Marvell acquires XConn Technologies in $540M deal as AI data center race intensifies

Marvell is making a clear bet on where AI infrastructure is heading next, and it is doing so with a $540 million acquisition.

Marvell Technology said on Tuesday it will acquire XConn Technologies, a networking chip startup focused on PCIe and CXL switching. The deal, split between cash and stock, places fresh emphasis on the plumbing inside modern AI data centers, where speed and scale increasingly decide who wins.

The announcement comes just a month after Marvell acquired Silicon Valley startup Celestial AI in a $3.25 billion deal, signaling a broader push as photonics emerges as the next frontier in AI chip design.

The move also comes as cloud providers and AI companies push beyond single-rack systems. Large training and inference jobs now span multiple racks and demand tighter coordination across accelerators, memory, and servers. That shift has brought networking silicon into the spotlight, moving it from background infrastructure to a strategic choke point.

XConn sits squarely in that transition. The company builds high-port-count PCIe and CXL switches that move data between accelerators and memory pools. Those connections shape how fast AI systems exchange data and how efficiently hardware resources get shared. For Marvell, the acquisition broadens its switching lineup and strengthens its push for Ultra Accelerator Link (UALink), a newer open standard designed for scale-up AI systems.

UALink aims to enable clusters of accelerators to behave as a single large system. It draws on decades of PCIe development and applies those ideas to higher-bandwidth, lower-latency environments. Marvell sees this layer as central to next-generation AI platforms, especially as customers look for alternatives to tightly bundled, single-vendor stacks.

“This combination creates a compelling switching platform for accelerated infrastructure, advancing Marvell’s connectivity strategy for next-generation AI and cloud data centers,” said Matt Murphy, chairman and CEO of Marvell. “With XConn, we add proven PCIe and CXL switch products, IP, and engineering talent to expand our UALink scale-up switch team. Combined with our pending acquisition of Celestial AI, we will be well positioned to deliver customers the performance, flexibility, and architectural choice they need as AI systems grow in size and complexity.”

The deal also brings talent. XConn’s engineers have deep experience in high-performance switching, an area where design mistakes can bottleneck entire systems. That expertise matters as hyperscalers experiment with new layouts that mix GPUs, custom accelerators, and shared memory across racks.

“At XConn we have built the industry’s highest-port-count advanced PCIe 5 and PCIe 6 switching portfolio to support the next generation of accelerated infrastructure,” said Gerry Fan, CEO of XConn. “Marvell brings cutting-edge SerDes technology, a leading process roadmap, deep hyperscale customer relationships, and global scale. We share a common vision for high-speed connectivity as the foundation of modern data centers, and we look forward to working together to help customers drive new waves of AI innovation.”

From a market angle, the acquisition adds another front to Marvell’s competitive battle. The company has faced pressure from larger rivals such as Broadcom and Nvidia, whose networking gear often ships alongside their own AI hardware. Marvell shares rose more than 2% in early trading after the announcement, following a rough year in which the stock fell more than 23%.

Marvell Buys XConn to Strengthen UALink and PCIe Switching for Next-Gen AI Data Centers

The transaction values XConn at about $540 million, with roughly 60% paid in cash. The stock portion will be priced using Marvell’s 20-day volume-weighted average. About 2.5 million new shares will be issued as part of the deal. Marvell’s market capitalization stands at above $76 billion.

XConn already works with more than 20 customers. Its PCIe 5 and CXL 2.0 switches are shipping today. PCIe 6 and CXL 3.1 products are sampling. Marvell expects the business to begin contributing revenue in the second half of fiscal 2027 and to reach about $100 million in sales in fiscal 2028. At this point, it should be accretive on a non-GAAP basis.

The timing matters. Analysts expect Marvell to post $12.75 billion in revenue in fiscal 2027, Reuters reported, citing LSEG data. Adding switching revenue tied directly to AI buildouts could help smooth out cycles tied to individual chip programs.

The deal is expected to close in early 2026. By then, the race to build faster, larger-scale AI data centers will likely look even more crowded than it does today.