Marvell Said to Draw China Interest in $1 Billion Mobile Arm

Updated on

Marvell Technology Group Ltd. is considering selling control of its wireless chip business, which has attracted interest from Chinese state firms, people familiar with the matter said.

Leadcore Technology Co. and Shanghai Pudong Science & Technology Investment Co. are weighing offers for the unit, which Marvell values at about $1 billion, the people said. One option under consideration would see Marvell pool its wireless operations into a joint venture, with a Chinese buyer taking a majority stake, the people said, asking not to be identified because the information is confidential.

Chinese firms have spent more than $6 billion on semiconductor acquisitions in the U.S. since 2013, data compiled by Bloomberg show, part of a government push to build out a local chip supply chain. The Marvell wireless unit, which designs chips for mobile phones as well as connected devices in the home, has struggled as Taiwan’s MediaTek Inc. wins orders for chips in mid-range smartphones in China.

Marvell shares climbed 4.9 percent at the close in New York, the most in three weeks, giving it a market value of $6.7 billion. The company hasn’t made a final decision to proceed, and the deliberations may not result in a sale, two of the people said.

Sue Kim, a representative for Marvell, which is run out of Santa Clara, California, said the company doesn’t comment on speculation. Wang Beibei, a spokeswoman for Leadcore, said company executives weren’t immediately available to comment, while several calls to its parent company’s Beijing headquarters weren’t answered. A press officer for Shanghai Pudong Science & Technology surnamed Meng declined to comment.

Montage Purchase

Marvell chips are used in Samsung Electronics Co. mobile phones, Sony Corp. game consoles and Xiaomi Corp. smart-home products, according to data compiled by Bloomberg. The company’s mobile and wireless revenue, which accounts for a quarter of total sales, fell 13 percent in the three months ended May 2 from the prior quarter, Marvell Chief Executive Officer Sehat Sutardja said on a May conference call.

China’s interest in Marvell’s mobile-phone chip business may be part of its push to reduce its dependence on overseas technology. While the country buys more than half the semiconductors sold each year, domestic production accounts for less than one-tenth of local demand.

Leadcore is owned by state-run Datang Telecom Technology & Industry Group, which helped develop China’s home-grown technology for high-speed mobile data networks. A deal with Marvell would be the company’s first U.S. acquisition, according to data compiled by Bloomberg.

Shanghai Pudong Science & Technology, controlled by the local district government, acquired Montage Technology Group Ltd. for $621 million last year after losing out in the bidding for another U.S.-listed chip designer, the data show.

Separately, the private-equity arm of China’s prestigious Tsinghua University has been preparing a bid for Micron Technology Inc. that would be worth about $23 billion, people familiar with the matter said last month. Any deal for the memory-chip maker would face tough regulatory scrutiny from U.S. security officials.