Celestial AI CEO Highlights Major Hyperscaler Win and Photonic Fabric Adoption at Marvell Industry Analyst Day
Celestial AI CEO Dave Lazovsky used Marvell’s Industry Analyst Day to spotlight the company’s most significant commercial milestone to date, announcing that a top-tier hyperscaler has selected Celestial AI’s photonic connectivity for its next-generation AI processors, with co-designed technology now moving into volume manufacturing. Lazovsky said this engagement represents one of the industry’s earliest large-scale transitions from copper to optical XPU interconnect inside AI systems.
Lazovsky told analysts that AI workloads are evolving faster than the data-center infrastructure designed to support them. With compute no longer the bottleneck, he said hyperscalers now face acute constraints around bandwidth, latency, power, and cost. Next-generation fabrics require sub-200-nanosecond link latency, at least a 4–5× reduction in power consumption, and a cost structure of roughly five to eight cents per gig per side. Celestial AI’s Photonic Fabric, he said, uniquely matches these requirements while enabling switch-class bandwidth at the XPU level—16 Tbps per direction per chiplet, or 64 Tbps bidirectional in a single package.
He emphasized that the hyperscaler deployment provides a first-mover advantage as system designers shift from electrical traces to optical connectivity earlier in the architecture. Customer volumes for chiplet attach can reach hundreds of thousands of units per quarter, creating a substantial near-term revenue engine, while Celestial AI’s optical HBM-pooling design allows memory to be extended tens of meters away from compute while maintaining the latency budgets required for large-scale training workloads.
• Celestial AI’s Photonic Fabric spans chiplet-level XPU connectivity and optical memory interconnect for HBM pooling.
• The chiplet provides 16 Tbps per direction with a DSP-free, analog-equalized linear-drive architecture optimized for power and area.
• Integrated link-management features include CRC, retransmission, and protocol abstraction, supporting Ethernet, proprietary fabrics, and direct HBM transactions.
• The platform enables early migration from copper to optical connectivity inside hyperscale AI systems.
“The timing of this combination couldn’t be better,” Lazovsky said. “Latency translates directly to revenue for our customers, and Photonic Fabric delivers the bandwidth density, energy efficiency, and cost structure required for AI at scale.”
🌐 Analysis
Earlier this month: Marvell agreed to acquire Celestial AI in a definitive deal valued at approximately $3.25 billion upfront, with contingent equity that could lift the total above $5 billion based on revenue milestones. The acquisition targets Celestial AI’s Photonic Fabric optical interconnect platform, which delivers 16 Tbps chiplets designed for next-generation scale-up fabrics connecting XPUs across packages, systems, and racks. Marvell expects the business to begin contributing revenue in the second half of fiscal 2028, reaching a $500 million annualized run rate by the fourth quarter of fiscal 2028 and $1 billion by the fourth quarter of fiscal 2029.
The deal positions Marvell to extend its connectivity portfolio—including Ethernet switching, DCI optics, custom silicon, and its UALink-based scale-up roadmap—into the short-reach optical domain that AI systems increasingly require as copper reaches limits in bandwidth, latency, power, and thermal reach. Celestial AI’s Photonic Fabric chiplets integrate electrical and optical components in a compact form factor and can be co-packaged directly with XPUs and scale-up switches, enabling optical links to originate from the center of the die and freeing die-edge area for additional HBM capacity. The company reports active engagements with multiple hyperscalers preparing multi-rack AI clusters that will transition high-speed XPU links from copper to optics.
Under the agreement, Marvell will pay $1 billion in cash and issue approximately 27.2 million shares valued at $2.25 billion based on the 10-day volume-weighted average price. Earn-outs totaling another ~27.2 million shares will be paid if Celestial AI achieves at least $500 million in cumulative revenue by the end of Marvell’s fiscal 2029 (one-third of the earn-out), and up to $2 billion in cumulative revenue by the same date (full earn-out). Closing is expected in the first quarter of calendar 2026, subject to regulatory review.
• Upfront value: $3.25 billion in cash and stock
• Earn-out potential: Up to ~$2.25 billion additional in equity
• Product target: 16 Tbps Photonic Fabric chiplets for optical scale-up fabrics
• Revenue outlook: $500 million annualized run-rate (Q4 FY28); $1 billion annualized (Q4 FY29)
• Integration: Co-packaged optical I/O for XPUs and scale-up switches, aligned with Marvell’s UALink roadmap
