Marvell to acquire chip startup Innovium for $1.1 billion

Latest update time：2021-08-05

Reads：

▲ For more exciting content, please click on the blue words above and follow us!

Marvell Technology announced on Tuesday that it would acquire chip startup Innovium in an all-stock transaction worth $1.1 billion. Innovium's business is mainly to manufacture network switching chips for cloud servers and edge data centers, and it is currently the only chip company that can eat into Broadcom's market share.

Marvell is an American chipmaker that specializes in manufacturing chips for storage, communications and consumer electronics. The acquisition is reportedly aimed at increasing the market share of network chips sold by Marvell to large cloud computing companies, thereby challenging Broadcom's leading position.

A strong competitor to Broadcom?

Founded in 1995 by Indonesian Chinese Dr. Zhou Xiuwen, his wife and brother, Marvell is one of the fastest-growing fabless semiconductor companies in the world, with a leading position in storage, communications, smartphones and consumer electronics semiconductor solutions.

According to the 2020 global top ten integrated circuit design companies' revenue ranking released by TrendForce, Marvell ranked seventh.

Marvell's competitor Broadcom currently dominates the switch chip market, which is used to help cloud computing companies such as Amazon and Microsoft build large data centers. In April this year, Marvell spent $10 billion to complete the acquisition of Inphi, whose chips can help connect switches to optical cables, allowing Marvell to take a step forward in the cloud computing chip industry.

The chips of Innovium acquired this time are used in the core position of switches, which will enable Marvell to have better switch chip products to compete with Broadcom and challenge the leading position in the industry. Matt Murphy, CEO of Marvell, said in an interview with foreign media that cloud computing suppliers are one of the manufacturers that purchase the most chips in the world, and the company's long-term plan is to integrate the products of Innovium and Inphi to deepen the relationship with cloud computing suppliers.

The net cost of the acquisition will be 955 million

"If you look at all the semiconductor end markets and the fastest-growing areas of the entire chip industry over the next decade, it's amazing the amount of money these companies are investing in the chip industry," Murphy said. For example, Microsoft's capital expenditures last year were $24.2 billion, most of which was used for data centers.

Innovium is a privately held company co-founded by three former Broadcom engineering executives. Its TERALYNX 8 Ethernet switch chip series launched in 2020 can compete head-on with Broadcom's switch chip products and is the only company that can take significant market share from Broadcom.

This acquisition will further improve Marvell's super data center product line. Murph said that the acquisition of Innovium will further expand Marvell's leadership in the cloud field.

Innovium expects revenue of $150 million in the next fiscal year. Under the terms of the deal, Marvell will pay $1.1 billion in stock (the cost of acquiring Innovium), but will receive $145 million in cash from Innovium's balance sheet, giving Marvell a net cost of $955 million.

Marvell also said it expects revenue of $1.065 billion, plus or minus 1.5%, when it reports earnings on Aug. 26. That matches data from IBES provided by Refinitiv.

How much strength will be enhanced after the acquisition remains to be tested

Marvell's frequent acquisitions in the market in recent years are related to the general environment of semiconductor acquisitions. Whether it is Nexperia wanting to acquire NWF or NVIDIA wanting to acquire Arm, in essence, both companies hope to "take over" the entire semiconductor industry chain and thus expand their own advantages.

Marvell just acquired Inphi in April this year, and this time announced the acquisition of Innovium, both of which are further strengthening the layout of its own chips in the cloud field. After this acquisition, Marvell will likely have a wider silicon product line in the industry.

Source: Zhidongxi

Recommended Reading

What’s wrong with China’s RF technology behind Huawei P50 being “forced” to use 4G?

The market value has evaporated by hundreds of billions and TSMC is deeply stuck in the "quagmire" of factory construction. What happened to TSMC?

The ups and downs of CMOS: From a two-horse race to domestic substitution

Transmission efficiency reaches 90%, a new breakthrough in wireless charging technology, and can automatically adjust the charging direction

Reply to any content you want to search in the official , such as problem keywords, technical terms, bug codes, etc., and you can easily get relevant professional technical content feedback . Go and try it!

Since the WeChat official account has recently changed its push rules, if you want to see our articles frequently, you can click "Like" or "Reading" at the bottom of the page after each reading, so that each pushed article will appear in your subscription list as soon as possible.

Or set our public account as a star. After entering the public account homepage, click the "three small dots" in the upper right corner, click "Set as Star", and a yellow five-pointed star will appear next to our public account name (the operation is the same for Android and iOS users).