Nvidia and Semiconductor Vendor Expand Partnership

Nvidia on Monday expanded its partnership with MediaTek, a large Taiwan-based semiconductor vendor that designs system-on-chip systems for smartphones, TVs and wireless communications.The move shows how the AI hardware and software provider is trying to move beyond selling GPUs to become the provider that both big and smaller players in the AI market will use.As part of the expanded partnership, Nvidia invested $3.5 billion in convertible bonds issued by MediaTek. MediaTek will adopt the Nvidia NVLink Fusion platform. The platform lets cloud providers integrate custom processors directly into Nvidia’s AI supercomputing ecosystem. The two vendors will work together to power PCs, AI developer supercomputers and enterprise-class workstations that incorporate Nvidia GPUs with MediaTek SoCs (system-on-chip).The partnership comes as a growing number of Nvidia customers, including hyperscalers and frontier model makers, focus more on training and deploying their own ASICs (application-specific integrated circuits). Most recently, OpenAI introduced its first custom ASIC, Jalapeno, designed to handle AI inference. While Nvidia customers are creating their own chips to rely less on GPUs, many smaller players in the AI market are turning to infrastructure vendors that support ASICs, such as MediaTek.Related:Anthropic Releases Interface to Help AI Agents Operate MachinesA Need to Stay On TopTherefore, through the partnership, Nvidia is looking to ensure it remains the go-to AI infrastructure provider across the market.“It's making sure that they are the top-level brand and top-level technology provider for as many of the solutions on the market as possible,” said Ryan Shrout, president and analyst at Signal65.He added that Nvidia has noticed that the fastest-growing part of MediaTek’s business is serving as an AI ASIC provider. Therefore, the AI chip giant sees an opportunity in MediaTek as a partner to help it become more of a platform provider for smaller AI vendors, said Chirag Shah, a professor at the University of Washington.“This is really Nvidia trying to be a platform for anything AI, even if you’re not a big player,” Shah said. He added that by doing this, Nvidia becomes even more of a service and platform provider, competing with Google, OpenAI and others, which have been taking Nvidia chips and building platforms on them.“Nvidia is getting into that middle tier,” Shah said. “It’s a crowded market.” He said that by offering XPU through MediaTek, Nvidia conveys that it is more than a GPU company and can offer a CPU or a hybrid as well.Related:Prompt: The AI Infrastructure Boom Is Getting Bigger Than GPUsNvidia’s Big AdvantageNvidia also sees integrating its technology with MediaTek as a way to continue pushing AI factories.In the past couple of years, Nvidia has positioned AI factories as the next stage beyond traditional data centers, enabling the continuous manufacturing of intelligence. Therefore, NVLink and partnerships such as the one with MediaTek could help it continue to push this narrative.“Nvidia sees NVLink and these types of technologies as a hedge against GPU sales and custom ASIC integration of their technology as the next best thing to have influence and effect on as much of this AI factory directive as possible,” Shrout said.While Nvidia is entering the AI services market late, it has the capital it needs to stay on top, as evidenced by its sizable investment in MediaTek.“They have an upper hand in the sense that they have tons of this influx of capital that they can inject into this market,” Shah said.He added that Nvidia’s capital can also be a weakness because it has invested in many AI vendors, and if Nvidia encountered financial problems or turbulence, that could have a cascading effect in the AI market.About the AuthorNews Writer, AI BusinessEsther Shittu has covered AI technologies and industry trends since 2021. As co-host of the Targeting AI podcast, she talks with experts, thought leaders and practitioners exploring critical AI developments. Before AI Business, she wrote for SearchEnterpriseAI, the New York Daily News, Bklyner and the Brooklyn Daily Eagle. When she's not diving deep into the world of AI, she spends her time on passion projects and raising her three daughters.