Nvidia has written what Decrypt described as its biggest check outside the United States, committing $3.5 billion to MediaTek’s convertible bonds in a deal announced Monday. The purchase covers roughly 90% of MediaTek’s $3.9 billion offshore bond offering, which MediaTek said was the largest transaction of its kind in the island’s capital-market history.
Alphabet, Google’s parent company, also participated in the bond sale, although neither company disclosed the size of Alphabet’s investment.
Nvidia and MediaTek push their partnership further
The transaction builds on an existing relationship that already reaches across PCs, data centers, and automotive systems. In a joint statement, the companies said MediaTek will adopt Nvidia’s NVLink Fusion platform, allowing custom-built chips to plug directly into Nvidia’s rack-scale computing systems.
The companies highlighted three priority areas:
- AI infrastructure
- Edge AI
- Software-defined vehicles
On the edge computing side, MediaTek and Nvidia are continuing joint development of RTX Spark and DGX Spark chips. Those products combine MediaTek’s system-on-chip capabilities with Nvidia GPUs for AI PCs and developer workstations.
Nvidia CEO Jensen Huang told Bloomberg TV that the arrangement should not be viewed as circular financing because the two companies operate separate businesses.
Zero-coupon structure draws questions
Even so, the structure of the deal has prompted criticism.
Under the agreement, Nvidia bought zero-coupon bonds. That means MediaTek does not pay interest unless bondholders convert at a preset strike price. The setup gives Nvidia potential equity upside if MediaTek’s stock continues to rise, without requiring an acquisition.
Critics have labeled the arrangement circular financing: Nvidia sells chips to the buyer, helps finance that buyer, and could profit again if the buyer’s stock climbs on the back of buying more chips.
The $3.5 billion commitment equals about 3.6% of the $96.2 billion in revenue Nvidia reported for the period ended in late July.
MediaTek raises its AI ASIC ambitions
MediaTek has been building out a data-center business around custom AI accelerator chips, or application-specific integrated circuits (ASICs). These chips are designed to do a specific job well rather than cover a broad range of computing tasks in the way Nvidia’s GPUs do.
The company expects that business to generate more than $2 billion in revenue this year. It also said the addressable market could reach $80 billion by 2027. MediaTek is now targeting 15% to 20% of that market, up from an earlier goal of 10% to 15%.
Google and OpenAI are part of the same race
MediaTek is not the only company pursuing the custom AI chip market. Google has relied on Broadcom to build its custom Tensor Processing Units. OpenAI, meanwhile, introduced its Broadcom-built inference chip, Jalapeño, in June.
Decrypt also reported that MediaTek has started helping Google build its own chips, giving Google a second option beyond Broadcom’s design operation.
Nvidia’s investment places the world’s most valuable chipmaker inside a second major ASIC shop at a time when some of its biggest customers are looking for alternatives to its GPUs.
Production timeline
MediaTek’s first AI accelerator ASIC is scheduled to enter mass production in the fourth quarter of 2026. A second-generation chip is slated for high-volume output in 2028.