Artificial Intelligence
Applied Digital Reports Fiscal Fourth Quarter and Full Year 2023 Financial Results
– Generated Sequential Revenue Growth of 56% –
– Provides Fiscal 2024 Full-Year Guidance –
DALLAS, July 24, 2023 (GLOBE NEWSWIRE) — Applied Digital Corporation (Nasdaq: APLD) (“Applied Digital” or the “Company”), a designer, builder, and operator of next-generation digital infrastructure designed for High-Performance Computing (“HPC”) applications, reported financial results for the fiscal fourth quarter and full year ended May 31, 2023. The Company also provided forward guidance and an operational update.
Recent Financial and Operational Highlights
- Fiscal fourth quarter 2023 revenue of $22 million.
- Fiscal fourth quarter 2023 adjusted EBITDA of $2.9 million.
- Fiscal fourth quarter 2023 adjusted loss from continuing operations of $0.3 million, or adjusted loss per share of less than $0.01.
- Launched AI Cloud Service to Provide High-Performance Computing Power for AI Applications.
- Energized 9MW Jamestown HPC Facility in May.
Management Commentary
“We ended the fiscal year with significant momentum. We successfully energized our Ellendale next-generation data center facility and launched our AI Cloud Service to provide high-performance computing power for AI applications,” said Applied Digital Chairman and CEO Wes Cummins. “Our differentiated and proprietary data center infrastructure uniquely positions us to meet the sophisticated and demanding requirements for businesses and enterprises to run AI workloads and other emerging HPC applications. Our recent announcement of two AI customer agreements worth up to $640 million solidifies our position as a key data center player in the emerging digital infrastructure landscape for artificial intelligence cloud services.”
“Looking ahead, we will accelerate our focus on non-crypto use cases and leverage the capabilities of our next-generation proprietary data center assets for HPC applications. Demand for our services from both traditional customers and emerging HPC applications remains robust, and we remain excited about the year ahead. We are incredibly proud of the progress made during the quarter and look forward to providing further updates on our progress as we head into fiscal 2024.”
Garden City, Texas Facility Update (200MW)
The Company finalized technical details with the utility provider and energy partner. Final tie-in to the substation was started last week and should finish in the next few days. Once we receive final facilities extension agreement, which we expect imminently, the site will begin energization.
Ellendale, North Dakota Facility Update (180MW)
The Company successfully completed the full energization of the facility after initiating the process in early March only six months after initial construction began.
HPC Update
The Company expanded the capacity of its specialized HPC datacenter, adjacent to its existing 100MW Jamestown facility, to 9MW and successfully energized initial capacity at the facility. The facility successfully passed the Integrated Systems Test for its first 200KW of HPC equipment and systems, which is the final step in ensuring that all systems, including powered equipment, operate in accordance with the design intent.
The company continues developing additional HPC data center capacity, including 200MW in North Dakota and 100MW in a new state.
AI Cloud Service Update
Applied Digital’s AI Cloud Service, offered through its wholly owned subsidiary Sai Computing, provides high-performance computing power for artificial intelligence and machine learning applications.
In conjunction with the launch of its AI Cloud Services, the Company announced the signing and successful onboarding of its first AI customer, Character A.I., with an agreement worth up to $180 million over 24 months. The service is expected to be fully operational by the end of 2023 and will be hosted at the standalone 9MW HPC facility in Jamestown along with third-party colocation facilities. This customer executed its option for the full $180 million contract and added an additional option for another $180 million in capacity, doubling the potential value of this initial contract. In June, the Company secured its second AI customer with an agreement worth up to $460 million over 36 months.
Financial Results for Fiscal Fourth Quarter 2023 Ended May 31, 2023
Revenues in the fiscal fourth quarter 2023 were $22 million, up 193% from the fiscal fourth quarter 2022. Hosting revenues were attributable to the Company’s operations in Jamestown, North Dakota along with the increase in energized MW capacity at the Ellendale, North Dakota facility. The Jamestown site operated at full capacity throughout the quarter.
