Marvell to acquire Lumentum in $115 billion deal targeting AI data centers

The deal, unveiled on Monday, represents one of the largest corporate acquisitions anticipated in 2026 and underscores a substantial investment in the continued growth of the AI sector. Marvell’s acquisition of Lumentum, a company roughly half its size, reflects a belief that demand for high-speed data transmission components will remain robust.

Under the terms of the agreement, Marvell will offer $1,132 per share in stock, a 23.9 percent premium over Lumentum’s closing price on October 28. This translates to an equity value of $102.54 billion. The combined entity is projected to have a total addressable market of $550 billion.

Marvell’s shares increased by 2.8 percent in premarket trading, while Lumentum’s shares were temporarily suspended. Earlier this year, Nvidia invested $2 billion in both Marvell and Lumentum.

Having previously been a lesser-known chipmaker, Marvell’s market value has now surpassed $170 billion, largely due to its contributions to the development of custom AI chips and networking technology for data centers in collaboration with companies like Amazon.

This acquisition could also strengthen Marvell’s competitive position against Broadcom, a key supplier of custom chips for Alphabet’s Google. In August, Marvell secured a deal to provide chips for Google’s AI processors, potentially generating up to $120 billion in sales through fiscal 2033, including a $12.2 billion purchase commitment from Google.

Since reports of the potential merger surfaced late last month, Lumentum’s shares have declined by approximately 8 percent, while Marvell’s have fallen by 22 percent, mirroring a broader downturn in the chip sector following Intel’s recent forecast.

Lumentum, alongside competitors like Coherent and Zhongji Innolight, is expected to benefit from a proposed U.S. ban on new Chinese optical transceivers, potentially redirecting demand towards American suppliers.

Marvell has been actively expanding its photonics business, including the $3.5 billion acquisition of Celestial AI in February, driven by the increasing demand for faster optical connections within AI data centers. Marvell’s revenue has more than doubled from $3 billion in fiscal 2021 to $8.2 billion in fiscal 2026. This acquisition follows Marvell’s $10 billion buyout of Inphi in 2021.