MediaTek's board has approved a discretionary financing framework totaling $5 billion to support the company's long-term growth initiatives, including an expansion into custom AI chips for data centers. The move is intended to give the company optionality to back investments as it shifts emphasis away from its historical dependence on smartphone processors.
Company executives framed the financing as a flexible tool to seize growing opportunities in the data-center market. Chief Executive Rick Tsai said on an earnings call that the arrangement "provides us with the optionality, when needed, to agilely support our long-term growth and capitalize on massive data center opportunities."
As part of its strategic update, MediaTek raised its outlook for the size of the custom AI chip market in 2027 to $80 billion, up from a prior range of $70 billion to $80 billion. It also lifted the share of that market it aims to capture to 15% to 20%, from a previous target range of 10% to 15%.
Tsai reported that MediaTek has completed development of its first custom AI chip and expects production to begin in the fourth quarter. A second custom AI design is on track for volume production in 2028. The company is forecasting that its data-center AI chip business will produce more than $2 billion in revenue in 2026.
The push into custom AI chips - also referred to as ASICs - is a strategic attempt to enter a faster-growing, higher-margin segment dominated by a relatively small number of suppliers. Rising investment in AI infrastructure has opened what the company describes as an attractive opportunity to expand beyond the smartphone market where MediaTek has been best known.
At the same time, MediaTek reported weakness in its mobile-chip business. Mobile-chip revenue declined 20% in the second quarter compared with a year earlier, a drop the company attributed in part to higher component costs that have weighed on smartphone demand.
According to preliminary estimates from Counterpoint Research cited by the company, global smartphone shipments fell 11% in the quarter to their lowest level for that period since 2013. MediaTek said a shortage in memory chips helped push up handset prices, contributing to the downturn in shipments.
On pricing, Tsai said the company is taking measures to ensure that rising costs across the supply chain are appropriately reflected in product prices. He also reiterated MediaTek's view for the year that global smartphone unit shipments are likely to decline by about 15%.
MediaTek, which sources manufacturing from TSMC, is the second-most valuable company listed on the Taiwan stock exchange, with a market capitalization of $176 billion. For the quarter the company reported revenue of T$152.18 billion ($4.71 billion), an increase of 1.2% year-on-year, while net income fell 12.3% to T$24.6 billion.
MediaTek's shares closed up 9.9% on Friday ahead of the results, and have risen 148.6% so far this year, compared with a 48.9% gain in Taiwan's benchmark index.