ByteDance is reportedly close to signing a deal with Taiwan’s MediaTek to supply custom AI chips for its data centers, according to a Bloomberg report.
MediaTek would provide ByteDance with application-specific integrated circuits, known as ASICs, which are engineered for dedicated computing tasks rather than general-purpose workloads.
The potential agreement carries significant competitive implications for Qualcomm (NASDAQ: QCOM), which earlier this year agreed to sell ByteDance millions of AI chips in a separate arrangement.
Broadcom (NASDAQ: AVGO) also faces a direct challenge, as MediaTek’s entry into ByteDance’s supply chain would give it a stronger foothold in a market where Broadcom is already well established.
Nvidia (NASDAQ: NVDA) could face additional pressure if ByteDance shifts more of its AI workloads toward custom ASICs, reducing its dependence on graphics processing units.
U.S. export restrictions on advanced chips are already pushing Chinese technology companies to seek domestic and alternative international suppliers, accelerating the shift away from American GPU makers.
Bloomberg reported that ByteDance is weighing capital expenditure of up to $70 billion this year, more than double last year’s total, as it aggressively expands its AI infrastructure.
MediaTek expects its AI chip sales to reach approximately $2 billion this year and is targeting 15% of an $80 billion market in the following year, according to Bloomberg.
The broader semiconductor sector has been under strain, with the iShares Semiconductor ETF falling for a seventh consecutive session and dropping 1.7% overnight, while South Korea’s Kospi tumbled more than 7%, with Samsung and SK Hynix among the biggest decliners.
Hotter-than-expected U.S. inflation data intensified interest-rate concerns, compounding existing worries around AI spending levels and mounting competition from Chinese chip developers.
AVGO and NVDA were each down between 0.7% and 1.3% overnight ahead of Thursday’s trading session, reflecting the broader sector weakness.
On Stocktwits, retail sentiment was tracked as “bearish” for QCOM and “extremely bearish” for both AVGO and NVDA heading into the session.
One trader on the platform captured the frustration among retail investors, writing: “NVDA all I can say is the stock market is bipolar. One day Nvidia is changing planet earth and next world is going bankrupt. The amount of manipulation is unreal. It’s not even weeks but days that story lines change.”
Year to date, QCOM stock is up 2.5%, while AVGO has gained 0.5% and NVDA leads the group with a 19% advance.
