Introduction
Founding
Marvell Technology (ticker: MRVL) is an American chip manufacturer that specializes in manufacturing chips for storage, communications and consumer electronics products. The company was co-founded in 1995 by Dr. Sehat Sutardja, an Indonesian Chinese, his wife Weili Dai, and his brother Zhou Xiuwu. It is headquartered in California, USA.
Company Size
According to TrendForce statistics, Marvell Technology was the sixth largest professional semiconductor designer in the world by revenue at the end of 2023.
IPO
An initial public offering on June 27, 2000 (near the end of the dot-com bubble) raised $90 million.
Main Products
Marvell Technology now ships more than 1 million processors based on the ARM architecture every day, which not only includes mobile phone application processors, but also includes communication processors, storage, WiFi and other chips.
In summary, Marvell produces data processing units (DPUs) that bundle CPUs, networking interfaces, and programmable data acceleration engines together. It also sells infrastructure, Wi-Fi, and custom chips, as well as networking and storage devices.
Storage control chip
Marvell started with storage chips. They were committed to designing a CMOS-based read channel for disk drives as their first product. Seagate Technology (ticker: STX) became their first customer.
Marvell’s products include SSD controllers, mechanical hard drive controllers, mechanical hard drive amplifiers, storage accelerators, and QLogic Fiber Channel adapters and controllers. On May 27, 2021, Marvell announced the launch of the first NVM Express SSD controller supporting PCI Express 5.0.
Network Communications
Marvell’s networking products include FastLinQ Ethernet interface cards and controllers, Ethernet switches, Ethernet PHYs and automotive Ethernet.
Marvell provided Wi-Fi chips for the original (first-generation) Apple (ticker: AAPL) iPhone. The Marvell Mobile Hotspot (MMH) is an in-car Wi-Fi connection.
Alphabet’s (ticker: GOOGL) Chromecast products are powered by Marvell SoC. That is the Marvell ARMADA 1500 Mini SoC (88DE3005) for the first generation Chromecast and the Marvell ARMADA 1500 Mini Plus SoC (88DE3006) for the second generation Chromecast and Chromecast Audio. Synaptics (US: SYNA) acquired Multimedia Solutions on June 12, 2017. The ARMADA 1500 SoC is now produced under a different name.
ARM processor
In 2006, it spent US$600 million to acquire Intel’s (ticker: INTC) ARM-based processor XScale mobile phone and related business units, making it the main supplier of ARM processor chips on the market. In 2018, it acquired Cavium, making it even more powerful in the supply of ARM processor chips.
ASIC customized chips
Mainly through the successive acquisitions of GlobalFoundries’ ASIC subsidiaries, Avera Semiconductor, helping it become the world’s second largest ASIC manufacturer, second only to Broadcom (ticker: AVGO) in market share.
Marvell also offers Customer Specific Standard Products (CSSPs), where customer accelerators and interfaces can be integrated directly into Marvell’s Octeon processors. Marvell acquired Avera Semiconductor in 2019; Avera was formerly the custom ASIC division of GlobalFoundries (ticker: GPS). Even earlier, Avera was actually the custom ASIC division of IBM (ticker: IBM).
Marvell provides customized ASICs tailored to customers’ specific design goals. It also provides ASIC development services to the aerospace and defense industries through its independent subsidiary Marvell Government Solutions (MGS). In a joint venture with TSMC, Marvell launched 3nm products.
Broadcom and Marvell are already well-known customized chip duos in the chip design industry. The most famous, important, and successful case of Marvell is that Marvell is an old partner of Amazon. Trainium of Amazon’s AWS was created by Marvell’s ASIC BU.
For the dedicated discussion on ASIC, please see my post of “ASIC market is getting bigger, and related listed companies in the US and Taiwan“
Infrastructure Processor
On November 12, 2019, Marvell announced that its ThunderX2 SoC has been deployed on Microsoft (ticker: MSFT) Azure. On March 2, 2020, Marvell announced the launch of OCTEON Fusion and OCTEON TX2 5G infrastructure processors, and provided 5G infrastructure for Huawei, Nokia (ticker: NOK), Ericsson (ticker: ERIC), ZTE and Samsung Processor transactions. On March 16, 2020, Marvell announced plans to launch ThunderX3 and ThunderX4 in 2022. On August 28, 2020, Marvell announced plans to refocus its ThunderX server team on custom chip business.
Security Chips
Marvell’s security-related products include LiquidSecurity HSM adapters and NITROX cryptographic offload engines.
Data processing chips
Marvell OCTEON and ARMADA DPU integrate CPU, network interface and programmable data acceleration engine on dedicated electronic circuits.
Acquisitions
Marvell steadily grew as it acquired smaller companies and sold plenty of chips for the cloud, 5G, automotive, enterprise networking, and artificial intelligence markets.
Through the years, Marvell acquired smaller companies to enter new markets.
