The competitor becomes the supplier's “new owner”! Bank of America: Mywell Technology's acquisition of Lumentum or prompted Cisco and Ciena to find alternative sources

The Zhitong Finance App learned that Bank of America analysts said that Mewell Technology (MRVL.US)'s acquisition of Lumentum (LITE.US) may cause Ciena (CIEN.US) and Cisco (CSCO.US) to diversify their optical component suppliers.

Chipmaker Maywell Technology announced on Monday that it will acquire data center laser maker Lumentum in an all-stock deal of approximately $115 billion. 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.

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 Ciena and Cisco, this major deal placed a major supplier of lasers used in high-speed networking products under the umbrella of a competitor. Currently, Ciena and Cisco both purchase optical components from Lumentum, and Maywell Technology competes with these two companies in the market for coherent pluggable optical modules (such products are used to transmit data through optical networks).

Bank of America analysts said, “We believe this may increase the risk in terms of pricing, capacity allocation, or simply the risk posed by making companies rely on competitors for the supply of critical components, especially when the supply of lasers is still tight.”

However, analysts also believe that Maywell Technology has little incentive to disrupt Lumentum's existing customer relationships, as this may lead to loss of sales and may exacerbate supply bottlenecks in the entire industry. Ciena accounts for 15% of Lumentum's 2026 revenue and is an important customer. Previously, Ciena indicated that the supply of pump lasers is limited and that some optical components are dependent on a limited number of suppliers.

This risk is particularly acute for narrow linewidth lasers, which provide a light source for coherent pluggable optical modules. Lumentum is believed to be the main supplier of narrow linewidth lasers from Ciena and Cisco.

Cisco's share of the 800G ZR and ZR+ coherent pluggable optical module market has remained around 60%. Meanwhile, Ciena's market share is expected to rise from 17% in 2025 to around 35% in 2026. The deal, which is expected to close in 2028, allows time for the two companies to develop alternative suppliers or autonomous laser technology. Both companies are reportedly developing their own narrow linewidth laser alternatives.