Marvell to buy Lumentum in a $115 billion all-stock deal for AI optics

Marvell will buy Lumentum, and it will pay in its own stock. Lumentum holders get a fixed 4.5 Marvell shares for each Lumentum share they own.

That works out to about $1,132 per Lumentum share. It is a premium of roughly 23.9% over the October 28 closing prices, the last trading day before rumors of a deal began.

The deal values Lumentum at an implied enterprise value of $115 billion. Enterprise value is the price of the whole business, counting its debt and cash.

Because nobody pays cash, the two sets of owners simply merge. Current Marvell owners will hold about 67% of the combined company. Lumentum owners will hold about 33%.

Here are the other terms the companies listed:

• Leadership: Matt Murphy stays Chairman and CEO of the combined company.
• Board: Three Lumentum directors, including CEO Michael Hurlston, join Marvell's board, which has seven seats today.
• Approvals: Both boards approved the deal unanimously. Shareholders of both companies and regulators still have to say yes.
• Timing: The companies expect to close in the first half of 2028.

Why it matters: The deal is closer to a merger than a classic buyout. Marvell's own shareholders are giving up a third of their company.

Lumentum makes the parts that create and handle light. That means high-power lasers, optical transceivers and optical circuit switches.

A transceiver is a small module that plugs into a switch. It turns electrical signals into light, sends them down a glass fiber, and turns them back at the other end.

Lumentum also works with indium phosphide, a material used to make lasers that fast communication links need. Few factories can make these parts at volume. The company says its optical circuit switch uses tiny moving mirrors to point a beam of light straight at its target, with no need to convert the signal along the way.

Marvell designs chips that move data. Its customers include big cloud companies, and it helps some of them build their own custom AI chips.

It also sells electrical and optical links, network switches and the packaging that ties chips together. Earlier this year it bought a photonics company called Celestial AI, so optics were already on its shopping list.

Marvell is also already a Lumentum customer. It buys Lumentum lasers, so this deal turns a supplier into part of the family.

In real life Think of a pizza chain buying the farm that grows its tomatoes. The pizza chain already knew what it needed, and now it can plan the crop with the cooks in the same room.

AI data centers link thousands of chips so they can work like one giant brain. Those chips talk to each other all day, and the wires between them are the bottleneck.

Copper wires lose the signal over distance, and the faster the signal, the shorter the distance. Engineers call this the copper wall. Light travels farther and uses less power.

Marvell's Murphy called it "an opportunity that comes along once in a generation." Lumentum's Hurlston said surging AI data traffic demands fast hardware innovation.

The companies describe four kinds of links they want to cover, from long runs between distant data centers down to connections inside a single chip package. The press release puts the combined market at about $550 billion.

Today most network switches read each packet of data, decide where it goes, and send it on. Between each hop, the signal changes from light to electricity and back to light again.

Lumentum's R300 optical circuit switch skips that. It uses micro-electro-mechanical mirrors, which are microscopic mirrors that tilt, to open a direct beam of light between two endpoints. Lumentum says this gives much lower delay, a cleaner signal and a big cut in network power for large GPU clusters. A GPU is the kind of chip that does most of the work in AI.

The catch: a mirror path is a fixed road, not a traffic cop. It suits big, steady flows of data between racks of chips.

Co-packaged optics, or CPO, means putting the light engine right next to the switch chip instead of at the edge of the box. The electrical signal then only has to travel a few millimeters.

Marvell showed a switch built this way, the TX9190, at an industry show in 2025. The photo on this page shows it: yellow fibers run to the front, where orange plug-in light sources sit. Short copper paths mean less loss and less wasted power.

This is where the deal gets practical. Making a CPO product work takes chip designers and laser makers talking daily, which is the whole point of putting them under one roof.

The big picture: Marvell has been moving that way for a while. Its Murphy has said that chip speed is growing faster than the links between chips, so connections are the next bottleneck.

The companies expect more than $1 billion a year in cost savings once the deal is fully running. That is called a run-rate synergy, which means yearly savings from combining the two businesses.

They also expect the deal to add to Marvell's profit per share, on an adjusted basis, in the first year after closing. They say the pairing should help them ship tested optical products to customers faster.

Along with the deal, Marvell shared early numbers for its fiscal third quarter. Revenue is in line with its earlier guidance, and Marvell tightened its forecast range to plus or minus 2%, down from plus or minus 5%.

Marvell's stock dropped more than 13% on October 29, after news of the talks leaked. Several analysts raised the same worries.

• Cash: Marvell held about $3.92 billion in cash in its latest quarter, so a stock deal was the only realistic route.
• Dilution: Issuing that many new shares can shrink each existing owner's slice of future profit.
• A high price: Analysts expected a big premium, which on its own can weigh on the buyer's shares.
• Regulators: The review could take a long time, including in China.

An analyst at Evercore ISI also said customers wondered why Lumentum would sell, given that it has said its output is sold out through fiscal 2029.

The Nvidia link adds another wrinkle. Nvidia invested $2 billion in Lumentum in March, which shows how much the AI chip world wants a steady supply of lasers.

• Not an overnight change: The deal closes in 2028, so your apps will not feel it soon.
• Faster, cooler AI later: If light links work as promised, AI services could get more speed for less power in the long run.
• Competition: The deal gives Marvell a bigger optical lineup to compete with its rival Broadcom.
• If you own either stock: Both companies' shareholders vote, so watch the filings the companies said they will submit to the SEC.