Nvidia pours $3.5B into MediaTek to widen its data centre grip
What's the deal? Nvidia is investing $3.5 billion in Taiwanese chipmaker MediaTekDealroom has a profile for this one. Try Dealroom →, buying bonds convertible into MediaTek shares, the companies said in a joint statement. The deal deepens a partnership between the two chip designers.
What's the endgame? The investment ties MediaTek into an Nvidia technology suite, including NVLink Fusion and the newly announced NVHBM, that helps components communicate more seamlessly in data centres. For Nvidia, it is the latest move to keep the future of artificial intelligence built around its hardware and standards.
Why MediaTek? The company is trying to challenge Broadcom and Marvell TechnologyDealroom has a profile for this one. Try Dealroom → by helping data centre owners create their own components. Long reliant on the smartphone market, MediaTek earlier this year secured a partnership with GoogleDealroom has a profile for this one. Try Dealroom → — supplying modems for the latest Pixel and helping with Google's TPUs — lifting its credibility as a design partner. That momentum has roughly tripled its market value in recent months.
The product angle: Nvidia and MediaTek will collaborate on future generations of Nvidia's Spark chips, which power consumer PCs, plus business computers using Nvidia GPUs with MediaTek technology. The two already work together on Nvidia's RTX Spark product as it pushes into the laptop market.
Why now? The agreement follows a similar deal with Amazon, which pledged to deploy an additional 2 million Nvidia components and to use Nvidia's connection technology with its own in-house chips. Both agreements let Nvidia keep a central role in AI data centre build-outs, even as customers deploy chips designed to replace its main offerings.
What could go wrong? The deal is another case of Nvidia investing in customers, rivals, and other AI players. Concern about the "circular nature" of those investments has grown in investor circles, though Nvidia disputes the idea it is creating false demand.
The signal: Nvidia's biggest customers — Amazon, Google, and Microsoft — are all building in-house chips, yet there is no sign of its crown slipping; it forecasts a 70% jump in sales next year. By wiring rivals' silicon into its own standards, Nvidia is betting it can stay at the centre of the AI hardware chain no matter who designs the chips.
Read more: Bloomberg, The Information
Image credit: Generated with Gemini
