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Investing.com -- Shares of Broadcom (NASDAQ:AVGO) dropped at the open on Monday following a report that Google (NASDAQ:GOOGL) is exploring a partnership with MediaTek to help design and produce some of its artificial intelligence (AI) chips, potentially reducing Broadcom’s exclusive role in the business.
AVGO stock fell as low as $187.50 at the open before recovering slightly to $193.82, down 0.9%.
According to The Information, Google is preparing to work with Taiwan-based MediaTek on the next generation of its Tensor Processing Units (TPUs), which are expected to be produced next year.
The report emphasized that the move does not mean Google has cut ties with Boradcome, with the companies said to still be in talks to continue co-designing some TPU chips.
However, MediaTek’s potential involvement could mean that Broadcom will now have to share the TPU business with a rival.
Pricing disputes with Broadcom reportedly influenced Google’s decision to work with MediaTek.
The Information cited sources stating that MediaTek offers lower costs per chip while maintaining a strong relationship with Taiwan Semiconductor Manufacturing Co. (TSMC), which produces the TPUs.
Google’s TPU chips are central to its AI strategy, powering internal AI research, cloud computing, and services like Google Search, YouTube, and Gemini AI models.
The company spent an estimated $6 billion to $9 billion on TPUs last year, but it remains one of Nvidia’s biggest customers, having ordered over $10 billion worth of Nvidia’s flagship Blackwell chips.
While Google is reportedly working toward developing more AI chips in-house, it is still expected to rely on external partners like Broadcom and MediaTek for chip production, packaging, and quality testing, according to The Information.