The young lady of the Dai family from Shanghai founded a company 31 years ago, which currently has a market capitalization of 1.8 trillion yuan.
The largest acquisition of a listed technology company in history has arrived.
Recently, U.S. chip giant Marvell announced that it will acquire Lumentum, a U.S. listed optical communications enterprise, in an all-stock transaction, with an implied enterprise value of as high as 1150 billion U.S. dollars (equivalent to over 7.6 trillion RMB).
According to statistics from Bloomberg's M&A database, calculated by equity value, if the "internal integration" between SpaceX and xAI in February this year is excluded, this transaction not only sets the record for the world's largest M&A deal since 2026, but also refreshes the historical M&A scale record of the global technology industry.
Coincidentally, both companies share the same investor - NVIDIA. In March this year, it invested 2 billion U.S. dollars in each of the two companies successively by subscribing for convertible preferred shares. According to Bloomberg, before the two companies announced the merger, the CEOs of both parties also sought Jensen Huang's opinion and obtained his support.
Jensen Huang gave the go-ahead, but Wall Street did not buy it. On the day of the announcement on November 2, the share prices of Marvell and Lumentum plummeted by 12.72% and 18.59% respectively. After that, the share prices of the two companies continued to fall. On November 5, affected by the collective decline of U.S. tech stocks, the two companies plunged another 16.43% and 18.58% respectively. As of the close of the day, compared with the last trading day before the announcement, the cumulative decline of the two companies had expanded to about 32% and 39.3%, with their market capitalizations shrinking to about 117.1 billion U.S. dollars and 46.3 billion U.S. dollars respectively.
One makes chips and the other makes optical communications. Why did Marvell spare no expense to acquire Lumentum? What signal does Jensen Huang's 4 billion U.S. dollar bet in advance reveal?
Why Merge?
For this transaction, Marvell does not need to directly come up with 1150 billion U.S. dollars in cash, but uses its own shares to exchange for Lumentum's shares.
According to the announcements of both parties, for each share of Lumentum held, shareholders will receive 4.5 shares of Marvell. Calculated based on the stock price before the M&A rumors emerged on October 28, these 4.5 Marvell shares are worth about 1132 U.S. dollars, a 23.9% premium over Lumentum's stock price at that time.
As for the 1150 billion U.S. dollars, it is the overall enterprise valuation after taking into account factors such as debt and cash. According to Reuters, if only the equity value is calculated, the transaction size is about 1025 billion U.S. dollars.
According to the announcements of both parties, after the transaction is completed, original Marvell shareholders are expected to hold about 67% of the shares of the merged company, and Lumentum shareholders hold about 33%. Matt Murphy, the current chairman and CEO of Marvell, will continue to take the helm, and three directors including Lumentum CEO Michael Hurlston will join the board of directors. The transaction is expected to be completed in the first half of 2028, and still needs to obtain the approval of both shareholders and regulatory authorities.
Let's take a look at these two companies.
Marvell is an American chip enterprise with Chinese entrepreneurial imprints. In 1995, Weili Dai from Shanghai, her husband Sehat Sutardja, and her brother-in-law Pantas Sutardja co-founded Marvell. In June 2000, the company landed on NASDAQ, issuing 6 million shares in its IPO, with a total fundraising amount of 90 million U.S. dollars.
In the early years, Marvell was mainly engaged in the hard disk control chip business. In 2016, the founder couple withdrew from the company's management, and Murphy took over as CEO. After that, through a series of acquisitions, the company gradually shifted its business focus to data centers and network communications.
After leaving Marvell, Weili Dai did not leave the technology entrepreneurship circle. She successively participated in the establishment of AI enterprise MeetKai and advanced packaging company Silicon Box. Her two elder brothers are also well-known entrepreneurs in the chip industry: the eldest brother Dai Weimin founded VeriSilicon, a company listed on the Sci-Tech Innovation Board, and currently serves as its chairman and CEO; the second brother Dai Weijin co-founded Silicon Perspective, and currently also serves as a director and chief strategy officer at VeriSilicon. The three Dai siblings have successively founded six chip enterprises.
Today, Marvell has become an important participant in the AI infrastructure industrial chain, mainly designing customized AI chips for large cloud computing enterprises such as Amazon, while providing products such as network switch chips and high-speed signal processing chips. Compared with NVIDIA, Marvell may not be as well-known, but it is also an important supplier for U.S. tech giants to build AI data centers.
Lumentum was spun off from the established optical communications enterprise JDSU and became independent in August 2015, and was listed on NASDAQ on the 4th of the same month. Its main products include lasers, optical transceivers, optical switching equipment, etc., and it is an important global supplier of optical communications technology.
In recent years, the boom in AI data center construction has also driven Lumentum's performance growth. According to the company's latest financial report released on November 2, revenue in the first quarter of fiscal year 2027 reached 1.263 billion U.S. dollars, a year-on-year increase of 136.5%.