Cost of revenues in the fiscal fourth quarter 2023 was $16.0 million compared to $7.4 million in the fiscal fourth quarter 2022. The increase in cost was attributable to higher energy costs used to generate hosting revenues, depreciation, amortization expense, and personnel expenses for employees working on our Jamestown and Ellendale hosting facilities.
Adjusted Gross Profit, a non-GAAP measure, for the fiscal fourth quarter 2023 was $7.8 million, or 36% of revenue, compared to Adjusted Gross Profit of $1.1 million, or 15% of revenue in the fiscal fourth quarter 2022.
Operating expenses for the fiscal fourth quarter 2023 were $12.3 million, which included $5.2 million of stock-based compensation, $6.2 million in other general and administrative costs, and $0.9 million of depreciation and amortization expenses. For the fiscal fourth quarter 2022, operating expenses were $4.4 million, almost all of which were attributable to general and administrative costs.
Net loss attributable to Applied Digital for the fiscal fourth quarter 2023 was $6.5 million, or $0.07 per basic and diluted share, based on a weighted average share count during the quarter of 95.1 million. This compares to a net loss attributable to Applied Digital of $2.8 million, or $0.04 per basic and diluted share, based on a weighted average share count of 76.6 million for the fiscal fourth quarter 2022.
Adjusted EBITDA, a non-GAAP measure, for the fiscal fourth quarter 2023 was $2.9 million compared to an Adjusted EBITDA loss of 3.1 million for the fiscal fourth quarter 2022.
Adjusted net loss from continuing operations, a non-GAAP measure, for the fiscal fourth quarter of 2023, was a loss of $0.3 million, or adjusted loss per basic and diluted share of less than $0.01, based on a weighted average share count during the quarter of approximately 95.1 million. This compares to an adjusted net loss from continuing operations of $4.3 million, or $0.06 per basic and diluted share, for the fiscal fourth quarter of 2022 based on a weighted average share count during the quarter of approximately 76.6 million.
Applied Digital ended the fiscal year with unrestricted cash and cash equivalents of $29.0 million and $79.4 million in debt outstanding.
Guidance
For full-year fiscal 2024, Applied Digital expects total revenue in the range of $385 million – $405 million, and Adjusted EBITDA in the range of $195 million – $205 million.
Conference Call
Applied Digital will host a conference call today, July 24, 2023, at 9:00 a.m. Eastern Time (6:00 a.m. Pacific Time) to discuss these results. A question-and-answer session will follow the management’s presentation.
To participate, please dial the appropriate number at least ten minutes prior to the start time and ask for the Applied Digital conference call.
U.S. dial-in number: 1-877-407-0792
International number: 1-201-689-8263
Conference ID: 13739906
The conference call will broadcast live and be available for replay here.
Please call the conference telephone number approximately 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Applied Digital’s investor relations team at 1-949-574-3860.
A replay of the call will be available after 1:00 p.m. Eastern time July 24, 2023, through August 7, 2023.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Conference ID: 13739906
About Applied Digital
Applied Digital Corporation (Nasdaq: APLD) designs, develops, and operates next-generation data centers across North America to provide digital infrastructure solutions to the rapidly growing high-performance computing (HPC) industry. Find more information at www.applieddigital.com. Follow us on Twitter at @APLDdigital.
Forward-Looking Statements
This release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position, business strategy and objectives. These statements use words, and variations of words, such as “continue,” “build,” “future,” “increase,” “drive,” “believe,” “look,” “ahead,” “confident,” “deliver,” “outlook,” “expect,” and “predict.” Other examples of forward-looking statements may include, but are not limited to, (i) statements of Company plans and objectives, including our evolving business model, or estimates or predictions of actions by suppliers, (ii) statements of future economic performance, and (iii) statements of assumptions underlying other statements and statements about the Company or its business. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections. These risks, uncertainties, and other factors include: decline in demand for our products and services; the volatility of the crypto asset industry; the inability to comply with developments and changes in regulation; cash flow and access to capital; and maintenance of third party relationships. Information in this release is as of the dates and time periods indicated herein, and the Company does not undertake to update any of the information contained in these materials, except as required by law.
