Semiconductor connectivity firm Credo Technology Group has acquired DustPhotonics in a cash and stock deal worth $1.3bn.

The agreement will see US-based Credo pay $750 million in cash and issue approximately $123m in shares, with the potential to pay up to an additional 3.21 million shares – worth around $430m – dependent on DustPhotonics hitting certain financial milestones, per a report from Calcalist.

The report added that Credo has estimated the companies’ joint portfolio, which will include optical transceivers, digital signal processors, and silicon photonics products, is expected to generate more than $500m in revenue by fiscal 2027.

Founded in 2017 and headquartered in Israel, DustPhotonics develops and manufactures pluggable optical modules and solutions for data center, enterprise, AI, and HPC applications. The company originally manufactured transceivers but phased out this product line in 2021 to instead focus its resources on silicon photonics solutions.

In 2024, the company raised $24m in a Series B follow-on funding round, bringing the total it had raised to $61m. Its product portfolio includes optical transceivers spanning 400Gbps, 800Gbps, and 1.6Tbps speeds.

"Silicon photonics is becoming a critical building block for AI infrastructure, and DustPhotonics has built a truly differentiated technology platform in this space," said DustPhotonics chairman Avigdor Willenz. "We have been disciplined in focusing on the right architecture and execution, and the results are evident in both the product and customer traction. Combining with Credo creates a powerful platform with the scale, integration, and customer access required to fully capture the opportunity ahead."

The company’s CEO, Ronnen Lovinger, added: "Joining Credo is the natural next step for DustPhotonics. We built this company with a clear conviction that Silicon Photonics would become the structural foundation of high-speed optical connectivity as AI infrastructure scales. Credo shares that conviction and brings the SerDes IP, the hyperscaler relationships, and the operational scale to turn that vision into reality far faster than we could independently. This is an exceptional outcome for our team, our customers, and the broader industry."