Shares of Marvell jumped more than 11% in premarket trading following the announcement, while larger rival Broadcom fell more than 3%, Reuters reported.
The deal comes as demand for custom artificial intelligence chips continues to grow, with major technology companies seeking alternatives to Nvidia’s expensive graphics processors.
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Google’s Tensor Processing Units (TPUs), which are designed for AI workloads, are among the custom chips driving this shift.
Under the agreement, Marvell will develop a range of technologies for Google, including AI inference accelerators, storage and networking components, memory interface controllers and near-memory computing technologies.
The warrant gives Google the option to acquire a significant stake in Marvell, potentially deepening the relationship between the two companies as they expand their work on AI infrastructure.
The deal also comes amid intensifying competition among semiconductor companies to supply custom AI hardware to major technology firms.
In April, Broadcom signed a long-term agreement with Google to develop and supply future generations of Google’s custom AI chips and other components for its next-generation AI racks through 2031.
The growing use of custom-designed AI chips reflects efforts by major cloud and technology companies to reduce their reliance on Nvidia’s general-purpose graphics processing units as demand for AI computing capacity accelerates.
