Marvell to Acquire Celestial AI for $3.5 Billion to Scale Up Data Centre Connectivity

Marvell Technology, a data infrastructure semiconductor solutions company, has announced plans to acquire Celestial AI, a startup focused on developing optical interconnect hardware, for  $3.25 billion. 

This strategic acquisition is for accelerating the company’s connectivity strategy for next-generation AI and cloud data centres, as the startup has built a disruptive photonic fabric technology platform for scale-up optical interconnect. 

“Next-generation accelerated systems are no longer confined to a single rack – they are evolving into multi-rack configurations that connect hundreds of XPUs with an integrated, high-bandwidth, ultra-low-latency, any-to-any scale-up fabric,” the chipmaker said in a statement. 

The company added that this architecture enables each XPU to directly access the memory of others. These advanced fabrics require specialised switches and protocols such as UALink to achieve optimal performance and efficiency.

As multi-rack scale-up fabrics demand power, bandwidth, latency, and reach, interconnects will increasingly shift to all-optical connections. 

Sandeep Bharathi, president of the Data Centre Group, said, “By combining our UALink scale-up switch roadmap and Celestial AI’s breakthrough optical scale-up interconnect, we will enable customers to build AI systems that scale beyond the limits of copper and redefine what’s possible in AI data centre architecture.”

Celestial AI’s photonic fabric technology enables scaling of AI clusters with high-bandwidth, low-latency optical connections. It boasts over twice the power efficiency of copper, low power consumption, and strong thermal stability. 

This compact solution allows direct optical connections to XPUs, freeing up space for added high-bandwidth memory. Its initial application targets scale-up interconnects, delivering 16 terabits per second, ten times the capacity of current systems, while enhancing total bandwidth.

According to the statement, Marvell expects Celestial AI to start generating revenue in the second half of fiscal 2028, reaching a $500 million run rate by the end of that year and $1 billion by the end of fiscal 2029. Additionally, its Photonic Fabric technology may enable innovations such as pooled-memory appliances and optical connections within multi-die packages.

Marvell will pay Celestial AI equity holders up to 27.2 million shares of common stock, valued at up to $2.25 billion, contingent on them meeting the above-mentioned revenue milestones based on a 10-day volume-weighted average price (VWAP).

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