MediaTek allocates $5B to AI datacenter ASIC chip development, targeting 20% of $80B custom silicon market
Taiwanese chipmaker MediaTek is lining up $5 billion in financing to expand into AI datacenter silicon, targeting a share of a market it expects to be worth up to $80 billion next year.
The fabless chip producer is perhaps best known for its Arm-based smartphone and Chromebook chipsets, plus wireless silicon for Wi-Fi products. However, the firm has identified a "compelling growth opportunity" in the market for compute to power AI and agentic AI in particular.
MediaTek is targeting application-specific integrated circuits (ASICs) rather than GPUs, reckoning it can capture 15 to 20 percent of the market.
The company's board has approved $5 billion in financing to secure supply chain capacity and fuel expansion from AI ASIC chips to full-scale systems and platforms, MediaTek stated.
Chief Executive Rick Tsai explained during an analyst call for the company's Q2 2026 earnings:
"Recently, the release of increasingly capable frontier AI models, together with the rapid transition toward agentic AI, has become a key driver of compute demand across both cloud and edge AI. Agentic AI, which executes a series of actions including planning, reasoning, execution, and self-correction, further increases workloads. This represents a compelling growth opportunity for MediaTek, as we are well-positioned to support both the scaling of AI datacenters and the proliferation of agentic AI experiences across a broad range of edge devices."
MediaTek's first ASIC family has been developed in close partnership with major US cloud service provider customers and is scheduled to enter production in the fourth quarter of this year. A second AI accelerator design is also progressing well and aims to deliver enhanced compute performance.
The chipmaker expects its AI datacenter ASIC revenue to exceed $2 billion in 2026, scaling substantially in 2027, primarily driven by increasing customer demand for its technology, which offers optimized performance for total cost of ownership and performance per watt at scale, Tsai claims.
"With close collaboration with our advanced packaging partner, the yield and reliability of the second ASIC are on track for high-volume production in 2028. We're confident in capturing additional market share when this ASIC ramps up," Tsai told analysts.
MediaTek faces competition from rivals including Broadcom and Marvell, which already design ASICs for the AI market, and Google, which announced plans to start selling custom tensor processing units to some customers earlier this year.
According to a Bloomberg Intelligence report from January, the market for AI ASICs is projected to expand at a 27 percent compound annual growth rate to reach $118 billion by 2033, growing from just 8 percent of the total AI accelerator market in 2024 to 19 percent in 2033.
MediaTek reported Q2 revenue of NT$152.18 billion ($4.68 billion), up just 1.2 percent year-on-year, while operating income declined 22 percent to NT$22.87 billion ($705 million).
Gartner VP Analyst Gaurav Gupta expressed skepticism about MediaTek's ambitions. "If I look at 2024 market share for MediaTek in AI accelerators in compute electronics, it was less than 1 percent. Based on recent studies, our projection is still less than 1 percent for MediaTek. The company has gained some traction recently in custom accelerators, like with Google. But aiming for 15 to 20 percent seems very high at this point."