UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 7, 2021
ACE Convergence Acquisition Corp.
(Exact name of registrant as specified in its charter)
Cayman Islands (State or other jurisdiction of incorporation) |
001-39406 (Commission File Number) |
N/A (I.R.S.
Employer |
1013 Centre Road, Suite 403S Wilmington, DE (Address of principal executive offices) |
19805 (Zip Code) |
(302) 633-2102
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of one Warrant to purchase one Class A ordinary share |
ACEVU | The Nasdaq Stock Market LLC
| ||
Class A ordinary shares, $0.0001 par value per share |
ACEV |
The Nasdaq Stock Market LLC | ||
Warrants to purchase Class A ordinary shares | ACEVW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01 Entry into a Material Definitive Agreement.
ACE Convergence Acquisition Corp. (“ACE”) is a blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On January 7, 2021, ACE entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ACE Convergence Subsidiary Corp., a Delaware corporation and a direct wholly owned subsidiary of ACE (“Merger Sub”), and Achronix Semiconductor Corporation, a Delaware corporation (“Achronix”).
Pursuant to the Merger Agreement, and subject to the approval of ACE's shareholders, among other things: (i) prior to the closing of the business combination contemplated by the Merger Agreement (the “Closing”), ACE shall domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Cayman Islands Companies Law (2020 Revision) (the "Domestication"), (ii) at the Closing, upon the terms and subject to the conditions of the Merger Agreement, in accordance with the DGCL, Merger Sub will merge with and into Achronix, the separate corporate existence of Merger Sub will cease and Achronix will be the surviving corporation and a wholly owned subsidiary of ACE (the "Merger"), (iii) upon consummation of the Merger, all of the equity interests of Achronix will be converted into the right to receive shares of common stock, par value $0.001 per share, of ACE (after its Domestication as a corporation incorporated in the State of Delaware) ("ACE Common Stock") and cash and (iv) upon the effective time of the Merger, ACE shall immediately be renamed "Achronix Semiconductor Corporation". The Closing is subject to the satisfaction or waiver of certain closing conditions contained in the Merger Agreement.
On January 7, 2021, concurrently with the execution of the Merger Agreement, ACE also announced that it entered into subscription agreements (the "Subscription Agreements") with certain investors (collectively, the "PIPE Investors") pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for 15,000,000 shares of ACE Common Stock for an aggregate purchase price equal to $150,000,000 (the "PIPE Investment"), a portion of which is expected to be funded by one or more affiliates of ACE Convergence Acquisition LLC, ACE's sponsor (the "Sponsor"). The PIPE Investment will be consummated substantially concurrently with the Closing, subject to the terms and conditions contemplated by the Subscription Agreements.
On January 7, 2021, concurrently with the execution of the Merger Agreement, certain affiliates of the Sponsor (the “Backstop Investor”) entered into a backstop subscription agreement (the “Backstop Subscription Agreement”) with ACE, pursuant to, and on the terms and subject to the conditions on which, the Backstop Investor has committed to purchase, following the Domestication and prior to the Closing, shares of ACE’s common stock, par value $0.001 per share, as such shares will exist as common stock following the Domestication, in a private placement for a purchase price of $10.00 per share to backstop certain redemptions by ACE shareholders.
On January 7, 2021, ACE also announced entry into a Support Agreement (the "Sponsor Support Agreement"), by and among ACE, the Sponsor, Achronix and certain other parties thereto, pursuant to which the Sponsor and each director and officer of ACE agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement. In addition, ACE has entered into a Support Agreement (the "Company Support Agreement") by and among ACE, Achronix and certain stockholders of Achronix (the "Key Stockholders"), pursuant to which the Key Stockholders have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Company Support Agreement.
A copy of the Merger Agreement, the form of the Subscription Agreements, the form of the Backstop Subscription Agreement, the Sponsor Support Agreement and the Company Support Agreement will be filed by amendment on Form 8-K/A to this Current Report within four business days of the date hereof as Exhibit 2.1, Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and the foregoing description of each of the Merger Agreement, Subscription Agreements, Backstop Subscription Agreement, Sponsor Support Agreement and Company Support Agreement is qualified in its entirety by reference thereto.
Item 3.02 Unregistered Sales of Equity Securities
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K with respect to the PIPE Investment is incorporated by reference in this Item 3.02. The shares of ACE Common Stock to be issued in connection with the PIPE Investment will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act.
Item 7.01 Regulation FD Disclosure.
On January 7, 2021, ACE and Achronix issued a joint press release (the “Press Release”) announcing the execution of the Merger Agreement. The Press Release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
Attached as Exhibit 99.2 and incorporated herein by reference is the investor presentation dated January 7, 2021, for use by ACE in meetings with certain of its stockholders as well as other persons with respect to ACE’s proposed transaction with Achronix, as described in this Current Report on Form 8-K.
Attached as Exhibit 99.3 and incorporated herein by reference is the transcript from a call on January 7, 2021, between ACE and certain of its stockholders to discuss the business combination.
The information in this Item 7.01, including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of ACE under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information of the information contained in this Item 7.01, including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3.
Forward-Looking Statements Legend
This Current Report on Form 8-K contains certain forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between Achronix and ACE. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. All statements, other than statements of present or historical fact included in this press release, regarding ACE’s proposed acquisition of Achronix and ACE’s ability to consummate the proposed transaction, among others, are forward-looking statements. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to: the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect the price of ACE’s securities, the risk that the transaction may not be completed by ACE’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by ACE, the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the Merger Agreement by the shareholders of ACE, the satisfaction of the minimum Trust Account amount following redemptions by ACE’s public shareholders and the receipt of certain governmental and regulatory approvals, the lack of a third party valuation in determining whether or not to pursue the proposed transaction, the inability to complete the PIPE Investment, the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, the effect of the announcement or pendency of the transaction on Achronix’s business relationships, operating results, and business generally, risks that the proposed transaction disrupts current plans and operations of Achronix, the outcome of any legal proceedings that may be instituted against Achronix or against ACE related to the Merger Agreement or the proposed transaction, the ability to maintain the listing of ACE’s securities on a national securities exchange, changes in the competitive and regulated industries in which Achronix operates, variations in operating performance across competitors, changes in laws and regulations affecting Achronix’s business and changes in the combined capital structure, the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities, failure to realize the anticipated benefits of the proposed transaction, risks relating to the uncertainty of the projected financial information with respect to Achronix, risks related to the rollout of Achronix’s business and the timing of expected business milestones, the effects of competition on Achronix’s business, the effects of the cyclical nature of the semiconductor industry on Achronix’s business, risks related to Achronix’s customer concentration, the risks to Achronix’s business if internal processes and information technology systems are not properly maintained, risks associated with Achronix’s operational dependence on independent contractors and third parties, risks associated with Achronix’s reliance on certain suppliers for, among other things, silicon wafers, risks and uncertainties related to Achronix’s international operations, including possible restrictions on cross-border investments which could harm Achronix’s financial position, and risks associated with Achronix’s ability to develop new products and adapt to new markets. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of ACE’s registration on Form S-1, as amended (File No. 333-239716), the registration statement on Form S-4 discussed above and other documents filed by ACE from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. There may be additional risks that neither ACE nor Achronix presently know, or that ACE or Achronix currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. ACE and Achronix anticipate that subsequent events and developments will cause ACE’s and Achronix’s assessments to change. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements as predictions of future events, and Achronix and ACE assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Neither Achronix nor ACE gives any assurance that either Achronix or ACE, or the combined company, will achieve its expectations.
Additional Information and Where to Find It
This Current Report on Form 8-K relates to a proposed transaction between Achronix and ACE. This Current Report on Form 8-K does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. ACE intends to file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (the “SEC”), which will include a document that serves as a prospectus and proxy statement of ACE, referred to as a proxy statement/prospectus. A proxy statement/prospectus will be sent to all ACE shareholders. ACE also will file other documents regarding the proposed transaction with the SEC. Before making any voting decision, investors and security holders of ACE are urged to read the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction as they become available because they will contain important information about the proposed transaction.
Investors and security holders will be able to obtain free copies of the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by ACE through the website maintained by the SEC at www.sec.gov.
The documents filed by ACE with the SEC also may be obtained free of charge at ACE’s website at http://acev.io or upon written request to 1013 Centre Road, Suite 403S, Wilmington, DE 19805.
Participants in Solicitation
ACE and its directors and executive officers may be deemed to be participants in the solicitation of proxies from ACE’s shareholders in connection with the proposed transaction. A list of the names of such directors and executive officers and information regarding their interests in the business combination will be contained in the proxy statement/prospectus when available. You may obtain free copies of these documents as described in the preceding paragraph.
