According to the EE Times, market research firm IC Insights data show that Marvell is ranked 33 in the world's top semiconductor manufacturers with an annual revenue of 2.4 billion US dollars.Indus Insights analyst Rob Lineback said the two companies are very suitable for each other, But Cavium focused on rapid growth, has been a loss for 5 consecutive years, and 2017 can not escape the loss of fate.
With sales of nearly $ 1 billion a year, Cavium sells a variety of network communications chips and boards, and Marvell's main products include hard disk and solid state disk (SSD) controllers, Ethernet switches, Wi-Fi and Bluetooth chips.
Linley Gwennap, head of the market-research firm Linley Group, said the two companies are in the midst of competition from Broadcom, Intel and Qualcomm and are not small enough to be bought out. Optimistic, both use ARM core, it will be easier to merge and manage product lines.
Ross Seymore, an analyst with Deutsche Bank, believes the merger will create cost-effective, scale and complementary products that promise to boost future revenue growth potential, compared with 25-30 in the typical semiconductor merger % Premium, Marvell only offers Cavium 11 ~ 20% premium, is a good price.
Bob Wheeler, communications analyst at Linley Group, said the deal comes at a time when the Marvell Prestera line of Ethernet switch products is back to growth, with the Cavium XPliant switch likely to appear on the Prestera roadmap as its first programmable product in the future.
For Cavium, its Octeon lineup has lagged behind Intel and NXP in embedded communications processors, but the future of the Cavium ThunderX ARM server SoC will not be clear with Marvell, which emphasizes cost control.
Cavium's revenue growth far above the industry average, but has not yet turned back to profit.The company's revenue in 2016 increased from 235 million to 603 million U.S. dollars, a loss of 146 million U.S. dollars in the first nine months of 2017, Cavium revenue A 40% increase, thanks in part to QLogic's $ 1 billion acquisition in 2016.
The acquisition of Cavium will help Marvell diversify its business beyond the two major businesses of hard disk controllers and read channels Marvell recently completed an 18-month restructuring that cut nearly 40% of its workforce, including former chief executive Sehat Sutardja and president Weili Dai.
Marvell, which received $ 2.3 billion in revenue and $ 21 million in revenue in 2016, has replaced the entire board of directors and top management and appointed Matthew Murphy as chief executive in June 2016.
Murphy said he has been joining Marvell in discussions with Syed Ali, co-founder and CEO of Cavium, about 10% of the combined company's new revenue will come from the fast-growing data center market and will have More than 10,000 patents, while the merger will reduce the proportion of hard disk chip revenue from 35% to 25%.
Murphy believes the R & D spending of the combined company will still outperform its peers in revenue, and there should not be too much regulatory challenges as the two products have little overlap.
In addition, Murphy made it clear that he and he will remain the chief executive after the merger, but will share power with Ali and at least one Cavium executive who will join the board of the new company.