Good morning and welcome to Marvell's 2021 Investor Day. Let me give you a quick preview of today's presentations. Matt will discuss our plan to capitalize on the cloud driven disruption in the semiconductor market. Raghib will lay out our technology platform to deliver silicon optimized for cloud customers. Note, we'll take a short break after Raghav's presentation.
Lloyd will then take a deep dive into our market leading electro optics platform. Dan, Nariman and Raghib We'll discuss the product leadership and share gains they are driving in our storage, networking and compute businesses respectively. Note we'll take another short break after Nariban's presentation. Gene will bring it home with our plan to deliver strong long term financial returns for our shareholders. We will wrap up our presentation with a Q and A session.
Participants can submit questions at any time during the presentation through the chat feature in the webcast window. Before we get to the fun stuff, let's go over our safe harbor statement. Except for statements of historical fact, This presentation contains forward looking statements, including but not limited to statements related to market trends and to the company's business and operations, business opportunities, growth strategy and expectations and financial targets and plans that involve risks and uncertainties. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Actual events or results may differ materially from those described in this presentation due to a number of risks and uncertainties.
For factors that could cause Marvell's results to vary from expectations, Please see the risk factors identified in Marvell's quarterly report on Form 10 Q for the fiscal quarter ended July 31, 2021. During this presentation, we will be making mentioning certain non GAAP financial measures. A reconciliation to GAAP is provided at the end of this presentation, which will be posted to our website. Let me now explain the syntax behind our fiscal calendar. Marvell financial measures in this presentation correspond to our fiscal calendar.
Our fiscal year generally starts in February and runs through the end of January of the following year. As an example, Fiscal year 2021 started in February of calendar 2020. Let's kick things off now with a short video followed by Matt's presentation. Thank you.
Cloud Computing, 5 gs Connectivity, Smart Automobiles, the Borderless Enterprise, These are the megatrends at the heart of today's connected world, and each of them is built on top of Marvell technology. With the industry's most advanced data infrastructure portfolio, Marvell is ready to power what comes next, which is Our platform continues to hyperscale, but all clouds aren't created alike. That's why we tailor our solutions to each of our customers' unique needs. Driving toward a safer, smarter, greener future. When the world needed to pivot quickly, Marvell was there, enabling the borderless enterprise, Keeping a newly fluid workforce connected and productive.
Together with our customers, we kept the new data economy humming. And it doesn't end there. As we meet the challenges of today, we're planning for the opportunities of tomorrow, investing in innovations to take our customers
Good morning, everyone, and welcome to the 2021 Marvell Investor Day. If you look at the world's most valuable companies, 7 of the top 10 have a combined market cap of over $10,000,000,000,000 They all have one thing in common, The cloud. The cloud is the single most disruptive force in the global economy over the last 10 to 15 years, And the single most disruptive force inside the cloud is the silicon on which this data infrastructure is built. It's called cloud optimized silicon, and it's already happening. We're going to talk to you today about how Marvell is Perfectly positioned to capitalize on this disruption and massive growth opportunity with a portfolio that spans compute, networking, Storage, security and electro optics and a customer engagement model that is unique to Marvell.
If you want to invest in the future of the cloud, Marvell is your company. Just to give you some context, when I talk about the cloud, I'm really talking about the entire data infrastructure market. There are 4 markets that Marvell serves. You're going to hear about these today from our team, and every one of these has a cloud strategy behind it. In the data center, this transition is obvious.
Carrier infrastructure is going to virtual RAN and cloudification. You'll hear from Raghav about this today. Automotive with 5 gs and autonomous driving all need a cloud strategy, and the enterprise has become borderless. The bottom line is all of these end markets are converging to the cloud. So let's see what's driving the cloud silicon market.
There was a belief going back 10 years ago, maybe more, that the cloud would run on industry standard hardware powered by X86. Just think about it as taking existing on prem data center hardware and scaling it up to the cloud. Software was supposed to do everything, turned out to be a very inefficient solution when you think about the scale required in cloud computing.
What you hear about today
is something called heterogeneous computing, a concept where you have specialized for different types of workloads and applications. GPUs for parallel workloads such as machine learning, FPGAs for acceleration. Each of these solutions are very good on their own merit, but if you look at the problems Cloud customers are trying to solve, they need even more. What I'm here to tell you today is that the opportunity is cloud optimized silicon. Silicon that is highly customized for individual cloud customers and applications.
The companies that enable this are going to be big winners. And it's not just happening in the compute. It's happening in the storage. It's happening in the networking. It's happening in the security, and it's happening in electro optics.
So to really address the entire opportunity, you need to be excellent at each one of these. I had a realization several years ago when Raghav and I went to a customer meeting together and we were driving back in the car, Just the 2 of us. And we had both reached the same conclusion in the meeting. He turned to me and said, Matt, I think the future of this market is going to require Customization and optimization, and we need to prepare for that. And I had reached the same conclusion in the meeting, which was The notion that selling a merchant or general purpose product wasn't where the market was going to go.
It was interesting because Just a few miles away at Inphi, Ford Tammer and Loy and Nariman and his team all reached the exact same conclusion, and that's really what led Inphi to their Incredible growth was their recognition that this market was moving to an optimized model. Let me be clear, this is not a zero sum game. There will be continue to be a very healthy market for general purpose products in the cloud. This is about enabling new capabilities in the cloud and where and heading to where the puck is going. So let me explain why this is happening.
It's because every cloud is unique. The architectures of these large cloud companies are all completely different. They actually design and build their individual data centers optimized for their own specific applications. Let me give you two examples. If you're one of the cloud titans and you're leading franchise's search like Google, you have a very different architecture than a company like Facebook That's serving up photos, videos or advertising.
They optimize their cloud data center design for the applications that they serve. One thing is clear, Each of them have their own unique requirements and massive scale. So let me give you an example of cloud optimized silicon, What that means? On the left, you see a representation of a general purpose product. Each of these blocks represents an individual functional block inside an SoC, for example, in ARM core.
This type of part represents a superset of all of the capabilities You might have in a chip to solve all of the problems for every data center it's sold into. It's designed for everything and optimized for nobody. This works well in the enterprise market, by the way, but when you get to the scale of the cloud market, there's an enormous benefit in creating an optimized solution. Cloud companies want purpose built silicon with exactly the right amount and type of each capability. For example, one might need a special purpose machine learning block built in.
Another might need proprietary security functions, as an example. It all depends on the use case. So when we build cloud optimized silicon, it's optimized for each individual cloud, each workload, each application. It's not just all about the silicon though. It's about the software, The firmware, the platform, the form factor in which the total solution is delivered.
These are all critical aspects Actually optimizing and customizing these solutions. At Marvell, we have cases where we're selling a card with multiple Marvell chips, With all the software, all the firmware, everything tuned and optimized to the customer's application, that's an example of cloud optimized. Now don't just take my word for it. You can read about this in the press on a regular basis, sometimes a daily basis. It's clear these cloud companies are very active in silicon.
Now some of you may be wondering, okay, Is this a good thing? Is this a bad thing for Marvell? It's completely aligned to our strategy For cloud optimized silicon, and this is good for Marvell. As you will hear throughout the presentations today, Marvell has all the pieces To be the indispensable partner to these companies to allow them to achieve their ambitions in silicon. Now let me show you how enormous this opportunity is.
Last year, we told you the TAM for infrastructure was $110,000,000,000 Growing at 6% a year. We said the Marvell portion was a $16,000,000,000 opportunity, growing to about 20, Which was growing faster than the TAM. Okay. This year, I'm here to tell you that the infrastructure TAM has grown close to $130,000,000,000 And as a result of the market continuing to accelerate, more exciting is that Marvell SAM is now 50% larger than it was just 12 months ago we had this Investor Day. It's driven by our SAM growing into the overall TAM on an accelerated basis and the transformational acquisition of Inphi and the recent addition as of yesterday of Innovium.
And the growth rate has also accelerated for Marvell From 9% a year compounded annual growth to 13%, giving us a $30,000,000,000 opportunity in just a few years. I'll let put this in perspective. We had our 1st Investor Day in 2017. We identified at that time the total market opportunity for Marvell It was $8,000,000,000 The market is now $30,000,000,000 that we're going after. It's almost a factor of 4 increase Larger than just a few years ago.
So we're in an end market that's growing 13% a year compounded off a huge $20,000,000,000 base. We've taken a look at all the major industry peers, by the way. We can't find a company that's got this kind of end market growth at this level. As you can see, the data center is the largest of our end markets. It's growing 24% a year off a very large base.
Within that, cloud is actually growing faster. Within Carrier, we're focused on the 5 gs opportunity. And as you can see in automotive, it's a smaller market, but it's the fastest growing. So if you put the company's growth drivers, which are cloud, 5 gs and automotive together, those end markets are growing 20% a year, Even faster than the 13% overall, Sam. These markets represent the largest opportunity for Marvell.
Now let's take a look at how we've transformed the company to address this very unique opportunity. 5 years ago, Marvell was a consumer company. Today, that's completely inverted. We've pivoted to data infrastructure We've been investing to become the leader. And now that vast majority of our revenue is in infrastructure.
To be clear, the market didn't just move Marvell here. What you see here is the result of a very deliberate plan over the last 5 years And strong execution to get to this point. Now let's see how we compare with our peers. So let's take the revenue split Of infrastructure versus consumer, 84%, 16%, and let's compare it to our large industry peers. First observation, Marvell has by far the most exposure to infrastructure and the least exposure to the consumer market.
This is important because the infrastructure market has extremely long product life cycles, sticky designs, High level of visibility and outsized growth. By contrast, the consumer market by nature is more volatile, more short term.
You need to
win new designs every single year, so we chose a different path. We also have the largest exposure Of any major semiconductor company to data center, which as I showed you earlier is the fastest growing portion of the entire market. It's the most lucrative disruptive end market opportunity in the industry. So if you believe data infrastructure is the most important growth driver In semiconductors, over the next 10 years, Marvell is your company. Here's how we deliver on it.
First, we have the leading technology platform bar none in the industry for infrastructure. What you're looking at here are all the critical building blocks you need for this market. And the way we got here was not by accident. We've been very deliberate in our approach to build this company to service this opportunity. So we started with 3 key areas of organic investment.
We doubled down on storage 5 years ago. You're going to hear about Dan from that. This was a business that was in decline, And it's now growing double digits. We doubled down on enterprise networking. And you can see from our financial results, and we actually break this out, Our business is outgrowing the market.
And 3rd, we had 5 years ago, we had 0 revenue in Automotive Ethernet. And now it's a booming business, and you'll hear from Neriman today about that opportunity. Next, we did 2 transformational acquisitions to drive our growth. The first was Cavium in 2018, and the second was earlier this year with Inphi. This gave us the compute capability and the electro optics capability we needed.
These were complemented by 3 very other Strategic tuck in acquisitions of Aquantia, Avera and Innovium. We also decided what not to do, And we executed multiple divestitures that ultimately generated $2,000,000,000 in cash for shareholders, and it helped hone our focus. The pieces of this platform, they existed. They were just inside other companies. They were inside Marvell.
They're inside Cavium. They're inside Inphi. We brought all these teams, the assets, the technologies, all together under one roof To execute on this opportunity, and the whole is much, much greater than the sum of the parts. We worked incredibly hard over the last 5 years to build this company, and now we're looking forward to reaping the rewards In scaling the company for growth, we have all the pieces to win. Here's how we scale.
It starts with the foundation of leadership products and technologies, how we work with customers and enable them to succeed Scaling up our operations, putting in place the right capacity to grow the company. And finally, none of this can happen without a winning team and culture. We're investing in each of these critical areas. So let's take a look at each one. It all starts with the foundational process technology platform and IP.
Last year, we told you that Marvell was going to be a leader, Not a follower in process technology. Our 5 nanometer platform is off to an incredible start. We already have over 20 Programs in development with customers. Last year, we talked to you about test chips. This year, we have product silicon back in the lab on multiple products with an intent to ramp those into production next year.
And you can bet that we're planning to be a leader in 3 nanometer as well and keep driving our technology platform forward. Product leadership is much more than just technology leadership. Product leadership is winning product definitions, winning features, Understanding the customer requirements and putting it into the products. When I look across our entire portfolio now, Marvell has leadership products in every single category where we compete. The output of all this is what we call market leadership, Which is execution, generation after generation after generation, building customer trust, this is how we win.
Customers are at the center of our strategy. We're building true partnerships with leading companies in our markets, Not just the big incumbent giants, we also focus on the innovators, the disruptors, and we're taking the long view to enable their success. Last year at Investor Day, we told you we had a path to 13 customers that would generate over $100,000,000 a year in revenue, Which is a significant milestone when you look at a customer relationship. When we announced the Inphi transaction, we increased that number to 17. We're well on our way, and today we now see a path to $19,100,000,000 plus customers for Marvell.
This is all aligned to our flexible business model, which is unique to Marvell. We can enable customers to go from full custom design to full merchant offerings to everything in between. Often that conversation starts with ASIC or custom moves to one of the other business groups. We look to see who has the right IP, experience and know how. And the ability to do this is unique for Marvell.
These are highly strategic, confidential relationships we have with these key companies. And while we're going to talk to you today about some very exciting projects we're working on, we maintain the highest levels of customer confidentiality And won't be disclosing any specific customer names. Thank you for understanding that. Each of these cloud optimized programs, They come with significant NRE, where they are partially funding the development of the chip. This expands our R and D footprint and our ability to invest.
