MediaTek warns of AI supply chain crunch, eyes price changes

Taiwan’s MediaTek reported supply chain challenges due to increased demand for AI applications, prompting the company to consider price adjustments.

The company, Taiwan’s leading chip designer, noted that global supply constraints are affecting costs across the industry.

CEO Rick Tsai expressed confidence in the company’s outlook but warned of rising supply chain expenses.

He also indicated that MediaTek plans to modify its pricing strategy to reflect these costs and optimize product allocation based on profitability.

Tsai reaffirmed expectations to generate billions in revenue from AI accelerator chips by 2027, with the market for data center ASIC chips now estimated at US$50-70 billion, up from previous forecasts.

MediaTek has collaborated with Nvidia on co-design projects, including the GB10 Grace Blackwell Superchip used in Nvidia’s DGX Spark.

The company reported Q4 revenue of T$150.2 billion (US$4.8 billion), up 8.8% year-on-year, with net income down 3.6%. Shares have risen 26% this year.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

MediaTek’s data centre push goes beyond its Nvidia partnership to Google

MediaTek landed a design win with Google, taking Broadcom’s place on Google’s seventh-generation AI accelerator, Ironwood 1.
The deal supports MediaTek’s plan to take 10–15% of the data-centre ASIC (application-specific integrated circuit) market within two years. CEO Rick Tsai puts that market at about US$50 billion 2.
MediaTek aims for US$1 billion in cloud AI chip revenue in 2026, then “multiple billions” in 2027 2.

MediaTek weighs price changes as AI demand strains the supply chain, including advanced packaging

MediaTek links higher costs to supply-chain limits tied to rising AI demand. CEO Rick Tsai said the company may adjust prices and allocate products based on profitability.
A wider bottleneck for AI chips involves advanced packaging, which assembles high-performance processors and accelerators 3.
One estimate puts advanced packaging in more than 72% of AI accelerators shipped in 2024 3.
Taiwan Semiconductor Manufacturing Co. (TSMC) is adding advanced packaging capacity. Deloitte cited analysts who estimate TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) capacity could grow from 35,000 wafers per month in 2024 to 70,000 wafers per month, then 90,000 wafers per month by end-2026 4.
Tight capacity can lift pricing power for chip designers that lock in production slots. Deloitte estimates the generative AI chip market could exceed US$150 billion in 2025 4.