California-based chipmaker Marvell has confirmed its plans to acquire optical interconnect startup Celestial AI.

Following a report from The Information that a deal was being considered, Marvell announced the acquisition as part of its Q3 earnings report. Under the terms of the deal, Celestial AI will receive $1 billion in cash and 27.2 million shares of Marvell common stock worth $2.25 billion.

However, the deal could ultimately total as much as $5.5bn, Marvell said, although that additional $2.5bn is contingent on Celestial achieving certain product milestones.

Founded in 2020, the Santa Clara, California-based Celestial AI is developing an optical interconnect technology platform for data center and AI computing solutions. In October 2024, the startup acquired the silicon photonics IP from Rockley Photonics, including the company’s worldwide issued and pending patents, for $20 million.

In March of this year, Celestial closed a $250m Series C1 funding round, securing it a valuation of $2.5bn and bringing the total raised by the company to more than $580m. Two months prior to the fundraise, Intel CEO Lip-Bu Tan joined the company’s board of directors.

Neither Marvell or the CEO Celestial, David Lazovsky, responded to The Information’s request for comment.