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Broadcom stock falls 5% on report Google may end partnership

EditorHari Govind
Published 21/09/2023, 11:04
© Reuters.

Alphabet-owned Google (NASDAQ:GOOGL) has reportedly considered ending its reliance on Broadcom (NASDAQ:AVGO) as a supplier of high-end chips, according to The Information.

If this transition occurs, Google would take on the responsibility of designing these AI chips, known as tensor processing units (TPUs), in-house. These changes could take place as early as 2027, the report added.

Accordingly, Google executives set a goal to move away from Broadcom due to a pricing dispute between the two companies related to the chips. As a result, Google has been exploring the possibility of developing its own TPUs.

The report comes after Broadcom's CEO, Hock Tan, recently noted that generative AI could constitute more than 25% of the company's semiconductor revenue next year.

If Google decides to end its Broadcom partnership, it could have significant cost-saving implications for the tech giant, potentially measured in billions of dollars annually.

Google declined to comment to The Information.

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