NEW YORK/BENGALURU (Oct 28): Marvell Technology is in advanced talks to buy data-centre optics maker Lumentum Holdings, with a deal potentially set to be announced as soon as next week, a source familiar with the matter told Reuters on Wednesday.

Marvell and Lumentum did not immediately respond to Reuters requests for comment.

Lumentum makes optical components used in communications networks and data centres, areas that have attracted growing investor interest as AI workloads drive demand for faster data transmission.

Marvell has emerged as one of the biggest beneficiaries of the AI spending boom, with its shares nearly tripling this year as demand for its custom AI chips and networking products surged.

The potential acquisition would further Marvell's push into optical technologies used in AI infrastructure, a strategy that Bernstein analysts said was reinforced by the company's acquisition of photonics firm Celestial AI in a US$3.25 billion deal announced late last year.

Marvell raised its fiscal 2028 revenue forecast earlier this month to US$20 billion from US$15 billion, citing strong demand for its custom AI chips and networking products used in data centres.

While Marvell had about US$3.92 billion in cash and cash equivalents as of its latest quarter, Bernstein analysts said an acquisition of that size would likely require additional financing and could present integration challenges.

Shares of Lumentum, which has a market value of roughly US$83 billion, rose about 9% in extended trading following news of the discussions, first reported by Bloomberg News. Marvell shares fell more than 8%.

Uploaded by Liza Shireen Koshy