APPLIED DIGITAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In thousands, except number of shares and par value data)
| | May 31, 2023 | May 31, 2022 | ||||||
| ASSETS | | | ||||||
| Current Assets: | | | ||||||
| Cash and cash equivalents | $ | 43,574 | $ | 46,299 | ||||
| Accounts receivable | 82 | 227 | ||||||
| Prepaid expenses and other current assets | 2,103 | 1,336 | ||||||
| Total current assets | 45,759 | 47,862 | ||||||
| Property and equipment, net | 195,593 | 64,260 | ||||||
| Operating lease right of use asset, net | 1,290 | 1,110 | ||||||
| Finance lease right of use asset, net | 14,303 | 5,298 | ||||||
| Other Assets | 7,012 | 1,450 | ||||||
| TOTAL ASSETS | $ | 263,957 | $ | 119,980 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | ||||||
| Current Liabilities: | | | ||||||
| Accounts payable and accrued liabilities | $ | 14,776 | $ | 13,260 | ||||
| Current portion of operating lease liability | 320 | 191 | ||||||
| Current portion of finance lease liability | 5,722 | 813 | ||||||
| Current portion of term loan | 7,950 | 1,333 | ||||||
| Customer deposits | 36,370 | 9,524 | ||||||
| Current deferred revenue | 48,692 | 3,877 | ||||||
| Sales and use tax payable | 1,630 | — | ||||||
| Total current liabilities | 115,460 | 28,998 | ||||||
| Deferred tax liability | — | 540 | ||||||
| Long-term portion of operating lease liability | 1,005 | 936 | ||||||
| Long-term portion of finance lease liability | 8,334 | 4,374 | ||||||
| Long-term portion of term loan | 33,222 | 5,897 | ||||||
| Long-term related party loan | 35,257 | — | ||||||
| Other long term related party liabilities | 1,000 | — | ||||||
| Total liabilities | 194,278 | | 40,745 | |||||
| Commitments and contingencies (Note 12) | | | ||||||
| Stockholders’ deficit: | | | ||||||
| Common stock, $0.001 par value, 166,666,667 shares authorized, 100,927,358 shares issued and 95,925,630 shares outstanding at May 31, 2023, and 97,837,702 shares issued and 97,801,406 shares outstanding at May 31, 2022 | 101 | 98 | ||||||
| Treasury stock, 5,001,728 shares at May 31, 2023 and 36,296 shares at May 31, 2022, at cost | (62 | ) | (62 | ) | ||||
| Additional paid in capital | 160,194 | 128,293 | ||||||
| Accumulated deficit | (100,716 | ) | (56,070 | ) | ||||
| Total stockholders’ equity attributable to Applied Digital Corporation | | 59,517 | | 72,259 | ||||
| Noncontrolling interest | 10,162 | | 6,976 | |||||
| Total Stockholders’ equity including noncontrolling interest | 69,679 | 79,235 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 263,957 | $ | 119,980 | ||||
APPLIED DIGITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)
| Three Months Ended | Year Ended | ||||||||||||||||
| May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||||
| Revenues: | |||||||||||||||||
| Hosting revenue | $ | 22,038 | $ | 7,523 | $ | 55,392 | $ | 8,549 | |||||||||
| Cost of revenues | $ | 15,950 | $ | 7,433 | $ | 44,388 | $ | 9,506 | |||||||||
| Gross profit | 6,088 | 90 | 11,004 | (957 | ) | ||||||||||||
| Costs and expenses: | |||||||||||||||||
| Selling, general and administrative | $ | 12,332 | $ | 4,356 | $ | 55,059 | $ | 19,941 | |||||||||
| Total costs and expenses | $ | 12,332 | $ | 4,356 | $ | 55,059 | $ | 19,941 | |||||||||
| Operating loss | $ | (6,244 | ) | $ | (4,266 | ) | $ | (44,055 | ) | $ | (20,898 | ) | |||||
| Other income (expense): | |||||||||||||||||
| Interest Expense | $ | (855 | ) | $ | (112 | ) | $ | (1,980 | ) | $ | (112 | ) | |||||
| Gain on extinguishment of accounts payable | — | — | — | 406 | |||||||||||||
| Loss on extinguishment of debt | — | — | (94 | ) | (1,342 | ) | |||||||||||
| Total other expense, net | (855 | ) | (112 | ) | (2,074 | ) | (1,048 | ) | |||||||||
| Net loss from continuing operations before income tax expenses | (7,099 | ) | (4,378 | ) | (46,129 | ) | (21,946 | ) | |||||||||
| Income tax benefit (expense) | 243 | (266 | ) | 523 | (540 | ) | |||||||||||
| Net loss from continuing operations | (6,856 | ) | (4,643 | ) | (45,606 | ) | (22,486 | ) | |||||||||
