Marvell gives Google option to buy $12.2 billion stake in custom chip deal

On Wednesday, Marvell Technology announced it had granted Alphabet's Google a warrant to purchase a $12.18 billion stake in the company. The custom chipmaker's shares surged over 11 percent in premarket trading, in contrast to a 3 percent drop in Broadcom's stock. The increasing demand for custom chips like Google's tensor processing units (TPUs), utilized for AI workloads, has soared in recent years as businesses explore alternatives to Nvidia's expensive graphics processors.

Marvell intends to create AI inference accelerators, storage, networking, and memory interface controllers, along with near-memory computing technologies for Google. In April, Broadcom had signed a long-term agreement with Google to develop and supply future AI chip generations and other components for the company's next-generation AI racks through 2031.