Marvell advances data-center strategy with Celestial AI acquisition

December 3, 2025 /SemiMedia/ — Marvell Technology said it will acquire semiconductor startup Celestial AI in a deal valued at $3.25 billion, as the company aims to scale its photonics and data-center semiconductor portfolio. The agreement includes $1 billion in cash and about 27.2 million shares of Marvell stock, with the deal expected to close in the first quarter of 2026.

Celestial AI’s technology is expected to generate meaningful revenue for Marvell beginning in the second half of fiscal 2028, with annualized revenue projected to reach $500 million in the fourth quarter of that year and to double by the fourth quarter of fiscal 2029.

AI demand boosts custom silicon development

The rapid expansion of generative AI has accelerated development cycles across the semiconductor sector, driving chipmakers to deliver faster and more power-efficient devices for hyperscale data centers. Marvell, along with Broadcom, has been building custom silicon for cloud providers, a business that has grown into a key revenue driver. Analysts say Marvell is involved in helping Amazon and Microsoft develop their in-house AI processors.

CEO Matt Murphy said Marvell expects total revenue of around $10 billion next fiscal year, with data-center revenue rising 25%. Custom silicon revenue is projected to grow roughly 20% next year, Murphy added.

Photonics to drive Marvell’s next growth phase

By integrating Celestial AI’s silicon-photonics research, Marvell expects to sharpen its competitive position in next-generation optical interconnects. The company said the technology will contribute to a future product portfolio targeting a market opportunity of about $10 billion. Murphy noted that large cloud customers are expected to begin broader deployment of photonics between 2027 and 2028, with adoption increasing industry-wide thereafter.