ASICs are on the Agenda as Marvell Acquire Custom Chipmaker Avera

Chipmaker Marvell has announced the purchase of Avera, the custom semiconductor manufacturer that was spun out from IBM’s chip-manufacturing unit GlobalFoundries in 2018.

The acquisition, which reflects a fresh focus on custom chips in the semiconductor market, is designed to help the firm accelerate its transformation into a supplier of silicon for specific use cases, rather than general purposes.

With a price tag of $650 million in cash, the sale is expected to close at the end of the fiscal year 2020, and will see Avera’s ASIC expertise absorbed into Marvell. Application-specific integrated circuits, or ASICs, are increasingly in demand as manufacturers look to improve performance and efficiency by customising chips a range of different industries.

The proliferation of cloud computing, and the development of next generation technologies like autonomous vehicles and Artificial Intelligence, are all driving demand for custom chips. But Marvell’s motivation for the acquisition is based on the need for tailored chips in wireless and wired infrastructure – more specifically the 5G Base Stations that will transmit the next phase of wireless connectivity.

“Our acquisition of Avera enables us to offer the complete spectrum of product architectures spanning standard, semi-custom to full ASIC solutions” said Matt Murphy, president and CEO of Marvel. “We will be better positioned to capitalise on our expanding opportunity in wired and wireless infrastructure, starting immediately in the fast growing 5G base station market.”

Increased scrutiny from regulators and global trade tensions have slowed the tide of consolidation that has swept over the semiconductor industry in the last few years.

The mega mergers of 2015 and 2016 are now just a memory, and reports suggest that the total value of semiconductor industry mergers and acquisitions fell for the fourth consecutive year in 2018.

But even as big dollar deals are taken off the table, the market remains bullish, Demand for custom chips, which were once the domain of specialised segments like military, aerospace, and medical, has become more widespread, generating several deals in the sector including  the purchase of custom semiconductor manufacturer eASIC by chip giant Intel in July 2018.

About Acuity Advisors LLP

We know technology – that’s why we’re the industry’s trusted M&A advisor. Our partners are senior players in tech and M&A: skilled at getting to the heart of a technology business, understanding what will attract buyers, and building long-lasting relationships. We have an unrivalled understanding of the industry’s complexities and personalities – our track record and client feedback are compelling evidence of that. We’re an international firm – most of our deals are cross-border, from offices in London, Munich, Shanghai and Silicon Valley – but we’re grounded in our approach. We move quickly when it’s needed, and we’re around for the long haul when patience is a virtue. We’ve maintained a very high success rate across hundreds of deals while keeping our focus on doing what’s right for our clients. From first meeting to successful exit, we earn the trust that clients and investors put in us.

© 2019 Acuity Advisors LLP

A conversation is never wasted. We’re confident that we can give you all the help you need, but we’ll tell you if we think there’s a better option for you.

Get in Touch Get in touch now