Marvell Technology Group Ltd. is in advanced talks to acquire Celestial AI, a photonics‑based AI chip startup valued at more than $5 billion. The deal would combine cash, stock and performance‑based earn‑outs, positioning Marvell to add a high‑bandwidth, low‑power interconnect platform that can accelerate data‑center AI workloads.
The acquisition follows Marvell’s strong Q4 FY2025 earnings, where the company reported revenue of $1.817 billion—up 27% year‑over‑year—and non‑GAAP EPS of $0.60, beating the consensus estimate of $0.59. The revenue growth was driven by a 78% jump in data‑center revenue, reflecting robust demand for AI‑accelerated services. Marvell’s guidance for Q1 FY2026 calls for revenue of $1.875 billion +/- 5%, implying a year‑over‑year growth of over 60% and signaling confidence in continued AI‑driven expansion.
Celestial AI’s technology—its “Photonic Fabric”—uses light to transmit data between chips, offering higher bandwidth and lower latency than traditional electrical interconnects. The startup has raised over $515 million, with a March 2025 Series C1 round valuing it at $2.5 billion. Production of the photonic interconnects is slated for 2027, so the acquisition represents a long‑term investment in future AI infrastructure rather than an immediate revenue source.
Marvell’s CEO Matt Murphy said the deal would strengthen the company’s competitive position against Broadcom and Nvidia and deepen relationships with hyperscalers that demand faster, more energy‑efficient interconnects. The transaction would also add a team of silicon‑photonics engineers and intellectual property, accelerating Marvell’s AI‑first strategy. The deal structure, with earn‑outs tied to product milestones, signals a focus on long‑term integration rather than a quick resale.
The market reaction to Marvell’s Q4 FY2025 earnings was muted, with shares falling 14% in after‑hours trading despite the earnings beat. Analysts cited the company’s forward guidance—while in line with consensus—as insufficiently aggressive to meet the high expectations generated by the AI boom. The acquisition is therefore seen as a strategic move to address the shortfall in interconnect performance that could become a bottleneck as AI models scale.
Overall, the potential acquisition aligns with Marvell’s broader shift toward data‑center and AI infrastructure, leveraging its existing electro‑optics and custom silicon businesses. If completed, the deal would broaden Marvell’s product ecosystem, enhance its competitive edge, and reinforce its position as a full‑stack AI infrastructure provider.
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