The reason is because of the value of our IP portfolio, our architecture expertise and our track record of execution. Our customers view us as a true extension of their engineering team. These are critical customer engagements. When you get to a $100,000,000 relationship or in some cases, a $200,000,000 plus relationship, The projects that we take on and we execute are typically 5 to 7 years in production. Customers care more and more about ensuring that their long term and also long term agreements with our supply chain to ensure our and more importantly our customers' growth plans.
I can tell you that Marvell is viewed by the supply chain as one of the most attractive companies in the industry to work with. They like our business model and our long term focus, and I'm confident that we're going to be able to secure the capacity we need. We've got this. It all starts with the team, the talented group of people we have working at Marvell. And we have the team we want.
I'm blessed. We have an incredible group of leaders in place With the best business and technical capabilities anywhere in the industry. And it's not just my direct team. BAC's strength extends to the next 100 key leaders and even more broadly across the company. Marvell is a company that people want to work for.
We've become a destination for talent in the industry. And while we've come together from many backgrounds, we have a strong company culture that binds us together as a team. Our core behaviors are the foundation of that culture. It's all about treating people with respect and creating opportunities, including those with diverse or underrepresented backgrounds. This has been a key competitive differentiator for Marvell.
And on that point, we've made substantial progress on our inclusion and diversity program. We've hired a great IND leader, and we've launched our first global strategy. We're focused on activating and empowering leaders, Creating an inclusive place to work and cultivating a diverse workforce. We're also very committed to a set of initiatives focused on improving opportunities for women in the company. In the past year, we've expanded online reporting of gender and diversity data.
This is hugely important to our stakeholders, including our employees, our customers, our shareholders. It's hugely important to me personally, and we're making this a priority at Marvell. By use of sports analogy, if you want the best team, you need the best athletes. The companies that can attract and retain and enable the best talent in the world We'll win over the long term. And one of the things that matters most in my experience in attracting and retaining talent Is that people want to be on a winning team that have the best products, the best technology, market leadership.
That said, you also need to be a great place to work and treat your employees well. Now don't take my word for it alone. We've been recognized by our industry peers. The GSA Last year named us as the most respected company in the industry. We've been recognized by our own team as a best place to work.
Our employee sat and Glassdoor rankings and ratings continue to rise, and we've been recognized by our community for philanthropy. And even by the financial community with multiple categories on the Institutional Investor All America list. We've been very focused on building the Marvell company culture the last 5 years, and it's great to receive these external recognitions. Climate change is one of the most pressing issues facing the world. And as a large and important company, we have an obligation to do our part.
Today, I'm here to tell you that we are committed to net 0 emissions as a company. We're adopting a science based approach to do this. And over the next year, we'll lay out our timeline for achieving these targets. And like everything we do at Marvell, We're going to measure, track and improve and report out the progress we're making. I consider this to be a business imperative.
It's We have a winning strategy and all the pieces in place. We're scaling to the growth opportunity in front of us. Net the financial community on over the last few quarters. It's going very well, And our team is making great progress.
Some of you
might recall that we said by the time we reach fiscal 'twenty five, fiscal 'twenty six Time frame. The incremental revenue from these wins would be roughly equal to Marvell's entire cloud revenue last year, which was about 400,000,000 Today, I'm here to tell you that we're on track to deliver, but now we expect to deliver. More exciting still is that based on new wins and higher demand for our products, we expect that the time we reach fiscal 2025 and 2026, The incremental revenue that we've won will actually double in that time frame. This is very exciting. So let's put this in the context now of the overall market opportunity.
Again, we have $20,000,000,000 opportunity. It's growing 13% a year. We're investing to drive outsized returns in cloud, 5 gs and automotive, and those markets are growing at 20% a year, and we're winning. Today, we have $1,500,000,000 annual run rate in these markets. So just like big round numbers.
Cloud is about $1,000,000,000 run rate today, 5 gs 400,000,000 And automotive, dollars 100,000,000 So that gets you to the $1,500,000,000 We can Believe we can grow this market, grow Marvell at 2x the market, which is what we actually said A year ago, although the market growth rate has actually increased. Now this includes the Innovium acquisition, which we just announced yesterday, And all those new design wins I told you about. This is huge growth. In the rest of the infrastructure We have over $2,000,000,000 in revenue today and expect to outgrow the market as we take share in enterprise. And in the wired market with Inphi's unique optical Products that Lloyd will talk about later, we have a great opportunity.
There is tremendous momentum overall in our business. Last year, we outlined 10% to 15% long term growth in our financial model. As a result of the market acceleration, the acquisitions of Inphi and Innovium and stronger demand for our products, We are significantly increasing our long term growth target model to 15% to 20%, which I think is one of the highest in the semiconductor industry. Now I don't want to steal any thunder from Gene's presentation, but you will see that we expect to drive this level of growth With an industry leading overall financial model, revenue growth, gross margins and operating margins, The future is very bright at Marvell. I hope you enjoy the rest of the day where you'll get to meet my team, including some of our new members that joined us from Inphi.
And I hope that by the end, you will be as excited about the future of Marvell as I am. Thank you very much.
Thank you, Meg. Good morning, everyone. It is great to be with you here today. As most of you know, I came to Marvel through Cavium Acquisition, where I was Co Founder. Recently, I took a broader role at Marvel as a President of Products and Technology.
As a part of my this new role, I'm responsible to coordinate across all Marvel Business Units And the customer to make sure that the product that we develop is in full alignment with the needs of end markets and customer, and they work together to deliver the optimized solution. Today, I'm going to talk about the disruption in data infrastructure by the data economy and how Marvell is very well positioned to take full advantage of it. Matt talked about how every cloud architecture is unique And requires optimized silicon. So let's take a look what is a cloud architecture. It has lots and lots of servers to provide compute, security and storage.
These servers are connected together with the switch on the top of the rack. And then there are multiple layers of switches to connect all these racks together. Now these switches are connected together With optical interconnect, with optical modules on both sides. And then in a cloud, there are lots of data centers connected through optical interconnect. The unique part about MARVEL is that we have market leading products for each one of these capabilities.
We have compute and security, and I'm going to talk more about it later today. We have storage, and Dan is going to talk how Marvell has invested to deliver optimized storage solution for cloud. We recently announced we recently closed Innovium. And with that, we have the data center switch. And later on, Loy will talk about how we are leading in electro optic products for cloud data infrastructure.
If a company only has a specialty in one of these area and the capabilities of delivering only that product, That is all they see and that is all they understand. For example, Marvell had storage and networking, Cavium had compute and security, Inphi had optical interconnect, And Innovium had switches. We had these market leading products, But together, we are leading the complete portfolio For the cloud infrastructure, which is second to none, the power of this unique architecture Is the vantage point for Marvell? Marvell has all the essential products for every capabilities in the cloud. So at a high level, all cloud architectures look similar.
They all need compute, security, electro optics, interconnect, Switches and storage. But as Matt talked about, each cloud architecture is unique. And it is unique because it has a unique workload. Let me show you how 2 different applications are driving different needs in cloud architecture. We have search application, which requires a very high performance compute and it is latency sensitive.
On the other hand, we have social media application, which Has a lot of requests coming in, but latency is not that critical. At the same time, Sarge Works with a lot of data and there's a lot of data movement within the data center. On the other hand, social media has a lot more movement from within the data center to out, not that much within the data center. As a result of that, we need very high performance CPUs for search application, but for social media, you can have optimized compute, but a lot of them. Similarly, we need high bandwidth, Low latency for data movement within the data center for search, but social media is not that much important, but to connect a lot of servers, you need a lot of Steve, for Serge, you're looking not only capacity, but the latency as well.
So as I said earlier, at a high level, It seems like all cloud architecture are same, but in reality, they are configured And optimize based on the target workload. Matt share with you what is needed to implement a cloud optimized silicon. If you want to be a leader for cloud optimized silicon, you need to be at the cutting edge. You need to be driving process node technology, high bandwidth, high performance, complex package. You need it all.
You need to be at the cutting edge. Let's take a look how Marvel is doing here. Marvel used to be fast follower when it comes to process node. But we decided if we want to be the leader in providing optimized silicon for data infrastructure, We need to be at the latest process node. This is why 3 years ago, we made it a company focus and invested to become the leader in process node technology.
Today, I'm pleased to share with you that We have established ourselves process node leader in 5 nanometer. We have complete 5 nanometer platform with all the key IPs. We are using this platform to implement our own products as well as offering it to our customer to achieve their own optimized silicon needs. This has been a key part of our technology, and it is driving design win, not only in cloud and 5 gs markets, but also in automotive and enterprise. We are taking several products in production in 5 nanometer, and We are planning to tape out another 20 products in the next 18 months.
But it does not stop there. We are fully committed to keep the leadership in process node technology. We are heavily investing to in 3 nanometer. You may have recently seen our announcement of partnership TSMC about 3 nanometer. It is not Only about know how of 3 nanometer.
It is about developing complete platform and their needed IPs to keep the leadership in the process node technology. One of the key critical IP for the for to have the high performance silicon is SerDes. Just to give you an idea, If you do not have right SerDes, you cannot have a high performance silicon. This is why The quality of SerDes is important. And that is the reason when we decided to take the leadership in process node technology, we also decided To take leadership on all the critical IPs, and SARDI's being one of them, we was obvious reason to invest in it.
So we invested to take the leadership in 5 nanometer, 112 gig SerDes. And today, I'm really Happy to share with you that we have the industry leading 5 nanometer, 112 gig SerDes in house today. We have used these studies in multiple of our own silicon, but this has been a driving factor for our design wins with the customers as well. We have won multiple designs. And customer, when they are looking at the survey, they look for few key parameters.
They are looking for low error rate, long distance Performance and power. 2 of our customers did complete evaluation of all the Available 5 nanometer, 112 gig SerDes in the market. And they found that our SerDes It's the best performing studies. That is why they chose us and that is why we won the design. We are not stopping here.
Just like we are investing in 3 nanometer process node technology, We are also investing in a 2 24 gig SerDes. Marvell is fully committed to keep their leadership Just like process node and critical IP, package is becoming another critical building block of delivering optimized high Just to give you an idea, most cloud silicon ends up being multi chip on the same package. When you are integrating multiple chips of multiple dies on a single package, it is very, very complex. That makes the design as complex as the silicon design itself. There are various examples of multi chip packages, for example, 2d, 3d, multi chip module, CoVOS as well as chiplets.
Package design is becoming a key defining factor to achieve the performance in high end silicon. We have 25 plus years experience of delivering Complex packages and multi chip design, we have shipped over 1,000,000 multi chip silicon in production. Loy is going to share with you later how Optics are getting closer and closer to the silicon. It is called co packaged optics, which means the optics and the silicon are in the same package. Now how do you put the light and the digital logic It is very complex technology.
But we have these capabilities Because of expertise that we have in house now combined with the optical expertise from Inphi. MARVEL is investing in all types of advanced complex packages, and we will be ready to deliver The most optimized high performance silicon for the cloud data center needs. There are 5 essential capabilities needed for Cloud data center architecture. It is not enough to have a process node leadership and best IPs and go to the customer and say, hey, what do you want? That's not going to work.
To deliver the optimized silicon For cloud architecture, one has to have in-depth knowledge of technology and expertise in every area of capabilities. Can gain that capability only through implementing market leading products. We have market leading products in each one of these areas. We have storage, we have networking,
we
have compute, we have security, we have electro optics. So do you want to know why do we win? We win because we have invested In market leading products, we have hardened it, we have fear proven, and we have deployed in volume products and in many, many use cases. And this is why when we go to a cloud provider and present our product offering, At times, they use our standard products. But often, they tell us, Mr.
Marvell, We like your these products, but the problem that we are trying to solve Requires the characteristics of the functionality from multiple of these products. And as a result, We believe that it will be great if our architects sit with your architects and come up with the right Product design. The discussion has moved from the relationship of Customer vendor to co design. And this is a unique position and advantage that Marvel have. For example, one of our cloud vendor wanted to implement and optimize storage accelerator.
They needed expertise in storage, SSD, in switching, In security and in ARM Compute. And guess what? Marvell has leading products in each one of these areas, and that is why we were The right partner to develop such a product. And it does not stop here. We have established a really great relationship with our cloud customer.
We have really become the extension of their engineering team. So now we are having a discussion about what problems that they are facing And how can we work together to bring the best optimized solution for that? Just in the last 6 months, we have been reached approach by multiple customers To do a proof of concept solution to figure out a solution of some complex problem that they are facing. We are innovating together and we are developing the most optimized products for their needs. So the cloud is driving the innovation.
Marvel is investing in process node technology and IPs and the market leading product To deliver the most comprehensive product portfolio to serve the needs of the cloud. However, this investment is equally applicable to all of other end markets. The tremendous Leverage in R and D that we are getting across all these markets. The same building blocks that we develop for cloud is equally applicable in the data center, in the carrier infrastructure, in automotive and in enterprise. With a strong product portfolio as a foundation, MARVEL is driving innovation and product leadership in all of our end markets.
Throughout today, you will hear from my colleagues how we are serving each one of our end markets. Thank you very much.
Good morning, everyone. I'm Loy, Co Founder of Inphi. Electro Optics has been my lifelong passion. I studied it at Cornell, got a PhD there and spent the next 12 years working at Hughes as a research scientist. And then the next 20 years at Inphi as Co Founder.
At Inphi, I led The Broadband Analog and Optics business, built it from scratch, took it to become a leader in Electro Optics. I joined Marvell as part of the Inphi acquisition, loan Marvell, Hello, my role and Marvell. Really excited to be here to talk to you about How Marvell is leading the Electro Optics revolution. Cloud customers depend on Marvell Electro Optics products To move massive amount of data inside data centers and between data centers, Electro optics represents a huge opportunity for Marvell. Our highly differentiated product portfolio and leading market share position We'll drive long term sustainable growth.
