Shares of semiconductor maker Broadcom fell 6% on September 21 after The Information reported that executives at Google agreed to end the partnership and design their own TPU (tensor processing unit) chips, saving billions of dollars in costs each year.
Google is ramping up its chip investment in 2023 as it chases Microsoft in the race to dominate the booming market for generative AI applications.
The search giant could replace Broadcom with Marvell Technology as its supplier of chips that connect servers to switches in its data centers, according to a person familiar with the matter. Shares of chip designer Marvell rose more than 3% in premarket trading.
Broadcom is said to be the second-biggest beneficiary, behind only Nvidia, of the generative AI boom. CEO Hock Tan predicted in June 2023 that the technology could account for 25% of the company’s semiconductor revenue by 2024.
Previously, in May 2023, analysts at JP Morgan estimated that Broadcom could receive $3 billion in revenue from Google in 2023 with TPU orders.
Google has partnered with Broadcom to design its sixth-generation AI chip. The semiconductor company also partners with Meta Platforms to develop custom chips for parent company Facebook.
Currently, large technology companies such as Microsoft and Amazon are rushing to develop their own custom chips to save costs and fine-tune them to suit each company's specific work needs.
The trend toward generative AI has pushed the price of Nvidia's H100, a processor that supports most creative AI tasks, to nearly double its original price, to $20,000.
(According to Reuters)
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