Nvidia plans to invest $3.5 billion in MediaTek to further expand its AI chip ecosystem.

Nvidia is extending its AI data center ecosystem to more chip partners and is solidifying this strategic move with substantial financial investment.

Nvidia will invest $3.5 billion in MediaTek through convertible bonds, the two companies confirmed in a joint statement on Monday. Nvidia CEO Jensen Huang stated that they are "significantly expanding" their collaboration with MediaTek and characterized the investment as a formal establishment of their partnership to build an AI factory, calling MediaTek "one of Nvidia's largest partners."

This investment further deepens the collaboration between the two chip design companies—MediaTek will incorporate NVIDIA's NVLink Fusion and newly released NVHBM technology into its portfolio to improve communication efficiency between various components in the data center. For the market, this deal reaffirms NVIDIA's consistent strategy of ensuring its hardware platforms and technology standards are at the core of AI infrastructure, and further supports MediaTek's stock price, which has nearly doubled in recent months.

Nvidia secures dominance in data centers with its interconnect technology.

For Nvidia, this agreement with MediaTek is the latest move to ensure that the future of AI is built around its own hardware platforms. In recent years, Nvidia has been continuously developing data center interconnect systems such as NVLink Fusion and has been actively seeking partners, aiming to maintain a core position in the entire hardware chain, rather than relying solely on its leading AI acceleration chips.

Under the cooperation agreement, MediaTek processors will also form the basis of the new Windows PCs, and the two companies already have a cooperative relationship in the laptop market—MediaTek is participating in the development of Nvidia's RTX Spark product for that market. Jensen Huang described this cooperation as "large-scale engineering collaboration."

This MediaTek agreement follows a similar deal signed between Nvidia and Amazon. According to Bloomberg, Amazon agreed to deploy an additional 2 million Nvidia components and pledged to integrate Nvidia's interconnect technology with its own chips. Both agreements demonstrate that even as major customers accelerate the development of their own chips, Nvidia remains committed to maintaining its central role in the wave of AI data center construction.

MediaTek's AI Ambitions: From Mobile Chip Maker to Data Center Player

MediaTek is actively reducing its reliance on the smartphone market and accelerating its transformation towards the AI data center sector. Earlier this year, the company partnered with Alphabet's Google, building considerable credibility in assisting major tech companies in designing their own AI chips, which has led to a significant increase in its market capitalization in recent months.

In terms of business strategy, MediaTek is attempting to compete with Broadcom and Marvell by helping data center operators develop customized components. The company expects its AI chip revenue to reach approximately $2 billion this year and has set a target of capturing up to 15% of the approximately $80 billion data center market segment next year. MediaTek also stated that it plans to significantly expand its talent pool to better capitalize on the business opportunities presented by the AI wave.

Circular investment controversy: Nvidia emphasizes accelerating technology adoption

Nvidia's massive investments in customers, competitors, and companies across the AI supply chain have raised concerns among investors about whether it is creating artificial demand. Nvidia management has strongly denied these allegations, maintaining that these investments are simply another way to accelerate the adoption of its technology and contribute to the development of the entire AI industry.

Currently, Nvidia's dominant position shows no signs of wavering. Despite its largest customers, such as Amazon, Google, and Microsoft, accelerating their own chip development, Nvidia remains the primary beneficiary of massive global spending on AI data centers, with its accelerator chips excelling in training and inference for AI tools and services. The company forecasts a significant 70% revenue increase next year and continues to expand its business from accelerator chips to broader technology areas such as complete computer systems and network interconnects.

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