Marvell gives Google option to buy $12.2 billion stake in custom chip deal
· CNA · JoinRead a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST
Aug 19 : Marvell Technology will help develop Google's in-demand custom chips and has given the tech giant the option to become one of its biggest investors through a stake purchase of as much as $12.2 billion, in its latest move to tap the AI boom.
Shares of the chipmaker jumped more than 11 per cent in premarket trading, while larger rival Broadcom — which has been Alphabet-owned Google's main custom chip partner — fell over 2 per cent.
Demand for in-house chips such as Google's tensor processing units (TPUs) has surged as companies seek cheaper alternatives to Nvidia's graphics processors and technologies better suited for inference, the process of running trained AI models.
The new tie-up covers a broad range of chips and related technologies designed to work with Google's TPU ecosystem, which underpins much of the company's AI infrastructure.
CNA Games
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Show More
Show Less
Under the deal, Google received a warrant to buy up to 58.97 million Marvell shares at $206.58 apiece.
If fully exercised, the warrant would be worth about $12.18 billion, according to Reuters calculations. A stake of that size will make Google Marvell's fifth-largest investor, according to data from LSEG.
Most of the warrant will become available only if Google meets agreed purchasing targets through fiscal 2033, linking the size of its potential Marvell stake to how much it buys from the chipmaker over time.
The agreement comes weeks after Big Tech companies reinforced expectations that they would spend more than $700 billion on AI infrastructure this year, an unprecedented sum that marks a big step up from last year's $400 billion outlay.
Marvell faces stiff competition from Broadcom, which signed a long-term agreement with Google to develop and supply future generations of custom AI chips and other components for the company's next-generation AI racks through 2031.
Newsletter
Week in Review
Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.
Sign up for our newsletters
Get our pick of top stories and thought-provoking articles in your inbox
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app