Marvell Technology to Acquire Celestial AI for $3.25 Billion

Mexico City, Mexico – Chipmaker Marvell Technology announced on Tuesday its plans to acquire semiconductor startup Celestial AI in a deal valued at $3.25 billion. This strategic move comes alongside Marvell’s forecast for fourth-quarter revenue that exceeds Wall Street expectations.

Marvell’s shares fell 6% in extended trading following the announcement. The deal is expected to enhance Marvell’s capabilities in advanced data centers, particularly in the fast-evolving field of generative AI, which has accelerated the need for efficient chip designs.

With this acquisition, Marvell aims to leverage Celestial AI’s innovations in photonics technology, which utilizes light instead of electrical signals to enhance the connections between AI and memory chips. This positions Marvell to better compete with industry giants like Broadcom and Nvidia.

Under the agreement, Celestial AI will receive $1 billion in cash alongside 27.2 million shares of Marvell common stock, which is valued at approximately $2.25 billion. Marvell anticipates that Celestial AI will start contributing substantially to its revenue in the second half of fiscal 2028, predicting a run rate of $500 million by that time, which could double by fiscal 2029.

The acquisition is projected to finalize in the first quarter of the 2026 calendar year. Marvell expects fourth-quarter revenue to be around $2.20 billion, which is slightly above the analysts’ average estimate of $2.18 billion. Its revenue for the third quarter ending November 1 rose by 36.8% to $2.07 billion, aligning with analysts’ predictions.

Despite these gains, Marvell’s stock has dropped over 15% this year, as growing competition in the custom AI chip and networking markets raises concerns about the sustainability of the AI boom.