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What's Behind Marvell's Innovium Deal


By: Mary Jander

Semiconductor maker Marvell Technology Inc. (Nasdaq: MRVL) has moved to buy Ethernet switch component startup Innovium for $1.1 billion in a deal that highlights the challenges and changes in today’s high-speed Ethernet chip market.

The all-stock transaction, which is expected to close by the end of 2021, has led to speculation about the low price tag for a company that at this time last year was valued at over $1 billion and was said to have a raft of hyperscale cloud customers and an OEM supply deal with Cisco (Nasdaq: CSCO).

Innovium also last year unveiled one of the world’s fastest Ethernet switching chips. That was the Teralynx 8, a 7-nanometer chip with 26.5 Tbit/s throughput that competes directly with the 14.4-Tbit/s Jericho2c+ chip from Broadcom (Nasdaq: AVGO). Both chips, along with wares from NVIDIA (Nasdaq: NVDA), Intel (Nasdaq: INTC), and others, aim to serve growing demand among hyperscaler cloud providers, carriers, and enterprises, as well as their equipment suppliers.

Given all this, how could Marvell pay relatively little for technology of this caliber? The answer, it seems, is tied directly to Innovium’s success. Let’s take a closer look.

Why Marvell Picked Innovium

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