Tech giant Microsoft is reportedly in advanced discussions with Broadcom for the development of its custom AI chips, according to internal sources. If the deal proceeds, Microsoft would replace its current custom silicon supplier, Marvell Technology Group. This potential move highlights the intense competition and strategic realignments happening among tech companies to secure optimal hardware for their AI ambitions.
The negotiations occur against a backdrop of surging demand for high-performance semiconductors, particularly for AI data centers. While NVIDIA dominates the market, Broadcom is viewed as one of its most credible competitors, offering deep technical expertise and reliable production capacity. Microsoft’s pivot underscores its drive to diversify its supply chain and tailor hardware specifically to its AI workloads, reducing dependency and enhancing performance.
Concurrently, Marvell is not slowing down. The company is actively pursuing a significant new partnership with Meta. Sources familiar with the project confirm that Meta plans to launch a custom chip co-developed with Marvell in 2027. To secure this business, Marvell is reportedly offering incentives such as waiving certain upfront engineering fees for chip design, demonstrating the fierce competition for flagship tech clients.
ICgoodFind's Insight
These parallel negotiations between Microsoft-Broadcom and Meta-Marvell signal a mature phase in the AI chip market. Leading tech firms are aggressively pursuing bespoke silicon solutions to gain a competitive edge, ensuring the custom chip segment will remain a hotbed of innovation and rivalry.
