According to a source involved in the negotiations, Microsoft is currently in discussions with Broadcom to jointly design future custom chips. If the collaboration materializes, Microsoft would shift its custom chip supply from its current provider, Marvell, to Broadcom.

The talks come amid surging demand for custom chips, as companies like Microsoft race to secure more semiconductors to expand their artificial intelligence (AI) product offerings. Nvidia currently dominates the semiconductor market, while Broadcom is seen as one of its most competitive potential rivals.

Meanwhile, two sources familiar with the negotiations revealed that Marvell recently agreed to waive certain upfront engineering fees for chip design in an effort to secure more business from Meta. Additionally, three individuals involved in the chip development disclosed that Meta plans to launch this custom chip by 2027.