- Chipmaker Marvell Technology on Thursday announced a new business making custom AI chips for large US-based cloud computing firms.
- Shares of Marvell fell 2.7% after the company’s executives discussed the business at an investor presentation.
- Marvell said it expects the AI chip business to hit $2.5 billion in sales by its fiscal 2026.
- Marvell is the latest tech company to hold an investor briefing focused on artificial intelligence.
Marvell Technology said on Thursday it won new business helping large US cloud-computing companies customise chips for artificial intelligence, but the company noted that its customisation business had lower margins than its other businesses.
Marvell’s profit
Shares fell 2.7% after Marvell executives discussed the business during an investor presentation.
Marvell said it expects the AI chip business to reach $2.5 billion in sales by fiscal 2026, although it’s not ideal right now.
Marvell helps customers such as Amazon design custom chips for its cloud computing unit and competes with rivals such as Alphabet supplier Broadcom. Broadcom said it expects sales of artificial intelligence chips to reach US$10 billion this year.
Marvell CEO Matt Murphy said in the release that the company has already produced custom AI chips for one cloud computing company and a central processor based on Arm Holdings technology for another, both of which will generate revenue this year.
Also read: Intel reveals details of new AI chip to take on Nvidia
Future of investing in artificial intelligence
Marvell is the latest tech company to hold an investor briefing focused on artificial intelligence, their AI event follows similar events in recent weeks by Adobe, Broadcom, Google, Intel, Microsoft, and Nvidia.
“While the custom AI (chip business) is expected to be a meaningful growth driver for Marvell, management is now disclosing that it will be a lower gross margin business,” said Kinngai Chan of Summit Insights, a team of highly skilled and innovative software developers.
“The company is still maintaining its operating margin targets as it expects the higher revenue will offset the lower gross margin business.”
