Marvell Pursues Multi-Billion-Dollar Acquisition Of Photonics Startup Celestial AI

Key takeaways

U.S. chipmaker Marvell Technology is in advanced discussions to acquire Celestial AI, a Santa Clara-based chip startup specializing in optical interconnect technology, in a deal valued at multiple billions of dollars, according to a December 1 report from The Information, citing people familiar with the matter.

The transaction, structured as a cash-and-stock agreement, could be announced as soon as December 2.

When factoring in earnouts linked to product milestones, the total deal price could surpass $5 billion, the report stated. Neither Marvell nor Celestial AI responded to Reuters' requests for comment, and Reuters could not independently verify the report.

Strategic move to strengthen AI infrastructure capabilities

The potential acquisition would bolster Marvell's position in the competitive custom chip market, where the company faces off against larger rival Broadcom for business from cloud service providers.

Marvell currently holds a market capitalization of $78.54 billion, according to LSEG data, with data center applications representing 72.2% of its net sales.

Celestial AI has emerged as a notable player in the AI infrastructure space through its Photonic Fabric technology platform, which employs photonics—the use of light rather than electrical signals—to create high-speed connections between AI computing chips and memory chips.

This approach addresses critical bandwidth and latency challenges facing modern AI systems.

"The largest global infrastructure investment in history is currently underway as companies race to build AI computing capacity.

The AI industry is hitting a fundamental wall with data movement between AI processors over copper wires," said David Lazovsky, CEO of Celestial AI, in an August 2025 statement.

Strong backing from industry giants

Celestial AI has raised $515 million in total funding, including a $250 million Series C1 round in March 2025 led by Fidelity Management & Research Company.

The company's investor roster includes AMD Ventures, BlackRock, Tiger Global Management, Koch Disruptive Technologies, Temasek, and Porsche Automobil Holding SE. Intel CEO Lip-Bu Tan serves on Celestial AI's board of directors.

The startup remains pre-revenue but has been working with major hyperscale data center companies to integrate its technology into next-generation AI accelerators.

In March 2025, Lazovsky noted the growing demands on AI infrastructure: "With the emergence of complex reasoning models and agentic AI, the requirements on AI infrastructure are compounding.

Cluster sizes must scale from a few AI processors in a server to tens of processors in a single rack and thousands of processors across multiple racks, all while relying on high-bandwidth, low-latency network connectivity to handle massive data transfers between processors."

Market implications and timing

The timing of the potential deal announcement aligns with Marvell's scheduled third-quarter fiscal 2026 earnings release on December 2.

Analysts from JPMorgan and Rosenblatt have forecast that Marvell will meet or slightly exceed earnings estimates, driven by strong datacenter momentum and robust optical demand.

Marvell held $1.22 billion in cash and cash equivalents as of August 2, 2025.

The company's stock has declined 18% year-to-date amid challenges in meeting revenue consensus estimates in multiple recent quarters.

The acquisition of Celestial AI's photonics technology could provide Marvell with internally owned optical technology capabilities, potentially accelerating product development and creating cross-selling opportunities with its existing cloud customer base.

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