Google is planning to breakup with Broadcom, wants to build TPUs in-house.

The Information reports Google’s latest maneuver to gain control over its AI chips. For years, Google has relied on Broadcom to customize and make its tensor processing unit (TPU) chips that power AI services like search and translation. But after supply chain drama and hiring movements drove up costs, Google now intends to handle the entire TPU design process itself. 

What’s going on here?

Google’s planning to cut ties with supplier Broadcom and design its own AI chips in-house starting in 2027.

What does this mean?

This mirrors moves by fellow tech titans Amazon and Microsoft to lock down their AI hardware. Google’s already expanded its chip team and reduced Broadcom’s design role lately. Broadcom has since hiked its prices up to 30% for future TPUs. Insider estimates Broadcom’s getting 70% margins by developing TPUs for Google. There’s no guarantee this goes as planned, as of now Google needs SerDes tech from Broadcom to use TPUs for LLM training.

Why should I care?

This shift holds massive implications. Google’s TPUs are integral for its AI offerings and cloud platform. More command over its chip supply chain will empower Google to advance its strategic AI and cloud priorities while boosting profits. Less reliance on Broadcom could also give Google leverage in future negotiations. For Broadcom, losing Google’s TPU business could substantially impact its fast-expanding AI revenue.

Bottom line

This illustrates how tech behemoths are aggressively tackling infrastructure costs to lead the AI race. Google’s play could pay off handsomely if it succeeds in designing cost-efficient TPUs in-house. But the plan carries risks, too, if Google struggles with the complex chip development process.