Semiconductor giant Marvell Technology (MRVL) is buying optical-components maker Lumentum Holdings (LITE) for $115 billion U.S.
The acquisition, which is one of the biggest in recent years, comes as Marvell looks to challenge rival Broadcom (AVGO) and gain market share amid the artificial intelligence (A.I.) boom.
In buying Lumentum, Marvell is betting that A.I. spending will continue and keep demand high for optical components used to move data at high speeds.
Three years ago, Marvell was a small player in the market for microchips, processors, and semiconductors.
But Marvell’s market capitalization has swelled to $172 billion U.S. due to its role in helping technology companies develop custom A.I. chips and networking technology for data centres.
The deal to buy Lumentum comes after Marvell landed a big win in August of this year, signing a deal to supply $120 billion U.S. worth of chips to Google parent company Alphabet (GOOGL).
However, the deal also comes as the A.I. trade begins to show signs of cracking as investors worry about the amount of money being spent on data centres and other infrastructure.
Since the Marvell-Lumentum talks were first reported in early October, Lumentum’s stock has fallen 8% and Marvell’s share price has declined 22%.
Still, Lumentum is expected to benefit from a proposed U.S. ban on Chinese optical transceivers that could shift demand toward American suppliers.
Marvell’s annual revenue has more than doubled from $3 billion U.S. in fiscal 2021 to $8.2 billion U.S. in fiscal 2026 due to A.I. demand.
Marvell’s acquisition of Lumentum is its largest purchase ever, dwarfing its previous $10 billion U.S. buyout of Inphi in 2021.
MRVL stock has risen 117% in the last 12 months to trade at $196.40 U.S. per share. LITE stock has gained 321% over the past year to change hands at $840.70 U.S. a share.
