Marvell Buying Cavium for $6 Billion-Ameya360 electronic components purchasing network

Marvell Buying Cavium for $6 Billion

Release time：2017-11-21

author：Ameya360

source： Dylan McGrath

reading：3248

　　Marvell Technology Group agreed to buy rival chip vendor Cavium for $6 billion in cash and stock in the semiconductor industry's latest blockbuster deal.

　　The deal, announced Monday (Nov. 20), would remake Marvell (Santa Clara, Calif.), bring its addressable market to more than $16 billion by bringing together its HDD and SSD storage controllers, networking and wireless connectivity semiconductor together with San Jose-based Cavium's multi-core processing, networking communications, storage connectivity and security chips, Marvell said. The combined entity will have annual revenue of about $3.4 billion.

　　News of a possible deal between the firms was first reported earlier this month by the Wall Street Journal and other media outlets.

　　The deal to acquire Cavium would give Marvell a fresh start after an accounting scandal that last year resulted in the resignations of Marvell's founders, CEO Sehat Sutardja and President Weili Dai.

　　"This is an exciting combination of two very complementary companies that together equal more than the sum of their parts," said Matt Murphy, who took over as Marvell president and CEO last year, in a press statement.

　　"Together, we all will be able to deliver immediate and long-term value to our customers, employees and shareholders," Murphy added.

　　Under the terms of the deal, Marvell will pay $40 per share in cash and 2.1757 Marvell common shares for each Cavium share. The deal is expected to close in mid-2018, Marvell said.

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Marvell's New CTO Wants 'Culture of Innovation'

　　Neil Kim is just what the doctor ordered for Marvell — a booster shot of positive, practical engineering energy for a company about halfway through a major surgical makeover. The former head of Broadcom’s central engineering group spent an hour with EE Times sharing his views at the end of his first week on the job as Marvell’s new chief technologist.　　It’s been a wild ride at Marvell, and it’s not over yet. A year ago, Marvell founders — chief executive Sehat Sutardja and president Weili Dai, his wife — resigned as the company’s finances tumbled amid investigations of accounting practices. Revenues and profits had fallen from $3.6 billion and $435 million in 2015, respectively, to $2.6 billion with an $811 million loss a year later.　　Since then, the company has essentially replaced its entire board and top tier of management. Last May, Rick Hill, former chief executive of Novellus Systems, became Marvell’s chairman. In June, Matthew Murphy, a senior executive from Maxim Integrated, was named chief executive. In less than a year, Murphy has hired a half-dozen execs under him, with Kim being the most recent, and the third to come from rival Broadcom.　　The financial freefall stabilized in Marvell’s last fiscal year to revenues of $2.3 billion and a $21 million profit. The company has 4,600 employees, down nearly 40% from its peak of 7,300 in 2014. Current management estimates that another 900 will leave, and it has earmarked an undisclosed number of products it aims to cancel or sell off.　　Murphy has indicated that he aims to complete the restructuring by October. Even when he is done, Marvell still faces a number of strategic challenges.　　While it has been focused on rebuilding itself, the semiconductor industry around it has gone through a historic consolidation. Marvell’s top competitors in embedded processors, Ethernet, and Wi-Fi have beefed up for the next rounds of battle amid slowing market growth. Broadcom merged with Avago, and Qualcomm is set to gobble up NXP, enabling new levels of chip integration, savings, and economies of scale.　　About half of Marvell’s current business is in a sunset sector — controllers for hard disk drives. It’s a business that depends on a few big customers.　　Marvell’s second largest customer after Western Digital — Toshiba’s electronics group — is now up for sale. Its third biggest customer, WinTech, is a relatively small memory module maker.　　Former CEO Sutardja was himself an engineer at heart. He was known for getting deeply involved in projects such as MoChi, a silicon interconnect that he described in a 2015 ISSCC keynote, one of his last major public talks.　　Neil Kim spent the last 15 years of his career building and overseeing Broadcom’s central engineering group. It was known for being a disciplined practitioner of silicon design and reuse, a skill that the company relied on repeatedly as it grew by acquisition.　　Kim retired from Broadcom last year just before Avago closed the deal to buy the company in one of the largest of many recent large mergers. We spoke to Kim after his first week at Marvell’s Silicon Valley headquarters.

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