Marvell to Acquire Celestial AI to Revolutionize Data Center Connectivity With Optical Technology

Marvell Technology announced a definitive agreement to acquire Celestial AI, a specialist in optical interconnect technology, for a total value of up to $5.5 billion. The deal combines cash and stock to secure Celestial AI’s Photonic Fabric platform for next-generation data centers. This acquisition addresses the urgent need for high-bandwidth, low-power connectivity in AI systems that now span multiple racks.

The financial structure includes $3.25 billion in upfront consideration, split between $1.0 billion in cash and $2.25 billion in common stock. An additional $2.25 billion in stock is available through earnouts based on revenue milestones through fiscal year 2029. Marvell expects the transaction to close in early calendar 2026, pending regulatory approvals.

Celestial AI's technology replaces traditional copper connections with light-based optical signals within the server rack and system. As AI clusters grow larger, copper cables struggle with signal integrity and excessive heat at speeds exceeding 200Gbps. This optical transition offers more than twice the power efficiency of copper while significantly increasing bandwidth for chip-to-chip communication.

A standout feature of the Photonic Fabric is its ability to be co-packaged vertically with high-power processors. This 3D packaging approach frees up valuable edge space on the silicon die, allowing for more high-bandwidth memory. It also maintains stability in high-heat environments, which is a major hurdle for older photonic designs.

The acquisition aligns with Marvell’s support for UALink, an open-standard alternative to proprietary interconnect systems. Major industry players like AWS have endorsed the move as a way to accelerate optical innovation for cloud deployments. By integrating these optical chiplets, Marvell aims to provide the backbone for large-scale AI clusters. Marvell forecasts that Celestial AI will contribute a $500 million annualized revenue run rate by the end of fiscal 2028. This figure is expected to double to $1 billion by the end of fiscal 2029 as hyperscalers adopt optical scale-up architectures. This growth reflects the broad industry shift toward all-optical data center infrastructure.

The Shift Toward an All-Optical AI Future

A New Era for AI Scale-Up Connectivity

Marvell Technology, Inc. has announced a definitive agreement to acquire Celestial AI, a pioneer in optical interconnect technology. The deal is valued at approximately 3.25 billion dollars upfront, with potential performance-based milestones bringing the total value to 5.5 billion dollars. This strategic move aims to accelerate the transition from traditional copper wiring to high-speed optical connections within next-generation data centers. The acquisition marks a significant milestone in Marvell's strategy to dominate the connectivity market for massive artificial intelligence systems. Celestial AI is widely recognized for its disruptive Photonic Fabric platform, which enables high-bandwidth connectivity for processors and memory systems. This technology allows data to move between chips at light speed with more than twice the power efficiency of electrical methods. By integrating optics directly into the semiconductor package, the platform circumvents the physical limitations of copper that currently hinder cluster performance. This shift is essential as modern AI models require hundreds of processors to function as a single, unified computer. https://www.celestial.ai

Strategic Integration and UALink

Marvell plans to incorporate this technology into its roadmap for UALink switches and custom silicon accelerators. This combination will provide a comprehensive platform for hyperscale customers who need to scale beyond the physical reach of electrical signals. The company anticipates that this expanded portfolio will create the industry's most robust solution for low-power, high-bandwidth data center needs. Success in this integration would establish Marvell as a primary alternative to proprietary hardware ecosystems. https://www.marvell.com Financial projections for the acquisition indicate significant growth potential in the coming years. Marvell expects meaningful revenue contributions from the Celestial AI platform to begin in the second half of fiscal 2028. By the final quarter of fiscal 2029, the company targets a revenue run rate of 1 billion dollars for these optical interconnect solutions. This aggressive timeline reflects the urgent demand from cloud service providers for more efficient and scalable infrastructure.

Industry Support and Future Outlook

The technology industry has shown strong support for this shift, with endorsements from major players like Amazon Web Services. Optical interconnects are increasingly viewed as a vital component for the future of cloud infrastructure and advanced machine learning services. By moving the optical connection point directly to the silicon rather than the edge, manufacturers can also increase high-bandwidth memory capacity. This design choice helps solve critical memory bottlenecks currently facing complex generative AI models. Looking ahead, the transaction is expected to close in the first quarter of calendar 2026, subject to regulatory approvals. Beyond immediate AI applications, the Photonic Fabric technology could enable pooled memory appliances and new types of optical die-to-die connections. Marvell remains focused on building the data infrastructure that connects the world through deep collaboration and innovation. The future of data center architecture is clearly moving toward a more integrated, light-based foundation. https://investor.marvell.com