MediaTek raised its target on July 31 to capture 15% to 20% of an estimated $80 billion custom AI-chip market in 2027. Its first AI accelerator for a major U.S. cloud provider will enter production in the fourth quarter, and MediaTek expects more than $2 billion in 2026 data-center revenue. The expansion could give Alphabet Inc. (NASDAQ:GOOGL) another design partner while challenging Broadcom Inc. (NASDAQ:AVGO).
Reuters reported in March 2025 that Google was preparing to use MediaTek for a future Tensor Processing Unit while retaining Broadcom. The Information’s report said MediaTek’s TSMC relationship and lower charges influenced the choice. If that relationship materializes, a second ASIC partner could expand design capacity, improve supply resilience, and give Alphabet Inc. (NASDAQ:GOOGL) more leverage over costs. So far, the customer remains unnamed, and neither company has confirmed that the chip entering production belongs to the TPU program. MediaTek’s claim of superior total cost of ownership remains unverified.
Broadcom Inc. (NASDAQ:AVGO) has a firmer disclosed position. On April 6, Broadcom announced a long-term agreement to develop and supply future Google custom AI chips and rack components through 2031. It also agreed to provide Anthropic access to about 3.5 gigawatts of computing capacity using Google processors beginning in 2027. Those commitments leave Broadcom embedded in Google’s roadmap. Google could divide future designs or components between suppliers without removing Broadcom.
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MediaTek’s target runs ahead of its evidence. A 15% to 20% share would represent $12 billion to $16 billion of its estimated 2027 market, compared with more than $2 billion in forecast 2026 data-center revenue. Its second accelerator is scheduled for volume production in 2028. The company approved a discretionary $5 billion financing budget while second-quarter mobile-chip revenue fell 20% and net income declined 12.3%.
The development is incrementally positive for Alphabet because supplier leverage can improve before MediaTek captures its target share. Broadcom still warrants a constructive view: its 2031 agreement and Anthropic capacity commitment limit the immediate competitive threat. Investors may want to monitor how Google allocates future designs, but MediaTek’s ambition alone does not weaken Broadcom’s case.
Insider Monkey’s data showed 174 hedge funds with Broadcom positions at the end of Q1 2026, down from 203 as of Q4 2025. At the July 15 settlement, 68,638,929 AVGO shares were sold short, or 1.47% of float, down 2.12% from the previous report, with 3.0 days to cover. The low, pre-announcement short interest is consistent with investors placing greater weight on Broadcom’s contracted Google role and custom-chip demand than on emerging design competition.
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