Marvell Technology (MRVL) shares climbed Tuesday after the chipmaker announced it's buying XConn Technologies, a move designed to beef up its position in the increasingly critical world of AI data center connectivity.
The deal is all about switches. Not the kind you flip on the wall, but the silicon that routes massive amounts of data between processors in modern data centers. XConn brings expertise in advanced PCIe and CXL switch products, technologies that are becoming essential as AI workloads get bigger and more complex.
The Price Tag and Structure
Marvell will shell out roughly $540 million for XConn, split about 60% cash and 40% stock. The equity portion is priced off Marvell's 20-day volume-weighted average price and should amount to approximately 2.5 million shares. The companies expect to close the transaction in early 2026, assuming they clear the usual regulatory hurdles and closing conditions.
The acquisition expands Marvell's Ultra Accelerator Link switch portfolio and brings a team of experienced switching engineers into the fold.
Why This Matters
Here's the context: as AI models grow more demanding, data center designs are evolving rapidly. What used to fit in a single rack now sprawls across multiple racks, requiring high-bandwidth, ultra-low-latency connections between dozens or hundreds of accelerators working in concert.
UALink is an open standard built for exactly this scenario, enabling scale-up connectivity across large accelerator clusters. The standard leverages advances in the PCIe ecosystem and targets the performance and reach requirements of next-generation infrastructure.
Matt Murphy, Marvell's chairman and CEO, said the combination strengthens the company's connectivity strategy for AI and cloud data centers. He also noted that XConn complements Marvell's pending acquisition of Celestial AI, suggesting the company is building out a comprehensive connectivity portfolio.
Gerry Fan, XConn's CEO, echoed the strategic fit, saying both companies recognize that high-speed connectivity is the foundation of modern data centers.
What XConn Brings to the Table
XConn isn't just vapor ware or future promises. The company's PCIe 5 and CXL 2.0 switches are already in production and shipping to customers. Its next-generation PCIe 6 and CXL 3.1 products are currently in the sampling phase with customers.
Marvell expects XConn to start contributing revenue in the second half of fiscal 2027. The company projects XConn will become accretive to non-GAAP earnings at that point, with the business potentially reaching approximately $100 million in revenue by fiscal 2028.
It's the kind of acquisition that makes sense when you zoom out. AI data centers need plumbing, and that plumbing needs to handle exponentially more traffic as these systems scale. Marvell is betting half a billion dollars that XConn's technology will help it capture a bigger slice of that growing market.
MRVL Price Action: Marvell shares were up 3.32% at $93.23 at the time of publication on Tuesday.