So why is Electro Optics? Simple, light travels Further and consume less energy in fiber optics than electrical data In copper cable, so all cloud data centers are wired up with fiber optic cables, Miles and miles of fiber optic cable to connect servers, switches, storage. In fact, All links greater than a few meter today are electro optics. The cloud data center bandwidth is a huge opportunity. Cloud operators deploy the latest and greatest electro optics solutions to provide that bandwidth.
In the early days, 10 gig was the best choice. That served the industry for Over 10 years, 40 gig will deploy in 2013, then 100 gig In 2016, beyond that, it was very challenging. So when you think about it, The cloud data center bandwidth represents a huge opportunity that is not meant by the industry. More bandwidth drive more of everything, More compute, more networking, more storage, more data centers, more electro optics, It's a positive feedback cycle. Marvell Electro Optic SAM It is growing very fast.
5 years ago, it was only about 260,000,000 dollars And the cloud portion of that same was only less than 20%. Today, LASM has grown to $1,000,000,000 and it is projected to grow to $2,000,000,000 by 2024. And more importantly, the bigger part of The Electro Optics SAM for Marvell is now completely flipped. 65% Ofmarvel Electro Optic Sand is now with Cloud Data Centers. Since Electro Optics is such an important technology, so let's take a look at what is inside Electro Optics and what are the solutions that Marvell provided inside the Electro Optic modules.
Electro Optics module converts digital data to light and vice versa. So to do that, the module needs a laser and a laser driver in the transmitter and a receiver, The detector and the transient pin amplifier for the receiver. As the data rate goes up, A quantum data recovery was added to the signal chain to improve The signal integrity. This architecture serve the industry well For over one decade, but at 100 gig, The analog architecture is running out of steam. It's very hard to scale analog beyond 100 gig and that's when Marvell came in.
We invented A new device, KONG, PAM4 DSP. DSP stands for Digital Signal Processing. The secret sauce is in the core of the DSP. That's where all the magic happens. But DSP operates in the digital domain, whereas optics operates in analog domain.
So for the DSPs to interface with the optics, we need to develop very, very high speed Analog to diesel converters and digital to analog converters. These are very challenging technology, mixed signal technology that require World class mixed signal engineers, advanced CMOS nodes, analog vendors who Due to the clock and data recovery, just don't have that technology. In addition, the PAM DSP also needs very high speed service To interface with the host interface and that also require very highly skilled mixed signal analog and advanced CMOS. Taking 1 by 1, you can find vendors who have one of these IPs. But taken all together, PAM DSP, high speed ADC, DAC, SerDes, Marvell was the only vendor who had all of those technologies together under one roof.
The benefit to the customer is the PAM4 DSP doubles the bandwidth of the module. Furthermore, because the PAM DSP is very powerful engine, It allows for better scaling to higher speeds. In short, PAM4 DSP accelerates the bandwidth growth in cloud data centers. Now this is the curve that I showed you earlier, 10 gig, 40 gig, 100 gig based on analog. Marvell DSP took this curve to a new heights, 200, 408 100.
We were first in every generation of PAM-four DSP. We were first in 200 gig, 1st in 400 gig, 1st in 800 gigs. Each cloud has a unique Requirements, unique architectures. So each of our PAM4 product It's designed specifically for a cloud customer. In fact, We didn't come up with a 200 gig PAM.
Our first PAM chip was a 100 gig PAM And we demonstrated at the European Optical Conference in Valencia, Spain. A lot of people came by and looked at this new PAM4 DSP. Everybody was interested. But at the end, one particular Cloud customer told us, you were too late for 100 gig, it's over. But I really like your technology.
I like your team. If you're going to spin this chip To 200 gig and reduce power by doing it in 60 nanometer instead of 28, We would consider SelectU. So that evening, 2 other colleagues and I at dinner, we scheduled together a plan on a piece of napkin And we had our 200 gig PAM proposals. We came back home, Meanwhile, the entire industry decided that they're going to skip the 200 gig generation and go straight for 400 gig. But we make the decision To stay with the cloud customer who selected us for 200 gig, everybody told us we were wrong.
But to now, we were absolutely right. The cloud provider who selected us for 200 gig, deployed PAM ahead of everybody else. The experience that we learned from doing that 200 gig PAM chip It was so valuable that we took it to the next cloud customers and work with that customer on the 400 gig PAM chip. Although we were not the first to sample 500 gig PAM, but we were the first to be qualified, The first to go to production. And today, the majority of the 400 gig PAM DSP That are being deployed today are made by Marvell.
We show you Marvell leads the market in PAM DSP. We lead in technology, product, Market position. PAM4 DSP Marvell leads the market. Today, only 2 Tier 1 clouds are in full deployment, Our sourcing these PAM4 DSP in full production mode. The rest of the market will follow.
Next, I would like to take the opportunity to discuss what's happening outside the data centers. Cloud computing gave rise to a new type of data centers, The regional data centers. As cloud computing became ubiquitous, Customers demand high availability, redundancy, Quality of service. So cloud data centers need to be located in major Population area, closer to the people, closer to the customers. So cloud providers realize that and so they began to deploy data centers In metro area, but it is more difficult to deploy huge data center, 4 or 5 foot 1 field big in the middle of, say, San Francisco or L.
A. So what the cloud operator Decide to do is to build data centers, smaller data centers, separate by a distance of roughly 100 kilometer And use high speed fiber optic links, massive bandwidth to connect these data centers together. And that give rise to Huge bandwidth demand growth for between data centers at about 100 kilometer distance. That 100 kilometer distance is often referred to by the industry as a ZR distance. This new architecture drive the demand for ZEA Optics.
Next, I will tell you how Marvell led the disruptive changes 2 ZR optics. In the early days, the only Technology that was available to connect data centers to data centers at distances of 100 kilometer was a transport box. These are telecom grade equipment, very powerful, but big, Power hungry and expensive. These boxes can drive data over 1,000 of kilometers. The cloud operators do not want such an equipment.
They can't afford to pay for Those equipment and provide massive amount of bandwidth for their regional data centers. So the industry came up with a better solution, what is called the DCI box. DCI stands for Data Center Interconnect. It's a smaller box, a slimmed out version of the chain swap box, but it is still a box. So it is still expensive.
So this is public knowledge. Back in 2014, Microsoft wanted to deploy regional data centers And they did not want any of the boxes. They wanted a class a new class of optics, KONZIYA optics. What it is, is pluggable margins in small form factors, same form factors as what they use inside data centers, But go 100 kilometer. Microsoft went to talk to Everybody in the industries, all of the OEM, all of the module vendors And everyone said, Mr.
Microsoft, it was impossible. But Microsoft did not give up. They went to talk to everybody at conferences. They talked to Marvell at the time I was We will invite, of course. We put together A world class team of DSP, optics, broadband analog And we came up with a solution.
It was turnout, it was a cloud optimized solution For the regional data center, for Microsoft data center specifically, We've branded this product Color At OFC 2016, Microsoft announced at the Executive Forum that they have picked Inphi as a vendor for this project. The whole room of 3 or 400 executives was just stunned. You could hear complete silence. You could actually hear the pin drop. No one believed that it could be done, but we did it.
Color went on to become one of Inphi's most successful products for many years. And today, Color is what provides The ZR connection for all of Microsoft Azure Regional Data Centers. Forward to today, the next generation of color It's 400 gig ZR. This time, 400 gig ZR is widely supported by the industries, by all top 4 cloud providers. And I'm very pleased to announce today that Marvell is the 1st company who took this Innovative product to production.
Again, here we show you Marvell leads the electro optics. We lead in technology, product, Market position. 400 gig ZEA Represents a massive growth opportunity ahead for Marvell. Among all of the top cloud providers, Only one cloud deploy the previous generation, color. 400 gigabytes ZR will see broad adoption of all of the top cloud providers, plus many of the other carriers as well.
Marvell leads the foreign ZR market. We are first to production. It's a huge opportunity, go ahead. So let's take a look at this 400 gig Zia and see what's the difference. Again, Module require laser, but other than that, every single key components inside the ZR Optics Our design and made by Marvell.
We own every single piece of critical component inside. The silicon photonics that make up all of the optical functions other than the laser were integrated in a single silicon chip. TIA and driver are something that we already developed in house and COVID DSP is a very powerful DSP engine. COVID DSP delivers higher performance, longer reach than PAM. In fact, 4x more bandwidth per module and 6x more bandwidth per fiber.
Because of that, Corvid DSP enables wide adoption of Xeon optics. Although Marvell developed and So complete 400 gig ZR optics. We also Mix available as merchant DSP for our Module Ecosystem Partners. The reason for it is cloud customers 1 multiple sources, they want Interop and so by enable our ecosystem partners with the same DSP. We make it easy for the end users to adapt the entire data center with Marvell DSP inside.
The DSP also has extended reach for Metro and Longhorn, which Marvell doesn't make modules. So it's a great for our module partners and Expand the addressable market for Marvell. The COVID DSP Canopus, which Marvell brought to market first, EaseNow the leading market share merchant Coherent DSP. Next, I want to discuss with you a really, really important technology called silicon photonics. We build this technology organically from scratch Back in the days at Inphi, the key advantage of silicon photonics is that it enables very high level of integration, Far more than the traditional discrete optics that are made by traditional optic vendors.
And Sutter integration will be super important as we continue to scale the bandwidth to 800 gig to 1.6t to 3.2t's because Discrete optics are bulky. They cannot be packaged together in a small form factor. And at MAVIA, we proved that with color. We proved that with the 400 gig ZR. You need silicon photonic to be able to put on the Optics functions in a very small pluggable module.
The packaging of DSP, analog and silicon photonic optics together Also reduce power and improve signal integrity. So this is the foundational technology for the electro optics industry and for Marvell moving forward. As we have shown you, Marvell has a leadership position in silicon photonics. And we are leading The next chapter of silicon photonic, which is integrated optics. At Marvell, we don't just build 1 single chip product, we build platforms.
Our unique platform solution create the largest ecosystem partners That consists of cloud providers, system OEMs, module partners. This home ecosystem needs to work together to bring products to market. Marvell chips are designed to work together really well in a platform. So customers who New Marvell platform can be assured that they can scale They can develop their products and take their products to market sooner. The cloud end customers can be assured that with multiple module vendors Using the same Marvell DSP insight, they can have multi sources, Assured enough supply, interop and also very important, Scale to volume.
Cloud Customers, when they deploy electro optics, they want millions of pieces from the get go. You need multiple sources and a strong ecosystem to support that. So having a strong ecosystem and a unique platform create incredibly high barrier to entry. Also, the more Marvell chips have inside the platform, the higher dollar content which So Up to this point, I have discussed with you all the technologies that go inside Elektra Optics Pluckable. As we look into the future, we see that the bandwidth The cloud bandwidth demand continues to accelerate.
To meet the Huge growth in cloud data center bandwidth demand need to work on reducing the power of the entire system. Power to the data center will ultimately be the limiting factor of how much bandwidth So we see a future where electro optics are being co packaged together with system on chips, Switches, cloud optimized silicon, compute, core packaged optics Reduce system power consumption up to 30%, and that's a huge, huge number. So in closing, I told you Marvell is leading the electro optics revolution. There's a huge bandwidth demand inside and between cloud data centers. Marvell is a leader for our electro optics.
We lead in technology, Product market position. We see massive opportunities ahead of us For PAM DSP and ZIA Optics, thank you, thank you very much. Thank you. And next, I would like to introduce Dan.
Thank you, Loy. Hello, everyone. I'm Dan. I joined Marvell in 2016 as part of the new leadership team, And I've been running the storage business now for 5 years. Now when I say Marvell storage, sustainable growth is Probably not the first thing that pops into your head.
When I took over the storage business 5 years ago, it was certainly one of my biggest challenges. Now fast forward to today, and I'm excited to share with you one of the greatest turnaround stories You've likely never heard. And it begins with our pivot to the data center. The data center is the best market in storage. It's big, it's growing, there's high barriers to entry and our customers want to differentiate with customization.
Now along the way, we built a custom preamp business from the ground up. We pioneered the DIY SSD. We assembled a world class firmware team to help our customers Customize. And we leveraged Marvell's advanced silicon platform to move 2 generations ahead of our competitors. Now when I'm finished today, you'll be able to take away one very important point, And that's it.
We expect Marvell stores to deliver sustainable, high value growth driven by the data center. Now, there's no surprise that there's a lot of data being generated every year. In fact, That's pushing the amount of capacity being stored in the data infrastructure or the data centers to increase at greater than 30% per year. That's a very good thing for Marvell because that means more HDDs and more SSDs. Now, in addition to more drives being shipped into the data centers, There's actually trends that are driving the value of these drives and therefore the value of our content to increase.
The first trend is they need to put more capacity in every drive. 2nd, They need these drives to be higher performance so they can access this data faster. And last, there are unique requirements For the data center and not just the data center as a whole, but for each of the individual cloud data centers have their own requirements. So for HDD, in order to add more capacity, you primarily do this in 2 ways. You either add more platters In every time you add a platter into an HDD, you need to add 2 preamp channels.
The other way is actually increase the amount of data stored Perflatter, which means you have to have smaller and smaller grain sizes, so they use a technology called Energy Assist. You may have heard HAMR Or MAMR used and when you use these techniques, the HDD controller requires innovation. It gets bigger. It's more complicated. Additionally, the pre amplifier now needs to add circuitry to support the energy assist elements.
