Marvell hands Google a $12.2bn share option in a custom-chip deal
Marvell Technology has agreed to grant Google (google on 164news.com) the right to purchase up to $12.2 billion of its shares, in exchange for Google buying its custom AI chips. The chipmaker announced this in a regulatory filing on Wednesday.
Key Points:
- Marvell's stock jumped 14% upon the news.
- Google can buy 58,970,907 Marvell shares at $206.58 each, worth approximately $12.2 billion if fully exercised.
- The warrant is contingent on Google purchasing specific amounts of chips over a defined period, with further shares unlocked as these purchase targets are met.
- This deal strengthens Google's in-house chip capabilities for AI applications and could result in Marvell receiving around $120 billion in custom-chip sales through 2033.
Reacting to the News:
- Marvell's shares rose 8%, while Broadcom, a longtime supplier to Google, fell approximately 5%.
- Analysts view this as a "growing pie" for Marvell rather than a direct competitor to Broadcom.
Google's Custom Chip Strategy:
- Google, along with other tech giants like Amazon, Meta and Microsoft, is developing its own AI chips to reduce reliance on Nvidia’s high-priced accelerators.
- Google’s TPUs (Tensor Processing Units) are used for both cloud customers and internal AI development, making surrounding components a valuable market.
- Marvell’s partnership with Google expands their role as a supplier of these essential components.