Marvell to Buy Lumentum in $115 Billion AI Optics Deal

Marvell Technology has agreed to buy optical components maker Lumentum in an all-stock deal valued at $115 billion including debt, one of the largest technology takeovers of 2026 and a sweeping bet that the artificial intelligence boom will keep demand for faster data-centre connections rising for years.

The companies announced the agreement on Monday, November 2, 2026. Under its terms, Lumentum shareholders will receive stock worth $1,132 per share, a 23.9% premium to Lumentum’s last unaffected closing price on October 28, before reports of the talks first emerged. That values Lumentum’s equity at $102.54 billion. When the deal closes, Marvell shareholders will own about 67% of the combined company and Lumentum shareholders about 33%.

Marvell said it expects the transaction to close in the first half of 2028, although the deadline could extend to August 2028 if regulatory approvals are still pending. The long timetable reflects the scale of the deal and the scrutiny large chip and components combinations now face in the United States, Europe and China.

Why Marvell wants Lumentum

Marvell designs custom chips that sit alongside processors made by larger rivals and by the big cloud companies themselves. Lumentum makes the lasers and optical components that move vast amounts of data between those chips at high speed, using light rather than traditional copper wiring.

As AI models grow larger, the bottleneck inside a data centre is increasingly not only computing power but moving data quickly enough between thousands of processors. Optical links are central to that task, and executives across the industry expect demand for them to outstrip supply while AI spending remains high.

By buying Lumentum, a company roughly half its size, Marvell is betting that the spending boom will last. The combined company will target a total addressable market of $550 billion, Marvell said, spanning custom silicon, networking and optical components for cloud and AI infrastructure.

The deal also sharpens Marvell’s challenge to Broadcom, the larger rival that dominates much of the custom-chip market. Marvell already works with Amazon’s cloud unit and Microsoft on custom AI chips, and in August it struck a deal to support Google’s tensor processing units worth up to $120 billion in sales through fiscal years covered by that agreement.

One of the biggest tech deals of the year

On an equity basis, the transaction is the top merger-and-acquisition deal of 2026 and the largest ever in the global technology sector, excluding the SpaceX-xAI merger, according to data compiled by Bloomberg. Heading into the announcement, Lumentum was valued at about $76 billion and Marvell at about $172.2 billion.

Both companies have the backing of Nvidia, the AI chip leader, which invested $2 billion in each of them earlier this year. Nvidia announced a $2 billion stake in Lumentum in March as part of a collaboration on photonics, the technology that uses light to move data faster and more efficiently.

Lumentum competes with US-listed Coherent and China’s Zhongji Innolight. It could also benefit from a proposed US ban on new Chinese optical transceivers, which analysts say could shift demand towards domestic suppliers.

Qatalyst Partners is serving as lead financial adviser to Marvell, while Citigroup and Evercore are advising Lumentum, Reuters reported.

Shares swing as investors weigh the price

Investors gave the deal a mixed reception on Monday. Marvell shares rose in premarket trading after the announcement, but later fell as much as 7.3% to $182.15, while Lumentum shares fell as much as 12% to $740.10, Bloomberg reported. Trading in Lumentum shares was halted earlier in the session.

The swings reflect two competing readings of the deal. Supporters see a combined company better placed to sell a fuller package of chips and optics to the largest cloud customers. Sceptics question the premium, the execution risk of integrating a large acquisition, and whether AI infrastructure spending can keep growing at its recent pace.

Since reports of the talks first emerged late last month, both stocks had already fallen sharply as a broad chip sell-off accelerated following Intel’s weak forecast, with Lumentum down about 8% and Marvell down about 22% over that period, Reuters reported.

What happens next

The deal now faces months of regulatory review, customer negotiations and integration planning. Marvell has not yet set out detailed plans for Lumentum’s product lines, factories or workforce, and the companies have not disclosed expected cost savings in the announcements reported so far.

For customers, the key question is whether a combined Marvell-Lumentum can deliver optical components at greater scale and lower cost without slowing innovation. For rivals, including Broadcom and Coherent, the deal raises the stakes in a race to control the links inside the data centres that power AI.

If the transaction closes as planned in 2028, it will stand as one of the defining deals of the AI investment cycle: a $115 billion wager that moving data with light, not copper, is the next great bottleneck in computing, and that owning both the chips and the optics is the way to profit from it.

Frequently asked questions

How much is Marvell paying for Lumentum?
The deal has an enterprise value of $115 billion including debt, and an equity value of $102.54 billion, based on $1,132 per share in Marvell stock.

When will the Marvell-Lumentum deal close?
Marvell expects the deal to close in the first half of 2028, with a possible extension to August 2028 if regulatory approvals are outstanding.

Who will own the combined company?
Marvell shareholders will own about 67% of the combined company, and Lumentum shareholders about 33%.

Why is Marvell buying Lumentum?
Marvell wants Lumentum’s optical components, which move data between AI chips at high speed, to strengthen its position in AI data centres and its challenge to Broadcom.

Sources: Reuters: Marvell to buy Lumentum in $115 billion deal in AI data-center bet; Reuters: How Marvell and Lumentum stack up in AI’s optical race; Bloomberg via Advisor Perspectives: Marvell reaches $115 billion deal for Lumentum Holdings