AMD's purchase of a stake in publicly-listed rival Marvell is a move that borrows from CVC's ecosystem investment approach.
We are seeing some interesting uses of corporate venture capital-style techniques to invest in strategic competitors’ public stock.
US semiconductor company AMD recently seemed to follow the lead of its peer Nvidia in taking a stake in Marvell. While AMD’s reported $6.5m investment was less than Nvidia’s $2bn purchase at the end of March, RollingOut assumes a healthy financial return for both.
But even more important is the strategic recognition of how Marvell’s optical photonic products are becoming critical in networking at data centres.
Other companies appear to be following the same playbook, with the FT reporting chemicals company Ineos buying €200m of stock in public peers.
Ineos’ move appears more of a straightforward financial bet, but AMD, which has been active in investing in privately-held companies for some time, may be using a CVC-like approach to blend financial and stragic aims.
We are seeing the development of private market and research and development insights helping public market investing approaches by corporations. AMD’s corporate venturing unit under Sagi Paz has invested in a wide range of startups, including RadixArk and Recursive Superintelligence this month.
Sameer Singh, venture capitalist at Breadcrumb, believes this barbell type of approach is well suited to current market conditions, as outlined in his ‘great reset’ thesis to navigate a turbulent world of the end of the current computing cycle.
Effectively, the late-stage computing cycle of artificial intelligence could be best played through listed companies, especially in hardware – something legendary investor James Anderson suggested in his most recent investor note picked up by the FT. Meanwhile CVC units could be searching for the next wave of opportunities in private markets in the coming robotics era, such as edge inference and 3D printing.
