Shares of Broadcom Inc. (NASDAQ: AVGO) experienced a 5% decline following reports that Google’s parent company, Alphabet Inc. (NASDAQ: GOOGL), is contemplating ending its reliance on Broadcom as a supplier of high-end chips.
Google has reportedly considered developing its own AI chips, known as tensor processing units (TPUs), in-house, potentially making the transition away from Broadcom by 2027.
This potential shift in strategy stems from a pricing dispute between the two companies related to the chips. In response to the dispute, Google has explored the possibility of designing its own TPUs.
Broadcom CEO Hock Tan recently mentioned that generative AI could account for over 25% of the company’s semiconductor revenue next year.
Should Google decide to terminate its partnership with Broadcom, it could lead to substantial cost savings, potentially amounting to billions of dollars annually for the tech giant.
Google has declined to comment on the reports.