Northeast Securities has released a research report stating that NVIDIA's strategic investment in Marvell Technology reaffirms the core foundational value of switch chips in AI computing infrastructure. The continuous expansion of heterogeneous interconnection ecosystems and the technological evolution toward "optical replacing copper" are set to fully unlock growth opportunities for the switching segment and the optical interconnection industry chain. The firm maintains an "Outperform" rating for the sector. Key viewpoints from Northeast Securities are as follows:
On March 31, 2026, NVIDIA announced a strategic investment of $2 billion in Marvell Technology. The two companies will engage in deep collaboration based on the NVLink Fusion platform, allowing Marvell's custom chips (XPUs) to access the NVLink interconnection ecosystem. Within the preceding month, NVIDIA had already invested $2 billion each in Lumentum and Coherent, totaling $6 billion in investments over 30 days, all directed toward the optical interconnection and AI computing infrastructure sectors.
Heterogeneous interconnection is reshaping computing architecture, with switch chips becoming a critical hub. Through NVLink Fusion, NVIDIA is opening its interconnection protocol to third-party custom chips for the first time, marking a transition in AI computing architecture from "GPU-centric" to a "heterogeneous interconnection ecosystem." Efficient coordination among various chip types—such as GPUs, XPUs, and DPUs—is essential. Switch chips, serving as the central hub for data scheduling, manage global traffic across chips, nodes, and racks, elevating their role from supporting components to the core foundation of computing clusters. As cluster scales evolve from tens of thousands to millions of cards, east-west traffic handled by the switching layer grows exponentially. The bandwidth, latency, and scheduling capabilities of switch chips directly determine the effective computing output of clusters. Driven by this demand, the iteration pace of switch chips is accelerating, transitioning from 800G to 1.6T, with 3.2T solutions already in pre-research stages. Marvell's Teralynx series already supports 51.2T switching capacity, while NVIDIA's Spectrum-X continues to expand AI networking capabilities. The actions of leading players underscore the strategic value of switch chips.
The shift from copper to optical interconnects is unleashing massive demand, amplifying the value of switch chips. NVIDIA's combined $6 billion investment in Marvell, Lumentum, and Coherent within 30 days highlights the focus on silicon photonics and optical interconnection technologies. Currently, copper-based electrical interconnects are reaching physical limits at the million-card scale, making optical interconnects the necessary path to break through the "communication wall." In this architecture, optical modules handle signal transmission as pipelines, while switch chips act as hubs for traffic aggregation and scheduling. Each generation of advancement in optical communication rates imposes stricter requirements on the capacity density and scheduling dimensions of switch chips. Aligning with this trend, Marvell leverages its dominant position in optical communication DSPs to create a synergistic "DSP + switching" solution with its core switching products, helping NVIDIA build a full-chain闭环 from light sources, optical devices, DSPs to switch chips on the capital side.
In the era of computing power, ecosystem dominance is paramount, and the localization of switch chips is imperative. The battle over interconnection architectures has escalated into a global ecosystem competition: Broadcom aims to penetrate NVIDIA's closed interconnection barriers with its UEC standard, while NVIDIA allies with Marvell to counter with an ecosystem moat. Turning to the domestic front, the large-scale construction of autonomous computing foundations urgently requires the establishment of secure and controllable system-level ecosystems. The industry cannot afford to leave the "scheduling heart"—switch chips—under the long-term monopoly of overseas giants. Faced with potential supply cut risks from Broadcom, persistent high premiums, volatile delivery times, and lagging technical support, the domestic market is gradually abandoning the illusion of complete reliance on foreign technology. Driven by both security imperatives and operational stability needs, systematic domestic substitution of switch chips is inevitable.
Investment recommendations: Relevant companies (not constituting investment advice): domestic switch chip firms such as Shengke Communication and ZTE; leaders in optical modules and optical connectivity like Zhongji Innolight, Eoptolink, and TFC Optical; and network equipment platform companies such as Unisplendour and Ruijie Networks.
Risk warnings: AI capital expenditure falling short of expectations, slower-than-expected validation progress, and geopolitical risks.
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