DSP Group Strengthens its Position in Rapidly Growing Headset Market with Acquisition of SoundChip SA
June 09 2020 - 6:00AM
DSP Group, Inc.
(NASDAQ: DSPG), a
leading global provider of wireless chipset solutions for converged
communications, today announced the acquisition of privately owned
SoundChip SA, a leading supplier of active noise cancellation (ANC)
technology, engineering services, design tools, and production-line
test systems for headsets. The acquisition combines SoundChip’s
proven capabilities in hybrid ANC with DSP Group’s SmartVoice™
advanced low-power voice processing platform, algorithms, and
mixed-signal expertise to streamline the delivery of cutting-edge
wireless and true wireless stereo (TWS) headsets, from concept
through to manufacturing. DSP Group’s technologies have recently
been adopted by Google, Panasonic and Technics in their latest TWS
headset models.
The acquisition of SoundChip, alongside the
strategic customer wins, marks a major milestone for DSP Group as
it emerges as a best-of-breed provider of technology and expertise
for smart hearables, a market that is expected to grow rapidly. For
example, according to Strategy Analytics, the total market for TWS
units is expected to grow from 170 million units in 2019 to 1.2
billion units by 2024[1], representing an $8 billion total
addressable market (TAM) for DSP Group. The company’s solutions are
ideal for TWS applications as their combination of low power
consumption, advanced algorithms and small footprint, enable
hands-free operation and artificial intelligence (AI) processing
with robust ANC over longer playback and talk times, all within the
TWS earbud’s ever-shrinking form factor.
According to a recently published iFixit
teardown, DSP Group’s advanced SmartVoice solution is driving
Google’s recently launched Pixel Buds 2. Earlier this year,
Technics and Panasonic launched ANC-enabled TWS headsets based on a
family of new advanced hybrid ANC codecs from DSP Group
incorporating SoundChip’s patented Soundflex® technology. Product
reviews have been very positive. For example, Forbes reported, “Not
only are these earbuds completely wireless, but they also include
an ANC (active noise-canceling) function for reducing background
noises such as the drone of an aircraft’s engines or the hum of a
busy office. It’s a bold move by Panasonic to compete with market
leaders like Sony and Sennheiser but based on my first impressions
of this new pair of earbuds that I’ve just reviewed, I think
Panasonic has scored a direct hit.” [2]
“The global pandemic has created extensive
challenges for businesses and consumers worldwide, but it has also
intersected with DSP Group’s business initiatives, presenting
significant new opportunities,” said Ofer Elyakim, CEO of DSP
Group. “Major trends, including work from home, remote
communications, and voice as a user interface, all emphasize the
need for robust, integrated, and highly optimized state-of-the-art
voice and connectivity solutions. DSP Group is committed to
providing these solutions to meet the needs of our customers and
their rapidly expanding markets. The acquisition of SoundChip is an
important element of our overall strategy to efficiently deliver
the highest quality and most comprehensive solutions into an
expanding TAM for voice and communications devices.”
“We have been working closely with SoundChip on
a number of shared-customer designs, and the acquisition is a
natural and exciting evolution for us both,” said Ran Klier, CVP
& GM Hearables and UC product lines at DSP Group. “Our tier one
customer base includes some of the world’s leading headset brands.
For them, and for all of our current and future customers, we are
highly optimistic that the unique combination of DSP Group’s
SmartVoice and SoundChip’s ANC technologies will generate solid
demand for their next generation of hearable products.”
“ANC represents a unique and challenging
system-level problem. The high degree of coupling that exists
between a headset’s acoustic, mechanical and hardware components
creates a level of complexity that is often difficult for customers
to master while attending to other important aspects of their
products’ design,” said Mark Donaldson, SoundChip’s CEO. “Through
our close collaboration with DSP Group, we have been able to
successfully integrate our leading ANC technologies into a family
of smart codecs that are gaining strong traction in the
marketplace. In joining DSP Group, SoundChip’s talented team of
electroacoustic engineers very much looks forward to multiplying
this success.”
