open_in_newOriginal article
Google preparing to partner with Taiwan's MediaTek on next AI chip: Report

Google preparing to partner with Taiwan's MediaTek on next AI chip: Report

  • 18.03.2025 04:23
  • thehindu.com
  • Keywords: AI

Google plans to collaborate with MediaTek on its next AI chip, Tensor Processing Units (TPUs), while retaining its partnership with Broadcom. The move aims to reduce reliance on Nvidia's dominant chips, leveraging MediaTek's ties to TSMC and lower costs.

Alphabet ReportsMicrosoft ReportsNvidia ReportsAlphabet NewsAVGOsentiment_dissatisfied

Estimated market influence

Google

Negativesentiment_dissatisfied
Analyst rating: N/A

Google is preparing to partner with MediaTek on the next AI chip, but has not cut ties with Broadcom. Google's TPU usage and spending are detailed.

MediaTek

Positivesentiment_satisfied
Analyst rating: N/A

MediaTek was chosen by Google due to its strong relationship with TSMC and lower costs compared to Broadcom.

Broadcom

Broadcom

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Despite Google partnering with MediaTek, Broadcom continues to work with Google on AI chips. However, Google's shift may impact Broadcom's market share.

Context

Analysis of Google's AI Chip Partnership with MediaTek

Key Facts and Data Points

  • Google's New Partnership: Google is preparing to collaborate with Taiwan’s MediaTek on its next-generation Tensor Processing Units (TPUs), set for production in 2025.
  • Ongoing Relationship with Broadcom: Despite this new partnership, Google has not severed ties with Broadcom, which has been its exclusive AI chip designer for several years.
  • Estimated Spending: Google spent between $6 billion and $9 billion on TPUs last year, based on Broadcom's target AI semiconductor revenue.

Market Implications

  • Reduced Reliance on Nvidia: By designing its own AI chips (like TPUs) and diversifying suppliers, Google aims to reduce dependence on Nvidia, the dominant player in the AI chip market.
  • Competitive Edge: This strategy positions Google ahead of rivals like Microsoft (via OpenAI) and Meta Platforms, which heavily rely on Nvidia's chips.
  • Cost Efficiency: MediaTek’s partnership is driven by its strong relationship with TSMC (a leading semiconductor manufacturer) and lower per-chip costs compared to Broadcom.

Industry Trends

  • Shift Toward Custom Chips: Google’s focus on in-house AI chip design reflects a broader industry trend, with companies like Intel and AMD also investing heavily in AI hardware.
  • Diversification of Supply Chains: The move highlights the importance of supplier diversification to mitigate risks and ensure stable chip supply amid global semiconductor shortages.

Strategic Considerations

  • Long-Term Effects: This partnership could strengthen Google’s position in the cloud computing market, where TPUs are rented out to customers.
  • Regulatory Impact: While not explicitly mentioned, such strategic moves often face scrutiny under antitrust and competition laws, particularly in the tech sector.

Competitive Dynamics

  • Pressure on Broadcom: The new partnership may signal reduced reliance on Broadcom, potentially impacting its market share in AI chip design.
  • Opportunity for MediaTek: This collaboration could elevate MediaTek’s position in the high-performance computing (HPC) chip market, traditionally dominated by U.S. and European firms.

Conclusion

Google’s decision to partner with MediaTek while maintaining ties with Broadcom underscores its strategic focus on reducing dependency on key suppliers like Nvidia. The move highlights the growing importance of custom AI chips in driving innovation and competitiveness in the cloud and AI markets.