On Dec. 5, The Information reported that Microsoft is considering Broadcom (AVGO) as a possible chip design partner. The potential deal would focus on a custom AI accelerator optimized for large language models and data center inference, the report said. Any such deal would be a setback for Marvell, which currently co-designs Microsoft’s Maia line of ASICs that are custom-built for Azure.Marvell Technology shares came under heavy pressure last week, dropping more than 15% after two separate reports—one from ...

Core Viewpoint - Marvell Technology (MRVL.US) anticipates revenue of approximately $10 billion for the next fiscal year, supported by an organic growth plan, with expectations for sequential growth each quarter and stronger growth in the second half of the year [1][2] Revenue Projections - The custom ASIC business is expected to grow by about 20% in the next fiscal year, with projections to double by fiscal year 2028 compared to fiscal year 2027 [1][2] - The interconnect business is projected to continue growing at a rate that exceeds capital expenditures [1][2] - Other segments of the data center business, including storage and switching, are expected to grow by 10% in fiscal year 2028, leading to an overall data center business growth rate of nearly 40% in that year [1][2] - The compound annual growth rate (CAGR) for the data center business since 2023 is approximately 50% [1][2] Long-term Growth Drivers - Assuming communication and other businesses grow at GDP rates, Marvell's total revenue growth rate for fiscal year 2028 is estimated to be around 30% [1][2] - Growth drivers such as Celestial AI are expected to start contributing from fiscal year 2028 and further accelerate in fiscal year 2029 and beyond [1][2] AI and Product Development - Marvell has secured orders for next-generation 3nm and 2nm XPU products, with a strong product pipeline and visibility [3] - Revenue targets for Celestial AI, including $500 million and $1 billion, are based on the overall business, with initial revenue expected from PF small chips [3][4] - The collaboration with a leading customer is crucial for driving initial growth, with significant interest in the photonics transition within data centers [4] Custom Business Insights - The custom business is projected to have a solid growth base of 20%, with strong order reserves and expected acceleration in the second half of the year [5] - Long-term guidance is provided due to the multi-year cycle of AI infrastructure development, enhancing confidence in achieving future revenue targets [5] Strategic Partnerships - The extension of a warrant agreement with Amazon for 1 million shares related to photonic architecture indicates a strong partnership, with significant potential for collaboration [6] - The optical business is driven by AI and AI accelerators, with growth expected to exceed capital expenditures [6] System-Level Solutions - Marvell aims to provide comprehensive rack-level solutions, integrating various optical interconnect technologies, while maintaining a vision for system-level capabilities [7] - Current forecasts do not include system-level revenue, but the strategy emphasizes a holistic approach rather than isolated solutions [7]

Marvell Technology ((MRVL) delivered a strong earnings report yesterday, beating analyst expectations on both revenue and EPS and sending shares nearly 6% higher today in trading. The company posted $2.075 billion in revenue, up roughly 37% year over year, and reported non-GAAP EPS of $0.76, modestly ahead of consensus. The beat comes after a stretch of uneven performance, and it appears to have reassured investors that Marvell is reestablishing its footing as a focused, niche, but increasingly important, p ...

Core Viewpoint - Marvell Technology is in advanced talks to acquire Celestial AI in a cash-and-stock deal potentially valued at over $5 billion, aiming to enhance its capabilities in AI technology and reduce existing bottlenecks in AI model training and execution [1][6]. Group 1: Acquisition Rationale - The acquisition is driven by the need to address the limitations of current electrical systems in AI, which are too slow and power-consuming, thereby hindering the scalability of AI clusters [3][4]. - Celestial AI's technology utilizes photonics, which allows signaling with light instead of electricity, providing a solution to the critical bottleneck in large-scale AI model operations [3][7]. Group 2: Strategic Importance - This deal is strategically transformative for Marvell, as it aims to offer hyperscalers like Google and Microsoft a superior end-to-end solution that significantly reduces latency and power consumption [4][6]. - Marvell's acquisition of Celestial AI could enhance investor sentiment and confidence, especially following a 20% decline in stock value year-to-date due to mixed earnings and order delays [6][7]. Group 3: Competitive Advantage - By acquiring Celestial AI, Marvell gains a crucial differentiating factor in the competitive landscape against larger rivals like Broadcom in the custom AI chips and networking silicon market [7]. - The deal could provide Marvell access to a valuable talent pool of leading U.S. silicon-photonics engineers currently at Celestial AI, further strengthening its technological capabilities [7]. - Celestial AI's existing relationships with key hyperscalers could secure long-term design wins and predictable revenue streams, aligning with Marvell's aggressive target of over $2.5 billion in AI sales by 2026 [7].

