Nvidia has expanded its partnership with MediaTek, a large Taiwan-based semiconductor vendor that designs system-on-chip (SoC) systems for smartphones, TVs and wireless communications. The move signals how the AI hardware and software provider is trying to move beyond selling GPUs to become the provider that both big and smaller players in the AI market will use.

As part of the expanded partnership, Nvidia invested $3.5 billion in convertible bonds issued by MediaTek. MediaTek will adopt the Nvidia NVLink Fusion platform, which lets cloud providers integrate custom processors directly into Nvidia's AI supercomputing ecosystem. The two vendors will work together to power PCs, AI developer supercomputers and enterprise-class workstations that incorporate Nvidia GPUs with MediaTek SoCs.

The partnership comes as a growing number of Nvidia customers, including hyperscalers and frontier model makers, focus more on training and deploying their own ASICs (application-specific integrated circuits). Most recently, OpenAI introduced its first custom ASIC, Jalapeno, designed to handle AI inference. While Nvidia customers are creating their own chips to rely less on GPUs, many smaller players in the AI market are turning to infrastructure vendors that support ASICs, such as MediaTek. The investment also reflects a broader industry pattern in which major technology companies take financial stakes in chip and AI suppliers to secure technology alignment — Nvidia has previously invested in a range of AI companies across the infrastructure stack. The convertible bond structure gives Nvidia an equity-linked position in MediaTek while allowing MediaTek to keep funding its design and manufacturing operations.

A Need to Stay On Top

Through the partnership, Nvidia is looking to ensure it remains the go-to AI infrastructure provider across the market.

"It's making sure that they are the top-level brand and top-level technology provider for as many of the solutions on the market as possible," said Ryan Shrout, president and analyst at Signal65.

Shrout added that Nvidia has noticed that the fastest-growing part of MediaTek's business is serving as an AI ASIC provider. The AI chip giant therefore sees an opportunity in MediaTek as a partner to help it become more of a platform provider for smaller AI vendors, said Chirag Shah, a professor at the University of Washington.

"This is really Nvidia trying to be a platform for anything AI, even if you're not a big player," Shah said. He added that by doing this, Nvidia becomes even more of a service and platform provider, competing with Google, OpenAI and others, which have been taking Nvidia chips and building platforms on them.

"Nvidia is getting into that middle tier," Shah said. "It's a crowded market." He said that by offering XPU through MediaTek, Nvidia conveys that it is more than a GPU company and can offer a CPU or a hybrid as well. That positioning matters as the AI hardware market increasingly divides between a handful of hyperscalers building their own silicon and a wider tier of companies that buy integrated platforms rather than design chips themselves.

Nvidia's Big Advantage

Nvidia also sees integrating its technology with MediaTek as a way to continue pushing AI factories. Over the past couple of years, Nvidia has positioned AI factories as the next stage beyond traditional data centers, enabling the continuous manufacturing of intelligence. NVLink and partnerships such as the one with MediaTek could help it continue to push this narrative.

"Nvidia sees NVLink and these types of technologies as a hedge against GPU sales and custom ASIC integration of their technology as the next best thing to have influence and effect on as much of this AI factory directive as possible," Shrout said.

While Nvidia is entering the AI services market late, it has the capital it needs to stay on top, as evidenced by its sizable investment in MediaTek.

"They have an upper hand in the sense that they have tons of this influx of capital that they can inject into this market," Shah said.

He added that Nvidia's capital can also be a weakness because it has invested in many AI vendors, and if Nvidia encountered financial problems or turbulence, that could have a cascading effect in the AI market. How the partnership translates into shipping products — the joint PCs, supercomputers and workstations combining Nvidia GPUs with MediaTek SoCs — will be a key marker of whether Nvidia can extend its platform reach beyond its core GPU business.

Source: AI Business