Google considered ending its contract with Broadcom as a supplier of AI chips, according to The Information.

Google considered ending its contract with Broadcom as a supplier of AI chips, according to The Information.

Google Considers Dropping Broadcom as AI Chip Supplier

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In a surprising move, Alphabet-owned Google is reportedly considering dropping Broadcom as a supplier of artificial intelligence (AI) chips as early as 2027. This revelation has caused Broadcom shares to drop by 5% in premarket trading. Instead, Google plans to design the chips in-house, known as tensor processing units.

The decision to part ways with Broadcom is fueled by a standoff between the two companies over the price Broadcom was charging for the AI chips. Google’s executives have set a goal to move away from Broadcom, opting for self-designed chips. This move aligns with Google’s intensified investments in generative AI, an area where it has been playing catch-up since Microsoft-backed OpenAI’s launch of ChatGPT last year, which took the tech world by storm.

Broadcom CEO, Hock Tan, has recently highlighted the importance of generative AI for the company’s revenue. Tan expects generative AI to account for more than 25% of Broadcom’s semiconductor revenue next year. However, Google seems determined to explore alternative options.

According to reports, Google has been actively working to replace Broadcom since last year. The tech giant is eyeing chipmaker Marvell Technology to provide an advanced chip, which is internally code-named “Granite Redux.” Marvell Technology is being considered as a potential replacement for Broadcom.

In response to this development, neither Google, Broadcom, nor Marvell has provided an official comment or statement. However, this potential shift in suppliers indicates a significant shift in the AI chip market, as Google seeks to take greater control over its chip design and development processes.

This decision by Google not only highlights the competitive dynamics of the AI chip industry but also reflects broader trends in the tech sector. Big players like Google are continuously competing to stay at the forefront of technological advancements, necessitating investment in cutting-edge technologies like generative AI.

As technology continues to evolve, the development of AI chips becomes crucial. They serve as the foundation for various AI applications, spanning industries such as healthcare, finance, autonomous vehicles, and more. By bringing chip design in-house, Google aims to gain greater flexibility, speed, and control over the innovation process.

While Broadcom’s revenue may be impacted by this potential loss of Google as a customer, the company’s focus on generative AI suggests a promising future. As businesses increasingly adopt AI technologies for enhancing productivity and innovation, the demand for AI chips is set to grow rapidly.

Google’s decision to consider dropping Broadcom in favor of in-house chip design not only reflects their commitment to innovation but also highlights the intensifying competition between tech giants in the AI arena. This move positions Google to be at the forefront of AI advancements, giving the company more control over its AI capabilities.

In conclusion, Google’s potential departure from Broadcom as an AI chip supplier signals a substantial shift in the industry landscape. As Google aims to design its own chips and invests in generative AI, the competition between tech giants in the AI chip market is set to intensify. This move showcases Google’s commitment to staying ahead in the race for AI dominance, allowing them to drive innovation and maintain a competitive edge in the ever-evolving tech landscape.

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