According to Bank of America analysts, Marvell Technology's acquisition of Lumentum could push Ciena and Cisco to diversify their optical component suppliers.
Chipmaker Marvell Technology announced on Monday that it will acquire data center laser manufacturer Lumentum in an all-stock deal valued at approximately $115 billion. If completed successfully, this transaction (based on equity value) would not only be the largest merger globally since the start of 2026, but also the largest tech industry deal worldwide aside from the SpaceX and xAI combination.
The combined new company could integrate Marvell Technology's chips, signal processing, and interconnect technology with Lumentum's lasers, optical devices, and manufacturing capabilities. This means it has the opportunity to shift from providing single chips or optical components to offering more complete high-speed interconnect solutions.
For Ciena and Cisco, this blockbuster deal brings a key supplier of lasers used in high-speed networking products under the umbrella of a competitor. Currently, both Ciena and Cisco procure optical components from Lumentum, while Marvell Technology competes with these two companies in the coherent pluggable optical module market (products used to transmit data over optical networks).
Bank of America analysts stated: "We believe this could increase risks related to pricing, capacity allocation, or simply the risk of companies depending on a competitor for critical component supply, especially given that laser supply remains tight."
However, analysts also believe that Marvell Technology has little incentive to disrupt Lumentum's existing customer relationships, as doing so could lead to lost sales and potentially exacerbate supply bottlenecks across the industry.
Ciena accounts for 15% of Lumentum's fiscal 2026 revenue, making it a significant customer. Previously, Ciena noted that pump laser supply was constrained and that some optical components rely on a limited number of suppliers. This risk is particularly pronounced for narrow-linewidth lasers, which provide the light source for coherent pluggable optical modules. Lumentum is believed to be the primary supplier of narrow-linewidth lasers for both Ciena and Cisco.
Cisco has maintained a share of approximately 60% in the 800G ZR and ZR+ coherent pluggable optical module market. Meanwhile, Ciena's market share is expected to have risen from 17% in 2025 to approximately 35% in 2026.
This deal, which is not expected to close until 2028, leaves time for both companies to develop alternative suppliers or in-house laser technology. According to reports, both companies are working on their own alternative narrow-linewidth laser solutions.
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