ByteDance Nears a Custom-Chip Deal With MediaTek That Would Make It the Chip Designer's Second-Largest ASIC Customer After Google

ByteDance is in advanced talks to buy MediaTek's custom data-center chips, Bloomberg reported Thursday, in a deal that would hand the Taiwanese chip designer a marquee customer for its nascent AI silicon business. MediaTek would supply an undisclosed number of application-specific integrated circuits tailored to ByteDance's platform, according to people familiar with the matter. If it closes, ByteDance would become MediaTek's second major ASIC customer after Google. MediaTek declined to comment and ByteDance did not immediately respond to a request for comment.

The motivation on ByteDance's side is structural. Like Alibaba and Tencent, the company is barred by US export controls from buying Nvidia's most advanced AI accelerators, and domestic suppliers such as Huawei cannot yet fill the entire gap between what its models need and what it can legally buy. Custom ASICs designed through partnerships are one of the workarounds: under current US rules, such arrangements are permitted as long as the compute Chinese companies purchase stays below a specified threshold. Bloomberg reported earlier this year that ByteDance had already struck a similar deal with Qualcomm covering millions of AI chips.

For MediaTek, the prize is diversification. The company expects roughly $2 billion of AI chip revenue this year and is aiming for a 10-15% share of a custom data-center ASIC market it sizes at $70-80 billion in 2027. A large ByteDance order would help reduce MediaTek's dependence on smartphones, where it dominates but grows slowly, and would put it on a collision course with Qualcomm and Broadcom in a segment it historically did not play in. Nvidia's previously announced $3.5 billion investment in MediaTek through a convertible bond subscription adds weight to that push. MediaTek's market capitalization stands at about $210 billion, second among Taiwan-listed companies only to TSMC.

The demand side is enormous. ByteDance is considering raising its capital expenditure this year to as much as $70 billion, more than double last year's total, to expand data centers and AI infrastructure, and could push spending to around $100 billion in 2027 if conditions allow, according to reporting cited alongside the talks. Those figures remain plans rather than audited results, but they indicate the scale of procurement that a MediaTek agreement would plug into.

Nothing is signed yet. The supply volume, pricing and timeline are all undisclosed, both companies have stayed quiet, and negotiations at this stage can still widen, stall or collapse. The reported structure, however, fits the pattern that has emerged over the past year: Chinese hyperscalers assembling multi-vendor custom-silicon portfolios that stay inside export-control limits while leaning on chip designers who have manufacturing relationships TSMC and its ecosystem can support.

If the deal lands, it would validate MediaTek's move from phones into data centers at exactly the moment custom ASIC demand is becoming the fastest-growing slice of the AI chip market, and it would give ByteDance a second custom-silicon partner to stack alongside Qualcomm. The open question is economics. ASIC programs only pay off at volume, and MediaTek will be betting that ByteDance's buildout is big enough, and durable enough, to keep a new product line fully loaded.