Nvidia will invest $3.5 billion in Taiwan’s MediaTek, its largest direct investment outside the US, deepening their AI chip partnership.

The two companies announced the deal on Monday through a joint statement. Under the arrangement, Nvidia will buy bonds that can later be converted into MediaTek shares.

This purchase is part of a bigger $3.9 billion bond sale that MediaTek is running to raise funds. MediaTek wasn’t always an AI-focused company.

For years, it built its business mainly around mobile phone chips, competing with Qualcomm for orders from phone makers like Xiaomi and Oppo.

Over the past few years, though, it has been shifting toward designing custom chips instead, going up against players like Broadcom and building a name for itself among tech companies that want to design their own AI hardware.

This investment fits into a much bigger pattern for Nvidia. The company has been striking deals across the AI supply chain to keep its technology at the centre of how AI data centres get built, even as some customers develop chips meant to replace Nvidia’s own products.

As part of the expanded partnership, MediaTek will start using Nvidia’s NVLink Fusion technology, which helps cloud companies build custom processors that still connect smoothly into Nvidia’s larger AI systems.

The two companies aren’t new partners either. They already work together on Nvidia’s RTX Spark and DGX Spark chips built for PCs, and on technology for software-defined vehicles.

MediaTek’s CEO Rick Tsai said he expects the company’s AI chip business to grow faster after this deal.

Earlier this year, MediaTek had said it expects its custom AI chip revenue to reach around $2 billion in 2026, with a longer-term goal of capturing 15% of an $80 billion market segment by 2027.

The company’s overall value has nearly tripled in recent months, helped along by an earlier partnership with Google and growing interest from other major tech firms exploring custom AI chips.

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