On December 3rd, local time, Marvell announced the acquisition of Celestial AI—a photonic-interconnect startup—for $3.25 billion in cash and stock. If Celestial AI meets specific revenue milestones, the total deal value may reach $5.5 billion.
The announcement arrived alongside Marvell’s strong quarterly earnings, briefly pushing the stock up more than 13% in after-hours trading. More importantly, this acquisition marks a forward-looking pivot: integrating Celestial AI’s Photonic Fabric platform to solve the interconnect bottlenecks defining the next era of AI data centers.
🔍 The Full Scope of the Deal #
Marvell’s acquisition structure signals not only confidence in the technology’s potential, but also expectations for long-term revenue growth.
- $1 billion in cash
- ~27.2 million shares of Marvell common stock (valued at ~$2.25B)
- Earn-out clause: If Celestial AI generates $2B in cumulative revenue by FY2029, the total transaction value increases to $5.5B
The deal is expected to close in Q1 2026. Marvell forecasts meaningful revenue contributions starting in 2H FY2028, including:
- $500M annualized revenue by Q4 FY2028
- $1B annualized revenue by Q4 FY2029
🚀 Strategic Breakthrough #
Despite strong financial results in 2025—$2.07B quarterly revenue (37% YoY growth) and a return to profitability—Marvell’s AI market position remains limited, holding only a low single-digit share. Competitors like Broadcom, NVIDIA, and specialized ASIC developers have accelerated faster during the AI infrastructure boom.
Meanwhile, the AI compute landscape is shifting toward:
- custom accelerators
- optical interconnects
- rack-scale and multi-rack architectures
- extreme bandwidth and memory coherence requirements
Marvell’s move to acquire Celestial AI is therefore both defensive and offensive: shoring up competitiveness while securing a critical technology path.
🧬 Technological Revolution: Photonic Fabric #
AI models scaling to tens of trillions of parameters have turned interconnect bandwidth into the defining bottleneck. Traditional copper-based electrical links are hitting hard physical limits:
- bandwidth loss from signal degradation
- power scaling poorly with distance
- latency compounding into a “memory wall”
Celestial AI’s Photonic Fabric platform replaces electrical signaling with optical connections, delivering:
- 16 Tb/s per chipset — 10× more than top copper solutions
- >2× power efficiency
- nanosecond-level secondary latency
- high thermal stability for multi-kW XPU clusters
- support for 3D vertical stacking to maximize chip-edge area
This positions Photonic Fabric as a foundational technology for future AI superclusters.
🏛️ Market Positioning and Competitive Landscape #
Marvell is already strong in:
- data center Ethernet
- storage controllers
- switching silicon
But it trails NVIDIA and Broadcom in high-end AI interconnects:
- NVIDIA NVLink dominates closed AI accelerator ecosystems
- Broadcom leads in optical modules and PAM4 DSPs
The Celestial AI acquisition gives Marvell a credible entry into a new $10B+ photonic interconnect market, filling a strategic gap and establishing a competitive moat.
A key endorsement comes from Amazon, which received a stock warrant allowing it to purchase up to $90M in Marvell shares by 2030, tied to its procurement of optical-interconnect products. This signals potential hyperscaler adoption—critical for scaling any AI-infrastructure technology.
🌐 Reshaping the AI Infrastructure Landscape #
This acquisition represents more than a portfolio expansion—it’s a shift toward the photonic era of data center design.
As optical interconnects proliferate:
- AI training throughput will increase dramatically
- multi-rack and cross-region compute will scale more efficiently
- real-time, large-scale intelligent applications will become practical
For Marvell, success will ultimately be measured by whether it can:
- convert photonic technology into commercial wins
- challenge NVIDIA’s interconnect hegemony
- capture meaningful share of the next-gen AI infrastructure stack
If achieved, this deal could redefine Marvell’s role in the semiconductor industry for the next decade.