Group 1 - Marvell Technology is in advanced talks to acquire Celestial AI for a deal potentially exceeding $5 billion, including cash and stock [1] - The acquisition is expected to enhance Marvell's product portfolio and highlight the strong demand for computing power in the market [1] - Celestial AI has raised a total of $515 million, with $250 million coming from a venture capital round supported by an AMD subsidiary [1][2] Group 2 - Celestial AI is focused on developing a photonic interconnect platform called Photonic Fabric to address the "memory wall" crisis in AI computing architectures [2] - The memory wall has become a significant barrier to system performance as the speed mismatch between computing units and memory leads to inefficiencies, especially with large AI models [2] - The acquisition of Celestial AI would provide Marvell with a strategic advantage in the evolving AI server market, particularly if photonic interconnect technology becomes a standard [3]

Core Insights - The article discusses the escalating arms race in artificial intelligence (AI) computing capabilities, highlighting a significant wave of global infrastructure investment. However, the AI industry faces a fundamental barrier in data movement between processors due to the limitations of existing copper interconnect technologies, which cannot effectively scale to meet the demands of next-generation AI requiring millions of processors. In this context, photonic chip startups Celestial AI and OpenLight are emerging to provide faster and more energy-efficient solutions to meet the needs of hyperscaler clients like Amazon, Microsoft, and Google [1]. Group 1: Celestial AI Developments - Celestial AI has secured $255 million in investments from TSMC's VentureTech Alliance and Samsung's Catalyst Fund, bringing its total funding to $520 million. The company plans to use this funding to strengthen its supply chain and deepen partnerships with foundries, including TSMC [2]. - Celestial AI expects to begin selling its first chips by mid to late 2026, focusing on server "scale-up" networks that account for 85% of data center traffic. The company anticipates that its scale-up sales will surpass copper-based Ethernet scale-out switches starting in 2025 [5]. - The core technology of Celestial AI, Photonic Fabric, offers optical interconnects from chip-to-chip and server-to-server, significantly outperforming Nvidia's NVLink in terms of power consumption. Celestial AI is positioning its Optical Memory Interface Bridge (OMIB) as an alternative to NVLink [5][7]. Group 2: OpenLight Developments - OpenLight raised $34 million in funding from investors including Juniper Networks and Lam Research. The company plans to use this capital to expand its process design kit (PDK) for active and passive photonic components, with production expected to begin for its first customers by the end of 2025 [4][11]. - OpenLight's competitive advantage lies in its use of indium phosphide technology, which allows for the integration of lasers onto chips. The company has demonstrated a 400 Gbps modulator with low power consumption of approximately 1.5 microjoules per bit [11]. - OpenLight provides a library of components (PDK) to enable customers to design their own chips, collaborating with ASE Holdings' subsidiary, Siliconware Precision Industries [14]. Group 3: Competitive Landscape - The photonic chip sector is becoming increasingly competitive, with players like Ayar Labs, Lightmatter, and Huawei entering the market. Huawei aims to challenge Nvidia's NVLink market with its new SuperPod cluster, which plans to connect up to 15,488 Ascend NPUs by 2026 [15]. - Lightmatter announced the Passage M1000 platform, which offers a total optical bandwidth of 114 Tbps, and is collaborating with GlobalFoundries and Amkor to begin production based on this platform [17][18]. - Quantum computing startup PsiQuantum is also manufacturing photonic chips using standard 45nm silicon nitride processes at GlobalFoundries [21].

Core Insights - Celestica Inc. (CLS) has outperformed the industry and peers with a stock gain of 24.3% over the past three months, compared to the industry's 15.4% growth and Flex Ltd. (FLEX) and Jabil Inc. (JBL) gains of 17.3% and 14.7% respectively [1][7]. Company Overview - With over two decades of manufacturing experience, Celestica focuses on next-generation, cloud-optimized data storage and AI networking solutions, operating primarily as a behind-the-scenes partner for electronics businesses [2]. - The company provides a comprehensive range of services in the electronics market, including design, manufacturing, and supply chain management [2]. Growth Drivers - The ongoing generative AI (GenAI) boom has significantly benefited Celestica, driven by strong demand for AI/ML compute and networking products from hyperscale customers [5]. - Key products include the high-performance 800G family of network switches and storage solutions like the SC6100 controller and SD6200 platform, which are essential for AI applications [5][6]. - Celestica's innovative Photonic Fabric solution enhances AI infrastructure, supporting scalable and sustainable business models [5]. Financial Performance - Earnings estimates for Celestica have increased by 5.7% for 2025 to $5.05 and by 2.4% for 2026 to $6.07, indicating positive sentiment regarding the company's growth potential [8][7]. Market Environment - Despite strong demand trends, Celestica expresses skepticism about the macro environment due to trade policy uncertainties, although recent U.S. government exemptions for key IT hardware provide some near-term clarity [9]. - The company is actively collaborating with customers to navigate the evolving policy landscape [9]. Challenges - Celestica faces ongoing margin pressures due to high research and development costs associated with sophisticated products, leading to high operating expenses [10][15]. - The company competes with industry giants like Foxconn, Jabil, Flex, and Sanmina Corporation, as well as smaller regional players, in a highly cyclical semiconductor industry [11]. Future Outlook - As production volumes increase and costs decrease, the potential applications for silicon photonics are expected to expand across various industries, positioning Celestica for sustained growth [14].

