The company's plan to increase its share of the excessive spending on artificial intelligence computers includes the acquisition of Celestial AI. Shares of Marvell Technology surged during prolonged trading.
Marvell Technology announced on Tuesday that it will pay $3.25 billion to purchase Celestial AI, an artificial intelligence business.
The announcement coincided with Marvell's third-quarter financial year results and optimistic outlook for the following fiscal year.
The company's plan to increase its share of the excessive spending on artificial intelligence computers includes the acquisition of Celestial AI.
At extended trading, Marvell Technology shares were up 8.73% to $101 per, according to MarketWatch. The closing price of Marvell Technology's stock was $92.89 on Tuesday.
What's in the Marvell-Celestial AI deal?
According to the chipmaker's statement, the $3.25 billion Celestial AI acquisition of Marvell consists of a $1 billion cash payment and $2.25 billion worth of Marvell shares. 27.2 million shares of Marvell ordinary stock will be given to Celestial AI.
Founded in 2020, Celestial AI is a Santa Clara, California-based firm that provides a technology called photonic fabric that links parts of AI infrastructure.
With the Celestial transaction, Marvell would have access to the startup's expertise on photonics, a field in which it competes with Broadcom and Nvidia, the most valuable business in the world, by using light instead of electrical impulses to connect AI systems and memory chips.
The Celestial AI technology will be utilized in Marvell's next-generation photonics-related infrastructure goods, according to CEO Matt Murphy, who told Reuters that this will open up a $10 billion new market for the company.
"When this is all finished, Marvell will have a silicon photonics powerhouse," he declared.
According to Marvell, significant revenue contributions from the Celestial acquisition might start in the second half of the 2028 fiscal year. This can double to a run rate of $1 billion by the fourth quarter of fiscal 2029, with an annualized run rate of about $500 million in the fourth quarter of fiscal 2028.
The first quarter of 2026 is when the deal is anticipated to close.
Fidelity Management & Research Co., BlackRock Inc., and Advanced Micro Devices Inc. supported Celestial AI, a firm that closed a $255 million fundraising round in August. Intel Corp.'s CEO, Lip-Bu Tan, was also an investor and joined the board earlier this year.
Marvell has made an effort to put itself in a position to profit from the surge in AI spending. The business has had varying degrees of success, though. Much of the company's AI future will be determined by the agreement with Celestial.
0 Comments