Infineon Acquires Marvell's Automotive Ethernet for $2.5B

According to reports, chipmaker Marvell Technology Inc. has agreed to sell its automotive networking division to Infineon Technologies AG for $2.5 billion in cash, resulting in an uptick in Marvell's stock price during after-hours trading.

In a statement released on Monday, April 7, Infineon confirmed that the acquisition of Marvell's automotive Ethernet business is expected to be completed by 2025. The division is projected to generate between $225 million and $250 million in revenue this year, with a gross margin of approximately 60%.

Ethernet technology is crucial for enabling low-latency, high-bandwidth communication, which is vital for software-defined vehicles. It serves as the backbone for efficient electronic/electrical (E/E) architectures, including central computing, regional systems, and endpoints. Additionally, advanced features such as driver assistance systems, autonomous driving, and wireless software updates rely heavily on secure data processing, connectivity, and storage capabilities, all of which depend on Ethernet connectivity. Ethernet also holds significant potential in adjacent application fields, such as humanoid robots.

In recent quarters, automotive components have been a weak point in the chip industry, partially due to sluggish sales of electric vehicles. Marvell, however, has focused on data center chips, a sector that saw a 78% increase in the fourth quarter. Meanwhile, its automotive and industrial sectors grew by 4.1% during the same period.

Marvell's stock rose more than 3% in after-hours trading. Despite this, the company's stock has fallen 54% this year, influenced by a broader decline in tech stocks. Marvell plans to address the transaction in its first-quarter earnings call, scheduled for May 29.

Infineon's statement noted that the automotive Ethernet business serves more than 50 automotive manufacturers. To finance the deal, Infineon will utilize existing liquidity along with additional debt. This business will become part of Infineon's automotive division, with the company planning to merge R&D efforts and leverage its production capabilities to achieve cost savings.