Non-Solicitation
This Current Report on Form 8-K is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of ACE, the combined company or Achronix, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ACE Convergence Acquisition Corp. | |||
Date: January 7, 2021 | |||
By: | /s/ Behrooz Abdi | ||
Name: Behrooz Abdi | |||
Title: Chief Executive Officer |
Exhibit 99.1
Achronix to List on Nasdaq Through Merger with ACE Convergence
· | Achronix is the only independent supplier of high-performance FPGAs and eFPGA IP based data acceleration solutions used in high-growth applications including AI, cloud computing, 5G, networking and automotive driver assistance |
· | Highly differentiated financial profile with estimated 2020 revenues of approximately $105 million, 79% gross margins and 35% operating margins with migration to next-generation products driving an estimated revenue CAGR of 20% to 25% from 2020 to 2025 |
· | Business combination with ACE Convergence Acquisition Corp. (Nasdaq: ACEV) positions Achronix to capitalize on non-cancellable backlog in excess of $160 million and over $1.1 billion in identified pipeline opportunities driven by Speedster® and Speedcore™ products |
· | Approximately $2.1 billion estimated post-transaction equity value based on current assumptions with up to $330 million in gross cash proceeds to the company, assuming minimal redemptions |
· | Oversubscribed $150 million fully committed common stock concurrent PIPE financing at $10.00 per share anchored by ACE Equity Partners LLC, funds and accounts managed by BlackRock and Hedosophia; and with participation from other institutional investors |
· | Achronix expected to be listed on Nasdaq under the ticker symbol “ACHX” following an anticipated transaction close by the end of the first half of 2021 |
Santa Clara, Calif., January 7, 2021 – Achronix Semiconductor Corporation, a leader in high-performance field-programmable gate arrays (FPGAs) and embedded FPGA (eFPGA) IP, and ACE Convergence Acquisition Corp. (ACE) (Nasdaq: ACEV), a special-purpose acquisition company, today announced that they have entered into a definitive agreement for a business combination that would result in the combined entity continuing as a publicly listed company. Upon closing of the transaction, the combined operating entity will be named Achronix Semiconductor Corporation and will be listed under the ticker symbol ACHX.
As the only independent, high-end FPGA semiconductor company that offers both high-end standalone FPGAs along with eFPGA IP technology, Achronix is uniquely positioned to address the needs of high-performance applications that require programmable hardware accelerators. Demand for FPGA-based data accelerators is driven by the rapid expansion of high-growth markets, including AI, Cloud, 5G, and ADAS. Achronix’s semiconductor portfolio targets the nearly $10 billion data acceleration market, which is expected to have double-digit CAGR through 2025. (Data according to Semico Research.)
Achronix’s data acceleration solutions provide optimal performance per watt compared to CPU- and GPU-based solutions with the additional benefits of hardware flexibility to support changing acceleration workloads. As compute performance requirements are now doubling in as little as three to four months, the need for dedicated FPGA-based hardware accelerators is growing rapidly. Customer validation of Achronix’s products is substantiated by nearly $240 million in orders received in 2020. Achronix’s new Speedster7t and Speedcore products, built on leading-edge process technology, have contributed to a design pipeline value in excess of $1.1 billion and are expected to drive Achronix’s future growth.
“We are very excited to have found the ideal merger partner in Achronix, the last remaining independent, high-end FPGA player,” said Behrooz Abdi, CEO and Chairman of ACE. “John Lofton Holt and Robert Blake have created a truly disruptive semiconductor company, with highly differentiated data acceleration FPGA products, complemented with a highly innovative embedded FPGA IP business model. Further bolstering Achronix’s robust free cash generation with proceeds from the merger will accelerate deployment of the company’s data acceleration solutions and position Achronix to fast track additional strategic growth initiatives.”
“The next era of growth and opportunity is in the trillions of connected devices providing compute-intensive intelligence, all fueled by network connectivity and 5G,” said Robert Blake, Achronix’s Chief Executive Officer. “Achronix’s technology was designed to address the insatiable demand for new hardware-based data acceleration, which we believe is resulting in significant long-term growth opportunities for our company. We are excited to partner with Behrooz and the ACE team at this inflection point in the company’s trajectory to capitalize on our design pipeline in excess of $1.1 billion, as we continue to create value as a public company.”
Leadership Team
Upon the closing of the transaction, the combined company will be led by the Achronix management team including Chief Executive Offer Robert Blake and Chief Financial Officer Mark Voll. Behrooz Abdi and Dr. Sunny Siu of ACE, with their combined 59 years of semiconductor experience, will add value to Achronix post-transaction by leveraging their deep sector knowledge and industry relationships, as board members and/or senior advisors.
Transaction Overview
The transaction reflects an implied equity value of the combined company of $2.1 billion, based on current assumptions, with a $10.00 per share PIPE financing subscription price. Upon closing, the combined company will receive up to $330 million in cash, comprised of $150 million in gross proceeds from a concurrent PIPE financing and up to $230 million in cash held in trust by ACE, assuming no redemptions by ACE shareholders, less $50 million paid to Achronix’s existing shareholders.
The boards of directors for both Achronix and ACE have unanimously approved the proposed business combination. The transaction is expected to be completed by the end of the first half of 2021. The transaction is subject to, among other things, the approval by ACE’s shareholders, satisfaction or waiver of the conditions stated in the definitive merger agreement (the “Merger Agreement”) and other customary closing conditions including a registration statement on Form S-4 being declared effective by the U.S. Securities and Exchange Commission (the “SEC”), the receipt of certain regulatory approvals, and approval by The Nasdaq Stock Market LLC to list the securities of the combined company.
Additional information about the proposed transaction, including a copy of the Merger Agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by ACE with the SEC and available at www.sec.gov. Additional information about the proposed transaction will be described in ACE’s registration statement on Form S-4 relating to the merger, which will include a proxy statement/prospectus, and other documents regarding the proposed transaction, each to be filed with the SEC.
Advisors
J.P. Morgan Securities LLC is serving as sole financial advisor and capital markets advisor to Achronix. Cooley LLP is serving as legal advisor to Achronix. Jefferies LLC is serving as lead financial advisor to ACE. J.P. Morgan Securities LLC and Barclays Capital Inc. served as placement agents to ACE, with Barclays also serving as capital markets advisor to ACE. Davis Polk & Wardwell LLP is acting as legal counsel to the placement agents. Cantor Fitzgerald & Co. also served as a capital markets advisor and Northland Securities, Inc. is also serving as financial advisor to ACE. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to ACE.
Webcast and Investor Conference Call
Achronix and ACE will host a joint investor conference call to discuss the proposed transaction today, January 7, 2021 at 4:30 p.m. ET.
To listen to the conference call via telephone dial 1-877-407-0789 (U.S. toll free) and 1-201-689-8562 (international callers) and enter the conference ID number 13714692. A live webcast and replay of the call will be available here and can also be accessed at https://achronix.com/investors_relations. A telephone replay will also be available until midnight on Monday, January 21, 2021 at 1-844-512-2921 (U.S. toll free) and 1-412-317-6671 (international callers), conference ID number 13714692.
About Achronix Semiconductor Corporation
Achronix Semiconductor Corporation is a fabless semiconductor corporation based in Santa Clara, California, offering high-end FPGA-based data acceleration solutions, designed to address high-performance, compute-intensive and real-time processing applications. Achronix FPGA and eFPGA IP offerings are further enhanced by ready-to-use accelerator cards targeting AI, machine learning, networking and data center applications. All Achronix products are fully supported by a complete and optimized range of Achronix software tools called ACE, which enables customers to quickly develop their own custom applications. Achronix has a global footprint, with sales and design teams across the U.S., Europe and Asia. For more information, please visit www.achronix.com.
About ACE Convergence Acquisition Corp.
ACE Convergence Acquisition Corp. is a $230 million special purpose acquisition company whose business mandate is to identify and acquire an emerging leader in the IT infrastructure software/systems and system-on-a-chip markets that is well-positioned to capitalize on the changing landscape of data acceleration being driven by developments in AI, Cloud, and 5G technologies. ACE is comprised of a team of sector specialists with a solid track record of scaling complex technology organizations and making transformative value-creation decisions. For more information, please visit http://acev.io/home/default.aspx.
