BREAKINGVIEWS-AI turns a chip deal into a laboratory lottery
Marvell Technology has agreed to acquire Celestial AI for approximately $3.25 billion. The deal involves $1 billion in cash and 27.2 million shares of Marvell's common stock, valued at $2.25 billion. Additional stock payouts up to $2.25 billion are contingent on Celestial AI meeting specific revenue milestones. The acquisition aims to enhance data center efficiency by using photonics systems to connect AI processing and memory chips with light, potentially improving energy efficiency and data transfer speeds.
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Robert Cyran
NEW YORK, Dec 3 (Reuters Breakingviews) - The heat is on to up data centers’ speed and efficiency. Semiconductor maker Marvell’s $3 bln swoop on Celestial AI promises both by swapping copper wires for light. A big yet far-flung pay-off makes M&A resemble costly science experiments, with uncertain claims on the spoils.
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CONTEXT NEWS
Marvell Technology said on December 2 it had agreed to buy Celestial AI for approximately $3.25 billion.
Celestial is a startup developing photonics systems that can connect artificial intelligence processing chips and memory chips using light, rather than copper, which could theoretically improve energy efficiency and data transfer speeds.
Marvell will pay $1 billion in cash and 27.2 million of its shares of common stock, worth $2.25 billion. In addition, if Celestial AI reaches certain revenue milestones, Marvell will pay out up to $2.25 billion in additional stock. One-third will be paid out if cumulative revenue reaches $500 million by the end of fiscal 2029, and all if cumulative revenue exceeds $2 billion.
Marvell expects the new unit to produce $500 million in annualized run-rate revenue by the fourth fiscal quarter of 2028 and $1 billion by the fourth quarter of the following year. (Editing by Jonathan Guilford; Production by Pranav Kiran)
