The semiconductor industry has seen significant mergers recently, and Marvell is the latest participant, announcing its acquisition of Inphi through a combination of stock and cash, totaling around $10 billion as stated by the company.

Marvell’s CEO, Matt Murphy, explained that integrating Inphi – a company specializing in chips for connecting servers within cloud data centers and between them via fiber optics – will enhance Marvell’s existing portfolio of copper-based chips and position them favorably for emerging applications where Inphi excels.

“This acquisition of Inphi will solidify Marvell’s leading role in the cloud computing sector and reinforce our 5G capabilities for the coming decade,” Murphy noted in an official statement.

This acquisition represents a strategic choice to leverage existing funds for expansion into new areas, rather than undertaking the complete development of new technologies independently. According to the company, “This transaction is highly synergistic, broadening Marvell’s market reach, strengthening its customer relationships, and accelerating its leadership in hyperscale cloud data centers and 5G wireless infrastructure.”

The chip industry is currently experiencing a wave of consolidation, with numerous companies merging in pursuit of similar benefits as Marvell anticipates from this deal. This announcement coincides with AMD’s recent agreement to acquire Xilinx for $35 billion, and follows Nvidia’s $40 billion acquisition of ARM last month, bringing the total value of these three transactions to $85 billion.

A common belief within the industry is that these companies can achieve greater success through collaboration and strategic investments than they could operating independently.

Marvell and Inphi are certainly presenting this perspective. They emphasize that their combined enterprise value will exceed $40 billion, representing substantial market opportunities. However, the ultimate success of this integration will depend on effective collaboration, the results of which will take time to materialize.

Initial market reaction to the deal has been muted, with Marvell’s stock declining by over 7% in early trading; however, Inphi’s stock has experienced a significant increase, rising nearly 23% this morning.

The acquisition has received approval from both companies’ boards and is anticipated to be finalized in the latter half of 2021, contingent upon shareholder and regulatory approvals.