Vendor

Datang Telecom intends to purchase Marvell

Updated:2015/6/10 13:34

“The purchase is clear, we intend to make the acquisition, I think there’s possibility for all the companies that have association with our business. But whether can we achieve the goal in the final depends on the situation in each period." the chairman of Datang Telecom Cao Bin responded to the media on the rumor of acquisition with Marvell.

After Avago purchased Broadcom with $37 billion, which was the largest acquisition in the semiconductor history, Intel also made its largest acquisition with Altera by $17 billion, the semiconductor industry has ushered a wave of mergers. In fact, there is no exception in China, the integration of IC industry enterprises became more intensified, some big reorganization, integration and strategic plans was being carried out quietly.

If China wants to take a part in the semiconductor industry, it does need to become bigger and stronger, while mergers and acquisitions are the fastest and most effective ways. As a veteran in this industry, Marvell knows this very well.

Marvell is a chip maker in USA with storage, network and mobile wireless chips as its major businesses. "In the last year, due to the slow development of LTE chips in MTK and the relatively loose environment, Marvell mobile business has done well in the early stage of 2014." But in this year, the replacement tide of 4G mobile phones has passed, the major customers of Marvell mobile chips were customized devices, but this market is gradually declining, and the mobile chips market for Marvell is constantly shrinking, the Secretary General of Handset Alliance Wang Yanhui said, "the longer it drags, the more unfavorable to Marvell."

From the end of last year, rumors on the acquisitions of Marvell continued to spread. According to an insider, Datang made the first contact with Marvell in last November. The two sides negotiated for about 4 months, but finally broke up on the purchasing price, "because Marvell asked for $2 billion while Datang only made it $500-600 million." the above resource said.

During this period, rumors also spread between Marvell with Intel, CLP Group, CEC, Lenovo and others.

In early May of this year, Datang sent a team to the Marvell headquarters for contact. "The current focus is whether setting a joint venture or as wholly-owned acquisition, for Datang, the wholly-owned acquisition is more favorable, because it can own 100% of the related patents and technologies, while the risk would be smaller in the joint venture." An industry insider told the reporters.

As the vice president of Marvell, Dai Weili preferred setting a joint venture company. In this way, if Marvell sells 51% of its shares, it can change the market share in China, but also bring cash benefits.

For the acquisition prospection, industry insiders analyzed that Marvell has technologies and products, and the awful situation was due to its poor performance in the marketing, “Marvell’s products are actually good”.

 Source:C114
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