Marvell Technology has issued Google, a warrant to buy a stake worth about $12.18 billion as part of a deal to help develop custom chips for the search giant, it said on Wednesday.

Leading American semiconductor company has issued Alphabet's Google a warrant to purchase up to 58,970,907 shares of its common stock at a strike price of $206.58 per share, totaling roughly $12.18 billion if fully exercised.

The agreement expands Marvell's collaboration with Google to develop custom silicon, specifically focusing on Google's Tensor Processing Units (TPUs), AI inference accelerators, storage controllers, networking, and memory interface technologies.

The warrants aren't handed over all at once; they are tied to performance and revenue. A small portion vests quarterly in the first year, while the bulk of the shares vest progressively based on the revenue Google generates for Marvell through purchases of these custom products through 2033.

Broadcom historically known as a primary partner for Google's TPU development saw its shares dip following the news as investors weigh the diversification of Google's custom chip supply chain.

Following the announcement, Marvell's stock jumped significantly over 10% in premarket trading as investors cheered the deep, long-term tie-in with a major hyperscaler.

The move highlights how intense the demand for custom AI silicon has become. As tech giants look for cost-effective alternatives to expensive Nvidia GPUs to power heavy AI workloads, chipmakers are locking in multi-year partnerships using high-stakes financial incentives like equity warrants.