Broadcom (AVGO) recovers as Google denies report is may end AI chip partnership
Alphabet-owned Google (NASDAQ: GOOGL) denied an earlier report from TheInformation.com that it is considering ending its reliance on Broadcom (NASDAQ: AVGO) as a supplier of high-end chips.
"We are productively engaged with Broadcom and multiple other suppliers for the long term," a Google spokesperson told StreetInsider.com. "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."
The earlier report stated that if a 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.
After selling off over 5% earlier on the report, Broadcom's stock is down 1.7% in afternoon trading.
By Senad Karaahmetovic