MediaTek allocates $5 billion for server processors and other long-term goals

Taiwan's MediaTek has approved a $5 billion investment to develop long-term programs, which include building server processors for AI infrastructure. The company is ready to design and supply custom logic chips for large cloud customers, attracted by rapid growth and high profit margins. MediaTek now estimates the custom AI chip market at $80 billion by 2027, up from a previous lower bound of $70 billion, and its market share target has risen from 10-15% to 15-20%. Production of its first AI chip for AI infrastructure will begin in the fourth quarter, with a second chip entering mass production in 2028. This year, server chips are expected to bring in over $2 billion in revenue, a necessity as mobile revenue fell 20% in the second quarter due to the AI boom and rising memory costs, which are expected to shrink the smartphone market by 15% this year. In Q2, MediaTek's revenue grew 1.2% to $4.71 billion year-over-year, but net profit decreased 12.3% to $761 million.