In another consolidation move in the semiconductor industry, chipmaker Marvell Technology announced it will acquire competitor Cavium Inc. for approximately $6 billion. It's estimated that the combined company will generate about $3.4 billion in annual revenue.Bermuda-based Marvell makes semiconductors for data-storage devices while California-based Cavium produces communications and networking chips. The deal better positions Marvell to compete with bigger rivals, including Intel and Broadcom, in a semiconductor industry that has changed a lot over the past couple years as companies buy out rivals."This is an exciting combination of two very complementary companies that together equal more than the sum of their parts,” Marvell's President and Chief Executive Officer Matt Murphy wrote in a statement. "This combination expands and diversifies our revenue base and end markets, and enables us to deliver a broader set of differentiated solutions to our customers."Murphy became the head of Marvell last year and has since started a restructuring effort to diversify the company's offerings. Instead of focusing Marvell's business efforts solely on chips that control hard drive disks, Murphy has switched gears to add more offerings in data center and wireless communication technology.Cavium has been trying to break into the server microprocessor market using ARM technology. Intel currently dominates the server market, but the combined Marvell-Cavium company will be better suited to take on the giant chipmaker than Cavium alone. There are a handful of other companies making ARM CPUs for the server market, including AMD.Another chipmaker making headlines is Broadcom, which offered to buy rival Qualcomm for $105 billion. Qualcomm quickly rejected the unsolicited offer, claiming it severely undervalued the company.
Marvell's acquisition of Cavium is subjected to shareholder and regulatory approval, but it's expected to be complete by mid-2018.