Autotech upstart Indie Semiconductor Inc., whose next-generation chips and software platform promise to power the automobiles and electric vehicles of the future, is making plenty of waves in the present.
The Aliso Viejo-based firm, founded in 2007 and which went public in June 2021 (Nasdaq: INDI), in February disclosed that annual revenue topped $100 million for the first time in 2022—it made $110.8 million for the year— on the back of a record fourth quarter.
Fourth-quarter revenue of $33 million was up 74% year-over-year and 10% sequentially, it reported.
Also in February, the company announced plans for its largest acquisition to date, San Jose-based GEO Semiconductor Inc., which specializes in video processors for automotive cameras.
Indie is expected to pay $180 million, in a mix of cash and stock.
GEO made about $40 million last year; its sales have roughly doubled the past few years, according to company officials. Its OEM (original equipment manufacturer) customers are largely in Asia, and include Honda, Hyundai, Kia, Nissan and Toyota.
The buy, expected to be completed this quarter, “effectively fast forwards our ability to provide a highly differentiated and true sensor fusion platform to our customers, CEO Donald McClymont told analysts this month.
“It’s rare that an acquisition target is a perfect fit, but this is indeed the case with GEO,” he said.
SPAC Overachiever
Another rarity: Wall Street likes Indie’s story.
Shares in the company were trading a bit over $10 as of early last week, giving the company a market valuation of about $1.3 billion. Its shares are up over 70% since the start of the year.
The company is one of the few companies that have gone public the past two years via a reverse merger with a Special Purpose Acquisition Company, or SPAC, to see their stock price not fall well below the typical $10 offering price of their SPAC partner.
There have been other upsides to going public for the firm, which recently completed a $160 million debt offering, according to McClymont (see story, this page).
“As we became a public company, ever larger customers would provide us with access to bid on ever-larger pieces of business,” McClymont told the Business Journal in January.
The company’s “strategic backlog” of orders now stands at a hefty $4.3 billion, up from $2.6 billion in 2021.
Indie is aiming to achieve profitability by the second half of the year.
$30B Market
Indie’s semiconductor products are used in driver assistance systems that help with parking and collision avoidance, onboard entertainment systems and lighting, as well as backup and forward cameras used to avoid driving errors.
Its chip products are also used in sensor fusion systems for occupant and driver monitoring as well as power delivery for wired and wireless charging. The chips are increasingly being used as cars go electric.
The company also makes software that is complementary to the chips.
Car brands like Audi, BMW, Daimler, Ford, General Motors, Hyundai, Nissan, Porsche, Stellantis and Volkswagen use the company’s products.
“We are approaching a new era of sensor fusion merging multiple disparate technologies together and process information, employing radars, Lidars, ultrasound and computer vision,” McClymont told analysts, citing a $30 billion opportunity in the autotech industry.
“We believe that following our sensor agnostic approach, Indie is the best-positioned autotech semiconductor and software pure-play to capitalize on this strategic megatrend.”
The company’s ultimate goal with its technology is to make vehicles “uncrashable,” company officials said.
‘New Oil’
McClymont agrees with popular assessment that semiconductors are the “new oil.”
“When you think about the larger part of consumption in the world today, everything runs on chips,” he told the Business Journal.
He said the pandemic-era chip shortage that slowed automobile production also underscored the importance of semiconductors.
Chip supply had been taken for granted for many years, while the supply shortage and tensions between U.S., and China makes people realize “that this is really important.”
Chips go into “everything from a toaster to an airplane,” he says.
McClymont praised legislation signed by President Joe Biden that will provide more than $52 billion to spur U.S. domestic chip production.
“I think it’s a good start. I think it will be a success,” according to the Indie chief, who said it probably won’t cause a “seismic shift” overnight.
“I think it will take some percentage of the manufacturing back from the Far East to the U.S.”
Extreme Headcount Growth
Indie Semiconductor Inc. has about 100 employees in Orange County, with a worldwide headcount of around 650.
“We’ve gone through a period of extreme growth over the last two years. There will be a bit of digestion for us,” according to CEO Donald McClymont.
On the hiring front, “we will continue to grow but probably at a slower rate,” he told the Business Journal.
The company was advertising for almost 90 positions Feb. 19, for locations including Dresden, Germany; Edinburgh in McClymont’s native Scotland; and Rabat, Morocco in addition to headquarters in Aliso Viejo.
The company has locations in more than 15 countries, also including Argentina, U.K. and China.
“It’s difficult to hire. I think we’ve done a good job at retention,” McClymont said.
“Our attrition rates are super, super low. Very few people have disappeared,” he said, citing the positive workplace at Indie.
McClymont said hiring on the “high end” is always hard, especially with companies such as Meta and Google competing for the same talent.
The main countries for Indie chips’ manufacturing are Malaysia, Germany and Taiwan.
“We still have some manufacturing in mainland China,” McClymont says.
Local Allure
Don’t expect a company relocation to Silicon Valley or anywhere else, according to McClymont, who has been in OC for more than two decades.
“I came here for 10 years 23 years ago,” the Dana Point resident told the Business Journal last month. “Maybe that is a metric for you.”
He calls Orange County “a super nice place to live.”
“The weather is fantastic. The environment is fantastic. It’s a great place to raise kids. It does attract talent.”
In short: “It’s nicer than Silicon Valley.”
—Kevin Costelloe