Date | Acquired company | Expertise | Cost |
October 2000 | Galileo Technology | Ethernet switches, system controllers | $2700M in stock |
June 2002 | SysKonnect | PC networking | |
February 2003 | Radlan | Embedded networking software | $49.7M |
August 2005 | Hard disk controller division of Qlogic | Hard disk & tape drive controllers | $180M in cash + $45M in stock |
December 2005 | SOC division of UTStarcom | Wireless communications (3G) | $24M in cash |
February 2006 | Printer ASIC business of Avago | Printer ASICs | $240M in cash |
July 2006 | XScale product line from Intel | Communications processors and SOCs | $600M in cash |
January 2008 | PicoMobile Networks | Communication software for IWLAN and IMS | |
August 2010 | Diseño de Sistemas en Silicio S.A. (“DS2”) | Spanish company, PLC communication ICs | |
January 2012 | Xelerated | Network Processors | |
July 6, 2018 | Cavium | ARM Processors | $6B in cash & stock |
May 2019 | Avera Semi | ASICs | $650 million in cash |
September 2019 | Aquantia Corporation | ASICs Mutli-Gig Ethernet | $450 million in cash |
April 2021 | Inphi Corporation | Mixed-signal integrated circuit, Provide high-speed data transmission chips | $8.2 billion |
October 2021 | Innovium | Data center network switches, focus on cloud and edge computing switch chip design | $1.1 billion |
Operating performance
2023 Q4 Report
Marwell remains sensitive to the overall chip cycle, which is just beginning to return to growth after an early slump, with revenue rising just 1% to $1.43 billion in the quarter, just above guidance of $1.42 billion.
Like other companies in the semiconductor industry, Marvell has achieved strong growth in the data center field, with revenue increasing 54% year-over-year to $765.3 million. But revenue fell by double-digit percentages across all of the company’s other product categories, including enterprise networking, carrier infrastructure, consumer and automotive/industrial.
Gross margin fell to 46.5% from 47.5% in the quarter, and GAAP operating expenses also increased, including increased stock-based compensation and $26 million in restructuring charges. Adjusted earnings per share were flat at $0.46, in line with expectations.
Data center business is accelerating
The data center market is undergoing a massive upgrade cycle to meet customer demand for artificial intelligence chip equipment. So far, NVDA (US: NVDA) has been the dominant player in this area, but it is expanding into other component and system manufacturers, including Marvell’s data infrastructure products.
Data center revenue accounted for 39% of Marvell’s business in the fourth quarter of 2023, an increase of 21% from the previous quarter.
In summary:
Its data center segment is growing rapidly, aided by the demand for artificial intelligence.
The rest of the business is still battling cyclical headwinds and underperforming.
Outlook
Maywell expects full-year revenue to decline in fiscal 2024, which ends in late January 2024, before returning to growth in fiscal 2025. As for earnings, earnings are expected to be $1.51 per share in 2024, growing to $3.75 per share by fiscal 2027.
Risks
Revenue sources concentrated
70% of Marvel’s revenue comes from data centers. One of the unnamed customers is likely to be Western Digital (ticker: WDC) or Seagate (ticker: STX), accounting for up to 24% of its fiscal 2024 revenue.
Revenue decelerated
Marvell’s revenue fell 7% in fiscal 2024 as macro headwinds curbed growth in its carrier, enterprise networks, consumer, automotive and industrial markets. Analysts believe that the economic slowdown will continue into fiscal 2025, and it may take until fiscal 2026 before the macro environment may improve.
Capital market performance
Share price performance
Investors are increasingly optimistic about Marvell’s prospects. The stock has gained 98% in 2023 and 39% so far in 2024. Demand for Marvell’s AI-related semiconductor solutions is taking off.
Marvell’s shares have soared 80% in the past 12 months, outperforming the broader S&P 500 by nearly 54 percentage points. Marvell’s stock has still rallied about 250% over the past five years. That easily beat the S&P 500’s gain of nearly 90% during the same period.
It went public on June 27, 2000, and a $10,000 investment in its IPO would be worth over $200,000 today. From fiscal 2001 to fiscal 2024, which ended this February, Marvell’s revenue grew at a compound annual growth rate (CAGR) of 14%.
Valuation
Marvell stock is not expected to be profitable until 2024. And Nvidia’s profits have been staggering. While Marvell stock generates positive free cash flow, the $856 million in free cash flow it generated over the past year puts the stock’s price-to-free cash flow ratio at nearly 80x. That’s a pretty rich valuation for a stock that’s only growing 12%.
The stock’s high forward price-to-earnings ratio of 40x suggests investors are counting on the company to beat those expectations, which is likely what the company must do to justify the stock’s premium valuation. The company will likely continue to report weak overall revenue growth in the near term, but as long as data center revenue grows at a high pace due to artificial intelligence demand, the stock may continue to reach new highs in 2024.

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