Taipei: MediaTek is making a big bet on artificial intelligence. The Taiwanese chip designer has approved a discretionary financing budget of $5 billion as it ramps up investments in custom AI chips for data centres, seeking to reduce its dependence on the slowing smartphone market, according to a Reuters report.
The financing plan was approved by the company’s board to support its long-term growth strategy, with a particular focus on expanding its presence in the rapidly growing market for application-specific integrated circuits (ASICs) used by major cloud service providers.
MediaTek, Taiwan’s largest chip designer and best known for its smartphone processors, expects its data centre AI chip business to generate more than $2 billion in revenue in 2026.
The company has also raised its estimate of the addressable market for custom AI chips in 2027 to $80 billion, up from its earlier projection of $70 billion to $80 billion. It now expects to capture between 15 per cent and 20 per cent of that market, compared with its previous target of 10 per cent to 15 per cent.
MediaTek said its first custom AI chip has been successfully developed and is scheduled to enter production in the fourth quarter of this year. A second AI chip remains on track for volume production in 2028.
The AI push comes as the company faces headwinds in its core smartphone business. Mobile chip revenue declined 20 per cent year on year in the second quarter as rising component costs dampened handset demand.
According to preliminary estimates from Counterpoint Research, global smartphone shipments fell 11 per cent during the quarter, marking the weakest second-quarter performance since 2013 as memory chip shortages pushed up handset prices.
For the June quarter, MediaTek reported revenue of T$152.18 billion, up 1.2 per cent year on year, while net income declined 12.3 per cent to T$24.6 billion.
The company, a key customer of TSMC, has emerged as one of Taiwan’s most valuable listed firms, with a market capitalisation of about $176 billion. Its shares closed 9.9 per cent higher on Friday ahead of the earnings announcement and have surged nearly 149 per cent so far this year, significantly outperforming Taiwan’s benchmark stock index.
As spending on AI infrastructure continues to accelerate globally, MediaTek is positioning itself to capture a larger share of the high-margin data centre market, even as weakness in smartphones weighs on its traditional business.
