MediaTek Secures $5 Billion War Chest to Challenge Broadcom in AI Datacenter Chips Market

MediaTek lines up $5B war chest for AI datacenter push

Taiwanese chipmaker MediaTek is lining up $5 billion in financing to expand into AI datacenter silicon, targeting a slice of a market it expects to be worth up to $80 billion next year. The fabless chip producer is perhaps best known for its Arm-based smartphone and Chromebook chipsets, plus wireless silicon for Wi-Fi products. But the firm is the latest to see a "compelling growth opportunity" in the market for compute to power AI and so-called agentic AI in particular. MediaTek is targeting application-specific integrated circuits (ASICs) rather than GPUs and reckons it can capture 15 to 20 percent of the market. The company's board has also approved $5 billion in financing to secure supply chain capacity and fuel an expansion from AI ASIC chips to full-scale systems and platforms, MediaTek stated. Chief exec Dr Rick Tsai spelled it out during an analyst call for the company's Q2 2026 earnings. "Recently, the release of increasingly capable frontier AI models, together with the rapid transition toward agentic AI, has become a key driver of compute demand across both cloud and edge AI," he stated. "Agentic AI, which executes a series of actions, including planning, reasoning, execution, and self-correction, further increases workloads. This represents a compelling growth opportunity for MediaTek, as we are well-positioned to support both the scaling of AI datacenters and the proliferation of agentic AI experiences across a broad range of edge devices." MediaTek says that its first ASIC family has been developed in "close partnership with major US cloud service provider customers," and is scheduled to enter production in the fourth quarter of this year. A second AI accelerator design is also progressing well and aims to offer a step up in compute performance. The chip biz expects its AI datacenter ASIC revenue to exceed $2 billion in 2026, scaling substantially next year, primarily driven by increasing customer demand for its technology, which boasts optimized performance for TCO and performance per watt at scale, Tsai claims. "With close collaboration with our advanced packaging partner, the yield and reliability of the second ASIC are on track for high-volume production in 2028. We're confident in capturing additional market share when this ASIC ramps up," Tsai told analysts. But MediaTek will be facing competition from rivals such as Broadcom and Marvell, which already design ASICs for the AI market, and even Google, which announced plans to start selling its custom tensor processing units (TPUs) to some customers earlier this year. According to a Bloomberg Intelligence report from January, the market for AI ASICs is projected to expand at a 27 percent compound annual rate to reach $118 billion by 2033, and grow from just 8 percent of the total AI accelerator arena in 2024 to 19 percent in 2033. MediaTek reported Q2 revenue of NT$152.18 billion ($4.68 billion), up just 1.2 percent year-on-year, but operating income was down by 22 percent to NT$22.87 billion ($705 million). ®

MediaTek plans $5 billion financing for AI data-center chips

TAIPEI, July 31 (Reuters) - MediaTek (2454.TW), opens new tab, Taiwan's largest chip designer, said on Friday its board had approved a discretionary financing budget of $5 billion to support long-term growth, including its expansion into AI chips for data centers. The plan highlights the company's push to reduce its reliance on smartphones and become a significant supplier of custom AI chips, known as ASICs, to major cloud providers. Although the market is dominated by a small group of players, rapidly rising spending on AI infrastructure is giving MediaTek, best known for smartphone processors, an opportunity to ⁠expand into a faster-growing and higher-margin business. "This flexible framework provides us with the optionality, when needed, to agilely support our long-term growth and capitalize on massive data center opportunities," Chief Executive Rick Tsai said on an earnings call. The company raised its estimate of the addressable market for custom AI chips in 2027 to $80 billion, from a previous range of $70 billion to $80 billion. It also increased its target share of that market to 15% to 20% from 10% to 15%. Tsai said MediaTek had successfully developed its first custom AI chip, with production set to begin in the fourth quarter. A second chip remains on track for volume production in 2028. MediaTek expects its data-center AI ⁠chip business to generate more than $2 billion in revenue in 2026. SMARTPHONE WEAKNESS MediaTek said its mobile-chip revenue fell 20% in the second quarter from a year earlier as higher component costs weighed on smartphone demand. Global smartphone shipments dropped 11% in the quarter to their lowest level for the period since 2013, according to preliminary estimates from Counterpoint Research, as a memory-chip shortage pushed up handset prices. "As rising costs ⁠across the supply chain have become an industry-wide reality, we are taking pricing actions to ensure these increases are appropriately reflected in our product pricing," Tsai said. "Our view for global smartphone shipment remains unchanged and we continue to expect the market ⁠to decline by about 15% in units this year," he added. MediaTek, a customer of TSMC (2330.TW), opens new tab, is the second-most valuable company on the Taiwan stock exchange, with a market capitalisation of $176 billion. The company reported quarterly revenue of T$152.18 billion ($4.71 ⁠billion), up 1.2% from a year earlier. Net income fell 12.3% to T$24.6 billion. MediaTek shares closed up 9.9% on Friday ahead of the results and have risen 148.6% this year, compared with a 48.9% gain in Taiwan's benchmark index (.TWII), opens new tab. Reporting by Wen-Yee Lee in Taipei. Editing by Eduardo Baptista and Mark Potter Our Standards: The Thomson Reuters Trust Principles., opens new tab

