Credo’s DustPhotonics acquisition solidifies its AI interconnect position

Credo is acquiring DustPhotonics, a developer of Silicon Photonics Photonic Integrated Circuit (SiPho PIC) technology for optical transceivers, for $750 million in cash and about 0.92 million shares of Credo common stock. 

The acquisition will position Credo with a vertically integrated connectivity stack spanning SerDes, Digital Signal Processing (DSP), Silicon Photonics, and system integration for scale-out and scale-up networks — addressing both electrical and optical interconnects across the full AI infrastructure buildout.

Set to close in the second quarter of calendar 2026 after meeting customary closing conditions and regulatory approvals, Credo said it expects the deal to be accretive to non-GAAP earnings per share in Credo’s fiscal 2027.

William Brennan, Chairman, President, and CEO of Credo Technology, said that acquiring DustPhotonics enables it to respond to a broader range of AI connectivity needs.

“We’ve built a strong position in high-speed electrical solutions, and this move decisively expands that leadership into Silicon Photonics with best-in-class PIC technology that complements our ZeroFlap Optical Transceivers and DSP portfolio,” he said.

Accelerating the interconnect roadmap

A key focus of the DustPhotonics acquisition is to scale Credo’s interconnect roadmap and expand its addressable market in the global optical industry, particularly in the SiPho PIC segment.

According to LightCounting and Credo estimates, the SiPho PIC market is expected to grow to $6 billion by 2030. 

What DustPhotonics brings to the table is a portfolio of SiPho PICs spanning 400G, 800G, and 1.6T, with a roadmap extending to 3.2T that integrates key optical functions onto a single chip. There are several benefits from this approach: reducing complexity, improving manufacturing yields, and enabling lower cost at scale as port speeds advance beyond 800G.

The result of these elements combined means AI cluster reliability, a critical factor for data center operators. These SiPho PICs are deployed in transceivers at major hyperscale AI clusters and are also designed for Near Port Optics (NPO) and Co-Packaged Optics (CPO) applications.

Optical inflection point

As Credo reaches what it believes is an inflection point in its optical business, the company sees the addition of DustPhotonic as creating a combined portfolio of ZeroFlap Optical Transceivers, Optical DSPs, and Silicon Photonics products.

With the adoption of optical technology across hyperscale AI infrastructure set to accelerate, Credo expects its optical business to become a meaningful, rapidly growing contributor by fiscal 2027.

In all, Credo expects this combination to generate more than $500 million in optical revenue in fiscal 2027.

It appears that Credo is making progress towards its goal.

Driven by growth in Active Electric Cables (AECs) and ICs and the announcement of three new multi-billion dollar TAM expansions through ZeroFlap optics, ALCs, and OmniConnect, Credo reported revenue of $407 million, grew by 51.9% quarter over quarter and 201.5% year over year in its third quarter of fiscal year 2026.

AECs have been a key growth area for Credo. The company reported what it said was “substantial year-over-year growth” across four US-based hyperscalers. Three of these hyperscalers each contributed more than 10% of total revenues, reflecting strong adoption of Credo’s AEC solutions. Also, Credo signed on with a fifth hyperscaler customer, further strengthening its position in the cloud ecosystem.

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