| Net loss from discontinued operations, net of income taxes | — | 1,826 | — | (1,044 | ) | ||||||||||||
| Net loss including noncontrolling interests | (6,856 | ) | (2,817 | ) | (45,606 | ) | (23,530 | ) | |||||||||
| Net loss attributable to noncontrolling interest | (383 | ) | (10 | ) | (960 | ) | (10 | ) | |||||||||
| Net loss attributable to Applied Digital Corporation | $ | (6,473 | ) | $ | (2,827 | ) | $ | (44,646 | ) | $ | (23,520 | ) | |||||
| Basic and diluted net (loss) gain per share: | |||||||||||||||||
| Continuing Operations | $ | (0.07 | ) | $ | (0.06 | ) | $ | (0.49 | ) | $ | (0.39 | ) | |||||
| Discontinued Operations | $ | — | $ | 0.02 | $ | — | $ | (0.02 | ) | ||||||||
| Basic and diluted net loss per share | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.49 | ) | $ | (0.41 | ) | |||||
| Basic and diluted weighted average number of shares outstanding | 95,146,122 | 76,631,835 | 93,976,233 | 57,121,096 | |||||||||||||
Use and Reconciliation of Non-GAAP Financial Measures
This press release and our related earnings call contain certain non-GAAP financial measures. See below for discussion on each non-GAAP metric.
Adjusted Operating Loss and Adjusted Net Loss
Adjusted operating loss and adjusted net loss are non-GAAP measures that represent operating loss and net loss from continuing operations excluding stock-based compensation and nonrecurring expenses. We believe these are useful metrics as they provide additional information regarding factors and trends affecting our business and provide perspective on results absent one-time or significant non-cash items. However, Applied Digital’s presentation of these measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Applied Digital’s computation of Adjusted Operating Loss and Adjusted Net Loss may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted Operating Loss and Adjusted Net Loss in the same fashion.
Because of these limitations, Adjusted Operating Loss and Adjusted Net Loss should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Applied Digital compensates for these limitations by relying primarily on its GAAP results and using Adjusted Operating Loss and Adjusted Net Loss on a supplemental basis. You should review the reconciliation of operating loss to Adjusted Operating Loss and net loss to Adjusted Net Loss above and not rely on any single financial measure to evaluate Applied Digital’s business.
EBITDA and Adjusted EBITDA
“EBITDA” is defined as earnings before interest, taxes, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation, gain on extinguishment of accounts payable, loss on extinguishment of debt, one-time professional service costs, one-time electricity costs, and other non-recurring expenses. These costs have been adjusted as they are not indicative of business operations. Adjusted EBITDA is intended as a supplemental measure of Applied Digital’s performance that is neither required by, nor presented in accordance with, GAAP. Applied Digital believes that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. We also believe EBITDA and Adjusted EBITDA are useful metrics to investors because they provide additional information regarding factors and trends affecting our business, which are used in the business planning process to understand expected operating performance, to evaluate results against those expectations, and because of their importance as measures of underlying operating performance, as the primary compensation performance measure under certain programs and plans. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA, Applied Digital may incur future expenses similar to those excluded when calculating these measures. In addition, Applied Digital’s presentation of these measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Applied Digital’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Applied Digital compensates for these limitations by relying primarily on its GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA above and not rely on any single financial measure to evaluate Applied Digital’s business.
