Nvidia said on Monday that it has invested $3.5 billion in convertible bonds issued by Taiwan's MediaTek, a move that could add to growing investor concerns about circular financing in the AI sector.

The new deal is the latest example of Nvidia helping to finance businesses building products and infrastructure around its technology, a strategy that supports growth in its AI ecosystem but has drawn investor scrutiny. Nvidia has previously announced multibillion-dollar investments in partners and customers such as OpenAI and CoreWeave, arrangements where the chipmaker both supplies technology and holds financial stakes, prompting debate about whether such deals inflate demand for its own products. Convertible bonds, like those MediaTek has issued, can be converted into shares of the issuing company, giving Nvidia potential equity exposure to its partner.

As part of the arrangement, MediaTek will adopt Nvidia's NVLink Fusion platform, allowing customers to develop custom AI chips that can connect to Nvidia-powered AI systems and data centers. Nvidia opened NVLink Fusion to third-party custom silicon in May at Computex, a shift that lets chip designers plug their own CPUs or AI accelerators into systems built around Nvidia's interconnect, positioning the company to capture value even from chips it does not make.

The companies will also extend their collaboration on AI chips for personal computers and continue developing platforms for AI-powered vehicles. MediaTek, one of the world's largest suppliers of smartphone chips, has been broadening into AI PCs and automotive silicon, and the deeper Nvidia partnership aligns with that diversification.

In June, Nvidia unveiled the RTX Spark PC chip, developed in partnership with MediaTek, as part of an effort to "reinvent the PC" for the AI era. (Reuters)