Marvell to Acquire Celestial AI for $3.25B in AI Chip Push
The acquisition of the optical interconnect startup aims to bolster Marvell's data center offerings as it also reports a swing to profitability on strong AI demand.
Marvell Technology Inc. (MRVL) has agreed to acquire Celestial AI for approximately $3.25 billion in cash and stock, a strategic move to enhance its capabilities in the booming artificial intelligence and cloud data center market. The deal, announced Tuesday, aims to integrate Celestial AI’s advanced optical interconnect technology to address critical data bottlenecks in next-generation AI infrastructure.
The acquisition of the Silicon Valley startup gives Marvell control of its ‘Photonic Fabric’ platform, a technology that uses light to move data between chips at higher speeds and with lower power consumption than traditional electrical connections. This is becoming increasingly vital as the size and complexity of AI models, like those developed by OpenAI and Google, place unprecedented demands on data center hardware.
Shares of Marvell Technology rose 1.96% to close at $92.89 in Tuesday trading following the announcement, reflecting investor optimism about the company's aggressive push into the AI sector. The move positions Marvell to better compete with rivals like Broadcom and Nvidia in providing the foundational hardware for AI and accelerated computing.
“The next generation of AI and cloud data centers will require a significant leap in connectivity performance,” said Matt Murphy, CEO of Marvell, in a statement. “Celestial AI’s Photonic Fabric technology is a groundbreaking innovation that will help us address the interconnect bottlenecks for our customers and solidify our leadership in end-to-end data infrastructure.”
The deal was unveiled concurrently with Marvell’s third-quarter financial results. The company reported a swing to profitability on higher data center demand, with revenue from its data center segment growing significantly, driven by strong demand for its custom AI silicon. Marvell posted net income of $189 million, or 22 cents a share, a sharp turnaround from a loss in the same period a year earlier.
Celestial AI, founded in 2020, has been developing its optical interconnect platform to create a more efficient pathway for data to flow between memory and processing units. As AI workloads become more distributed across thousands of chips, the speed and efficiency of this communication are paramount. The company’s technology is seen as a key enabler for the continued scaling of large-scale AI systems.
Analysts see the acquisition as a strategic necessity for Marvell. The integration of optical interconnects directly into its chip portfolio could offer a significant performance advantage. According to a company press release, the combination is expected to accelerate the deployment of hyperscale data center infrastructure capable of handling the next wave of AI applications.
The transaction is expected to close by the end of Marvell's fourth fiscal quarter of 2026, subject to customary closing conditions and regulatory approvals. Marvell, with a market capitalization of over $78 billion, has been actively expanding its portfolio to capitalize on the secular growth trends in 5G, automotive, and cloud computing, with AI now representing a primary strategic focus.