Prime Highlights-
- MediaTek approves $5 billion in financing to expand into AI chips for data centers.
- MediaTek raises its 2027 custom AI chip market forecast to $80 billion, targeting 15 to 20 percent share.
Key Facts-
- MediaTek expects data-center AI chip revenue to exceed $2 billion in 2026.
- MediaTek’s mobile-chip revenue fell 20 percent in the second quarter as smartphone shipments hit a decade-plus low.
Background-
MediaTek, Taiwan’s largest chip designer, has signed off on a discretionary financing budget of $5 billion to fund long-term growth, including its move into AI chips built for data centers.
The plan reflects the company’s effort to cut its dependence on smartphones and build a bigger role as a supplier of custom AI chips, known as ASICs, to large cloud providers.
Chief Executive Rick Tsai said the flexible financing framework gives MediaTek the option to move quickly on long-term growth and take advantage of data center opportunities as they arise.
MediaTek lifted its forecast for the addressable market for custom AI chips in 2027 to $80 billion and raised its target market share to a range of 15 to 20 percent, up from 10 to 15 percent.
Tsai said the company has finished developing its first custom AI chip, with production due to start in the fourth quarter, while a second chip stays on schedule for volume production in 2028. MediaTek expects its data-center AI chip unit to bring in more than $2 billion in revenue during 2026.
The company’s mobile-chip revenue dropped 20 percent in the second quarter compared with a year earlier, as higher component costs cut into smartphone demand. Global smartphone shipments fell 11 percent during the quarter to their weakest level for the period since 2013, based on figures from Counterpoint Research, as a memory-chip shortage drove handset prices higher.
Tsai said the company is raising prices to reflect climbing supply chain costs and still expects global smartphone shipments to fall about 15 percent in units this year.
MediaTek, which counts TSMC as a customer, ranks as the second-most valuable company on the Taiwan stock exchange, holding a market capitalization of $176 billion. Quarterly revenue climbed 1.2 percent to $4.71 billion, while net income slipped 12.3 percent. MediaTek shares have gained 148.6 percent this year.