Data centre consolidation as Cavium acquires QLogic for $1.36 billion

US data centre chip maker Cavium is to acquire networking infrastructure company QLogic to drive scale in the data centre and storage markets.

Most of the rhetoric from the companies is standard M&A fare, with talk of economies of scale, complementary (as opposed to overlapping) areas of business and, of course, end-to-end solutions.

“Today’s acquisition of QLogic is highly complementary and strategic to Cavium and it creates a diversified pure-play infrastructure semiconductor leader,” said Syed Ali, CEO of Cavium.  “QLogic’s industry leading products extend our market position in data centre, 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.”

“QLogic with Cavium is a winning combination for customers and employees and is financially compelling for QLogic shareholders,” said Christine King, Executive Chairman of QLogic. “The scale of operations of a nearly $1 billion revenue business will allow the combined company to deliver better solutions for customers and create more career opportunities for employees.”

As the Samsung acquisition of Joyent shows, the cloud is becoming increasingly important across a widening range of businesses. With the telecoms industry set for a wholesale move to the cloud as 5G approaches this seems like a good time to be doubling-down on data centres.