Marvell wants to be a copper topper, bets $115B on photonics leader to push optical networking

IP house believes optics demand is going to explode as Nvidia and others eye bigger systems

Hoping to dominate the next phase of AI networking, Marvell Technology plans to acquire photonics giant Lumentum in an all-stock deal valued at $115 billion. The move will fill several key gaps in Marvell's photonics portfolio, particularly with regard to high-performance laser sources, optical transceivers, optical circuit switches, and specialized compound semiconductor manufacturing capabilities involving indium phosphide.

Higher speed interconnects combined with larger compute domains are the driving forces behind the move to photonics. As interconnects push beyond 400 Gbps per lane, copper interconnects are being pushed to their limit, necessitating denser, hotter rack systems. Optics offer a reprieve from these scaling laws.

Traditional copper wire can only maintain a 400 Gbps signal over about 1.25 meters. Every time the per lane speed doubles, the reach is halved. Photonics are largely immune to this and can push that signal over kilometers, enabling infrastructure providers to scale their systems across entire aisles, while also reducing the power and cooling requirements of each individual rack.

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Due to close in the first half of 2028, the all-stock transaction comes as AI infrastructure builders, including Nvidia and AMD, eye larger rack-scale systems, which will rely heavily on optical interconnects to stitch hundreds and even thousands of GPUs together into a single compute domain for training or inference.

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At Computex 2026 in Taipei earlier this year, Jensen Huang predicted that Marvell's long-term investments in photonics would catapult the IP house to a $1 trillion valuation. That hasn't happened just yet – the company’s market cap currently sits at just $180 billion – but it seems Marvell isn't above buying its way to the finish line by snapping up optics vendors before the AI boom sends their valuations skyrocketing.

As we've previously reported, the move to optical scale up networks has fueled a flurry of investment in optics, silicon photonics development, and manufacturing. Nvidia itself invested $2 billion into Lumentum just eight months ago to bolster its optics manufacturing capacity.

The limiting factor up to this point has been power. When Nvidia unveiled its first Blackwell-based rack systems in 2024, Huang noted the company specifically avoided optics as they would have added 20 kW of additional power draw to a system that already consumed 120 kW under load.

In the years since then, Marvell has invested heavily in next-gen optics tech. One of the most notable acquisitions came in February 2026, when the company paid about $3.5 billion for photonic interconnect developer Celestial AI.

Celestial's tech opened the door to more efficient optics integrations including near- and co-packaged optical interconnects that used a fraction of the power of conventional pluggable optics used in scale out networks.

Marvell's Lumentum buy will position the IP house as a one-stop shop for AI infrastructure providers' photonics needs. ®