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03 Dec 2025
Data center infrastructure giant to pay initial $3.25BN for venture-backed photonic interconnect startup.
Marvell, the Silicon Valley tech company that provides everything from high-capacity hard drives to network switches, has signed a potential $5.5 billion cash-plus-stock deal to acquire the optical interconnect developer Celestial AI.
The Santa Clara neighbors are set to work together on what they believe will turn out to be a “transformational milestone” as optical connections replace copper wires at every level of the AI data center.
“As bandwidth and reach continue to increase, every connection point in the data center must move from copper to optical,” Marvell says. “For rack-to-rack scale-out and data-center to data-center (DCI) connections this transition has already taken place.
“The next inflection point is within the rack, within the system, and even within a package - where electrical connections must now give way to optics.”
Celestial AI has raised in excess of $500 million venture capital support in its development of what it calls “Photonic Fabric” technology, which revolves around its "Optical Multi-Chip Interconnect Bridge" (OMIB) that is said to allow connectivity from any point on one die to any point on another die.
Although that technology is not expected to generate meaningful sales revenues for Marvell until late 2028, the subsequent ramp should be rapid, with the firms predicting a billion-dollar annualized run-rate by the end of 2029.
AWS support
Marvell explains that the power, bandwidth, latency, and reach requirements of multi-rack scale-up fabrics used in next-generation AI data centers means that interconnects will increasingly transition to all-optical links.
Sandeep Bharathi, president of the firm’s data center group, added: “AI infrastructure is transforming faster than ever, and the future demands scale-up fabrics that deliver unprecedented bandwidth, power efficiency, and reach.
“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 center architecture.”
The planned deployment of Celestial’s optical technology already has backing from leading data center hyperscaler AWS (Amazon Web Services), whose VP of Compute and Machine Learning Services, Dave Brown, noted:
“At AWS, we aim to be at the forefront of major technology inflections, and we believe optical interconnects will play an important role in the future of AI infrastructure. Building a scalable, high-performance, and power-efficient cloud starts with an approach built upon differentiated technologies.
“Celestial AI has made impressive progress, and we expect their combination with a large-scale semiconductor company like Marvell will help further accelerate optical scale-up innovation for next-generation AI deployments."
AI inflection
Founded by CEO David Lazovsky and COO Preet Virk in 2020, and previously known as “Inorganic Intelligence”, Celestial AI’s most recent venture funding effort saw $250 million raised in March this year, with blue-chip investor BlackRock among those to lend support.
That followed rounds of $56 million in February 2022, $100 million in July 2023, and $175 million in March 2024, over which time spending on AI infrastructure has exploded but data center operators still face huge challenges dealing with power consumption and the speed and latency limitations of copper connections.
“Celestial AI’s Photonic Fabric technology platform was purpose-built for this inflection,” claims the startup. “It enables large AI clusters to scale both within and across racks using a high-bandwidth, low latency, low power and cost-effective optical fabric.
“This breakthrough delivers a true optical solution with more than two times the power efficiency of copper interconnects, along with far longer reach and significantly higher bandwidth.”
Just over a year ago the firm also acquired the silicon photonics patent portfolio belonging to Rockley Photonics, covering optoelectronic systems-in-package, electro-absorption modulators (EAMs), and optical switch technologies seen as relevant for multiple AI data center infrastructure applications.
And when compared with alternative photonic technologies, such as co-packaged optics (CPO), Celestial AI’s solution is said to provide exceptionally low power consumption, nanosecond-level latency, and excellent thermal stability - meaning that optical interconnects can be used deep within the data center, linking “XPUs” (extreme processing units) and switch systems.
Thermal advantage
“The thermal stability of Celestial AI’s Photonic Fabric technology is a significant competitive differentiator,” Marvell explained. “It enables reliable operation in the extreme thermal environments created by large, multi-kilowatt XPUs and switches.
“This allows the photonics technology to be co-packaged vertically with high-power XPUs and switches in a 3D package, enabling the photonic connection to be made directly into the XPU, rather than from the edge of the die.”
That approach is said to result in a more compact and integrated design compared with alternative optical solutions, freeing up valuable space within XPU packages for additional computing power.
“Celestial AI’s first-generation Photonic Fabric chiplet for scale-up interconnect integrates all the required electrical and optical components into a compact form factor,” Marvell adds.
“It is the industry’s first scale-up optical solution delivering an unprecedented 16 Tb/s of bandwidth in a single chiplet - ten times the capacity of today’s state-of-the-art 1.6 Tb/s ports used in scale-out applications.
“Based on existing customer traction, Marvell expects Celestial AI’s Photonic Fabric chiplets to be co-packaged with custom XPUs and scale-up switches, enabling the industry’s first large-scale commercial deployment of optical interconnect for scale-up connectivity.”
• According to the terms of the deal, which should be wrapped up by the end of March 2026, Marvell will pay an initial $3.25 billion for Celestial AI, comprising $1 billion in cash plus 27.2 million shares, currently worth $2.25 billion.
Up to another 27.2 million shares will be payable if certain sales revenues targets are hit. One-third of the earn-out will become payable if Celestial AI’s cumulative revenues reach $500 million by the end of Marvell’s fiscal year 2029, with full amount becoming due if that total exceeds $2 billion.
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