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Marvell to Buy Avera Semi for $650M in Cash

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5/20/2019

SANTA CLARA, Calif. -- Marvell today announced it has entered into definitive agreements to purchase Avera Semiconductor, the Application Specific Integrated Circuit (ASIC) business of GLOBALFOUNDRIES. This acquisition brings together Avera Semi's leading custom design capabilities with Marvell's advanced technology platform and scale, creating a leading ASIC supplier for wired and wireless infrastructure. The agreements include the transfer of Avera's revenue base, strategic design wins with leading infrastructure OEMs, and a new long-term wafer supply agreement between GLOBALFOUNDRIES and Marvell.

Marvell is focused on becoming the world's leading supplier of infrastructure semiconductor solutions. Avera's ASIC capabilities will accelerate this transformation. Specifically, Avera's advanced full custom development capabilities complement Marvell's standard and semi-custom product portfolio. Previously part of IBM's Microelectronics business, Avera has successfully executed more than 2,000 complex designs in its 25-year history and built a significant business, supported by approximately 800 talented technologists. Avera brings highly innovative design competencies in analog, mixed-signal and SoCs as well as a rich IP portfolio including high-speed SerDes, high-performance embedded memory and advanced packaging technology. They have built strong relationships with blue-chip wired and wireless networking OEMs, having delivered custom solutions for multiple generations of switches, routers and base stations. More recently, Avera has started to address emerging opportunities in next-generation cloud data centers with multiple programs in development today.

As a leading supplier of standard and semi-custom products into these same markets, Marvell has also seen an expanding opportunity pipeline for custom solutions utilizing its leading IP and technology platform. For example, within 5G infrastructure, Marvell offers complete silicon platforms that enable a wide range of digital processing including baseband, processors, Ethernet switches and PHYs. As these products have gained traction in the marketplace, Marvell's opportunity set has recently expanded to encompass a number of custom SoCs addressing a broader portion of the base station. Several of these new products are designed to replace FPGAs with purpose-built optimized silicon. At the same time, Avera has provided custom products to be deployed in the radio head of a leading wireless infrastructure OEM for multiple generations. These solutions expand Marvell's addressable market and are indicative of the broader opportunity for custom ASICs within both wired and wireless infrastructure. The addition of Avera's talented team and extensive ASIC design expertise will accelerate Marvell's ability to address these opportunities and capture significantly more content in the broader infrastructure market.

Under the terms of the agreement, Marvell will pay GLOBALFOUNDRIES $650 million in cash at closing plus an additional $90 million in cash if certain business conditions are satisfied within the next 15 months. The transaction is expected to close by the end of Marvell's fiscal year 2020 pending receipt of regulatory approvals and other customary closing conditions.

The acquisition is expected to be accretive to Marvell's non-GAAP earnings per share in the first full year following the close.

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