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Marvell to acquire Avera Semi for $740 million

Marvell, a computer networking technology supplier, has reached an agreement to purchase Avera Semi, the chip design business of Global Foundries.

Marvell will initially pay $650 million in cash and an additional $90 million over the next year or so, depending on the performance of the business.

Marvell says the acquisition brings together Avera Semi’s “leading custom design capabilities with Marvell’s advanced technology platform and scale”, creating a “leading application specific integrated circuit supplier for wired and wireless infrastructure”.

The agreements include the transfer of Avera’s revenue base, strategic design wins with leading infrastructure original equipment manufacturers, and a new long-term wafer supply agreement between Global Foundries and Marvell.

Marvell says it is focused on becoming the world’s leading supplier of infrastructure semiconductor solutions. Avera’s ASIC capabilities will accelerate this transformation.

Specifically, Avera’s advanced full custom development capabilities complement Marvell’s standard and semi-custom product portfolio.

Previously part of IBM’s Microelectronics business, Avera has successfully executed more than 2,000 complex designs in its 25-year history and built a significant business, supported by approximately 800 technologists.

Avera brings highly innovative design competencies in analog, mixed-signal and SoCs as well as a rich IP portfolio including high-speed SerDes, high-performance embedded memory and advanced packaging technology.

They have built strong relationships with blue-chip wired and wireless networking OEMs, having delivered custom solutions for multiple generations of switches, routers and base stations.

More recently, Avera has started to address emerging opportunities in next-generation cloud data centers with multiple programs in development today.

As a leading supplier of standard and semi-custom products into these same markets, Marvell has also seen an expanding opportunity pipeline for custom solutions utilizing its leading IP and technology platform.

For example, within 5G infrastructure, Marvell offers complete silicon platforms that enable a wide range of digital processing including baseband, processors, Ethernet switches and PHYs.

As these products have gained traction in the marketplace, Marvell’s opportunity set has recently expanded to encompass a number of custom SoCs addressing a broader portion of the base station.

Several of these new products are designed to replace FPGAs with purpose-built optimized silicon.

At the same time, Avera has provided custom products to be deployed in the radio head of a leading wireless infrastructure OEM for multiple generations.

These solutions expand Marvell’s addressable market and are indicative of the broader opportunity for custom ASICs within both wired and wireless infrastructure.

The addition of Avera’s talented team and extensive ASIC design expertise will accelerate Marvell’s ability to address these opportunities and capture significantly more content in the broader infrastructure market.

Matt Murphy, president and CEO of Marvell, says: “Our acquisition of Avera enables us to offer the complete spectrum of product architectures spanning standard, semi-custom to full ASIC solutions.

“With their highly experienced design team and Marvell’s leading technology platform, we will be better positioned to capitalize on our expanding opportunity in wired and wireless infrastructure, starting immediately in the fast-growing 5G base station market.

“In addition, we are looking forward to furthering our successful partnership with Global Foundries in the coming years and beyond.”

Tom Caulfield, CEO at Global Foundries, says: “This transaction is another example of our commitment to focus on our core business of providing differentiated foundry offerings as a manufacturing service provider, while establishing deeper relationships with customers who are leaders in their respective sectors.

“With this deal and our growing strategic partnership with Marvell, we will forge new opportunities for the teams of both companies to leverage GF’s broad set of offerings and capitalize on the 5G infrastructure market as well as other opportunities.

“We look forward to becoming a strategic provider for Marvell for decades to come.”

Under the terms of the agreement, Marvell will pay Global Foundries $650 million in cash at closing plus an additional $90 million in cash if certain business conditions are satisfied within the next 15 months.

The transaction is expected to close by the end of Marvell’s fiscal year 2020 pending receipt of regulatory approvals and other customary closing conditions.

The acquisition is expected to be accretive to Marvell’s non-GAAP earnings per share in the first full year following the close.