Marvell Technology buys Celestial AI, a business that makes photonic chips, for up to $5.5 billion. The goal is to improve AI connection and compete with Nvidia in data centers. Inside: deal specifics, tech impact, and stock chatter.
This week, Marvell Technology made a big splash in the AI chip sector with a daring move. The Santa Clara-based semiconductor giant announced on December 3 that it would buy Celestial AI, a hot company working on next-generation optical technology. This grab might be worth $5.5 billion in total and makes Marvell’s tools better for big data centers that are driving the AI growth.
Why is Marvell putting so much money on AI connectivity right now?
AI workloads are growing quickly, but problems with data transport are slowing things down. Old-fashioned electrical connections use a lot of power and slow things down. Marvell thinks Celestial AI is the answer. Their technology replaces electrons with photons, which cuts energy use by up to 30 times and speeds up data flow. It’s great for clouds that are really big, like those from Amazon and Google.
Matt Murphy, the CEO, says it’s a game-changer.
“This purchase strengthens our position as a technology leader, opens up new markets for large-scale connectivity, and speeds up our plans to create the most complete connectivity platform for AI and cloud customers in the industry.”
Murphy’s words hit home as Marvell tries to get a piece of the $50 billion AI connection pie.
Why Do You Need Celestial AI’s Photonic Fabric?
Celestial AI, which started in 2020, makes “Photonic Fabric,” a technology that connects AI chips with light instead of copper. Picture laser beams whizzing terabits across racks instead of cumbersome wires. Early successes include working with significant cloud companies on pilots. Marvell aims to add this to its own silicon, with the goal of making money in late 2028.
The startup’s supporters, like Amazon through warrants, also scent triumph. This purchase shows that photonics will be the main part of AI in the future.
What are the parts of the $5.5 billion deal?
Marvell pays $1 billion in cash and 27.2 million shares worth $2.25 billion immediately away. The extra money? Linked to sales goals. You can get one-third of the incentive if Marvell’s total revenue reaches $500 million before the conclusion of the 2029 fiscal year. Nail $2 billion in total? Full payment.
People who owned Marvell shares were happy: the stock price went up 13% after hours. The merger will be done early next year, as long as all the clearances come through. No problems are predicted.
This revelation strengthens Marvell’s AI push, which is competing with Nvidia and Broadcom. In 2026, there will be more changes in the photonics field.
