Marvell already covers most of the electrical and electronics side, with a portfolio that includes custom AI accelerators, Ethernet switches, high-speed SerDes interfaces, DSPs, optical drivers, TIAs, and silicon photonics. Lumentum, on the other hand, supplies many optical components, including high-performance lasers, modulators, photodetectors, optical transceivers, and optical circuit switches. Combining these portfolios and processes allows Marvell to develop more complete solutions, designing and optimizing electrical and optical components as part of the same system.
Perhaps the most strategically important part of Lumentum's business is its expertise in compound semiconductors, particularly indium phosphide (InP) , which is critical for laser and other optical chips. Unlike conventional silicon, which has an indirect bandgap and is inefficient at generating light, InP-based semiconductor structures can efficiently emit and detect light, making the material well suited for manufacturing high-performance lasers and other optical components used in high-speed communication systems.
Lumentum is also bringing its manufacturing experience to the merger. Unlike Marvell's predominantly fabless semiconductor business, Lumentum directly controls its front-end semiconductor fabrication processes, owning and operating specialized InP fabrication facilities, which its CEO Michael Hurlston described as the world's largest InP manufacturing footprint during the acquisition announcement. If the deal closes in 2028, Marvell will transition into a hybrid model, inheriting Lumentum's internal factories while keeping its chip side outsourced. The combined company would also gain access to gallium arsenide (GaAs) technologies.
Over the years, Marvell — already one of the biggest custom ASIC suppliers, with clients such as Google, AWS, Meta, and Microsoft — has also strategically positioned itself as a major player in the optical interconnects market, supplying the largest optical transceiver manufacturers. In March 2026, Nvidia invested $2 billion directly in Marvell in a partnership that brings Marvell’s custom XPUs and scale-up networking into Nvidia’s NVLink Fusion ecosystem.
Marvell's biggest optics competitor, Broadcom, also supplies custom AI accelerators , networking silicon, and optical connectivity components, offering both the electronic chips and the optical components. Acquiring Lumentum would give Marvell a more comprehensive portfolio similar to Broadcom's. Nvidia’s separate $2 billion stake in Lumentum would also convert into Marvell shares, consolidating its two $2 billion bets into a single holding.
A key question is how vertical integration affects existing customers, as Marvell supplies optical module manufacturers, while Lumentum sells optical components to companies that also compete with its transceiver business. Merging operations could create concerns among customers that depend on the companies for critical components. Marvell CEO Matt Murphy addressed this issue during the company's November 2 investor conference call, stating that the company intends to maintain its existing component supply model. Lumentum CEO Michael Hurlston also emphasized that supplying competitors is already an established part of the optical industry's business model.
Financially, Marvell expects the combined company’s total addressable market to reach about $550 billion by 2030 — roughly $60 billion more than the two companies’ standalone estimates combined. The companies also expect more than $1 billion in annual run-rate cost synergies, primarily from cost of goods sold. Combining Marvell’s current-quarter guidance with Lumentum’s latest results, the companies put the merged business at about $17.7 billion in annualized revenue.
According to Murphy, pairing Lumentum’s next-quarter guidance with analyst consensus for Marvell’s next quarter lifts that figure to more than $21 billion. Lumentum's recent performance shows the growing demand behind these projections. The company reported $1.26 billion in revenue for its first fiscal quarter of 2027, a 136.5% year-over-year increase. It also announced a second major near-packaged and co-packaged optics design win, which Hurlston said he expects to generate more than $5 billion in revenue.
However, the merger's huge valuation raises questions about whether future growth will justify the acquisition price. Investors reacted negatively to the announcement, with Marvell shares closing down 12.7% at $171.41 on November 2 and Lumentum falling 18.6% to $684.40. For now, the agreement is subject to a lengthy review, with an outside date of November 1, 2027, and options to extend to February 1, May 1, and finally August 1, 2028, if regulatory approvals are still pending. If the deal then fails on regulatory grounds alone, Marvell owes Lumentum $3.2 billion. However, if either board backed out or took a rival offer, Marvell would pay $5.8 billion, and Lumentum $2.9 billion.
Etiido Uko Social Links Navigation News Contributor Etiido Uko is a news contributor for Tom's Hardware covering the latest updates in big tech and the PC industry. He is a mechanical engineer and senior technical writer with over nine years of experience in documentation and reporting. He is deeply passionate about all things engineering and technology, and is an expert in gadgets, manufacturing, robotics, automotive, and aerospace.
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Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/marvell-to-buy-lumentum-in-usd115-billion-all-stock-deal-combined-company-to-supply-scale-up-and-scale-in-optics-for-ai-data-centers#main
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