Arm shakes up the IP game

Arm has announced the launch of its flexible licensing model to allow customers to access to its IP without breaking their bank accounts.

It’s a model which has the potential to shift traditional dynamics in the segment as Arm aims to shift its customer base outside its traditional mobile market. With the connected era promising a ridiculous number of devices there are riches available for those who can prove their IP is suitable for this varied plethora. This seems to be the strategy in mind.

In short, customers pay a ‘modest’ fee upfront and then negotiate contracts when the team is moving towards production phase.

“By converging unlimited design access with no up-front licensing commitment, we are empowering existing partners and new market players to address new growth opportunities in IoT, machine learning, self-driving cars and 5G,” said Rene Haas, President of the Intellectual Property Group at Arm.

As it stands, Arm works like many other IP businesses. Customers pay the full-amount for access to licences and agree royalty payments, depending on the potential scale of the devices, upfront. Although this is the traditional way in which business is conducted, it is risky as it is an expenditure irrelevant as to whether the Arm IP is used in production or not.

The Arm Flexible Access model effectively delays payment. SoC design teams will be able to engage Arm and its IP before any licences or royalty payments are agreed. In short, customers will only pay for what they use when they get to production, paying only a trial fee at the beginning of the process.

Arm has said the Flexible Access portfolio includes all the essential Intellectual Property (IP) and tools needed for an SoC design. Prototypes can be designed and evaluated in numerous ways before any significant financial commitments are made. Theoretically, it should offer customers more opportunity to experiment without the fear of irreversibly-expensive mistakes or assumptions.

There are now three ways to work with Arm:

Arm DesignStart Arm Flexible Access Standard Licensing
Cost $0 for Cortex-M0, M1 and M3$75k for Cortex-A5 $75k entry package annual access fee$200k standard package annual access fee Upfront license fees based on license terms
Licensing Simple license agreement for DesignStart Pro Sign one-time access and manufacturing agreements Agreement terms vary to cover single or multiple uses
Support Community-based support Standard support and maintenance for all included products Standard support and maintenance for licensed products
Portfolio Click here Click here Access to the most advanced Arm IPLocked-down system-on-chip (SoC) roadmaps with multiple uses of specific Arm IP products

“We are working on several products to address AI use cases in automotive, IoT gateways and edge computing,” said Nagendra Nagaraja, CEO of AlphaICs, an AI start-up. “For this, we need access to a wide range of IP and the ability to rapidly evaluate, prototype and design. Arm’s Flexible Access model gives us that agile approach to IP for the first time.”

This is where the model can be incredibly beneficial for both the ecosystem and Arm. Companies like AlphaICs would have struggled financially to scale under the traditional IP model, it is a 50-strong start-up exploring an embryonic segment of the technology industry. In paying a modest amount up-front, AlphaICs has the opportunity to prove the business case before making any significant financial commitments.

This approach obviously helps the start-ups who are exploring unproven ideas, but it also gains Arm traction in currently unprofitable segments which could scale extraordinarily quickly. AlphaICs is aiming to create the next-generation of AI compute for autonomous edge and data centre applications, not a traditional stomping ground of Arm, but there are certainly growth opportunities.

Ren’s back to tell us how Huawei is starting to ditch the US

Huawei founder Ren Zhengfei appears to be little more than a celebrity spokesperson nowadays, but a recent interview suggests the vendor is just fine with its US shunning.

Speaking to the Financial Times, Ren has once again been called into action to address the tensions between China and the US, as a result of which, Huawei has become a prime target for anyone hoping to inflict damage on the worlds’ second largest economy. The message from Ren is relatively simple; we’re doing OK and we’ll move away from US suppliers.

Such comments will certainly set off alarm bells in the offices of some US semiconductor firms, but it should hardly come as a surprise. The ‘Made in China 2025’ strategy might be unpopular with the US and Europe, but it is by no-means a secret.

‘Made in China 2025’ is an initiative set into action by Chinese Premier Li Keqiang during 2015. Through this initiative, the Chinese Government wants to evolve the perception of the country, ditching the ‘world’s factory’ tagline and moving up the value chain towards higher value products and services. The Government will be contributing $300 billion to the project to enable China to compete with the US.

This plan has been heavily criticised by the US for a number of reasons, but ultimately it all boils down to one; this is a genuine threat to the technological domination of the US on the global scene.

