Dive Brief:
- Networking and artificial intelligence chipmaker Marvell Technology has agreed to buy Lumentum, a maker of optical components, in a $115 billion all-stock deal that includes Lumentum’s debt.
- The transaction represents about $1,132 per share of Lumentum common stock and a premium of about 23.9% based on each company’s unaffected closing share price as of October 28, Marvell said in a news release.
- After closing, current Marvell stockholders will own about 67% of the combined company on a fully diluted basis, while Lumentum stockholders will own about 33%. The transaction will expand the combined company’s total addressable market to $550 billion, Marvell said.
Dive Insight:
The data center construction boom is driving record demand and revenue for many technology companies, including Marvell and Lumentum.
According to Marvell, the artificial intelligence infrastructure industry has now reached “an inflection point” defined by rapidly growing bandwidth requirements, coupled with the physical limitations of copper-based wire. This is driving adoption of higher-bandwidth optical technologies to meet AI’s increasing connectivity needs, the company said.
Marvell’s acquisition of Lumentum joins “Marvell's strengths in electrical and optical interconnect, network switching, custom XPU [processors] and XPU attach and advanced semiconductor technologies with Lumentum's expertise in high-performance lasers, optical transceivers, optical circuit switching and specialized compound semiconductor manufacturing,” per the news release.
“AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation,” Marvell Chairman and CEO Matt Murphy said in a statement. “By bringing together two leaders with highly complementary technologies, exceptional talent and specialized manufacturing capabilities, we intend to help shape the next era of AI connectivity and create exceptional stockholder value.”
Murphy will serve as chairman and CEO of the combined company. The agreement, which Marvell said the boards of directors of both companies have unanimously approved, calls for Lumentum stockholders to receive a fixed exchange ratio of 4.5 shares of Marvell common stock for each share of Lumentum common stock held at the time of closing.
According to market research firm TrendForce, the acquisition will “significantly strengthen Marvell’s optical technology portfolio" and allow the company to produce “more comprehensive next-generation optical interconnect technology solutions.” This could allow the combined company to compete more effectively with Broadcom, which dominates the optical interconnect market, TrendForce said.
It added that the combined company will have nearly 7% of the semiconductor wired communications market, behind only Broadcom and Nvidia.
In February, Marvell completed its acquisition of Celestial AI, which also makes optical interconnect technologies required for next-generation AI equipment. The following month, Nvidia announced it would invest $2 billion in a multiyear strategic partnership with Lumentum to accelerate innovation in advanced optics technologies for next-generation AI infrastructure and systems.
“The addition of Celestial AI expands Marvell’s optical connectivity capabilities, enabling more tightly integrated, high-bandwidth, and power-efficient solutions for data center customers,” Marvell said in a news release. “This positions the combined company to be a technology leader in the emerging scale-up interconnect market, adding a significant and completely incremental new total addressable market.”
Marvell and GlobalFoundries inked a multiyear deal in September to increase capacity for GlobalFoundries’ silicon germanium technology at its Burlington, Vermont, facility. Like many of Marvell’s other deals, the goal of its expanded partnership with GlobalFoundries is to support growing demand for next-generation optical connectivity in AI data centers, according to the company Marvell said.
Marvell reported record revenue of $2.7 billion in the second fiscal quarter of 2027, up 37% year over year and $39 million above the midpoint of the company’s May guidance. Revenue was driven by strong demand in Marvell’s data center portfolio, which saw 46% revenue growth year over year, Murphy said in a statement.
