Marvell bets $115 billion on optical chips with all-stock Lumentum takeover
Marvell Technology will pay US$115 billion, including debt, to buy optical components maker Lumentum in an all-stock deal, the custom chipmaker said on Monday, wagering that the lasers and photonics inside AI data centres will be as decisive as the processors themselves. Lumentum shareholders receive 4.5 Marvell shares for each share they hold, valuing Lumentum at $1,132 a share, a 23.9 per cent premium to its last unaffected close on 28 October, before talks were first reported. Lumentum holders will own roughly 33 per cent of the combined company.
The bet is on optical connectivity. Marvell chief executive Matt Murphy, who will chair and lead the combined company, said AI infrastructure is undergoing a fundamental architectural shift toward optical links, calling it an opportunity that comes along once in a generation. Marvell expects interconnect to grow 65 per cent a year to a $65 billion market by 2030, and said the acquisition lifts the combined company's addressable market to $550 billion. Lumentum makes high-performance lasers and optical components for AI, cloud computing and communications networks, competing with Coherent and China's Zhongji Innolight.
Investors were unconvinced on Monday. Lumentum shares fell 6.5 per cent before the bell and Marvell 2.3 per cent, extending declines since the talks surfaced, as doubts about the sustainability of AI spending and tightening margins weigh on chip stocks. Axel Rudolph, chief technical analyst at IG Group, said combining Marvell's custom chips and networking with Lumentum's optics could give it a stronger hand as data centres demand faster, more energy-efficient connections, but called it an enormous bet and said investors are right to ask whether Marvell is paying too much at once.
The deal sharpens Marvell's challenge to Broadcom, long the main custom-chip partner to Alphabet-owned Google. Marvell signed a deal in August to supply chips alongside Google's AI processors worth up to $120 billion in sales through fiscal 2033, and in October forecast fiscal 2031 revenue of $70 billion to $90 billion. Nvidia, which invested $2 billion each in Marvell and Lumentum earlier this year, did not immediately respond to requests for comment.
The transaction was unanimously approved by both boards and is expected to close in the first half of calendar 2028. Marvell would owe Lumentum $5.8 billion if its board drops support or walks away for a rival offer, while Lumentum would owe Marvell $2.9 billion in similar circumstances, and Marvell would pay $3.2 billion if regulators block the deal. Separately, Lumentum forecast second-quarter revenue of $1.58 billion to $1.63 billion, above the $1.48 billion analysts expected.
