Nvidia said on Monday it was investing $3.5 billion in Taiwan's MediaTek, the latest deal to widen the U.S. chipmaker's financial ties across the AI industry. The investment is part of MediaTek's record $3.9 billion overseas convertible bond offering, in which Alphabet, a key AI infrastructure partner, also participated, though the search giant did not disclose the size of its stake.
The move follows Nvidia's up to $105 billion guarantee earlier this month for OpenAI's Ohio data-center lease, and could intensify scrutiny of arrangements where the chipmaker funds companies that help drive demand for its AI products. As part of Monday's deal, MediaTek will allow customers to use Nvidia's technology to design their own AI chips that connect directly to Nvidia's larger computing systems.
The technology, called NVLink Fusion, provides chipmakers with ready-made connectors and specialized memory so custom AI chips can plug into Nvidia's larger data-center systems. It saves customers time and engineering costs, letting them focus on their own chip designs rather than building connections to Nvidia's systems from scratch.
"Nvidia is financing MediaTek so MediaTek can develop products that extend Nvidia's architecture," said Joe Tigay, portfolio manager of the Rational Equity Armor Fund. "That makes it less circular than Nvidia financing a customer -- but it is still Nvidia using its balance sheet to accelerate ecosystem growth."
In an interview with Bloomberg TV, Nvidia CEO Jensen Huang addressed concerns about the circularity of the investment, saying, "This is not circular because obviously they do their own business and we do our own business."
The Santa Clara, California-based chip giant and MediaTek will also continue collaborating on chips for personal computers and technology for AI-powered vehicles. The latest deal builds on a broader relationship between the two companies; in June, they teamed up to launch the RTX Spark PC chip, aiming to bring AI features directly to laptops and desktops.
Nvidia's investment in MediaTek comes days after the U.S. chipmaker provided a rare long-term outlook of 70% revenue growth for next year, with Huang saying AI has reached its inflection point and is doing useful work. MediaTek, meanwhile, has been pushing beyond smartphones into AI chips for data centers, backed by a $5 billion financing plan approved in July.