AI Sparks an "Optical" M&A Deal: Marvell Technology, Inc. (MRVL.US) Seeks to Swallow Lumentum (LITE.US), Potentially Ranking Among the Top Ten Largest Deals in Tech History

Marvell Technology, Inc. (MRVL.US) is in advanced talks to acquire data-center optics maker Lumentum (LITE.US), according to people familiar with the matter, a potential blockbuster deal in the race to scale up in artificial intelligence. An agreement could be announced as soon as next week, the people said. Lumentum has a market value of about $83 billion, while Marvell's is about $221 billion. The talks between the two companies underscore how the growth of AI has spawned a mergers-and-acquisitions frenzy, with investors betting on the technology's enormous growth potential. No final agreement has been reached, and the talks could still end without a deal, or details such as timing could still change, the people said. Marvell's shares fell about 9% after Wednesday's regular trading close, while Lumentum rose about 11% to around $1,018. Lumentum has climbed 148% this year and closed Wednesday's regular session at $913.95. If it succeeds in acquiring Lumentum, the deal would likely rank among the top ten largest technology and telecom mergers of all time. Lumentum makes lasers and other optical technology used to transmit Beijing Vastdata Technology at extremely high rates. This hardware underpins the AI boom, enabling data centers and telecom companies to move information between servers, facilities and other locations. Marvell is a semiconductor manufacturer that buys lasers from Lumentum, so the deal could streamline its supply chain. Marvell has been increasing its bets on optical and photonic technology that connects data-center equipment. Earlier this year, the company acquired photonics firm Celestial AI. NVIDIA Corporation (NVDA.US) previously took a stake in Lumentum worth $2 billion as part of a cooperation agreement between the two, covering photonicsusing light instead of traditional copper cabling to transmit data faster and more efficiently. Marvell also works with Amazon.com, Inc.'s (AMZN.US) cloud unit and Microsoft Corporation (MSFT.US) to build custom AI chips for the two companies. In August, the company reached a chip agreement with Alphabet Inc. Class C (GOOGL.US) to support Alphabet Inc. Class C's self-developed AI chipstensor processing units (TPUs).