The rapid expansion of AI data centres is driving demand for faster ways to transfer data between processors. Against this backdrop, Marvell Technology has announced a $115 billion stock-based acquisition of Lumentum Holdings, aiming to strengthen its position in optical networking.
The transaction, which includes Lumentum’s debt, would be the largest deal by value between publicly listed technology companies.
Marvell develops chips for networking and AI applications. The 31-year-old company has expanded through acquisitions since Matthew Murphy became its CEO in 2016. Lumentum produces lasers, chips and other components that use light to transmit data, a technology widely used in long-distance communications and increasingly important in AI data centres.
Optical networking gains importance in AI infrastructure
The companies said the deal reflects the growing need for computing capacity beyond what individual chips can provide. Technology companies are now connecting large groups of specialised AI processors so they can operate as a single system.
This is increasing demand for faster connections between processors. One emerging approach, known as co-packaged optics, uses laser-based links placed close to AI chips instead of traditional copper connections.
“The companies that move first and help define this transition will set the standard for decades to come,” Murphy said.
Competition in optical networking is also intensifying. Nvidia invested $2 billion each in Lumentum and its rival Coherent in March, alongside purchase commitments for their technology. Nvidia has also invested $2 billion in Marvell. Other major players include Broadcom, which makes networking chips and helps companies design AI accelerators.
Deal structure and regulatory hurdles
Under the agreement, Lumentum shareholders will receive 4.5 Marvell shares for each share they own. They would hold approximately 1/3 of the combined company.
Despite the announcement, investor response was cautious. Lumentum shares fell 11%, while Marvell shares declined about 6%.
The deal could face significant regulatory scrutiny. Saja Dogra, an analyst at Rosenblatt Securities, had predicted a review lasting 12 to 18 months, including close examination by regulators in China.
Marvell expects the acquisition to close in the 1st half of 2028.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream LinkedIn | The Mainstream Facebook | The Mainstream Youtube | The Mainstream Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.