Nvidia Invests $3.5 Billion in MediaTek to Lock In Its AI Chip Standard

Nvidia is pouring $3.5 billion into Taiwanese chipmaker MediaTek through convertible bonds, deepening their partnership as the chipmaker races to make its NVLink interconnect the universal backbone for custom AI chips. The deal, part of MediaTek's record $3.9 billion overseas bond offering, lets customers design AI chips that plug directly into Nvidia's data-center systems.

Key Takeaways

Nvidia is pouring $3.5 billion into Taiwanese chipmaker MediaTek through convertible bonds, deepening their partnership as the chipmaker races to make its NVLink interconnect the universal backbone for custom AI chips.
The deal, part of MediaTek's record $3.9 billion overseas bond offering, lets customers design AI chips that plug directly into Nvidia's data-center systems.

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Nvidia announced Monday it is investing $3.5 billion in Taiwanese chipmaker MediaTek through convertible bonds, part of MediaTek's record $3.9 billion overseas offering that also drew participation from Alphabet. The deal deepens a partnership that aims to make Nvidia's NVLink Fusion interconnect the universal backbone for custom AI chips.

Under the arrangement, MediaTek customers will be able to use Nvidia's technology to design AI chips that plug directly into Nvidia's larger computing systems. NVLink Fusion provides ready-made connectors and specialized memory, saving chipmakers time and engineering costs by letting them focus on their own designs rather than building Nvidia-compatible connections from scratch.

The investment builds on the companies' existing relationship, including the RTX Spark PC chip launched in June to bring AI features to laptops and desktops. Nvidia CEO Jensen Huang addressed concerns about circular financing in an interview with Bloomberg TV, saying the deal is not circular because both companies operate independently.

The move comes just days after Nvidia offered a rare long-term outlook projecting 70% revenue growth for next year, with Huang declaring AI has reached its inflection point. MediaTek has been pushing beyond smartphones into data-center AI chips, backed by a $5 billion financing plan approved in July.

Analysts noted that while the deal accelerates ecosystem growth through Nvidia's balance sheet, it also raises questions about the chipmaker's strategy of funding companies that help drive demand for its own products. The investment follows Nvidia's up to $105 billion guarantee earlier this month for OpenAI's Ohio data-center lease.