With the rise of the AI boom, both companies have been in the 100-billion-dollar market capitalization club. In early October this year, Lumentum's market capitalization exceeded 100 billion U.S. dollars, while Marvell's market capitalization exceeded 200 billion U.S. dollars in the same period.
From the perspective of equity structure, there is also overlap between the major institutional shareholders of the two companies. Marvell's major shareholders include FMR, Vanguard and BlackRock, while Lumentum's major shareholders include institutions under Vanguard and BlackRock.
Both are fast-growing listed companies, so why did Marvell spend huge sums of money to acquire Lumentum?
The key is that the bottleneck of AI data centers is extending from computing power to data transmission. As tens of thousands of GPUs work together, chips need to continuously exchange data. If the transmission speed cannot keep up, no matter how powerful the computing power is, it will be difficult to give full play to its advantages. Traditional copper wires still have advantages in short-distance connections, but as bandwidth and transmission distance increase, loss and energy consumption problems gradually emerge, and the importance of optical communications rises accordingly.
The two companies happen to master the key technologies in this field. Marvell is good at DSP (digital signal processing) chips, which are responsible for high-speed signal processing; Lumentum has manufacturing capabilities for lasers, optical devices and compound semiconductors such as indium phosphide, providing key support for high-speed optical signal transmission.
In the past, chips and optical devices were usually developed separately by different enterprises, and then integrated by optical module manufacturers. However, as the transmission rate continues to increase, the two sides need to cooperate closely at the design stage. Marvell's acquisition of Lumentum is intended to integrate chip design and optical technology, accelerate product R&D and delivery, and enhance its competitiveness in the high-speed optical interconnection industrial chain at the same time.
In fact, Marvell has long laid out its business in optical communications. In 2021, the company acquired high-speed interconnection chip enterprise Inphi; in February this year, it completed the acquisition of optical interconnection enterprise Celestial AI. Now the proposed acquisition of Lumentum is equivalent to further completing its capabilities in lasers, optical devices and related manufacturing.
According to the announcements of both parties, the merged company is expected to expand its addressable market size to 5500 billion U.S. dollars, and is expected to achieve annual cost synergies of more than 1 billion U.S. dollars. In terms of actual business scale, according to the investor materials released by both parties, the merged company has an annualized revenue of about 17.7 billion U.S. dollars, and is expected to exceed 21 billion U.S. dollars in the next quarter. Calculated based on the stock price before the announcement, the value of the merged enterprise exceeds 2750 billion U.S. dollars (equivalent to 1.8 trillion RMB).
In Marvell's view, optical communications is no longer just a supporting link for data centers, but a core technology worth investing hundreds of billions of dollars to compete for.
However, Wall Street is temporarily unwilling to pay for this high-stakes bet.
The Stock Price Dropped First
The first concern of the market is that the acquisition price is too high.
According to Reuters' calculation based on LSEG data, the valuation of this transaction for Lumentum is about 33 times its expected core operating profit in the next 12 months, while the median valuation of comparable companies in the same industry is only 16 times, with a very obvious premium.
Not only that, the equity value of this acquisition exceeds half of Marvell's own market capitalization before the announcement, and its scale is more than ten times that of Marvell's acquisition of Inphi in 2021. For a chip enterprise with annual revenue of less than 10 billion U.S. dollars, such a large-scale acquisition is undoubtedly a high-stakes gamble.
Axel Rudolph, chief technical analyst at IG Group, also pointed out in an interview with Reuters that investors have reasons to question whether Marvell has paid too high a price and whether it has taken on too much risk at one time.
In addition to the excessively high acquisition price, the fall in stock prices has brought another problem: since the two sides adopt a fixed share exchange ratio, the value of the shares that Lumentum shareholders finally obtain will also shrink as Marvell's stock price falls.
By November 4, Marvell's stock price had fallen to 159.8 U.S. dollars. Calculated according to the previously agreed share exchange ratio, the corresponding stock value per Lumentum share is only about 719 U.S. dollars, which is more than 30% lower than the originally announced estimated price.
On that day, Lumentum's stock price closed at 626.75 U.S. dollars, which was even lower than the theoretical value after the share exchange. This gap reflects that investors are still leaving a discount for uncertainties such as whether the transaction can be completed smoothly.
Regulatory approval is also a major hurdle. According to the 8-K document submitted by Marvell to the U.S. Securities and Exchange Commission (SEC), if the transaction fails due to specific antitrust or regulatory approval obstacles, Marvell may need to pay a 3.2 billion U.S. dollar regulatory termination fee to Lumentum under agreed conditions.
At the same time, this acquisition also affects China's optical communications market.
In recent days, the A-share optical communications sector has continued to fluctuate. On November 3, leading stocks such as Innolight and TFC plunged sharply at one point, and rebounded the next day, but weakened again on November 5 - as of the close, Innolight fell 7.51%, Eoptolink fell 5.54%, TFC fell 4.78%, and Source Photonics fell 1.06%.