About ACE Equity Partners
ACE Equity Partners is a Seoul-headquartered cross-border private equity firm with a single-minded focus on the convergence of digital and industrial technologies. For more information, please visit: http://acelp.co.kr.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the federal securities laws, including with respect to the proposed transaction between Achronix and ACE. These forward-looking statements generally are identified by the words “intend,” “future,” “may,” “will,” “would,” “will be,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. All statements, other than statements of present or historical fact included in this press release, regarding ACE’s proposed acquisition of Achronix, ACE’s ability to consummate the proposed transaction, the benefits of the proposed transaction and the combined company’s future financial performance, as well as the combined company’s strategy, future operations, estimated financial position, estimated revenue growth, prospects and pipeline expectations, estimated market growth, estimated backlog, plans and objectives of management are forward-looking statements. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: the risk that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect the price of ACE’s securities; the risk that the proposed transaction may not be completed by ACE’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by ACE; the failure to satisfy the conditions to the consummation of the proposed transaction, including the adoption of the Merger Agreement by the shareholders of ACE or the stockholders of Achronix and the receipt of certain governmental and regulatory approvals; the lack of a third party valuation in determining whether or not to pursue the proposed transaction; the inability to complete the concurrent PIPE financing; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; the effect of the announcement or pendency of the transaction on Achronix’s business relationships, operating results, and business generally; risks that the proposed transaction disrupts current plans and operations of Achronix; the outcome of any legal proceedings that may be instituted against Achronix or against ACE related to the Merger Agreement or the proposed transaction; the ability to maintain the listing of ACE’s securities on a national securities exchange; changes in domestic and foreign business, market, financial, political, and legal conditions and changes in the combined capital structure; the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities; failure to realize the anticipated benefits of the proposed transaction; risks relating to the uncertainty of the projected financial information with respect to Achronix; risks related to the rollout of Achronix’s business and the timing of expected business milestones; the effects of competition on Achronix’s business; the effects of the cyclical nature of the semiconductor industry on Achronix’s business; risks related to Achronix’s customer concentration; the risks to Achronix’s business if internal processes and information technology systems are not properly maintained; risks associated with Achronix’s operational dependence on independent contractors and third parties; risks associated with Achronix’s reliance on certain suppliers for, among other things, silicon wafers; risks and uncertainties related to Achronix’s international operations, including possible restrictions on cross-border investments which could harm Achronix’s financial position; and risks associated with Achronix’s ability to develop new products and adapt to new markets. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the final prospectus to ACE’s registration statement on Form S-1, as amended (File No. 333-239716), the registration statement on Form S-4 discussed above and other documents filed or that may be filed by ACE from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. There may be additional risks that neither ACE nor Achronix presently know, or that ACE or Achronix currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. ACE and Achronix anticipate that subsequent events and developments will cause ACE’s and Achronix’s assessments to change. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements as predictions of future events, and Achronix and ACE assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable law. Neither Achronix nor ACE gives any assurance that either Achronix or ACE, or the combined company, will achieve its expectations.
Important Information for Investors and Stockholders
In connection with the proposed transaction, ACE will file a registration statement on Form S-4 (the “Registration Statement”) with the SEC, which will include a preliminary proxy statement to be distributed to holders of ACE’s common stock in connection with ACE’s solicitation of proxies for the vote by ACE’s stockholders with respect to the proposed transaction and other matters as described in the Registration Statement, as well as the prospectus relating to the offer of securities to be issued to Achronix’s stockholders in connection with the proposed transaction. After the Registration Statement has been filed and declared effective, ACE will mail a definitive proxy statement, when available, to its stockholders. Investors and security holders and other interested parties are urged to read the proxy statement/prospectus, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about ACE, Achronix and the proposed transaction. Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus (when available) and other documents filed with the SEC by ACE through the website maintained by the SEC at http://www.sec.gov, or by directing a request to: ACE Convergence Acquisition Corp., 1013 Centre Road, Suite 403S, Wilmington, DE 19805. The information contained on, or that may be accessed through, the websites referenced in this press release is not incorporated by reference into, and is not a part of, this press release.
Participants in the Solicitation
ACE and its directors and officers may be deemed participants in the solicitation of proxies of ACE’s shareholders in connection with the proposed business combination. Security holders may obtain more detailed information regarding the names, affiliations and interests of certain of ACE’s executive officers and directors in the solicitation by reading ACE’s final prospectus filed with the SEC on July 28, 2020, the registration statement on Form S-4, proxy statement/prospectus and other relevant materials filed with the SEC in connection with the business combination when they become available. Information concerning the interests of ACE’s participants in the solicitation, which may, in some cases, be different than those of their stockholders generally, will be set forth in the registration statement, proxy statement relating to the business combination when it becomes available.
Non-Solicitation
This press release is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of ACE, the combined company or Achronix, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.
Trademarks
Achronix and Speedster are registered trademarks, and Speedcore and Speedchip are trademarks of Achronix Semiconductor Corporation. All other brands, product names and marks are the property of their respective owners.
Contacts
For Achronix:
(408) 625-3120
Media@Achronix.com / IR@Achronix.com
ACE Convergence Acquisition Corp.:
(302) 633-2102
info@acev.io
Exhibit 99.2
January │ 2021 Investor Presentation
2 Disclaimers (1/2) This presentation (this “Presentation”) is provided for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a potential business combination between Achronix Semiconductor Corporation (“Target ” or “ Achronix ”) and ACE Convergence Acquisition Corp . (“ACE”) and related transactions (the “Potential Business Combination”) and for no other purpose . By reviewing or reading this Presentation, you will be deemed to have agreed to the obligations and restrictions set out below . Without the express prior written consent of ACE, this Presentation and any information contained within it may not be (i) reproduced (in whole or in part), (ii) copied at any time, (iii) used for any purpose other than your evaluation of Target or (iv) provided to any other person, except your employees and advisors with a need to know who are advised of the confidentiality of the information . This Presentation supersedes and replaces all previous oral or written communications between the parties hereto relating to the subject matter hereof . This Presentation and any oral statements made in connection with this Presentation do not constitute an offer to sell, or a solicitation of an offer to buy, or a recommendation to purchase, any securities in any jurisdiction, or the solicitation of any vote, consent or approval in any jurisdiction in connection with the Potential Business Combination or any related transactions, nor shall there be any sale, issuance or transfer of any securities in any jurisdiction where, or to any person to whom, such offer, solicitation or sale may be unlawful under the laws of such jurisdiction . This Presentation does not constitute either advice or a recommendation regarding any securities . Any offer to sell securities will be made only pursuant to a definitive Subscription Agreement and will be made in reliance on an exemption from registration under the Securities Act of 1933 , as amended, for offers and sales of securities that do not involve a public offering . ACE and the Target reserve the right to withdraw or amend for any reason any offering and to reject any Subscription Agreement for any reason . The communication of this Presentation is restricted by law ; it is not intended for distribution to, or use by any person in, any jurisdiction where such distribution or use would be contrary to local law or regulation . No representations or warranties, express or implied are given in, or in respect of, this Presentation . Industry and market data used in this Presentation have been obtained from third - party industry publications and sources as well as from research reports prepared for other purposes . Neither ACE nor Target has independently verified the data obtained from these sources and cannot assure you of the data’s accuracy or completeness . This data is subject to change . Recipients of this Presentation are not to construe its contents, or any prior or subsequent communications from or with ACE, Target or their respective representatives as investment, legal or tax advice . In addition, this Presentation does not purport to be all - inclusive or to contain all of the information that may be required to make a full analysis of Target or the Potential Business Combination . Recipients of this Presentation should each make their own evaluation of Target and of the relevance and adequacy of the information and should make such other investigations as they deem necessary . Forward Looking Statements Certain statements included in this Presentation are not historical facts but are forward - looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward - looking statements gen erally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “po tential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or th at are not statements of historical matters, but the absence of these words does not mean that a statement is not forward - looking. All statements, other than statements of present o r historical fact included in this Presentation, regarding ACE’s proposed acquisition of Target, ACE’s ability to consummate the proposed transactions, the benefits of the proposed transactions and the combined company’s future financial performance, as well as the combined company’s strat egy , future operations, estimated financial position, estimated revenue growth, prospects and pipeline expectations, estimated m ark et growth, estimated backlog, plans and objectives of management, among others, are forward - looking statements. These statements are based on various assumpti ons, whether or not identified in this Presentation, and on the current expectations of Target’s management and are not predi cti ons of actual performance, and, as a result, are subject to risks and uncertainties. These forward - looking statements are provided for illustrative purpose s only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a predictio n o r a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many fa cto rs could cause actual future events to differ materially from the forward - looking statements in this Presentation, including but not limited to: the inability of the parties to successfully or timely consummate the Potential Business Combination, including the risk that any required regulatory approva ls are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company or the expected benefits of the Potential Business Combination is not obtained; the risk that the Potential Business Combination may not be completed by ACE’s business co mbination deadline and the potential failure to obtain an extension of the business combination deadline if sought by ACE; fa ilu re to realize the anticipated benefits of the Potential Business Combination; risks relating to the uncertainty of the projected financial information with re spect to Target; the lack of a third party valuation in determining whether or not to pursue the Potential Business Combinati on; the inability to complete the concurrent PIPE financing; the occurrence of any event, change or other circumstance that could give rise to the termination of the defi nit ive transaction agreement; the effect of the announcement or pendency of the transaction on Target’s business relationships, ope rating results, and business generally; risks that the Potential Business Combination disrupts current plans and operations of Target; the outcome of any legal proce edi ngs that may be instituted against Target or against ACE related to the definitive transaction agreement or the Potential Bus ine ss Combination; the ability to maintain the listing of ACE’s securities on a national securities exchange; changes in domestic and foreign business, market, financia l, political, and legal conditions and changes in the combined capital structure; the ability to implement business plans, forec ast s, and other expectations after the completion of the Potential Business Combination, and identify and realize additional opportunities; failure to realize the a nti cipated benefits of the Potential Business Combination; risks relating to the uncertainty of the projected financial informat ion with respect to Target; risks related to the rollout of Target’s business and the timing of expected business milestones; the effects of competition on Target’s business; th e effects of the cyclical nature of the semiconductor industry on Target’s business; risks related to Target’s customer conce ntr ation; the risks to Target’s business if internal processes and information technology systems are not properly maintained; risks associated with Target’s operational de pendence on independent contractors and third parties; risks associated with Target’s reliance on certain suppliers for, amon g o ther things, silicon wafers; risks and uncertainties related to Target’s international operations, including possible restrictions on cross - border investments which co uld harm Target’s financial position; and risks associated with Target’s ability to develop new products and adapt to new mar ket s. The foregoing list of factors is not exhaustive. Please carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Fact ors ” section of the final prospectus to ACE’s registration statement on Form S - 1, as amended (File No. 333 - 239716), the registratio n statement on Form S - 4 to be filed with the SEC by ACE and other documents filed or that may be filed by ACE from time to time with the SEC. These filings ident ify and address other important risks and uncertainties that could cause actual events and results to differ materially from thos e contained in the forward - looking statements. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results im plied by these forward - looking statements. There may be additional risks that neither ACE nor Target presently know or that ACE and Target currently believe are immaterial that could also cause actual results to differ from those contained in the forward - looking statements. In addition, f orward - looking statements reflect ACE’s and Target’s expectations, plans or forecasts of future events and views as of the date of this Presentation. ACE and Target anticipate that subsequent events and developments will cause ACE’s and Target’s assessments to change. However, while ACE an d T arget may elect to update these forward - looking statements at some point in the future, ACE and Target specifically assume no ob ligation and do not intend to do so, nor do they intend to revise these forward - looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable law. These forward - looking statements should not be relied upon as represe nting ACE’s and Target’s assessments as of any date subsequent to the date of this Presentation. Neither ACE nor Target gives any assurance that eithe r A CE or Target, or the combined company, will achieve its expectations. Accordingly, undue reliance should not be placed upon t he forward - looking statements as predictions of future events .
