Google Gets Option to Buy $12.2 B Marvell Stake
Synopsis
Google can buy up to 58.97 million Marvell shares at $206.58 each, potentially making it Marvell’s fifth-largest investor. The deal will also expand Marvell’s role in Google’s AI chip development.
Key Highlights
- Marvell will help Google develop a broader range of custom AI chips.
- Google has the option to purchase up to 58.97 million Marvell shares.
- The shares can be bought for $206.58 each, putting their total value at around $12.18 billion.
- If Google exercises the full option, it could become Marvell’s fifth-largest shareholder.
Marvell Expands Custom Chip Deal With Google
Marvell Technology will work with Google to develop a broad range of custom chips and related technologies for its AI systems. The agreement covers chips built to support Google’s Tensor Processing Unit (TPU) ecosystem, which plays a central role in the company’s AI infrastructure.
Google has also received a warrant allowing it to purchase up to 58.97 million Marvell shares at $206.58 per share. If the entire warrant is exercised, the shares would be worth roughly $12.18 billion, based on Reuters calculations.
Google’s Potential Stake
If Google takes up the full option, it could become Marvell’s fifth-largest shareholder. However, most of the warrant will only become available if Google meets certain purchasing targets through fiscal 2033.
That means the size of Google’s eventual stake in Marvell will depend on how much business it does with the chipmaker over the coming years.
Growing Demand for Custom AI Chips
Demand for Google’s in-house AI chips, including its TPUs, has been increasing as companies seek alternatives to Nvidia’s graphics processors. These custom chips are built for specific AI workloads, including running already-trained AI models.
Following the announcement, Marvell shares jumped more than 11% in premarket trading, while Broadcom shares declined by more than 2%.
Competition With Broadcom
The agreement comes as Marvell competes with Broadcom for Google’s custom AI chip business. Broadcom already has 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 systems through 2031.
The deal also highlights the enormous spending expected across the AI industry. Major technology companies are projected to spend more than $700 billion on AI infrastructure this year, up from roughly $400 billion last year.
Source: Reuters
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