Inphi's Data Center Game Remains Strong As The Clock Ticks Down

I think there’s a good argument to be made that Inphi (IPHI) has been one of the best plays on the growth of data center spending over the past three years (NVIDIA (NVDA) certainly belongs in that discussion too), with the company enjoying especially strong share in physical layer Ethernet components and subsystems (analog chips, DSPs, and optical components), particularly its PAM4 platform. While telecom has been more up-and-down, this market too should enjoy a rebound in 2021 as major service providers resume deployments and the company moves beyond the loss of Huawei as a customer.

Inphi’s upside is now limited by the pending acquisition of the company by Marvell (MRVL). I continue to believe that this is a good (albeit expensive) deal for Marvell, and I expect the deal to close in the second half of the year. With Inphi trading at a greater than 8% discount to the implied deal value, this might be a name to consider for investors who like to trade those deal spreads.

 

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Inphi's Data Center Game Remains Strong As The Clock Ticks Down