Electro-Optics & the Interconnect FranchiseWide moat

The sturdiest part of Marvell is the one it bought. The $10 billion acquisition of Inphi in 2021 brought the electro-optics business: PAM4 digital signal processors, the chips inside optical modules that encode data onto light and recover it at the other end, plus the coherent optics used between data centers.

This matters more in the AI era than it did when the deal was signed. A training cluster is not one computer but tens of thousands of accelerators that must exchange data constantly, and the bottleneck has moved from compute to interconnect. Every generation of accelerator demands faster links, and faster links demand better signal processing, because pushing more bits down the same glass means fighting physics — noise, dispersion, power. That is a genuinely hard engineering problem where Marvell's lead is measured in generations.

It is also a better business than custom silicon in a specific way: optics products are sold to many module makers rather co-designed for one buyer, so no single customer decision removes the franchise. Data-center revenue growth has been driven by custom silicon and electro-optics together, and in some periods the interconnect side has been the faster of the two — together they carried data-center revenue above $6 billion in fiscal 2026¹.

The risk is architectural rather than competitive: if optics move onto the switch package itself, the discrete module — and the discrete DSP inside it — becomes a smaller opportunity.