Of course, there are plenty of reasons not to like the idea. Some have suggested it violates the World Trade Organization (WTO) rules on self-sufficiency. Others have said trade secrets have been stolen from foreign companies or unfairly obtained through forced joint-ventures. For ‘Made in China 2025’, companies have to move up the value chain, targeting growth industries such as AI or medicine, and these smarts have to come from somewhere.

However, you always have to bear in mind the end-result irrelevant of path taken to get there. If ‘Made in China 2025’ succeeds, the US will no-longer be the dominant force in the technology world, and other economies could be shattered if China replaces imported goods with domestic.

In the latest interview, Ren is suggesting that even if there is a reprieve from President Donald Trump following the G20 summit last weekend, Huawei will continue to move its supply chain out of the US. Perhaps this is the catalyst which was needed to kick the ‘Made in China 2025’ concept up another gear.

“The US is helping us in a great way by giving us these difficulties,” said Ren. “Under external pressure, we have become more united than ever.

“If we aren’t allowed to use US components, we are very confident in our ability to use components made in China and other countries.”

Although there has been a concession from Trump with regard to the ban facing Huawei, some might view this pardon with scepticism. The President’s opinion seems to change more often than the tides so why would any organization pins its hopes and aspirations on the door of the Oval Office. Instead of a power demonstration, the US seems to have pushed the Chinese further towards autonomy.

While it is far from confirmed, we strongly suspect the huffing and puffing from the White House was little more than a demonstration of power. Huawei’s entry onto the Entity List might have been an aggressive move to gain the upper-hand in trade talks with the Chinese; look what we did to ZTE last year, the US appears to be saying, so play nice or we’ll do the same to Huawei.

But it doesn’t seem to have worked; Huawei is still alive and still OK, if you listen to Ren.

How OK Huawei actually is remains to be seen. Ren has been wheeled out to put a positive spin on the situation, but the picture is rather gloomy. Smartphone shipments are set to decline by 40-60% over the remainder of the year, Google hasn’t said it is once again on friendly terms with Huawei despite Trump’s amnesty, and some have questioned whether China is capable of filling the semiconductor hole created through the China/US vacuum.

Huawei has done a lot to add diversity to its supply chain in recent years, while also moving numerous operations to its own fabless semiconductor company HiSilicon, but can it satisfy its appetite for more specialised components? Huawei works with a number of US firms who have niche operations, Qorvo supplies radio-frequency systems and solutions for Huawei for example, and when it comes to specialised components, the US rules the world.

For certain segments of the semiconductor industry, field programmable gate arrays as another example, and China has not been able to replicate the US success just yet. Despite what Ren says about moving Huawei’s supply chain out of the US, it will still be reliant for some incredibly important cogs.

One way of viewing this situation is that there is a short-term demonstration of power. Without the likes of Xilinx, Qualcomm, Qorvo, NeoPhotonics and numerous other semiconductor businesses, Huawei cannot produce the products it is promising customers. Not yet at least.

But long-term, perhaps this approach is simply forcing ‘Made in China 2025’ to accelerate and eroding the control the US has globally over some very high-value, highly profitable segments. Prior to the trade war, US companies were inside the tent. Admittedly conditions were not perfect, but they were inside not outside.

Perhaps this is the watershed moment; companies are going to be forced out as companies like Huawei increasingly look for domestic suppliers, and once they find them (by luck, convenience or necessity) there is no coming back.

Samsung profit is halved, company guidance warns

Samsung, the world’s largest smartphone and memory chip maker, warned the market its quarterly profit would drop by 56%, prior to the official result announcement later this month.

Samsung Electronics told the market that the operating profit generated in the quarter ending 30 June amounted to KRW 6.5 trillion ($5.55 billion), which would be a 4% sequential improvement on Q1 this year, but would represent a 56% drop from the same quarter a year ago. The total revenue is expected to be around KRW 56 trillion ($47.8 billion), a 7% sequential growth, but 4% year-on-year decline. The continued depressed profitability (operating margin almost unchanged from last quarter at 12%, compared with 25% a year ago) indicates Samsung’s main business has not turned the corner.

The semiconductor sector, where Samsung has generated the highest profit among all of its business units, remains weak. Last month investment analysts from the private fund Evercore reported that the inventory of memory chips by downstream device makers continued to be at excessively high level, therefore the investors did not see the sector recover before 2020.

