Marvell cancels order with POET, citing breach of confidentiality

This is an own goal for the ages.

POET Technologies is cratering on Monday after announcing “the cancellation of all purchase orders received by the Company from Celestial AI, including the ones for initial production units first disclosed (the ‘Purchase Orders’) by the Company in a press release on April 25, 2023.”

Marvell Technology, which acquired Celestial AI, provided written notice of the cancellation on Thursday, citing “disclosures of information related to the Purchase Order and shipping information in contravention of its confidentiality obligations.”

We can zero in on the likely cause here — the interview that CFO Thomas Mika did with Stocktwits TV last week:

“We’re a supplier to Marvell now that they’ve acquired Celestial AI, who has been a customer of ours for a couple of years. And what we supply to Celestial AI are light sources — high-bandwidth, multi-frequency, high-power light sources that light up the photonic fabric that Celestial AI talks about as being the communication device between GPUs and one GPU and another GPU, a GPU and a memory device.”

Now, it’s likely that Mika provided a useful excuse for Marvell to cancel a contract it may not have wanted, thanks to its own in-house capabilities.

The worst part is: any reasonable person would have assumed that Marvell, through Celestial AI, was a customer of POET! The stock surged when Marvell acquired Celestial in December for that very reason!

On Friday, the day after POET received notice of the cancellation and one trading day before that information became public, a record $1.1 billion changed hands trading the stock. That high-water mark lasted only one session, with more than $1.3 billion in dollar volumes through 12:30 p.m. ET.

“The Company remains focused on executing its strategic priorities and advancing product development within the AI and optical networking markets to meet increasing demand,” per POET’s press release on Monday. “This effort also involves fulfilling product deliveries for other customers, including a recently disclosed purchase order with another technology company with a value of approximately $5 million.”