NextFin News - In a strategic move that signals a major realignment in the global semiconductor landscape, MediaTek has solidified a deep partnership with Google to manufacture the next generations of AI accelerators. According to DIGITIMES, the Hsinchu-based chipmaker is now targeting a massive US$10 billion valuation for its Application-Specific Integrated Circuit (ASIC) business by 2027. This ambitious goal is underpinned by MediaTek securing orders for Google’s v7e and v8e Tensor Processing Units (TPUs), which are critical components for the search giant’s massive data center operations and AI training workloads.
The partnership, which has been developing under the radar for several months, reached a critical milestone this week as industry sources confirmed that MediaTek has requested a massive expansion in production capacity. To meet Google’s surging demand, MediaTek has reportedly secured a commitment from Taiwan Semiconductor Manufacturing Company (TSMC) for a sevenfold increase in Chip on Wafer on Substrate (CoWoS) packaging capacity, rising from an initial 20,000 wafers in 2026 to over 150,000 wafers annually by 2027. This surge in production is necessary to support the mass production of the v8e TPU, which is expected to utilize TSMC’s cutting-edge 3nm process node starting in the third quarter of 2026.
MediaTek’s pivot toward the cloud AI market represents a fundamental shift in its corporate strategy. Historically known for its dominance in the smartphone System-on-Chip (SoC) market, the company is now aggressively reallocating internal resources. According to TrendForce, MediaTek has shifted significant personnel from its mobile chipset division to its ASIC and automotive segments. This internal restructuring is designed to capture the high-margin opportunities presented by hyperscalers like Google and Meta, who are increasingly looking to develop proprietary silicon to reduce their reliance on expensive, off-the-shelf GPUs from market leaders like Nvidia.
The financial implications of this partnership are profound. MediaTek CEO Rick Tsai has previously stated a target of US$1 billion in AI-ASIC revenue for 2026, but the latest order volumes suggest this figure could be conservative. Analysts now estimate that the v7e and v8e cycles could contribute earnings equivalent to two full years of the company’s traditional mobile profits. By 2027, the ASIC business is projected to become a primary growth engine, potentially rivaling the company’s core smartphone business in terms of profitability, if not total volume.
From a technical perspective, the collaboration highlights MediaTek’s growing sophistication in high-end chip design. Designing for Google’s TPU architecture requires managing extreme thermal envelopes and high-speed interconnects, areas where MediaTek has rapidly closed the gap with rivals like Broadcom and Marvell. By successfully qualifying the v7e for risk production by the end of the first quarter of 2026, MediaTek has demonstrated its ability to meet the rigorous timelines demanded by cloud service providers (CSPs). This track record is already attracting other major players; rumors suggest that Meta is in discussions with MediaTek for a 2nm-based custom chip project slated for 2028.
The broader impact on the semiconductor industry is the creation of a new power bloc. As U.S. President Trump continues to emphasize domestic manufacturing and supply chain security, the deep integration between a Taiwanese design powerhouse and a U.S. hyperscaler creates a robust alternative to the current GPU-centric status quo. This diversification is essential for the AI industry, which has been plagued by supply bottlenecks and skyrocketing hardware costs. By bringing MediaTek into the fold, Google not only secures its own supply chain but also introduces much-needed competition into the high-end AI accelerator market.
Looking ahead, the success of MediaTek’s US$10 billion ambition will depend on TSMC’s ability to scale its advanced packaging facilities. While TSMC is aggressively expanding its CoWoS capacity in Taiwan and planning future hubs in Arizona, the competition for these wafers remains fierce. However, with Google’s backing and a clear roadmap toward 2nm production, MediaTek is no longer just a follower in the chip race. It has successfully transitioned from a consumer electronics supplier to a strategic architect of the global AI infrastructure, a move that will likely redefine the company’s valuation and influence for the remainder of the decade.
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