AI Chip Shepherds Broadcom And Marvell Have Skinned The Golden Fleece
Chip designers outside Nvidia are capturing significant revenue from the surge in AI infrastructure spending.
Broadcom and Marvell are companies that design custom chips for major technology firms rather than manufacturing them, a business model known as "chip shepherding." This business is becoming increasingly dominant for both companies as hyperscalers and cloud builders seek alternatives to buying chips from major vendors, since making their own chips costs significantly less and allows them to retain higher profit margins. Broadcom is tracking toward over $100 billion in AI revenues, while Marvell is expected to reach substantial growth in the coming years, with both companies' businesses now dominated by AI datacenter operations. The shift toward homegrown chips represents an inevitable economic rebalancing away from single-vendor dependency and positions these two companies as the primary counterbalance to larger chip vendors at major cloud and hyperscale firms.
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