Marvell to buy Lumentum in $115 billion deal in AI data center bet

Marvell Technology buys optical component manufacturer Lumentum in a deal valued at $115 billion, as the custom chipmaker steps up its challenge to bigger rival Broadcom amid a boom in AI spending.

The deal, announced Monday, is one of the largest in 2026 and one of the boldest corporate bets yet on an AI boom that chip executives say will underpin industry demand for years.

By buying Lumentum — a company about half its size — Marvell is betting that big tech’s AI spending boom is here to stay and would keep “demand” for optical components used to move data at high speeds outpacing supply.

AI chip giant Nvidia invested $2 billion each in Marvell and Lumentum earlier this year.

Just three years ago, Marvell was a relatively unknown chipmaker. But its market value has since soared to more than $170 billion, “thanks to its role in helping tech giants such as Amazon develop custom AI chips and networking technology for data centers.”

Monday’s deal could also give Marvell more leverage in its race with rival Broadcom, which has long been Google’s main custom chip partner, owned by Alphabet, and offers customers a broader menu of AI data center hardware under one roof.

Marvell scored one of its biggest wins in August, signing a deal to supply chips that accompany Google’s AI processors worth up to $120 billion in sales through fiscal 2033, giving the search giant the right to buy a $12.2 billion stake.

Lumentum could benefit from China’s proposed ban

Since the Marvell-Lumentum talks were first announced late last month, Lumentum shares have fallen about 8% and Marvell’s shares about 22%, as widespread chip selling has accelerated following Intel’s weak forecasts.

Lumentum, which competes with U.S.-listed Coherent and China’s Zhongji Innolight, stands to benefit from a proposed U.S. ban on new Chinese optical transceivers, which could shift demand to domestic suppliers.

Marvell has already strengthened its photonics business this year. The company completed a $3.5 billion purchase of Celestial AI in February, as the growing use of AI agents and chatbots drives demand for faster optical links connecting thousands of chips in AI data centers.

Shares of Marvell hit a record high in June after Nvidia CEO Jensen Huang called the custom chipmaker the next “billion-dollar company.” Its annual revenue more than doubled from $3 billion in fiscal 2021 to $8.2 billion in fiscal 2026.

Marvell’s acquisition of Lumentum is its largest purchase since its $10 billion buyout of Inphi in 2021.