As the semiconductor industry reals from the global trade war, Marvell Technology announced it will sell its automotive ethernet business to Infineon Technologies AG, Germany’s largest semiconductor manufacturer for $2.5 billion. According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly-announced transactions, the all-cash deal is subject to regulatory approvals but expected to close this year.
Marvell aims “[t]o deliver the data infrastructure technology that connects the world,” according to the deal’s press release. “Trusted by the world’s leading technology companies for over 25 years, we move, store, process and secure the worlds data with semiconductor solutions designed for our customers current needs and future ambitions.”
Global Semiconductor Companies, by Market Cap
Source: Visual Capitalist
The deal is announced as the semiconductor industry faces strong political headwinds, with the Trump Administration’s planned tariffs costing U.S. equipment manufacturers a projected $1 billion per year. These estimated costs, “include lost revenue, primarily for missed sales of less sophisticated equipment to overseas rivals, and the costs of finding and using alternative suppliers for the complex components of chipmaking tools,” according to Reuters. “The estimate also includes tariff compliance costs, such as adding personnel to handle the complexities of following the rules.”
President Trump has sought to use tariffs as an alternative source of federal funding beyond income taxes while also seeking to ameliorate trade imbalances with other nations. The Administration points to unfair trade practices such as foreign government subsidies as well as currency manipulation that makes overseas products artificially inexpensive – putting U.S. producers as a severe disadvantage. Tariffs tax those imports thereby increasing the prices of foreign made goods in an attempt to aide domestic manufacturers. Some analysts question the efficacy and inflationary effects of what has been dubbed a “new tariff regime more severe than anything seen in more than a century.”
China has responded to the Administration’s moves with retaliatory tariffs and internet campaigns mocking U.S. manufacturing; however, the world’s second largest economy may be cracking in its economic resistance. Just this past week, China quietly rolled back its retaliatory tariffs on targeted semiconductors made in the U.S., including microchips or semiconductors as well as certain aircraft parts. This moves signals that China is more reliant on certain U.S.-made goods that previous political rhetoric has suggested.
Amid this turmoil, Marvell plans to spin its segment off to Infineon in Germany.
