Dutch chipmaker NXP Semiconductors said on Wednesday that it will acquire Marvell Technology's wireless connectivity business for $1.76 billion in cash. The division brought Marvell $300 million in revenue in FY 2019, and NXP expects this number to double by 2022.
Harsh Kumar, an analyst at investment bank Piper Jaffray, said NXP has been under-investing in the WiFi industry for the past few years because it believes it can acquire Qualcomm's WiFi technology. But the deal failed in 2018.
NXP produces a variety of chips for industrial and automotive customers, and an agreement with Marvell will help the company cross-sell Marvell's products to customers.
For Marvell, the sale of the connection business is strategic because the company has paid more attention to the network equipment market after acquiring the Cavium for $6 billion in 2017. "We are not surprised by this divestiture," Cooma said. “Marvell once thought that these assets could be used to enter the auto market, but in our opinion, this opportunity is quite small.”
The transaction is expected to be completed in the first quarter of 2020 and will increase NXP's adjusted quarterly operating profit after the transaction is completed.
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