Marvell Acquires Inphi in Cloud and 5G Push

Marvell Technology Group confirmed Thursday it would buy Inphi Corp. in a cash-and-stock deal. The acquisition, estimated to be as much as $10 billion, is the second big chip M&A announced this week, after AMD officially unveiled its plan to acquire Xilinx.

Inphi’s shares shot up as much as 27 percent today after the Wall Street Journal initially reported that Marvell is in talks to buy the Calif.-based company.

Marvell hopes the deal will help expand its footprint in the networking industry. Inphi, a Santa Clara-based chip company makes high-speed analog and mix-signal components and optical subsystems.

In announcing the agreement to buy Inphi, Marvell made clear its intent to “accelerate the company’s growth in cloud and 5G infrastructure.” Marvell estimates that the combined company creates “a U.S. semiconductor powerhouse with an enterprise value of approximately $40 billion.”

In breaking down the deal for EE Times, Jim McGregor, principal analyst and the founder of Tirias Research, said, “Inphi has silicon photonic for optical interconnects and Marvell has copper interconnects. The combined company will be able to provide both for networking.”

He added, “Optical is critical for longer and faster speeds. So, the deal makes sense. Silicon photonics/optical networking is a hot and growing part of networking.”

Matt Murphy, president and CEO of Marvell, said, “Inphi’s technologies are at the heart of cloud data center networks and they continue to extend their leadership with innovative new products, including 400G data center interconnect optical modules, which leverage their unique silicon photonics and DSP technologies. We believe that Inphi’s growing presence with cloud customers will also lead to additional opportunities for Marvell’s DPU and ASIC products.”

Gary Mobley, senior analyst at Wells Fargo Securities, wrote in his research note that this was an unsolicited offer by Marvell. Inphi was not being shopped.

Analysts responded positively. Mobley noted that the proposed acquisition would allow Marvell “increased exposure to data center and 5G back/mid/front-haul.” Besides enabling Marvell to diversify from slower growing storage and enterprise networking markets, the deal would also “match Marvell’s strength in multi-gig Ethernet with Inphi’s strength in physical layer electro-optical interconnect,” he said.

(Source: Marvell)

Inphi, founded in 2000, has steadily increased its visibility by offering high-speed analog, DSP and optical semiconductor solutions for the cloud and service provider communication markets. It has done some M&A deals of its own. Most notably, it acquired Cortina Systems to gain its high-speed interconnect and optical transport product lines.

A year ago, Inphi and Synopsys announced a deal to divvy up eSilixon.

Under the deal, Inphi Corp., bought most of eSilicon, and Synopsys absorbed the fabless vendor’s embedded memory and interface intellectual property (IP) business. This acquisition added 2.5D packaging, SerDes and custom silicon design products to the Inphi Portfolio.

Marvell intends to finance the transaction with cash on hand and some additional financing. Marvell said it has debt financing commitments from JPMorgan Chase Bank, N.A.

The transaction is not subject to financing conditions and is expected to close by the second half of calendar 2021, subject to the approval of Marvell shareholders and Inphi stockholders and the applicable regulatory approvals.

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