June 20, 2016

Enterprise data center and storage market shake up: Cavium-QLogic merger

Cavium seeks to buy QLogic for an estimated $1.36 billion.

Earlier this year, TechTarget predicted significant shake up in the enterprise data center and storage market in 2016. Some of these changes include the slow fade of traditional data storage methods, decline in high-performance hard disk drives and consolidations among various vendors, as new technology drives the marketplace. It would seem that this prediction is coming true.

Recently, Cavium, a leading provider of semiconductor products, announced its intentions to broaden its reach into the data center and storage market by acquiring QLogic Corporation, a successful supplier of high-performance networking infrastructure solutions. A company press release said that the deal values QLogic at an estimated $1.36 billion in equity value. 

Through this deal, Cavium will benefit from QLogic's extensive portfolio of innovative connectivity and storage solutions, thus driving significant growth in the data center and storage markets. The semiconductor supplier's products current enable intelligent processes for data center, enterprise, wired, cloud and wireless networking. The deal will also provide Cavium with significant revenue and customer diversification.

"Today's acquisition of QLogic is highly complementary and strategic to Cavium and it creates a diversified pure-play infrastructure semiconductor leader," Syed Ali, president and chief executive officer of Cavium, explained.  "QLogic's industry leading products extend our market position in data center, cloud and storage markets, and further diversifies our revenue and customer base. In addition to the compelling strategic benefits, the manufacturing, sales and operating synergies will create significant value for our shareholders."

Christine King, executive chairman of QLogic, said that this deal will not only create better solutions for the customers, but will open up new development and career opportunities for QLogic employees as well. King described the deal as "financially compelling" for QLogic shareholders.