Adjusted Gross Profit
“Adjusted Gross Profit” is a non-GAAP measure that represents gross profit adjusted for depreciation expense and one-time electricity charges within cost of revenues. We believe this is a useful metric as it provides additional information regarding gross profit aside from significant non-cash expenses in depreciation. However, Applied Digital’s presentation of this measure should not be construed as an inference that its future results will be unaffected by other factors within cost of revenues. Applied Digital’s computation of Adjusted Gross Profit may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted Gross Profit in the same fashion.
Because of these limitations, Adjusted Gross Profit should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Applied Digital compensates for these limitations by relying primarily on its GAAP results and using Adjusted Gross Profit on a supplemental basis. You should review the reconciliation of gross profit to Adjusted Gross Profit above and not rely on any single financial measure to evaluate Applied Digital’s business.
| Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||||
| Three Months Ended | Fiscal Year Ended | ||||||||||||||
| $ in thousands | May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | |||||||||||
| Adjusted operating loss | |||||||||||||||
| Operating Loss from Continuing Operations (GAAP) | $ | (6,244 | ) | $ | (4,266 | ) | $ | (44,055 | ) | $ | (20,898 | ) | |||
| Add: Stock-based compensation | 5,195 | — | 32,074 | 12,337 | |||||||||||
| Add: Gain on Extinguishment of Accounts Payable | — | — | — | (406 | ) | ||||||||||
| Add: Loss on Extinguishment of Debt | — | — | 94 | 1,342 | |||||||||||
| Add: Non-recurring professional service costs | 727 | 240 | 2,164 | 1,310 | |||||||||||
| Add: One-time electricity charges | — | — | 114 | — | |||||||||||
| Add: Other non-recurring expenses | 615 | 93 | 2,290 | 93 | |||||||||||
| Adjusted Operating Loss from Continuing Operations (Non-GAAP) | $ | 293 | $ | (3,933 | ) | $ | (7,320 | ) | $ | (6,222 | ) | ||||
| Adjusted operating margin from Continuing Operations | 1 | % | (52) | % | (13) | % | (73) | % | |||||||
| Adjusted net income (loss) | |||||||||||||||
| Net Loss from Continuing Operations (GAAP) | $ | (6,856 | ) | $ | (4,643 | ) | $ | (45,606 | ) | $ | (22,486 | ) | |||
| Add: Stock-based compensation | 5,195 | — | 32,074 | 12,337 | |||||||||||
| Add: Gain on Extinguishment of Accounts Payable | — | — | — | (406 | ) | ||||||||||
| Add: Loss on Extinguishment of Debt | — | — | 94 | 1,342 | |||||||||||
| Add: Non-recurring professional service costs | 727 | 240 | 2,164 | 1,310 | |||||||||||
| Add: One-time electricity charges | — | — | 114 | — | |||||||||||
| Add: Other non-recurring expenses | 615 | 93 | 2,290 | 93 | |||||||||||
| Adjusted net loss from Continuing Operations (Non-GAAP) | $ | (319 | ) | $ | (4,310 | ) | $ | (8,871 | ) | $ | (7,810 | ) | |||
| EBITDA and Adjusted EBITDA | |||||||||||||||
| Net Loss from Continuing Operations (GAAP) | $ | (6,856 | ) | $ | (4,643 | ) | $ | (45,606 | ) | $ | (22,486 | ) | |||
| Add: Interest Expense | 855 | 112 | 1,980 | 112 | |||||||||||
| Add: Income Tax Benefit (Expense) | (242 | ) | 266 | (523 | ) | 540 | |||||||||
| Add: Depreciation and Amortization | 2,636 | 875 | 7,267 | 1,120 | |||||||||||
| EBITDA (Non-GAAP) | $ | (3,607 | ) | $ | (3,390 | ) | $ | (36,881 | ) | $ | (20,714 | ) | |||
| Add: Stock-based compensation | 5,195 | — | 32,074 | 12,337 | |||||||||||
| Add: Gain on Extinguishment of Accounts Payable | — | — | — | (406 | ) | ||||||||||
| Add: Loss on Extinguishment of Debt | — | — | 94 | 1,342 | |||||||||||
| Add: Non-recurring professional service costs | 727 | 240 | 2,164 | 1,310 | |||||||||||
| Add: One-time electricity charges | — | — | 114 | — | |||||||||||
