Embracing Silicon Photonics: A $750 Million Bet on AI Data Centers

Credo Technology Group Holding Ltd (NASDAQ: CRDO) announced on April 13 that it has entered into a definitive agreement to acquire DustPhotonics, a developer of silicon-photonics photonic integrated‐circuit technology. Under the terms of the deal, Credo will pay $750 million in cash and issue shares of its own stock up front, with additional stock payments contingent on future performance. The acquisition is intended to vertically integrate Credo’s next-generation 400G, 800G, 1.6T and 3.2T optical-solutions portfolio.

Credo projects that its optical business alone will generate more than $500 million in revenue (approximately KRW 650 billion) in fiscal 2027 and that the transaction will have a positive impact on its non-GAAP earnings per share. The deal is expected to close in the second quarter of 2026. Credo also disclosed that its chief technology officer, under a pre-arranged Rule 10b5-1 trading plan, sold tens of thousands of shares in March and April—raising roughly $2.8 million to $2.84 million (about KRW 3.6 billion) per tranche—while still holding several million shares.

Following the acquisition announcement, Credo’s stock jumped more than 10% combined in after-hours and regular trading on the next trading day, as investors highlighted the growth potential in optical communications for AI data centers. Some outlets have hailed the transaction as a “game changer.” Leading research firms have maintained overweight and buy ratings on Credo, citing the expanded optical-communications portfolio and strong revenue growth—revenues more than doubled year-over-year in the past fiscal year.

Credo is a fabless semiconductor company that designs and supplies high-speed, low-power connectivity chips, active electrical cables, optical transceivers and digital-signal-processing chips for AI and cloud data centers and hyperscale networks. It has been expanding sales across the U.S. and Asia. The recent surge in AI compute demand has driven increased investment in 800G-and-above optical modules and silicon-photonics–based networking equipment, sparking a wave of large M&A deals in the semiconductor and optical-communications sectors.