Google strikes $12bn AI chip deal with Marvell

Google has struck a deal with Silicon Valley semiconductor group Marvell to develop custom AI chips, including an option to buy up to $12.2bn in Marvell shares.

Marvell Technology on Wednesday said the two groups will work together to develop specialised hardware for the search giant’s AI chips, known as tensor processing units.

As part of its expanded partnership, Marvell said it had issued a warrant allowing Google to purchase up to 58.9mn of its shares at $206.58 each, according to a regulatory filing.

Marvell helps hyperscalers including Amazon design their own specialised AI accelerator chips, providing an alternative to Nvidia’s general-purpose graphics processing units.

Marvell’s shares rose 8 per cent on Wednesday following the announcement, extending gains that have seen its stock more than triple in value over the past 12 months. Shares in Broadcom, Google’s main supplier for its TPUs, fell 5 per cent.

The expanded partnership with Marvell comes as Google begins to sell its TPUs, once restricted largely to its own data centres, to external customers.

The search giant has built a mammoth financing operation to supply over $150bn of AI chips to Anthropic, the FT reported earlier this month.

In April, Google signed an agreement with Broadcom to develop TPUs and other components for the search group’s AI infrastructure until 2031.

Marvell said it would work with Google to develop custom semiconductor products tied to the TPU ecosystem, including “AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory compute”.

Under the terms of the deal, some 1.3mn of the shares vest in equal quarterly instalments during the first year after the execution of the warrant.

The remaining shares will vest based on “discretionary purchases” from Marvell’s third quarter of 2027 to the end of 2033, with one tranche vesting for every $500mn in revenue from the custom products the pair develop together.

Nvidia in March said it was investing $2bn in Marvell and that the two chipmakers would work together on silicon photonics as part of a push to speed up data flows in data centres.

Earlier this year Marvell acquired Celestial AI, which specialises in photonics technology that helps connect AI chips within huge clusters. This capability has become important to the physical systems powering Google’s Gemini, Anthropic’s Claude Code and OpenAI’s ChatGPT.