MediaTek Explains Why Custom Silicon is Critical for AI Innovation - Six Five Virtual Webcast

How is the role of custom silicon expanding with the future of AI and cloud data centers?

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Hosts Patrick Moorhead and Daniel Newman are joined by MediaTek's Shahar Noy, AVP, Data Center Solutions, and Rahul Sandil, VP and GM, Global Corporate Marcom, for a conversation on MediaTek’s pivotal role in custom silicon innovation. They cover the trends shaping custom silicon for AI, diving into how MediaTek's & industry partners are working to meet the surging computing needs of modern AI applications and cloud data centers.

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Key Takeaways Include:

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🔹Legacy and Growth Drivers: MediaTek’s extensive history in silicon design, manufacturing, and technology partnerships continues to shape its leadership and competitive edge in today’s AI-focused computing environment.

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🔹Differentiation in Data Center Space: Transitioning from a strong client computing heritage, MediaTek leverages its experience to deliver specialized solutions tailored for the evolving requirements of data centers.

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🔹Strategic Partnerships: Long-standing collaborations with industry leaders such as TSMC and Nvidia empower MediaTek to accelerate innovation, enabling scalable and efficient AI infrastructure.

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Learn more at MediaTek.

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Patrick Moorhead:

The Six Five is back, Pat and Daniel here. Daniel, we're about to talk about, it's pretty much our favorite topic, and that is AI-based custom silicon. I mean, whether it's Google, you and I just got back from reInvent, whether it's Microsoft with Maya and all the new pieces of silicon that are kind of announced out there that people have flirted with, we love to talk about custom AI silicon.

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Daniel Newman:

Yeah, this is a massive trend line right now, running right alongside with all the interest in large language models, with the growth of AI in the enterprise, smart devices powered with AI or the, you know, AI device wave. Companies are making big bets on building a vertically integrated stack. And then, of course, we see merchant Silicon continuing to develop custom AI chips. to meet the need. And Pat, that is the thing right now. The need is massive. The opportunity is significant. And there are some really exciting players in this space.

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Patrick Moorhead:

Yeah. And one of the companies that there have been rumors about out there getting into the custom data center. market is MediaTek. We've talked a lot about MediaTek in smartphones, mobile devices, and they're showing their head in even some of the NVIDIA devices that are out there. But it's time to talk about custom silicon and data center. I'd like to introduce Shahar and Rahul. Welcome to the Six Five podcast for the first time.

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Rahul Sandil:

Hey, thanks so much, Pat. And thanks, Dan. And thanks for having MediaTek here and Shahar and me. It's exciting.

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Daniel Newman:

Well, listen, Rahul, I'd love to start with you. I mean, MediaTek is not a newbie, no stranger to Silicon. But, you know, as Pat alluded to, getting into data center, getting into custom, potentially getting into AI. I want to talk about that. I mean, how is the legacy of the company and its Silicon history driven what's going on with it today and the company's growth strategy?

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Rahul Sandil:

Hey, thanks, Dan. I think, look, firstly, I must say that today we're going to break some myths about MediaTek and what we've been doing in this space, especially in data center and custom basic. But going back to our history, right, 28 years, the company kind of had this core DNA to look for opportunities in the technology space, look for early positions and then get into a segment and then blow up that segment and make it available for the masses, right? That's really core to our DNA. So we went from the whole kind of personal computing era from making DVD optical drives to the smartphone era where we started building custom silicon and SOCs for Android smartphones, TVs, and so on, and personal devices. And of course, now we are in the middle of this massive transformation. We are what we are calling the multi-business driver era. So we have leadership in smartphones, leadership in TVs. leadership in compute. We are getting into new businesses like auto, IOT, and of course, data center silicon. So for us, this has been a natural progression of staying ahead of the pack, both in performance and power efficiency. So, you know, this is kind of feels very natural while we are inside MediaTek, but obviously works cut out for us to come talk to the world and tell us all our capabilities.

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Patrick Moorhead:

I appreciate it. That's a really good lead in. I want to ask a follow-up question for both of you, and maybe we start off with Shahar. What gives you permission to play in the data center space? You've been so successful in the client space, you know, TVs as well.

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Shahar Noy:

Thanks for the question, Patrick. First, I'm super excited to be here. First time for me on the show. I'm a huge fan. I'm also a bit excited today. Feels for me like I'm on the morning show with a lot of celebrity people around me. So Patrick, to answer the question about the permission, Raul pointed to our history in the mobile space. And what we created with our partners, mainly with TSMC, is a lot of know-how on how to do low power devices. And you know, in mobile, low power is key, right, to get most performance per minimum watts. Now, fast forward to AI and data centers, right, the biggest news right now is that we don't have enough power, right, to grow those data centers at the speed that customers expect them to grow. So taking the power know-how, how we can optimize silicon to be more power efficient is one of our key, I want to say key success metrics and key know-hows. And when we approach customer talking about, hey, how we can do those XPUs better for you, we got a lot of positive feedback and we demonstrated key capabilities to show them that we can cram much more compute power with less power requirements.

