Prime Highlight
- Marvell Technology announced plans to acquire Celestial AI in a deal valued between $3.25 billion and $5.5 billion, marking a major push to expand its AI-focused semiconductor networking capabilities.
- The acquisition aligns with Marvell’s strong quarterly earnings and its strategy to strengthen its leadership in high-performance AI connectivity solutions.
Key Facts
- The deal’s full payout depends on Celestial AI reaching $2 billion in cumulative revenue by fiscal 2029, with the acquisition expected to close early next year.
- Marvell reported third-quarter earnings of 76 cents per share on $2.08 billion in revenue and forecast fourth-quarter revenue of $2.2 billion, sending its stock up 13% in extended trading.
Background
Marvell Technology has announced that it will acquire Celestial AI in a major deal valued at a minimum of $3.25 billion in cash and stock. The total value could reach as high as $5.5 billion if Celestial achieves specific revenue milestones, the company said on Tuesday. The acquisition marks one of Marvell’s boldest moves to strengthen its semiconductor networking portfolio as demand for AI infrastructure surges worldwide.
The announcement came alongside Marvell’s third-quarter earnings, which beat analyst expectations. The company reported earnings of 76 cents per share on revenue of $2.08 billion. Its stock rose 13% in extended trading after it projected a 25% rise in data center revenue next year. Marvell also forecast fourth-quarter revenue of $2.2 billion, slightly above market estimates.
Celestial AI, valued at $2.5 billion earlier this year, builds optical interconnect hardware called “photonic fabric.” These optical links are becoming essential for advanced AI models that require hundreds of chips to work together. While most chip connections still rely on copper wires, optical systems offer faster data transfer and support longer distances, though at a higher cost.
Marvell said Celestial’s technology will first be used to connect systems built on large custom AI chips, known as XPUs. The company also plans to integrate optical components into custom chips and switches.
Marvell CEO Matt Murphy said the acquisition expands the company’s leadership in AI connectivity and strengthens its product roadmap. Amazon Web Services also supported the move, saying it will help accelerate optical scale-up for next-generation AI deployments.
The deal is set to close early next year, with full payout tied to Celestial reaching $2 billion in cumulative revenue by fiscal 2029.
