The Marvell-Google deal covers a broad range of technologies used with TPUs, including processors that run AI models, manage data storage and move information across networks.
It gives Google a warrant to buy up to 58.97 million Marvell shares at $206.58 apiece. That is worth $12.18 billion if fully exercised and will make Google the fifth-largest investor of Marvell.
"This is a big win for Marvell," said Morningstar analyst William Kerwin, but added that he saw "this news as a growing pie at Google for new sources, rather than a competitive displacement of Broadcom."
AI chip ties draw scrutiny across the industry
Still, Wednesday's deal could add to growing concerns around the increasingly intertwined relationships in the AI industry, days after Nvidia agreed to provide a backstop of up to $105 billion for a data-center project OpenAI is leasing in Ohio.
In October, AMD struck a similar deal, agreeing to supply OpenAI with AI chips worth tens of billions of dollars in annual revenue while giving the ChatGPT maker the option to buy a stake of up to roughly 10% in the chipmaker.
Broadcom falls as Google deepens TPU investment
Larger rival Broadcom AVGO.O, which had been Google's main custom chip partner so far, fell more than 5%, while shares in Google-parent Alphabet GOOGL.O were little changed.
Demand for in-house chips such as Google's tensor processing units (TPUs) has surged as companies seek cheaper alternatives to Nvidia's pricey graphics processors and technologies better suited for inference, the process of running trained AI models.
A recent overhaul of Google's AI division that shifted power toward executives with closer ties to Google Cloud has also put the spotlight on the custom chips and AI infrastructure, which analysts say are increasingly central to powering that business.
Marvell and Google expand custom AI chip partnership
Marvell Technology MRVL.O will help develop Google's in-demand custom chips and has offered the search giant the right to buy a potential $12.2 billion stake, the latest deal in which Big Tech is investing in the suppliers powering its AI build-out.
Shares of the chipmaker jumped nearly 8% as the deal marked a major vote of confidence from a top cloud-computing provider and could bring roughly $120 billion in revenue through fiscal 2033, if Google hits the targets its stake option depends on.
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