MediaTek Bets $5B on AI Chips
Synopsis
The company is ramping up investment in custom AI chips as it expands beyond smartphone processors.
MediaTek has validated a financing plan of up to US$5 billion to support its growth in AI chips, along with more investment in data centre processors.
The Taiwan-based semiconductor maker plans to obtain the funds through one or more financing transactions, the timing, amount and mechanism of which will be determined based on market conditions.
The decision comes as chipmakers compete for a larger share of spending by cloud service providers building AI infrastructure.
Traditional smartphone processors have been replaced by custom chips that can train and run AI models in large data centres, meeting a growing demand for such capabilities.
AI Data Centre Strategy Gains Momentum
MediaTek is targeting to sell over US$2 billion worth of its data centre AI chips in 2026. It has also updated its forecasts for the size of the global AI data centre chip market to 15%-20%, or US$80 billion, by 2027.
The first custom AI accelerator chip is expected to hit production in the fourth quarter of 2026, and a second-generation version is expected to be in production in 2028. The chips are intended for hyperscale clouds service providers that need dedicated processors to power AI workloads.
Production of AI infrastructure is still accelerating, according to industry estimates. Gartner forecast that global semiconductor revenue will hit US$1.34 trillion in 2026, with a majority of the revenue coming from demand for AI.
AI semiconductors will make up roughly 30% of the industry's share of total revenue, according to the forecast.
Quarterly Results Reflect Business Transition
The financing plan is based on MediaTek's latest financial results. Second-quarter sales came in at NT$152.18 billion (NT$5.1 billion) up 1.2% from the same period a year ago. Net profit dipped 12.3%, and sales of the smartphone chips dropped around 20% due to weaker handset demand and rising component costs.
MediaTek is looking to spread its risk with smartphone growth slowing. Even though it's a relatively mature market, IDC reports that global smartphone shipments grew by 1.0% year on year in the second quarter of 2026, standing in contrast to the robust investment cycle in AI infrastructure.
The AI semiconductor supply chain continues to be dominated by a few economies.
The United States is a major importer via large cloud providers, Taiwan is a centre of chip design and manufacturing, South Korea is a key supplier of high bandwidth memory (HBM) for AI servers, and China is further developing its own AI chip industry.
Source: Reuters
Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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