| Add: Other non-recurring expenses | 615 | 93 | 2,290 | 93 | |||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 2,930 | $ | (3,057 | ) | $ | (146 | ) | $ | (6,038 | ) | ||||
| Adjusted Gross Profit | |||||||||||||||
| Gross profit (GAAP) | $ | 6,088 | $ | 90 | $ | 11,004 | $ | (957 | ) | ||||||
| Add: Depreciation and amortization in cost of revenues | 1,739 | 1,010 | 4,320 | 1,070 | |||||||||||
| Add: One-time electricity charges | — | — | 114 | — | |||||||||||
| Adjusted Gross Profit (Non-GAAP) | $ | 7,827 | $ | 1,100 | $ | 15,438 | $ | 113 | |||||||
Investor Relations Contacts
Matt Glover or Alex Kovtun
Gateway Group, Inc.
(949) 574-3860
[email protected]
Media Contact
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Gateway Group, Inc.
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Artificial Intelligence
IBM, Government of Canada, Government of Quebec Sign Agreements to Strengthen Canada’s Semiconductor Industry
Up to $187M CAD to be invested to progress expansion of chip packaging capacity and capabilities and to strengthen R&D at IBM Canada’s Bromont plant
BROMONT, QC, April 26, 2024 /PRNewswire/ — IBM (NYSE: IBM), the Government of Canada, and the Government of Quebec today announced agreements that will strengthen Canada’s semiconductor industry, and further develop the assembly, testing and packaging (ATP) capabilities for semiconductor modules to be used across a wide range of applications including telecommunications, high performance computing, automotive, aerospace & defence, computer networks, and generative AI, at IBM Canada’s plant in Bromont, Quebec. The agreements reflect a combined investment valued at approximately $187M CAD.
“Today’s announcement is a massive win for Canada and our dynamic tech sector. It will create high-paying jobs, invest in innovation, strengthen supply chains, and help make sure the most advanced technologies are Canadian-made. Semiconductors power the world, and we’re putting Canada at the forefront of that opportunity,” said the Right Honourable Justin Trudeau, Prime Minister of Canada
In addition to the advancement of packaging capabilities, IBM will be conducting R&D to develop methods for scalable manufacturing and other advanced assembly processes to support the packaging of different chip technologies, to further Canada’s role in the North American semiconductor supply chain and expand and anchor Canada’s capabilities in advanced packaging.
The agreements also allow for collaborations with small and medium-sized Canadian-based enterprises with the intent of fostering the development of a semiconductor ecosystem, now and into the future.
“IBM has long been a leader in semiconductor research and development, pioneering breakthroughs to meet tomorrow’s challenges. With the demand for compute surging in the age of AI, advanced packaging and chiplet technology is becoming critical for the acceleration of AI workloads,” said Darío Gil, IBM Senior Vice President and Director of Research. “As one of the largest chip assembly and testing facilities in North America, IBM’s Bromont facility will play a central role in this future. We are proud to be working with the governments of Canada and Quebec toward those goals and to build a stronger and more balanced semiconductor ecosystem in North America and beyond.”
IBM Canada’s Bromont plant is one of North America’s largest chip assembly and testing facilities, having operated in the region for 52 years. Today, the facility transforms advanced semiconductor components into state-of-the-art microelectronic solutions, playing a key role in IBM’s semiconductor R&D leadership alongside IBM’s facilities at the Albany NanoTech Complex and throughout New York’s Hudson Valley. These agreements will help to further establish a corridor of semiconductor innovation from New York to Bromont.
