Earlier this year, Nvidia (Nasdaq stock code: NVDA) Announced its intention to acquire chip designer ARM Holdings for US$40 billion AMD (Nasdaq stock code: AMD) Reach a merger agreement Xilinx (Nasdaq: XLNX) For 35 billion U.S. dollars.
Don’t be excluded from the feeding frenzy Marvell Technology Group (Nasdaq stock code: MRVL)Announced on Thursday that it has reached an agreement to acquire data center and 5G mobile network hardware providers Infino (Nasdaq: WHERE) 1
In 2020, M&A activities in the semiconductor industry will accelerate, which is related to cloud computing and data centers. As early as the spring, NVIDIA discussed the vision of using the data center as the main computing unit, and the acquisition of ARM will double the company’s overall development in this area. Similarly, AMD has similar aspirations for data centers and other modern computing needs. Marvell, much smaller than NVIDIA and AMD, hopes to achieve similar goals.
Marvell specializes in chips involving the movement of large blocks of data, while Inphi complements its product portfolio with devices that help move data faster (used in Internet infrastructure and between and within data centers). More than 70% of Inphi’s sales come from cloud computing operators and 5G networks, which closely matches Marvell’s storage, network and computing hardware.
Marvell predicts that the total value of the serviceable market this year will reach 16 billion U.S. dollars and will grow at an annual rate of 9% by 2023. Taking Inphi into consideration, Marvell predicts that the annual growth rate of the serviceable market will reach 12%, and believes that there will be some growth by 2023. The annual sales of its products are 23 billion U.S. dollars. Given that the combined company has generated only $3.63 billion in revenue in the past 12 months, there is still a lot of room for growth. In addition to being able to cross-sell products between customers, Marvell and Inphi are also expected to become a more profitable company with a long-term target operating margin of 38% to 40% (compared to Marvell’s only 22% in the first half of the year 12 Months).
Chip manufacturers are working hard to improve their product portfolios, not only to increase sales, but also to offer cloud computing and data center customers the “more buy, more savings” value proposition. In order to avoid being left behind, this is a good move by Marvell after rivals NVIDIA and AMD played their respective games.