Google Could Become a Major Shareholder in Marvell: It Will Purchase Chips in Exchange for a Stake

Marvell Technology, a developer of AI chips, and Alphabet (Google’s parent company) have announced a partnership in the semiconductor sector. Under the agreement, Marvell will assist Google in developing specialized AI chips that are in high demand, and in exchange for Google’s purchase of its chips, Marvell will grant Google warrants (the right to purchase its shares) worth up to $12.2 billion, according to a statement Marvell filed with regulatory authorities.

Marvell's stock jumped more than 9% on this news, while Alphabet's stock is up a symbolic 0.08%.

According to the document, Google may purchase up to 58.97 million shares of Marvell common stock at a price of $206.58 per share (approximately 4% below the last closing price). Nearly 1.4 million shares under the warrant will become available for Google to purchase during the first year of the agreement. The remainder will be released gradually in tranches—each tranche, according to the agreement, will be tied to a subsequent $500 million purchase of chips by Google from Marvell.

Thus, Google could become Marvell’s fifth-largest investor, notes Reuters, emphasizing that the deal represents a significant vote of confidence in Marvell from a leading cloud computing provider. The agency notes that this could generate approximately $120 billion in revenue for the chipmaker by fiscal year 2033.

Marvell's products will support Google's Tensor Processing Units (TPUs)—chips used to train and train, and run artificial intelligence systems, Bloomberg explains, noting that Google and other major tech companies are developing their own AI chips in part to reduce costs—Nvidia’s leading AI accelerators cost tens of thousands of dollars apiece.

Google's TPUs are available to the company's customers and have become one of the main factors driving their appeal, according to Bloomberg. Alphabet is expected to generate about $3 billion in revenue this year from infrastructure related to Tensor processors, and that figure is projected to reach $25 billion by 2027, Citizens analyst Andrew Boone said earlier this year.

As its TPU business grows, Google is seeking to bring in more partners to develop custom chips, according to Bloomberg. In April, the company signed an agreement with Broadcom to develop and supply custom TPUs. Until now, this chipmaker has been Google’s main partner in the production of specialized chips, Reuters notes. Following news of the partnership between Google and Marvell, Broadcom’s stock briefly fell by more than 5%.

This article was AI-translated and verified by a human editor