Marvell Technology, a U.S. semiconductor maker, said it has entered a definitive agreement to acquire AI-focused startup Celestial AI in a transaction valued at about US $2.35 billion, marking a major strategic move to bolster its capabilities in data-centre and AI infrastructure technology.
Under the agreement, Marvell will pay approximately $1 billion in cash and roughly $2.25 billion in Marvell common stock to Celestial AI’s shareholders at closing, which is expected early in 2026 pending regulatory approvals and customary conditions. Contingent stock consideration of up to about $2.25 billion may be issued based on future revenue milestones tied to Celestial’s growth.
Celestial AI, founded in 2020, has developed a Photonic Fabric technology platform that uses optical interconnects to enhance bandwidth, power efficiency and scalability inside and between servers — a development that industry observers see as increasingly critical for next-generation artificial intelligence and cloud computing workloads.
Marvell executives described the acquisition as a “transformative step” that expands the company’s leadership in AI-related connectivity and data-centre networking technologies. The combined portfolio aims to address the transition from traditional electrical connections to optical solutions in high-performance systems as AI model sizes and compute demands grow.
Officials at both companies highlighted expanding market demand for AI infrastructure as a driving force behind the deal. Marvell expects Celestial’s technology to begin contributing to revenue in the second half of its fiscal year 2028, with projected annualised revenue reaching $500 million by late 2028 and $1 billion by late 2029.
Analysts view the acquisition as part of broader industry shifts toward optical interconnects and high-bandwidth solutions to support large-scale AI deployments, reflecting heightened competition among semiconductor firms to lead in the AI hardware ecosystem.
The transaction follows other significant Marvell acquisitions in recent years and underscores continued consolidation in the semiconductor sector as companies seek to enhance capabilities for emerging computing architectures.
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