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Patrick Moorhead:

So let me ask the same question to you, Rahul. Hopefully your answers are the same.

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Rahul Sandil:

Yeah, look, I want to add to what Shahar said. And I said this earlier, we're here to break some myths, right? Data center and enterprise is not new for us. And yes, we're a quiet company. You don't hear about us normally in the media or PR when it comes to data center. But we started making initial investments in this space all the way back in 2011. We started investing in this market. 2016, we actually launched and powered our first enterprise switch. We actually launched an enterprise switch. In 2020, MediaTek created the world's largest InfoRNFO package, which was 91 square millimeters in volume production. This was the largest ASIC package. And of course, we are well known to make chips smaller, but this was quite the beast, right? 2022, we launched the world's first hybrid COWAS, which is an 85 square millimeter package in volume production. And of course, 2024 Long Beach customization with 224 gigs, 30. So there's a lot of IP and technology development happening in the company and commercialized, not just, you know, trade show talk or PowerPoint slides. These are actual products which are in volume production. And of course, lately, you must have heard about the partnership with NVIDIA and the link. The chip interconnect on GB10. These are path-breaking, industry-leading technologies we've been putting out there. And of course, on the data center space, we obviously cannot talk about the customers who we are working with because the products we develop and design are specifically for customers, hence custom ASIC. But we've got now multiple design wins. OK, last earnings. Rick announced that we are already on target for our first billion in revenue, commercialized revenue in twenty twenty six with potentially multiple billion dollars in twenty twenty seven. So we are already on the trajectory of commercializing volume production in this space.

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Daniel Newman:

You kind of took the words out of my mouth. I was going to ask you kind of what is the history and it sounds like there's a decade plus long history of work in the data center. And while I agree, I think it's often companies across Asia tend to be a little less PR forward, a little less focused and a little bit more just quietly building and doing. And of course, in this very noisy era of of chip making and constant competing for, you know, performance, tokens, throughput. And then when you can't by name, tell us who the customers are. Although, you know, we're going to figure this out. And then we're going to tell everybody because that's what we do. But but yeah, I appreciate you not breaking any embargoes. But I guess, you know, kind of this is a little bit of a click into the last two questions. I just like, you know, you know, both of you potentially feel free to add where you think it makes sense. But If I'm hearing it right, low power, of course, is like, because that's a big problem. We're energy constrained, but like, you know, you heard me say in the beginning of the conversation, you know, I said that we also are in this situation where it's kind of like everything that can be built will be sold. But like, what is kind of the, you can't do, you can't tell me who the customers are, can't tell us that, but like the wings you're getting. What are you hearing? What are the things that you're doing that's unique that they're saying, we're working with MediaTek?

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Shahar Noy:

Let me take this. So we hit about the power element, the low power. Low power falls under the pillar of optimizations, right? And MediaTek is known for optimizing technologies really, really well. One of the things that we keep talking about is the DTCO, which is a technology that was enabled by TSMC, but MediaTek took it into some level of perfection, also enabling our customers to use it. What it does in a cell level depends on what node the customer pick up, we can optimize the performance per power, it's per cell level. So if the customer does their own design, they can either use standard capabilities from TSMC, or they either can come to us and we will further optimize it. And we show our customers some significant advantages in performance to power and also performance to area. So this is like, you know, you take the low power, you take DTCO, this demonstrates our capability to do optimizations. Now, one key element in those XPUs, those AI accelerators, is that you also need to connect to more XPUs, because a single XPU cannot do an AI workload. So we also optimize the I.O. We announced our own family of service. We do homegrown development of service. And we announced certain capabilities in terms of performance and reach, which were better than some other industry benchmarks. So, customers like to see how we optimize more and more and basically help them to achieve better products in-house. That's number one. Number two, I think, another thing that we do very well is utilizing our scale, right? We have been doing over 4 billion units a year. Correct. And we're dealing with the major OSATs worldwide. We have this great relationship with TSMC. We always brag that our existing CEO used to be, right, Rick Tsai used to be the CEO of TSMC. And all of this help us to build scale. Now, if you read through the news, if you guys follow the news and follow the announcements, the scale of those XPUs, we're talking half a million cluster, million cluster, you need some ability to support this scale. And there's not a lot of companies, fabulous companies in this industry that have this access to scale and they know how to scale. So this is number two. Number three, is our execution. We're well known in terms of executing to the schedule. We proved it in the mobile world. We came right from nowhere into becoming a leading vendor in the mobile side, mostly based on execution, fast execution. Now, our customers in the XPU field, they want to replace GPUs. GPUs are getting out at a cadence of 12 months. So if you don't have the ability to execute fast, right, as an ASIC vendor, you're not finding yourself in a really good position. So our reputation of executing on time, ability to do more with less, also helped to build this credibility with customers.

