Marvell Buys Lumentum for $115B in AI Optics Bet

Marvell Technology, the US chip designer behind custom AI processors and data-centre networking chips, has agreed to buy Lumentum, a maker of lasers and optical parts, in an all-stock deal that values Lumentum at about $115bn including debt. The companies announced it on Monday, 2 November.

Lumentum shareholders will get 4.5 Marvell shares for each share they hold. The companies put that at about $1,132 a share, a premium of about 23.9% to both stocks' closing prices on 28 October, the last trading day before talk of a deal moved the market. Marvell's shareholders will own about 67% of the combined company and Lumentum's about 33%.

That puts it among the largest technology acquisitions ever announced, bigger than Microsoft's $68.7bn purchase of Activision Blizzard and Dell's $67bn deal for EMC, TechCrunch notes.

Why light, and why now

AI data centres move enormous amounts of data between chips, servers and buildings, and copper wiring is hitting its limits on speed, distance and power. The industry is shifting to optical links, which carry data as light. Lumentum makes the lasers, optical transceivers and optical circuit switches those links use, and runs its own compound-semiconductor factories. Marvell designs the electrical side: interconnect and switching chips and custom processors.

"AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation," Marvell chairman and chief executive Matt Murphy said. Lumentum chief executive Michael Hurlston said the combination could go after "a market opportunity of $550 billion", the companies' own estimate.

Lumentum is already growing fast on AI demand. Its revenue for the quarter to the end of September was $1.26bn, up from $533.8m a year earlier, and it expects $1.575bn to $1.625bn this quarter, Yahoo Finance reports. Nvidia is a shareholder in both: it invested $2bn in Lumentum in March under a multi-year deal to buy its lasers, and another $2bn in Marvell later that month, according to TechCrunch.

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What happens next

• Murphy stays chairman and chief executive. Three Lumentum directors, including Hurlston, join Marvell's seven-member board.
• The companies say they see a path to more than $1bn a year in cost savings and expect the deal to add to Marvell's adjusted earnings per share in the first year after closing.
• Marvell said its revenue for the current quarter is in line with its earlier guidance and narrowed the range around the midpoint to 2% either way, from 5%.
• Closing needs approval from both companies' shareholders and from regulators, and is expected in the first half of 2028.