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Marvell makes a $115 billion bet on optical technology with Lumentum deal

Chip designer Marvell announced last week that it has agreed to acquire Lumentum, a maker of light-transmitting optical hardware, in a $115 billion all-stock deal including debt. The move gives Marvell technology and manufacturing capacity critical to moving data through AI data centers.

Marvell and other industry experts believe copper wiring is reaching its limits as AI workloads grow, forcing a shift toward optical connections. "Surging AI data traffic requires rapid hardware innovation, and this combination enhances our ability to deliver next-generation solutions at scale," Lumentum CEO and president Michael Hurlston said in a prepared statement.

Patrick Moorhead, founder and principal analyst at Moor Insights & Strategies, thinks Marvell is well suited to make the most of this deal. "Marvell is really good at choosing and integrating other companies. They have a great track record on this," Moorhead told FastForward. "It’s expensive but Lumentum brings a lot to the table that Marvell does not have. It indicates to me that valuations and opportunities are high and that more integrated solutions versus piece parts are desired."

In a LinkedIn post, Moorhead said he believes the combined companies are going to solve a big problem. "The copper wall is real. I said in March that scale-out and scale-across were already optical and scale-up was next. When the link goes optical inside the rack, the DSP, the laser and the packaging have to be designed as one thing. That's the whole thesis, and it holds."

Remarkably, Marvell announced it doesn't expect the deal to close until the first half of 2028. That's not a typo, that's somewhere between 14 and 20 months from now. That's a heck of a long time for a deal to simmer, but perhaps the companies expect a lengthy regulatory review.

This story first ran in FastForward #85: Dispatches from the road, my Friday newsletter for enterprise tech leaders.

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