Chipmaker Marvell wants Google to buy stake worth around $12.18B
What's the story
Marvell Technology has issued a warrant to Alphabet's Google, giving the tech giant an option to buy a stake worth about $12.18 billion. The move is part of a deal between the two companies for developing custom chips specifically for Google. The announcement saw Marvell's shares surge over 11% in premarket trading, while its bigger competitor Broadcom witnessed a decline of over 3%.
Market trend
Custom chips for AI workloads
The demand for custom chips, including Google's tensor processing units (TPUs) for artificial intelligence workloads, has skyrocketed in recent years.
This is mainly because businesses are looking for alternatives to NVIDIA's expensive graphics processors.
Marvell has promised to develop a range of technologies such as AI inference accelerators, storage and networking solutions, memory interface controllers, and near-memory computing technologies for Google as part of this deal.
Strategic alliance
Broadcom's existing deal with Google
In another strategic move, Broadcom had earlier signed a long-term deal with Google in April.
The agreement is to develop and supply future generations of custom AI chips and other components for Google's next-gen AI racks until 2031.
This shows the growing trend among tech giants to invest heavily in custom chip development as part of their AI strategies.