Marvell will develop chips for Google and allow it to buy $12.2 billion worth of its own stock

This week, a filing with U.S. regulators from a trading participant it becomes well knownAccording to sources, Marvell Technology will develop chips related to the TPU ecosystem for Google, and Party B will have the right to invest US$12.2 billion in capital into the developer. The plan will be implemented until fiscal year 2033, and share purchases will be made in phases.

Image source: Marvell Technology

Marvell Technology shares rose nearly 14% after the news broke. Marvell’s collaboration with Alphabet (Google) in this area became public knowledge as early as this spring. It was later reported that Marvell would be involved in developing tensor processing units (TPUs) and memory controllers to meet Google’s needs. Google has mainly worked with Broadcom to develop chips for the past decade, and the company renewed the contract in April this year. However, the day before, Broadcom’s stock price fell 5.9%. Taiwan’s MediaTek is also cooperating with Google to develop TPU.

If we go back to the deal between Marvell and Google, in the first year of the contract, the latter will have the right to purchase approximately 1.4 million shares of the chip developer, and the final total should be closer to 59 million shares. The share purchases will be made in phases, proportional to the amount of money Google spends for each $500 million it spends on the chips Marvell helps it develop. This interaction model is consistent with the logic of so-called “ring transactions” in the field of artificial intelligence infrastructure, that is, everyone transfers funds to each other in a circle. It is estimated that Google will be able to generate about $3 billion in revenue due to its work on the TPU-based computing infrastructure part, but that this number will increase to $25 billion by the end of 2027. If we talk about Marvell, the deal with Google should earn the company nearly $120 billion by 2033. According to rumors, AMD may also participate in developing TPU for Google in the future.