Sierra Wireless has agreed to divest its automotive embedded module product line for US$165 million to Rolling Wireless (H.K.), a consortium led by Fibocomm Wireless of Shenzhen.
The divested product line is part of the company’s embedded broadband division. Sierra Wireless will exit automotive applications but will continue to invest in other product lines in its embedded broadband segment, specifically high-speed cellular modules typically used in enterprise applications. Its retained products include 4G LTE and LTE-Advanced cellular embedded modules that, as well as new 5G modules that will be made available to customers from its retained business. Sierra Wireless’s 5G modules and gateways are expected to be available in Q4 2020, extending its portfolio of IoT solutions.
The automotive embedded modules are developed in China by Sierra Wireless and manufactured in China by outsourced contract manufacturers for sale to global electronics companies for integration into new vehicles assembled in China, Europe, and Mexico. No Canadian-based or U.S.-based employees, operations or assets will be transferred as part of this transaction.
Sierra Wireless expects that approximately 150 of its employees will become employees of Rolling Wireless. Approximately 120 of these employees are located in Mainland China. The other 30 are located in Europe or in the APAC region.
“This divestiture enables Sierra Wireless to strengthen our focus and investment in our fully integrated IoT solutions that deliver high-value recurring revenue,” said Kent Thexton, president and CEO of Sierra Wireless. “This transaction will improve our balance sheet and allow us to expand our R&D centre in Richmond, British Columbia to accelerate our innovation in integrated IoT solutions and 5G modules, gateways and routers.”
With a strengthened focus on its higher-margin IoT solutions business unit, Sierra Wireless said it will continue to target key industrial and enterprise markets in North America, Europe and the APAC region. The company added that its improved financial profile means it will be better positioned to address the broader multi-billion-dollar IoT solutions market opportunity.
Rolling Wireless is owned 49% by Fibocom Wireless, a manufacturer and distributor of wireless communication equipment. The remaining 51% is owned by three leading investment firms based in China.