Nvidia to Invest $3.5 Billion in Taiwan’s MediaTek in Biggest Overseas Direct Investment

Nvidia Corp. is investing $3.5 billion in Taiwanese semiconductor company MediaTek Inc., marking its largest direct investment outside the US.

Bloomberg reported on August 31 that Nvidia agreed to buy $3.5 billion of convertible bonds to be issued by MediaTek. The bonds can later be converted into MediaTek shares. MediaTek stock surged as much as 10% in Taiwan trading after the investment was reported, hitting the market’s daily limit.

The investment is part of MediaTek’s broader $3.9 billion offering of dollar-denominated convertible bonds. MediaTek said other investors, including Alphabet Inc., also participated in the fundraising, though it did not disclose their individual commitments.

MediaTek, which built its business around smartphone chips, has recently expanded into custom chip design. It has competed with Qualcomm Inc. while supplying mobile chips to Xiaomi and Oppo. Now the company is stepping up its custom semiconductor business, helping corporate customers develop their own AI chips as the market grows.

Earlier this year, MediaTek also established a partnership with Alphabet’s Google. Market speculation has also pointed to the possibility that SpaceX could become a future customer for MediaTek’s AI semiconductors. Expectations for its AI business have helped triple MediaTek’s market value in recent months.

Francis Tan, chief strategist at Indosuez Wealth Management, said the investment represents substantial strategic support for MediaTek. In his view, it also reinforces the company’s shift from a smartphone chip-focused business to a broader AI semiconductor player.

MediaTek Chief Executive Officer Rick Tsai said the investment agreement with Nvidia should further accelerate growth in its AI chip business. The company previously projected that revenue from its custom AI semiconductor business would reach $2 billion this year.

MediaTek plans to further expand its presence in the AI custom-chip market over the medium to long term. The company is targeting a 15% share of a market it expects will reach $80 billion by 2027.