Targeting AI Data Centers with Silicon Photonics: Acquisition of Optical Communication Company for $750 Million

Credo Technology Group Holding Ltd (NASDAQ: CRDO) has signed an agreement to acquire DustPhotonics, a silicon photonics–based optical integrated circuit technology company, for $750 million in cash and Credo shares. The deal includes contingent share payments tied to future milestones, potentially bringing the total transaction value to roughly KRW 1 trillion. Through this vertical integration, Credo aims to expand its addressable market across 400G, 800G, 1.6T and forthcoming 3.2T optical solutions, while improving the competitiveness, supply-chain stability and cost structure of its ZeroFlap optical transceiver portfolio. The company projects that optical revenues from the combined portfolio will exceed $500 million in fiscal 2027 and contribute positively to non-GAAP EPS in the same year. The acquisition is expected to close in Q2 2026.

Separately, CTO Cheng Chi-Feng sold portions of the shares held by his family trust in several tranches during March and April under a pre-established Rule 10b5-1 trading plan. Filings confirm that he still retains a significant stake, both directly and indirectly.

Driven by robust demand for high-speed connectivity in AI data centers, Credo posted triple-digit year-over-year revenue growth last quarter, raised its guidance and saw its stock strengthen. Wall Street firms including Mizuho continue to rate CRDO “Outperform” with aggressive price targets, citing growth in active electrical cables and optical solutions and viewing investments in 800G and 1.6T data-center infrastructure as long-term growth drivers.

Credo is a fabless semiconductor company that designs low-power, high-speed connectivity chips, active electrical cables and optical DSPs for cloud/AI data centers and telecom infrastructure, with hyperscale operators as key customers. This acquisition—adding silicon photonics, optical transceivers and application-specific optical engines (AEC) to its portfolio—aligns with industry trends as intra-rack AI compute traffic surges and competition intensifies around expanding data-center bandwidth and improving power efficiency.