2 weeks ago
Marvell Shares Jump as Google Expands Custom AI Chip Partnership
Marvell and Google agreed to work more closely on special computer chips for artificial intelligence.
These chips will support Google’s Tensor Processing Units, also called TPUs.
They will help with tasks such as running already-trained AI models and moving data around computer systems.
Google received permission to buy a large number of Marvell shares.
If Google buys all of them, the shares could be worth about $12.18 billion.
The agreement does not mean Google has already bought all those shares.
Marvell’s stock rose sharply after the news, while Broadcom’s stock fell.
Broadcom already works with Google on custom AI chips, so investors saw the Marvell deal as adding competition.
Marvell shares rose more than 12% in premarket trading after expanding its AI-chip partnership with Google.
Google received a warrant to buy up to 58.97 million Marvell shares at $206.58 each.
If fully exercised, the warrant would be worth approximately $12.18 billion and could make Google Marvell’s fifth-largest shareholder.
The partnership covers inference accelerators, storage controllers, network and memory interface controllers, and near-memory computing technology.
Broadcom shares fell more than 2% as investors assessed increased competition in Google’s custom AI-chip supply chain.
- Who
- Marvell Technology and Google, with Broadcom affected as an existing Google chip partner.
- What
- Marvell and Google expanded a partnership covering custom AI semiconductors, while Google received a warrant to buy up to 58.97 million Marvell shares.
- Where
- When
- The partnership was expanded on July 29, the warrant was issued on August 18, and the market reaction occurred on Wednesday.
- Why
- The companies are developing specialized hardware for Google’s AI infrastructure as demand for inference and custom AI chips increases.
Key facts
- Maximum warrant shares
- 58.97 million Marvell shares
- Exercise price
- $206.58 per share
- Potential warrant value
- Approximately $12.18 billion, or about $12.2 billion
- Potential shareholder ranking
- Google could become Marvell’s fifth-largest shareholder if the warrant is fully exercised.
- Vesting terms
- About 1.36 million shares vest in equal quarterly installments during the first year; remaining shares vest through fiscal 2033 based partly on future purchases.
- Revenue-linked vesting
- One tranche vests for every $500 million in revenue generated from Marvell’s custom products under the partnership.
- Market reaction
- Marvell rose more than 11% to 12% in premarket trading, while Broadcom fell more than 2%.
Quotes
Marvell Technology
Marvell Technology executive quoted in regulatory filing
“"The expanded partnership spans a comprehensive range of custom silicon programs that attach to the TPU ecosystem, including AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near‑memory compute."”
livemint.com
“"Google received a warrant that could allow it to buy up to $12.2 billion worth of Marvell shares."”
livemint.com
Sources
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