Marvell Technology announced a partnership with Google to develop custom artificial intelligence chips, with the arrangement including an option for Google to purchase a substantial stake in the chipmaker. The potential stake purchase was valued at $12.2 billion and would be exercised through a warrant allowing Google to acquire up to 58.97 million Marvell shares at $206.58 per share. If Google exercises this option fully, it would become the fifth-largest investor in Marvell.
Marvell’s stock price rose sharply following the announcement, with shares jumping nearly 8% on the news. The deal was characterized as a significant vote of confidence from a major cloud-computing provider. Industry analysts projected that if Google achieves the targets tied to its stake option, the arrangement could generate approximately $120 billion in revenue for Marvell through fiscal 2033. In contrast, Broadcom, which had previously served as Google’s primary custom chip partner, saw its shares decline more than 5%. Alphabet, Google’s parent company, saw little change in share price.
The agreement encompasses a wide range of technologies associated with Google’s tensor processing units, including processors that execute AI models, manage data storage, and facilitate information transfer across networks. The deal reflects broader industry trends as companies increasingly seek alternatives to Nvidia’s expensive graphics processors and develop proprietary chips better suited for inference operations, which involve running trained artificial intelligence models.
The arrangement adds to discussions about deepening interconnections within the AI industry. Similar deals have emerged recently, including AMD’s October agreement with OpenAI to supply AI chips worth tens of billions in annual revenue while offering the ChatGPT developer an option to acquire up to roughly 10% of AMD. Additionally, Nvidia recently agreed to provide financial backing of up to $105 billion for a data-center project OpenAI is leasing in Ohio.
Analysts noted that recent organizational changes at Google, including a restructuring of its AI division that elevated executives with closer ties to Google Cloud, have heightened focus on custom chips and AI infrastructure as increasingly vital components of that business segment.
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