Marvell said it is going to undertake a "significant restructuring" of its mobile chipset unit and indicated it is going to get out of the smartphone and tablet processor business. The company said it will cut around 17 percent of its global workforce and plans to continue to focus on Wi-Fi and other wireless standards "needed to support its strategies in existing markets as well as expanding into emerging opportunities" in the Internet of Things, networking and automotive markets.
It's unclear how many jobs will be cut. Marvell had 7,163 workers as of Jan. 31, according to regulatory filings.
Marvell said that based on preliminary estimates for the first half of fiscal 2016, the company's mobile platform unit generated roughly $122 million in revenues and around $13 million in gross profit. The company said the restructuring and job cuts will let it achieve annual operating expense savings of around $170 million to $220 million.
Marvell had been the smallest of the top tier players in the cellular baseband chipset market. Qualcomm (NASDAQ:QCOM) , MediaTek, Spreadtrum, Samsung LSI and Marvell captured the top-five baseband revenue share spots in the first quarter, according to research firm Strategy Analytics.
Additionally, Marvell's' departure from the cellular device chipset market comes after other silicon providers decided it was not worth it to continue. Nvidia said in May it would wind down its Icera cellular baseband operations. In September 2014 Ericsson (NASDAQ: ERIC) exited the wireless modem business, which came just a few months after Broadcom did the same.
Forward Concepts analyst Will Strauss told FierceWireless Marvell is exiting the cellular baseband market even though it has actual products shipping inside smartphones and tablets because there is not enough business. "There are not enough cellphone companies who are looking for product," he said.
"If you don't have a huge customer base, there are just not many opportunities left for you," he said. Strauss said that the move will likely boost Marvell's profitability and share price.
- see this release
- see this Wall Street Journal article (sub. req.)
- see this Reuters article
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