Google strikes expanded chip deal with Marvell worth up to $12.2B

Marvell Technology and Google’s parent company Alphabet have expanded their chip development partnership. The announcement sent Marvell shares more than 10% higher in premarket trading.

The deal includes a warrant allowing Google to acquire up to 58.97 million Marvell shares for approximately $12.2 billion. Google can exercise the warrant at $206.58 per share, with about 1.4 million shares vesting quarterly during the first year and the rest tied to discretionary purchases and revenue from jointly developed products.

One additional share tranche will vest for every $500 million in revenue generated from those products, with the arrangement running through Marvell’s fiscal 2033.

The companies plan to work together across several areas of AI and data-center hardware, including AI inference accelerators, storage and network controllers, memory interface controllers and near-memory computing.

The partnership comes as Google and other large cloud companies look to reduce the cost of building AI infrastructure. While NVIDIA remains the dominant supplier of AI accelerators, hyperscalers are increasingly developing their own chips for tasks such as AI inference, which involves running trained AI models.