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Chipmaker Marvell Technology to buy Cavium

Chipmaker Marvell Technology Group is to buy Cavium for a reported $6 billion, in a move intended to expand its wireless connectivity business in what is a rapidly consolidating semiconductor industry.

Marvel’s Chief Executive Matthew Murphy, who took the top job in 2016, has been focusing on the company’s networking business at a time when the demand for its chips which are used in the hard disk drives of personal computers is in decline.

Murphy replaced former husband and wife team, CEO Sehat Sutardja and President Weili Dai, and analysts expect the new management team are planning number of significant product launches for later this year after refreshing 25 products over the past 18 months.

“With Marvell facing secular challenges on its core chip business, this acquisition is a smart strategic move which puts the company in a stronger competitive position for the coming years,” said GBH Insights analyst Daniel Ives.

The newly combined business will now be in a stronger position to compete with rivals Intel, Qualcomm and Broadcom and its decision to acquire Cavium, continues a trend in the chip industry of significant merger activity.

Broadcom recently bid for rival Qualcomm offering $103 billion for the company.

Marvell plans to fund the deal through a combination of cash and $1.75 billion in debt financing.

Neil Tyler

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