April 19, 2024 /SemiMedia/ -- Marvell recently said it has won new business to help large U.S. cloud computing companies produce customized artificial intelligence chips, but pointed out that the profit margin of its customization unit is lower than other business lines.

Marvell said it expects AI chip business sales to reach $2.5 billion by fiscal 2026. Marvell helps customers such as Amazon design custom chips for their cloud units and competes with Alphabet suppliers Broadcom and others.

Marvell CEO Matt Murphy said the company is producing custom AI chips for one cloud computing company and CPUs based on ARM technology for another cloud computing company, both of which will generate revenue this year.

Matt Murphy also revealed that Marvell is developing AI chips for a third customer and will put them into production in 2026.

"We always say that the gross margin of the custom business will be lower than the commercial product. But over time, the operating margin will actually be roughly the same," Matt Murphy said.