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The introduction of 5G in 2019 heralded a new era for the wireless market, opening up a world of opportunities for carriers, chipset makers, and various other companies in the value chain. As the race to capitalize on this rapidly expanding market heats up, there are still only a few companies well poised to capitalize on the opportunity such as Qualcomm, Samsung, and MediaTek.
Even intel, a former contender in the wireless business, found it challenging to secure a foothold in this competitive landscape, eventually selling its smartphone wireless division to Apple in 2019. Wireless startup Mobix Labs is looking for the latest to join these chipmakers, as it announced its intention to go public through a SPAC. So how will Mobix Lab fare in an industry dominated by these well-established heavyweights?
The Data Boom
The COVID-19 pandemic brought about a significant shift in data consumption and creation patterns, as students and businesses transitioned to remote work and learning. In 2020 alone, data consumption was estimated at around 64.2 Zettabytes, a figure projected to skyrocket to over 181 Zettabytes by 2025.
With the introduction of 5G technology, wireless carriers are promising generational leaps in performance, including a 10x increase in throughput, 3x spectrum efficiency, and 100x traffic capacity, which will supposedly help address the data demands.
The potential applications of 5G remain vast, spanning industries such as connected and self-driving cars, augmented reality, remote medicine, and the Industrial Internet of Things.
However, delivering on these promises is easier said than done, considering the scale of infrastructure required and the substantial costs associated with deploying it. To truly realize the vision of 5G, the industry must adopt advanced technologies like C-Band and mmWave, which offer greater bandwidth and higher frequency ranges.
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‘True' 5G
To address the challenges faced by the witless industry in realizing the true potential of 5G, Irvine, California-based Mobix Labs, founded in 2020, is developing a universal C-Band and mmWave chipset. This company's solution is equipped with beamformers, frequency converters, synthesizers, gain blocks, splitter/combiners, and antenna-in-module.
Its chipset boasts global 5G frequency coverage and is designed as a highly integrated single-chip, single-die bulk CMOS solution that is fully scalable for high power and MIMO applications. Mobix Labs' technology is also protected by extensive trade secrets and over 95 issued and pending patents.
Designed to accelerate and future-proof 5G, Mobix Labs' chipset enables network infrastructure to support the continued explosion of data and the realization of next-generation connected products and applications.
The company plans to simplify the development process for customers, thereby maximizing the performance of existing and next-generation wireless products, and delivering flexible, high-performance, cost-effective, and ultra-compact solutions. In addition to its chipset, Mobix Labs also offers a full suite of connectivity which include hybrid active optical cables, transceivers, and optical engines that provide performance at longer distances and in smaller form factors.
Expanding Horizons
In addition to its 5G chipsets, Mobix Labs offers connectivity solutions like optical cables, HDMI, and DisplayPorts, catering to markets like infrastructure, consumer products, automotive, and health. The company is in discussions with customers such as Cisco, Google, Oculus, and Teradyne, to explore potential collaborations.
To further fuel its growth, Mobix Labs plans to use funds from its operations to pursue strategic acquisitions. The company's acquisitions will focus on immediately profitable companies or those that contribute to earnings within two quarters.
Mobix Labs has already announced three successful acquisitions, including two Irvine-based firms: EMI Solutions, a maker of electromagnetic filtering products, and high-tech cable specialist Cosemi Technologies.
Financials and Valuation
As of the end of 2022, Mobix Labs had accumulated a deficit of $53 million but expects to be well-capitalized after completing its merger with the SPAC. The deal is expected to generate gross proceeds of $200 million, including $80 million from the cash held in the SPAC trust, a $30 million PIPE, and a $100 million common equity line of credit.
Most of the company's 2022 revenues, totaling $3.3 million, came from its acquisition of Cosemi. Over the long term, Mobix Labs anticipates that its gross and operating margins will be around 60% and 30% respectively as the business scales up. The SPAC deal values the company at an enterprise value of $276 million.
The question arises as to whether the company can justify this valuation, given the unproven nature of the business and limited commercial success. The deal bears similarities to the zero-revenue EV, quantum computing, and space businesses that debuted throughout 2020 and 2021.
However, Mobix Labs claims that the opportunity ($155 billion target market), coupled with patents and strategic customer relationships, should lead to rapid commercial opportunities. Ultimately, only time will tell if the company can achieve its targets and justify its lofty valuation, as it seeks to make a lasting impact in the competitive 5G wireless market.
Bottom Line
Matrix Labs is looking to address the challenges associated with scaling 5G infrastructure and realizing the true potential of this transformative technology. With strategic acquisitions and customer relationships across various industries, Mobix Labs is looking to position itself to capitalize on the anticipated explosion in data consumption. However, the company's business model and technology remain unproven, and only time will tell if it can find a foot in the wireless market commercially to justify its lofty valuation.
Source: The Future of Wireless Connectivity