Summary of Key Points
NVIDIA is investing $3.5 billion in MediaTek through convertible bonds. This move is not an acquisition nor a direct stakeholding; its main goal is to deepen cooperation. The idea is to enable MediaTek to produce custom AI chips for customers, which can then be integrated into NVIDIA’s rack-level systems. NVIDIA’s strategy is not to eliminate competitors but to allow chips with different architectures to coexist, as long as they are compatible with its platform. This way, even if customers do not use NVIDIA GPUs, they may still purchase NVIDIA’s interconnection technologies, memory, and rack integration services, thus maintaining or even expanding business opportunities.
1. Why Would NVIDIA Invest in a Potential Competitor?
Many people wonder why NVIDIA would invest in MediaTek, given that the custom AI chips produced by MediaTek could potentially compete with NVIDIA’s GPUs. However, NVIDIA’s focus has shifted from selling individual chips to selling complete systems. For example, if a customer wants to develop custom chips optimized for specific AI tasks (which might be cheaper than using general-purpose GPUs) and NVIDIA cannot stop them, it’s better to allow those chips to be integrated into NVIDIA’s systems. Although the customer may not use NVIDIA GPUs, the chips still need to communicate with other components (such as memory and network cards) and be installed in racks, all of which require NVIDIA’s technologies (like NVLink interconnection and NVHBM memory). This approach allows NVIDIA to continue making money and is more stable in the long run, as it ensures that customers do not switch to other solutions and lose business.
2. This Cooperation Is Not a New Start, but an Enhancement of Existing Relationships
It’s not the first time MediaTek has collaborated with NVIDIA. Back in May 2025, when NVIDIA launched the NVLink Fusion platform, MediaTek was one of the initial partners. This new round of cooperation includes more detailed aspects such as additional chip modules, custom memory, and packaging manufacturing, as well as continuing partnerships in the PC and automotive sectors. Therefore, the claim that “Mediatek is entering NVIDIA’s ecosystem for the first time” is incorrect; this investment is simply an effort to strengthen the existing relationship.
3. Why Invest Through Convertible Bonds Instead of a Simple Contract?
While a technical cooperation agreement is a formal agreement, custom chip development requires significant upfront investment (for example, in research and development and testing). NVIDIA is issuing convertible bonds, which can be converted into stock, to share the development costs with MediaTek and create a financial bond between the two companies. This ensures that both parties benefit from the cooperation. However, the investment does not grant exclusive rights or guarantee orders; it merely increases the likelihood of a successful project.
4. NVIDIA’s Investment Strategy: Diversifying Its Portfolio
NVIDIA’s investments are not limited to MediaTek. It has also invested in companies like Intel (for CPUs), Marvell (for custom chips), SiFive (for RISC-V), and Ayar Labs (for optical interconnect technologies). Some of these companies compete with NVIDIA (e.g., Marvell’s custom chips), while others complement its offerings (e.g., optical interconnect technologies). NVIDIA’s strategy is to ensure that it can benefit from any customer that uses its platform, regardless of the chips they choose. By investing in these companies, NVIDIA can cater to a wider range of customer needs and expand its market presence.
5. The Benefits and Challenges for Both Customers and MediaTek
For customers, using NVIDIA’s platform eliminates the need to develop their own interconnection and memory integration solutions, allowing them to launch custom chips more quickly. However, this could lead to greater dependence on NVIDIA, making it difficult to switch to other technologies in the future. For MediaTek, the investment provides financial benefits and access to NVIDIA’s system integration capabilities, which can attract more customers. However, it also means competing with other partners to meet customer needs and deliver products more efficiently.
6. Will This Strategy Be Successful?
NVIDIA’s goal is to achieve both chip diversity and the expansion of its platform. Whether this strategy will be successful depends on actual project outcomes. Will there be customers who use MediaTek chips in combination with NVIDIA’s systems and continue to do so? Will the revenue generated from system services cover the loss of GPU sales? Only time will tell.
In summary, NVIDIA’s approach is to become a “platform enabler,” ensuring that all chips can work on its systems. Whether this strategy will be successful depends on how customers respond to it.