“Advanced packaging is a crucial component of the semiconductor industry, and IBM Canada’s Bromont plant has led the world in this process for decades,” said Deb Pimentel, president of IBM Canada. “Building upon IBM’s 107-year legacy of technology innovation and R&D in Canada, the Canadian semiconductor industry will now become even stronger, allowing for robust supply chains and giving Canadians steady access to even more innovative technologies and products. This announcement represents just one more example of IBM’s leadership and commitment to the country’s technology and business landscape.”
Chip packaging, the process of connecting integrated circuits on a chip or circuit board, has become more complex as electronic devices have shrunk and the components of chips themselves get smaller and smaller. IBM announced the world’s first 2 nanometer chip technology in 2021 and, as the semiconductor industry moves towards new methods of chip construction, advances in packaging will grow in importance.
“Semiconductors are part of our everyday life. They are in our phones, our cars, and our appliances. Through this investment, we are supporting Canadian innovators, creating good jobs, and solidifying Canada’s semiconductor industry to build a stronger economy. Canada is set to play a larger role in the global semiconductor industry thanks to projects like the one we are announcing today. Because, when we invest in semiconductor and quantum technologies, we invest in economic security.” — The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry
“This investment by IBM in Bromont will ensure that Quebec continues to stand out in the field of microelectronics. An increase in production capacity will solidify Quebec’s position in the strategic microelectronics sector in North America.” — The Honourable Pierre Fitzgibbon, Minister of Economy, Innovation and Energy, Minister responsible for Regional Economic Development and Minister responsible for the Metropolis and the Montreal region
About IBMIBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. More than 4,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in semiconductors, AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.
Media ContactLorraine BaldwinIBM [email protected]
Willa HahnIBM [email protected]
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Artificial Intelligence
HITACHI ACQUIRES MA MICRO AUTOMATION OF GERMANY IN EFFORT TO ACCELERATE GLOBAL EXPANSION OF ROBOTIC SI BUSINESS IN THE MEDICAL AND OTHER FIELDS
HOLLAND, Mich., April 26, 2024 /PRNewswire/ — Hitachi Ltd. (TSE: 6501, “Hitachi”) has signed a stock purchase agreement on April 26 to acquire all shares of MA micro automation GmbH (“MA micro automation”, headquartered in St. Leon-Rot, Germany) from MAX Management GmbH (a subsidiary of MAX Automation SE). MA micro automation is a leading provider of robotic and automation technology (robotic SI) including high-speed linear handling systems, high-precision assembly lines, and high-speed vision inspection technology for Europe, North America, and Southeast Asia, for EUR 71.5M million. The transaction is expected to close in the second half of 2024, pending completion of the customary regulatory filings. After the acquisition is completed, MA micro automation will join JR Automation Technologies, LLC (“JR Automation”), a market leader in providing advanced automation solutions and digital technologies in the robotic system integration business for North America, Europe, and Southeast Asia as a continued effort to expand the company’s global presence.
MA micro automation is a technology leader for automation solutions within micro-assembly. Through its state-of-the-art proprietary high-speed and high-precision automation know-how, combined with unique optical image inspection capabilities, MA micro automation serves high-growth med-tech automation end-markets, covering the production, assembly, and testing medical and optical components including contact lenses, IVD and diabetes diagnostics consumables, and injection molding for medical use. The company was established in 2003 through a carve-out from Siemens*1 and since 2013 has been part of the MAX Automation group.
JR Automation is a leading provider of intelligent automated manufacturing technology solutions, serving customers across the globe in a variety of industries including automotive, life sciences, e-mobility, consumer and industrial products. With over 20 locations between North America, Europe, and Southeast Asia, the leading integrator offers nearly 2 million square feet (185,806 sq. m) of available build and engineering floorspace. This acquisition allows JR Automation to further grow and strengthen both the company’s geographical footprint and their continued commitment on expanding support capabilities within the European region and medical market vertical.
“MA micro automation provides engineering, build and support expertise with established capabilities in complex vision applications, high-speed and high-precision automation technologies. When integrated with JR Automation’s uniform global process and digital technologies, this partnership will further enhance our ability to deliver added value and support to all of our customers worldwide and continue to grow our capabilities in the medical market,” says Dave DeGraaf, CEO of JR Automation. “As we integrate this new dimension, impressive talents and abilities of the MA micro automation team we further enhance our ability to serve our customers, creating a more robust and globally balanced offering.”
