Marvell Grants Google $12.2 Billion Stake Option

Marvell Technology said on 19th August it will help develop Google's custom AI chips and has given the search giant the right to buy a potential $12.2 billion stake in the company, deepening ties between chip suppliers and the cloud providers that depend on them.

Google received a warrant to purchase up to 58.97 million Marvell shares at $206.58 each. If fully exercised, the stake would make Google the fifth-largest investor in Marvell. The deal could generate roughly $120 billion in custom chip revenue through fiscal 2033 if Google meets the targets tied to the option.

Marvell shares jumped nearly 8 percent after the announcement. Broadcom, which had been Google's main custom chip partner, fell more than 5 percent. Morningstar analyst William Kerwin described the agreement as a big win for Marvell but said it looked like a growing opportunity at Google rather than a displacement of Broadcom.

The deal covers a broad set of technologies used with Google's tensor processing units, including processors that run AI models, manage data storage, and move information across networks. Demand for in-house chips such as 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 arrangement follows similar deals across the industry. Nvidia recently agreed to provide a backstop of up to $105 billion for a data-centre project OpenAI is leasing in Ohio. Last October, AMD agreed to supply OpenAI with chips worth tens of billions of dollars while giving the ChatGPT maker an option to buy up to roughly 10 percent of AMD.

The Google-Marwell tie-up shows how chipmakers are locking in key customers through equity arrangements, blurring the line between vendor and investor.