Marvell interconnect business (50% of data center revenue) expected to continue outpacing cloud capex growth (30%+ expected in FY2027) on strength of 1.6T and emerging 3.2T PAM DSPs, coherent light, and scaleup switch ramps; targeting 25%+ data center growth FY2027, 40%+ FY2028
“We expect our interconnect business which is roughly half our overall data center revenue to continue growing faster than cloud capex next year even with the higher outlook... As our PAM DSP products enter into their fifth year of 800 gig production, demand for our solutions continues to accelerate... We began shipping our 1.6 products in the second half of this fiscal year and are seeing exceptionally strong demand heading into next year... we have already demonstrated at the optical fiber conference this past April 400 gig perlane technology to drive the next industry transition to 3.2T. The demonstration was on 3nometer technology, but we expect production deployments which are expected in calendar 2028 to require a two nanometer solutions.”
Why it matters
Marvell's dominance in PAM DSPs (1.6T ramping now, 3.2T coming 2028) and high-performance analog drivers is creating a structural advantage in hyperscaler optical interconnect buildout. The transition from copper to optical at scale is driven by power and reach constraints, not optional upgrade—this is a hard requirement for million-GPU clusters. Marvell's early lead and 5-year+ refinement cycle on each generation creates switching costs.
Investment implication
Upstream suppliers to Marvell (semiconductor foundries at 3nm, 2nm; advanced packaging/chiplet assembly) will see sustained capex demand. Downstream optical component suppliers (transceivers, coherent light engines, photonic integration) are locked into dependent relationships. Competitors in SerDes/DSP (Broadcom, Inphi/Marvell's own Aquantia legacy) face margin compression. The shift from copper to optical I/O is non-reversible and tied directly to hyperscaler CapEx acceleration (30%+ growth), making this a structural, multi-year theme.