Marvell acquires Celestial AI for $5.5 billion to scale up optical interconnects

News and Business

Data infrastructure semiconductor solutions provider Marvell Technology has entered into a definitive agreement to acquire Celestial AI, a pioneer of a disruptive Photonic Fabric technology platform purpose-built for scale-up optical interconnect.

This strategic acquisition – a $5.5 billion cash and stock deal – represents a transformational milestone in accelerating Marvel’s connectivity strategy for next-generation AI and cloud data centres.

According to Marvell, AI is reshaping data centre architectures at unprecedented speed. Next-generation accelerated systems are no longer confined to a single rack – they are evolving into multi-rack configurations connecting hundreds of XPUs with an integrated high-bandwidth, ultra-low latency, any-to-any scale-up fabric.

Given the power, bandwidth, latency, and reach requirements of multi-rack scale-up fabrics, interconnects will increasingly transition to all-optical connections. This acquisition positions Marvell to lead this technology shift and capture a brand-new semiconductor TAM for optical interconnects.

Combined with existing leadership in scale-out and scale-across connectivity, Marvell expects this expanded portfolio will result in the industry’s most comprehensive provider of high-bandwidth, low-power, low-latency solutions for next-generation data centre connectivity.

“The acquisition of Celestial AI is a transformative step in Marvell’s evolution and expands our leadership in AI connectivity, as scale-up becomes the next frontier in AI infrastructure,” said Matt Murphy, Chairman and CEO of Marvell. “This builds on our technology leadership, broadens our addressable market in scale-up connectivity, and accelerates our roadmap to deliver the industry’s most complete connectivity platform for AI and cloud customers.”

“At AWS, we aim to be at the forefront of major technology inflections, and we believe optical interconnects will play an important role in the future of AI infrastructure. Building a scalable, high-performance, and power-efficient cloud starts with an approach built upon differentiated technologies,” said Dave Brown, Vice President of Compute and Machine Learning Services at AWS. “Celestial AI has made impressive progress, and we expect their combination with a large-scale semiconductor company like Marvell will help further accelerate optical scale-up innovation for next-generation AI deployments.”

As bandwidth and reach continue to increase, every connection point in the data centre must move from copper to optical, says Marvel. For rack-to-rack scale-out and data centre to data centre DCI connections this transition has already taken place. The next inflection point is within the rack, within the system, and even within a package – where electrical connections must now give way to optics.

Celestial AI’s Photonic Fabric technology platform was purpose-built for this inflection. It enables large AI clusters to scale both within and across racks using a high-bandwidth, low latency, low power and cost-effective optical fabric, explained Marvel.

The thermal stability of Celestial AI’s Photonic Fabric technology is a significant competitive differentiator. It enables reliable operation in the extreme thermal environments created by large, multi-kilowatt XPUs and switches. This allows the photonics technology to be co-packaged vertically with high-power XPUs and switches in a 3D package, enabling the photonic connection to be made directly into the XPU, rather than from the edge of the die, continued Marvel.

Celestial AI’s Photonic Fabric technology platform is the industry’s first scale-up optical solution delivering 16 terabits per second of bandwidth in a single chiplet – 10 times the capacity of today’s state-of-the-art 1.6T ports used in scale-out applications.

“Together with Marvell’s scale-up switching strategy, we’re excited to accelerate the transition to optical scale-up interconnect and expand what next-generation AI infrastructure can achieve,” said David Lazovsky, Co-Founder and CEO of Celestial AI.

Marvell will acquire Celestial AI for upfront consideration valued at approximately $3.25 billion, consisting of $1.0 billion in cash, as well as approximately 27.2 million shares of Marvell common stock, having a value of $2.25 billion.

In addition, Marvell will pay Celestial AI equity holders incremental contingent consideration of up to approximately 27.2 million shares of Marvell common stock if Celestial AI reaches cumulative revenue of at least $500 million by the end of Marvell’s fiscal year 2029. The full earnout would be paid if Celestial AI’s cumulative revenue by the end of Marvell’s fiscal year 2029 exceeds $2.0 billion.

The transaction is expected to close in the first quarter of calendar 2026, subject to customary closing conditions and regulatory approvals.