Marvell to buy Lumentum in $115 billion all-stock deal

Marvell Technology Inc. has finalized a $115 billion all-stock merger with Lumentum, consolidating two leading entities in the data center optics industry. Under the terms of the agreement disclosed on November 2nd, Lumentum shareholders will receive 4.5 Marvell shares for each share held, valued at approximately $1,132 per share, representing a 23.9% premium over Lumentum's October 28 closing price.

Following regulatory and shareholder approvals, the merger is anticipated to conclude in the first half of 2028. Marvell will hold roughly 67% of the combined company, while Lumentum will own about 33%.

This acquisition marks one of the largest tech merger deals, surpassing SpaceX's xAI integration, as per Bloomberg. Both companies' boards have unanimously approved the deal. The merger significantly expands Marvell's optical infrastructure portfolio, adding to its recent acquisitions, including Inphi ($10 billion in 2021) and Celestial AI ($3.5 billion upfront in February 2026). All three deals involve companies specializing in various aspects of AI infrastructure, particularly optical connectivity.

As AI infrastructure scales, optical connectivity becomes increasingly crucial for efficiently transmitting vast quantities of data between processors, racks, data centers, and within accelerator boards. With Lumentum's addition, Marvell, already a provider of optical DSPs, silicon photonics, and high-speed SerDes, aims to become a key supplier of optical interconnect technologies, which span scale-across and scale-out networking to emerging scale-up and scale-in connections.

AI data centers now house thousands of interconnected accelerators, exchanging substantial data volumes. As data scales in volume, speed, and distance, copper interconnects reach physical limitations, becoming impractical for connections beyond one to two meters.

To overcome these limitations, the industry has shifted towards optics, using light instead of electrical signals for inter-rack and beyond connections. Optical transceivers and fiber optics replace copper for inter-rack connections and beyond, with pluggable transceivers converting electrical signals to light for fiber transmission and back to electrical signals at the receiving end.

The industry is also exploring optics within accelerator packages through co-packaged and near-packaged optics, reducing the electrical path from inches to millimeters.

This transition to optics has established optical interconnects as a critical segment in the AI infrastructure market, driving multiple multi-billion-dollar deals and partnerships among industry leaders. Marvell's portfolio includes semiconductor chips like high-speed SerDes and optical DSPs, analog components like drivers and transimpedance amplifiers, photonic integrated circuits (PICs), laser technology, and optical components such as lasers, modulators, and photodetectors, as well as fiber optic cables and passive optical devices.

Lumentum, on the other hand, supplies high-performance lasers, modulators, photodetectors, optical transceivers, and optical circuit switches. The merger will allow Marvell to create comprehensive solutions, integrating electrical and optical components within the same system. Lumentum's expertise in compound semiconductors, particularly indium phosphide (InP), is particularly significant, as InP efficiently generates light and is ideal for manufacturing high-performance lasers and optical components used in high-speed communication systems.

Unlike Marvell's fabless approach, Lumentum has operational control over its front-end semiconductor fabrication processes using specialized InP technology.