ACEV SPAC – An Chip Ace in the Hole?

semiconductor chip

An Introduction to the ACE Convergence Acquisition (NASDAQ: ACEV) SPAC

On July 27th 202, the ACEV SPAC began trading on the NASDAQ. The IPO containted 20,000,000 units at the standard $10.00 per unit. Listed on the NASDAQ, each unit was a Class A share and one half of a warrant.

The company has been making waves across the tech sector since its conception due to an interesting team of Key executives and a very exciting market criteria.

The generation of $200 million in funds is certainly extremely exciting for the recently announced merger between the ACEV SPAC and Achronix Data Accelerate company.

Achronix to List on Nasdaq Through Merger With ACE Convergence

Press Release (Business Wire) 2021

Follow this in-depth analysis as we assess this SPAC, its Merger and consider the potential investment opportunity.

Sponsor Reputation & Context

The listed sponsor is the ACE Convergence Acquisition LLC. This limited liability company was established purely for the purpose of this SPAC and thus further research is futile.

However, a closer look at the SEC filings reveals a partnership with the cross-border technology private equity firm ACE Equity Partners LLC (“ACE Equity Partners”).

The firm was established in 2017 and is headquartered in South Korea. The company has a large presence across Asia but has only recently ventured into the American marketplace.

As of Q2 2020, the company has managed assets in excess of $1.6 billion and has expanded from Seoul to Singapore. ACE Equity Partners has the aim of seeking assets relevant to the “fourth industrial revolution.”

Management Team

Behrooz Abdi

The current CEO and Chairman of the Board of Directors, Mr Abdi is certainly extremely valuable to both the ACEV SPAC and the subsequent merger. Although maintaining such a heavy role within the Acquisition Corp, Mr Abdi is currently the Strategic Advisor of TDK (Tokyo: 6762.T).

This extremely influential Japanese multinational is just the tip of the iceberg when it comes to experience in the electronics sector for Mr Behrooz Abdi.

Having previously served as the CEO of InvenSense from 2012 to 2020. However, it was his experience as CEO of RMI (2007 – 2009) and Executive VP at NetLogic (2009 – 2011). That marked the beginning of his relationship with Dr Sunny Sui (President of the ACEV SPAC).

Prior to that, Senior VP and General Manager of Qualcomm (NASDAQ: QCOM). And VP and General Manager at Motorola Inc. (NYSE: MSI) from 1985 to 2003.

Read more about Behrooz Abdi!

Dr Sunny Sui

Dr Siu currently sits as the President of the ACEV SPAC as well as the director upon the completion of the offering. Although he is currently the co-founder and President of ProphetStor Data Services Inc, there shall be no direct competition of the separate ventures.

In a managerial capacity, Dr Siu was the Managing Director of the Chinese division of Broadcom (NASDAQ: AVGO) from 2012 to 2015 in which he oversaw the acquisition of NetLogic by Broadcom in 2012. Prior to this, he sat as the Managing Director of RMI as Co-Founder before it was acquired by NetLogic in 2009.

His vast amount of experience far surpasses the industry as he is also an extremely established academic, having served as Associate Professor at Massachusetts Institute of Technology (“MIT”) from 1996 to 2002.

Read more about Dr Sunny Sui!

Denis Tse

Currently serving as the Secretary of the ACEV SPAC as well as the CEO at ACE Equity Partners International. This direct influence from the sponsors is to be expected, but Mr Tses previous work experiences make his selection truly invaluable.

Mr Denis Tse was the head of private investments at the Asian division of Lockheed Martin from 2009 to 2015. However, his extensive experience in the managing and operating of large organizations, having to consider financial strategy and investing. Especially within the technology sector, make him all the more vital.

Read more about Denis Tse!

Current IPO Landscape & Investment Thesis

The ACEV SPAC claims the open US markets have been detrimental to high-quality, small-cap tech companies. Citing an average of 32 IPOs in the sector per year.

However, across a decade, less that 60 relevant companies have achieved a successful IPO in the US. With less than half achievement a market valuation of $1 Billion.

SPACs are Beginning to Infiltrate the Semiconductor Industry

Sally Ward-Foxton (EE Times) 2021

Further stating the COVID-19 outbreak creating a window of opportunity among IT software and hardware companies due to the sector-wide upsurge.

Selected Target of the ACEV SPAC

Achronix Semiconductors is a “fabless” semiconductor manufacturer based in California.

