BofA analyst: Marvell could generate up to $30 billion in component revenue
Bank of America analyst Vivek Arya believes that Marvell Technology could generate up to $30 billion in revenue by the end of the decade from components that complement its custom data-center chips. As MarketWatch reports, the analyst maintained a buy rating on the company's shares.
XPU attach segment
Marvell calls its custom chips XPUs, while the components that support their operation in data centers — including networking controllers and storage controllers — are referred to as the XPU attach segment. According to Arya, the company considers this business significantly more resilient than the XPUs themselves, as customers are more likely to return to such products and continue using them.
The analyst suggests that each custom chip may have one or more sockets for connecting other components. If the average price of each component is between $500 and $1,500, Marvell's XPU attach revenue could reach $30 billion by the end of the decade. By then, the total addressable market for auxiliary chip components could amount to $60–65 billion or more, in his estimate.
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Customers and optical networks
Marvell expects its leading custom-chip customer, Amazon Web Services, to continue growing annually. The company also plans to begin scaling up custom products next year in cooperation with Microsoft. In Arya's view, this will help Marvell increase its share of the custom-chip market.
Arya estimates the total addressable market for custom computing solutions, including chips and auxiliary components, at about $300 billion by the end of the decade. He also believes that Marvell has a chance to win the scale-up optical networking market thanks to its portfolio of co-packaged optics, near-package optics, and related optical components. Such networks connect several processors so that they operate as one more powerful system.
Arya added that Marvell sees no threat to its optical business from Amazon's recent announcement of cooperation with Qualcomm on optical interconnect components. On Friday, Marvell shares rose 4%, and they were up nearly 178% since the start of the year.
