New york: US chip firm Marvell Technology granted Google the right to purchase nearly 59 million of its shares under an expanded artificial intelligence chip partnership, according to a regulatory filing on Wednesday. Marvell issued Google a warrant to buy up to 58.97 million common shares at an exercise price of $206.58 each, giving the shares a total potential value of approximately $12.2 billion.

According to Anadolu Agency, the warrant does not constitute an immediate $12.2 billion investment, as Google's right to purchase most of the shares is tied to its spending on Marvell products. About 1.36 million shares will vest in equal quarterly installments during the first year of the agreement. The remaining 57.61 million shares will vest in 240 tranches through the end of Marvell's fiscal 2033, with one tranche becoming available for every $500 million in qualifying revenue generated from Google's purchases of custom chips. Fully vesting the performance-based portion would therefore require around $120 billion in qualifying revenue.

The warrant can be exercised until Aug. 18, 2033, subject to its vesting terms and customary adjustments, Marvell said in a filing with the US Securities and Exchange Commission. The companies entered into the commercial agreement on July 29, while the warrant was issued on Aug. 18. The expanded partnership covers custom semiconductor programs linked to Google's tensor processing unit ecosystem, including AI inference accelerators, storage and network interface controllers, memory interface controllers, and near-memory computing products.

Tensor processing units are specialized chips developed by Google to perform AI calculations efficiently and offer an alternative to general-purpose graphics processors supplied by companies such as Nvidia. Marvell shares jumped as much as 7.5% in New York following the announcement, while Google parent Alphabet's shares were little changed.