Credo closes $750M DustPhotonics deal to expand silicon photonics

Credo Technology Group completed its $750 million acquisition of DustPhotonics, adding silicon photonics to its AI connectivity stack.

Credo Technology Group Holding Ltd now owns silicon photonics technology after closing its acquisition of DustPhotonics, giving the chipmaker a vertically integrated optical connectivity stack spanning 800G to 3.2T speeds for AI data centers.

"I am thrilled to officially welcome the talented team from DustPhotonics to Credo," Bill Brennan, President and Chief Executive Officer at Credo, said. "Today marks an important milestone as we join two deeply skilled organizations united by a shared commitment to innovation, execution and customer impact."

DustPhotonics brings silicon photonic integrated circuit technology that deepens Credo's optical portfolio across 800G, 1.6T and 3.2T near-packaged optics and co-packaged optics. The combined portfolio of ZeroFlap optical transceivers, optical DSPs and silicon photonics products is expected to become a significant growth driver in fiscal 2027, the company said. Credo reported $407 million in revenue for its fiscal third quarter, up 201% from a year earlier, and guided fiscal fourth-quarter revenue between $425 million and $435 million.

The deal positions Credo against larger rivals Marvell Technology and Broadcom in the race to supply optical interconnects for hyperscale AI deployments. Credo now controls SerDes, digital signal processing, silicon photonics and system integration — a full-stack approach that management expects to drive more than 50% revenue growth in fiscal 2027. The company trades at about 107 times trailing earnings, reflecting high investor expectations for its expansion beyond active electrical cables into optical connectivity.

Silicon photonics uses standard semiconductor manufacturing to produce optical components on silicon wafers, reducing cost and power consumption compared with traditional discrete optics. The technology is becoming critical as AI clusters grow to tens of thousands of accelerators that must communicate at high bandwidth over distances where copper cables become impractical.

Credo's acquisition comes as hyperscale cloud providers race to upgrade data center networks to handle AI workloads. The company recently secured a fifth hyperscaler customer, broadening its base beyond the three customers that accounted for 88% of its fiscal third-quarter revenue. Management expects its ZeroFlap optics business to ramp earlier than previously anticipated in fiscal 2027.

"Silicon photonics will increasingly become the foundational technology for AI-driven optical connectivity — enabling the bandwidth, efficiency and scale that next-generation infrastructure demands," Ronnen Lovinger, Vice President of Silicon Photonics at Credo, said.

The competition is intensifying. Marvell Technology, which received a $2 billion investment from Nvidia, projects its data center revenue will grow nearly 50% year over year in fiscal 2028. Astera Labs, another connectivity specialist, reported $308.4 million in first-quarter revenue, up 93% from a year earlier, and expects its Scorpio switch family to become its largest product line by the end of 2026.

For investors, the question is whether Credo can translate its expanded product portfolio into sustained market share gains against better-capitalized competitors. The company's customer concentration — 88% of revenue from three customers — remains a risk, as does the integration of DustPhotonics' operations and technology. Credo did not disclose the financial terms of the deal beyond the earnout structure tied to performance milestones.

This article is for informational purposes only and does not constitute investment advice.