Dec 2 (Reuters) – Chipmaker Marvell Technology said on Tuesday it will buy semiconductor startup Celestial AI in a deal worth $3.25 billion and forecast fourth-quarter revenue that beat Wall Street estimates.
Marvell shares were down 6% in extended trading.
The generic AI boom has accelerated the development process of chip makers, as they race to design the fastest, most energy-efficient devices for advanced data centers.
The deal will allow Marvell to join the startup’s work on photonics, which uses light instead of electrical signals to make connections between AI chips and memory chips, an area where it competes with Broadcom and Nvidia, the world’s most valuable company.
Under the terms of the deal, Celestial AI will receive $1 billion in cash and 27.2 million shares of Marvell common stock, valued at $2.25 billion.
Marvell said it expects meaningful revenue contributions from Celestial AI to begin in the second half of fiscal 2028, reaching a $500 million annualized run rate in the fourth quarter of fiscal 2028 and doubling to a $1 billion run rate by the fourth quarter of fiscal 2029.
The deal is expected to be completed in the first quarter of calendar year 2026.
Marvell estimates revenue for the fourth quarter at about $2.20 billion, plus or minus 5%, according to data compiled by LSEG, while analysts’ average estimate is $2.18 billion.
Revenue for the third quarter ended Nov. 1 rose 36.8% to $2.07 billion, in line with analysts’ estimates.
Marvell’s stock is down more than 15% this year amid growing competition in the custom AI chip and networking markets and Wall Street’s AI bubble concerns.
(Reporting by Jubi Babu in Mexico City; Editing by Alan Barona)
<a href=