Prime Highlights
- Marvell to develop Google’s custom AI chips; stock jumps 8% on deal.
- Google gets option to buy $12.2B Marvell stake tied to revenue targets.
Key Facts
- Deal could bring Marvell $120B in revenue through fiscal 2033.
- Broadcom, Google’s prior chip partner, shares fell over 5%.
Background
Marvell Technology will help develop Google’s custom AI chips under a new agreement that also gives the search giant the right to buy a stake in the chipmaker worth up to $12.2 billion. Marvell shares jumped nearly 8% following the announcement, while larger rival Broadcom, previously Google’s main custom chip partner, fell more than 5%. Shares of Google parent Alphabet were largely unchanged.
The deal marks a significant vote of confidence from a major cloud-computing provider and could generate roughly $120 billion in revenue for Marvell through fiscal 2033, provided Google meets targets tied to the stake option. Demand for in-house chips, such as Google’s tensor processing units, has grown as companies look for cheaper alternatives to Nvidia’s costly graphics processors and technology better suited for running trained AI models.
A recent leadership shakeup within Google’s AI division, which shifted influence toward executives closer to Google Cloud, has drawn added attention to custom chips and AI infrastructure, seen by analysts as increasingly important to that business.
The agreement adds to growing concern over increasingly interconnected relationships across the AI industry, coming shortly after Nvidia agreed to back a data-center project worth up to $105 billion that OpenAI is leasing. Earlier this year, AMD signed a comparable deal, agreeing to supply OpenAI with AI chips in exchange for an option to sell a stake of roughly 10% in the company.
The Marvell-Google agreement spans several technologies tied to TPUs, including processors, data storage management, and network infrastructure. Google would become Marvell’s fifth-largest investor if the warrant is fully exercised. A Morningstar analyst described the deal as a major win for Marvell, framing it as an expansion of opportunity at Google rather than a displacement of Broadcom.
