Marvell to buy data centre component maker Lumentum in $115bn AI bet

US semiconductor group Marvell has agreed to buy data centre component maker Lumentum in a $115bn deal, in a major bet on the durability of the AI boom.

The two Silicon Valley companies said on Monday that the all-stock deal, one of the biggest of the year, would create a “leader in AI connectivity” as the industry races to handle the expected demand for the computing power required to power AI.

“AI infrastructure is undergoing a fundamental architectural shift toward optical connectivity, creating an opportunity that comes along once in a generation,” said Matt Murphy, chief executive of Marvell.

Marvell helps hyperscalers design their own specialised AI accelerator chips, providing an alternative to Nvidia’s. Silicon Valley-based Lumentum manufactures optical technology used in data centres, including lasers.

The transaction comes at a critical juncture for the AI boom as investors grow increasingly wary of whether the record-breaking investment in data centres will pay off.

This is a developing story