With this move, SiTime solidifies its position as a market leader in precision timing solutions, with the guidance of Barclays as its exclusive financial advisor.
SiTime Corporation has made a significant business move by entering into an exclusive agreement with Aura Semiconductor to acquire its clock products and secure the licensing rights to all its clock intellectual property (IP). This transaction, entirely in cash, involves fixed payments amounting to $148 million, complemented by earnouts with an upper limit of $120 million. The deal is on track to conclude by the close of 2023.
SiTime’s CEO and Chairman, Rajesh Vashist, shared the company’s ambitious vision, stating, “SiTime’s vision is to transform all categories of the $10 billion timing market.” Having focused on addressing complex issues in the oscillator category since its IPO in 2019, the company has seen remarkable growth over the past four years, expanding its product portfolio from 60 to 150 unique offerings. The price of its highest-value oscillator has surged tenfold during this period. With this acquisition, it is extending its expertise to the clock category, immediately adding 20 best-in-class clocks and promising an additional 20 by the end of 2024.
The company mentioned the financial aspect of the deal that they have leveraged their strong balance sheet to accelerate by several years their clocking revenue while also increasing their oscillator revenue. The acquired clocks boast gross margins that surpass the company’s corporate targets and are compatible with the company’s Elite TCXO and Epoch OCXO families. Before this agreement, customers had to engage with separate clock and oscillator vendors. The company is now uniquely positioned to offer both categories as standalone products or engineered to work optimally in tandem. This comprehensive precision timing product offering caters to the company’s core markets of communications, data centres, and artificial intelligence, solidifying its position as the sole provider with a complete and differentiated precision timing product line.
Under the terms of the agreement, the company gains exclusive, perpetual, and irrevocable rights to sell existing and new products based on Aura’s IP and clocking portfolio. Of the fixed payments, $36 million will be disbursed upon closing, with $75 million in 2024 and $37 million in 2025, all contingent on product deliveries from Aura. The earnout payments will be determined by various revenue multiples generated from the acquired products between 2023 and 2028. Along with this transaction, the company is establishing an office in Bengaluru, India, which will house an engineering and support team.
Barclays played a pivotal role in the deal, acting as the company’s exclusive financial advisor. This acquisition underscores the company’s commitment to innovation and market leadership in precision timing solutions, paving the way for continued growth and success in the rapidly evolving technology landscape.