To improve performance in an HDD, it's really about dual actuators. That means they actually put 2 HDD controllers Per drive and these controllers need to talk to each other, which increases the complexity of these controllers. And then last, as we disaggregate storage in the Our customers want to use a single unified interface and that happens via NVMe. So we are now starting to see ACD vendors Adding NVMe into their hard drives. And of course, this requires again more circuitry on our HDD controllers as well as now firmware support.
Now for SSD, to add more capacity, you're adding more NANDI And more NANDI means more NAND channels on our controller, and you need more throughput in a wider pipe. Now in order to get faster performance, it's all about the host interface. In this case, we're looking at PCIe Gen 5 and Gen 6. These are twice and 4 times the throughput as a PCI Gen 4 interface. Last, optimize for the cloud, you need to think about the fact that you have multiple customers accessing these drives at the same times.
And our cloud vendors have SLAs in place that they need to make sure that this data is both secure and that they manage this access to these customers. Now, this means everything's more complex, the value of our content goes up, And we actually see generational ASP uplifts in the data center. So let's combine these two trends, more drives, higher ASPs, and you see a data center SAM That's going from just over $2,000,000,000 to over $3,000,000,000 a 14% CAGR rate. If you look closer, you'll see that this growth is really being driven by the cloud. And if you look closer, a little more closer at least, you'll see that it's no surprise that our flash based products, The market for them is increasing in double digits, but it may be surprising to see that the market for HDDs Both flash and HDD are driving this growth.
It may be time to rethink HDD. In fact, as the nearline drives become a bigger and bigger portion Of the overall market, it's offsetting now the PC segment where SSDs are being or replacing HDDs And we're actually getting a stable ACD market. Combine that with the preamplifier business I spoke to in the beginning, This is a business that 5 years ago was $0 for Marvell. Last year, we did just under $20,000,000 We are targeting $100,000,000 next year. Now when you combine these two aspects, Marvell's HDD business is growing again.
In fact, it grew this year. So let's pivot to SSD for a moment and particularly the cloud, SSD for the cloud. We are uniquely positioned for the cloud and SSD. We have 25 years of experience in storage. We have the most comprehensive IP portfolio stores out there.
We have central engineering Groups that are developing PHYs faster and better than anyone else in their customize for our storage. In addition, we have access to all of Marvell's IPs, and that will be very important, and I'll share with you in a few slides why. Next, we get to leverage Marvell's advanced silicon platform. We get to be 2 generations ahead of our competition, And we have to deliver lower power and higher performance solutions to our customers. Next, we have a flexible business model, very customer centric.
We can deliver cloud optimized solutions, we can deliver custom solutions, All the way to merchant solutions and anything in between, we also pioneered the DIY SSD model, which actually strengthened our relationship with the NAND vendors. Because the NAND vendors want to be part of our DIY infrastructure or ecosystem, We actually get access to the latest NAND before others. And last, We truly built a world class firmware team that enables our customers to customize their solutions. We don't deliver just one single firmware solution to all of our customers. This is not the PC market.
We need to customize for our customers. So let's revisit the DIY model for a moment on SSD. Many of you know this market very well, But to remind others who may not be aware, our customers start with a Marvell controller And we customize the firmware around their application. Marvell then qualifies and tunes for multiple NAND vendors for the end solution. Now there are many benefits to the customer in this model.
First of all, it's optimized for their application and their use case. They get real time telemetry, what's happening in their data center or in their system. They also get a flexible supply chain. They can source multiple NANDs now. You cannot do this with an off the shelf black box SSD.
It's just not possible. And I'm really excited to say that today, I can tell you we are now in high volume production with both our gaming partner and our cloud partner. This customization of the firmware around Marvell's Sure, our chip architecture and application optimization is extremely sticky. And I'm excited to say today, It's now also multi generational. Let's talk technology leadership for a moment.
Marvell recently announced our Brevera SC5 data center SSD family. Now this is the industry's 1st PCIe Gen 5 Product, it's optimized for the cloud. In fact, it was defined with the cloud vendors To achieve higher capacity in a smaller form factor, higher throughput, Higher performance. And it has acceleration blocks in custom firmware to address all the unique needs of our data center customers. We have tremendous traction with this product already.
We secured 2 NAND vendor design wins, and we're engaged with 3 additional NAND vendor customers Already. But we didn't stop there. In the last earnings call, Matt announced that we had won A PCIe Gen 6 custom project with a NAND vendor and it uses our 5 nanometer platform. Well, today I'm here to share with you that we've now put into design our first merchant solution for PCIe Gen 6, The Prevera SC6 and this also leverages Marvell's 5 nanometer platform. You can see why I am so confident that we believe we can grow twice as fast Now so far, I've talked about our HDDs and our SSDs, all of our traditional storage components.
But there is an additional opportunity For storage in the cloud, your traditional server is going to have a CPU, Memory, a NIC and of course your storage, your HDD and the SSD. Now you may recall Matt mentioning cloud optimized silicon earlier. You may have heard or remember Raghav talking about the concept Well, offloading the CPU to more efficiently manage the data center infrastructure also applies to the storage infrastructure. In fact, we are now seeing the need for storage acceleration and offloading the CPU for areas such as Managing a virtualized environment, securing the data, Accessing additional memory or accelerating applications And even scaling out storage over Ethernet. Well, the cloud vendors are turning to Marvell for these solutions because We have the best technology.
We have custom firmware. We have access to the latest Advanced geometries for silicon. And we have all of the IP across Marvell, whether it be storage, Security, processing or networking. And guess what? This is happening now.
In fact, we've already secured our 1st custom design win for these cloud storage accelerators. And there's more to come. We are actively engaged on multiple other opportunities. We expect this market to grow to be over $500,000,000 in the next 5 years. So let's bring it all back around to where we started.
When we talk about our storage outlook, This is our HDD. It's our flash based products and our Fibro Channel products. We have pivoted our business. Last year, over 60% of our revenue was in the data center. We expect to outgrow the data center market with our data center solutions.
And we expect to deliver sustainable growth for our entire storage business From 6% to 8%. In fact, this year, we're growing much more than that. And last, there's another growth long term growth vector out there in these custom storage accelerators. Last, Marvell storage is back. And I hope that going forward, the next time someone says Marvell storage, The first thing that comes to mind will be sustainable growth.
Thank you. I'll now welcome Nerimen onto the stage.
Hello, ladies and gentlemen. Since this is my first time Presenting in the Marvell analyst meeting, I thought to start by introduction. I came to Marvell from the Inphi acquisition. I manage the networking line of switching business, automotive and also the coherent DSP. Coherent DSP is used for long reach optics.
I'm very excited about the prospect of these three businesses. Also, I'm excited about working with the Marvell team to innovate and excel in these areas. A little bit of background for myself. I'm no stranger in networking industry. I was the 1st employee that was hired on at Broadcom back when Broadcom was a startup.
They hired me to start the networking group. At that time, Broadcom was only 12 people. I had various roles at Broadcom, including managing large engineering organizations, Managing businesses and for many years, I was the General Manager of the whole networking portfolio. After 17 years, I became the CEO of a startup company in Irvine called Clarify Communication. The focus was coherent optics technology.
After few years, we successfully sold that startup to Inphi, and that's how I started working with Loy and Ford working on optoelectronics around our solutions and the existing Inphi products and build Inphi into a powerhouse in optoelectronic platform. So now let me start my presentation. I'll start with the question. What's more important, processing the data or connecting the data? Well, it turns out that they're both important.
Fast computer clusters cannot be built without fast networks. The faster the CPU gets, the faster the network must get to connect the CPUs. At Marvell, our mission is to be 1st to fastest in our networking ICs. We have a diversified portfolio. We are well positioned for 20 plus CAGR growth for the next few years.
And in my presentation, I would like to discuss our strategy of how we plan to execute on these great opportunities ahead of us. The markets we serve each have its own distinct product requirements. And from the revenue perspective, we have the benefit of getting the revenue from 4 distinct markets that's diversified. Cloud data centers. These customers want the highest bandwidth.
They are demanding the networking IC providers To increase the capacity by 2 times every 2 or 3 years at around the same power dissipation. This market is big and is getting bigger. And Marvell is investing heavy in this market to broaden its portfolio. Now let's talk about enterprise market. This market is actually has currently a tailwind in spending.
Marvell is well positioned in this market, is well positioned with the Prestera switching product families And Alaska physical layer families. In this market, we're growing revenue, and we're gaining market share. The type of switches that's required for this market needs to be feature rich and flexible. Moving on to the carrier market. It's all about programmability because these chips go into networks that have to interoperate with the old networks, But also have to be future proofed for the upcoming standards.
And now with inclusion Of Inphi's coherent optics asset that's applicable to long distance optics, now Marvell has a bigger footprint in the carrier market. And the 4th one is the automotive market that's very exciting. This market is estimated to be the next $1,000,000,000 Ethernet market for the IC industry. This is a market that the chips have to be particularly designed For RO, ROAD is great and the manufacturing and the process has to be ROAD grade quality, but it's a very fast growing market for the type of products we have. Now I'm going to talk about how our product portfolios are suited to address all these markets.
Starting from the top left is the whole electro optics platform that Lloyd eloquently discussed before me. This is the combination of DSP technologies for PAM, Coherent, the best in class TIA and drivers and silicon photonic technologies. It's essential technologies for optical interconnects for inside data center and for outside data center. Raghav will talk about the role of optimized cloud CPUs that are needed for specific workloads. What I'm going to talk about in this presentation is switch and PHYs, which are the fundamental building blocks for networks and our progress in Automotive Ethernet.
Collection of all these products Gives us the ability to have an end to end networking portfolio. So what are the switches and PHYs? Where are they used? While they're used in switch platforms, the chip in the middle is a chip that Marvell develops and sells. It's the brain of the switch platforms.
Its function is to connect the endpoints. The endpoints could be servers, could be AI clusters, Could be storage arrays. The endpoints get connected through those optical transceivers that are in the bottom. What's in those optical transceivers of the optoelectronic products that I showed you on the previous slides that gives us to innovate and offer these solutions end to end to Switches is what makes the network, it's what builds the network. It does the function of switching and routing and all the traffics and provide the hooks for manageability that's needed to manage a network And build this data center and enterprise networks.
These devices are very, very difficult to develop. In fact, they're the most complex SoCs our industry does. In every generation, our engineers Have to break new boundaries. And typically, the die size of the switches maximizes the allowable reticle Die size in the reticle of any new CMOS process geometry. To execute, You have to have a broad IP and great engineering team, and we are very suited for that.
So within the switching market, The fastest growing segment of the switching IC market is data center. According to 650 Group, this market is about $1,000,000,000 of silicon SAM today And growing very rapidly to 1,700,000,000 by 2024. Today, Marvell Does not have a lot of participation in this market segment. That's why I'm so pleased that we are able to Announced today that we closed the acquisition of Innovium. Innovium was a very focused private company Focus on cloud optimized solution switch solution for data center application.
An open chip is very high bandwidth. It has the lowest latency and also very cloud optimized for the application. The Innovium team did a fantastic job. Not only they proved their technology, but they won some major designs. And in fact, they won a major Tier 1 cloud operator that has deployed their technology in live networks.
When we announced Inovio, We announced that Innovium brings to Marvell incremental $150,000,000 of business next year, And that revenue is covered by backlog. When we also did the due diligence of the Innovium team, we were impressed by the quality of the engineers, the quality of the architecture team, the quality of the implementation team. And we were also impressed by how well that architecture can scale to the future needs for our data center customers. So with inclusion of Inovio now as part of the private portfolio, That brings us the high bandwidth switch that's cloud optimized. With the addition that Inphi Asset brought into Marvell, which just happened spring of this year.
And the Inphi asset is really the gold standard Of optical DSP that's needed for optical connectivity inside data center and outside, With the existing widely proven and established Prestera Fisher Ridge Switch and Alaska PHY, Now Marvell has complete portfolio to innovate and address what the data center and cloud customer needs are. It's interesting, when we talk to the architects of these mega cloud data centers, they typically ask us, well, we need a High bandwidth switch for this application, well, we got that now covered with Inovio. We need fast optical connectivity, but on low power And efficient, well, we got that from the in flight now. And if they're not using optical connections, they're using copper connections. And that gets addressed by the well established Alaska PHY and how they connect The variety of high band switches together and to other data centers is its feature rich and higher end switches, and that gets Satisfied by the Precera product family that Marva currently has.
So that gives us a very unique position to be able to innovate and provide the right solutions for the customers. And also compared to last year, Comparing last year to this year, the addition of all these product portfolios is absolutely a huge game changing portfolio boost for Marvell and puts us in a great position to execute. Now also the customers, after we And also acquisition of Innovium called us, and we're very pleased about what we have done. And commonly, we heard that the Innovium Team, although they have done great, but the feedback that we got from all the customers is they're even going to flourish even more within the Marvell infrastructure. Why?
Because Marvell has the capacity to invest more, Leading edge in access to the best in class CMOS technology and the broader set of IP to develop these kind of switches. So we are very excited about what the company has now have in terms of the product portfolios to address what the customer needs are. So in general, our focus is expand our portfolio in data center. We'll do it through innovation. We do it in innovation not just at the switching level, but at the platform level.
We pretty much have all the necessary IPs as required to do what the customers want. And given the bigger scale now the company has, now we have more investment capacity and gives us the opportunity To increase the velocity of product refresh cycle and keep up with the explosive demand of data that our customers have in this market segment. So now let me move on to the enterprise markets. If there are two messages that I want you guys to take away is that the revenue is growing very nicely year on year, And we are gaining
market share.