3 Disclaimers (2/2) Use of Data The data contained herein is derived from various internal and external sources. No representation is made as to the reasonab len ess of the assumptions made within or the accuracy or completeness of any projections or modeling or any other information co nta ined herein. Any data on past performance or modeling contained herein is not an indication as to future performance. ACE and Target assume no obligation t o u pdate the information in this presentation. Further, the financials contained herein were prepared by Target in accordance with private company AICPA standards. Target is currently in the process of uplifting its financials to comply with public company and SEC requirements. Trademarks ACE and Target own or have rights to various trademarks, service marks and trade names that they use in connection with the o per ation of their respective businesses. This presentation may also contain trademarks, service marks, trade names and copyright s o f third parties, which are the property of their respective owners. The use or display of third parties’ trademarks, service marks, trade names or products in this presentation is not intended to, and does not imply, a relationship with ACE or Target, or an endorsement or sponsorship by or of ACE or Target. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this presentation may appear without th e T M, SM, ® or © symbols, but such references are not intended to indicate, in any way, that ACE or Target will not assert, to t he fullest extent under applicable law, their rights or the right of the applicable licensor to these trademarks, service marks, trade names and copyrights . Use of Projections The projections, estimates and targets in this Presentation are forward - looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond ACE’s and Target’s control . While all projections, estimates and targets are necessarily speculative, ACE and Target believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection, estimate or target extends from the date of preparation . The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to di ff er materially from those contained in such projections, estimates and targets . The inclusion of projections, estimates and targets in this presentation should not be regarded as an indication that ACE and Target , or their representatives, considered or consider the financial projections, estimates and targets to be a reliable prediction of future events . Financial Information ; Non - GAAP Financial Measures The financial information and data contained in this Presentation is unaudited and does not conform to Regulation S - X . Accordingly, such information and data may not be included in, may be adjusted in or may be presented differently in, any proxy statement or registration statement to be filed by ACE or Target with the SEC . Some of the financial information and data contained in this Presentation, such as EBIT Margin and Net Income Margin, has not been prepared in accordance with United States generally accepted accounting principles (“GAAP”) . These non - GAAP measures, and other measures that are calculated using such non - GAAP measures, are an addition, and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to operating income, net income or any other performance measures derived in accordance with GAAP . ACE and Target believe these non - GAAP measures of financial results including on a forward - looking basis provide useful information to management and investors regarding certain financial and business trends relating to Target’s financial condition and results of operations . Target’s management uses these non - GAAP measures for trend analyses, for purposes of determining management incentive compensation, and for budgeting and planning purposes . ACE and Target believe that the use of these non - GAAP financial measures provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing Target’s financial measures with other similar companies, many of which present similar non - GAAP financial measures to investors . Management of ACE does not consider these non - GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP . However, there are a number of limitations related to the use of these non - GAAP measures and their nearest GAAP equivalents . For example other companies may calculate non - GAAP measures di ff erently, or may use other measures to calculate their financial performance, and therefore Target’s non - GAAP measures may not be directly comparable to similarly titled measures of other companies . See the footnotes on the slides where these measures are discussed and the Appendix for definitions of these non - GAAP financial measures and reconciliations of these non - GAAP financial measures to the most directly comparable GAAP measures . Important Information for Investors and Stockholders ACE and Target and their respective directors and executive officers, under SEC rules, may be deemed to be participants in the solicitation of proxies of ACE’s shareholders in connection with the Potential Business Combination . Investors and security holders may obtain more detailed information regarding the names and interests in the Potential Business Combination of ACE’s directors and officers in ACE’s filings with the SEC, including ACE’s registration statement on Form S - 1 , which was originally filed with the SEC on July 10 , 2020 . To the extent that holdings of ACE’s securities have changed from the amounts reported in ACE’s registration statement on Form S - 1 , such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC . Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies to ACE’s shareholders in connection with the Potential Business Combination is set forth in the proxy statement/prospectus on Form S - 4 for the Potential Business Combination, which is expected to be filed by ACE with the SEC . This Presentation is not a substitute for the registration statement or for any other document that ACE may file with the SEC in connection with the Potential Business Combination . INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION . Investors and security holders may obtain free copies of other documents filed with the SEC by ACE through the website maintained by the SEC at http : //www . sec . gov . INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY AUTHORITY NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN . ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
4 Introduction to the Team Achronix Executives ACE Executive Previous experience Robert Blake Chief Executive Officer Joined 2011 Behrooz Abdi CEO & Chairman Mark Voll Chief Financial Officer Joined 2020
Transaction Summary 5 Transaction Details Overview ▪ ACE Convergence Acquisition Corp. (Nasdaq: ACEV), a publicly - listed special purpose acquisition company, proposes to enter into a business combination with Achronix Semiconductor Corporation through a reverse subsidiary merger Capital Structure ▪ $230mm cash held in trust assuming no redemptions ▪ $150 mm PIPE is being raised in connection with the proposed transaction Sponsor Commitments ▪ Anchor investor (a vehicle managed by ACE Equity Partners LLC) to purchase ~$ 50 mm of the PIPE ▪ Sponsor also committing an additional $50mm to backstop any redemptions ▪ Sponsor commitment of $200mm minimum cash in trust (incl. PIPE proceeds raised) ▪ Earn - out of up to 5mm shares (3.5mm Seller earn - out and 1.5mm Sponsor earn - out) ▪ Sponsor, Executive Officers, Directors and >1% Achronix holders subject to a 1 year lock - up 1 Valuation ▪ Pre - money equity value of $1,700mm and Pro - forma equity value of $2,073mm Ownership 2 ▪ ~80% of existing Target shareholders; ~11% ACE public shareholders; ~7% PIPE investors; ~2% ACE Sponsor Anticipated Timing ▪ Transaction announcement in January 2021 and targeting closing after SEC review process and receipt of approval by stockholde rs of ACE and Achronix Source: Achronix management current estimates 1 Sponsors will be subject to 1 year lock - up, subject to earlier release if the reported last sale price equals or exceeds $12.00 per share for any 20 trading days within any 30 - trading day period commencing at least 150 days after closing. Company directors, executive officers, and all company holders of more than 1% of new Achronix common sto ck will also be subject to 1 year lock - up, unless the last sale price equals or exceeds $12.00 per share for any 20 trading days within any 30 - trading day period commencing 150 days after closing; 2 Excludes warrants and earnouts. Assumes no redemptions.
