AmpliTech Group, a designer, developer, and manufacturer of state-of-the-art signal-processing components for satellite and 5G communications networks, defense, space, and other commercial applications, has announced that it has executed a definitive agreement to acquire the assets and operations of Spectrum Semiconductor Materials Inc., a rapidly growing global specialty distributor of semiconductor components based in San Jose, CA. The transaction is expected to close within the fiscal year 2021, subject to the satisfaction of certain closing conditions.
The purchase is expected to deliver significant strategic and top and bottom-line benefits while also building on AmpliTech’s technical and management expertise and distribution reach. Spectrum is on track to achieve unaudited 2021 revenue of $10 - 11 Million, representing double-digit growth over Spectrum Semiconductor Materials sales in fiscal 2020, with 2021 pre-tax net income of approximately 25% of revenue. Spectrum achieves such strong net margins by stocking a wide variety of specialty products and employing disruptive digital inventory practices that optimize operating efficiency. AmpliTech’s revenue for the past four quarters was $3.5 Million and recently announced a record order backlog of $3.4 Million following $1.2 Million in new orders. Spectrum Semiconductors has a record current order backlog of $8 Million in orders anticipated to ship through June 30, 2022.
The purchase price is $8 Million in cash plus $1.5 Million to be held in escrow through December 2022, to fund any purchase price or other adjustments, plus the grant of 188,442 restricted shares of AmpliTech common stock. The parties have agreed to a purchase price adjustment of 25% of Spectrum’s cumulative net revenue above or below $20 Million in sales for calendar years 2021 and 2022 combined. On September 30th AmpliTech had approximately $28 Million in cash, cash equivalents, and marketable securities, and no long-term debt.
Spectrum Semiconductors provides a powerful distribution platform in the U.S., Europe, and Asia for AmpliTech’s new line of monolithic microwave integrated circuit (MMIC) chip designs, and Spectrum has been building its radio frequency (RF) focused semiconductor revenue base. AmpliTech’s innovative MMIC chip designs integrate its industry-leading low noise signal amplification (LNA), signal filter, and signal attenuator technologies into the much smaller and more flexible chip form factor. Foundry production of initial MMIC chipsets is targeted for commercial availability by the end of Q1 2022.
Each company brings proven sales personnel and relationships that will complement each other in addressing the combined company’s expanded market opportunity. Furthermore, as AmpliTech develops its new MMIC line, Spectrum can package the designs for high-volume applications expected to drive sales growth. The acquisition is expected to bring AmpliTech a substantial business development presence in Silicon Valley and international markets, building on its existing East Coast and Texas teams to create a broad global footprint.
AmpliTech CEO, Fawad Maqbool, said, “Spectrum Semiconductors is a perfect fit for advancing AmpliTech’s strategic goals and delivering shareholder value. With Spectrum, we will add a well-managed, growing business with a long-term track record for high quality and excellent customer service and the ideal distribution platform for the launch of our MMIC chip solutions. This transaction will allow us to more than triple our current annual revenue run rate, while also being immediately accretive to our bottom line.
“Of equal importance, Spectrum brings us a highly satisfied, long-term, and global customer base with excellent penetration in our core end markets of aerospace, defense, automotive, and computing, along with a deep Silicon Valley presence, to support the launch of MMIC chip solutions we plan to bring to market by the end of Q1 2022. We expect AmpliTech and Spectrum will play a key role in improving the speed and efficiency of communications systems around the world in high-growth applications such as 5G cellular, MEO, and LEO satellites, quantum computing, and autonomous vehicles. Importantly, AmpliTech is well funded to complete this transaction and to then execute on the growth opportunities of the combined business.”
Robert Larson, Spectrum CEO, commented, “Joining forces with AmpliTech is a big win for our company, our customers, and our suppliers. It provides us with a broader base of opportunity and exciting growth potential as we collaborate to bring AmpliTech’s premier MMIC chip solutions to market. I look forward to collaborating with the transition efforts with the AmpliTech team to execute on this exciting growth.”