Could Marvell get a buyout bid? Here's why a SoftBank deal might make sense.

By Steve Goldstein and Britney Nguyen

SoftBank reportedly considered buying Marvell to merge it with Arm, which is looking to enter the market for custom chips

Marvell Technology shares advanced in Thursday morning trading.

Could Marvell Technology Inc. be a buyout target? The stock is seeing a slight bump in Thursday morning action after a report indicated that SoftBank considered buying the U.S. chipmaker in what would have been a record deal.

Bloomberg reported that SoftBank made an "overture" to Marvell several months ago, but that the two sides couldn't agree on terms. While the two sides aren't currently in active talks, the report said it's possible the interest could be revived as SoftBank's founder, Masayoshi Son, regularly looks at deals.

SoftBank's idea was to buy Marvell and merge it with Arm, the chip designer that it mostly owns. None of the companies commented to Bloomberg.

Marvell stock (MRVL) jumped in premarket trades, but lost some of its gains after the market opened, and was up about 1.7% after 10 a.m. Shares of Arm Holdings PLC (ARM), which separately reported earnings late Wednesday, rose 6%, but also faded later in the morning to be flat.

SoftBank shares (JP:9984) rose 3% in Tokyo trade.

Marvell designs and develops custom chips and other technologies, and works with Amazon (AMZN) Web Services on its Trainium chips for training its artificial intelligence models.

The custom chip maker's shares are down about 16% so far this year. After it failed to beat Wall Street's expectations for its second-quarter results and guidance in August, the stock had fallen 11%.

See more: Marvell's stock is falling as its earnings didn't live up to the AI hype

The company saw record revenue of $2.01 billion for the July quarter, and Marvell Chief Executive Matt Murphy said it expects to see growth in the current quarter, as well as an expansion of its operating margin and earnings power. Murphy added that the company's "custom AI-design activity is at an all-time high," and that it has engagements with more than 10 customers on several opportunities.

Mizuho desk-based analyst Jordan Klein pointed to Marvell's struggles with Amazon's Trainium 3 design and with Microsoft's custom AI accelerator, Maia, which he said "sounds delayed and underwhelming" in a Thursday note.

However, Marvell develops "some of the best SerDes and optical IP around," Klein said, referring to serializer/deserializer technology that is crucial for high-speed data communication, and the system integrating IP and optical networking.

A SoftBank acquisition could be logical, Klein said, considering Arm's interest in and plan to enter the market for custom AI chips - a space where he thinks Marvell has proven itself. He also cited chip investors who think SoftBank's interest in Marvell "made total sense."

If Arm wants to make custom silicon, the company "would need SerDes, networking IP to be successful," Klein said. Broadcom Inc. (AVGO) and Qualcomm Inc. (QCOM) are already loading up with the technology, he added.

One challenge to a possible acquisition is whether Marvell's Murphy or Arm Chief Executive Rene Haas would run the business, Klein noted.

A deal could also face challenges from U.S. regulators who "would also have to allow a Japan tech conglomerate to acquire one of the more valuable U.S. semi assets for AI/networking/optical," Klein said. He added that the Trump administration could be open to the idea, considering Japan's investments in the U.S.

"In sum, talk of M&A is a net positive for broader semis in my view," Klein said. "This would do nothing to impact or hurt" Nvidia, Advanced Micro Devices or Broadcom, in his view.

However, Qualcomm could be challenged by the deal as it enters the market for AI-inferencing chip-based cards.

Read: Qualcomm ups its game in AI, sending its stock to a 15-month high

Despite Marvell's early stock momentum fading, "the floor is now higher for stock in [the] near term," Klein said. He sees the stock rising heading into Marvell's fiscal third-quarter earnings report on Dec. 2.

-Steve Goldstein -Britney Nguyen

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11-06-25 1048ET