Google has been handed a potential $12.2 billion opportunity to buy into Marvell Technology shares as part of a new agreement to develop custom artificial intelligence chips for the tech giant.
Marvell said on Wednesday that it had issued Alphabet-owned Google a warrant to purchase up to 58.97 million shares at $206.58 per share.
The arrangement strengthens Marvell’s position in the growing custom AI chip market as major technology companies look for alternatives to Nvidia’s expensive graphics processors.
Under the agreement, Marvell will develop several technologies for Google, including AI inference accelerators, storage and networking controllers, memory interface controllers and near-memory computing products.
The warrant is structured to vest over time, with part of it tied to Google’s purchases of products developed through the partnership and revenue generated from those products through fiscal 2033.
The agreement could generate up to $120 billion in revenue for Marvell through fiscal 2033, depending on Google meeting certain performance targets.
Marvell shares jumped more than 11% in premarket trading following the announcement, while shares of rival chipmaker Broadcom fell.
The deal adds another major supplier to Google’s custom chip programme.
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Broadcom has been a key partner in developing Google’s Tensor Processing Units (TPUs), which are designed to handle artificial intelligence workloads.
In April, Google and Broadcom announced a long-term agreement covering the development and supply of future generations of custom AI chips and other components for Google’s next-generation AI systems through 2031.
Google has increasingly invested in custom silicon as demand for AI computing grows and technology companies seek to reduce their dependence on Nvidia’s graphics processing units.
The latest agreement with Marvell expands Google’s options in AI chip development while giving Marvell a potentially significant long-term source of revenue from the company’s expanding AI infrastructure.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