With this acquisition, Hitachi aims to further enhance its ability to provide a “Total Seamless Solution*2” to connect manufacturer’s factory floors seamlessly and digitally with their front office data, allowing them to achieve total optimization and bringing Industry 4.0 to life. This “Total Seamless Solution” strategy links organizations’ operational activities such as engineering, supply chain, and purchasing to the plant floor and allows for real time, data-driven decision-making that improves the overall business value for customers.
Kazunobu Morita, Vice President and Executive Officer, CEO of Industrial Digital Business Unit, Hitachi, Ltd. says, “We are very pleased to welcome MA micro automation to the Hitachi Group. The team is based in Europe, providing robotic SI to global medical device manufacturing customers with its high technological capabilities and will join forces with JR Automation and Hitachi Automation to strengthen our global competitiveness. Hitachi aims to enhance its ability to provide value to customers and grow alongside them by leveraging its strengths in both OT, IT, including robotic SI, and “Total Seamless Solution” through Lumada*3’s customer co-creation framework.”
Joachim Hardt, CEO MA micro automation GmbH says, “Following the successful establishment and growth of MA micro automation within the attractive automation market for medical technology products, we are now opening a new chapter. Our partnership with Hitachi will not only strengthen our global competitive position, but we will also benefit from joint technological synergies and a global market presence. We look forward to a synergistic partnership with Hitachi and JR Automation.”
Outline of MA micro automation
Name
MA micro automation GmbH
Head Office
St. Leon-Rot, Germany
Representative
Joachim Hardt (CEO)
Outline of Business
Automation solutions within micro-assembly
Total no. of Employees:
Approx. 200 (As of April 2024)
Founded
2003
Revenues (2023)
€ 46.5 million
Website
*1
“Siemens” is a registered trademark or trademark of Siemens Trademark GmbH & Co. KG in the U.S. and other countries.
*2
“Total Seamless Solution” is a registered trademark of Hitachi, Ltd. in the U.S. and Japan.
*3
Lumada: A collective term for solutions, services and technologies based on Hitachi’s advanced digital technologies for creating value from customers’ data accelerating digital innovation. https://www.hitachi.com/products/it/lumada/global/en/index.html
About JR AutomationEstablished in 1980, JR Automation is a leading provider of intelligent automated manufacturing technology solutions that solve customers’ key operational and productivity challenges. JR Automation serves customers across the globe in a variety of industries, including automotive, life sciences, aerospace, and more.
In 2019, JR Automation was acquired by Hitachi, Ltd. In a strategic effort towards offering a seamless connection between the physical and cyber space for industrial manufacturers and distributers worldwide. With this partnership, JR Automation provides customers a unique, single-source solution for complete integration of their physical assets and data information, offering greater speed, flexibility, and efficiencies towards achieving their Industry 4.0 visions. JR Automation employs over 2,000 people at 21 manufacturing facilities in North America, Europe, and Asia. For more information, please visit www.jrautomation.com.
About Hitachi, Ltd.Hitachi drives Social Innovation Business, creating a sustainable society through the use of data and technology. We solve customers’ and society’s challenges with Lumada solutions leveraging IT, OT (Operational Technology) and products. Hitachi operates under the 3 business sectors of “Digital Systems & Services” – supporting our customers’ digital transformation; “Green Energy & Mobility” – contributing to a decarbonized society through energy and railway systems, and “Connective Industries” – connecting products through digital technology to provide solutions in various industries. Driven by Digital, Green, and Innovation, we aim for growth through co-creation with our customers. The company’s revenues as 3 sectors for fiscal year 2023 (ended March 31, 2024) totaled 8,564.3 billion yen, with 573 consolidated subsidiaries and approximately 270,000 employees worldwide. For more information on Hitachi, please visit the company’s website at https://www.hitachi.com.
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