Semiconductor maker Marvell Technology is beefing up its presence in the data center space by buying Cavium, an enterprise server technology vendor, for $6 billion.
The two companies want to target the "high growth" data center market at a time when businesses are moving to the cloud and carriers are deploying faster networks, generating need for more storage and better wireless connectivity, the CEOs of both companies said Monday.
"The data center opportunity is tremendous with a combined company," Marvell CEO Matt Murphy said in a Monday conference call.
Marvell, based in Santa Clara, California, is perhaps best known for making the storage controllers in HDD and SSD memory drives. It also develops Wi-Fi and Bluetooth chipsets. The company intends to combine that tech with Cavium's data center processors and enterprise networking offerings.
Cavium's CEO Syed Ali said the merger will help Marvel "fulfill the needs of every aspect of the data center infrastructure."
It will also put some pressure on Broadcom's enterprise networking business, said Patrick Moorhead, an analyst with Moor Insights and Strategy. Cavium has strong server computing products that can help telecommunication carriers optimize their networks, which Broadcom doesn't have, Moorhead said in an email.
The planned acquisition comes as the semiconductor industry has been going through a period of consolidation. Broadcom is attempting to buy Qualcomm, and offered $105 billion for the company earlier this month. Qualcomm rejected the offer, but Broadcom isn't giving up.
Marvell claims its own acquisition will help the company generate $3.4 billion in annual revenue. Its purchase of Cavium is expected to close in 2018 mid-year.