Nvidia to acquire about 90% of MediaTek's $3.9 billion convertible bond issuance

Nvidia CEO Jensen Huang holds an impromptu press conference after attending an AI ecosystem reception in Tokyo, Japan, on July 16. [Reuters]
Nvidia CEO Jensen Huang holds an impromptu press conference after attending an AI ecosystem reception in Tokyo, Japan, on July 16. [Reuters]

Nvidia, the world's leading AI semiconductor company, will invest $3.5 billion in Taiwan-based fabless chipmaker MediaTek as the two companies deepen their long-term collaboration.

According to Taiwanese media outlets including United Daily News and China Times, MediaTek announced Monday that it plans to issue $3.9 billion worth of euro-convertible bonds to raise funds overseas.

MediaTek said US tech giants Nvidia and Alphabet, Google's parent company, will participate in the bond issuance. Nvidia will acquire approximately 90% of the offering, the company said, with the investment expected to deepen ongoing cooperation between the firms.

Nvidia founder and CEO Jensen Huang shrugged off concerns from some quarters about "circular financing," saying the partnership roadmap between the two companies spans a decade and is not a short-term plan.

MediaTek CEO Rick Tsai said the two sides will work together to dramatically shorten time-to-market for customers worldwide. He added that the proceeds will be invested in technology research and development and supply chain buildout.

The euro-convertible bond issuance carries a zero-coupon rate and a five-year maturity, totaling $3.9 billion, and is set to be listed on the Singapore Exchange on Tuesday.

Sources said the issuance marks the largest euro-convertible bond offering ever in Taiwan's capital markets and the first to involve two US tech giants, with Nvidia's participation drawing particular attention as the company's first-ever investment in a Taiwanese firm.

The investment is part of an expansion of the partnership between MediaTek and Nvidia, sources said, and will support seamless communication between components inside data centers using Nvidia's NVLink Fusion and NVHBM technologies. They added that MediaTek is competing with Broadcom and Marvell by helping data center operators develop their own custom chips.

Sources said the Nvidia investment is expected to benefit not only MediaTek but also TSMC, the world's largest contract chipmaker, and ASE, a major Taiwanese semiconductor packaging firm, with far-reaching implications for Taiwan's semiconductor supply chain and the broader development of AI.

They also said Nvidia's decision is aimed at ensuring that AI is built around the company's own hardware platform and standards going forward.


yckim6452@heraldcorp.com