en.Wedoany.com Reported - Taiwan-based fabless chipmaker MediaTek has announced that its board has approved a $5 billion discretionary financing budget to support long-term expansion into the application-specific integrated circuit (ASIC) sector for data center AI.

MediaTek CEO Rick Tsai stated during the company's second-quarter earnings call that this flexible framework provides the company with the optionality needed to support long-term growth with agility and seize large-scale data center opportunities. The move underscores the company's strategic direction of reducing its reliance on the smartphone business and transforming into a major supplier of custom chips for cloud service providers.

MediaTek has raised its total addressable market (TAM) estimate for custom AI chips in 2027 to $80 billion, up from a previous estimate of $70 billion to $80 billion. The company expects to capture a target market share of 15% to 20% in this segment, up from the previously set 10% to 15%.

Tsai revealed that the company's first AI accelerator ASIC is scheduled to begin production in the fourth quarter, with the second-generation chip expected to enter mass production in early 2028. MediaTek projects its data center AI chip business will generate over $2 billion in revenue in 2026. U.S. competitor Qualcomm is also making inroads into the AI data center market, targeting $5 billion in revenue from this business in fiscal 2027 and $15 billion by 2029.

In the second quarter, MediaTek's mobile business revenue declined 20% year-over-year, due to rising bill of materials (BOM) costs caused by shortages of AI-related components. Tsai said the company's view on global smartphone shipments remains unchanged, still expecting market volumes to decline by approximately 15% this year.

According to preliminary estimates from Counterpoint Research, global smartphone shipments in the second quarter of 2026 fell 11% year-over-year, marking the lowest second-quarter level since 2013. Worsening memory shortages emerged as a major factor dragging down the industry. The research firm noted that memory and storage prices continued to rise during the quarter, as memory suppliers prioritized AI data center demand over consumer electronics, forcing vendors to pass on rising BOM costs to consumers through repeated price increases, impacting entry-level to mid-range devices.