The IT & Mobile communication unit, which has generated the highest revenue for Samsung, is still in trouble. Samsung has braced intensive competition particularly from the Chinese competitors, and its Galaxy S10 series have not been able to turn its fortune. The troubled launch of the Fold version of S10, which had been slated for Q2, has still yet to happen. A new Unpacked event has just been announced for August, but is likely to unveil its new tablet, the Galaxy Note 10, to consider the stylus featured on the event invitation.

When faced with pressure on profit, companies often turn to control cost. That looks to be what Samsung has been doing. A few days ago The Economic Times of India reported that Samsung will cut 1,000 jobs from the company’s smartphone functions. This is after 150 jobs are already gone in Samsung’s telecom infrastructure team.

Industry quietly lobbies against Trump’s anti-globalisation agenda

Slowing down the progress made by Huawei on the global stage might be a win for the White House, but US firms are not seeing the benefits as some are reportedly lobbying against the infamous ban.

In a televised interview this morning, Huawei Founder Ren Zhengfei suggested sales forecasts will be negatively hit by the firms debut onto the US ‘Entity List’, taking two years to get back onto the 2018 trajectory. For the White House, this might be vindication of its aggressive anti-Huawei agenda, but not everyone is happy about how events are unfolding.

According to Reuters, US semiconductor firms are quietly lobbying the US Department of Commerce in an attempt to limit the negative impact of the ban. Let’s no forget that while the White House might seem against globalisation trends right now, the success of these firms is largely based on the idea of free-trade and capitalising on the rapid evolution of international markets.

The issue which these firms face is one of commercial loss and gain. Huawei is one of the industry’s biggest consumers of semiconductor products, with the firm rumoured to spend roughly $20 billion a year on such products. When you look at the impact on some firms, you can see why the semiconductor industry is getting a bit twitchy.

Last week, Broadcom lowered its sales forecast for the year by $2 billion, pointing towards one of its customers being caught up in an international trade-war. Although Broadcom has not explicitly stated how much of the total revenues are attributable to Huawei, firms are only compelled to do so when it is more than 10% of the total, the numbers would suggest it is not far off that percentage.

And Broadcom is not alone on relying on Huawei as a customer. Qorvo depends on Huawei for 11% of its total revenues, while Lumentum has said Huawei accounted for 18% of all shipments during the last quarter. As a result, Lumentum’s sales forecast is now $30-35 million less for the year. Xilinx is another chipmaker which has been impacted by the ban on selling components to Huawei, and there are others as well including Intel and Qualcomm.

As a result, numerous lobbying efforts are reportedly being held behind closed doors to mitigate the impact. This might be exemptions or the creation of loopholes, but the friendly-fire is quite notable in this segment.

What is worth noting is that there are other lobby efforts going on also. Google is rumoured to be in active conversations, suggesting its operating system Android should be exempt from the ban on the grounds of national security. Google is arguing that should it be banned from working with Huawei, it would not be able to provide timely security updates which could make the devices vulnerable to hacking and data breaches.

However, there is a commercial angle to all of these arguments which might gain more traction in the minds of the government puppeteers.

At Google, the firm has a dominant position in the OS market. Huawei’s alternative OS might not be able to dislodge this position, but it does have a significant domestic market to drive user adoption. If a suitable alternative to Android emerges from the Chinese telco flagbearer, it would not be unimaginable to see mass adoption in the Chinese market. Once it has domestic domination, it would not be unusual to see international expansion to the China-friendly nations. This would potentially erode Google’s influence on the world.

In the semiconductor space, the risk is of the emergence of a homegrown Chinese-semiconductor industry.

This is not to say China does not already have a presence in the semiconductor space but forcing Huawei away from the US could be the catalyst the slumbering sector needs. Companies like Shenzhen Fastprint Circuit Technologies and Jiangsu Changjiang Electronics Technologies have been making financial gains in recent months, both in terms of revenues and share price, while Huawei’s HiSilicon has also been ramping up.

The US is dominant in the semiconductor market and will probably continue to be. There is a gap in competence for core technologies in the Chinese segments to eclipse this position, though the risk is erosion of profits. The more competitors there are on the market, the lesser the market share for US firms. This assumption might well be exaggerated when you consider the preference of Chinese firms for a homegrown supply chain.

For the semiconductor industry, this should be seen as a red-flag. The Semiconductor Industry Association (SIA) has already suggested the industry is in a bit of a slump at the moment, with sales for April down 14.6% year-on-year. The SIA does have international members, though its biggest role is to represent the interests of US manufacturers. The last thing these firms need right now is more bad news when the market is already dampening.

