Marvell Technology is in advanced talks to buy Lumentum Holdings, a maker of optical components for data centres, Bloomberg News reported on Wednesday, in a deal that would deepen Marvell’s bet on the hardware behind artificial intelligence.
No final agreement has been reached, and the talks could still fall through, the report said, citing people familiar with the matter. A deal could be announced as soon as next week. Neither company immediately responded to Reuters’ requests for comment.
What Happened
Bloomberg’s report, carried by Reuters and other outlets on Wednesday and Thursday, describes late-stage, private discussions between the two Northern California companies. Marvell makes custom AI chips and networking hardware that connect servers inside data centres. Lumentum makes lasers and other optical parts that move data between those servers using light, at speeds copper wiring struggles to match. The timing matters. Demand for AI computing has pushed data-centre builders to link ever-larger clusters of chips together, and the optical links between them have become a bottleneck. Owning Lumentum would give Marvell direct control over a part it already buys, rather than leaving it dependent on an outside supplier in a market where supply is tight.
Why Marvell Wants Lumentum
Lumentum’s parts are sold out through early 2029, its chief executive Michael Hurlston said this month, according to TipRanks’ report. The company could not meet about 70% of demand for some products next year, and some customers have already begun placing orders for 2030. To expand, Lumentum plans to invest at least $350 million in Japan to grow production of indium phosphide and other optical parts — but new factory capacity takes time. For Marvell, the logic is straightforward: secure the supply, and sell a more complete package. Marvell already supplies custom AI chips to major cloud companies, works with Amazon’s cloud unit and Microsoft on custom chips, and struck a chip deal with Alphabet’s Google in August. Adding Lumentum’s lasers would let it combine chips, networking and optics — three layers of the same AI data-centre stack — under one roof. It would also build on a photonics push Marvell has already started. The company bought photonics firm Celestial AI for $3.25 billion in a deal announced late last year, a step in the same direction: using light, not just electricity, to move data.
The Numbers
The deal would be one of the largest in AI infrastructure. Lumentum carries a market value of about $83 billion, against roughly $221 billion for Marvell — meaning the target is worth more than a third of its would-be buyer. That size creates a funding question. Marvell held about $3.92 billion in cash and cash equivalents in its latest quarter, far below Lumentum’s market value, so a deal would almost certainly need substantial new shares, debt, or both. Analysts at Bernstein have also warned about integration risk — combining two large, complex manufacturers is rarely smooth, even when the strategic logic is clear.
| Marvell Technology | Custom AI chips and data-centre networking hardware | About $221 billion |
| Lumentum Holdings | Lasers and optical components for data centres and telecom networks | About $83 billion |
Market Reaction
Investors split on the news. After the report, Lumentum shares rose about 9% in after-hours trading, while Marvell shares fell 8%, TipRanks reported, as investors weighed the cost of the deal against its promise. The pattern is familiar in large acquisitions: the target’s shareholders gain on the prospect of a premium, while the buyer’s shareholders worry about how much it will pay and how long integration will take. A rival optics maker, Coherent, also rose in after-hours trading, a sign that investors see the whole optical-components sector repricing on the back of the AI build-out, not just the two companies named in the report.
What Could Still Stop It
Advanced talks are not a signed deal. The report itself stresses that no final agreement has been reached, and the price, the mix of cash and shares, and any conditions attached to a deal are all still unknown. Either side could walk away, and the announcement timetable — as soon as next week — could slip. Regulatory scrutiny is another open question. Large technology deals now face close attention from competition authorities, and a combination that joins a major chipmaker with a leading optics supplier would be no exception. That scrutiny has already touched the sector this week: the Justice Department is examining Nvidia’s $12.93 billion deal to buy Hugging Face, asking whether owning the open AI platform could harm competition.
Wider AI Context
The Marvell-Lumentum talks land in the middle of a remarkable week for AI spending and deal-making. Nvidia, which invested $2 billion in Lumentum earlier this year, has itself been at the centre of the action — both as an investor, through Nvidia’s $3 billion investment in Meta, and as a dealmaker under regulatory scrutiny. Alphabet’s shares fell after its earnings miss as AI spending burned cash, while Microsoft reported a profit after offering buyouts to 60,000 workers. Together, those stories describe the same underlying shift: AI infrastructure is now so valuable, and so expensive, that even the largest companies are reshaping themselves — and each other — to secure it.
Timeline
- Late 2025: Marvell announces its $3.25 billion acquisition of photonics firm Celestial AI.
- Earlier in 2026: Nvidia invests $2 billion in Lumentum.
- August 2026: Marvell strikes a chip deal with Alphabet’s Google to support its in-house AI processors.
- October 2026: Lumentum’s chief executive says its optical parts are sold out through early 2029.
- Wednesday 28 October 2026: Bloomberg reports Marvell is in advanced talks to buy Lumentum, citing people familiar with the matter.
- As soon as next week: the earliest a deal could be announced, according to the report — if the talks hold.
What Happens Next
Watch for three things. First, whether either company confirms the talks or announces a deal next week. Second, the price and structure — in particular, how much Marvell pays in new shares, which determines how much existing shareholders are diluted. Third, any regulatory response, which will shape how quickly a deal, if agreed, could actually close. Until then, this remains a reported negotiation, not a completed acquisition, and the share moves since the report reflect expectations, not a done deal.
FAQs
Is Marvell buying Lumentum? Not yet. Bloomberg reported advanced talks, but no final agreement has been reached and the talks could still fall through. Neither company has confirmed the discussions.
How big would the deal be? Lumentum’s market value is about $83 billion, against about $221 billion for Marvell. The final price, if a deal is agreed, has not been reported.
Why does Marvell want Lumentum? Lumentum makes lasers and optical components that carry data between servers in AI data centres. Demand outstrips supply — its parts are sold out through early 2029 — and Marvell already buys lasers from Lumentum, so owning the supplier would secure a critical input.
When could a deal be announced? As soon as next week, according to Bloomberg’s report, though that timetable could slip and no announcement is guaranteed.
What happens to Marvell and Lumentum shares? After the report, Lumentum shares rose about 9% in after-hours trading while Marvell shares fell 8%, as investors weighed the deal’s cost against its strategic value. Share prices will keep moving as the talks develop.
Does Nvidia have a stake in this story? Yes, indirectly: Nvidia invested $2 billion in Lumentum earlier this year, and Nvidia is itself active in AI deal-making, including its investment in Meta and its Hugging Face acquisition, which regulators are examining.
Related Coverage
Readers following the AI deal wave may also want to read about Nvidia’s $3 billion investment in Meta, and about the Justice Department’s examination of Nvidia’s Hugging Face deal. The wider earnings backdrop includes Alphabet’s shares falling after its earnings miss and Microsoft’s profit after offering buyouts to 60,000 workers. More business news can be found in the Business section.