MediaTek's choice is not insignificant. The company maintains a privileged relationship with Taiwan Semiconductor Manufacturing (TSMC), the semiconductor manufacturing giant. In short, this allows Google to negotiate more attractive prices for the production of its TPUs. According to estimates from the firm Omdia, the company would have spent between $6 and $9 billion in 2024 on these chips. A bill that could be reduced thanks to this change of direction.
A solution to save big
But be careful, Google is not completely cutting ties with Broadcom. According to The Information, the American company remains involved in the design of certain Google chips. For now, this is more of a strategic reorganization than a complete break. Google wants to avoid putting all its eggs in one basket, a logical precaution in such a competitive sector.
This announcement also had some repercussions on the financial markets, with shares of Broadcom and Alphabet having declined earlier this week. Nothing dramatic, but enough to make investors wonder about the future of the historic partnership between Google and Broadcom.
If Google places so much importance on its TPUs, it's because they are at the heart of its artificial intelligence strategy. These chips are used to power in-house services like Google Search, YouTube, and especially Gemini's AI models. They also allow Google Cloud to offer an alternative to Nvidia GPUs, which have become essential for training artificial intelligence models.
Last year, Google launched the sixth generation of its TPUs, in order to give a credible option to companies that want to separate themselves from Nvidia. This approach is part of a broader trend, where each tech giant is trying to limit its dependence on traditional suppliers.
To go further, Google has also stepped up the recruitment of engineers specialized in chip design, particularly in Taiwan. The objective is to develop even more technologies internally and, in the long term, why not, design its TPUs from A to Z without going through an external partner.
With this strategic shift, Google hopes not only to optimize its costs, but also to better control the evolution of its AI processors. History will tell us if this bet on MediaTek will pay off, especially in the face of increasingly fierce competition in the field of semiconductors dedicated to artificial intelligence.
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