US semiconductor company Marvell Technology is in advanced talks to buy data centre optics manufacturer Lumentum Holdings in an all-stock deal, Bloomberg reported, citing unnamed sources.
The report said the discussions are private and the proposed deal could be announced as soon as next week. It also said the talks could still end without a transaction and that the timing could change.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
If the deal proceeds, the acquisition would give Marvell more control over optical technology used in digital infrastructure and artificial intelligence (AI) data centres.
Marvell is valued at around $196bn, while Lumentum, which is backed by Nvidia, has a market value of about $85bn.
A completed deal between the two Northern California companies would be among the “largest” transactions in the global technology sector.
It said the move would also reflect a broader increase in mergers and acquisitions linked to AI-related infrastructure.
Lumentum makes lasers and other optical components used to transfer large volumes of data at high speed.
The technology has become more significant as AI data centres deploy larger processor clusters that require faster links between chips, servers and facilities.
As those clusters expand, more data transmission is moving from copper to optical connections.
Earlier this month, Lumentum chief executive Michael Hurlston said the company’s optical components are sold out through early 2029 and that it expects to be unable to meet about 70% of demand for some products next year.
The company is raising manufacturing capacity, including in Japan, where it plans to invest at least $350m to increase production of indium phosphide and other optical components.
Bloomberg said Marvell already buys lasers from Lumentum and that an acquisition would give it more direct access to optical technology and manufacturing capacity.
Earlier this year, Marvell acquired Celestial AI. It also works with Amazon’s cloud division and Microsoft on custom AI chips.
In August, it reached a chip agreement with Alphabet’s Google to support its tensor processing units.
