NXP Semiconductors said it would buy Marvell Technology's Wi-Fi and Bluetooth products business in an effort to expand its sales in the communications infrastructure, automotive, industrial and Internet of Things markets. The Eindhoven, Netherlands-based company is paying $1.76 billion in the deal, which is expected close by the first quarter of 2020, subject to customary closing conditions.
As part of the deal, NXP plans to purchase Marvell’s WiFi Connectivity business, closing one of the biggest blind spots in NXP's wireless product portfolio. NXP is also acquiring assets related to Bluetooth technology. Marvell's Wi-Fi and Bluetooth sales totalted $300 million in 2018. NXP sees the business ballooning to $600 million in 2022. The company plans to absorb about 550 employees in the deal.
Richard Clemmer, NXP's CEO, said in a statement that the combination of “Marvell’s world-class connectivity with NXP’s industry leading embedded processing” will give customers access to “the broadest portfolio of edge solutions which includes tailored security and a full suite of wireless connectivity," ranging from Wi-Fi and Bluetooth to near-field (NFC) and dedicated short-range communications (DSRC).
Since Qualcomm's bid to buy the chip manufacturer collapsed last year, NXP has been trying to position itself as a standalone company capable of strong sales growth. In September, NXP said it would not significantly alter its strategy prior to the $44 billion deal. NXP is doubling down on the emerging Internet of Things market and trying to maintain its lead as the world's largest supplier of automotive chips.
Marvell is a major player in the Wi-Fi and Bluetooth chip market. The company's first chip lineup based on the new Wi-Fi 6 standard are now in mass production. Annual WiFi 6 chip shipments are projected to break the one-billion-unit barrier in 2022 and set to account for 33% of WiFi shipments in 2023, according to ABI Research. Marvell's closest competitors in Wi-Fi include Qualcomm, Cypress, Broadcom and Intel.
Marvell said that selling the Wi-Fi and Bluetooth business helps sharpen its focus amid slowing growth and tightening competition in the global semiconductor market. The Silicon Valley company is expanding its efforts around chips used in cars, data centers and network infrastructure. Marvell recently revealed its plans to buy Aquantia, moving it into the market for Multi-Gig Ethernet PHYs, MACs and other chips.
The divestiture will also help pump up its overall profit margins, the company said. Matthew Murphy, Marvell's chief executive, said the NXP deal “yields a premium valuation and substantially higher economic return for Marvell shareholders while accelerating our transformation into a leading infrastructure supplier spanning 5G, data center, enterprise and automotive Ethernet applications."
