The News: Marvell, a provider of infrastructure semiconductor solutions and Innovium, a provider of networking solutions for cloud and edge data centers, announced a definite agreement under which Marvell will acquire Innovium for $1.1 billion in an all-stock transaction. Marvell has a portfolio of Ethernet switch semiconductor solutions with a strong and growing position in the enterprise and carrier segments the company services with a broad portfolio of specialized products.
Marvell is strategically targeting the cloud data center (DC) market through the development of dedicated high radix, performance optimized switch silicon for use in hyperscale DCs, following on the recent completion of its acquisition of Inphi. Innovium’s TERALYNX switching architecture is developed to deliver ultra-low latency, optimized power, and high-performance telemetry that are critical in today’s cloud-scale DCs. Read the Marvell press release here.
Marvell Ups Its Cloud Data Center Game with $1.1 Billion Acquisition of Innovium
Analyst Take: Marvell is proving its strategic commitment to the Ethernet switch semiconductor market with the $1.1 billion acquisition of Innovium. The deal follows on Marvell’s $10 billion acquisition of Inphi completed in April 2021. Marvell locked in Inphi’s chips, particularly Pulse Amplitude Modulation (PAM) 4 Digital Signal Processor (DSP) capabilities, which fulfill the burgeoning hyperscaler demand for enabling and scaling the trafficking of data over fiber-optic cables.
With the Innovium deal, Marvell strengthens its hand to drive more Ethernet switch chip business across cloud-scale DC and edge environments. Specifically, Marvell incrementally adds engineering resources to develop and innovate cloud-optimized silicon through Innovium’s TERALYNX platform as the 9K product series, while also advancing cultivation of its Prestera 2K to 8K product families aimed at the enterprise and carrier switch market. Moreover, Marvell secures Innovium’s channels throughout the merchant cloud semiconductor switching market segment.
In addition, Marvell anticipates the acquisition of Innovium will enable the addition of approximately $150 million in incremental revenue next fiscal year. The transaction is expected to be neutral in Marvell’s non-GAAP (Generally Accepted Accounting Principles) earnings per share in the first full quarter after the transaction closes, and accretive in the first full fiscal year thereafter.
The move bolsters Marvell’s hand in competing more broadly against Broadcom and Intel, as well as established players like Texas Instruments (TI) and Microchip. Now Marvell can target a wider range of chip-level cloud DC needs, including:
- Cloud-optimized Ethernet switches per the Innovium deal
- High-speed Electro-Optical PAM4 and Coherent DSP chipsets (Inphi)
- OCTEON-based DPUs for security, offload, and acceleration
- Custom Arm-based service CPUs
- Full custom ASICs
- Bravera Flash and HDD-based storage
- Pluggable COLORZ DCI modules
The Innovium deal fills the high-speed cloud scale switching portion of Marvell’s portfolio forming a logical complement to its existing assets, including the feature-rich product offerings. Now Marvell needs to demonstrate that its M&A playbook extends to successfully integrating the Innovium assets on the heels of the integration of the Inphi personnel and portfolio assets.
Key Takeaways on Marvell’s Acquisition of Innovium
I see Marvell as an increasingly formidable competitive force in the overall cloud DC space, including especially the Ethernet switch chip segment. I see the Innovium deal motivating key Marvell rivals Broadcom and Intel to invest more aggressively in portfolio development and marketing aimed at the merchant Ethernet switch silicon market segment. Now that Marvell has raised the stakes, they will need to directly respond or risk falling behind Marvell’s ecosystem-wide momentum with hyperscalers and other cloud service providers.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
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The original version of this article was first published on Futurum Research.