Marvell Technology Group Ltd. (NASDAQ:MRVL) is reportedly in advanced discussions to acquire AI-focused chip startup Celestial AI in a deal valued at over $5 billion, according to a report by The Information.
The potential transaction could include a combination of cash, stock, and performance-based earnouts.
Financial terms reportedly include milestone-based earnouts tied to product development and delivery.
Celestial AI, backed by AMD, specializes in photonics-based AI chips aimed at accelerating compute-intensive workloads in datacenters.
Sources familiar with the matter told The Information that an official announcement could come as soon as this week.
The acquisition could strengthen Marvell’s capabilities in next-generation AI silicon and provide a strategic boost in the highly competitive AI hardware market.
Marvell has been actively expanding its AI and datacenter portfolio in recent years, positioning itself against rivals in the high-performance computing sector. Celestial AI’s photonics expertise is seen as a potential differentiator in building more efficient, scalable AI accelerators.
Wedbush analysts took a “somewhat cautious” initial view on the deal.
“While Celestial AI has hinted at some success penetrating hyperscale accounts, we generally have believed significant penetration for CPO is still a bit in the future with some uncertainty around the exact path of the technology,” the analysts wrote.
“Having said this, if Celestial AI's technology is further along than we would guess, this addition could resolve some of the questions investors have asked around MRVL's potential for success related to both optical and AI transitions.”