After China approves the merger, Marvell moves forward with plans to acquire Cavium.
Semiconductor company Marvell Technology announced on Friday that it has completed the acquisition of Cavium, designer of communications and storage integrated circuits (ICs). The addition of Cavium should boost Marvell’s position in the infrastructure market, especially in storage and networking.
Marvell announced the $6-billion deal originally in November 2017. China’s State Administration for Market Regulation approved the deal on June 28, despite the ongoing trade war posturing of the U.S. and China.
Cavium brings multi-core system-on-chip products for data center appliances, wireless applications and networking to Marvell’s portfolio of storage drive controllers, networking systems and wireless connectivity products.
“The next wave of semiconductor growth will be fueled by advancements in the data economy,” said Matt Murphy, Marvell’s president and CEO, in a press statement. “Applications such as [artificial intelligence], 5G, cloud, automotive, and edge computing all require engineering solutions that combine high bandwidth, very low power consumption, and leadership in complex system on a chip solutions. As a combined company, we now offer industry-leading IP, a broad portfolio of infrastructure solutions, and a talented team of innovators ready to tackle our customers’ toughest challenges. We’re excited to get started.”
Cavium’s CEO Syed Ali, Brad Buss and Dr. Edward Frank have all been appointed to the Marvell’s Board of Directors. Ali is an engineer who co-founded Cavium and served as its president, CEO and chairman of the board of directors. Buss has been a director since July 2016, and previously served as CFO of SolarCity and Cypress Semiconductor. Frank was also a director of Cavium with an engineering and computing background. He was CEO and co-founder of startup Cloud Parity and has worked at Apple and Broadcom.
Cavium’s brand-name products include ThunderX and ThunderX2 ARM processors for servers, Octeon processors for infrastructure, Octeon Fusion processors for base stations, and NICs (network integrated circuits) under the brand name LiquidIO. XPliant are its programmable Ethernet switches, Qlogic for fibre channel adapters and controllers, and Nitrox for security. Cavium also makes Ethernet controllers and adapters under the name FastLinQ.
“Mergers can sometimes be disruptive. But due to extensive preparation, we don’t anticipate interruptions; you can plan on business as usual with your order contacts, backlog, and warranties.” said Thomas Lagatta, EVP of worldwide sales and marketing for Marvell, in a letter to customers on Cavium’s website posted over the weekend. “We expect our new scale and strength — with more than 5,000 employees and 12,000 patents — will make us a more valuable partner to you. Until notified, please continue to work with your respective Marvell and/or Cavium Account Managers when forecasting and ordering products. We’ll be in contact with you whenever we require you to do something differently from what you’ve done in the past.”
Cavium also posted a similar letter to suppliers.
Marvell is based in Bermuda and operates out of Santa Clara, California. Cavium, which was founded in 2000, has headquarters is in San Jose, California, and has design centers in California, Massachusetts, India, Israel, China and Taiwan.
Chinese state-owned Tsinghua Holdings revealed that it owned a stake in Marvell in May 2016, which ultimately necessitated China’s regulatory input on the Cavium deal. Tsinghua Holdings is a wholly owned subsidiary of Chinese public university Tsinghua University.
Meanwhile, another chip deal is still waiting for Chinese approval. Qualcomm and NXP are still waiting for their deal to be finally approved by a regulatory agency in China.
Analyst Earl Lum of EJL Wireless Research said that with Marvell having Taiwanese operations — which China considers to be domestic — and acquiring a U.S. company, the approval shouldn’t really be taken as a sign of China’s willingness to allow international acquisitions to proceed in the current uneasy trade climate.
“It was more of a surprise that CFIUS [the Committee on Foreign investment in the United States] approved the deal and didn’t cite any national security concerns,” he said.
Lum said that while the Qualcomm deal was conditionally approved in China as of May, it is still awaiting approval now, “but being that the tariff wars are happening or starting to happen, it is a much bigger negotiating chip on a table for China than a Marvell or a Cavium would be.”
