Marvell In Advanced Talks to Buy Celestial AI in Multibillion Deal
The Takeaway
- Marvell is in advanced talks to acquire chip startup Celestial AI.
- The total value of the deal including earnouts could be over $5 billion.
- Celestial AI develops optical interconnect technology for faster AI data movement.
Marvell is in advanced talks to buy Santa Clara-based chip startup Celestial AI in a cash-and-stock deal worth multiple billions of dollars, according to people with knowledge of the deal.
Under the deal they’re discussing, Marvell would pay several billion dollars upfront for the startup, which has yet to generate any revenue, according to one of the people. Celestial has the potential to receive performance earnouts if it hits certain product milestones, said the same person. The total deal price, including earnouts from product milestones could be higher than $5 billion.
A deal could be announced as soon as Tuesday, the people said.
Celestial AI was last valued at $2.5 billion in March and has raised more than $580 million from investors including Fidelity Management, BlackRock and Tiger Global Management.
Founded in 2020, Celestial is developing an optical interconnect technology designed to more efficiently move data between AI processors and memory inside data centers. Along with including Lightmatter and Ayar Labs, it is one of several startups that are using photonics, or light, rather than electrical systems to make AI run faster.
Lip-Bu Tan—a semiconductor veteran and the CEO of Intel—joined Celestial’s board of directors in January of this year.
Marvell designs and develops semiconductor chips for data centers, networking and storage systems. It competes with Broadcom in the custom AI chip business and counts Amazon Web Services as one of its customers.
Shares of Marvell are down roughly 20% this year and currently has a market capitalization of around $75 billion. In contrast, other rival chipmakers such as Nvidia, Broadcom and AMD all surged this year.
The CEO of Celestial, David Lazovsky, did not respond to a request for comment. A spokesperson for Marvell didn’t immediately respond to a request for comment.