Google Gets Paid in Marvell Stock Warrants for Buying Chips

Alphabet, the parent company of Google, recently signed an agreement with Marvell Technology to expand its custom chip work. The unusual part of this deal is that Marvell handed Google a warrant for 58,970,907 of its shares, roughly 7% of the company, at a fixed price of $206.58.

This means that Google will receive additional shares as it makes purchases from Marvell. For every $500 million spent on covered products, Google will receive another block of stock at the same price. This structure is unusual because it converts Google's spending into an asset, essentially giving it a discount on its chip purchases.

The warrant is not exclusive to Marvell and does not obligate Google to spend any amount on chips. In fact, the company can control the pace entirely, making discretionary purchases as needed.

This deal follows AMD's partnership with OpenAI last year, where AMD issued a warrant for up to 160 million shares in exchange for supplying GPUs. The Google-Marvell agreement is more conventional but serves the same purpose: big buyers of AI silicon are starting to charge suppliers equity for their business.