When you think about enterprise, Sometimes you think about these big large buildings with wiring closets in the middle, the switches go on the wiring closets and computers get connected with Cubicles and offices into this wiring closet, and that's enterprise. Well, that's not the enterprise anymore. Enterprise needs to connect to outside, To cloud, to hybrid cloud, to public cloud, some of the applications in enterprise now is commingled. Enterprise has to provide the same service to those of us at home as if we were in the office. And enterprise is connecting the whole world now.
Now to make that happen, the data has to be secure, Encrypted. The networks have to provide the right level of intelligence so IT managers can manage the data, can make it fault tolerant. It's switching ships and all the hardware has to be a lot more intelligent than they used to be. And that is creating the uplift in spending and giving opportunity for networking IC providers to increase the dollar content reports. There is yet another catalyst for the growth in enterprise for the IC market, which is the adoptions of faster Wi Fi access points.
Today, gigabit Ethernet is the standard that's used in the current generation of Wi Fi 5. But Wi Fi 6 is rolling out right now, and gigabit Ethernet Connections at the switch has to be upgraded to 2.5 to 5 gig to 5 gig to keep up with it. And that trend will continue in the future. This is a long term trend. So the faster the wireless access point, the faster the switching silicon and faster the physical layer silicon.
And that's why the 650 Group is predicting that by calendar year 2025, there'll be 5x Number of ports of connections that are faster than gigabit in this market. And again, as an investor, the key takeaway is that faster ports correspond to faster dollar content per board per port and higher revenue. Also, Marvell Business for enterprise is very unique This is gaining market share. It's gaining market share because it has better products. Our products are more intelligent.
They're more secure. They have higher speed. We've done a great job with this product portfolio and we want our designs. And one way to show how well we've done is by looking at the number of ports that we forecasted to ship In 2021 and compare that to the number of switching ports that we shipped in 2019, this is the internal data that come from our own manufacturing. And that number is 2 times.
This is 2x the number of ports in a market that at best only grew single digit in this time frame. So clearly shows that we have gained market share, and that has been showing up in our in the revenue growth. So in summary, the enterprise business for us is a market share gaining market share story. Increasing content report, we've done it and we'll continue to do it. In fact, when I look at the trajectory Of the design wins that we have won that hasn't gone to production yet and the new products that we are refreshing, I'm very confident that we'll continue to gain market share and continue to add more content to our products and continue to improve revenue.
And we have shown you that we have improved the revenue year on year, and we'll continue to do that. So now let's start talking about Automotive, which is the next $1,000,000,000 Ethernet IC market. There are some megatrends in our automotive. The first one, which I'm sure you hear a lot about is autonomous. The autonomous vehicles need to have a lot of cameras, a lot of sensors, a lot of CPUs, And all these elements need to be connected seamlessly with a network with the right quality of service.
Cars also have to be connected not to inside, but to outside, to 5 gs, To WiFi, but also cars need to communicate with other cars. All of that means a lot of bandwidth. And more importantly, cars from a networking perspective need to be secure. Because imagine if you have autonomous vehicle, you don't want a hacker to take over your car. So technology inside the car, not only inside, but how the car connects to cloud has to be secure.
And also, believe it or not, the car is now going to now is being asked to be software defined, which means you sell a platform, you sell a car and as time goes by, We can do a software upgrade and get more features in
the car.
All of these trends means that there has to be a solid Network inside the car that achieves the quality of service and the bandwidth that's needed. And Ethernet, it is the best fabric for that. When you think about why Ethernet, because Ethernet has been around for over 30 years, Has evolved, has evolved into so many other networks. And this industry, rather than creating a new network, might as well take advantage of Ethernet. It's available.
A lot of the developers know how to work with it. A lot of the chip providers know how to deal with it. And it's the most natural fabric for inside the car. Now looking back at the old cars, It's a lot of these elements are connected point to point. They're rigid and expensive.
The new platforms, the cars are networked inside the cars. All these elements that are shown here, which are different colors, Our calls are the sensors and actuators and other elements that need to connect to a network, displays, cameras. And all those green lines that are in the middle with all those points are the Ethernet fabric. So I think you can see that there could be a lot of points that need Ethernet in the cars. So this architecture makes the cars To be secure, because Ethernet has a lot of good security elements, scalable and intelligent.
And as I said, Ethernet is the future for the cars. To kind of show that trend in numbers. First of all, auto industry doesn't adopt a new technology overnight. It takes years. I remember the first Ethernet ports that was shipped into autos back in 2008, 2009 time frame.
It took about 10 years For the industry to buy and deploy 100,000,000 units, it's just a big number. But this calendar year, The expectation is 400,000,000 units of Ethernet shipping into cars. It's a big number and it's getting bigger. The forecast is by 2024, it will be about 1,000,000,000 units of 800 ports in the car. That's a large number.
And not only is a large number that is growing, but there is a trend from 100 megabit Ethernet 2 gigabit, multi gig and faster, 10 gig and beyond, which actually bodes well for companies like us that has very advanced technology that's always pushing the envelope and getting to that faster nodes ahead of our competition. So then you would ask yourself, why does car need so much bandwidth inside the car? Why is there so much of the gigabits of Ethernet and 10 gig? That's a lot of bandwidth. But if you think about cameras, each camera can generate multi gigabit of traffic.
Each camera and many cars have 5 cameras or 7 cameras with sensors and connections to 5 gs. So there's definitely a lot of traffic that needs to be routed around inside the car. And also as an investor, the key takeaway is the higher the speed, The higher the value of the connection, the higher the dollar content and the higher the revenue. Wanted to show you some of the examples of the design win contents that you see out there. There's 2 extremes that I'm showing you.
One is a high content car on the right. These are cars that are brand new architectures They are being designed primarily for electric vehicles, autonomous. These are cars that are designed with new generation Of Ethernet and fabric and scalability in mind, they're future proof cars. And they can have up to $50 to $70 worth of Ethernet content in every car. And then on the other spectrum, like a high volume older generation cards, but they still have $5 to $8.5 of Ethernet content.
And we see that content to grow over time because some of these old architectures, when a new car comes on, they just change one ECUs at a time. So it takes time for them to adopt. But you take any of these numbers and you multiply by approximately 100,000,000 Cars that get manufactured on an annual basis is still a big number. If you're wondering which car manufacturer has adopted Ethernet, it's hard to find one that hasn't. You may want to take a look at this chart and see if the car you're driving shows up on this chart.
And if it doesn't, I suggest you sell your car And buy one of these cars that has Ethernet in
it.
Also, Marvell is the fastest Growing as a more returnless company. For two reasons. One is, has invested heavily in auto quality manufacturing, In auto grade qualification, a dedicated team that's developing Specific Ethernet products for auto. And also that's not just that by itself It's great, but it's not doesn't get all the design wins. You still have to innovate.
But the team at Marvell has also innovated, has been able to be first with the automotive secure switch. And as I showed you earlier on, security is very important in the car. Also, the Marvell has been able to be first with gigabit Ethernet. And the trend we see is a fast move From 100 megabit to gigabit Ethernet, I'm still very well positioned to execute and have a high market share in gigabit Ethernet market. Also the 1st company that delivers a sampled 10 gigabit Ethernet for the cars.
Based on that great execution and solid manufacturing and focus on quality, Marvell has won 28 OEMs and 7 out of 10 OEMs are now buying Marvell cars Marvell chips for the cars for production, and we're working on the rest of the 3. The great design win momentum is also showing up in great revenue ramp. Comparing 2019 calendar year 2019, which is the FY 2020 that we show the revenue on this chart To what we're targeting this year, which is the calendar year 2021 or FY 2022, the revenue for this Line of business, our Board line of business is going up 7x in a market that did grow 2.5x, But we are growing faster in this market. The revenue run rate right now for this business is about $100,000,000 annually And it's growing fast. And we expect this line of business, our Memorial line of business, to grow faster than the company average.
And also given the competitiveness on the product and the design win momentum that we see right now, Last year, we set a target a long term target of gaining or getting to about onethree of the market. Now we are confident that based on the momentum that we see, we can get to above 50% market share. Now to put it all together as a recap, Marvell is well positioned for growth. It invested heavy in data center. We are winning in data center with the Innovium asset that we just acquired and with the Inphi products We got their great set of portfolios to win in data center.
Marvell is also gaining market share with enterprise because of Better products, more secure products, more intelligent products. And in fact, we're also gaining market share in automotive Ethernet. And the revenue of automotive is going is has a nice trajectory to grow fast in a $1,000,000,000 new Ethernet market. Thank you.
Hello once again. Now I'm going to tell you an exciting story of how Marvell has been disrupting With the optimized compute, the in data infrastructure. Optimized compute is becoming a large market, and it is going to be a long term growth driver for Marvell. We have a long and proven history of optimized compute. We started in enterprise.
We expanded into 5 gs, and now we are further expanding into cloud. In each of these markets, we have provided optimized compute, which enabled additional capabilities and the possibilities for new applications and new businesses. Let's take a look at it. 1st optimized compute disruption was in enterprise market. Enterprises have all kind of appliances for networking, for security, for various kind of storage applications.
20 years ago, these appliances were using many small Our PC Cores. They were not able to meet the requirements of next level of applications. At the time when Marvell acquired Cavium, it was Most of Cavion's compute revenue. Option got designed in all kind of appliances and enabled new possibilities and new application. This is still a very successful product line for Marvell.
We have latest OCTEON's processor in the 5 nanometer. We shared with you last year that based on our 5 nanometer OCTEON design, We are getting a great traction in enterprise. We are winning multiple designs. Today, I'm pleased to announce that one of those designs is going in production next year. Today, we are shipping in 9 out of the top firewall security appliances.
But we are not stopping there. We are winning a lot more design and growing this business. Wireless infrastructure was the next optimized compute disruption. 3 gs RAN devices and equipments were implemented using FPGAs and fixed function ASIC. Those solutions were good for those applications, but could not keep up with the requirements of data in the 4 gs LTE.
This is where optimized compute was needed. Once again, we identified this problem. We leverage our field proven and established high performance OCTEON compute platform. And we introduce RAN Optimize Opteon Fusion. OCTEON platform already had high performance multi core compute, it had security, it had networking interfaces.
We combined it with the DSPs and hardware acceleration for RAN and implemented a unique architecture, which combines CPU, DSP and hardware acceleration. This platform became very successful in 4 gs LTE And became the foundation of our 5 gs platform. Compute is the foundation of 5 gs RAN platform. We started with baseband processing and transport processing. And then we expanded it into a complete digital platform.
Today, we have distributed unit. We have transport processor, baseband processor, switches, and then for radio unit, We have DFEs and massive MIMO processor. As we discussed last year, with the increased demand Of compute in radios, they require a full processor. Let me be very clear. This is of our massive MIMO, our full processor inside the radio.
This is a new content for us. When we first started our 5 gs platform, it was all about DU, our distributed unit. Fast forward today, we have secured multiple design, which has Significant high volume and it is for massive MIMO radio solution across multiple Tier 1 OEMs. Our radio designs are driving significant content growth for us in 5 gs. And now with the combination in PHY, we also have optical interconnect, which completes our 5 gs RAN platform.
We are the only company that has the entire digital platform for 5 gs. The overall 5 gs business has done very well for us. We already have established a position in 4 top tier Tier 1 OEMs in 5 gs. These customers are ramping. In addition to these customers, we have also secured Design in 3 regional 5 gs OEM providers.
And these will contribute to our overall Marvel's 5 gs business. The business is growing quickly. As of last quarter, we had already achieved $400,000,000 run rate on an annualized basis. And there's a lot more growth in front of us. We are in addition to that, we are also gaining market share with our customers Ramping and new design coming in production.
5 gs is ramping, but there are a lot of growth still in front of us. Just to give you an idea, The 43% of the phones that are shipped are 5 gs enabled. However, Only 27% network have been upgraded with 5 gs capability. And among those networks We have been upgraded with 5 gs capabilities. Only 11% coverage they have.
So in other words, the overall 5 gs It's still a lot of deployment and it's still going to happen. And if we take The cell phone sale as a leading indicator, this is a huge growth in front of us, and it is happening. 5 gs is a large growth driver for us, and it is growing. We are gaining in addition, we are gaining Content share as well as overall market share. There are 2 new trends that are going in the overall 5 gs RAN.
And often, they are confused there are a lot of confusion about it. That is O RAN and vRAN. So let me explain today in a very simple term. O RAN is open interface. It is all about interoperability between Radio unit and digital unit among various vendors.
It allows operator to pick and choose ready units and retail units from different vendors and do a mix and match of implementation in their network. VRAN, on the other hand, is much large opportunity and disruption in the market. It is about moving the fixed function distributor unit appliances into the data center Our cloud data center architecture. It is about taking advantage of the scale of data center. This is a perfect example of cloudification.
So what does it mean for the silicon vendors? Well, vRAN is not just running software. Baseband processing is a complex And latency sensitive operation. It requires specialized compute. The ability to process baseband in cloud computing requires we ran optimized Custom Compute Solutions.
The secret of success in vRAN is optimized compute silicon. And this is not only vRAN, the entire RAN processing depends on optimized compute, including traditional RAN as well as vRAN. MARVEL is the only semiconductor company with the field proven, high performance, Baseband solution capabilities. This solution, as I discussed earlier, is called Opteon Fusion. The flexibility and the scalability of our solution allows us to adapt to any model and architecture for 5 gs RAN.
We are using the same baseband solution that we are deploying in the traditional RAN as a foundation to implement the optimized solution for vRAN. As a result, Marvell is industry leading solution provider for the cloud V RAN. When a cloud provider looks for a partner to deploy vRAN, they are looking for A solution which is a higher performance V RAN solution. They are looking for a team which has expertise of baseband processing An understanding of both RAN architecture as well as cloud scale architecture. They are looking for the track record of delivering generations of product in production in the field.
