Marvell in Talks to Buy Lumentum in $83 Billion AI Optics Deal

Marvell Technology is in late stage talks to acquire Lumentum Holdings, the maker of laser and optical components that move data inside artificial intelligence data centers, Bloomberg reported on Thursday, citing people familiar with the matter. No final agreement has been reached, but the people said a deal could be announced as early as next week.

Lumentum has a market value of about $83 billion. Marvell is worth about $221 billion. A completed deal would rank among the largest acquisitions in the AI infrastructure industry, and it would put a key supplier inside one of its own biggest customers.

Why Marvell wants its own supplier

Marvell already buys laser components from Lumentum for its data center networking products. Owning the supplier would simplify that supply chain at a moment when optical parts are scarce. Lumentum chief executive Michael Hurlston said this month that the company's optical products were sold out through early 2029, that it could not meet about 70 percent of demand for some products next year, and that some customers are already placing orders for 2030. The company plans to invest at least $350 million in Japan to expand production of indium phosphide and other optical parts.

Lumentum is also backed by Nvidia, which invested $2 billion in the company earlier this year. Both Marvell and Lumentum are headquartered in Northern California.

How the market reacted

Investors split the two stocks in opposite directions. Reuters reported on Thursday morning that Marvell shares fell 9.4 percent in premarket trading after the reports, while Lumentum shares rose 4.3 percent. Other reports put Lumentum up as much as 9 percent in after hours trading when the news first broke. Marvell held about $3.9 billion in cash in its latest quarter, a small share of Lumentum's value, so a deal would likely lean heavily on stock and would dilute Marvell shareholders. That math helps explain the drop.

Neither company has confirmed the talks. Marvell and Lumentum did not immediately respond to a Reuters request for comment on Thursday.

What happens next

Talks at this stage can still fall apart, and no price or terms have been announced. If an agreement comes next week, the announced mix of cash and stock, and any premium over Lumentum's market value, will decide how investors judge it. Marvell agreed late last year to acquire optical technology company Celestial AI for $3.25 billion, a much smaller step in the same direction.