Google Is Getting Paid in Marvell Stock Warrants for Buying Marvell's Chips
The search giant lined up another custom silicon partner this summer. It also negotiated something a purchase order never includes: the right to buy its supplier's stock at a fixed price.
Google, Alphabet's search and cloud computing arm, has entered into a unique arrangement with Marvell Technology to source custom chips for AI inference, storage controllers, and other silicon components built around Google's proprietary Tensor Processing Units (TPUs). The deal, announced on July 29, saw Marvell grant Google a warrant for 58,970,907 shares at a fixed price of $206.58, representing approximately 7% of the company.
This arrangement, disclosed in a recent securities filing, has triggered a significant surge in Marvell's stock price, jumping around 10% to near $237 following the announcement. Essentially, Google is not merely purchasing chips from a supplier, but also obtaining the right to profit from Marvell's stock while doing so. This innovative agreement, while obligating Google to buy nothing at all, could potentially be exercised for a total cost of around $12.2 billion.
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