Nvidia just wrote its biggest check outside the United States: $3.5 billion for MediaTek’s convertible bonds in a deal announced Monday. The purchase covers roughly 90% of MediaTek’s $3.9 billion offshore bond offering, which MediaTek called the largest of its kind in the island’s capital-market history.

Google’s parent company, Alphabet, also bought in, though neither company said how much Google’s parent chipped in.

The deal deepens a partnership that already touches PCs, data centers, and cars. MediaTek will adopt Nvidia’s NVLink Fusion platform, wiring custom-built chips straight into Nvidia’s rack-scale computing systems, according to the companies’ joint statement. Three areas get top billing: AI infrastructure, edge AI, and software-defined vehicles.

On the edge side, MediaTek and Nvidia keep building RTX Spark and DGX Spark chips together, pairing MediaTek’s system-on-chip work with Nvidia GPUs for AI PCs and developer workstations. Jensen Huang told Bloomberg TV this isn’t circular financing, since the two run separate businesses.

That claim, though, is a bit hard to fully believe, and here’s why.

Per the agreement, Nvidia bought zero-coupon bonds, meaning MediaTek pays no interest unless bondholders convert at a preset strike price. That gives Nvidia equity upside if MediaTek’s stock keeps climbing, no acquisition required. Critics have been calling the whole setup circular financing—Nvidia sells the chips, bankrolls the buyer, and profits again if the buyer’s stock climbs on the strength of buying more chips.

The $3.5 billion check amounts to roughly 3.6% of the $96.2 billion in revenue Nvidia reported for the period ended in late July.

MediaTek’s AI ambitions

MediaTek didn’t stumble into this moment. It’s been racing to build a data-center business around custom AI accelerator chips—application-specific integrated circuits, or ASICs, built to do one job well instead of everything the way Nvidia’s GPUs do—and it expects that business to clear $2 billion in revenue this year, with the addressable market reaching $80 billion by 2027. MediaTek is now targeting 15% to 20% of that market, up from an earlier 10% to 15%.

MediaTek isn’t the only one chasing that money. Google has leaned on Broadcom to build its custom Tensor Processing Units, and OpenAI rolled out its own Broadcom-built inference chip, Jalapeño, in June. MediaTek has quietly started helping Google build its own chips too, giving Google a second option beyond Broadcom’s design shop.

Nvidia’s bet on MediaTek plants the world’s most valuable chipmaker inside a second major ASIC shop just as its biggest customers keep looking for ways around its GPUs.

MediaTek’s first AI accelerator ASIC is scheduled to enter mass production in the fourth quarter of 2026, with a second-generation chip slated for high-volume output in 2028.