Marvell to Acquire Lumentum in $115 Billion Bet on AI Optical Networks - Big Tech and the digital economy

Marvell Technology has announced an all-stock acquisition of Lumentum Holdings valued at $115 billion, including debt, as both companies target growing demand for optical networking in artificial intelligence data centers.

Marvell Technology announced Monday that it will acquire Lumentum Holdings in a $115 billion stock-for-stock transaction, including Lumentum’s debt. The deal would be the largest by value between publicly traded technology companies, according to the companies.

The agreement brings together Marvell, which develops networking and artificial-intelligence chips, and Lumentum, a maker of lasers and other components that use light to transmit data. Optical networking, traditionally associated with long-distance communications, is increasingly being used inside data centers.

The companies said the transaction reflects the growing need to connect large numbers of AI processors. As AI systems expand beyond individual chips, companies are linking racks of specialized processors so they can operate as unified systems. Those connections are increasingly shifting from copper to faster, laser-based links located close to AI chips, in a development known as co-packaged optics.

Marvell Chief Executive Matthew Murphy said in prepared remarks that companies moving early in this transition could help establish the industry’s standards for years to come.

The combined company would face competition from established networking and optical technology providers. Nvidia invested $2 billion each in Lumentum and Coherent in March and also made purchase commitments for their technology. Nvidia has separately invested $2 billion in Marvell. Broadcom is another major player in networking chips and AI accelerator design.

Under the proposed terms, Lumentum shareholders would receive 4.5 shares of Marvell common stock for each share they own. They would hold approximately one-third of the combined company. Lumentum shares declined 11 percent, while Marvell shares fell about 6 percent after the announcement.

Investor caution may reflect uncertainty over whether the transaction will receive regulatory approval. Saja Dogra, an analyst at Rosenblatt Securities, previously forecast an antitrust review lasting 12 to 18 months, with potentially close scrutiny from regulators in China. Marvell expects the deal to close during the first half of 2028.

Sources: The New York Times Technology.