DSP Group has agreed to pay $14.5 million in
cash upon closing of the acquisition and up to an additional $6.0
million subject to the performance of certain business criteria.
The transaction is projected to close in the third quarter of 2020,
subject to customary closing conditions. DSP Group expects to fund
the transaction from existing cash.
About DSP Group DSP Group,
Inc. (NASDAQ: DSPG) is a global leader in wireless chipsets for a
wide range of smart-enabled devices. The company was founded in
1987 on the principles of experience, insight and continuous
advancement. We seek to consistently deliver next-generation
solutions in the areas of voice, audio, video and data
connectivity. Experts in voice processing, DSP Group invests
heavily in innovation for the smart future. The result is
leading-edge semiconductor technology that allows our customers to
develop products that enhance user experiences. From mobile phones
to VoIP and virtual assistants using cloud-based voice services,
DSP Group answers the growing demand for the ever-expanding
collection of voice-controlled smart devices. For more information,
visit www.dspg.com.
About SoundChip SASoundChip is
a leading supplier of electroacoustic technology and engineering
services. The company’s patented active noise cancellation
solutions, which feature advanced situational awareness and
augmented audio capabilities, enable smart headsets with
class-leading ANC, enhanced speaking comfort and smart-audio
features, including Smartaware™ and Framed Adaptive™. For further
information about SoundChip, visit www.soundchip.com.
Forward Looking StatementsThis
press release contains statements that qualify as “forward-looking
statements” under the Private Securities Litigation Reform Act of
1995. Forward looking statements include (i) those relating
to the potential benefits of the acquisition such as the
combination of the two technologies enables DSP Group to expedite
the delivery of class-leading wireless and TWS headsets, from
concept through to manufacturing, and presenting DSP Group with the
opportunity to address a market that is expected to grow rapidly to
1.2 billion units by 2024 with a $8 billion TAM, (ii) DSP Group’s
solutions are ideal for TWS applications, and (iii) trends that
have emerged from the global pandemic has intersected with DSP
Group’s business initiatives and presents significant new
opportunities. The risks, uncertainties and assumptions that could
cause differing DSP Group results include: effects of the COVID-19
pandemic and the impact on the demand for consumer electronics, DSP
Group’s ability to successfully integrate SoundChip’s operations;
DSP Group’s ability to implement its plans, forecasts and other
expectations with respect to the SoundChip business after the
completion of the transaction and realize expected synergies;
disruption from the transaction making it more difficult for DSP
Group to maintain business and operational relationships; the
negative effects of the announcement or the consummation of the
proposed transaction on the market price of DSP Group’s common
stock or operating results; unknown liabilities related to the
transaction; the risk of litigation or regulatory actions related
to the transaction; market penetration of DSP Group’s VUI and
SmartVoice products; unexpected delays in the commercial launch of
new products; DSP Group’s ability to develop and produce new
products at competitive costs and in a timely manner and the
ability of such products to achieve broad market acceptance; and
general market demand for products that incorporate DSP Group’s
technology in the market. These factors and other factors which may
affect future operating results or DSP Group’s stock price are
discussed under “RISK FACTORS” in the Form 10-K for fiscal 2019, as
well as other reports DSP Group has filed with the Securities and
Exchange Commission and which are available on DSP Group’s website
(www.dspg.com) under Investor Relations. DSP Group assumes no
obligation to update any forward-looking statements or information,
which speak as of their respective dates.
The DSP Group logo is a registered trademark. All other product
and company names are trademarks or registered trademarks of their
respective holders.
Contact:Tali ChenChief Marketing OfficerDSP
Group, Inc. Tel: +1 (408) 240-6826Email:
tali.chen@dspg.com@ChenDsp
References:[1]: imore.com[2]: Forbes.com
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