles.
It is reckoned that each company brings proven sales personnel and relationships that complement each other in addressing an expanded market opportunity. “We are already focused on several joint business development opportunities that should expand the reach and value of our respective solutions and total market opportunity,” says Spectrum’s president Steve Ochoa.
Joining forces with AmpliTech provides “a broader base of opportunity and exciting growth potential as we collaborate to bring AmpliTech’s premier MMIC chip solutions to market,” comments Spectrum’s CEO Robert Larson.