Core Insights - Marvell has reached a final agreement to acquire Celestial AI for approximately $3.25 billion, which includes $1 billion in cash and $2.25 billion in Marvell common stock [1][2] - The acquisition is expected to enhance Marvell's position in the AI and cloud data center connectivity market, with significant revenue contributions anticipated from Celestial AI starting in the second half of fiscal year 2028 [1][2] - Celestial AI's technology focuses on photonic interconnects, which are expected to provide high bandwidth, low latency, and energy efficiency, making them suitable for large AI clusters [6][8] Acquisition Details - The deal includes an additional contingent payment of up to 27.2 million shares of Marvell common stock, valued at up to $2.25 billion, based on revenue milestones achieved by Celestial AI [1][2] - The transaction is expected to close in the first quarter of 2026, pending customary closing conditions and regulatory approvals [2] Financial Projections - Marvell anticipates that Celestial AI will generate a run rate of $500 million by Q4 of fiscal year 2028, doubling to $1 billion by Q4 of fiscal year 2029 if certain revenue milestones are met [1][2] Strategic Importance - The acquisition is seen as a strategic milestone for Marvell, reinforcing its technological leadership and expanding its potential market in scalable connectivity [2] - Marvell's CEO emphasized that the acquisition will accelerate the company's roadmap to provide a comprehensive connectivity platform for AI and cloud customers [2] Technology Overview - Celestial AI's photonic interconnect technology is designed to allow large AI clusters to scale easily, offering energy efficiency that is more than twice that of copper interconnects [6][8] - The technology is expected to support high-performance, low-power, and low-latency solutions, which are critical for next-generation data center architectures [5][6] Market Context - The demand for scalable, high-performance cloud platforms is driving the need for differentiated technology solutions, with photonic interconnects playing a crucial role in future AI infrastructure [3][5] - Marvell's custom chip business is projected to experience accelerated growth, with new customers including emerging hyperscale data center operators [3]