Marvell Is Betting $115 Billion on 1 of AI's Biggest Bottlenecks

The Motley Fool · Adam Levy · 2026-11-06 15:45 UTC

The chipmaker is paying a premium price to protect its biggest business.

There are a ton of supply constraints in the artificial intelligence industry. As large language models grow bigger and more complex and the number of people using them grows, a handful of companies are working to supply as much compute capacity as possible.

There are a few bottlenecks limiting their ability to scale, though. Many people know about the memory chip shortage, which has led to booming profits for the chipmakers supplying that key component. But optical networking components may be an even bigger bottleneck. Lumentum (LITE +4.56%) CEO Michael Hurlston said at a conference that the shortage the key material for developing its lasers "will become even more acute than what we see from the memory guys."

That shortage has already shown up in its financial statement with booming revenue and profit margins. Marvell Technology (MRVL +3.46%), which expects its optical interconnect chips to remain its biggest business for the foreseeable future despite a rapidly growing custom XPU business, seems to agree with Hurlston.

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