Fabless manufacturing is the design and sale of hardware devices and semiconductor chips while outsourcing their fabrication (or fab) to a specialized manufacturer

Definition – Fabless Manufacturing

Since the 1980s, this business model has been highly favored across the industry due to the ability to mitigate risks and overhead. The heavily lowered capital costs allow the company to focus on Research & Development.

Founded in 2004, the Company has seen private capital funding, rounds of seeding through Venture Capital firms until the decision to go public most recently.

Achronix’s flagship products is the design and creation of FPGA’s. The “Field-programmable gate array” is a series of logic gates that can be used for a variety of applications.

Achronix FPGAs, eFPGAs and chiplets support a wide variety of applications including high-performance communications, artificial intelligence, machine learning, automotive driver assistance, compute acceleration, industrial and military.

Achronix Press Release

The series of processors and network chips that Achronix creates has helped land it one of the biggest clients in the tech industry. Intel (NASDAQ: INTC). In fact, close to all of Achronix income is generated through its dealings with Intel.

NASDAQ: INTC Share Price versus Time

Although nowhere near its price share price of $74. Intel is still a fairly successful company that is a part of the Oligopoly that dominates the global technology market.

However, recent Tech News and competition from rivals such as AMD has Intel seriously lacking with a product line that is inferior. Although still considered a blue chip stock, is the agreement with Achronix reliable and stable enough?

A better deal could come along and Intel can very easily switch its source of FGPA’s. Ultimately crippling Achronix. And leaving the ACEV SPAC, dead in the water.

Deal Flow Analysis

Some of the more relevant previous deals undertaken by ACE Equity partners have been the leveraged buyouts of Daeho Technology Co. and the Woojin Electric Machinery Co. Ltd.

Woojin Inc. (KSE: 105840.KS) is a Korean based conglomerate that has expanded its influence into the US. The buyout cost $200 million and was a necessity from the Asia-based Electric Machinery Manufacturer.

KSE: 105840.KS Share Price versus Time

Daeho Technology Co. is a subsidiary of Daeho O&C Co. Ltd (KOSDAQ: 021040.KQ). In a management buyout valued at $356.8 million, it can be clear to see that ACE Equity Partners are confident in their Tech sector buys.

In entering the Americas and other foreign markets was the seed funding involvement with Preciseley Microtechnology. This Canadian based company contributes to the design and manufacturing of MEMS (Micro Electro Mechanical Systems) products.

The most noticeable investments made by ACE Equity Partners and its affiliates include:

  • AIM – a manufacturing management software vendor
  • Tesna (KOSDAQ: 131970.KQ) – a speciality outsourced semiconductor testing house
  • HMD – the exclusive licensee of Nokia brand mobile phones
  • Maxnerva (HKSE: 1037.HK) – the smart factory system integration spin-off of Foxconn Technology Group.

This clear affinity for microcontrollers and both software and hardware development with a consumer focus leads to the merger acquisition with Achronix as a clearly suitable candidate. One that ACE Equity Partners seem well experienced in dealing with.

Post Deal Value

The ability to generate post deal value is the greatest benefit of opting for an SPAC-assisted entrance into the public markets as opposed to the traditional IPO.

In this regard, the performance of the ACEV share price is certainly a good sign of things to come.

NASDAQ: ACEV Share Price versus Time

However, it is still early days but the analysis of both the ACEV SPAC, Achronix Company and ACE Equity Sponsor indicates positively in regards to the ability to generate Post Deal Value.

There is clearly a lot of excitement and chatter across both the technological and financial world as to the revolutions and agreements that Achronix has in store.

The company has been operating successfully in the private sector for many year and this cash injection could be just what it needs to gather a firmer foothold in the emergent technology sector.

Don’t trust us? Take a look at the Achronix-Ace Investor Merger presentation.

In Summary…

The ACEV SPAC has certainly done its homework in regards to selecting an appropriate sector and a suitable business. Our analysis of the Achronix Semiconductor company certainly highlights a bright future in store for both corporations.

However, Achronix and the reliance on Intel is noticeable and some investors are taking note.

Although this is a distant threat, the “Banana Republic” nature of Achronix is definitely cause for concern and investors will be eager to hear more of the companies medium to long term goals.

Regardless, the vast amount of experience that the members of the ACEV SPAC bring to the Semiconductor industry and SPAC Merging process with Achronix is truly invaluable.

This faith and belief is reflected in the upswing share price trade of the ACE Convergence Acquisition company. But the performance across the upcoming months remain yet to be seen!

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