MediaTek Invests $5B in AI Chips, First ASIC Launches in Q4
According to MediaTek, its board of directors has approved a discretionary financing budget of up to $5 billion to support the company’s long-term growth strategy, including the expansion of its data center AI chip business.
The move highlights MediaTek’s efforts to reduce its reliance on the smartphone market and establish itself as a key supplier of custom AI application-specific integrated circuits (ASICs) for major cloud service providers.
Although the AI infrastructure market is currently dominated by a small number of major players, rapid growth in AI data center investment is creating new opportunities for MediaTek to expand beyond its traditional smartphone processor business into a faster-growing and potentially higher-margin segment.
“This flexible framework allows us to support long-term growth when needed and capture the significant opportunities emerging from data centers,” said MediaTek CEO Rick Tsai.
MediaTek has raised its outlook for the custom AI chip market, estimating that the total addressable market could reach approximately $80 billion by 2027, up from its previous forecast of $70 billion to $80 billion. The company also increased its target market share from 10%-15% to 15%-20%.
Tsai revealed that MediaTek has successfully developed its first custom AI chip, which is expected to enter mass production in the fourth quarter. Development of its second AI chip is also progressing as planned, with mass production expected in 2028.
MediaTek expects revenue from its data center AI chip business to exceed $2 billion in 2026, reflecting the company’s growing focus on AI computing infrastructure.
Meanwhile, MediaTek’s mobile chip revenue declined 20% year over year in the second quarter, as rising component costs weakened smartphone demand.
According to preliminary estimates from Counterpoint Research, global smartphone shipments fell 11% year over year in the second quarter, marking the lowest level for the period since 2013, as memory chip shortages pushed up device prices. Tsai said, “As rising supply chain costs become a widespread industry challenge, we are implementing pricing measures to ensure these increases are appropriately reflected in our product pricing.”
He added that MediaTek’s outlook for the global smartphone market remains unchanged, with shipments expected to decline by around 15% this year.
MediaTek, a major customer of TSMC, is currently the second-largest company by market capitalization on the Taiwan Stock Exchange, with a market value of approximately $176 billion.
For the latest quarter, MediaTek reported revenue of NT$152.18 billion (about $4.71 billion), up 1.2% year over year. Net profit declined 12.3% to NT$24.6 billion.
Ahead of the earnings announcement, MediaTek shares closed 9.9% higher on Friday. The stock has gained 148.6% so far this year, significantly outperforming Taiwan’s benchmark weighted index, which rose 48.9% during the same period.
