Marvell Technology's deal for optical components maker Lumentum will create an "enormous" opportunity to address growing connectivity demands from the artificial intelligence infrastructure buildout, Lumentum CEO Michael Hurlston told CNBC on Monday.
"You need scale-up technology that needs semiconductors and optical working seamlessly together," Marvell CEO Matt Murphy told CNBC's "Squawk on the Street." "We are going to create a new category of company here."
Since the tie-up is a fixed-ratio deal with no cash, the value will depend on the price of Marvell shares. The company said the transaction has an implied enterprise value of $115 billion for Lumentum, in a release.
Marvell shares slumped 8% in trading Monday, while Lumentum's stock sank 13%.
Through the acquisition, Marvell said it can combine electrical and optical technologies to meet accelerating and shifting AI connectivity demands across regions and systems. Companies are increasingly relying on optical connections to piece together chips used to run and train large language models.