Google says 'no change' to Broadcom relationship despite report (updated)
Sep. 21, 2023 3:45 PM ET
Alphabet Inc. (GOOG), AVGO, MRVL, GOOGL NVDA
By: Chris Ciaccia,SA News Editor
35 Comments
 Justin Sullivan/Getty Images News
Broadcom (NASDAQ: AVGO) shares clawed back losses and fell1.5%on Thursday even as Google (NASDAQ: GOOG) (NASDAQ: GOOGL) said it saw "no change" in its relationship with the San Jose, California-based semiconductor company.
"We are productively engaged with Broadcom for the long term," a Googlespokesperson told Seeking Alpha. "Our work to meet our internal and external Cloud needs benefit from our collaboration with Broadcom; they have been an excellent partner and we see no change in our engagement."
Earlier on Thursday, The Information reportedthat Mountain View, California-based Google ( GOOG) ( GOOGL) could make the move to drop Broadcom ( AVGO) as soon as 2027 in an effort to save on computing costs related to artificial intelligence, citing a person with direct knowledge of the effort.
The news outlet added that Google ( GOOG) ( GOOGL) could also replace Broadcom ( AVGO) with a custom chip from Marvell Technology (NASDAQ: MRVL) that connects servers to ethernet switches inside data centers
Seeking Alpha reached out to Broadcom to further clarify the matter but did not hear back as of press time.
Marvell ( MRVL) shares erased earlier gains andfell 1%on Thursday.
In April, Google ( GOOG) ( GOOGL) toutedthe capabilities of its own TPUs. The Sundar Pichai-led company said the fourth-generation TPUs that train its artificial intelligence models were faster and more power-efficient than Nvidia's ( NVDA) A100 chips.
The custom chips are between 1.2 and 1.7 times faster than Nvidia's ( NVDA) A100 chips, with up to 1.9 times more power efficient, Google ( GOOG) ( GOOGL) added.
Mountain View, California-based Google ( GOOG) ( GOOGL) did not compare the fourth-generation TPUs to Nvidia's ( NVDA) H100 chips because those came to market after Google's chips and use newer technology.
Last month, Google ( GOOG) ( GOOGL) showedoff its new fifth-generation tensor processing unit chip, known as TPU v5e.
Google said the TPU v5e is built to train large language models, or LLMs, and bring cost efficiency as well, delivering up to twice the higher training performance per dollar and up to two-and-a-half times the performance per dollar for LLMs and generative AI models compared to the previous model.
Evercore ISI weighed in with a defense of Broadcom ( AVGO), with or without a change in its relationship with Google.
"We note that Google is now on its 5th generation TPU working with AVGO and is the sole public customer within AVGO's offload-ASIC business," analyst Matthew Prisco said.
"To start, there has been meaningful collaboration and leverage of AVGO IP in these designs, thus any shift at this point would be a rather larger endeavor -- in our view calling into question the probability that this story actually comes to fruition," he said. "But if true, what is the downside?"
"A knock on EPS and potential questions into AVGO's competitive position if true. That said, the validity of this report is not entirely clear today and we thus recommend taking a wait and see approach," he added, reiterating an Outperform rating.
This story has been updated to include a comment from Google. |
