Google has secured the right to buy up to $12.2 billion of Marvell Technology stock as part of an expanded custom-chip partnership — a deal that gives it a serious second supplier for the silicon under its AI business.
The mechanics
Marvell granted Google a warrant covering 58.97 million shares at $206.58 each. Exercised in full, that is about $12.18 billion of stock and would make Google one of Marvell''s five biggest shareholders.
The vesting is the clever bit. Google does not just buy in. The warrant unlocks in tranches tied to orders: every $500 million of custom-chip purchases releases another batch, 240 batches in all, with targets running through Marvell''s 2033 fiscal year. About 97.7% of the shares sit behind that gate, and if Google hits every target, reporting around the deal puts Marvell''s potential revenue at roughly $120 billion through fiscal 2033.
So this isn''t a passive investment. Google is effectively paying itself in equity for volume it planned to buy anyway, and Marvell gets a decade of demand visibility while only taking the dilution if the orders actually show up.
What Marvell is building
The agreement covers the silicon around Google''s Tensor Processing Units rather than the TPU core: processors that run AI models, chips that handle data storage, and the parts that move information across networks. In a modern AI data centre, that supporting cast adds up to a large share of the bill.
Why Broadcom got hit
Broadcom has been Google''s main custom-chip partner, and traders read this as an incursion. Marvell jumped about 10% on the day, to roughly $237. Broadcom fell about 5% to roughly $362 — an estimated $87 billion of market value in one session. Alphabet barely moved.
Analysts hedged faster than the market did. Timothy Arcuri at UBS said he doesn''t expect Google to ask Marvell, or AMD, to design a new TPU. Morningstar''s William Kerwin read the deal as a sign Google''s chip budget has grown big enough to carry more suppliers, not as Broadcom losing its seat.
Why it matters
Two things stand out. Hyperscalers have decided that single-sourcing critical AI silicon is a risk worth paying to fix, and they now have enough buying power to purchase that insurance with equity instead of cash.
The other is how these contracts are being written. A warrant that vests against purchase volume ties a supplier''s share price to one customer''s roadmap. That alignment looks elegant while demand climbs. It looks like concentration risk the moment the buildout slows.
What to watch
Marvell now has to execute at a scale it has never worked at, and the tranche structure conveniently lets the market count progress in $500 million steps. The real tell will be whether Broadcom''s Google revenue actually shrinks over the next few quarters — or whether Kerwin is right and the pie just got bigger.
Image: Sergei Starostin, via Pexels
