Marvell Bets $115 Billion That the Future of AI Runs on Light (Business / Tech)

The chip world woke up to a monster deal on Monday. Marvell Technology says it will buy Lumentum, the company that makes lasers and optical parts for data centers, in an all-stock deal that values Lumentum at about $115 billion. That makes it one of the biggest acquisitions of the year and by far Marvell's largest ever, according to CNBC. Its previous record was the roughly $10 billion Inphi deal back in 2021.

Here's how it works. Lumentum shareholders will get 4.5 Marvell shares for every share they own. Based on prices from October 28, before word of the talks leaked, that works out to about $1,132 per share, roughly a 24% premium. When it's done, Marvell's current owners will hold about 67% of the combined company and Lumentum's about 33%. Both boards voted unanimously for it.

Why does this matter? AI data centers are basically giant webs of chips that need to talk to each other insanely fast, and more and more of that talking happens over light instead of copper. Marvell already designs the networking chips. Lumentum makes the optical pieces that carry the signal. Put them together and Marvell says it can sell the whole connection. It claims the deal grows its potential market to $550 billion and could save more than $1 billion a year in costs.

CEO Matt Murphy called it a once-in-a-generation opportunity. He'll stay on as chairman and CEO, and Lumentum boss Michael Hurlston and two other Lumentum directors will join Marvell's board.

Investors aren't fully sold yet. Marvell's stock has dropped about 22% since the talks were first reported, partly because the whole chip sector got hit after Intel's ugly forecast. And there's a long wait, since closing isn't expected until the first half of 2028.