ACE Overview 6 ACE at a Glance Led By Operators With Deep Domain Expertise Mandate Identify and acquire emerging leader in IT infrastructure and SoC markets Sponsor commitment of ~$50mm in anchor PIPE demand and $200mm minimum cash condition ~$ 230mm held in trust Backed by ~$1bn cross - border Tech PE Manager, ACE Equity Partners Management Team Track Record ACE Differentiation ▪ Team of operators with 160+ years of combined experience in the semiconductor and software industries ▪ Significant track record of scaling public and private companies ▪ Deep and extensive relationships in the semiconductor and software ecosystems • Experienced Chairman & CEO with a history of monetizing public and private companies Behrooz Abdi CEO & Chairman 35 years of semis experience Dr. Sunny Siu President & Director 24 years of semis experience Key Board Members Omid Tahernia (ex Corp VP of Xilinx Proc. Solutions) Ken Klein (ex Chairman & CEO, WindRiver ) Ryan Benton (Ex CEO and CFO, EXAR) Raquel Chmielewski (Dir. of Inv., Council on Foreign Rel.) ▪ Original transaction value of $227mm in 2009 turned into over 80% of attributable value in NetLogic’s $3.7bn acquisition by Broadcom in 2011 1 ▪ Built and ran business unit that propelled 67% growth at NetLogic during its integration period ▪ Transaction value of $1.3bn (May 18, 2017) ▪ Organic growth, diversification, and acquisitions transformed InvenSense into a sensor system leader / • Deep domain expertise and successful entrepreneur Denis Tse Secretary & Director • Cross - border technology investor ACE Equity Partners / 1 Broadcom Form 8 - K filed 9/13/2011.
Achronix – a High Growth Investment Opportunity 7 Unique Business Model and Superior Financial Profile Scarce High - End Programmable Logic Play Data Acceleration in AI, Cloud, and 5G Investment Highlights $158mm Revenue 2021E 76% Gross margin 2021E 32% EBIT margin 2 2021E ~30% Estimated revenue CAGR 20E - 23E Financial profile x Pure - play data acceleration solution, operating in high growth FPGA end - markets – AI, Cloud, 5G, and ADAS x Disruptive technology optimized for high - bandwidth workloads x Unique and synergistic combination of product and IP business model x Compelling financial model with rapid revenue growth, software - like margins x A seasoned team with a long history of innovation and focused execution x Scarcity value as the only independent high - performance FPGA company 1 Note: FPGA stands for Field - Programmable Gate Array 1 Based on all FPGA companies with revenue above $50mm and gross margin above 65%. 2 EBIT Margin is a non - GAAP measure. For a reconciliation of each of our non - GAAP measures to the most comparable GAAP measure, s ee Appendix.
Company Overview 1
Introduction to Achronix 9 At a Glance $158mm Revenue 2021E Key Financial Metrics 76% Gross margin 2021E 32% EBIT margin 2 2021E Key Partnerships ▪ Founded in 2004 ▪ The only independent high - end FPGA provider 1 ▪ Differentiated IP licensing business ▪ Key products include high - end FPGAs, embedded FPGAs ▪ Key markets: 5G, Automotive and AI/ML, SmartNIC and Storage applications in Data Center Phase 3 Accelerate Phase 2 Scale Phase 1 Design & build 55 patents • ~10mm cores shipped • $400mm+ of cumulative orders • ~$1.1bn pipeline opportunity 3 • ~30% estimated revenue CAGR 20E - 23E Future 1 Based on all FPGA companies with revenue above $50mm and gross margin above 65%. 2 EBIT Margin is a non - GAAP measure. For a reconciliation of each of our non - GAAP measures to the most comparable GAAP measure, s ee Appendix; 3 As of November 2020.
Big Data and AI Expected to Fundamentally Redefine Compute Needs 10 100s of Millions 1 Billion Phones Simple workloads, serial processing Embedded processing, power efficiency 100 Million FLOPS Giga FLOPS PC Mobile / Internet Data intensive, parallel computing, zero latency Tera FLOPS 1 Trillion Devices 1 AI Era Source: IDC, Worldwide Traditional PC Forecast Update, 2020 – 2024 2Q20; IDC, Worldwide Mobile Phone Forecast Update, 2020 – 2024 Se ptember 2020; 1 By 2035, an update on Arm’s AI journey toward a trillion connected device – Arm, September 2019.
11 Limitations of Traditional Approaches: Traditional Solutions Can No Longer Scale with Compute Demands 1970 2010 1980 1990 2000 2020 Orders of Magnitude 10 - 12 10 - 08 10 - 04 10 - 00 10 +04 300,000x increase since 2002 Moore’s Law: Growth doubles every 2 years AI Capacity: Growth doubles every 3 to 4 months Performance Power efficiency Cost and flexibility Data Acceleration and AI Workloads Require Specialized Flexible Solutions Source: Bill Gates: AAAS Feb 14th 2020 Note: 1 PETAFLOP = 1,000,000,000,000,000 Neural Net Operations / Second.
12 Compute Acceleration Choices in the Age of AI and Big Data CPU Serial processing GPU Highly parallel FPGA Programmable hardware ASIC Hardwired, custom - built Flexibility and Ease of Use Performance and Power Efficiency FPGA Combines the Programmability of CPU & GPU and Performance of ASIC
13 AI Adoption Expected to Drive Shift to Heterogeneous Compute System HD CPU Central Processing Unit (CPU) SSD DRAM . DRAM DRAM Network Computer - Centric (Current ) NIC SSD CPU Data Processor Unit DRAM DRAM DRAM . Network Data - Centric (Future ) Expected majority of servers in 5 years “CPU is Complexity Offload Engine for FPGA” 1 CPU GPU ASIC FPGA GPU eFPGA 1 Microsoft, H2RC 2016.
14 Programmable Logic, the Orchestration Layer for All Heterogeneous Compute Systems SSD DPU CPU GPU ASIC FPGA RAM FPGA eFPGA Massive Flow of Data AND/ OR x Flexibility / Dynamic Allocation x Purpose - Built for Data Acceleration x Optimized for High - Bandwidth / AI Workloads Advantages of FPGA 0101101001101 1001101001011 1000100100101 0010110100010 0101011110010
15 ~$10B Opportunity With Multiple Potential High - Growth Markets $3.3bn $5.4bn 2020E 2025E 10% CAGR Digital IP Accelerators 1 Market Size ($ bn ) Projected CAGR 20E - 25E Opportunity Product Segments $1.9bn $3.4bn 2020E 2025E 12% CAGR Select High - Growth Focused End Markets 12% 10% 23% 26% 26% 27% 10% 31% 16% 21% 24% 28% Overall 5G Wireless Automotive Computational Storage SmartNIC Compute, Cloud and Edge Digital IP Accelerators High-End FPGA High - End FPGA Market Size ($ bn ) Source: Achronix estimates, Semico Research 1 Digital IP includes CPU, GPU (less graphics), DSP, Security, Audio, eFPGA.
Achronix Data Acceleration Solutions 16 ASIC/ SoC Speedster7t x Most advanced high - performance FPGA 1 x Optimized for data acceleration x Advanced efficient data transports Speedcore eFPGA x Custom FPGA to embed in SoC / ASIC x Only high - end embedded FPGA solution 1 x Over 10mm cores shipped VectorPath Accelerator Cards x High - performance PCIe data accelerator x Standalone with full software suite x Accelerate data center designs Supported by / Synthesis – Verification – Timing – Programming – Debug All Products Supported by Achronix ACE Design Tools High - End FPGAs Embedded FPGA ( eFPGA ) Accelerator Cards Speedster family - chip business Speedcore family - IP business 1 Based on process node and all FPGA companies with revenue above $50mm and gross margin above 65%.
Speedcore : Enabling Technology for New Applications 17 Power FPGA 75% Lower Performance FPGA 100x Higher Cost FPGA 90% Lower • Only high - end embedded FPGA solution 1 • Custom FPGA to embed in SoC /ASICs for high volume deployment • Proven IP with over 10 million cores shipped • Benefits: ASIC Performance with FPGA Flexibility x Enable ASIC - like performance x Keep flexibility only where it is required x Create multiple product variants x Extend product lifecycle: enables next - gen x Change ASIC / SoC economics 0 200 400 600 800 1,000 1,200 0 2 4 6 8 10 ASIC Unit Volume Year Extended Lifecycle Standard Lifecycle Address More SKUs Extend Lifecycle Earlier Tape - out Source: Achronix estimates 1 Based on all FPGA companies with revenue above $50mm and gross margin above 65%.
