Marvell Technology is acquiring optical components maker Lumentum in an all-stock deal valued at $115 billion, including debt, as the US chipmaker looks to strengthen its position in the artificial intelligence (AI) infrastructure market and challenge larger rival Broadcom.

The deal, announced on Monday, is among the biggest corporate acquisitions of 2026 and reflects growing confidence among chipmakers that Big Tech's AI spending boom will sustain demand for computing and data centre infrastructure for years, Reuters reported.

By acquiring Lumentum, a company roughly half its size, Marvell is betting that demand for optical components used to transmit data at high speeds will continue to outstrip supply as technology companies expand their AI data centres.

Under the agreement, Marvell will pay $1,132 per Lumentum share in stock, representing a 23.9% premium to Lumentum's last unaffected closing price on October 28, before reports of deal discussions emerged.

The transaction gives Lumentum an equity valuation of $102.54 billion, while its total value, including debt, stands at $115 billion.

Marvell said the acquisition would expand the combined company's total addressable market to $550 billion. Its shares rose 2.8% in premarket trading on Monday, while trading in Lumentum shares was halted, Reuters reported.

Marvell looks to challenge Broadcom in AI chip market

The acquisition could strengthen Marvell's position in the race to supply technology for AI data centres, where Broadcom has emerged as a major player in custom-designed chips and networking hardware.

Broadcom has long been Google's main partner for custom AI processors and offers customers a wider range of AI data centre hardware under one roof, according to Reuters.

Marvell, meanwhile, has expanded its presence by helping technology companies such as Amazon develop custom AI chips and data centre networking technology.

One of its biggest recent wins came in August, when it signed an agreement to supply chips that work alongside Google's AI processors. The deal could generate up to $120 billion in sales through fiscal 2033 and gives Google the right to purchase a $12.2 billion stake in Marvell.

Marvell's market value has climbed to more than $170 billion, reflecting its growing role in the AI infrastructure supply chain.

Why Lumentum matters to Marvell's AI ambitions

Lumentum makes optical components used to transmit data at high speeds. These technologies are becoming increasingly important as AI data centres connect thousands of processors and require faster communication between chips.

The company competes with US-listed Coherent and China's Zhongji Innolight.

Lumentum could also benefit from a proposed US ban on new Chinese optical transceivers, which could shift demand towards domestic suppliers, Reuters reported.

Nvidia, the world's leading AI chipmaker, invested $2 billion each in Marvell and Lumentum earlier this year, highlighting the strategic importance of both companies to the AI infrastructure ecosystem.

Marvell has also been expanding its photonics capabilities. It completed its $3.5 billion acquisition of Celestial AI in February as demand for faster optical links connecting thousands of chips in AI data centres grows.

Marvell's biggest acquisition since Inphi deal

The Lumentum acquisition is Marvell's largest purchase since its $10 billion acquisition of Inphi in 2021.

Marvell's annual revenue more than doubled from $3 billion in fiscal 2021 to $8.2 billion in fiscal 2026, driven by growing demand for custom AI chips and data centre networking technology, Reuters reported.

Its shares hit a record high in June after Nvidia CEO Jensen Huang described the custom chipmaker as the next "trillion-dollar company".

However, both companies have faced pressure amid a broader semiconductor selloff. Since reports of acquisition talks emerged late last month, Lumentum shares have fallen about 8%, while Marvell shares have declined around 22%. The selloff accelerated after Intel issued a weak forecast, according to Reuters.

The acquisition marks a major bet by Marvell on sustained AI infrastructure spending and the growing importance of high-speed optical connectivity in data centres.