Alphawave profit warning as it pulls back from China

SHARES in London-listed microchip business Alphawave have plummeted by almost a third on the back of a profit warning triggered by its business in China.

The Anglo-canadian semiconductor company, which designs tiny wireless “chiplets” for data centres and 5G technology, told investors its expected revenues for 2023 to miss its targets by tens of millions of dollars.

Alphawave said its revenues for the year would be between $318m (£255m) and $328m, below its forecast of $340m to $360m, while its adjusted earnings could also miss expectations.

It blamed a decision to “transition away from China” for the underperformance. The company previously attracted scrutiny from US politicians for its business links to China. In 2022, China hawk Senator Marco Rubio criticised a decision by the US government to green-light the sale of an American semiconductor business to Alphawave.

Amid heightened trade tensions between Washington and Beijing, Alphawave has been pulling back from China. John Lofton Holt, Alphawave’s chairman, had previously said the company would make “major simplifications” to its China business to “respect the evolving geopolitical and macroeconomic environment”.

The company said yesterday it would soon stop receiving revenue from a deal with Chinese technology company Wisewave, previously one of its biggest customers, once its contract runs out.

Alphawave’s shares fell 32pc yesterday on news it would miss its revenue forecast, before recovering slightly to a drop of 25pc and trading at about 123p.

The collapse wipes out all Alphawave’s gains so far this year, which have been driven by investor optimism that semiconductor companies could benefit from a wave of interest in artificial intelligence.

Alphawave said it had a “stronger than expected” start to 2024 with $110m secured in new bookings. It added that it expected revenues in 2024 of between $345m and $365m.

The company was valued at about £3bn when it went public in May 2021, but is now worth about £900m.

Last year, it was forced to suspend its shares after it missed regulatory deadlines to publish audited results.