(Sept 1): Shares of MediaTek Inc soared after the Taiwanese chipmaker scored a US$3.5 billion outlay from Nvidia Corp, the American chipmaking giant’s largest ever direct investment outside the US. 

The deal announced on Monday will see Nvidia buy bonds convertible into MediaTek shares. MediaTek shares jumped 10% in Taipei on Tuesday, hitting a daily limit.

The Taiwanese company was once best known for its rivalry with Qualcomm Inc in the mobile phone market, vying for orders from the likes of Xiaomi Corp and Oppo. But it has gradually shifted its focus to designing custom silicon, taking on the likes of Broadcom Inc and gaining credibility as a partner to major tech firms seeking to build their own AI chips.

“This investment is a significant strategic endorsement of MediaTek,” said Francis Tan, chief strategist at Indosuez Wealth Management in Singapore. “It reinforces MediaTek’s evolution from being primarily associated with smartphone chips into a much broader AI semiconductor company.”

MediaTek earlier this year secured a partnership with Alphabet Inc’s Google, and some analysts have speculated that SpaceX could be its next AI customer. That momentum has led the chipmaker’s market value to roughly triple in recent months.

Nvidia’s investment is part of a US$3.9 billion US dollar-denominated convertible bond sale by MediaTek, according to terms reported by Bloomberg News earlier on Monday. Alphabet and other investors also participated in the round, a spokesperson for MediaTek said in a separate statement, without specifying the investment amounts.

MediaTek CEO Rick Tsai said that he expects the company’s AI chip business to accelerate after the Nvidia deal. Previously the company guided its custom AI silicon business will reach US$2 billion this year, while saying it’s looking to secure 15% of the $80 billion segment in 2027.

Uploaded by Liza Shireen Koshy