Through the deal Marvell, the Wilmington, Del., chipmaker, aims to challenge rival Broadcom (AVGO) - Get Broadcom Inc. Report and its current domination in providing chips for clients in the cloud computing space, reports say.
This is Marvell's second major cloud acquisition in recent months following its $10 billion purchase of Inphi last year.
Marvell says it has an extensive portfolio of Ethernet switch semiconductor solutions and has a growing position in the enterprise and carrier segments it serves.
Innovium's Teralynx product delivers "the ultra-low latency, optimized power, high performance, and innovative telemetry that are critical in today's cloud-scale data centers," Marvell said in a statement about Tuesday's purchase.
Innovium, San Jose, Calif., is backed by a number of venture-capital firms and industry players, including Greylock Partners, BlackRock (BLK) - Get BlackRock, Inc. Report, Qualcomm (QCOM) - Get Qualcomm Inc Report and Xilinx (XLNX) - Get Xilinx, Inc. Report. It was founded in 2014, according to Crunchbase.
By calendar 2026, the data-center market for merchant Ethernet switch silicon is estimated to grow to about $2 billion at a 15% compound annual growth rate, according to Marvell.
Last month, Marvell reported fiscal-first-quarter results ahead of estimates, and analysts were mostly bullish on the company's numbers.
Marvell reported quarterly earnings of 29 cents a share on revenue of $832 million. Analysts were expecting earnings of 27 cents per share on revenue of $806.7 million.
At last check Marvell shares were trading little changed at $60.61.