Valens Eyes Acquisitions Amid Market Downturn

Israeli chip designer Valens Semiconductor is navigating through turbulent markets by considering strategic acquisitions to bolster its position in the industry. Despite facing a decline in revenues, Valens remains proactive in its growth strategy.

In the second quarter of 2024, Valens reported revenues of $13.6 million, a significant drop from $24.2 million in the same period of the previous year. This decline mirrors the broader trend in the automotive chip market, impacting not only Valens but also other key players like STMicroelectronics and Texas Instruments.

During this challenging quarter, Valens made a pivotal move by acquiring Acroname, based in Boulder, Colorado, for an initial payment of $7.8 million in cash. This acquisition marks Valens' foray into automation and control technologies, expanding its reach into industrial applications, Audio-Video solutions, video conferencing rooms, and embedded robotic control systems.

Audio-video revenues constituted around 60% of Valens' total revenues at $8.1 million, down from $15.5 million in the second quarter of 2023 due to ongoing inventory adjustments. Meanwhile, automotive revenues made up approximately 40% of total revenues at $5.5 million, a decrease from $8.7 million in the same period last year, primarily driven by reduced demand from Mercedes-Benz.

The Acroname acquisition includes potential earn-out payments of up to $7.2 million, contingent on meeting specific revenue and cash flow targets in 2024 and 2025, as well as the development of a designated product by June 2026. This strategic move is expected to be followed by further acquisitions as Valens seeks to strengthen its market position.