Google Expands Custom Chip Agreement with Marvell Instead of Replacing Broadcom
On August 19, Marvell Technology announced an expanded custom chip agreement with Google that includes a warrant tied to up to $120 billion in future purchases. This news caused investors in Broadcom — which supplies AI chips for Alphabet's TPUs — to sell off shares, sending the stock down about 5% on the day. The drop was not sector-wide; Marvell’s stock rose nearly 8%, while AMD fell around 4%. The reaction suggests that investors were reassessing who would win Google’s future AI chip business rather than reacting broadly to a market downturn. Importantly, Broadcom had already announced in April its own long-term agreement with Google for TPU development and component supply through 2031. This situation echoes the past when Apple planned to replace one of Broadcom's chips but ended up deepening their relationship by extending another critical contract. The precedent shows that such design-out risks can take years to materialize, if at all — especially in a fast-growing AI segment where demand is overwhelming other concerns.
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Topics: AI chips custom silicon agreements Google-Broadcom relationship