The result of this friendly-fire is conversations behind closed-doors. The Trump administration is seemingly trying to dilute the influence of China on the rest of the world, though it appears to be having the same impact on some US firms. We’ve said this before, but the result of this trade-war seems to be nothing by a net-loss globally right now; no-one is winning, and it seems to be a matter of damage limitation.

What the White House should be wary of is whether this anti-China agenda is starting to look like a personal vendetta for the President. If there is notable damage to US firms as well as Chinese, the White House must question whether the current strategy is the most effective.

Is ‘Make America Great Again’ is the motto of the White House, it would be useful for the rest of us to understand how much friendly-fire will be tolerated in the quest to destroy the Silk Road.

Broadcom hit by friendly-fire in US/China trade war

Broadcom has unveiled its financial results for the last three months, though it isn’t the rosy picture some might have hoped for as ‘continued geopolitical uncertainties’ weigh heavy on the spreadsheets.

Although total revenues were up 10% from the same period of 2018 to $5.5 billion, the team has lowered its forecast for the remainder of the financial year. The new forecast for 2019 is now $22.5 billion, $2 billion lighter than the team was initially aiming for.

“We currently see a broad-based slowdown in the demand environment, which we believe is driven by continued geopolitical uncertainties, as well as the effects of export restrictions on one of our largest customers,” said CEO Hock Tan.

“As a result, our customers are actively reducing their inventory levels, and we are taking a conservative stance for the rest of the year.”

Although not mentioned here, guessing who Tan is referring to is not the most taxing of tasks. While Broadcom does not have as much exposure to Huawei as some US firms, it is its biggest customer; the unintended consequences (or at least we hope they were unintended) of President Trump’s Executive Order continue to pile up.

Estimates might vary, though the general consensus is that Huawei, the world’s largest manufacturer of telecoms equipment, purchases around $20 billion of semiconductors each year. Broadcom is being impacted here, though Qualcomm, Intel, Xilinx and several other smaller firms will also be feeling the pinch.

Although the year-on-year stats are still encouraging, investors might be a bit turned off by the sequential 4.7% decrease in revenues. Net income stood at $691 million, though this is not comparable to the year as this was the period Broadcom realised the benefits of changes to tax laws in the US.

The last couple of years have certainly been an interesting saga for Broadcom. Having shifted its HQ to the US in an effort to buy favour with authorities while attempting to acquire Qualcomm, the transaction was eventually blocked by the White House on the grounds of national security. With financials now being hit because of the anti-China mission of the Oval Office, Tan must be wondering why he bothered to cosy up with the US.

LG muscles in on competitive AI chip space

LG has unveiled has developed its own artificial intelligence chip in an attempt to muscle in on this increasingly competitive segment of the semiconductor market.

The AI market is proving to be rewarding for those who can prove their worth, and each day there seems to be a new ‘thought leader’ entering the fray. While there is a feeling AI could benefit application developers (Uber, Cruise, Waymo etc.) and internet companies (Amazon, Google, Microsoft etc.) more than the semiconductor giants, there will be winners and losers in this segment also.

“Our AI C​hip is designed to provide optimized artificial intelligence solutions for future LG products,” said IP Park, CTO of LG Electronics. “This will further enhance the three key pillars of our artificial intelligence strategy – evolve, connect and open – and provide customers with an improved experience for a better life.”

Nvidia might have made a run at this segment in the early days, though considering its experience lies in gaming applications, whether it can mount a serious challenge remains to be seen. Graphcore is one which has attracted investment from the likes of Dell, Microsoft and Samsung, while AMD, Intel, Huawei, Google and Qualcomm (as well as numerous others) are making this a very competitive space.

As with Intel in the PC-era and Qualcomm’s continued dominance in mobile, some might suspect there might be a clear leader in AI also.

LG has stated its chip will feature its proprietary LG Neural Engine to better mimic the neural network of the human brain. The aim is to distinguish space, location, objects and users, while hoping to improve the capabilities of the device by detecting physical and chemical changes in the environment. As with every AI plug, LG is also promoting the ability of on-device processing power.

Looking at the approach from LG, the team are targeting quite a niche aspect of the AI segment; the smart home. This makes sense, as while LG has a smartphone business, the brand is perhaps primarily known for its home appliances range.

During the last earnings call, the LG mobile business continued to struggle in a sluggish and cut-throat market, reporting a 29% year-on-year drop to $1.34 billion, though the home appliance market soared. Revenues and profits soared to record levels, accounting for more than 80% of the total profits for the business over the three months.

