Marvell wants to be a copper topper, bets $115B on photonics leader to push optical networking

Marvell Technology is planning to acquire photonics company Lumentum in a deal valued at $115 billion, aiming to establish itself as a leader in the next stage of AI networking. This strategic move will address several gaps in Marvell's photonics portfolio, such as high-performance laser sources, optical transceivers, optical circuit switches, and specialized compound semiconductor manufacturing capabilities using indium phosphide.

As interconnects surpass 400 Gbps per lane, copper interconnects are reaching their limits, prompting the shift towards denser, hotter rack systems. Optics prove advantageous in overcoming these scaling laws, allowing signals to travel over kilometers instead of just 1.25 meters with copper wire. Faster speeds necessitate shorter reach, so photonics enable the connection of hundreds or thousands of GPUs into a single compute domain for AI training and inference.

The all-stock transaction is expected to close in the first half of 2028, coinciding with AI infrastructure builders like Nvidia and AMD seeking larger rack-scale systems that heavily rely on optical interconnects. Marvell's CEO, Jensen Huang, had previously predicted that the company's investments in photonics would lead to a $1 trillion valuation, although its current market cap is only $180 billion.

The move aligns with the growing trend of investing in optics, silicon photonics development, and manufacturing. Nvidia recently invested $2 billion into Lumentum to enhance its optics manufacturing capacity. Power consumption has historically been a constraint, with Nvidia's Blackwell-based rack systems in 2024 consuming 120 kW under load.

However, Marvell's investment in next-gen optics technology and its acquisition of Celestial AI in February 2026 for $3.5 billion have positioned it as a comprehensive solution provider for AI infrastructure companies' photonics needs.