SoftBank said to have weighed potential takeover of Marvell
The Japanese conglomerate’s push into the space has gone beyond pure mergers and acquisitions
[NEW YORK] SoftBank Group explored a potential takeover of US chipmaker Marvell Technology earlier this year, sources familiar with the matter said, in what would have been the semiconductor industry’s largest-ever deal.
The Japanese conglomerate’s billionaire founder, Masayoshi Son, has been studying Marvell as a possible target on and off for years, according to the sources. It’s part of his efforts to bet on hardware that can benefit from the artificial intelligence (AI) boom. SoftBank made overtures to Marvell several months ago, but the two sides could not reach an agreement on terms, the sources said.
SoftBank was eyeing Marvell with the idea of combining it with Arm Holdings, the UK chip designer that it controls, the sources said. While Marvell and SoftBank are not currently in active negotiations on a deal, it’s possible the interest could be revived, some of the sources said. Son regularly looks at dozens of possible deals without taking action, the sources said.
Shares of Marvell have fallen 16 per cent this year, giving the company a market value of about US$80 billion. That’s in contrast with Nvidia, Broadcom and Arm, which have all surged this year. Arm has a market capitalisation of around US$170 billion.
Marvell could also attract interest from other suitors, some of the sources said. Representatives for SoftBank, Marvell and Arm declined to comment.
Data demand
Led by chief executive officer Matthew Murphy, Marvell designs and develops semiconductor chips and related technologies for data centres, the massive server hubs that power cloud computing and AI. Marvell reported record revenue of US$2 billion in the quarter that ended Aug 2.
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An acquisition of the company would have been the latest in a string of investments by SoftBank intended to extend the Japanese firm’s reach into AI infrastructure. In March, it agreed to buy semiconductor designer Ampere Computing, which makes processors for data centre machinery.
SoftBank acquired Arm in 2016 and took the chip designer public in 2023, while retaining an equity stake of almost 90 per cent. Son and Arm CEO Rene Haas have been working on their own AI chips that they hope to introduce next year, Bloomberg has reported.
Nvidia has demonstrated the potential riches from the frenzied build-out of AI data centres, with a 1,300 per cent stock surge over the past five years that turned it into the world’s first US$5 trillion company. Chipmakers such as Marvell and Arm are seeking to tap into that demand from customers such as OpenAI and Microsoft. Tech companies plan to spend more than US$1 trillion on AI chips and other infrastructure in the years ahead.
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Marvell’s shares have run up in recent years on enthusiasm for the prospects of its custom chip business, which has clients such as Amazon.com’s cloud unit and Microsoft. But in March, the company suffered its worst stock drop in more than two decades after a revenue forecast fell short of the highest estimates.
And while Broadcom, Marvell’s main rival in the custom AI chip business, has racked up new customer wins such as OpenAI, some analysts have expressed concern about the predictability of Marvell’s future business. TD Cowen downgraded the company to a “hold” rating in September because of customer uncertainty.
Chip competition
Bringing Marvell and Arm together could result in a more potent competitor in the chip market. Marvell specialises in taking chip design elements, like those offered by Arm, and combining them into final blueprints that can be given to Taiwan Semiconductor Manufacturing Company or another contract manufacturer to put into production.
There are major hurdles to a Marvell acquisition, even beyond a price tag that could approach US$100 billion. The US government has been pushing to develop the domestic semiconductor industry, so it’s not clear they would approve the chipmaker’s sale to a Japanese company, despite a close relationship between Son and US President Donald Trump.
A tie-up between Arm and Marvell may also face antitrust scrutiny. Regulators in the US, Europe and China forced Nvidia to abandon its proposed 2020 acquisition of Arm, and Qualcomm pulled the plug on an offer to acquire NXP Semiconductors in 2018 after China’s antitrust authority withheld its approval.
In addition, Arm and Marvell have not been able to work through how they would combine the management teams after an acquisition, some of the sources familiar with the matter said. Haas is 63 years old, while Murphy is in his early 50s.
SoftBank’s push into the space has gone beyond pure mergers and acquisitions. In January, it announced a US$500 billion project called Stargate, alongside OpenAI and Oracle, to build data centres in the US. While SoftBank’s Son pledged to deploy US$100 billion “immediately”, the rollout of Stargate has been slower than planned, in part because of disagreements over where the data centres should be located. BLOOMBERG
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