Sources: Marvell is in advanced talks to buy data center optics maker Lumentum, whose market value is ~$83B; the deal could be announced as soon as next week

The cost of optical components for AI infrastructure is poised to decrease.

Marvell Technology is reportedly in advanced negotiations to acquire Lumentum Holdings, a maker of optical components. The potential deal, which could be announced as early as next week, aims to bolster Marvell's position in the AI hardware market. Lumentum's stock saw a significant increase following the news, while Marvell's stock experienced a decline. Lumentum is scheduled to release its fiscal first-quarter earnings on November 5th. This development signals a move by Marvell to expand its offerings and competitive standing in the rapidly evolving AI infrastructure sector.

This reported acquisition signals a significant consolidation trend within the AI hardware supply chain, indicating that established players like Marvell are seeking to integrate critical capabilities to accelerate their AI product roadmaps. The move suggests a strategic imperative to gain greater control over specialized technologies essential for high-performance computing and data center operations.

The consolidation could impact market dynamics for other component suppliers and potentially lead to more integrated solutions for customers. Investors will be watching for how Marvell leverages Lumentum's optical expertise to enhance its own product portfolio and its competitive differentiation against rivals investing heavily in AI infrastructure.