Future products, such as washing machines, refrigerators, and air conditioners will be fitted with the devices, as ‘intelligence’ and personalisation become more common themes in more generic and everyday products.

Maybe the smart toilet isn’t that far away after all.

Samsung’s profit crashes on weak semiconductor sales

Samsung Electronics reported a net profit decline of 57% in Q1, with total revenue going down by 14%. The semiconductor unit suffered the worst.

Samsung’s quarterly revenue went down from KRW60.56 trillion ($52 billion) a year ago to KRW52.39 ($45 billion) in Q1. The gross margin level came down from 47.3% to 37.5%. The operating profit dropped to KRW6.23 trillion ($5.3 billion) from KRW15.64 trillion ($13 billion), a decline of 60.2%. The net profit came down by 57% to KRW5.04 trillion ($4.4 billion).

 Samsung 2019_1Q_income

On business unit level, Device Solutions reported a 27% drop in revenue, the sharpest decline among all the business units. Inside the unit, Memory chips declined by 34%. Samsung attributed the weakness to “inventory adjustments at major customers”, indicating its customers including other smartphone makers, have been selling slower than expected.

IT & Mobile Communications, Samsung’s largest business unit by sales, the business was more stable. Revenue from the handset business dropped by 4% from a year ago, but grew sequentially by 17%. Samsung saw strong demand for its Galaxy S10 products, but the de-focus of mid-range and lower products limited the volume growth. The recent debacle of S10 fold, high profile as it may be, should not have had any material impact on Q1 as it was scheduled to launch in Q2. Samsung’s network business, though small in comparison to its competitors, reported a strong revenue growth of 62% to reach KRW1.28 trillion ($1.1 billion), benefiting from the “accelerating commercialization of 5G in Korea”.

Samsung 2019_1Q_BU

Samsung gave cautious lift to its outlook for Q2 but more optimistic with the second half of the year. It foresees the memory chip market stabilising in Q2 and stronger growth in the second half due to seasonality and product line refreshing. On the mobile side, Samsung sees growth in shipment in Q2 thanks to continued demand for the S10 products and positive market response to its new mid-range A series. It sees the 5G products and the fold form-factor making material contribution in the second half.

S9 halts Samsung run of progress but semiconductors stand strong

Samsung’s run of reporting record quarterly results has come to an end as sluggish sales for its flagship S9 device hit a wall.

Analysts had been predicting this would be a tough quarter for the device, some believing this would be the weakest launch for years, and it appears the fears have become reality. With sales of roughly $52.1 billion for the three months, a decline of 4% year-on-year, Samsung at least offered somewhat accurate guidance in a note a couple of weeks ago.

“Second quarter revenue fell due to softer sales of smartphones and display panels, despite robust demand for memory chips,” said Samsung in the earnings statement. “The continued strength of the Company’s memory business contributed to the higher operating profit. Net profit was little changed from a year earlier due to higher income tax.”

While this is certainly not an ideal situation for the business, at least it is not alone. The iPhoneX has also been experiencing sluggish sales, as the continued trend of flat innovation and limited differentiation continues. Apple might have been able to avoid the dip over the last couple of years, selling on its brand more than product innovation, but it seems not even the iLifers can continue to blindly follow the iChief down the trail of mediocrity any more. No-one is permanently exempt of global trends.

For the short-term future, the story is unlikely to change significantly, but there is a light at the end of the tunnel. With 5G networks set to be switched on over the next couple of years, manufacturers will soon be able to begin a refreshment cycle of devices, with flagship products being marketed as ‘5G Ready’. The consumers insatiable appetite for data and the need for speed will likely spur on the need to update devices.

This might not be the best time for the devices division, Samsung does at least have the burgeoning, if not as sexy, semiconductor unit. The NAND and DRAM markets continued to be big earners for Samsung, despite commenting on weak seasonal demand. With global cloud trends continuing to surge, front-line suppliers to the data centre industry are not going to be going hungry any time soon.

For servers, demand for SSD for data centres is forecast to remain strong, while for enterprise, adoption of high-density server SSD over 8TB is expected to continue. The adoption of SSD is expected to expand into more sectors and all product segments are projected to use more high-density eStorage, perhaps explaining the South Korean drive for innovation in the semiconductor market.

According to Yonhap News Agency, the South Korean government has pledged roughly $1.34 billion to the semiconductor industry over the next ten years, to support the country’s position in the global standings, but also to capitalise on the expected growth in the segment. The semiconductor space is considered to account for roughly 20% of the country’s exports.