Achronix’s Software Ecosystem Enables Ease of Use 18 Partners Achronix’s CAD Environment (ACE) Optimized Library IP Bridge Industry Standard Frameworks ACE Libraries: IP: Linear Algebra Matrix Math Floating Point Math Fast Fourier Transform Genomics Compression/Decompression Encryption Algorithmic Search KVS H.264 Full - stack Combining High - Quality Software with In - house Tools Plug - ins: Main tool:
Differentiated Competitive Position – Why Achronix Wins 19 Performance FPGA and eFPGA Functionality Logic Density Standalone FPGAs Embedded FPGAs eFPGA High - End Mid - R ange Low - End Target mission - critical compute applications Target connectivity and interface applications Why We Win Targeted Applications Superior product AI / ML SmartNIC Computational Storage Automotive 5G Wireless Sticky design environment Only independent FPGA focused on high - end markets 1 Only company with dual strategy (FGPA + eFGPA ) 1 Sitting $1bn+ pipeline and contracted revenue 2 1 Based on all FPGA companies with revenue above $50mm and gross margin above 65%; 2 As of November 2020.
Key Potential High - Growth Compute Applications for Achronix’s Solutions 20 AI / ML SmartNIC Results Highly effective FPGA processing performance. Flexible interfacing Enhanced connectivity and line rate packet processing offload ASIC cost and power cost with FPGA programmability for new wireless standards Use Case Machine Learning / Edge Compute 400GE Smart NIC High bandwidth, low latency wireless infrastructure 5G Wireless Solution High performance ML Inference; Interoperate with ML ASIC High speed low latency crypto, compression and transcoding ASIC with eFPGA for optimized Radio and Baseband processing Automotive OEM ADAS ASIC cost structure and power, with FPGA programmability ADAS Sensor Fusion ASIC with eFPGA for optimized data sensor collection Computational Storage Best - in - class performance / watt with optimized MLP architecture Process Data Closer to Storage Hardware acceleration for machine learning, crypto and compression
21 Uniquely Positioned for Rapidly Growing Markets 5G Wireless SmartNIC AI / ML Automotive Computational Storage Aligned to Growth Markets and Industry Leaders Speedcore (IP) Speedster and Speedcore (chip and IP) Speedster and Speedcore (chip and IP) Speedster and Speedcore (chip and IP) Speedster and Speedcore (chip and IP)
Comparison of High - End FPGA Vendor Strategies ▪ Follow ‘one - size - fits - all’ strategy ‒ Heterogeneous multicore architecture ▪ Very efficient for targeted applications (e.g. video or speech) ▪ Less suitable for general purpose data acceleration applications ▪ Highly complex software tool flow (legacy) ▪ Broad product portfolio ▪ Focused on FPGA as CPU coprocessor and specialized silicon ▪ Reduced focused on general purpose FPGA portfolio ▪ Latest products are evolutionary, incremental improvements – Product delays – No optimizations for ML applications ▪ No low - cost FPGA platform x Purpose - built for data acceleration applications vs. custom hardware • Optimized Machine Learning processor • Highly efficient data movement • Industry - leading h igh speed interfaces x Homogenous design architecture which enables easier design flow and backward compatibility x Only provider of high - end embedded FPGA 1 • Offers a low cost migration path • Enables new applications x Enabling under - served markets: Industrial, T&M Only Company to Offer High - End FPGA and Migration to Embedded FPGA solutions 1 22 1 Based on all FPGA companies with revenue above $50mm and gross margin above 65%.
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Long History of FPGA Technology Innovation and 1 st Silicon Success 23 65nm Process Node R&D 7nm R&D Next Gen R&D 22nm 22i 22nm 12nm 16nm 7nm 5nm 3nm Accelerate Scale Design & build • 55 patents • 10mm cores shipped • $400mm+ cumulative orders • Projected ~30% revenue CAGR 20E - 23E • Estimated ~$1.1bn pipeline opportunity 1 1 As of November 1, 2020.
Strong and Diverse Design Wins Pipeline across Speedster and Speedcore ~$720mm ~$400mm Pipeline ~$1,120mm Revenue Opportunity Pipeline Opportunity Evaluation Interest Design Win 16 projects 26 projects 15 projects 20 projects 6 projects 6 projects • Downloaded product sheets and evaluation against other products • Selected Achronix and doing a comprehensive technical analysis using ACE software tools (1,000+ R&D man - hours) • Speedcore – Commercial agreement • Speedster – initial product orders and VectorPath cards ~$162mm (as of Nov 2020) 24 Backlog chip IP
Management Team: Industry Veterans and Key Technology Leaders 25 Virantha N. Ekanayake: CTO & Co - Founder Achronix: 15 years PhD and Achronix Founder 24 years in semiconductors Robert Blake: CEO Achronix: 9 years Altera: 17 years 26 years in semiconductors 17 years in FPGA Raymond Nijssen: VP of System Engineering Achronix: 14 years Synopsys, Tabula: 10 years 24 years in semiconductors Mike Fitton: VP of Strategic Planning Achronix: 3 years Altera: 14 years 17 years in semiconductors 17 years in FPGA Steve Mensor: VP of Sales & Marketing Achronix: 8 years Altera: 22 years 30 years in semiconductors with 22 years in FPGA Chris Pelosi: VP Hardware Engineering Achronix: 12 years Nvidia: 4 years 24 years in semiconductors Randy Jurrat: VP of Operations Achronix: 12 years ChipX: 12 years 24 years in semiconductors Kamal Chaudhary: Sr. VP Software Engineering Achronix: 13 years Xilinx: 14 years 27 years in semiconductors Renowned in FPGA architecture Mark Voll : CFO Techpoint : 1 year Aquantia : 3 years 25 years in semiconductors
Achronix Worldwide Indirect Sales Channels North America 78 Europe 58 Asia 31 26 Sales and Applications Support Key IP & Design partners
Growth Strategy 27 Expand Sales footprint to capture new opportunities Continue to expand technology footprint Multiple Avenues to Deliver Long - Term Value for Stakeholders Continue to invest in product innovation
0 50000 100000 150000 200000 250000 300000 350000 400000 450000 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E $ 235 $ 105 $ 158 $ 195 Revenue Historical and Projections 28 48% 34% 17% 0.3% 1% 100% • Inventory digestion from our #1 customer led to fall off in 2019 • Changed to non - cancellable and non - returnable orders in 2019 • $ 238mm orders received in 2020 End Markets Historical Revenue ($mm) Revenue Projections ($mm) • Migration to next - gen product is expected drive strong growth (7nm in 2021 and 5nm in 2024) • Diversified across tier - 1 customer base and end markets Test & measurement Data Center Networking Test & measurement Automotive 5G Wireless 2021E 2018 $4 $61 Speedster7t (chip) Speedster22 (chip) Concentration of largest customer 85% 97% 99% 72% 26% 0 % Include 5nm ~30% CAGR Speedcore (IP)
Summary and Projected Financials 29 ($ mm) 2018A 2019A 2020E 2021E 2022E Revenue $ 61.2 $ 4.2 $ 104.9 $ 157.6 $ 195.0 % growth n.m. n.m. 50% 23% Gross profit (GAAP) 44.6 1.7 83.3 119.8 143.4 % margin 73% 4 0 % 79% 76% 74% R&D (GAAP) 25.6 23.8 34.4 51.8 53.1 SG&A (GAAP) 9.8 11.2 12.5 22.9 33.8 Operating Income (GAAP) $ 9.2 $ (33.3) $ 36.4 $ 45.1 $ 56.5 SBC 0.5 0.7 0.6 5.0 7.0 EBIT (Non - GAAP) 1 $ 9.7 $ (32.6) $ 37.0 $ 50.1 $ 63.5 % margin 16% n.m. 35% 32% 33% Net Income (Non - GAAP) 2 $ 9.5 $ (32.9) $ 34.0 $ 50.3 $ 58.6 % margin 3 16% n.m. 32% 32% 30% Source: Management estimates Note: n.m. refers to margins less than 0% and growth rates less than (50%) or greater than 100%; 1 EBIT margin is a non - GAAP measure. For a reconciliation of each of our non - GAAP measures to the most comparable GAAP measure, s ee Appendix; 2 Net Income is a non - GAAP measure. For a reconciliation of each of our non - GAAP measures to the most comparable GAAP measure, see Appendix; 3 Net Income Margin is a non - GAAP measure. For a reconciliation of each of our non - GAAP measures to the most comparable GAAP meas ure, see Appendix.
Quarterly Revenue Mix Projections 2020E to 2022E ($mm) 30 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2020 Q1 2020 Q2 2020 Q3 2020E Q4 2021E Q1 2021E Q2 2021E Q3 2021E Q4 2022E Q1 2022E Q2 2022E Q3 2022E Q4 Speedcore (IP) Speedster7t (chip) Speedster 22i (chip) $5 $14 $43 $43 $30 $36 $45 $47 $ 44 $ 48 $51 $53 $238mm Orders Received in 2020 YTD 1 ~$162mm Backlog 1 (Non - Cancellable, Non - Refundable) Current Product Pipeline Estimates 1 ($mm) 1 As of November 1, 2020.
