Marvell acquires networking chip manufacturer in $1.1 billion deal

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Chipmaking specialists Marvell Technologies announced their acquisition deal with Innovium Inc, a processor line that assists cloud providers in powering data center networking infrastructure.

What does this acquisition mean for the cloud industry

Marvell financed this deal through their shares of their common stock on the stock market. They expect to add $150 million in revenues in 2023 with Innovium.

The servers and storage devices used in data centers are linked together through switches and move data through specialized networking chips. Until a few years ago, Broadcom Inc. occupied a near-total share of this market (more than 90%).

Innovium, based in San Jose, produces chips for these switches and now occupies 20% of the market share, winning deals from significant data center operators and large cloud providers. In addition, the company recently raised $170 million in funding.

Future plans for Marvell

Marvell hopes to capture a larger share of revenue and direct cloud provider business its way with this startup as more enterprises switch workloads to the cloud. Innovium is also in talks with other data center operators to provide switch processors.

The company offers three switch processors, namely Teralynx 5, Teralynx7, and Teralynx 8, with the latter having a transmitting capacity of up to 25.6 terabits of data per second.

All of these chips have in-built buffers, which hold data temporarily until a chip processes it. This in-built buffer decreases network delays and reduces the risk of packet drops. Innovium also beats out its competitors in power efficiency, with its chips having almost double the efficiency of standard chips.

These advanced technology features complement Marvell’s line of networking chips. The company has a presence across much of the market for data center chips, including server CPUs and data processing units. It is also a silicon supplier to other companies and specializes in networking hardware for vehicles as well.