Guess what? MARVEL has it all, and that is why MARVEL is the obvious choice. We have already won 5 designs. For the cloud, the business model is different. These are complex card level solutions.
To be clear, in this market, we are selling entire card, which means we will have higher ASPs. The next big opportunity in compute disruption is happening in cloud, And it is growing at a very fast rate. Cloud needed optimized solution to implement virtualized security and networking applications. It was being done with the CPU software or the FPGAs, but it was not enough to achieve the scale needed to enable Extract capabilities and application in the cloud. In other words, it was not enough to achieve the scale of cloud.
Working closely with a leading cloud provider, we implemented a solution which was Optimize for cloud scale. We introduce cloud optimized DPU. OCTEON already has capabilities of the networking and security and various kind of other application processing. We use the same technology as a foundation to build cloud optimized TPU solution. It is a server offload solution for security, networking protocol, storage and so on.
DPU in cloud has been a great business for us. We are shipping today SmartNIC We have designed in 4 Tier 1 clouds, and it is adding to Marvel Growth. I already talked about the We ran solution in cloud, but in the context of cloud, it is another DPU. This is great business for Marvell, And it is going to drive growth further growth overall Marvel growth. Now I would like to talk about the next phase in cloud optimized Silicon, the next era.
Matt talked about how cloud architectures are unique and they require Optimized silicon. The need this trend is especially important for the Compute solution. Because compute is a big part of application processing, And that is why it needs to be aligned with the workload of the applications. This additional optimized compute is the basis of the next phase of the cloud scale. It is going to enable New application, new possibilities and new businesses.
Cloud scale compute requires optimized compute solutions Tailored specific to the workload. Just to be clear, these are not standard Marvel products. These are specific products co designed by the customers and Marvel. I believe Marvel is the only company which has the knowledge and expertise and the right know how and every capabilities needed To implement cloud optimized silicon. This is a perfect example of what I explained earlier, Where we have become an extension of engineering team in the cloud.
These applications are designed for various workloads for the cloud, Optimize according to specific application. This is our great opportunity that differentiates us from rest of the semiconductor companies. So let me walk you through Few examples. Cloud providers are implementing Their own optimized ARM based compute. Now at a high level, all compute Looks similar.
They all have cores. They all have caches. They all have memory interfaces, system interfaces. But when you look closely, They are not similar. There's a lot of opportunity to optimize those compute to achieve the Full performance and efficiency for a cloud scale application.
We learned it through our experience. If you remember, we had ThunderX program. We were working closely with multiple cloud Providers. This is when we realize to achieve the full scale of efficiency and performance, Cloud providers require to optimize their solution according to their workload needs. It means one size does not fit all.
This is when we pivoted our business from a standard product To a custom solution working with the cloud guys. So why do we win? We win not only because we have a leadership in a process node and technology, but also Because we have know how and expertise of building a very high performance, Multi core ARM based compute. And on top of that, we also have understanding of what does it take To design a hardware which will be able to run-in a most efficient way with the existing software infrastructure. Another example of cloud optimized custom solution It's ML AI ML product.
Just like that Compute. Not all AI is same. Again, at high level, they all look same. But when you look at Closely, there's a lot of opportunities to optimize it for the target workload. And I'm not only talking about the difference between inference and training.
I'm talking about actual and application. For example, you can optimize the AI solution much better, Much more for the natural language processing, which will be different compared to recommendation engine. And this is why cloud providers are implementing their own in finance and training solutions. These optimized solutions allow providers cloud providers to achieve next level of scale, And it enables them to deploy new application and new businesses. So why we win here?
We win not only because we have a process node and IP, but we also have Decades of experience of delivering very complex multi chip module. These AI solution require High bandwidth, and that is why it is important to put a lot of memory along with the silicon. It requires a lot of expertise in complex packaging, and this is why Marvel is very well positioned. All these custom solutions are going to enable next era of cloud computing. It is already enabling new capabilities, new services, new business model.
We believe working with the cloud providers, we will be able to deliver the innovation innovative products. We are engaged in a lot of design. We have won several design in this area. We talk about how Marvell is taking advantage of optimized compute Optimized compute requirement in the infrastructure. We have taken advantage of disruption in enterprise, 5 gs and cloud.
And in each one of these markets, through our innovative solution, we have enabled next level of Capabilities and possibilities. Now I'm going to talk to you about next big compute opportunity. This is going to be another big growth driver for Marvell, the next multibillion dollar market, And it is automotive market. So let's take a look. The future of car technology is in intelligence.
This is why autonomous car need optimize, Compute silicon. Car OEMs are realizing that the value that they will deliver In future, in the next years to come, we'll be dependent on hardware and software platform for AI and computer vision. This is why each car OEM want to Control it and own it. Just like a car company could not be a car company without owning engine in the past, The optimized compute solution for automotive is the new engine for cars. Anybody who is designing ADAS Assisted solution today, they need to use the existing available solution like CPUs and GPUs.
But these are not efficient. These are not optimized and designed for the automotive application. And more importantly, the car OEM Cannot own it and control it. Marvel has been investing in a platform for optimized compute solution for automotive. We not only have the process node and IP, but we also have the security and networking and high end multi core processor.
But what is needed for automotive platform is the auto grade quality, And that is where we have been investing. We have full AutoGAD quality capable Product line function building block that can be used to implement Optimize Auto Compute Solution. We have been working with multiple car OEMs. And today, I'm pleased to announce that we have secured the 1st high volume optimized auto compute design. This is a great opportunity for Marvell, and we have a strong opportunity pipeline.
And it is going to be multiyear growth driver for Marvell. We are engaged With OEMs in every geographies and the discussions are at various stages. But as you know, it takes time to ramp design and production in automotive industry. So while it is going to be a great growth driver, it is going to take several years to ramp. Automotive compute is a new emerging market.
These are early estimates of the size of the market. However, just to give you an idea, there are 80,000,000 cars are shipped every year. Now over time, These cards will become autonomous, ADAS enabled. And the solution that compute you need to enable that autonomous star is what we are talking here. And I'm not talking about $10 or $20 silicon.
These are multi $100 solutions. And a typical car Needs 2 of those because of the fact that you need for high availability and redundancy. So as the adoption of autonomous car increase, this market is geared to high growth. This is going to be multi $1,000,000,000 opportunity and incremental opportunity for Marvell. So we talk about how Marvell is Very well established to be the leader in optimized compute, and it has been disrupting multiple markets.
We disrupted enterprise market, added value, and we are established player, and it is growing. We brought a lot of value through optimized compute in 5 gs market. We are the only Silicon provider in 5 gs with a complete digital platform. That business is great, it is growing, And we are gaining more share with V RAN. We are very well aligned With the disruption of optimized compute in cloud, we are working very closely with our customer, Innovating together, developing together and bringing new solutions, which is opening up new possibilities, new application, new businesses, We are capitalizing on this huge disruption of cloud optimized silicon.
And finally, We are investing in optimized compute platform for automotive. This is going to be a massive market, And we are very well positioned with our investment as well as engagement with the customer. And that is why this is going to be a huge growth driver for Marvell. With that, I would like to invite our CFO, Jean Ho. Thank you.
Thank you, Raghib. Thank you all for joining us virtually today. As you have heard from our team this morning, The investment Marvell has consistently made to build the best technology and product portfolio to address the most exciting market opportunities Driving incredible momentum across our entire business. Today, Marvell is a fast growing company leading the future of data Infrastructure Semiconductor market. Our technology and product leadership, customer centric business model, Our talented team and the strong execution capability have driven accelerated revenue growth, Earning expansion and a strong cash flow generation.
More importantly, it will allow Marvell to continue to invest Ahead of industry curve to drive long term value creation for all stakeholders. At our prior Investor Day, We set up our financial road map for long term value creation to focus on the key elements of our business model: Accelerating top line revenue growth, drive earnings expansion faster than revenue growth and the disciplined capital allocation. Specifically, we set our long term revenue target in the range of 10% to 15%. We updated to 12% to 16% post Inphi acquisition. We also said We are going to expand earnings much faster than top line revenue growth.
We showed you our scale curve To expand operating margin from 20% at that time to 35% target, We also talk about our disciplined capital allocation approach to focus on return on investment. Looking back, Our team executed very well. We did exactly what we said we're going to do. 1st, on revenue. As you can see from this chart, we grew our top line revenue for last 6 consecutive quarters.
Marvell organic revenue growth represented by the blue line there accelerated from 5% to 17% in first half of fiscal twenty twenty two. At the middle point of our Q3 guidance, Our revenue is expected to grow more than 20%, exceeding our long term target. We also closed the Inphi acquisition in Q1 fiscal 2022 within 6 months of the deal announcement. Inphi acquisition was accretive to our Q2 top line revenue growth, the Q4 as part of Marvell. The combined company at the middle point of Q3 guidance is expected to grow revenue by more than 50% And they reached $4,600,000,000 annualized revenue run rate, a historical record for Marvell.
Our revenue acceleration is made possible because we have multiple drivers to drive our top line revenue growth About our key business growth drivers, we have started to report revenue by end market to align Our financial reporting with our business driver and the market focused resource allocation approach. To start with, in data center, we grew our revenue by 62%, driven by a broad set of products from storage, DPU, time based optical interconnect inside the data center and adoption of optical interconnect Between data centers, we are at a very early stage of many of these product revenue ramps. Our carrier infrastructure business grew 38%. In addition to Inphi's contribution to our wireline business, Our growth is driven by continued 5 gs adoption and the new program ramps with our key customers, Samsung and Nokia. Our enterprise networking business grew 41%, driven by our enterprise networking portfolio to continue to gain market share And also the multi gig adoption.
Auto industrial business grew 125% year over year, Driven by Automotive Ethernet Business Ramp Nerimen discussed earlier. As a team, we are very pleased with the revenue acceleration performance, and we strongly believe the merit of scale and operating leverage To drive earnings expansion faster than revenue, we improved our gross margin from 63% To 64.8 percent despite a very challenging supply chain environment, Our 2 highest growth end market, auto industrial and the data center, have highest gross margin over the company, too. We expanded our operating margin by 900 basis points to above 30%. As a result of our operating leverage, We drove our earnings per share growth by 62% in Q2 fiscal 2022, And we are on track to drive continued revenue growth and the earning expansion in second half of fiscal 'twenty two. We are very pleased with our performance.
It's an exciting time to be part of Marvell Because as you heard from our team this morning, we have been laser focused on what Marvell can become in next 5 years and how we get there. So let me bring together what you heard this morning from our team In the context of financial model, to talk about our financial priorities going forward, to drive Sustainable revenue growth at scale to scale our business model to expand earnings faster than revenue growth And continue to generate strong returns for shareholders. 1st, on revenue growth. As you recall, Matt discussed earlier about extraordinary opportunities ahead of Marvell and how we have transferred the company through both organic investment and acquisitions to address these opportunities. Today, Infrastructure represented 84% of our revenue.
As many of you know, Our infrastructure business tend to have a very long product cycle. The revenue transformation you see today It's really a function of the investment that we have made and that we talked to you about at our prior Investor Days. What you heard today, the exciting technology and the product portfolio, the cloud, the customized silicon opportunity, our complete platform to address those opportunities and the tremendous design win momentum. Those are going to drive next phase of Marvell's transformation and the top line revenue growth. So let me now summarize our key revenue growth drivers going forward.
It's important to note our revenue growth drivers are long term in nature and we assume a normalized economic environment. As you know, Matt talked earlier About our market opportunity to grow from $20,000,000,000 to $30,000,000,000 at 13% CAGR. Within the market we serve, There are several secular growth trend in cloud, 5 gs and automotive, which are driving those market to grow even At 20% CAGR, we expect our revenue in cloud, 5 gs and automotive The largest incremental revenue growth We'll come from cloud data center, driven by a broad set of products our team discussed today from storage, Networking, electro optics, compute and security. Based on strong revenue momentum we have And the design wins Matt discussed earlier, we are on track to drive exciting growth in this fast growing market. Next, 5 gs.
Rakiv will talk about significant design wins we have with our core EM key core EMs And regional OEMs. We also extend our leadership into O RAN, DRAM market. We expect our revenue continue to ramp significantly driven by 5 gs adoption globally and our new programs ramps, including 5 nanometer programs. We also expect to get the benefit from the initial deployment of O RAN and the vRAN. In automotive, as Nerimen discussed earlier, we currently already have the run rate of 100,000,000 Based on our leadership products and the design wins we have, we now expect to get to onethree of market share much earlier than we told you last year.
We also expect our new target is 50% market share. Now look at the rest of the infrastructure market. We expect our revenue to grow faster than market. The primary driver is enterprise networking business. We expect our enterprise networking business to continue to grow double digit, Driven by market share gain and the market upgrade cycles.
We also expect our wireline business to continue to grow Faster than market, driven by our coherent DSP leadership and the technology transition in metro and the long haul market. Our on premise business and industrial business are expected to grow at the same rate of the market. Overall, as a result of market acceleration, acquisition of Inphi and Inovium As well as higher demand for our products, we are updating our long term target to 15% to 20%, 1 for the highest growth rate in semiconductor industry. Now let me shift the gear to talk about gross margin and operating margin, How we can continue to drive earnings expansion faster than revenue growth. We are very pleased with our strong gross margin performance in Q2 fiscal 'twenty two at 64.8%.
