Written by: Rita
Google has signed a new custom chip agreement, redefining the division of responsibilities between Marvell and Broadcom in the TPU supply chain.
On August 19, Bank of America released an industry snapshot report. Marvell entered into a new warrant agreement with Google, establishing a custom chip partnership with cumulative procurement from Google of up to $120 billion, entitling Marvell to approximately 60 million shares.
Investors are concerned that Broadcom's share in Google TPU supply has been diminished. Bank of America offers a different assessment: Marvell is securing peripheral chips for the XPU, while Broadcom retains control of the core computing chips.
The value is heavily weighted toward Broadcom's core chips.
The supply chain for Google's TPU systems is diverging, but the core computing chips are not part of this divergence.
Bank of America's report breaks down the division of labor between the two companies. Broadcom is responsible for the core ASIC and advanced packaging design, HBM integration, high-speed SerDes, and network switching and physical layer connectivity around the chip. These four components constitute the highest-value portions of the TPU system's BOM.
Marvell’s role is XPU-attach—custom chips connected to the TPU ecosystem, including AI inference accelerators, storage controllers, NICs, memory interface controllers, and near-memory computing. Specific details remain unclear. Bank of America assesses that Marvell’s value contribution within the TPU is limited to the XPU-attach projects, with the core compute chips still belonging to Broadcom.
Bank of America estimates Google’s total capital expenditures over the next five years will range from $1.5 trillion to $2 trillion, with TPU systems accounting for 25% to 30%, corresponding to a TAM of $400 billion to $600 billion. Broadcom holds 55% to 60% of the value share, equivalent to $250 billion to $350 billion. Marvell captures 10% to 20% through XPU-attach, amounting to $50 billion to $100 billion. MediaTek secures 20% to 30% of the cost-optimized chip segment. The three suppliers each hold distinct shares, with the value重心 clearly tilted toward Broadcom.
The high BOM content of the core chip creates a value barrier.
Broadcom's value advantage in TPU comes from high unit value, not merely market share percentage.
These four items are locked in through long-term agreements until CY31, making it difficult for competitors to break in短期内. Marvell’s XPU-attach also holds value, but its ecosystem is fragmented with lower unit value, and there is a possibility of design partner changes.
MediaTek's entry validates Bank of America's assessment. Bank of America expects MediaTek to capture a 20% to 30% share in cost-optimized chips, which have lower unit value and fall under “low-value inference/peripheral content.” The three-supplier landscape has reallocated the low-value peripheral content, while Broadcom retains the high-value core chips.
Another easily overlooked variable is the expansion of silicon content. Bank of America believes that as system complexity continues to rise, Broadcom’s silicon content per generation of TPU is increasing, similar to NVIDIA’s GPU trajectory. This means that even if market share remains unchanged, absolute revenue continues to grow.
Valuation remains attractive despite competitive pressures.
Bank of America sets a $530 price target for Broadcom, based on a 30x multiple of its CY27 expected P/E ratio. This multiple falls in the middle of Broadcom’s historical range (11x to 41x) and aligns with the PEG (Price/Earnings to Growth) framework of 0.5x to 2x for high-growth computing chips.
The valuation's attractiveness stems from growth certainty. Broadcom's current stock price implies an estimated P/E ratio of approximately 21x for CY27 and 16x for CY28, with a PEG of -0.5x, reflecting earnings growth significantly outpacing valuation multiples. With AI revenue expansion and TPU market leadership secured through CY31, this valuation is not aggressive.
Bank of America's listed downside risks include a potential reversal in the semiconductor cycle, customer concentration in Apple and Google, competitive pressures across markets, and financial risks from approximately $60 billion in net debt. Demand for TPUs remains strong, and management will reaffirm the growth trajectory of custom chips in the September 2 earnings report; new projects from Meta and OpenAI, each at approximately 1 GW, are set to launch in CY27.
Competitive narratives are reshaping the TPU supply chain, but the fundamental structure of value distribution remains unchanged. The impact of Marvell and MediaTek on Broadcom has been overestimated, while customer loyalty and BOM depth for core chips have been underestimated. Competition in peripheral chips is intensifying, highlighting the scarcity of computing cores.
Disclaimer
This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (Bank of America Securities, August 19, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage’s analysts and represent the position of their respective institution only; they do not reflect the views of Chaoxiang Research nor constitute any investment advice.
The market carries risks; make decisions independently. This article should not be used as a basis for buying or selling any securities.