(Reuters) - Activist investor Starboard Value LP disclosed a stake of about 7 percent in Marvell Technology Group on Wednesday, saying the U.S. chipmaker's shares were "undervalued".
Marvell shares were up 5.9 percent at $9.18 in late afternoon trading. The company, which is embroiled in accounting and legal troubles, had lost nearly 40 percent of its value in 2015.
Starboard, run by Jeffrey Smith, wants Marvell to cut costs and exit its mobile-wireless business, according to a person familiar with the matter.
"We will carefully review any suggestions Starboard or their advisors may have, as we would with any other shareholder," Marvell said in a statement.
Marvell had said in September it would cut about 17 percent of its workforce as it trims its mobile business to focus on automotive technologies and Internet of Things.
The chipmaker had, at that time, also said that it was investigating its accounting practices related to revenue-recognition issues in the second quarter.
Analysts had said Marvell's woes may have kept away potential suitors at a time of record consolidation in the semiconductor sector.
Starboard said on Wednesday it would retain Rick Hill, Oleg Khaykin and Jeff McCreary - executives from the semiconductor industry - as advisers in connection with its investment in the company.
The activist hedge fund has invested in several semiconductor companies, including TriQuint Semiconductor and Integrated Silicon Solution Inc.
Marvell also said it had hired international executive search firms to look for additional board members and a permanent chief financial officer.
Mike Rashkin resigned as Marvell's finance chief in May.
The Wall Street Journal first reported the news of Starboard's stake on Tuesday.