GlobalFoundries is selling its chip design business Avera Semiconductor to Marvell Technology Group Ltd. in a deal valued at up to $740 million.
Officials said Marvell will pay $650 million in cash for Avera at the deal’s closing, plus another $90 million in cash if certain business goals are met within the first 15 months. The acquisition includes most of Avera’s revenue base, design agreements with several large OEMs, and a new supply agreement between Marvell and GlobalFoundries.
The agreements include 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, company officials said.
Avera, which was formerly IBM’s Microelectronics business, was launched as a subsidiary of GlobalFoundries last year focused on application specific integrated circuits (ASICs) for wired and wireless applications, including 5G next-generation wireless technology. At that time, GlobalFoundries said Avera Semi had more than 850 employees worldwide.
The deal is expected to close by the end of Marvell’s 2020 fiscal year in January, the company said, pending standard regulatory approvals and closing conditions.
Analysts called the April deal a win for GlobalFoundries because it will allow the company to focus on its core business and optimize for profitability.
“This transaction is another example of our commitment to focus on our core business of providing differentiated foundry offerings as a manufacturing service provider, while establishing deeper relationships with customers who are leaders in their respective sectors,” said Tom Caulfield, CEO at GlobalFoundries who at one time headed the chip fab plant in Malta. “With this deal and our growing strategic partnership with Marvell, we will forge new opportunities for the teams of both companies to leverage GF’s broad set of offerings to capitalize on the 5G infrastructure market as well as other opportunities. We look forward to becoming a strategic provider for Marvell for decades to come.”
“This announcement marks another step forward for GlobalFoundries on its path to profitability, which in turn bodes well for Saratoga County, the Capital Region and New York state,” said Saratoga County Prosperity Partnership President Marty Vanags. “We applaud CEO Tom Caulfield for defining and executing a visionary strategy that ensures GlobalFoundries remains an industry leader far into the future, and keeps Saratoga County at the forefront of the global semiconductor world.
“We look forward to continuing to work with the exceptional team at GlobalFoundries to strengthen our innovation-driven economy that is providing high-paying jobs, significant opportunities for local businesses, and a hub for top-tier talent.”
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, Marvel officials said in a new release.
“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.”
Marvell is focused on becoming the world’s leading supplier of infrastructure semiconductor solutions, company officials said. Avera’s ASIC capabilities will accelerate this transformation. Specifically, Avera’s advanced full custom development capabilities complements Marvell’s standard and semi-custom product portfolio.
GlobalFoundries employs 3,000 people at its $15 billion plant in Malta. It shifted its strategy last year to focus on design and innovation of 14-nanometer chips after setting aside efforts to make 7-nanometer chips.
