Strengthening its long-term AI strategy, MediaTek has approved a discretionary financing budget of $5 billion to accelerate the development of artificial intelligence (AI) application-specific integrated circuits (ASICs) for data centers. The investment is aimed at expanding the company’s presence in the fast-growing custom AI chip market and reducing its dependence on smartphone chip sales.
During the company’s 2Q26 earnings call, MediaTek CEO Rick Tsai said the funding framework provides the flexibility to support long-term growth and capture emerging opportunities in the data center industry.
MediaTek has also increased its estimate for the addressable custom AI chip market in 2027 to $80 billion, up from its earlier forecast of $70-80 billion. The company has raised its target market share to 15-20%, compared to its previous goal of 10-15%.
Tsai confirmed that MediaTek’s first AI accelerator ASIC is expected to enter production in Q4, while a second-generation chip is planned for volume production in early 2028. The company projects its AI data center chip business to generate more than $2 billion in revenue in 2026.
The announcement comes as Qualcomm also expands its presence in the AI data center market. The company is targeting $5 billion in revenue from this segment by fiscal year 2027 and $15 billion by 2029.
MediaTek also reported that its mobile phone segment revenue declined by 20% year-on-year in Q2. The company attributed the drop to rising bill-of-materials costs caused by an AI-driven component shortage.
Tsai said the outlook for global smartphone shipments remains unchanged, with the market expected to decline by about 15% in unit sales this year. Preliminary estimates from Counterpoint Research showed that global smartphone shipments fell by 11% year-on-year in Q2 2026, marking the lowest second-quarter shipment levels since 2013. The report noted that memory and storage prices continued to rise as suppliers prioritised AI data center demand over consumer electronics, leading to higher smartphone prices, especially in the entry and mid-range segments.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream LinkedIn | The Mainstream Facebook | The Mainstream Youtube | The Mainstream Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.