MediaTek’s potential deal with ByteDance highlights the growing competition in custom AI chips.

  • ByteDance is close to contracting MediaTek for AI data center chips, Bloomberg reported.
  • Earlier this year, ByteDance agreed to buy millions of AI chips from Qualcomm.
  • Retail sentiment was ‘bearish’ on QCOM and ‘extremely bearish’ on AVGO and NVDA on Thursday.

Qualcomm (QCOM) and Broadcom (AVGO) shares are in focus after a Bloomberg report said ByteDance is close to a deal to buy custom AI chips from Taiwan’s MediaTek for its data centers.

MediaTek would supply ByteDance with application-specific integrated circuits (ASICs), which are designed for particular computing tasks. MediaTek is a major vendor for Google’s tensor processing units (TPUs).

The deal is a competitive signal for Qualcomm and Broadcom. ByteDance agreed earlier this year to buy millions of AI chips from Qualcomm, while it would give  MediaTek a stronger foothold in a market where Broadcom is already well established. 

Nvidia (NVDA) could also face pressure if ByteDance shifts more AI workloads to custom ASICs, reducing its reliance on GPUs, although U.S. export restrictions on advanced chips are already forcing Chinese companies to look for alternatives.

ASIC Chips Market

Demand for ASICs has grown as AI companies seek alternatives to general-purpose GPUs, with major cloud providers such as Amazon and Google and AI developers increasingly investing in their own chips to cut costs.

Bloomberg reported that ByteDance is considering capital expenditure of up to $70 billion this year, more than double last year’s total, as it builds out its AI infrastructure. 

MediaTek expects AI-chip sales to reach about $2 billion this year and is targeting 15% of an $80 billion market next year, according to Bloomberg. 

Global Chip Rout

Global semiconductor stocks extended their selloff on Thursday as hotter-than-expected U.S. inflation data heightened interest-rate concerns, compounding worries about AI spending and intensifying Chinese competition.

The iShares Semiconductor ETF (SOXX) fell for a seventh consecutive session on Wednesday and dropped 1.7% overnight, while South Korea’s Kospi tumbled more than 7% on Thursday, with Samsung and SK Hynix among the biggest decliners. 

AVGO, AVGO and NVDA were down 0.7% to 1.3% overnight ahead of Thursday’s session. 

Retail View On QCOM, AVGO, NVDA

On Stocktwits, the retail sentiment was ‘bearish’ for QCOM, and ‘extremely bearish’ for AVGO and NVDA.

“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,” a trader wrote. 

Year to date, QCOM stock is up 2.5%, while AVGO is up 0.5% and NVDA is up 19%.

 

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