The market is worried that once Marvell and Lumentum complete the merger, key components of high-speed optical modules such as DSP chips and EML lasers will be further concentrated, and domestic optical module manufacturers may face greater procurement and bargaining pressure.
However, the fall of the sector cannot be entirely attributed to this M&A. The optical communications sector has continued to adjust since the third quarter, and factors such as tight supply of key components are also affecting market expectations.
In the final analysis, the market is not not optimistic about the development prospect of AI optical communications, but the price Marvell has paid for it has made investors feel uneasy.
What Did Jensen Huang's 4 Billion U.S. Dollars Bet On?
Behind this transaction, there is another noteworthy name - NVIDIA.
On March 2 this year, NVIDIA announced that it would invest 2 billion U.S. dollars in Lumentum to support its R&D of advanced optical technologies and expansion of local manufacturing in the United States. The two sides also signed a multi-year procurement agreement, and NVIDIA obtained the right to use relevant production capacity of advanced laser components in the future.
On the same day, NVIDIA invested another 2 billion U.S. dollars in Coherent, another optical communications giant, which also involves R&D of lasers and optical devices and manufacturing capacity.
On March 31, NVIDIA invested another 2 billion U.S. dollars in Marvell, and the two sides will cooperate in customized AI chips, high-speed interconnection and silicon photonics technology.
In just one month, 6 billion U.S. dollars were invested in three enterprises. Among them, Lumentum and Coherent master the manufacturing capabilities of advanced lasers, optical devices and related technologies, while Marvell is good at customized AI chips, high-speed signal processing and network interconnection technologies.
These investments just cover multiple key links of AI data centers from chip computing to high-speed data transmission.
Why does NVIDIA attach so much importance to these enterprises?
NVIDIA's competitive advantage has long gone beyond GPUs, and has gradually extended to the entire AI computing system. The larger the data center scale, the more the full release of computing power depends on the high-speed connection between chips and the supply of key components.
This has also changed the competition mode of chip enterprises. In the past, different manufacturers could provide chips and optical devices respectively, and then customers completed the integration. Now, as optical communication technology gradually extends into chips and packages, the two sides need to cooperate closely at the design stage. Whoever can better integrate these technologies will have more opportunities to participate in the core design of the next-generation AI system.
According to Reuters, Marvell expects that by 2030, the size of the interconnection market it focuses on will reach 65 billion U.S. dollars, and the average annual growth rate in the next few years is expected to reach 65%.
For NVIDIA, investing in Lumentum and Coherent is to support more R&D and capacity construction of advanced optical devices, and reduce the risk of insufficient supply of key components in the future. Investing in Marvell has another layer of consideration.
Today, large technology enterprises such as Amazon and Google are developing customized AI chips. According to NVIDIA's announcement on March 31, Marvell will connect its self-designed customized computing chips to NVIDIA's interconnection ecosystem through the NVLink Fusion platform. This means that even if customers use computing chips designed by other manufacturers, they can still use part of NVIDIA's network and interconnection technologies.
Therefore, NVIDIA's investment is not just for financial returns, but to connect key suppliers more closely through equity investment, long-term procurement and technical cooperation.
According to people familiar with the matter cited by Bloomberg, before the transaction was announced, the CEOs of Marvell and Lumentum sought Jensen Huang's opinion and obtained his support. Marvell CEO Murphy also said that the merger will benefit NVIDIA and further strengthen support for NVIDIA.
However, Marvell's customers are not only NVIDIA. The company has also established cooperative relations with tech giants such as Amazon and Google. After acquiring Lumentum, Marvell is expected to rely on its more complete optical interconnection product layout to enhance its attractiveness to large cloud computing customers.
From this transaction, we can see that the competition in the U.S. AI industrial chain is extending from chip performance to the technical integration of the entire system. NVIDIA lays out key suppliers through investment and cooperation, while Marvell chooses to acquire, hoping to gain more say in the next-generation AI infrastructure.
For Chinese optical communications enterprises, this M&A may also bring new opportunities. If downstream optical module manufacturers speed up the introduction of other suppliers to diversify supply chain risks, domestic products such as high-speed EML lasers are expected to get more verification and procurement opportunities. But whether it can be truly converted into orders still depends on the technical maturity and mass production capacity of domestic enterprises.
Conclusion
From a chip enterprise co-founded by Chinese people in 1995 to launching a 1150 billion U.S. dollar acquisition today, Marvell has gone through 31 years.
Whether this transaction can be completed smoothly will have to wait until 2028. Even if it is finally approved, how to digest such a huge acquisition is still a test that Marvell must face.
1150 billion U.S. dollars is used to buy an optical communications giant, but what is at stake is Marvell's competitiveness in the next decade.