Marvell Technology, a U.S. chip giant, has announced a major price increase across its entire product line starting from January 1, 2025, driven by soaring demand for AI-related products. This move marks the first significant price adjustment within the optical communications and semiconductor sectors.

The decision to raise prices reflects Marvell’s need to support expanding investments in ASICs, silicon photonics, and other cutting-edge technologies for data centers. The company’s last quarterly report, driven by strong AI demand, significantly outperformed market expectations, particularly in its data center business, which saw over 90% year-on-year growth in revenue, fueled by its 800G PAM and 400ZR solutions.

A leaked letter signed by Dean Jarnac, Senior VP of Global Sales at Marvell, revealed that the price hike was necessary to support ongoing investments in production expansion and the establishment of diversified manufacturing bases. While Marvell is attempting to minimize the impact of these increases, the growing global demand for AI and accelerated computing continues to reshape the semiconductor industry.

CEO Matt Murphy emphasized the importance of these growth areas in Marvell’s trajectory, noting that the company is rapidly scaling its custom AI programs and data center business. He expects this growth trend to accelerate into the next quarter, with consolidated revenues forecasted to rise by 14% sequentially.

The price hike is expected to benefit several Taiwanese partners, including WPG, Marvell’s largest distributor, which has seen its own revenues skyrocket. Meanwhile, optical communication firms such as Hua Sheng Guang are poised to benefit from increased demand for 800G optical transceivers and co-packaged optics (CPO), technologies closely tied to Marvell’s roadmap.

Industry experts have remarked that Marvell’s price hike sets the tone for the rest of the industry, reflecting intense market demand and significant opportunities in the AI and optical communications sectors.