Shares in chipmaker Marvell Technology fell more than 10 percent on Monday after it announced the record $115 billion (£85.7bn) acquisition of optical component maker Lumentum, in a deal intended to take advantage of the runaway market for data centre technology.

Shares in Lumentum plunged by more than 18 percent, as investors fretted over the acquisition, which comes after a week of sagging share prices across AI-exposed companies.

The all-stock deal, under which Lumentum investors are to receive 4.5 shares of Marvell common stock for each share owned, would give Lumentum investors ownership of about one-third of the combined company, leaving them exposed to Marvell’s recent sell-off.

Marvell makes a wide range of chips, including networking and custom AI processors for companies including Google.

The deal – which is likely to face significant regulatory scrutiny in countries including China – would give it access to optical technology designed to speed up data transfers within high-performance systems.

High-speed data transfers

In March Nvidia invested $2bn in Lumentum and its competitor Coherent, in addition to a $2bn investment in Marvell.

Marvell said it expects the deal to close in the first half of 2028, indicating it does not expect regulators to rubber-stamp the acquisition, which would be the largest-ever merger of publicly traded companies.