On December 2, 2025, Marvell, a leading semiconductor design company, announced a definitive acquisition agreement with Celestial AI, a high-speed optical I/O interconnect technology firm. According to the agreement, Marvell will acquire Celestial AI for a total consideration of $3.25 billion, which includes $1 billion in cash and $2.25 billion worth of Marvell common stock. The deal is expected to close in the first quarter of 2026, subject to customary closing conditions and regulatory approvals.

Background and Technological Value

As the scale and complexity of artificial intelligence models continue to increase, data centers need to connect hundreds or even thousands of chips into a cohesive working unit. Traditional copper wire connections are reaching their limits. Celestial AI's photonic Fabric technology platform replaces electrical signals with optical signals to connect AI chips and memory chips, solving the "memory wall" problem associated with traditional copper wire connections. This technology is characterized by high bandwidth, low power consumption, and low latency, and it performs exceptionally well in thermal stability, ensuring reliable operation in extreme heat conditions.

Celestial AI's photonic Fabric technology platform is the first to integrate 16Tbps of bandwidth into a single chip, which is ten times the capacity of the most advanced 1.6T port currently available. This technology not only significantly enhances the interconnect efficiency of data centers but also paves the way for future deeper levels of optical interconnectivity.

Marvell's acquisition of Celestial AI aims to accelerate its next-generation AI and cloud data center connectivity strategy, positioning the company as the most comprehensive supplier of high-bandwidth, low-power, low-latency solutions in the industry. By integrating Celestial AI's technology, Marvell will strengthen its competitiveness in the AI data center connectivity field and compete with companies such as Nvidia and Broadcom.

Transaction Structure and Performance Expectations

Under the terms of the transaction, Marvell will pay $1 billion in cash and 27.2 million shares of common stock (valued at $2.25 billion), with the stock price based on the volume-weighted average price over the 10 trading days ending on the second trading day before the agreement was signed. Additionally, if Celestial AI achieves cumulative revenue of at least $500 million by the end of the 2029 fiscal year, Marvell will pay additional consideration, potentially increasing the total transaction value to up to $5.5 billion.

Marvell expects Celestial AI to start making significant revenue contributions in the second half of the 2028 fiscal year, reaching an annualized revenue rate of $500 million by the fourth quarter of the 2028 fiscal year and doubling to $1 billion by the fourth quarter of the 2029 fiscal year. This forecast indicates Marvell's strong confidence in Celestial AI's technology and market prospects.

Future Outlook

This acquisition not only marks a significant strategic move by Marvell in the AI infrastructure field but also signals that optical interconnect technology will become a core technology for future data center interconnectivity. As data centers' demand for high bandwidth, low latency, and low power consumption continues to grow, photonic Fabric technology is expected to find applications in more areas, such as memory pooling devices and optical interconnects in multi-chip packages.

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