Core Insights - Celestica Inc. (CLS) has significantly outperformed the industry and peers, with a stock price increase of 98.8% over the past year compared to the industry's 36.4% growth [1] - The company has a strong focus on AI applications, leveraging over 25 years of manufacturing experience to provide advanced data storage and networking solutions [2] Performance and Growth - The ongoing generative AI boom has driven demand for Celestica's AI/ML compute and networking products, particularly from hyperscale customers [3] - Celestica's high-performance 800G network switches and scalable storage solutions are essential for AI applications, enhancing its market position [3] - Earnings estimates for 2025 have increased by 5.7% to $5.05, and for 2026 by 2.4% to $6.07, indicating positive growth expectations [6] Financial Guidance - The company has raised its revenue guidance for 2025 to $10.85 billion from $10.7 billion, with an expected non-GAAP operating margin of 7.2% [7] - Non-GAAP adjusted earnings are projected to be $5 per share, up from a previous estimate of $4.75 [7] Challenges and Competition - Despite strong growth, Celestica faces high operating expenses due to sophisticated product development, which has impacted margins [8] - The company competes with major players like Foxconn, Jabil, and Flex, as well as smaller regional firms, in a highly cyclical semiconductor industry [9] - Persistent weakness in the ATS segment and elevated inventory levels in industrial markets are hindering net sales growth [9] Future Outlook - Management anticipates demand stabilization in the first half of 2025, although macroeconomic challenges remain a concern [12] - As production scales and costs decrease, the potential applications for silicon photonics are expected to expand across various industries [13] - The stock has a trailing four-quarter average earnings surprise of 7.4% and a favorable Zacks Rank of 2 (Buy), suggesting potential for further appreciation [14]

Core Viewpoint - Celestial AI has raised $250 million in Series C funding led by Fidelity Management and Research, bringing total capital raised to over $515 million, with participation from notable investors like BlackRock and Tiger Global Management [2][3]. Group 1: Investment and Financials - The recent funding round included new investors such as BlackRock, Maverick Silicon, and Tiger Global Management, alongside existing investors like AMD Ventures and Temasek [2]. - The total capital raised by Celestial AI has now exceeded $515 million, indicating strong investor confidence in the company's technology and market potential [2]. Group 2: Technology and Innovation - Celestial AI's Photonic Fabric technology platform is designed to meet the increasing demands of AI infrastructure, enabling seamless networking for AI computing from processor packaging to multi-rack servers [3][12]. - The technology offers high bandwidth, low latency, and energy efficiency, setting new standards for AI infrastructure [3][5]. - Photonic Fabric provides tailored solutions for interconnectivity, including chip-to-chip and processor-to-processor connections, and is compatible with industry-standard manufacturing and packaging processes [4][12]. Group 3: Market Position and Strategy - Celestial AI aims to enhance the performance of existing systems rather than compete directly with major players like Nvidia and AMD, focusing on improving interconnect bandwidth and reducing latency and power consumption [9]. - The company is positioned to address the challenges faced by traditional data center infrastructure, which is struggling to scale effectively under the demands of modern AI workloads [11][12]. Group 4: Product Offerings - Photonic Fabric includes various product forms such as PFLink™ for connectivity, PFSwitch™ for low-latency high-bandwidth switching, and OMIB™ for packaging solutions [13][14]. - The PFLink™ supports extensive communication between multiple XPU units, while PFSwitch™ is designed for high-bandwidth, low-latency communication, capable of supporting up to 14.4 Tbps [14][15]. - OMIB™ allows for the integration and interconnection of multiple chips within a single package, facilitating the expansion of AI computing while reducing thermal design power (TDP) [17].