SANTA CLARA, California: Nvidia will invest US$3.5 billion in Taiwan's MediaTek and expand its partnership with the chipmaker, including by allowing its customers to use Nvidia technology to design their own AI chips.

The investment is part of MediaTek's record $3.9 billion overseas convertible bond offering. The Taiwanese chipmaker said Alphabet, a key AI infrastructure partner, also participated in the offering but did not disclose the size of the company's investment.

The deal is the latest to expand Nvidia's financial ties across the AI industry and follows its guarantee of up to $105 billion earlier this month for OpenAI's Ohio data-center lease. Such arrangements, where Nvidia funds companies that help drive demand for its AI products, could face increased scrutiny.

"This is not circular because obviously they do their own business and we do our own business," Nvidia CEO Jensen Huang said in an interview with Bloomberg TV about the MediaTek investment.

Under the August 31 deal, MediaTek will allow customers to use Nvidia's NVLink Fusion technology to design their own AI chips that connect directly to Nvidia's larger computing systems.

NVLink Fusion provides chipmakers with ready-made connectors and specialized memory that let custom AI chips connect to Nvidia's larger data-center systems. The technology saves customers time and engineering costs, allowing them to focus on their own chip designs instead of building connections to Nvidia's systems from scratch.

"Nvidia is financing MediaTek so MediaTek can develop products that extend Nvidia's architecture," said Joe Tigay, portfolio manager of the Rational Equity Armor Fund. "That makes it less circular than Nvidia financing a customer—but it is still Nvidia using its balance sheet to accelerate ecosystem growth."

Nvidia and MediaTek will also continue working together on chips for personal computers and technology for AI-powered vehicles.

The deal expands an existing relationship between the companies. In June, Nvidia and MediaTek teamed up to launch the RTX Spark PC chip, aimed at bringing AI features directly to laptops and desktops.

Nvidia's investment comes days after the chipmaker provided a rare long-term outlook forecasting 70 percent revenue growth for next year. Huang said AI had reached its inflection point and was doing useful work.

MediaTek has also been expanding beyond smartphones into AI chips for data centers, supported by a $5 billion financing plan approved in July.