Marvell Buys XConn for $540M, Deepening Its AI Infrastructure Bet

SANTA CLARA, CA – January 06, 2026 – Marvell Technology, Inc. today announced a definitive agreement to acquire XConn Technologies for approximately $540 million, a strategic move designed to cement its leadership in the critical connectivity infrastructure powering artificial intelligence. The deal brings XConn’s advanced PCIe and CXL switching silicon under Marvell’s roof, significantly bolstering its portfolio for next-generation AI and cloud data centers.

The acquisition, which will be paid with a mix of approximately 60% cash and 40% stock, is the latest in a series of aggressive moves by Marvell to build a comprehensive platform for the demanding workloads of the AI era. It underscores a fundamental reality of modern computing: as AI models grow exponentially larger, the 'plumbing' that connects processors and memory is becoming just as important as the chips themselves.

A Strategic Push into AI's Foundational Layer

This acquisition is not an isolated event but a key piece of a much larger puzzle Marvell is assembling. It follows the company’s recent blockbuster announcement in December 2025 to acquire Celestial AI, a specialist in photonic fabric technology, for $3.25 billion. Together, these deals signal an ambitious strategy to dominate the entire data center interconnect hierarchy, from optical links between racks (Celestial AI) to electrical switches within the server (XConn).

“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, in a statement. He emphasized the synergy of the recent acquisitions, stating, “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.”

Marvell's intense focus on AI infrastructure has reshaped its business. The data center segment has become its primary growth engine, accounting for a staggering 76% of total revenue in the first quarter of fiscal 2026. This focus was further sharpened by the strategic sale of its automotive ethernet business in 2025, a move that streamlined its portfolio to concentrate on higher-margin AI opportunities. By acquiring XConn, Marvell is doubling down on this strategy, aiming to capture a significant share of the expanding market for custom AI silicon and its associated connectivity components.

The Technical Imperative: Unclogging AI Bottlenecks

At the heart of the acquisition is the highly specialized technology developed by XConn. As AI workloads scale from single-rack deployments to vast, multi-rack configurations, the communication pathways between thousands of processors (XPUs) and memory pools become a critical performance bottleneck. XConn’s expertise lies in two key standards designed to alleviate this congestion: PCIe and CXL.

PCIe (Peripheral Component Interconnect Express) is the established high-speed bus that has served as the data highway inside computers for decades. XConn has developed what it calls the “industry’s highest-port-count” switches for the latest PCIe 5 and emerging PCIe 6 standards, allowing for denser and more efficient connectivity.

CXL (Compute Express Link) is a newer, open standard built upon the PCIe physical layer. Its revolutionary capability is enabling memory disaggregation—allowing CPUs, GPUs, and other accelerators to share vast pools of memory across the data center. This is vital for training and running enormous AI models that would otherwise be constrained by the memory attached to a single processor. XConn was an early innovator in this space, delivering a hybrid switch that supports both CXL and PCIe on a single chip.

“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.”

XConn’s products are already gaining traction, with its PCIe 5 and CXL 2.0 switches in production and next-generation PCIe 6 and CXL 3.1 switches currently sampling with over 20 customers. This existing market validation provides Marvell with a mature product line and an experienced engineering team ready for integration.

Navigating the Interconnect Standards Maze

The acquisition also strengthens Marvell's position in the complex and competitive landscape of AI interconnect standards. While NVIDIA champions its proprietary, high-performance NVLink fabric, a significant portion of the industry is coalescing around open standards to foster a more diverse and competitive ecosystem. Marvell is strategically positioning itself to capitalize on this trend.

The XConn deal directly augments Marvell’s team working on the Ultra Accelerator Link (UALink), a new open industry standard purpose-built for high-speed, low-latency communication between accelerators. By integrating XConn’s switching expertise and IP, Marvell can accelerate the development and adoption of UALink-based solutions, offering a compelling open alternative for building large-scale AI systems. This positions Marvell as a key enabler for a broad coalition of hardware vendors looking to compete with vertically integrated players.

By combining its own CXL memory-expansion controllers with XConn’s CXL switches, Marvell aims to establish what it calls “the industry’s most comprehensive CXL portfolio.” This creates a powerful offering for hyperscale customers who demand flexibility and want to avoid being locked into a single proprietary ecosystem, allowing them to build more efficient and cost-effective infrastructure for memory-intensive AI tasks.

Financial Implications and Market Outlook

Wall Street has reacted favorably to the strategic logic behind the acquisition, with Marvell’s stock (NASDAQ: MRVL) climbing over 4% in trading following the announcement. The positive response indicates investor confidence in Marvell's aggressive M&A strategy to build a defensible moat in the AI infrastructure market.

The financial terms value XConn at approximately $540 million, with the transaction expected to close in early calendar 2026, pending regulatory approvals. Marvell does not expect an immediate financial return, projecting that XConn’s products will begin contributing to revenue in the second half of fiscal year 2027. However, the company anticipates a swift ramp, forecasting that the new business line will generate approximately $100 million in revenue in fiscal 2028 and become accretive to Marvell’s non-GAAP earnings at that time. This long-term view aligns with the multi-year design and deployment cycles typical of the data center industry, where Marvell is now positioned to be a foundational technology provider for years to come.