Our 2 highest growth market, auto industrial and the data center, actually have Higher than corporate average gross margin. We expect not only we continue to drive top line growth from those 2 end markets, We also believe the gross margin of those 2 end markets are going to be continue to be accretive to our overall gross margin. Our enterprise networking gross margin is around core bridge. As many of you recall, We have improved our enterprise networking gross margin from below 60% to about around corporate average. We expect to continue to improve gross margin going forward to be above corporate average.
Our consumer business is going to become smaller portion of our business, and we expect the impact going to be smaller in the long term. We'll continue to improve our carrier infrastructure gross margin. We do believe we'll benefit from the scale of revenue ramp when we started to significantly ramp the 5 gs revenue going forward. Overall, we believe gross margin is a strong reflection of our IT, Technology product leadership and the value we added to our customers. We are targeting our non GAAP gross margin To be in the range of 64% to 66%, the variation is largely due to both carrier market and the cloud data center Tend to have a lumpy product cycles.
Now let's talk to about operating expense. We intend to continue to drive operating leverage while investing to support our long term growth. As you can see, we have been very successful to drive scale and operating leverage. As a result of our revenue growth From below RMB3 1,000,000,000 in fiscal 2021 to RMB4.3 billion run rate based on Q2 fiscal 2022 performance, We have reduced our OpEx as a percentage of revenue from 43% to 34%. We expect to continue to grow OpEx slower than our top line revenue growth to further drive operating leverage.
At the same time, given the tremendous opportunity we have as a company, we want to make sure We are investing at the right intensity to support our long term growth. We're spending over RMB 1,200,000,000 in our R and D, and our team is excellent and disciplined to drive return on invested capital. As you can see, 95% of our R and D are focused on cloud, carrier, enterprise, automotive, 3 nanometer, 5 nanometer advanced technology development. In addition, as Matt and Raghib talked about it earlier, We work with our customers, and we have a long term partnership to help our customers To develop differentiated solutions, as part of a partnership, we also got a co investment from customers, Which increased our R and D skill significantly, and also we can leverage IP across all our business and all our end market. Overall, we are targeting non GAAP operating expense as a percentage of revenue to be in the range of 26 28% of sales.
Now let me summarize our financial model. As you recall, last year, exactly a year ago, we set up our financial model, long term financial model. The top line revenue growth was 10% to 15%, and the operating margin was 35%. Today, we set up our operating model as top line revenue growth of 15% to 20%, Gross margin in the range of 64% to 66% and operating margin in the range of 38% to 40%. This is a very compelling financial model in our industry.
And as you can see from our recent financial performance And we are improving our operating margin each quarter rapidly. So we are on track and making great progress toward our model. Now let me switch to capital allocation. Our capital allocation principles Continue to be consistent and the same. 1st and foremost is organic investment to support the growth Our focus is to invest in talent and the people, as Matt discussed earlier.
We are also driving the technology in 3.5 nanometer and the foundational IP development. We invested in supporting infrastructure too to continue to scale our supporting structure. Secondly, we'll continue to explore acquisition opportunities with a mindset of long term Both transactions are very compelling strategically and financially. As Matt discussed earlier, We now have all the pieces to execute on our roadmap and address opportunities ahead of us, so we can generate Significant returns on those investments. Finally, our business is generating strong cash flow today.
As we move forward toward our target model, we're going to generate more cash flow going forward. We are very committed to return cash to shareholders and the target to return more than 50% free cash flow to shareholders in the long term. We are also targeted to offset employee equity plan dilution through share buyback at a minimum. We currently intend to maintain the dividend level we have and prioritize share repurchase. In the near term, Our first priority is to pay down the debt we used for Inphi acquisition By $100,000,000 to $150,000,000 each quarter, our target gross leverage ratio is 2x.
We do expect to deleverage quickly as our EBITDA is going to expand significantly each quarter because of the top line revenue growth and operating leverage. Once we are on track to achieve our target gross leverage ratio, We will have the flexibility to start a share repurchase. As a company, we do have a good record of share repurchase. We returned RMB 1,200,000,000 cash to shareholders since Q3 fiscal 2017 At an average price per share of $18 and it generated 36% compound annual return. So in closing, today, Marvell is a fast growing campaign, leading the data center future.
And we are building one of the best financial model to drive sustainable revenue growth and deliver significant value to our shareholders. With that, I want to thank everyone for your interest in Marvell. We will now go to Q and A session.
Wow, what an exciting morning. I mean, I'm in the middle of all this, and I still get excited every time I see this. And I just want to thank my whole team who Worked so hard on these incredible presentations. We're missing Nariman. He actually had to run off to go secure design win, so we figured we'd make that trade off so we can answer questions for him.
But with that, I think, Ashish, let's go ahead and get started with the first question.
The first question is, Matt, you guys did a great job of describing your long term strategic growth drivers, but investors are also very curious about your take on the near term economic environment, especially how do you think about supply, your ability to actually continue driving growth at or even potentially above your long term target model.
Yes, great. Well, first I'd start off by saying business is incredibly strong. If you look at where we've been growing and even in Q3 where we guided at the midpoint, we're actually growing above The long term model range that we set, this is not due to a COVID bump. I mean, this is due to really these fundamental growth drivers we talked about In cloud and 5 gs and auto and also this very strong demand we're now seeing in enterprise. I'd also say that in the last 6 to 9 months, I give our team a lot of credit.
We've really done tremendous work, right, to work with our supply chain partners On telling them our story, actually working with them to plan our business together, signing long term agreements And securing additional capacity that we see coming online next year to really help us drive our growth. And in fact, Some of that capacity will incremental capacity will also be coming online in Q4, which is really exciting because of all the growth opportunities we have ahead of us.
The next question is around PAM4. So, Loy, can you talk about your PAM4 market share? And how do you think about the long term competitive position for Marvell?
Great question. As you know, we invented PAM4. We were first for 200 gig, First for 200 gig, 1st for 400 gig, and we're leading the market for the next gen 800 gig. So obviously, we have a high share of the market. But it is not just about the PAM4 DSP.
It's a complete platform. The TIA, the driver, the firmware, how all the pieces need to work together and the strong ecosystem partners who could ramp these things to millions of pieces from day 1. So the barrier to entry is actually incredibly high. So we expect that We will continue to maintain very high share in the PAM4 platform.
Thanks, Roy. The next question is on cloud. You explained clearly that cloud needs customized silicon. Why do you think that they want to work with Marvell versus developing these solutions internally.
Yes. I'll have Raghu answer that question.
Okay. So as I explained, it is not about a point product. It's a combination of process node leadership, IP leadership as well as product expertise and know how leadership. As I explained during my presentation, MARVEL has actually established leadership in each one of the components, which are capabilities which are needed to develop A leading optimized solution for cloud. So for example, we have the compute, the security, the storage, The switches and optical interconnect.
So when a customer is looking to develop and optimize product, Which combine the capabilities from multiple of these market, they are looking for somebody who has developed those Taken into production, harden it, shift it in various use cases so that you have the right expertise and the right capabilities. And this is why it is about having a partnership where they develop certain portion and we develop certain portion. It is about bringing all the capabilities where we put our architects with their architect and we are co designing this thing, right? So this is where my as I said, one of my job is to have that interface with the customer and really understand what is needed And then bring pulling architects from various BUs. So for example, recently, just yesterday, I had a meeting with a cloud provider and I had to pull the architect from storage as well as switch, as well as optical actually, because the solution requires all those combination in that, right?
So those kind of things happening again and again. And this is where, as I said earlier, market Marvell has established itself To have this advantage compared to any other supplier out there because of the fact that we have market leading products in each one of these areas.
Ashish, I would just add to that, if I could, and what Raghav said. I think part of that is also How the company culture operates. I mean, we really operate as one team, and it's how we set our goals, we drive our incentives And the type of people we hire. This is not a siloed company where different BUs are completely stovepipe from one another. We actually the teamwork extends.
Rajiv has got this great new role to coordinate, but it's really a team oriented, Marvell first, One Marvell type of company, and I think you need that as well to all the pieces to really make this happen, and I think the customers see that.
A follow on question on the economics of the cloud optimized model. Historically, co investment of customers in joint development and NRE translated to lower gross margin, But your model is showing higher gross margin suggesting that, that paradigm is broken. So the question is, what has changed? Why is the gross margin model different going forward in cloud optimized.
Sure. Well, I mean, I'll give one example. It's a win win When you can do an optimized solution for a customer, meaning they actually can save cost, improve their performance, Get a better outcome. And for us to be able to do that for them, that's got value ascribed to it. And as Gene showed, I think in the bubble chart, we have a very healthy margin profile in this segment.
And I think it's a testament to the value we can that we can deliver. And remember, we have a range of products as well that we sell into the data center, right? We sell Switches and optical components and storage products, and there is a range Of margin profiles within that, but the overall blend is quite strong. So I want to dispel the notion that cloud optimized means A 10 or 20 year old version of what people think ASIC might be. It's the farthest thing from that actually, although there is an aspect of our business We do full custom.
But even in those engagements, there's tremendous value, as Raghav said, to really bring in the Marvell IP portfolio and figure out how to add value. So I think it's got a compelling financial model behind it, but also it's because Of the value that's being delivered into these applications.
Just staying on the cloud theme, you outlined a new target for Large customers, 100,000,000 plus customers, you took that from 2017 to 2019. Can you elaborate how many cloud customers are part of the new model?
Sure. Maybe just to take a quick step back, if you go back to just 1 year ago today, when we had our Investor Day pre in flight, we actually had 13 A path to $13,000,000 customers. So what was exciting about Inphi is they brought us an additional 4 And now we said we're going to 2019. And so the what's happened now is we've actually got an additional cloud customer that we're going to be adding as And an additional networking customer. And so that's really the ads on top of where we were before.
Great. So we're going to move away from cloud for a few moments. Question is on automotive. You've made rapid progress on Ethernet and you talked about entering into the compute market. Can you talk a little bit about how Marvell got here and how do you think about your prospects going forward?
Sure. I'll speak to that. When I joined the company 5 years ago, we had nothing. I mean, we didn't have any business. There was a small engineering team that had a vision that said that This could be an important technology.
The group was not really getting attention, any attention inside of Marvell. And my background prior to being CEO of Marvell is I had extensive experience for the prior 15 years or so in automotive semiconductors, and I knew this Ethernet So between myself and a few others, we really made a concerted effort to build a business from the ground up. And we've developed winning products with exceptional quality. I mean, we just had a review the other day, a few of us were there With a leading car OEM, who's one of the largest producers of cars in the world, and they were astonished On the fact that we're shipping now below 1 DPPM kind of quality levels on our Ethernet products. But we always had a vision, Ashish, that this was going to be much larger than just networking.
So we've got Ethernet products today and switches and PHYs and now going to multi gig and Nerimen showed that Super exciting. We believe we can get 50% of that market. But then beyond that, I think long term, I've always believed that the biggest next Market opportunity in automotive was going to be for the data centric IPs, and that includes The compute, the storage, the networking, the security. And there's even experimental things we're looking at optics, right, in the future. So I think it's going to be a very much a greenfield for Marvell.
And Raghav really talked about what is the first of, I think, many really unique opportunities across those other categories
Right. Next is a 2 part question. First on M and A and the second one is on return to shareholders. You've done a lot of M and A over the last few years, very transformative in nature. It feels like you have everything now.
So can you kind of comment on how you think about future M and A going forward? And related to that, can you discuss your priorities on returning cash to shareholders? Can you just comment on both of those, please?
Sure. I'll take the first part, and I'll let Gene talk about the second. So look, I think The M and A that Marvell has done over the last 5 years has been just transformational for our company. Obviously, if we hadn't done this, I wouldn't be sitting on stage here with 2 founders, okay, of 2 of the most successful Highest quality semiconductor companies we've ever seen, right, which is Cavium and Inphi and their teams. So hadn't done that, we wouldn't have these kind of people.
Beyond that, though, look, we did what we had to do, okay, to get Marvell out of the situation it was in 5 years ago. And I'm very proud of that, the accomplishments of the team to get the companies integrated and also the organic investments that have paid off. And Dan, I mean, is a shining example of that, taking a storage business that was effectively left for dead and now creating one of the most exciting businesses inside of Marvell. So all that's gone really well. We have all the pieces now, okay?
Now is the time for us to focus, execute, Take advantage of all these opportunities, not only that we've already won, but that keep coming in the door every week as we continue to sort of talk about our platform and engage So that's really where our focus is. Now we're very good at M and A. These are always we're always going to have a lookout, and there are some unique Promising young companies, there's technology out there that we would look at. But if you just look at the portfolio, we have all the pieces. It's the best one in the industry.
We've got what we need. And I'm really focused on driving that in the near term. And then all of that, and I'll turn it to Gene, relates How we think about shareholder and capital returns because those things the two things go part and parcel.
Yes. I just follow what Matt said. If you Think about Marvell. We are building one of the best compelling financial models. So today, our revenue growth is The target of 20%, and we're generating tremendous cash flow.
Going forward, when we move toward our target model, We're going to generate more free cash flow. Of course, our number one priority is investing, but following what Matt said is we actually really Once we get our target leverage ratio, we're going to return cash to shareholders, and the priority is share repurchase. We'll keep our current dividend level and the return cash through share repurchase we can do.
Following on the M and A theme, pretty exciting to see you close Innovium. Can you discuss a little bit about how you feel about Innovium as part of Marvell and how you think that will compete against a primary competitor in that particular space.
Yes, sure. I'll comment on that and maybe Raghav can have as well. We worked closely together to go get that transaction completed and now Nariman is managing it. Look, what Innovium does is Extremely hard. We have our own switch business, right, that grew up in Marvell.
