Broadcom recovers as Google denies report it may end AI chip partnership

investing.com:

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 Investing.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.