MediaTek Commits $5 Billion to AI Data Centre Chips as Mobile Sales Drop

MediaTek has expanded its data centre work through custom chip design and high-speed connectivity products. In June, the company said its services cover advanced chip processes, packaging, memory, interconnects and rack-level integration. These areas form part of its custom silicon offer for cloud companies building AI infrastructure. MediaTek raised its estimate for the 2027 custom AI chip market to $80 billion. Its earlier forecast placed the market between $70 billion and $80 billion. The company also increased its target share to 15% to 20%, from 10% to 15%. Three months earlier, MediaTek had already doubled its 2026 AI accelerator revenue target to $2 billion. Customer programmes were moving closer to commercial production during that period. The chip designer now expects its data centre AI business to generate more than $2 billion in 2026. Its first custom AI chip will enter production in the fourth quarter. MediaTek expects a second product to reach volume production in 2028. Custom chips allow cloud companies to build processors for specific instead of relying only on standard products. MediaTek supplies design services and supporting technology. Customers then set performance, power and system requirements for their data centres. Meanwhile, MediaTek reported quarterly revenue of NT$152.18 billion, or about $4.71 billion. Revenue rose 1.2% from the same period last year. However, net income fell 12.3% to NT$24.6 billion as mobile conditions and product costs weighed on earnings.

MediaTek Aims to Expand From Smartphones to Data Center AI

Taiwanese chip designer MediaTek is set to begin mass production of its first custom artificial intelligence accelerator for data centers late this year, pushing deeper into the booming AI infrastructure market. The company expects its data center business to gain momentum over the next couple of years, with related revenue projected to surpass $2 billion this year. Growth is driven by rising demand from major cloud and tech companies seeking customized AI computing solutions, said Chief Executive Rick Tsai during an earnings call Friday. Although MediaTek did not identify customers, analysts and investors widely associate its custom AI accelerator business mainly with Google. References to a first-generation accelerator already delivering strong economics and a second-generation of that chip suggest a deepening role in next-generation Google AI hardware program, according to TF International Securities analyst Ming-Chi Kuo. MeditaTek said the second-generation of that AI chip is progressing toward mass-production in 2028. Encouraged by stronger product competitiveness and customer interest, MediaTek raised its 2027 market share target in the data center business to 15% to 20%, up from 10% to 15%. Analysts expect more meaningful revenue growth to emerge later this year as Google-related programs ramp up. MediaTek is also expanding beyond data centers. Its advanced mobile processors designed for autonomous smartphone AI features will arrive in the third quarter, while a computing system developed jointly with Nvidia for Agentic AI is expected by the end of the year. Responding to questions regarding a leading LLM developer-widely speculated to be OpenAI-Tsai declined to address specific companies, noting instead that multiple AI hardware formats are being explored across the industry, though it remains unclear which format will dominate. Regardless of which format dominates, Tsai said MediaTek's power-efficient, high-performance central processing chips position it well to support a wide range of AI-enabled devices. These moves highlight a major pivot for MediaTek from its roots in consumer electronics. Pushed beyond handsets by a persistent smartphone slump, the company is now taking on U.S. chip designers like Broadcom in the custom AI chip market.