Marvell Technology has signed a deal to acquire optical components maker Lumentum, pairing the chip designer’s data-centre interconnect technology with one of the industry’s leading laser suppliers. The combined company would have an enterprise value of more than $275 billion.

The merger agreement is dated November 1 and was disclosed in filings with the US Securities and Exchange Commission on November 2. It is an all-stock transaction. Each Lumentum share converts into 4.500 Marvell shares, and holders of Lumentum’s Series A convertible preferred stock receive Marvell stock on an as-converted basis, or can elect a new Series B convertible preferred. After the deal, about 67% of the company will be owned by existing Marvell shareholders and about 33% by Lumentum’s.

Matt Murphy will remain chief executive and chairman of the combined company. Three Lumentum directors, including Lumentum President and CEO Michael Hurlston, will join Marvell’s board. The companies expect the deal to close in the first half of calendar 2028, subject to approval by both sets of shareholders, antitrust clearance under the Hart-Scott-Rodino Act and other regulatory approvals, and an effective registration statement.

The strategic case rests on the data centre. Marvell supplies the interconnect, DSP and SerDes technology that moves data between chips, while Lumentum makes the lasers used in optical links. In their investor presentation, the companies say combining the two will let them offer a full-stack partner across distances and network topologies, and co-design the pieces end to end as AI clusters grow more complex. They put the combined addressable market at about $550 billion by calendar 2030, against $400 billion for Marvell and more than $90 billion for Lumentum alone.

On the numbers, the companies say the deal should add to Marvell’s non-GAAP earnings per share in the first year after closing, with a line of sight to more than $1 billion in run-rate synergies, mainly in cost of goods sold. On an annualised basis from the latest quarter and without synergies, the combined company would have revenue of $17.7 billion, a non-GAAP gross margin of 57% and a non-GAAP operating margin of 39%.

The agreement carries heavy break fees. Marvell would pay $5.8 billion, and Lumentum $2.9 billion, in certain circumstances. Marvell would pay a further $3.2 billion if the deal fails for regulatory reasons. The outside date is November 1, 2027, extendable in steps to August 1, 2028 if regulators are still reviewing.

Markets had a preview. Reports of advanced talks, first published by Bloomberg, preceded the announcement, and Taiwan’s TechNews reported that Marvell shares fell more than 13% on October 30 as investors worried about the premium, share dilution and regulatory scrutiny. Lumentum has been described in Bloomberg-based coverage as Nvidia-backed.

The filings do not state a premium to Lumentum’s share price or a standalone price for the deal. With closing about 18 months away, regulators in the US and elsewhere will be a main test, given both companies’ roles in the supply chain for AI data centres.