Qualcomm has agreed to buy London-listed Alphawave IP Group, which designs semiconductor and connectivity technology for data centres, in a $2.4 billion (£1.8bn) all-cash deal designed to help Qualcomm diversify away from smartphones.

The deal comes at a time when US companies have been acquiring British firms that are seen as undervalued, with British fintech firm Wise saying this month it would move its primary listing to the US.

It would also help Qualcomm’s efforts to tap into the data centre market, which has seen substantial growth fuelled by the boom in generative AI applications.

Diversification

The deal, which is subject to regulatory and shareholder approval, is expected to close in the first quarter of next year.

Qualcomm’s offer amounts to about 183 pence per share for Alphawave, the companies said, or roughly a 96 percent premium on Alphawave’s shares on 31 March, the last day before they disclosed talks.

Qualcomm sells processors to the likes of Apple and major Android smartphone makers, but as Apple has shifted toward using in-house chips and growth has slowed in the wider smartphone market Qualcomm has responded by moving into areas such as PCs and data centres.

“Alphawave has developed leading high-speed wired connectivity and compute technologies that are complementary to our power-efficient central processing unit and neural processing unit cores,” said Qualcomm chief executive Cristiano Amon in statement.

Alphawave’s board has unanimously recommended the cash offer while Alphawave shareholders and directors representing about 50 percent of shares have agreed to vote in favour of the deal, the company said.

Investors representing 75 percent of shares must vote in favour of the agreement for it to go through.

Trade tensions

Alphawave shares rose as high as 23 percent on Monday after the deal was announced. They are up about 117 percent this year.

The company held an IPO in 2021 at 410 pence per share but has consistently traded below that value since then. Even with Monday’s gains the firm’s share price was less than half its IPO value.

Alphawave had been hit by geopolitical tensions and last year exited its Chinese joint venture WiseWave.

The company reported a surge in orders for the fourth quarter of last year, which chief executive Tony Pialis said was driven by North American AI customers.

SoftBank-owned ARM had looked into buying Alphawave but decided not to pursue the deal, Reuters reported in April.