$0 $50 $100 $150 $200 $250 $300 Current Pipeline Provides Revenue Visibility to 2022 17 $189 $246 $158 $195 Speedster7t Current Pipeline Speedcore Current Pipeline Speedster22i Current Pipeline Total Revenue Plan 2021E 2022E 31 PIPELINE PLAN PIPELINE PLAN
Long - Term Operating Model 32 70% 30% Speedster Speedcore Targets YoY Revenue Growth 20 – 25% Gross Margin 70 – 75 % OpEx as % of Revenue ~40% EBIT Margin 1 30 – 35 % Long - Term Financial Goals Long - Term Revenue Product Mix Goal Compelling Financial Profile with Expected Strong Revenue Growth and High Profitability 1 EBIT Margin is a non - GAAP measure. For a reconciliation of each of our non - GAAP measures to the most comparable GAAP measure, s ee Appendix.
Executive Summary 33 AI Era expected to fundamentally redefine compute needs, which traditional solutions can’t address Need for specialized flexible compute solutions for data acceleration – $10bn+ market opportunity Technology leadership built over 16+ years of FPGA technology through deep ecosystem relationships and powered by an effective management team with deep domain expertise Highly differentiated financial profile with expected strong revenue growth and high profitability Achronix’s solutions are at the heart of these hetereogenous computing systems, offering advanced high - end FPGA and the only company to offer migration to Embedded FPGA Source: Achronix estimates, Semico Research
Transaction Overview And Valuation 2
Transaction Overview 35 Illustrative Sources and Uses Pro Forma Valuation ($mm, except per share data) Pro Forma Ownership at Close 1 ~ 80% ~ 11% ~ 7% ~ 2% Target's Existing Shareholders ACE Public Shareholders PIPE Investors ACE Sponsor ▪ $ 200 mm minimum cash condition inclusive of PIPE proceeds ▪ Anchor investor (a vehicle managed by ACE Equity Partners LLC) to purchase ~ $ 50 mm of the PIPE ▪ Sponsor also committing an additional $ 50 mm to backstop any redemptions ▪ Additional shares to be granted under an earn - out to current Achronix owners and ACE founders ( 3 . 5 mm and 1 . 5 mm, respectively), 50 % of the respective amount if trading at or above $ 12 for 20 out of 30 trading days and 50 % of the respective amount if at or above $ 18 for such period Key Transaction Terms Pro Forma Shares Outstanding 1 (mm) 207.3 Share Price $10.00 Pro Forma Equity Value at Close $ 2,073 Less: Net Cash (312) Pro Forma Enterprise Value at Close $1,761 Sources ($mm) ACE IPO cash $230 60.5% PIPE Proceeds 150 39.5% Total Sources $380 100.0% Uses ($mm) Growth Capital $289 76.1% Cash to Achronix Shareholders 50 13.2% Estimated Transaction Costs 41 10.8% Total Uses $380 100.0% ACE IPO cash Source : Achronix management case estimates 1 Assumes Achronix shareholder equity roll - over equivalent to $ 1 , 650 mm of common shares, PIPE investors own $ 150 mm of common shares, ACE public shareholders own $ 230 mm of common shares, and ACE founders own $ 42 . 5 mm of common shares initially . Excludes the effect of warrants and earn - outs . Assumes no redemption by public shareholders in connection with the transaction .
19% 19% 18% 14% 12% 12% 11% 76% ~30% Operational Benchmarking 36 Long - term revenue growth (%) 2021E Gross margin (%) 2021E EBIT margin (%) 32% Source: Factset as of 12/17/2020 Note: Sorted by market cap; 1 Represents FY20E - FY25E revenue CAGR; 2 Represents FY20E - FY24E revenue CAGR; 3 Represents FY20E - FY23E revenue CAGR; 4 Represents FY20E - FY22E revenue CAGR; 5 Pro forma for the acquisition of Xilinx; 6 Unaffected stock price on 10/8/2020 for AMD’s acquisition of Xilinx announced on 10/26/2020. 22% 13% 88% 69% 66% 62% 56% 55% 51% 53% 52% 41% 34% 30% 27% 22% 13% 7% 20% 11% 1 5 6 4 2 1 4 1 4 4 5 6 Recent IPOs Core Comps 4 4 5 6
32.1x 25.3x 20.8x 57.9x 55.6x 47.8x 40.5x 37.4x 20.6x nm 11.2x 9.0x 7.5x 17.3x 16.9x 14.5x 12.0x 10.4x 7.7x 7.7x Valuation Benchmarking 37 2021E FV / revenue 2021E FV / EBITDA Source: Factset as of 12/17/2020 Note: “ na ” represents unavailable street estimates; “nm” represents multiples <0.0x or >75.0x; 1 Pro forma for the acquisition of Xilinx; 2 Unaffected stock price on 10/8/2020 for AMD’s acquisition of Xilinx announced on 10/26/2020. 16.0x 8.4x 30.5x nm FV at close: $1.8bn Core Comps Recent IPOs 1 2 1 2 2021E 2022E 2021E 2022E 2023E 2023E
$1.8 $5.6 $4.0 $6.3 $6.4 Attractive Initial V aluation Transaction Value ($ bn ) Expected enterprise value at close Comparable Valuation Sensitivity Analysis ($ bn ) 40x – 45x applied to 2025E EBITDA of ~$140mm 1 10x – 16x applied to 2025E Revenue of ~$401mm 2 36% CAGR Midpoint Indicative Enterprise Value $6.0 38 11.2x 2021E Revenue 32.1x 2021E EBITDA 1 2025 EBITDA assumes $ 401 mm revenue and applies mid - point of long - term financial goals ( 32 . 5 % EBIT margin) ; 2 2025 Revenue assumes ~ 30 % CAGR 2020 E – 2025 E applied on 2020 E revenue of $ 105 mm .
APPENDIX 3
Annual Reconciliation of GAAP to Non - GAAP 40 ($ mm) 2018A 2019A 2020E 2021E 2022E Operating Income (GAAP) $ 9.2 $ ( 33.3) $ 36.4 $ 45.1 $ 56.5 SBC 0.5 0.7 0.6 5.0 7.0 EBIT (Non - GAAP) 9.7 ( 32.6) 37.0 50.1 63.5 ($ mm) 2018A 2019A 2020E 2021E 2022E Operating Income Margin (GAAP) 15.0% n.m. 34.7% 28.6% 29.0% SBC 0.8% n.m. 0.6% 3.2% 3.6% EBIT Margin (Non - GAAP) 15.8% n.m. 35.2% 31.8% 32.6%
Annual Reconciliation of GAAP to Non - GAAP 41 ($ mm) 2018A 2019A 2020E 2021E 2022E Net Income (GAAP) $ 9.1 $ (33.7) $ 33.4 $ 45.3 $ 52.1 SBC 0.5 0.7 0.6 5.0 7.0 Income Tax Impact of Non - GAAP Adjustments (0.0) 0.0 (0.0) (0.0) (0.5) Net Income (Non - GAAP) 9.5 (32.9) 34.0 50.3 58.6 ($ mm) 2018A 2019A 2020E 2021E 2022E Net Margin (GAAP) 14.8% n.m. 31.9% 28.7% 26.7% SBC 0.8% n.m. 0.6% 3.2% 3.6% Income Tax Impact of Non - GAAP Adjustments (0.0%) n.m. (0.0%) (0.0%) (0.3%) Net Margin (Non - GAAP) 15.5% n.m. 32.4% 31.9% 30.0%
42 Disclosure of Material Contracts Risk Related to Our Customer Concentration We receive substantially all of our revenue from Intel Corporation (“Intel”) . For the nine months ended September 30 , 2020 , Intel accounted for approximately 99 % of our revenue . All of our revenue from Intel is generated by separate purchase order contracts with Intel, and we do not have any long - term contractual commitments from Intel . As a result, we may be unable to sustain or increase our revenue from Intel . Further, we may not be able to offset the discontinuation of purchases by Intel with purchases by new or existing customers . We expect Intel will continue to account for a high percentage of our revenue for the foreseeable future and that our results of operations may fluctuate materially as a result of Intel’s buying patterns . Thus, our business success depends on our ability to maintain strong relationships with Intel . The loss of Intel as a customer for any reason, or a change in our relationship with them, including a significant delay or reduction in their purchases, may cause a significant decrease in our revenue, which we may not be able to recapture, and our business could be harmed . Summary of Key Terms Achronix has never had a supply agreement or contract cover terms and conditions relating to purchases by the customer, Intel . We operate with an annual quote for pricing based on order size, and then Intel issues a purchase order . When such purchase order is received, we request certain information from Intel . We then process as a normal device and order shipping to the backlog when the product is available for shipment . We believe this system has operated effectively since its inception in 2017 .
Exhibit 99.3
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
Operator
Welcome to today’s conference call announcing the business combination of Achronix Semiconductor Corporation and ACE Convergence Acquisition Corp. Joining us on the call are Behrooz Abdi, Chairman and Chief Executive Officer of ACE, John Lofton Holt, Founder and Chairman of Achronix, and Robert Blake, Chief Executive Officer of Achronix.
