Marvell Technology has entered into a definitive agreement to acquire Celestial AI for upfront consideration valued at approximately $3.25 billion, combining the companies' capabilities to drive next-generation optical interconnect solutions for AI scale-up data centre infrastructure.
The acquisition includes $1bn in cash and approximately 27.2 million Marvell shares valued at $2.25bn. Marvell will pay additional contingent consideration of up to $2.25bn in shares upon achievement of revenue milestones, with the full earnout paid if Celestial AI reaches cumulative revenue exceeding $2bn by the end of Marvell's fiscal year 2029.
Photonic fabric technology for multi-rack AI clusters
Celestial AI's Photonic Fabric technology platform enables optical I/O for package, system, and rack-level connectivity. The platform is specifically designed for large AI clusters spanning multiple racks, providing high bandwidth, ultra-low latency, and significantly reduced power consumption compared to existing copper or early optical alternatives.
The technology delivers more than twice the power efficiency of copper interconnects while supporting longer reach and higher bandwidth. Celestial AI's first-generation Photonic Fabric chiplet integrates electrical and optical components to deliver 16Tbps of bandwidth in a single chiplet, representing 10x the I/O capacity of current 1.6T-equivalent scale-out optical ports.
"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.
Thermal stability enables vertical co-packaging with XPUs
A key differentiator is the Photonic Fabric's high thermal stability, which is critical for co-packaging vertically with high-power, multi-kilowatt XPUs and switches. This innovation allows the photonics to connect directly into XPUs in 3D packages, rather than being restricted to connecting from the die edges.
This approach frees up die edge space that can be repurposed to increase high-bandwidth memory (HBM) capacity within XPU packages, creating more compact, highly integrated solutions.
Sandeep Bharathi, president of Marvell's data centre group, said combining the company's UALink scale-up switch roadmap with Celestial AI's optical interconnect will enable customers to build AI systems that exceed copper limitations. "AI infrastructure is transforming faster than ever, and the future demands scale-up fabrics that deliver unprecedented bandwidth, power efficiency, and reach," he said.
Hyperscaler engagement and deployment timeline
Celestial AI is engaged with multiple hyperscalers and ecosystem partners planning to deploy the Photonic Fabric technology in next-generation scale-up architectures. Marvell expects the chiplets to be co-packaged with custom XPUs and scale-up switches for the industry's first large-scale commercial deployment of optical interconnect for scale-up connectivity.
Dave Brown, vice president of compute and machine learning services at AWS, said optical interconnects will play an important role in future AI infrastructure. "Celestial AI has made impressive progress, and we expect their combination with a large-scale semiconductor company like Marvell will help further accelerate optical scale-up innovation for next-generation AI deployments," he said.
Marvell expects meaningful revenue contributions from Celestial AI to begin in the second half of fiscal 2028, reaching a $500m annualised run rate in the fourth quarter of fiscal 2028 and doubling to $1bn by the fourth quarter of fiscal 2029.
