The AI optical interconnection circuit ushered in an epic integration! $115 billion super merger and acquisition endorsed by Nvidia (NVDA.US) Hwang In-hoon

The Zhitong Finance App learned that chipmaker Maywell Technology (MRVL.US) announced on Monday that it will acquire data center laser manufacturer Lumentum Holdings (LITE.US) in an all-stock transaction of about 115 billion US dollars. If successfully completed, this deal (in terms of equity value) will not only be the world's largest merger and acquisition since 2026, but also the largest merger and acquisition deal in the global technology industry other than the merger of SpaceX (SPCX.US) and XAI.

Prior to finalizing this huge deal, the heads of both Maywell Technology and Lumentum received support from Nvidia (NVDA.US) CEO Wong In-hoon. According to people familiar with the matter, Matthew Murphy, CEO of Maywell Technology, and Michael Hurlston, CEO of Lumentum, sought Hwang In-hoon's views over the phone before the deal was announced.

Hwang In-hoon's support highlights that as demand for higher speed optical connections becomes a bottleneck in the construction of larger and larger data centers, Nvidia, a leader in the field of artificial intelligence (AI), is driving integration among key suppliers. In an interview on Monday, Michael Hurlston said, “I think Nvidia's response has always been very positive. We believe that with this merger, we can actually deliver more products to Nvidia more quickly.”

Matthew Murphy said during an investor conference call discussing the deal: “Mike and I have a very similar vision of where the world is going.” “We have maintained a long-term relationship both on a professional and personal level — Lumentum is a major Mewell Technology customer. We have had a lot of interaction with the Lumentum team. It all just came naturally.”

How will the merger of Mywell Technology and Lumentum benefit Nvidia?

Earlier this year, Nvidia invested $2 billion in Maywell Technology and Lumentum respectively, for a total investment of $4 billion. Today, the merger of these two companies may not only bring investment returns to Nvidia, but also has the following significance for Nvidia.

1. Open up the high-speed optical interconnection industry chain and ease the AI data center connection bottleneck

The larger the AI computing power, the easier it is for data transmission to become a bottleneck. Nvidia needed not only a more powerful GPU, but also a high-speed interconnect system that would enable tens of thousands of GPUs to work together efficiently. The deal happened to integrate the two companies' technologies in the fields of electrical interconnection, optical interconnection, and custom chips.

The new merged company can combine Maywell Technology's chip, signal processing, and interconnect technology with Lumentum's lasers, optics, and manufacturing capabilities. This means it has an opportunity to move from providing a single chip or optical component to providing a more complete high-speed interconnect solution. For Nvidia, this will help improve the optical component supply capacity of AI data centers and drive overall performance improvements in next-generation AI infrastructure.

2. Accelerate the implementation of silicon photonics and next-generation optical interconnection technology

Silicon photonics technology is another focus of attention in this deal. Simply put, silicon photonics technology combines optical devices with semiconductor chip manufacturing processes to enable data to be transmitted between chips and systems through optical signals. It is expected to solve the power consumption and bandwidth limitations faced by traditional electrical interconnections in high-speed transmission scenarios.

Nvidia has previously arranged this field with Maywell Technology and Lumentum, respectively. In terms of cooperation with Mywell Technology, the two sides will jointly promote silicon photonics technology and connect Marvell's customized XPU and network technology to the Nvidia ecosystem through NVLink Fusion. In terms of cooperation with Lumentum, the two sides are jointly developing advanced optical technology, focusing on lasers and optical connectivity solutions required for next-generation AI infrastructure.

After the merger of the two companies, it is expected to further open up optical devices, semiconductor chips, signal processing and packaging, etc., and shorten the product development cycle. For Nvidia, this means that in the future, when building hyperscale AI clusters, it will have the opportunity to obtain more mature and more integrated optical interconnection solutions.

3. Strengthen supply chain support and reduce the supply risk of key optical components

Currently, the scale of AI infrastructure construction continues to expand, and the bottlenecks in the industrial chain are no longer limited to GPUs themselves, but also include key components such as high-bandwidth memory, advanced packaging, network switching equipment, optical transceivers, and lasers. In particular, high-performance lasers are an important part of optical communication systems and are directly related to the ability to generate and transmit optical signals.

Nvidia previously invested $2 billion in Lumentum, while also receiving multi-year procurement commitments and the right to use future production capacity. This means that Nvidia not only wants to participate in technology research and development, but also wants to lock in supply capacity for some key products ahead of time.

If Maywell Technology and Lumentum successfully complete the merger, the new company is expected to further coordinate chip design, optical component production, and system-level product development. This helps Nvidia reduce supply chain coordination costs and increase delivery certainty for next-generation AI data center products.

4. Promote the expansion of Nvidia's AI ecosystem and enhance the competitiveness of the platform

The deal may also have an easily overlooked significance: Nvidia is driving its transformation from a GPU vendor to a complete AI infrastructure platform. Previously, Nvidia had gradually built a complete technology system covering computing, networking, and data transmission through products such as NVLink, NVLink Fusion, Spectrum-X, ConnectX, and Bluefield. Among them, NVLink Fusion allows customers to develop customized AI computing infrastructure while being compatible with Nvidia's technology ecosystem.

Maywell Technology is an important partner in this strategy. The partnership allows Maywell Technology to provide customized XPU and NVLink Fusion compatible high-speed interconnect technology, while Nvidia provides technologies such as Vera CPUs, ConnectX network cards, BlueField DPU, NVLink interconnect, and Spectrum-X switches.

The addition of Lumentum is expected to further enhance the optical connectivity capabilities of this ecosystem. From an industrial competition perspective, this helps Nvidia cope with competition from competitors such as Broadcom (AVGO.US) in the fields of customized AI chips, network switching, and data center infrastructure. Especially in a context where large cloud service providers are increasingly paying attention to customized AI chips, Nvidia needs to ensure that even if customers use non-Nvidia GPUs or customized XPUs, their infrastructure still has the opportunity to use Nvidia's interconnection technology and network ecosystem. Therefore, Nvidia supports the integration of Maywell Technology with Lumentum, which is also in line with its strategic direction of expanding the coverage of the AI infrastructure ecosystem.