Google Secures Custom Chip Deal with Marvell, Ties Warrant to $500M Purchases

Alphabet's Google has negotiated a deal with Marvell Technology to buy its custom chips. The agreement, signed on July 29, covers AI inference accelerators, storage controllers, and other silicon built around Google's in-house TPU chips.

The unusual part of the deal is that Marvell handed Google a warrant covering 58,970,907 shares (roughly 7% of the company) at a fixed price of $206.58. This means that for every $500 million spent on the covered products, Google will receive another block of Marvell stock.

The warrant is not obligatory, and Google controls the pace entirely. The full package would cost about $12.2 billion to exercise in full, but it would also obligate Marvell's existing shareholders to a 7% increase in share count if the warrant fully vests and converts into shares.

This deal follows a similar agreement between AMD and OpenAI, where AMD issued a warrant for up to 160 million AMD shares (about 10% of the company) for its partnership with OpenAI. The Google-Marvell version is more conventional, but it shows that the biggest buyers of AI silicon are charging their suppliers in equity for the privilege of supplying them.