Key points
- ByteDance is in advanced talks with MediaTek
- Nvidia's best chips are off limits in China
- MediaTek shares fell in Taipei
ByteDance, the Chinese owner of TikTok, is in advanced talks to buy custom chips for its data centers from Taiwan's MediaTek, according to Bloomberg. The deal could make ByteDance MediaTek's second major customer for those chips, after Alphabet's (GOOGL) Google.
MediaTek would supply an unspecified amount of application-specific integrated circuits, or ASICs. These are chips customized to work with one client's platform. ByteDance didn't have an immediate comment, and MediaTek declined to comment.
US export rules leave room for custom chips
Like Alibaba (BABA) and Tencent (TCEHY), ByteDance is barred from buying Nvidia's (NVDA) most advanced AI chips. Chinese chipmakers such as Huawei can't meet all the demand.
Partnerships with chip designers are allowed under current US export curbs as long as the AI computing power a Chinese company seeks doesn't exceed a certain threshold. ByteDance struck a similar deal with Qualcomm (QCOM) earlier this year to buy millions of AI chips. Last month, China signaled it may let ByteDance and Alibaba buy Nvidia's new RTX PRO 5500.
ByteDance is considering a bigger AI spending budget
ByteDance is considering raising its capital spending to as much as $70 billion this year, more than double last year's total. That could rise to $100 billion in 2027 if economic and business conditions are favorable. The company secured a $30 billion loan in September to help pay for the build-out.
MediaTek wants a bigger data center business
MediaTek is best known for smartphone processors. It expects AI chip sales of about $2 billion this year. In July, MediaTek said it sees the market for custom AI chips reaching $80 billion in 2027 and is targeting 15% to 20% of it, up from 10% to 15%. At the end of August, Nvidia agreed to invest $3.5 billion in MediaTek convertible bonds.
MediaTek shares closed down 6.93% at NT$4,165 ($128.77) in Taipei on Thursday, on more than twice the previous day's trading volume. The Taiex index fell 3.41% the same day. Qualcomm shares were up 2.1% at $176.33 at 2:36 p.m. ET.
Taiwan dollar figures are converted at 32.345 to the US dollar, the Yahoo Finance rate on October 15, 2026.
