AMD to Acquire Xilinx in $35 Billion Deal, Followed by Marvell-Inphi Merger

Consolidation in the semiconductor industry continues to rise with this week’s AMD deal to acquire Xilinx for $35 billion. The acquisition promises to make AMD a considerably larger player, emboldening its expansion into equipping data center, cloud and edge infrastructure.

The AMD deal follows last month’s agreement by Nvidia to acquire Arm for $40 billion. Joining the fray, Marvell on Thursday announced a $10 billion deal to acquire Inphi, a provider of high-speed data movement processors.

All three deals must clear regulatory approvals and won’t likely close before the latter half of next year. Presuming they close, the newly combined semiconductor giants will become more formidable rivals to Intel, the market leader. Intel’s mounting competition is among the latest setbacks facing the company. Just as it faces intensified competition, Intel reported softness in its data center business in the third quarter.

The AMD deal brings technology and financial benefits, CEO Lisa Su said during an investor call.

“AMD will offer the strongest portfolio of high-performance and adaptive computing products in the industry, setting leadership in CPUs, GPUs, FGPAs and adaptive [system on chips],” Su said. “This will enable us to take a leading position, accelerating a diverse set of emerging workloads from AI, to smart networking, and software-defined infrastructure.”

FGPAs

Among various growth markets, the AMD-Xilinx deal puts the spotlight on the market for field programable gate arrays (FPGAs). FPGAs are programable integrated circuits (ICs) capable of parallel processing to allow faster execution of code. While manufacturers use FPGAs for various electrical and mechanical gear, cloud providers use them to boost performance of their infrastructures.

Intel jumped into the FPGA market in 2015 with its $16.7 billion acquisition of Altera.

Futurum Research’s Daniel Newman

“This certainly brings new competitive pressure to Intel because Xilinx is undoubtedly the biggest competitor in the FPGA space,” said Daniel Newman, principal analyst with Futurum Research. Speaking on a podcast discussion with Moor Insights and Strategy principal analyst Patrick Moorhead, Newman added: “I’m wondering what AMD’s plan is to deliver that at scale, because they get the value back at $35 billion. We still remember how much criticism IBM has been getting for Red Hat at $34 billion.”

Besides FPGAs, Su sees growth in Xilinx new smart NIC technology, which will compliment AMD’s Epyc processors used in data center infrastructure and by cloud providers.

“Together, we will be a stronger strategic force powering the next generation data center,” she said.

Marvell-Iphi Deal

The Marvell deal to acquire Inphi dwarfs the AMD deal. But both promise to expand each company’s reach into cloud, edge and 5G networks. Likewise, all of the semiconductor manufacturers are targeting emerging industries. The industry knows Inphi for its electro-optics components that provide the connectivity backbones of cloud data centers and telecommunications infrastructure.

“Marvell’s vision is to move, store, process and secure the world’s data faster and more reliably than anyone else,” said Marvell CEO Matt Murphy, on an investor call. “This acquisition significantly accelerates the move element in our vision. The combined company will be the premier enabler of high-speed data movement; we formed the connective fabric of our global data infrastructure and enables the data economy.”

Moorhead noted on a separate podcast that Marvell’s networking technology operates primarily on copper networks. Inphi’s technology operates with DSPs for fiber optics.

“It’s much higher speed connections,” he said.