Google can buy up to $12.2 billion of Marvell stock if the custom-chip orders show up
The warrant is tied to silicon around Google's TPU. Broadcom shares fell about 4 percent.
Marvell Technology told the US securities regulator this week that it has a commercial agreement with Google, signed on 29 July, to design custom chips that attach to the TPU ecosystem. On 18 August it issued Google a warrant to buy up to 58,970,907 Marvell shares at $206.58 each. That is about $12.2 billion if the warrant is fully exercised.
Most of that stake is not a gift. About 1.36 million shares vest in equal quarterly instalments over the first year. The rest vest only if Google and its affiliates actually buy the chips, in 240 tranches of one for every $500 million of custom-product revenue, running through Marvell's fiscal 2033. Hit every target and you are looking at $120 billion of purchases. Miss them and Google's option shrinks with the orders.
The work list is specific: AI inference accelerators, storage controllers, network interface controllers, memory interface controllers, and near-memory compute. Google's public cloud already runs on its own Tensor Processing Units, designed for years with Broadcom. Broadcom still has a deal to supply Google with AI accelerators through 2031. Marvell's filing does not say Broadcom is out. It does say Google now has a second house to design the silicon that sits around the TPU.
Marvell shares jumped about 8 to 10 percent on Wednesday. Broadcom fell about 4 percent.
The last time a hyperscaler handed a chipmaker an equity warrant this large, the market read it as a customer locking in supply and a supplier locking in a customer. AMD did a version of this with OpenAI. Google is doing the same shape of deal, only with a company that is not Nvidia, and with chips that are meant to make inference cheaper than renting someone else's GPUs. Maybe this is just dual-sourcing, so Broadcom cannot raise prices the way it did after buying VMware. Maybe Marvell's newer photonic memory, which can pool RAM across racks 50 metres apart, is the actual reason. The filing does not say.
Google does not have to exercise the warrant. Vesting is the tell. The first year's time-based slice is small. The $500 million tranches are the story, and those will only show up in Marvell's revenue if Google starts putting these chips into data centres before 2033.