Marvell to buy Inphi in $10 billion chip deal to bolster data center, 5G business

In this news, we discuss the Marvell to buy Inphi in $10 billion chip deal to bolster data center, 5G business.

(Reuters) – Marvell chip supplier Technology Group Ltd on Thursday announced it has agreed to buy its counterpart Inphi Corp in a $ 10 billion cash and stock deal to expand Marvell’s footprint in data centers and network infrastructure 5G.

Marvell competes with Broadcom Inc to supply chips that move data over copper-based cables. But Inphi designs chips that transfer data over fiber optic cables hundreds of times faster than copper cables.

Companies such as Amazon.com, Alphabet Inc.’s Google, Microsoft Corp and Facebook Inc uses Inphi chips for optical connections inside the huge data centers that power their online services.

Inphi has also won deals to help Microsoft consolidate its data centers with high-speed optical connections and connect various parts of 5G networks.

Data centers and 5G infrastructure “are our two key markets,” Marvell chief executive Matt Murphy told Reuters in an interview. “They’re right in there,” Murphy said of Inphi, “so the fit is really good.”

The deal comes amid a wave of pullbacks in the semiconductor industry this year. Advanced Micro Devices Inc said on Tuesday that it will buy Xilinx Inc in a $ 35 billion deal, following Nvida Corp’s $ 40 billion purchase of SoftBank Group Corp’s Arm Ltd and the Analog Devices Inc’s $ 21 billion acquisition of Maxim Integrated Products.

As part of the deal, Marvell will give Inphi shareholders $ 66 in cash and 2.32 shares of the combined company for each share of Inphi. After the deal, Marvell shareholders will own around 83% of the combined company, with Inphi shareholders owning around 17%.

Marvell plans to use the cash and debt on the balance sheet to fund the transaction, taking on approximately $ 4 billion in new debt as part of the transaction with funding commitments from JPMorgan Chase & Co.

While Marvell is headquartered in Silicon Valley, it is currently domiciled in Bermuda. After the transaction, Marvell and Inphi will both become subsidiaries of a new US-domiciled holding company. The deal is expected to be concluded in the second half of 2021.

Reporting by Stephen Nellis in San Francisco; Edited by Kenneth Maxwell

Original © Thomson Reuters Corporation

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