Chipmaker Marvell Technology has given Google the right to buy up to $12.2 billion worth of its shares as part of an expanded partnership to build custom silicon for Google’s data centres, a deal that sent Marvell’s stock surging while shares in rival Broadcom fell.
How the Deal Works
Under the agreement, disclosed in a securities filing on August 19, Google received a warrant to buy up to 58.97 million Marvell shares at $206.58 apiece, a stake worth roughly $12.18 billion if fully exercised, according to Reuters calculations. Google does not pay for the shares upfront. Instead, the warrant vests in tranches tied to how much custom silicon Google actually purchases from Marvell, with each $500 million in chip orders unlocking a further slice of the option. The purchasing targets run through Marvell’s 2033 fiscal year.
If Google hits those targets, the arrangement could generate roughly $120 billion in revenue for Marvell over that period, and would make Google one of Marvell’s largest shareholders, ranking as its fifth-biggest investor according to data from the London Stock Exchange Group.
What Marvell Is Actually Building
The chips at the centre of the deal are not Google’s main processors but the components that support them. Marvell said the expanded agreement, originally signed on July 29, covers products built to work alongside Google’s tensor processing units, or TPUs, including AI inference accelerators, storage controllers, network interface controllers and memory interface controllers. Demand for this kind of custom silicon has grown as cloud providers look for cheaper, more efficient alternatives to Nvidia’s graphics processors, particularly for inference, the process of running an already-trained AI model rather than training a new one.
Marvell shares jumped nearly 10 percent on the news, while Broadcom, which has been Google’s main custom chip partner and struck its own long-term supply agreement with the company through 2031, fell more than 5 percent as investors weighed the arrival of a second major supplier.
Analysts See Room for Both
Morningstar analyst William Kerwin described the deal as “a big win for Marvell,” but said he read it as evidence of a growing overall pie at Google for chip suppliers rather than Marvell directly displacing Broadcom’s existing business. The deal comes weeks after major technology companies signalled they would collectively spend more than $700 billion on AI infrastructure this year, up sharply from roughly $400 billion in the prior year, underscoring how much capital is now flowing into the hardware underpinning AI systems.
Why It Matters
The agreement reflects how central Google’s custom chip business has become to its broader strategy. Alphabet is projected to generate around $3 billion in revenue this year from TPU-related infrastructure, a figure the company expects to climb to roughly $25 billion by 2027. By linking Marvell’s potential windfall directly to Google’s own chip purchases, the structure gives Marvell a strong incentive to deliver on Google’s roadmap, while giving Google a second major supplier to hedge against reliance on any single chip partner as AI infrastructure spending continues to climb.
