[nasional_list] [ppiindia] Marvell's power

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  Marvell spent a year designing a chip that moved data 20% faster than TI's. 
Sehat and Pantas were so sure of their design that they sent it to Seagate 
before it had been fully tested. It worked. Seagate kicked TI out of its line, 
and Marvell later chased NEC and Infineon out of other disk drive makers. 
Marvell now supplies chips for 90% of big corporate disk drives and half the 
chips for mass-market PC drives. Sehat and Pantas plan to double their storage 
business by getting their silicon into optical drives, especially the new 
high-definition DVD burners. 

Dai and the Sutardjas next went after networking products, designing a chip 
that would transmit data through Ethernet ports at a billion bits per second, 
ten times the speed of the then current standard. Marvell and Intel signed a 
development pact. 

The promise of the networking business fueled hopes for Marvell's initial 
offering in early 2000. The firm was already profitable, with $88 million in 
annual revenue. But it wasn't the smoothest deal. Morgan Stanley (nyse: MWD - 
news - people ) reportedly rejected the group, as did late-stage venture 
capitalists, because of concerns over how the family-run company would handle 
corporate governance. Many also felt Marvell was too dependent on the 
hard-drive business. 

To make matters worse, Marvell's chief financial officer, Gordon Steel, was 
fired unceremoniously two months before the public offering. According to 
Steel's rendition of the story, he was summoned into a meeting with Banatao, 
along with other vice presidents, to ask for unfiltered feedback about the 
company on the eve of the initial offering. The other vice presidents kept 
silent, says Steel, who had previously been chief financial officer at 
chipmaker Xilinx (nasdaq: XLNX - news - people ). He told Banatao that Dai 
hired and fired too many secretaries. While he admired his bosses' technical 
abilities, they told underlings only what to do, not why they should do it. 

The next day Sehat Sutardja summoned Steel to his office and, according to 
Steel, fired him. Steel says he was shocked by Banatao's betrayal. Sutardja 
says that he fired Steel because he wasn't working hard enough on the stock 
offering. Steel sued Marvell in August 2000 for wrongful termination and won a 
small award in arbitration. 

Marvell's networking ambitions ignited the ire of Broadcom, the leader in chips 
for network switches, modems and set-top boxes. Broadcom's then chief, Henry 
Nicholas, tried to tank Marvell's offering, says Dai, by calling Fidelity and 
other institutional investors to tell them that Marvell's planned gigabit 
Ethernet chip would fail. Nicholas, who is no longer with Broadcom, denies ever 
having done that. 

After the stock offering Marvell beat Broadcom to market with a gigabit chip 
and stole away with 80% of Broadcom's business with Cisco Systems, which is now 
a $100-million-a-year Marvell customer. "For a new company to come in and get 
it right is rare," says David Leonard, manager of desktop switching at Cisco. 

Marvell has a certain win-at-all-costs reputation. In 2001 it was negotiating 
to buy the patents of a company called Jasmine Networks. Some Marvell 
executives forgot to hang up the phone after leaving a voice mail with Jasmine 
and were overheard seemingly plotting to steal the technology. Marvell's patent 
attorney Eric Janofsky wondered aloud if Sehat would go to jail and moments 
later remarked: "If we took the [intellectual property] on the pretense of just 
evaluating it. ? " Jasmine, now bankrupt, sued Marvell, which denies it was 
acting underhandedly. The case is in court. 

In 2004 Marvell licensed chip designs and software to a firm called Alliant 
Networks that was designing a chip to handle both cellular and Wi-Fi signals. 
Months later Alliant stunned Marvell with news it was being sold to Broadcom. 
Marvell immediately sued Alliant, alleging theft of trade secrets. In a 
convoluted countersuit Alliant says Marvell was trying to "grab" its software 
and also buy it with a lowball offer. That case is also pending. 

Last year a product development manager named Suibin Zhang at wireless-hardware 
maker Netgear allegedly spent two hours downloading 78 documents from Marvell's 
extranet, a site restricted to customers. Problem was, Zhang had just received 
a job offer from Broadcom. Marvell tipped off federal prosecutors, who indicted 
Zhang in December for corporate espionage and computer fraud. (Zhang has 
pleaded not guilty.) Broadcom got revenge in May when, for the same crime, the 
feds indicted Tien Shiah, a manager Marvell poached from Broadcom. (Shiah's 
lawyer says he is innocent and is preparing for trial.) 

Marvell's founders have had to loosen their grip as the company grows. Sehat 
and Pantas no longer rejigger circuits during the final design stage. Dai knows 
it's no longer possible to get involved in every sale. Paramesh Gopi, who 
manages Marvell's Wi-Fi business, used to tell Dai everything he's doing; he 
now says it's gotten harder to get on her calendar. "Saturdays were good, but 
they are getting full," he says. 

Should Marvell employees care that their company is being run by a husband and 
wife? Marketing vice president Alan Armstrong shrugs: "When they go to a 
conference we save money on a hotel room." 

These billionaires do have a life, sort of. "We have kids [sons aged 18 and 16] 
who are growing up by themselves," Sehat says. "But they know how to cook," Dai 
interrupts. Sehat says, "You can't say, 'It's time to play golf.' Life is full 
of tradeoffs." Adds Dai: "We like to say, 'This is just the beginning.'" 


  Three Leaps Ahead  Marvell has a knack for breakthrough chips. 

1998 Marvell's disk drive chip shuttles data 20% faster than TI chips then in 
use. Seagate is first customer. Now has 90% of market for high-end corporate 
disk drives. 

2000 Releases the first "gigabit" Ethernet chip that moves data between 
computers ten times as fast as older chips. Cisco becomes a big customer. 

2005 Marvell produces a Wi-Fi chip that's smaller and uses half the power of 
other chips, perfect for handhelds. Sony (nyse: SNE - news - people ) embeds it 
in its PSP, Nikon in its Coolpix S6 camera. 




   


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