Marvell Seen As Possible Buyer Of Intel’s Altera Unit

Date:

Chipmaker Intel (INTC) reportedly plans to sell its programmable chip unit Altera as part of an initiative to turn around its flagging operations. Marvell Technology (MRVL) is seen as a likely buyer. Intel stock and MRVL stock both declined in early trades Tuesday.





X



NOW PLAYING
Broadcom Earnings Due: Will Nvidia’s Influence Spark A Move?



On Monday, Reuters reported that Intel Chief Executive Patrick Gelsinger and other key executives are preparing to present to the board a plan to trim assets and reduce costs. Among the plans is the sale of its Altera unit, Reuters said.

Intel also is likely to further reduce its capital spending on factory expansion. It might even decide to scrap its planned $32 billion factory in Germany, a project that has reportedly been delayed, Reuters said.

The plan does not include a proposal to split Intel and sell off its contract manufacturing operation, or foundry business, Reuters said. Bloomberg reported last week that the split was possible, but analysts have dismissed that move as highly unlikely.

MRVL Stock: Marvell Could Make Play For Altera

In premarket trading on the stock market today, Intel stock declined 1% to 21.82. Meanwhile, MRVL stock sank 1.2% to 75.30.

If Intel decides to sell its Altera business, Marvell is likely to make a bid for it, analysts say. However, the possible acquisition comes with pros and cons, Raymond James analyst Srini Pajjuri said in a client note Monday.

“From a strategic standpoint, a potential acquisition would help Marvell diversify into industrial/defense markets and beef up its already strong presence in telco and data center markets,” Pajjuri said. “Higher gross margins associated with FPGA (field-programmable gate array) products would also be attractive to Marvell, especially as AI custom silicon becomes a larger portion of its revenues.”

On the negative side, the FPGA chip market is expected to grow at a slower pace than Marvell’s other businesses.

Plus, the deal likely will require China regulatory approval, which could be a challenge, Pajjuri said.

Intel bought Altera for $16.7 billion in 2015. Its current market value is about $20 billion, Pajjuri said.

Pajjuri rates Intel stock as market perform. He rates MRVL stock as outperform with a price target of 90.

IBD Stock Ratings For Intel, Marvell

Intel ranks No. 17 out of 32 stocks in IBD’s semiconductor manufacturing industry group, according to IBD Stock Checkup. It has a lowly IBD Composite Rating of 11 out of 99.

On Aug. 1, Intel badly missed Wall Street’s targets for the second quarter and with its guidance for the third quarter. The chip giant also announced a $10 billion cost-reduction plan and suspended its quarterly dividend. Intel stock plunged on the news.

Meanwhile, MRVL stock ranks 10th out of 39 stocks in IBD’s fabless semiconductor industry group. Marvell stock has an IBD Composite Rating of 74.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

YOU MAY ALSO LIKE:

How Nvidia Is Building A Moat To Fend Off AI Challengers

MRVL Stock: Marvell Technology Seeing Strong AI Chip Demand

AI Computer Sales Fuel Dell’s Better-Than-Expected Q2 Results

Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks

See Stocks On The List Of Leaders Near A Buy Point

Share post:

Popular

More like this
Related

Rams offense set to get long-awaited boost against Dolphins on Monday

The Rams are at the midpoint of their season...

Micah Parsons to return for Cowboys vs. Eagles on Sunday

The Dallas Cowboys are gaining Micah Parsons as they...

Ja Morant considered ‘week-to-week’ with right hip injury, Grizzlies announce

Memphis Grizzlies star Ja Morant is "week-to-week" with a...

‘After six titles, maybe another team deserves one’ – Guardiola

Manchester City manager Pep Guardiola says maybe another team...