Marvell Technology Leadership & AI Growth Strategy: Citi Global TMT Conf. 2025 Fireside Chat

Key Takeaways

TL;DR: MRVL mgmt. remains highly bullish on custom AI silicon & optics, projecting outperformance of FY25 AI custom rev. targets and reiterating 20% TAM share ambition. Near-term guide stays cautious due to customer confidentiality/visibility, but mgmt. signals continued growth accel., new design wins (now 18+ sockets), and robust sector tailwinds. Margins remain pressured by custom ASIC ramps, but OP leverage, NRE offsets, and portfolio rebalancing drive profitability. Non-AI segments (networking & carrier) have rebounded faster than expected, validating core portfolio profitability. MRVL is proactively investing R&D/capex to sustain tech leadership while retaining capital return/buyback flexibility. Near-term photonics vol. adoption will be limited, but MRVL leads across required optic modalities. Emerging AI capex outside hyperscalers (e.g., sovereign, enterprise) presents further upside optionality.

Key Discussion Points & Investment Implications

1. Custom AI Silicon/XPU Programs & Rev. Visibility

• Mgmt. reaffirmed no change in custom AI/XPU biz trajectory: “It was not our intent to signal a change in our biz when we said that” on the prior earnings call, emphasizing “harder” confidentiality due to strategic customer sensitivities (esp. hyperscalers).
• FY25 custom AI rev. tracking “way ahead” of $1B+ target: “Planning for growth in this biz, and we still are,” but will “communicate…once those plans shore up and we have better visibility.”
• Design win momentum accel.: Now “18-plus sockets” (vs. prior “18”) and closed add’l custom programs since last disclosure; “We said there was another 50 sockets…worth $75B+ of lifetime rev. Subsequent to the call, we’ve actually closed several of those.”
• Longer-term, customer base to diversify & rev. planning to ease: “We’ll also have better diversity in the biz going forward. It’ll be easier to plan and communicate it.”

2. TAM & Mkt Share Ambition

• Mgmt. reaffirmed 20% share target of rapidly expanding custom AI silicon TAM.
  • Custom TAM updated at AI Day: $55B (YoY up), w/ $40B from XPU and $15B from XPU attach.
  • “The 20% share is really a combo of, one, our bottoms-up view of the individual opps…plus, just from a top-down perspective…”
  • Win rate in design activity supports share goal, but “it’s a very dynamic environment,” and upside is possible: “the pushback I got was why can’t it be bigger if you just look at the law of mkt share.”

3. Competitive Dynamics / Mkt Fragmentation

• Custom AI ASIC mkt shifting from “winner take all” to diversified mix: Mgmt. expects “diversity in there…the spend is so big that…you’re going to see some variety of biz models that emerge.”
• Some variants will enable multiple vendors/partners per hyperscaler or program, and “the majority mkt share will still come from what I would call full svc or full turnkey providers… That’s where the bulk of the mkt will land.”
• Custom spend to surpass x86 CPU mkt by 2028: “The spend on these things is – for example, the custom spend alone is projected to be bigger than the entire x86 CPU mkt by 2028.”