Insight Bite: Marvell Joins Semiconductor Dealmaking Boom

Amidst coronavirus-induced social distancing, insatiable demand for bandwidth is making networking and cloud infrastructure firms attractive acquisition targets.

In a megadeal that strikes at the heart of these thriving sectors, chipmaker Marvell has agreed to buy Inphi Corp for $10 billion to expand its presence in datacenters and 5G network infrastructure.

Inphi’s tiny innovative chips are a key component of big tech’s datacenters, helping companies like Microsoft, Cisco and Google to accelerate the movement of data along fibre-optic cables.

Compared to conventional copper-based cables, Inphi’s high-speed optical connections represent a quantum leap, offering hundreds of times faster connectivity. This boost could help Marvell, which primarily produces chips for data storage, to assert dominance in the rapidly growing networking market, and gain ground on industry leader Broadcom.

“Our acquisition of Inphi will fuel Marvell’s leadership in the cloud and extend our 5G position over the next decade,” said Marvell president Matt Murphy. “Inphi’s technologies are at the heart of cloud datacenter networks.”

Over the last decade, deal making in the chip market has largely been driven by the need to reduce costs and expand product lines.  And as cloud and telecommunications markets have expanded during the Covid-19 pandemic, demand for datacenter silicon has pushed this consolidation into overdrive.

Marvell’s acquisition of Inphi is just one of a series of recent megadeals aimed at acquiring datacenter chip expertise.  In the biggest semiconductor deal this year, NVIDIA is buying ARM for $40 billion with a view to capturing demand for datacenter chips. Similarly, AMD is pushing up against Intel by acquiring Xilinx in a $35 billion deal aimed at garnering expertise in  field-programmable gate array (FPGA) chips, which are particularly valuable for hyperscale datacenters.

Lastly, Analog Devices bought Maxim Integrated Products for $21 billion in July to supplement its industrial and healthcare business with automotive and datacenter expertise.

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