AI drives "light" merger and acquisition: Marvell Technology (MRVL.US) seeks to acquire Lumentum (LITE.US), potentially entering the top ten largest tech deals in history

According to Golden Ten Data APP, informed sources have revealed that Marvell Technology (MRVL.US) is in advanced talks to acquire data center optical device manufacturer Lumentum (LITE.US). In the race to expand scale in the artificial intelligence sector, this could become a landmark deal.

Sources indicate that the deal could be announced as soon as next week. Lumentum has a market capitalization of about $8.3 billion, while Marvell’s market cap is about $22.1 billion.

The negotiations between the two companies highlight how the development of artificial intelligence has sparked a wave of mergers and acquisitions, as investors rush to bet on the huge growth potential of this technology.

According to the sources, a final agreement has not been reached, and talks could still end without a deal or with changes to the timeline and other details.

After regular trading closed on Wednesday, Marvell’s stock price fell by about 9%, while Lumentum rose by about 11% to around $1018. Lumentum has surged 148% so far this year and closed regular trading on Wednesday at $913.95.

If Marvell successfully acquires Lumentum, this transaction is likely to rank among the ten largest tech and telecom mergers and acquisitions in history.

Lumentum manufactures lasers and other optical technologies that transmit massive amounts of data at extremely high speeds. These hardware components underpin the boom in artificial intelligence, enabling data centers and telecom companies to transfer information between servers, facilities, and other locations.

Marvell is a semiconductor manufacturer that sources lasers from Lumentum, so this deal is expected to streamline its supply chain. Marvell has been increasing its investment in optical and photonic technologies that connect data center equipment. Earlier this year, the company acquired photonics firm Celestial AI.

NVIDIA (NVDA.US) previously invested $2 billion in Lumentum as part of a cooperation agreement between the two companies, which covers photonic technology—replacing traditional copper cabling with light to transmit data faster and more efficiently.

Marvell also works with Amazon’s (AMZN.US) cloud division and Microsoft (MSFT.US) to customize AI chips for both companies. In August, Marvell struck a chip deal with Alphabet's (GOOGL.US) Google to support Google’s proprietary AI chip—the Tensor Processing Unit (TPU).