It was here 5 years ago. And I had concluded for many years that the it was going to be very difficult organically to try to actually go compete because we have some There's a very, very strong competitor in that area. What Innovium did was find a way. And it's an incredibly strong team. They manage from basically starting from nothing to being a venture backed startup to generating significant position in Including a major presence with 1 of the Tier 1 cloud companies.
And as Nariman said, we've got strong backlog For next year, we've got the demand. In fact, the demand is even higher than what we think we can ship currently. So we're actually working on that. So it's a great set In terms of the asset, but like a lot of small companies, I think there was a number of customers that Played around with their parts. It was always interesting, but never was always worried, well, what's going to happen?
Is it going to get acquired? Is it going to make it? And to some extent, even with Inphi and Cavium, which were established companies that were publicly traded, we saw that same effect, right? Once they became part of the Marvell platform, It opened up massive new sets of customers. So I think the same thing is going to happen.
The second we announced it, All the customers that have been sampling the product move basically to how do we engage. And so I think the prospects Look great. We've only owned it for a day, obviously, but the integration planning has gone well. And I'm very optimistic about that business and what it can do over the next several years as part of the Marvell family.
Just following on the Ethernet theme, you showed a very impressive chart outlining 2x Port gains over the last couple of years. Can you comment on your competitive position in the Ethernet market? What drove those share gains? And how do you think about it going forward?
Sure. I'll have Raghav comment on that. He was running that business and Did a great job. And of course, Neriman has now taken the mantle, but maybe you want to comment. This is our enterprise switch business, Ashish?
Yes. So overall, if you look at the overall Ethernet Enterprise, we have invested over the last several years. And this is where We differentiate in our product when it comes to the feature, the visibility capability and the security and all that. And that kind of is what is needed in as the overall market is evolving into more of a borderless enterprise, The need of telemetry, the need of security increasing, and that is where we are gaining more and more share in the market. And that trend is still going on.
So we have established Product, which is a market leading product in that market and with this trend of more feature requirement, more security requirement, We are seeing a constant trend in the growth of our market share in overall adoption of our product.
The next question is around our update on our long term revenue growth target. Can you bridge the prior target of 12% to 16%, midpoint of 14% to the new target of 15% to 20%. Is Innovium a big reason for the update or is it broader than that?
Yes, I would say Inovium is part of that. I think it's part of the bigger shift that we've seen even in the last 12 months To the market growth rate and opportunity really around this cloud optimized silicon framework that we talked about. So if I look at What's driving our model update, it's really that cloud portion, which has continued to build momentum, right? If you go back into, Say early 2020, we said, hey, for the first time cloud was more than 10% of revenue for Marvell. And I was like, wow, that's a new data point.
And then we sort of get To the Investor Day last year, and at that point, our cloud business was whatever it was, dollars 400,000,000 kind of run rate. Fast forward to now, Inphi is under the $10,000,000,000 it's $1,000,000,000 I mean, this thing is moving at an incredible rate, right? So, Innovium certainly helps boost that, but it's also the prospects of the core Marvell business, the organic product lines we're investing in, Plus the Inphi acquisition, and I think the adoption there as well.
Just bridging on that next question is, it seems like Part of the increase in the growth rate was also some of the new incremental design wins you talked about. You mentioned there some of them are pulled in as well as you Chorda 2x. So can you comment on what drove both the pull in as well as the significant jump in the outer years?
Sure. Yes, I think a couple of things have happened. One is when we talked about those wins initially, they were confirmed design wins, and we Certainly had an outlook of and a view on when they would ramp up and the economic value of those. Subsequently, a couple of things have happened. One is we've concluded the contracts on those.
So we've completed development agreements, we've got schedules, we've got Pricing, volumes and given the trend in the market, you got to assume that all that sort of floated up Since we started, we've also won some additional design wins, right, since that time. And candidly, the customers are pulling us, And my team knows this to do them even faster. So it's not like the schedules we have are exactly what everybody wants. So we're actually working at improving those. So I think it's really a testament, Ashish, the way to think about it is, it's just an example of how fast this transition is moving within the market, Where that old framework of there was sort of a general purpose way to do it and then there's this opportunity set around cloud optimized.
I'd say in my weekly one on ones with my BU Direct reports, every week there's new opportunities coming in. They're big. They're meaningful. They're addressing new applications. And I think our model is kind of feeding that now.
I'm not sure that if you go back a year ago, they would have said we could even feasibly do what we're thinking without a Marvell in the room. They may just have gone and used some general purpose product to go do that and it wouldn't so I think it's only going to continue to Stronger, Ashish, in terms of the opportunities we see. And I think this is just one example of the momentum in our business in terms of how We view even opportunities we won, call it 9 months ago versus where we see them today.
We're going to switch gears and now talk Couple of questions, take 2 questions on technology. So the first one is for Loy. Loy, you showed some very interesting charts on both silicon photonics as well as co packaged optics. Can you elaborate on these new packaging technologies Marvel is working on, especially relative to CPO? How do you see that intersect in the roadmap?
And what's the benefit you see for customers.
Good question, Ashish. So we started working on silicon photonics Nearly 10 years ago actually, when we and then we developed our entire way to integrate, How the couple light into the piece of silicon photonic, that's a really, really secret sauce, a magic know how that most people don't realize. How to do that in a very efficient way, putting everything together, both electronics And optics in a very small form factor like color. And then we went on to continue to do that with the 400 gig ZR, Extremely complex packaging technology, and then we continue on with that path, 2.5d3d packaging, chip on chip heterogeneous integration, you will hear that term a lot. What it means is you now the technology allows Marvell to integrate optics and electronics In this way, stacking on top of one another, very compact, very high integration, and it's really a critical piece Four very high bandwidth products.
And then you do that again with the DSP and the rest of the SoC. So the example that Regev show At the beginning, and then I show during my presentation, that is literally a optical electro optics system on a chip. It had silicon photonic, it had lasers, it had TIA, it had driver, it had DSP On co packaging together in a very compact form factor, that is the basis for developing the next generation of even more compact 2.5d3d packaging for co packaged optics. In that case, the optical system on chip will be co packaged with a switch. And now, Innovium is part of the Marvell family, and so we could do that internally.
But even so, We are supporting open ecosystem. Our cloud customer would like to have an open standard for Cold package optics. And so we are working in a way so that the cold package optic can be done in an industry Agree upon standard way as well as our internal solution. Thank you.
A broader question on process technology. So it's very exciting to see Marvell talk about introducing a 3 nanometer platform. Raghu mentioned 224 gig SerDes. So can you elaborate a little bit on timing? What's driving the quick move towards 3?
Marvel just announced 5 just last year. How do you see that helping the road map going forward?
Sure. I'll just make a couple of comments and I'll let you chime in. I think, look, The 5 nanometer platform that we announced last year where it was really visible that we had made this pivot from follower to leader, It's been a home run. So we absolutely are going to be there as a leader as well on 3, and it's critical, it's strategic, And we're investing. And Raghav, maybe you want to add some of the details around how we think about it, because it's more than just the node, more than just the Moore's Law jump, it's actually much That's
true, Matt. So first, establishing yourself the leader in the process node is not about a one time, okay? So You have to keep leadership, and we have established ourselves in 5 nanometer, and I'm really confident we will Repeat the same thing in 3 nanometer. Now talking about what is 3 nanometer and we did a press release with TSMC as well. It's Not just a node.
It is about the whole platform. So Loy just mentioned about heterogeneous integration. What is it? So as you go in a latest process node, there are pieces of the silicon you may not want to do in 3 nanometer, keep in 5 nanometer, for example. This is where you need to invest in this whole technology platform where you can bring chiplets Our multiple chips from different process node and put together and have all those package design and so on.
So when we say about 3 nanometer Investment. We talk about process node investment, CERD is IP investment. We establish our self leadership in 112 gig. We are investing in 224 gig to keep that leadership. So I'm pretty confident with our engineering team that we will achieve that one too.
And then also having a leadership in putting this thing together, having the leadership of having the platform and the package. So all those Things require multiyear kind of R and D and investment and research, and this is where we are leading to keep our leadership established.
We're going to switch gears to Jean. So the question is on OpEx. Marvell has done a tremendous job of managing OpEx over the last few years, but you're driving incredible revenue growth, Significant number of new design wins and a lot more excitement ahead. So how do you think about OpEx going forward? Do you think you're spending enough to sustain this level of growth You intend to drive?
Yes. So given the opportunities we have as a company, it's definitely most important to continue Invest and at the right intensity on R and D side. So our team has been super disciplined, Super focused on the investment. If you look at our investment, we're very focused. As a company, we're spending about RMB 1,200,000,000 On R and D, annualized run rate, right?
In addition, we do get the co investment from customer side. So we leverage all the investment to do not only product investing, but also advanced process technology investing. I think it's important that we'll continue to drive the R and D expenses going up going forward. But Compared to our top line revenue growth rate, the investment, the OpEx growth is still going to be lower than top line revenue growth. So overall, when we ramp our revenue significantly up, you can see the continued significant leverage of our operating model.
Question for Loy. Loy, you showed a very interesting graph showing 400 ZR Port counts, units increasing 6x over the next few years. Marvell or Inphi really was a pioneer in introducing this technology. So how do you think about what this growth means for Marvell going forward, your market share in this particular market? Well,
As we discussed during my presentation, we invented this whole class of products from ZEER optics. We started with COLOR for 100 gig and now we move Into 400 gig. So we have a tremendous amount of know how how to get this product works in a cloud customer environment inside of Switch. We expect that we will be the market leader for the transition to 400 gigabytes We demonstrate that we are the 1st company who take who are taking this product to production. So we believe that we will continue to maintain market leadership in 400 gig ZER optics as it move forward.
As fitting for today's presentation, we'll take our last question on cloud optimized silicon. It's a long question. Let me read it out. Matt, while you've been more focused and earlier than most talking about cloud optimized silicon, Can you comment about the motes you have? To what extent the IP blocks that you have, which is not available at other competitors?
What feedback do you get from your cloud customers when you engage with them on this optimized model going forward?
Sure, Ashish. That's a great question. And I think the way I would propose that we conclude the Q and A is I'm going to ask The members of my team who are running these groups, because remember, this isn't just a one size fits all. It's not like we have this one IP and then that's it's actually How you bring it all together in the solution, right? So maybe I'll start with Dan.
I mean, you talked about The whole cloud accelerator opportunity, the trends in storage. So why don't we go, Dan and then Loy and then Raghav, and have each of you comment about in your area, How this comes together.
Yes, I mean, I think we have 25 years of experience in storage and we're organized in such a way that we have teams of architects, Product definers and really innovators within storage that are continuously driving new innovations customized for the data center. But what's unique is that we also get to leverage the IP in the other organizations, whether it be advanced processing, networking capabilities, security. So we go in and talk to our customers and work with our customers, we have a very unique view. We also have unique capabilities. And then you combine that with our firmware capabilities, Then we allow massive customization with a very data center focused firmware team that's optimized to customize.
It really is unique And there's no other competitor in the world that has all the capabilities that Marvell has in storage, we believe.
So in terms of the electro optics, as you know, we invented the PAM, and we are leading the market For every single generation of PAM, we invented ZR optics and we're leading the 400 ZR optics. So our cloud customers, They are really depend on Marvell to work with them to define what's the next Generation of whether PAM or ZI optics that they need for their cloud data center. These are very, very cloud optimized solutions. It's not a one size fits all. Everything It's tailored for particular customers.
So there's really no other vendor who has that kind of Technology, capability, products and the deep level of engagement, which each of us cloud Provider today is Marvell.
So as I already explained, we pioneered Data centric compute, data processing unit concept. And we have 35 plus years experience of leading Data centric processing as well as security, right? So as I said earlier, it is not only about One category and one capability. What makes Marvell unique is Dan talked about storage, Lloyd talked about optical, I just explained Compute and security, when Nariman earlier presented about the switching capability and so on. So Having the ability to be able to have expertise to develop those products and Really gain market knowledge and technology knowledge through deploying that product in production in the market, and that is what is unique.
And what our cloud customer like is this, we are not kind of keeping those knowledge or IPs close to our chest only. And we are letting them to work with us to participate in co design, leveraging all those expertise and IPs and capabilities to develop Optimized solution, leveraging capabilities from multiple areas, and that's what makes us unique. And to tell you truth, all our cloud customer treat us as a partner, and we have very good relationship with each one of them. So I would say it's all positive.
If I were just to bring it home and I'll make my concluding remarks, as you heard, I mean, for example, Dan's talked about in storage, right, Leading next generation PCIe interfaces, right? Gen 5, Gen 6, in 5 nanometer. Those are things that all goes on to our platform, Those are things that the rest of the company can leverage. Same with Raghav's area, right? State of the art CPU cores, right?
Neo verse 2, our own fabric and interconnect, that's available to other teams to use as well. We've now got this Incredible SERDES and PAM4DSP capability. You think about connecting our switches to our optical modules, that's an IP So I actually the way I see it is each of these groups has their own expertise. We bring it all together, Ashish. And that's really where the uniqueness comes from is Being able to go into the customer and then have the way of working for all of the team to really bring in the best of Marvell every time we go in front of We look like 1 company, 1 front end, but the access that they get all the way into the deep, deep, deep Sets of technologies and IPs and it's circuits, it's packaging, it's Modeling, I mean, it's form factors.
I mean, we have a card business. The list is endless, right, of the capabilities that we can offer. So is that the last question? So yes, in closing, thank you so much to everybody that participated today or if you're watching the webcast later. It's been a pleasure to tell our story about the Marvell journey.
Personally, while the last 5 years have been incredibly fulfilling and a great run and a great story. I truly believe our best days are ahead of us and I couldn't be more excited about the future of Marvell. Thank you very