Marvell Technology has agreed to acquire optical-technology company Lumentum in an all-stock transaction with a value of US$115 billion. This is an unusually large deal for the optics and photonics sector and a further sign of the growing relevance of optical connectivity in AI infrastructure.

The proposed transaction was announced on November 2 and values Lumentum at approximately US$1,132 per share, representing a premium of about 24% based on the companies’ closing share prices as of October 28. Lumentum shareholders would receive 4.5 Marvell shares for each Lumentum share and own roughly 33% of the combined company, with existing Marvell shareholders retaining the remaining 67%.

As AI clusters scale to include thousands of accelerators, increasing bandwidth requirements and the limitations of copper interconnects are driving the adoption of optical links closer to the processors themselves. Marvell brings technologies spanning electrical and optical interconnects, network switching, custom compute silicon and silicon photonics. Lumentum adds high-performance lasers, optical transceivers, optical circuit switching and compound-semiconductor manufacturing, including indium phosphide.

"AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation," said Matt Murphy, Chairman and CEO of Marvell.

In a press release, the companies say “the combination brings together best-in-breed technology” that would enable more tightly integrated design across the electrical and optical supply chain, from links between distributed data centers to connections within advanced semiconductor packages. “Joining Marvell creates a company uniquely positioned to capitalize on a market opportunity of $550 billion and generate significant, sustainable stockholder value,” commented Michael Hurlston, President and CEO of Lumentum.

The size of the proposed transaction has attracted scrutiny from investors and financial analysts. Marvell shares fell more than 10% and Lumentum’s by 15% after the announcement, according to Reuters, amid questions about the acquisition’s price and execution risks.

The deal is far from complete and it is expected to close in the first half of 2028, subject to shareholder and regulatory approvals. Antitrust review, including potential scrutiny in China, could become a significant factor in whether and on what terms the acquisition proceeds ultimately.

If completed, the transaction would represent a significant consolidation of semiconductor and photonics capabilities at a time when “AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation,” said Matt Murphy, Chairman and CEO of Marvell.