Nvidia to Take $3.5 Billion Stake in MediaTek as Interconnect Standards Hedge Cloud Vendors' In-House Chips

Tradingkey - Nvidia (NVDA) and MediaTek jointly announced on Monday that Nvidia will invest $3.5 billion to subscribe to convertible bonds issued by MediaTek. This represents Nvidia's largest direct investment outside the United States to date. As the conversion price, maturity, and potential equity stake have not yet been disclosed, this transaction should be understood as a convertible bond investment, rather than Nvidia already holding MediaTek shares.

Nvidia CEO Jensen Huang stated that the two sides already had large-scale cooperation, which will now expand further, calling it a "tremendous engineering synergy" with a joint product roadmap spanning ten years.

Nvidia Uses Interconnect Standards to Counter Customers' In-House Chips

At the core of this upgraded partnership is the AI data center. MediaTek will adopt NVLink Fusion and the newly released NVHBM technology to help hyperscalers integrate custom XPUs into Nvidia's rack-scale AI systems. NVLink Fusion connects different processors, while NVHBM provides custom high-bandwidth memory capabilities, aiming to lower integration complexity across chips, packaging, memory, and rack systems.

This means that even if tech giants like Amazon and Google continue to develop their proprietary AI chips, Nvidia still has the opportunity to remain at the center of the hardware chain through interconnect technology, memory architecture, and system platforms. Previously, Amazon also agreed to expand its deployment of Nvidia components and use Nvidia interconnect technology for its internal chips. Nvidia's competitive boundary is expanding from AI accelerators to data center standards and complete systems.

MediaTek Enters Custom AI Chip Market via NVLink

For MediaTek, the collaboration offers a new path to reduce its reliance on the smartphone market. MediaTek can combine its strengths in SoC design, advanced packaging, and power efficiency to develop custom XPUs for cloud service providers, competing with Broadcom and Marvell for custom data center chip business. The two companies will also continue to develop RTX Spark and DGX Spark PC chips, as well as AI platforms for software-defined vehicles.

Circular Investment Controversy Still Awaits Commercial Order Validation

Nvidia's continued investments in customers, competitors, and AI supply chain companies have raised concerns among some investors about "circular investments." Jensen Huang denied that such collaborations create artificial demand, emphasizing that MediaTek operates an independent and profitable business. For the market, what truly bears watching is not the investment amount itself, but whether MediaTek's custom XPUs can gain adoption among cloud providers and whether NVLink Fusion can become the de facto standard for heterogeneous AI chips entering rack-level systems.