Alphawave IP Group PLC (LSE:AWE) shares plummeted 42% to a new low of 70.6p after its interim results showed a swing into losses and a reduction in the full-year outlook.
The Canadian microchip designer reported revenue of US$91 million for the first six months of 2024, down 51% from a year earlier, though total bookings were up 20% to US$225.3 million.
It said this was due to a "change in revenue mix towards its vertically integrated semiconductor business, which has longer revenue recognition cycles than the historical IP licensing business".
In April it had also warned that its accelerated transition away from a legacy custom silicon business in China, and changes in expected revenue recognition would hit revenues and profits. In the past six months, 20% of revenue in the period was generated from Chinese customers, down from 66%.
An underlying EBITDA loss of US$11.8 million was reported, compared to US$32.4 million a year earlier, reflecting the lower revenues and continued R&D investment in chiplets and new silicon connectivity products that are expected to begin shipping as samples in 2024 and ramp into production in 2025.
Alphawave said it expects "significant revenue growth" in the second half based on anticipated 'tape outs' (design completion) of certain ASIC custom chips and the timing of conversion of IP and non-recurring bookings into revenue.
However, full-year revenue for 2024 is now expected in a range of US$310-330 million and adjusted EBITDA of approximately US$50 million, which it said was because of "the merger of two large AI customers in Korea that resulted in the consolidation of development programmes already in progress, as well as the timing of tape outs in H2".
The outlook for 2025 and 2027 remains unchanged, it added, "reflecting the sustained bookings growth and increased backlog conversion to revenue expected in H2 2024 and beyond".
Chief executive Tony Pialis said: "We are successfully executing on our strategy, with a significantly expanded range of advanced connectivity solutions, including chiplets, that will enable the next generation of AI and cloud infrastructure.
"In the first half of the year, we have continued investing organically to support our pipeline and future revenue growth. Our leading connectivity technology and strong execution give us confidence in the prospects for our business in the second half of 2024 and beyond."