Marvell in Talks to Acquire Celestial AI in Multi-Billion Dollar Deal
The chipmaker is reportedly pursuing the optical interconnect startup to bolster its AI data center offerings and compete with rivals Nvidia and Broadcom.
Marvell Technology is in advanced talks to acquire Celestial AI, a semiconductor startup specializing in optical-interconnect technology, in a deal that could be valued at several billion dollars. The potential acquisition signals an aggressive move by Marvell to deepen its capabilities in the critical infrastructure powering the artificial intelligence boom.
The discussions, first reported by The Information and later confirmed by Reuters, would see Marvell absorb a company at the forefront of using light to move data between chips. A deal of this magnitude would represent one of the most significant acquisitions in the semiconductor space this year, underscoring the fierce competition to provide the high-speed connectivity essential for training and deploying large AI models.
Shares of Marvell rose on the news, climbing 1.9% to close at $91.10 in Tuesday trading. The move suggests investors view the potential tie-up as a strategic step to fortify Marvell's position against larger rivals.
At the heart of the deal is Celestial AI's Photonic Fabric platform. As AI models grow in complexity, the electrical wiring that traditionally connects processors and memory has become a major bottleneck, limiting speed and consuming vast amounts of power. Celestial AI's technology replaces these electrical connections with optical ones, using light to shuttle massive datasets between chips at nearly the speed of light with significantly lower latency and energy consumption.
This technology is crucial for the sprawling data centers operated by cloud giants like Amazon, Microsoft, and Google. For Marvell, which has a market capitalization of approximately $77 billion, acquiring this capability would allow it to offer a more integrated and higher-performance solution. The company is a key supplier of data infrastructure silicon, including networking chips, custom processors, and data processing units (DPUs). Integrating Celestial's optical interconnects could create a powerful, proprietary ecosystem that is more efficient than assembling components from various vendors.
The move is widely seen as a direct response to similar vertical integration strategies by competitors. Broadcom has leveraged its own connectivity solutions to great success, while market leader Nvidia has its proprietary NVLink interconnect for its dominant AI graphics processing units (GPUs). By securing a cutting-edge optical technology, Marvell aims to ensure its products remain essential components in next-generation AI systems.
Analysts see the potential acquisition as a logical, albeit expensive, step in Marvell's strategy. The company has a history of strategic acquisitions to bolster its portfolio, most notably its $10 billion purchase of Inphi Corp. in 2021, another company specializing in optical interconnects for data centers. The pursuit of Celestial AI indicates a doubling-down on this strategy as AI workloads demand ever-faster data throughput.
According to company filings, Wall Street has remained broadly optimistic about Marvell's direction, with 29 of the 37 analysts covering the stock maintaining a 'Buy' or 'Strong Buy' rating. The consensus price target sits at $91.73, just above its current trading price.
While neither Marvell nor Celestial AI has officially commented on the reports, the strategic rationale is clear. The AI arms race is no longer just about building the most powerful processing chip; it is equally about building the fastest and most efficient infrastructure to connect those chips. A successful acquisition of Celestial AI would provide Marvell with a key piece of that puzzle, potentially reshaping the competitive landscape for AI hardware for years to come.