In what it calls a drive further into the data centre market. Cavium has entered into a definitive agreement to acquire all outstanding QLogic common stock in a deal worth approximately $1.36 billion.

The acquisition adds Qlogic's Fibre Channel and Ethernet controllers and boards to Cavium's line up of communications, security and general-purpose processors making Cavium a full-line supplier to data centres.

It also means that Cavium can take on storage and networking with Broadcom, Intel and Mellanox.  The deal also gives Cavium a mature software stack in storage and networking and operational savings expected to amount to $45 million a year by the end of 2017.

Both companies sell to server makers and large data centers with a customer overlap of more than 60 per cent. Qlogic’s customer base is highly concentrated with nearly 60 per cent of its business for the last several years to HP, Dell and IBM.