Marvell Technology has agreed to acquire chip startup Innovium in a $1.1 billion all-stock deal aimed at bolstering Marvell’s share of networking chips sold to large cloud-computing companies.
Marvell’s rival, Broadcom, currently dominates the market for chips that go into the switches that help move digital information around inside massive data centers owned by cloud players like Amazon Web Services (AWS), Microsoft and others.
Marvell took a step toward getting into that market last year with its $10 billion purchase of Inphi, whose chips help connect the switches with fiber optic cables.
Innovium’s chip sits at the heart of the switches and competes directly against Broadcom, Reuters reported. Marvell CEO Matt Murphy said the company’s long-term plan is to integrate the Innovium and Inphi products to deepen its ties with cloud computing vendors, which are some of the largest spenders in the world on chips.
Microsoft had $24.2 billion in capital expenditures last year, much of it spent on data centers.
Innovium is expected to generate $150 million in revenue in its next fiscal year.
Marvell said it expects revenue of $1.065 billion, plus or minus 1.5 percent, when it reports earnings on Aug. 26.
