BY Fraser Tennant
In a deal that accelerates its connectivity strategy for next-generation artificial intelligence (AI) and cloud data centres, chipmaker Marvell Technology is to acquire semiconductor start-up Celestial AI in a transaction valued at approximately $3.25bn.
Under the terms of the definitive agreement, Celestial AI will receive $1bn in cash and 27.2m shares of Marvell common stock worth $2.25bn – based on the average volume weighted average price for the 10 trading days ending the second day prior to signing.
The deal to acquire Celestial AI will allow Marvell to tap into the start-up’s work on photonics, which uses light rather than electrical signals to create connections between AI chips and memory chips – an area in which Marvell competes with Broadcom and the world’s most valuable company, Nvidia.
Combined with its existing leadership in scale-out and scale-across connectivity, Marvell expects the combination with Celestial AI to result in the industry’s most comprehensive provider of high-bandwidth, low-power, low-latency solutions for next-generation data centre connectivity.
“The acquisition of Celestial AI is a transformative step in Marvell’s evolution and expands our leadership in AI connectivity, as scale-up becomes the next frontier in AI infrastructure,” said Matt Murphy, chairman and chief executive of Marvell. “This builds on our technology leadership, broadens our addressable market in scale-up connectivity, and accelerates our roadmap to deliver the industry’s most complete connectivity platform for AI and cloud customers.”
Founded in 2020, Celestial AI is the creator of the ‘photonic fabric’, an optical interconnect technology platform for AI computing systems. The photonic fabric provides the foundational technology for data centre computing, networking and memory systems to enable advancements in AI with sustainable and profitable business models.
“Marvell is the ideal home for our Photonic Fabric, with the scale, customer relationships and connectivity leadership to take this platform into high-volume production,” said David Lazovsky, co-founder and chief executive of Celestial AI. “Together with Marvell’s scale-up switching strategy, we’re excited to accelerate the transition to optical scale-up interconnect and expand what next-generation AI infrastructure can achieve.”
The transaction is expected to close in the first quarter of 2026, subject to customary closing conditions and regulatory approvals.
Marvell expects meaningful revenue contributions from Celestial AI to begin in the second half of 2028, reaching a $500m annualised run rate in the fourth quarter of 2028, doubling to a $1bn dollar run rate by the fourth quarter of 2029.
News: Marvell to buy chip startup Celestial AI for $3.25 billion, bullish on growth next year