Lumentum CEO touts 'enormous' opportunity in massive AI connectivity deal with Marvell
by Samantha Subin · CNBCKey Points
- Marvell will acquire Lumentum in an all-stock transaction.
- The deal will expand Marvell's push into optical connectivity for artificial intelligence data centers.
- Marvell's takeover marks one of the most significant bets on AI in 2026.
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Marvell Technology's deal for optical components maker Lumentum will create an "enormous" opportunity to address growing connectivity demands from the artificial intelligence infrastructure buildout, Lumentum CEO Michael Hurlston told CNBC on Monday.
"You need scale-up technology that needs semiconductors and optical working seamlessly together," Marvell CEO Matt Murphy told CNBC's "Squawk on the Street." "We are going to create a new category of company here."
Since the tie-up is a fixed-ratio deal with no cash, the value will depend on the price of Marvell shares. The company said the transaction has an implied enterprise value of $115 billion for Lumentum, in a release.
Marvell shares slumped 8% in trading Monday, while Lumentum's stock sank 13%.
Through the acquisition, Marvell said it can combine electrical and optical technologies to meet accelerating and shifting AI connectivity demands across regions and systems. Companies are increasingly relying on optical connections to piece together chips used to run and train large language models.
"We're actually going to create solutions around those that are highly sticky, and the reason that they're sold out is because the demand is exploding, and we don't see that changing anytime soon," Murphy said.
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Lumentum shareholders will receive 4.5 Marvell shares for each Lumentum share under the agreement. The deal is expected to close during the first half of 2028.
Marvell's takeover marks one of the most significant bets on AI in 2026 and comes despite recent concerns over the long-term sustainability of infrastructure spending.
This isn't the company's first bet on AI growth. This year, the company closed a multibillion-dollar deal for Celestial AI, a startup focused on optical interconnectivity technology.
Marvell's Murphy also shot down concerns about Nvidia's circular dealmaking, given the leading AI chipmaker's recent multibillion-dollar investments in both companies.
In a bid to further support the data center infrastructure that houses its AI chips, Nvidia has positioned itself as a central cog in a network of related companies, investing in several technology companies that purchase its chips or neoclouds that rent out computing capacity. That's sparked criticism that companies like Nvidia are virtually funding themselves by taking stakes in customers.
"This is a double down on supporting Nvidia, who is the ecosystem leader in this area," Murphy told CNBC. "We're very committed to that partnership, and I think having two of the key suppliers come together, that support that ecosystem, is going to be a big benefit for them."
Marvell has seen its market value more than triple over the last three years, buoyed by unrelenting AI enthusiasm. Lumentum's stock has more than doubled in 2026 alone.
CORRECTION: This story has been updated to reflect that Lumentum CEO Michael Hurlston described the deal as an 'enormous' opportunity. A previous version of this story incorrectly cited the Marvell CEO.