We would first like to remind everyone that this call contains forward-looking statements including, but not limited to, Achronix’s and ACE’s expectations or predictions of financial and business performance and conditions, competitive and industry outlook; the cash resources, plans and prospects of the combined entity; expected valuations of the combined entity; and the timing and completion of the transaction. Commentary on these topics constitutes forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. We encourage you to read the press release issued today, the accompanying presentation, and ACE’s public filings with the SEC, including a Registration Statement on Form S-4 that will be filed in the coming days and available on the SEC’s website, and, in particular, to the section or sections titled Risk Factors, for a discussion of the risks that can affect the transaction, ACE’s and Achronix’s businesses, and the outlook of the combined company.
Achronix and ACE are under no obligation and expressly disclaim any obligation to update, alter or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
1
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
This conference call is for informational purposes only and shall not constitute an offer to buy any securities or a solicitation of any vote in any jurisdiction pursuant to the proposed business combination or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
And now, I would now like to introduce Behrooz Abdi, Chairman and CEO of ACE Convergence Acquisition Corp.
2
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
Behrooz Abdi, Chairman and CEO of ACE Convergence
Hello everybody. I'm joined on today’s call by Founder and Chairman of Achronix Semiconductor Corporation, John Lofton Holt, as well as Robert Blake, Chief Executive Officer of Achronix. We are very excited to present the business combination between ACE and Achronix.
ACE was established with a focus on the enterprise IT sector, targeting high-growth companies that are poised to capitalize on the changing landscape of data acceleration being driven by developments in AI, Cloud, and 5G technologies. We assembled a team of sector specialists with a proven history of scaling complex technology organizations and making transformative value-creation decisions. Our team’s collective years of operating experience in this space is a distinguishing factor in this merger. We can leverage our deep sector knowledge and industry connections to increase shareholder value post-transaction, as board members and senior advisors.
As we launched our SPAC we had a few criteria for selecting the optimal target. We were looking for a company that was either a category leader or had scarcity value, and that had a disruptive technology with high barriers to entry that was customer validated with a strong design pipeline and attractive financial characteristics. Achronix had been on our short list from the start. When we began our diligence, we knew we had found our merger partner, one that satisfied our mandate and also offered a compelling and highly-differentiated investment opportunity.
Achronix is a fabless semiconductor company with a long history of delivering innovative FPGA products and supporting software tools. As the only independent, high-end FPGA provider bolstered by a distinctive licensing model, Achronix is uniquely positioned to provide specialized, flexible compute solutions for data acceleration—an approximate $10 billion market opportunity, expected to grow at a double digit CAGR through 2025, according to Semico Research.
3
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
I will add a few words about the expected transaction parameters: the implied equity value of the combined company is approximately $2.1 billion. With industry leading forecast revenue growth and profitability, we believe the valuation compares very favorably to recent semiconductor IPOs and the peer group.
Furthermore, our PIPE was oversubscribed at $150 million. The transaction is expected to result in $330 million in cash to the combined company before expenses, assuming no redemptions by our shareholders. To demonstrate our conviction in the future of this merger and alignment of interests with shareholders, Achronix and ACE have collectively agreed to defer five million of our shares, subject to the achievement of certain stock price hurdles. We could not be more excited to partner with the Achronix team.
With that, I'm pleased to ask John Holt, Founder and Chairman of Achronix for additional comments.
John Lofton Holt, Chairman and Co-Founder of Achronix
Thanks Behrooz. As the founder and original investor in Achronix 16 years ago, I'm very excited to tell you about how we succeeded in building a world-class silicon and tools capability that can disrupt the FPGA market.
In 2010, we made history when we became Intel’s first foundry customer, allowing us to rapidly scale our business and establish Achronix as a leader in the FPGA industry. This led to the development of our Speedster22i product family in 2013.
Then in 2016, by partnering with TSMC and offering our technology as IP, Achronix became the first company to license our FPGA fabric for use in custom chips. To date, this licensing business with TSMC has shipped 10 million cores, while our chip business has secured over $400 million in production orders.
Achronix is now in the most exciting time in our company’s history, our acceleration phase. With Robert Blake as CEO, we have built a diverse and robust business with a pipeline of over $1.1 billion. Achronix is the only independent, high-end FPGA player and we believe it is the market leader with its embedded FPGA IP business.
4
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
This IP licensing business model complements our high-end, FPGA offering and has driven strong profitability. As of today, Achronix has a revenue run rate of nearly $160 million, supporting gross margins of nearly 76% and EBIT margins of 32%.
It’s now my pleasure to turn the call over to my partner and our CEO, Mr. Robert Blake.
Robert Blake, CEO of Achronix
Thanks, John. The world is at the beginning of a high-growth phase of intelligent, self-learning computation that will have broad impacts on all aspects of our daily lives.
As we enter the AI Era, where computational power requirements are doubling every three to four months versus traditional CPU architectures that doubled every two years that followed Moore’s Law. Conventional solutions can no longer scale to meet the performance, cost and flexibility requirements for these new classes of applications in high-growth markets, including AI, Cloud, 5G wireless, all of which drive strong demand for data throughput.
The landscape for acceleration technologies is broad with traditional CPUs, GPUs, FPGAs, and application-specific, customized circuits. Traditional, CPUs and GPUs have more flexibility, but FPGAs and ASIC technologies offer better performance and power efficiency. Our latest products, Achronix’s Speedster7t family, combines the flexibility of FPGAs with ASIC-level performance and power efficiency.
This new compute and networking space, offers high-growth opportunities. Achronix focuses on the high end of the FPGA market, which has significant growth and profitability potential. In addition, we offer our embedded FPGA IP for high-volume applications that have critical cost and power constraints like computational storage, ADAS in automotive and 5G wireless.
5
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
Achronix has three main classes of products. Speedster7t are standalone, high-performance, FPGA products that are built using TSMC’s seven-nanometer technology and are optimized for data acceleration and high-speed communications applications.
Additionally, Achronix offers its FPGA products on data acceleration cards intended to drive faster adoption of our products. We ship these cards either as standalone products or with our partners, inside server platforms with a full range of software to accelerate new data networking and machine learning applications.
Speedcore is our high-end, high-performance embedded FPGA technology that is offered as a licensed IP for integration in other companies’ ASICs and SoCs. This licensing model allows our customers to build customized products with increased performance and FPGA flexibility at a lower cost and power consumption.
All of these new products are fully supported with a complete and optimized range of Achronix software tools that we call ACE, or the Achronix CAD Environment. ACE enables customers to quickly develop their own custom applications.
We have seen customer validation of our products come in the form of almost $240 million of orders in calendar year 2020. Further, we have a very large and growing pipeline comprised of Speedster7t and Speedcore, which is over $1.1 billion. It is this enthusiasm for our products that we believe will drive our future growth.
Our key geographic markets are the US, Europe and Asia. In each of these locations, we go to market with our own direct sales organizations, field application engineers, application support team, as well as a network of highly trained and focused sales representatives. We also have an extensive partner network that enables us to provide additional IP and design services to accelerate the adoption of our technology.
6
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
Turning to our financials, Achronix’s estimated revenue for 2020 is approximately $105 million with a 79% gross margin and 35% EBIT margin, subject to the completion of our year-end closing procedures. Our long-term operating model, we expect 70% of our revenue will be comprised of Speedster standalone FPGA products, and 30% will come from Speedcore embedded FPGA IP, where Achronix has no manufacturing costs. The net of these two products is expected to drive our year-on-year growth of approximately 20% to 25%, with a gross margin in the 70% to 75% range. We expect to maintain our operating expenses at approximately 40% of revenue, driving EBIT margins to 30% to 35%. We believe that our unique business model, combining these two product classes, enables us to drive strong growth and high profitability.
Our company has technology leadership built over the last 16 years. We have developed deep customer insight and knowledge, not only in how to build this technology but how to deliver it in a production environment to meet the quality levels required by mission-critical applications.
In closing, I would like to summarize why we are very excited about the opportunity Achronix has ahead of us:
· | AI compute requirements are doubling every three to four months versus compute doubling every two years under Moore’s Law, presenting a very large growth opportunity for Achronix data acceleration products and services |
· | We see data acceleration as a large and growing $10 billion market opportunity, where Achronix has exposure to the highest growth segments including: AI, cloud-compute, 5G, networking, computational storage and automotive |
· | Achronix is the only remaining independent, high-end FPGA player in the market |
7
ACE Convergence Acquisition Corp. and Achronix Semiconductor Corporation
Conference Call Script
January 7, 2021
· | And finally, we have a highly differentiated financial model that comprises strong revenue growth with software-like margins and a non- capital-intensive, fabless model that will generate substantial free cash flow |
Thank you again for joining us.
We look forward to updating you on our progress.
8
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