Marvell Technology, Inc. (MRVL.US) rose after hours and agreed to sell its automotive networking business to Infineon Technologies for $2.5 billion.

Chip manufacturer Marvell Technology, Inc. (MRVL.US) has agreed to sell its automotive networking business to Infineon Technologies for $2.5 billion in cash. The transaction is expected to be completed by 2025. In response to this news, as of the time of writing, Marvell Technology, Inc. saw its stock rise over 3% after trading hours on Monday. Marvell Technology, Inc.'s automotive networking business is expected to generate revenues of $225 million to $250 million this year, with a gross margin of around 60%. In recent quarters, automotive components have been a weak spot in the chip industry, partly due to sluggish sales of electric vehicles. Marvell Technology, Inc. has been focusing more on data center chips, with that business seeing a 78% year-on-year increase in revenue in the fourth quarter of last year. In contrast, its automotive and industrial sectors saw only a slight 4% year-on-year revenue growth. Marvell Technology, Inc. plans to discuss this transaction during its first quarter earnings review conference call scheduled for May 29. In a statement, Infineon Technologies mentioned that Marvell Technology, Inc.'s automotive networking business has customers from over 50 car manufacturers. The German company is financing this deal using its existing liquidity and additional debt. The business will become part of Infineon's automotive division, with the goal of driving cost savings through combining research and utilizing production capabilities.