U.S. fabless chip designer Marvell Technology completed its acquisition of Celestial AI in a deal worth around $3.25 billion.

Teased back in December, the acquisition sees Marvell pick up Celestial’s Photonic Fabric platform. Unlike co-packaged optics (CPO), the startup boasts an apparent full-stack technology it claims can increase off-package bandwidth between data center chips by up to 25-times, while simultaneously reducing power consumption substantially.

“The addition of Celestial AI’s Photonic Fabric technology platform complements Marvell’s existing portfolio and enhances our ability to address the most demanding requirements of next-generation AI and cloud data center architectures,” Marvell CEO Matt Murphy explained in a statement. “We are excited to welcome the talented team from Celestial AI to Marvell.”

Celestial was founded back in 2020, and counted the likes of Intel CEO Lip-Bu Tan on its board. The firm counted $515 million in funding, most recently a $250 million round last March that saw it secure investment from backers including AMD Ventures, BlackRock, and Koch Disruptive Technologies.

The startup joins Marvell in a deal payable at closing, consisting of $1 billion in cash and $2.25 billion in stock.

Celestial will aid its parent’s existing optical connectivity capabilities, with the fabless firm having already dipped its toe into the world of photonics via a linear-drive pluggable optics (LPO) module capable of data transfer speeds of 1.6 Tb/s across eight parallel channels of 200 Gb/s each.

Officially, Celestial AI’s tech and team are now part of Marvell’s Data Center Group, a segment that’s seen sustained growth in recent years, with robust demand for its 800 Gb/s PAM4 optical products and Teralynx Ethernet switches.

“By joining forces, Celestial AI’s Photonic Fabric technology platform becomes part of a broader, end-to-end AI connectivity platform within an organization that has a proven track record of taking advanced technologies into high-volume production,” a statement on the startup’s website reads. “Together, we are helping define how next-generation AI systems are built, from chip to package to rack to data center.”

“Celestial AI will enable us to advance Marvell’s long-term strategy to deliver the industry’s most comprehensive data infrastructure platforms,” Murphy added. “As AI systems continue to scale in size and complexity, customers require innovative connectivity solutions.”

Marvell said upon closing that it expects Celestial’s initial revenue contributions to begin in the latter of fiscal 2028, increasing to an annual rate of $500 million by the fourth quarter of that year. The firm then projects Celestial-related revenue to double to $1 billion by the fourth quarter of fiscal year 2029.

The chip firm said the acquisition will increase its annual operating expenses by about $50 million, with approximately 27 million new shares of equity issued to finalize the acquisition.

Despite the Celestial addition to its nascent photonic portfolio, Marvell expanded its copper-focused designs last year through the addition of new designs in its active copper cables (ACC), which feature a small signal equalizer chip to extend reach while maintaining minimal latency.