Marvell Technology Group subsidiary Marvell Israel, based in Yokne'am and headed by Israel General Manager Guy Azrad, has begun extensive layoffs, sources inform "Globes." The company will dismiss 90 of its 650 employees in Israel.

Sources in the sector believe that one of the reasons for the measure is Marvell's acquisition of US company Cavium last November, which included the absorption of 70 employees of Israel company QLogic, a Cavium subsidiary, into Marvell Israel. Cavium, which develop communications equipment and servers and cyber components, acquired QLogic last year for $1.3 billion.

Sources in the sector severely criticized Marvell's decision, saying that it was part of the policy of cutting back on R&D activity in Israel led by the company's global management. They said that the high tech and chip development industry in Israel would be severely damaged because entire areas of specialization would be completely eliminated and the employees would be liable to move to major overseas companies. On the other hand, market sources said that the bottom line was a change in specialization that would not greatly affect the company's staff.

Marvell is one of the world's largest computer chip manufacturers. US hedge fund Starboard, which acquired 6.8% of Marvell's shares two years ago, is behind the company's new policy. Starboard is an activist fund that acquires companies in order to increase their value and then sell them. As it did with Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX), in which Starboard acquired a 10.6% stake, Starboard demanded the appointment of three directors to represent it on the company board of directors and replaced two of the company's founders. Starboard then initiated measures designed to increase the company's value, such as closing down unprofitable activity and the acquisition of Cavium for $6 billion, which resulting in a surge in Marvell's share price.

Market sources believe that changing the composition of Marvell Israel's staff is designed to meet the new market needs: entering the cloud computing infrastructure and autonomous transportation sectors and exiting areas of communications that are shrinking. Israeli industry sources, on the other hand, assert that the measure is a cruel one by management, which does not understand the technology and seeks to make money and nothing more. These sources say that the employees' faith in the company has been damaged, which is liable to cause them to leave it en masse.

Marvell Israel has had to lay off half of its employees, whose number reached a peak of 1,200, in recent years. Marvell, founded on the basis of Israeli company Galileo Technology (acquired in 2000 for $2.7 billion), went on acquiring companies: Radlan in 2003, DSPC in 2006, and Iamba in 2010. Then came leaner years, however, and the company wrote off major spheres of activity, including its mobile phone division, and laid off hundreds of employees in a number of rounds.

Marvell Israel said, "The company does not response on internal organizational matters."

Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2018

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