The deal comes as demand for in-house chips such as Google’s tensor processing unit (TPUs) has increased as companies are seeking cheaper alternatives to Nvidia’s GPUs, mainly used in inference.
Marvell Technology has offered the search-giant, Google $12.2 billion stake in exchange for producing Google’s in-demand custom chips.
Shares of the California-based chipmaker grew 8 percent after the deal, marking a major vote of confidence from a top cloud-computing provider, which could bring $120 billion in revenue by fiscal 2033.
Larger rival Broadcom, which has been Google’s main custom chip partner, fell 5 percent, while shares of Google parent Alphabet remained largely unchanged.
Demand for Google’s in-house chips such as tensor processing unit (TPUs) has surged as companies are seeking cheaper alternatives to Nvidia’s graphic processors and other technologies, better suited for inference, the process of running trained AI models.
A recent overhaul in Google’s AI division with executives closer to Google cloud gaining more influence, signal the growing importance of AI infrastructure in its business.
Wednesday’s deal stoked concerns regarding circular flow of funds in the AI industry, similar to those invoked by Nvidia’s deal with OpenAI,a few days earlier, where the chip-making giant guaranteed $105 billion for an AI datacentre in Ohio.
The Marvell-Google deal covers a broad range of technologies used with TPUs. It gives Google a warrant to buy up to 58.97 million Marvell shares at $206.58 apiece. That is worth $12.18 billion if fully exercised and will make Google the fifth-largest investor of Marvell.
