Chip manufacturer Marvell Technology recently announced that it will acquire startup company Celestial AI for $3.25 billion in cash and stock. The total transaction amount could reach up to $5.5 billion, primarily aiming to obtain Celestial AI's photonic interconnect technology, further enhancing Marvell's competitive strength in the AI data center connectivity sector. This acquisition will help Marvell compete with industry giants such as NVIDIA and Broadcom, and meet the growing demand for AI computing.

Celestial AI was founded in 2020 and focuses on the development of photonic interconnect hardware. Its core product, "Photonic Fabric," aims to use optical signals instead of traditional electrical signals to increase data transfer speeds, reduce latency and energy consumption. As the demand for computing power in AI models continues to rise, photonic technology has the potential to solve transmission bottlenecks in data centers. Marvell believes that by integrating Celestial AI's technology, the company will be able to establish a new technology platform, offering more efficient connection solutions for AI and cloud computing customers.

According to the terms of the deal, Marvell will pay $1 billion in cash and $2.25 billion in common stock, and include a "performance-based" clause tied to Celestial AI's future performance. If Celestial AI achieves cumulative revenue of $2 billion before fiscal year 2029, Marvell will pay additional amounts, bringing the total transaction value to $5.5 billion. The deal is expected to close in the first quarter of 2026.

In addition, Marvell has received support from Amazon, issuing stock warrants to it to strengthen future collaboration. An executive from Amazon Web Services (AWS) stated that Marvell's acquisition will drive the development of next-generation AI technologies. This acquisition, along with the company's strong financial results, stimulated the market, and Marvell's stock price rose by 13% in after-hours trading.

Marvell CEO Matt Murphy said that this acquisition not only expands the company's market share but also helps it provide a more complete connectivity platform in the AI and cloud computing sectors. Marvell expects that Celestial AI will begin contributing significantly to the company's revenue in the second half of fiscal year 2028, and may reach an annualized revenue of $1 billion by the fourth quarter of fiscal year 2029.

Key Points:   

📈 Marvell acquired Celestial AI for up to $5.5 billion, aiming to enhance AI data center connectivity technology.   

💡 Celestial AI's photonic interconnect technology can significantly increase data transfer speed and reduce energy consumption.   

🤝 Marvell has partnered with Amazon to strengthen future product procurement relationships.