“In order to have South Korea maintain its reputation as the world’s top semiconductor powerhouse, we will support the development of the chip industry by focusing on three strategies,” said Paik Un-gyu, Minister of Trade, Industry and Energy.

The three pillars of the strategy are the development of next-generation materials that will replace existing memory chips, the seeking of combined growth of fabless and foundry businesses, and hosting production lines of global semiconductor companies. Samsung will almost undoubtedly benefit from government interest in this area.

Samsung’s flagship business unit, its smartphone division, has had a rough couple of years, owing to a global slowdown on devices and also its own engineering ‘difficulties’, but this decline is not something which we should be surprised at; the writing has been on the wall as consumers start to favour refurbished or second devices, while also extending the lifecycle of their current devices. But on the positive side, Samsung is collecting profits through diversification.

Investors will moan about the deficit in sales and profits, but a burgeoning semiconductor division and a device refreshment cycle on the horizon, it could be in a worse position.

Qualcomm chases out big thinking board member

Qualcomm has announced it will not re-nominate Paul Jacobs to the Board of Directors after the executive made the decision to explore the possibility of making a proposal to acquire Qualcomm.

Jacobs has been working at the chipmaker since 1990, holding the position of CEO between 2005 and 2014, and also serving as Chairman of the Board. But it seems ambitions of trying to take the company private where too much for the other 10 board members, who have said in a statement they would consider his proposal should it come to fruition.

“These opportunities are challenging as a standalone public company, and there are clear merits to exploring a path to take the company private in order to maximize the company’s long-term performance, deliver superior value to all stockholders, and bolster a critical contributor to American technology,” Jacobs said in a statement.

It seems Qualcomm can’t keep itself out of the news right now, as President Trump might be called upon again to beat back the ambitions of foreign investors. According to the FT, Jacobs has been in discussions with several global investors, including the Softbank Vision Fund. Considering Softbank’s apparent intentions to diversify into the technology world this would seem like a fair rumour to believe, though sources close to the situation have pointed to a personal relationship between Jacobs and Softbank CEO Masayoshi Son as a means to facilitate the deal.

Perhaps an interesting twist to the story will be the foundations of the Softbank Vision Fund. While walking the road to raise $100 billion of committed capital, the wannabe investors knocked on the Qualcomm doors, with the chipmaker more than willing to contribute. Qualcomm dollars underwriting its own buy-out might cause a few complications.

This statement of intent is by no-means a guarantee Jacobs will be able to raise interest or the funds to forge an assault on the chipmaker. And you thought the Qualcomm soap opera had reached the final chapter.

More semiconductor consolidation as Marvell buys Cavium for $6 billion

US networking and wireless chip company Marvell is dropping $6 billion on Cavium, which also makes chips that do similar stuff.

Both companies work largely behind the scenes, designing SoCs that control things like storage units, networking products and wireless connectivity. Here’s how the announcement describes the deal.

‘The transaction combines Marvell’s portfolio of leading HDD and SSD storage controllers, networking solutions and high-performance wireless connectivity products with Cavium’s portfolio of leading multi-core processing, networking communications, storage connectivity and security solutions.’

The rest of it is the usual M&A talk about synergies, scale and end-to-end solutions. “This is an exciting combination of two very complementary companies that together equal more than the sum of their parts,” said Marvell CEO Matt Murphy.

“This combination expands and diversifies our revenue base and end markets, and enables us to deliver a broader set of differentiated solutions to our customers. Syed Ali has built an outstanding company, and I’m excited that he is joining the Board. I’m equally excited that Cavium’s Co-founder Raghib Hussain and Vice President of IC Engineering Anil Jain will also join my senior leadership team. Together, we all will be able to deliver immediate and long-term value to our customers, employees and shareholders.”

“Individually, our businesses are exceptionally strong, but together, we will be one of the few companies in the world capable of delivering such a comprehensive set of end-to-end solutions to our combined customer base,” said Cavium Co-founder and CEO, Syed Ali. “Our potential is huge. We look forward to working closely with the Marvell team to ensure a smooth transition and to start unlocking the significant opportunities that our combination creates.”

As they said Murphy will be the CEO of the combined company, with Ali adopting a more strategic role as an advisor and board member. The semiconductor sector has been subject to consolidation for some time, with the mega-acquisition attempt by Broadcom of Qualcomm set to be one of the biggest acquisitions ever if they pull it off.