MediaTek approves $5 billion to fund AI data-center chip push

MediaTek, Taiwan's largest chip designer, said on Friday its board had approved a discretionary financing budget of $5 billion to support long-term growth, including its expansion into AI chips for data centers.economictimes+1

The announcement, made alongside the company's second-quarter 2026 earnings call, underscores MediaTek's accelerating push to reduce its reliance on smartphones and establish itself as a supplier of custom AI chips — known as ASICs — to major cloud providers.reuters+1

Raising the Stakes in a Booming Market

MediaTek raised its estimate of the total addressable market for custom AI data-center chips in 2027 to $80 billion, up from a previous range of $70 billion to $80 billion, according to Reuters. The company also increased its target share of that market to 15% to 20%, from 10% to 15% previously.reuters+1

CEO Rick Tsai said MediaTek had successfully developed its first custom AI chip, with production set to begin in the fourth quarter. A second chip remains on track for volume production in 2028. The company expects its data-center AI chip business to generate more than $2 billion in revenue in 2026.globalbankingandfinance+2

From Mobile Giant to Data-Center Contender

The financing plan arrives as global smartphone shipments have declined, pressuring MediaTek's core mobile-chip revenue. At its analyst day in April, the company described data-center work as the "heart of the MediaTek opportunity" and its top priority, noting it could leverage its position as a top-five partner of TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 7.64% to enter the market.650group+1

MediaTek is not alone in pivoting toward AI infrastructure. Qualcomm ↘ 2.62% has outlined plans for $15 billion in annual data-center revenue by 2029, while Broadcom ↗ 4.73% and other ASIC designers compete for hyperscaler contracts.youtube

The $5 billion budget is intended to "secure supply chain capacity and fuel our strategic expansion" in AI ASICs, MediaTek said during the earnings call. For a company long defined by its dominance in affordable smartphone processors, the bet represents the most concrete step yet toward a new identity at the center of AI infrastructure spending.investing