Credo to Acquire DustPhotonics for $1.3 Billion to Accelerate AI Connectivity Growth

Credo Technology Group Holding Ltd has signed a definitive agreement to acquire DustPhotonics for an upfront consideration of $750 million in cash and equity. The deal includes performance-based milestones that could bring the total valuation to approximately $1.3 billion. By acquiring the Israeli-based startup, Credo aims to cement its position as a primary provider of the high-speed connectivity required for massive AI infrastructure.

DustPhotonics specializes in Silicon Photonics Photonic Integrated Circuit technology, which is a foundational component for next-generation optical transceivers. These circuits allow for the integration of multiple optical functions onto a single silicon chip, significantly reducing hardware complexity. This technology is critical as data centers move toward 800G and 1.6T speeds to support the heavy data loads of modern AI clusters.

The acquisition allows Credo to achieve vertical integration across its entire connectivity stack. By combining its existing Digital Signal Processing expertise with in-house silicon photonics, Credo can now offer an end-to-end solution for both electrical and optical interconnects. This strategy reduces reliance on third-party component suppliers and creates a more efficient path to market for high-volume deployments.

Reliability and energy efficiency are the most pressing constraints for hyperscale operators managing AI workloads. The integrated nature of silicon photonics improves manufacturing yields and reduces the physical footprint of optical components. These benefits result in lower power consumption and higher system stability, which are vital for maintaining the uptime of multi-billion dollar AI training environments.

Credo projects that this strategic expansion will drive significant financial growth in the coming years. The company expects its combined optical portfolio to generate more than $500 million in revenue by fiscal 2027 as adoption of its ZeroFlap platform accelerates. This reflects a major inflection point for the business as it transitions into a dominant player in the global optical industry. The transaction is expected to close in the second quarter of 2026, pending customary regulatory approvals. Upon completion, the combined team of engineers will focus on developing a roadmap that extends to 3.2T connectivity speeds. This ensures that Credo remains a key strategic partner for hyperscalers building the world's most advanced AI networks.