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Rahul Sandil:

Yeah, and just to add to that really fast, it's kind of the other two elements. One is kind of the collaborative nature of the company. We always hear from customers and partners and media tech, we are known for our collaboration. We have extremely flexible engagement models and the supply chain resiliency that we've built, especially in these times with our global presence and deep relationships, right? completely across the supply chain, whether it's deep relationships with NVIDIA, also with Intel, and further up and down the supply chain. And lastly, I think the company's business position. I mean, if you look at our industry, right, and you look at, say, the 10 or 15 companies, and of course, you know, We've grown from, like, what, in the 2010s to, like, $8 billion in revenue. And this year, we're probably projecting coming in closer to $19 billion in revenue. So that's been a solid growth. But really, if you look further deep inside of that, the company is very disciplined in its execution. We almost have near-zero debt. Like, in June 2025 financials, we had half a billion of debt against a $7 billion cash position. So, you know, the company is really good at a macro level of being extremely responsible, disciplined, very partner and customer focused when it comes to execution. And we've relatively put ourselves in a very advantageous business model where we can drive the flexibility using our discipline and relentless execution.

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Patrick Moorhead:

I'm glad you brought up the partnerships, Rahul. I mean, it's funny. Everybody says they're, hey, we're best partners with NVIDIA, best partners with TSMC. And I'm just curious, can you kind of elaborate and maybe turn up the contrast ratio? And you don't have to cite other companies, but how your relationships are different and maybe even unique.

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Rahul Sandil:

Sure, I mean, I'm sure and I can both speak to it. I think it definitely goes back to one I think our kind of core DNA, right? Like we are looking at opportunities in every segment we get into to make sure that we allow that potential technology to achieve its full potential, right? And we understand we can't make that happen on our own. So very early kind of in our core DNA, the ability to go work with different organizations. Now to kind of say contrast ratio, I mean, Obviously, our relationship and the relationship I executive share with NVIDIA leadership is extremely special, right? I mean, we've been close partners through the ages. We now have multiple segments in which we are partnering, right? We've got the DGX Park. We've got IoT where we've integrated the entire like Tao library of models into our IoT platforms. We've got auto where we announced a few years ago that we're partnering to create like custom silicon for automobile industry. So there's so many touch points already. Amongst other partners, we have great relationships with Synopsys and Cadence given the The number of years we've been in business and working very closely with them, which is very beneficial to us now. If you look at our partnerships in memory manufacturing, we are possibly one of the world's largest consumers of client memory. That means we have very deep relationships with Micron, Samsung. Look, we are the company which is powering Samsung's Galaxy Tab 11. It's a flagship device. We've come into the flagship segment in client. We are now kind of leading in many of those verticals. So we have these very deep relationships and very few companies are in that same position as us who are playing the market, who are playing the industry from cloud all the way down to edge in AI. while building devices and providing custom silicon, that just can't be replaced, that core DNA cannot be replaced.

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Shahar Noy:

I want to add into that, Raul, and to Patrick's question, I think what's fairly unique to MediaTek, we have a strong vision, right? We go to customers, we have roadmap, we have the whole investment lineup and we explain to customers, as Raul said, We have a very strong cash position relatively to the rest of the industry. We have carried little debt. So it helps us to do different investments and show it to our customers. But what I find MediaTek do very unique and special is that we're service oriented, right? That's the nature of MediaTek. And for example, right now we have very deep discussions on packaging and optics, right? That's the next phase for XPUs. And we outline, hey, here's our vision. Here's why we think it's the best thing for you guys to pick up. But customers come in and say, well, we think you need to work on something slightly different. So we partner with them, right? We're not, you know, single minded in terms of like forcing customers to take whatever we invest. And I think this openness, right, that they're like, hey, we can collaborate, we can do more, also gets us a lot of like credit points in terms of like, okay, those guys are the trustee partner for us for the long term.

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Patrick Moorhead:

Thank you for outlining that.

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Daniel Newman:

Well, listen, I genuinely appreciate you guys taking us through this. It's a really big moment and it's a really big opportunity. As analysts, we're watching the market and right now it's one of those situations where every new AI chip that's being produced really has a buyer, which is a great opportunity for MediaTek. Having said that, over time, ideally, we're going to see capacity grow, we're going to see competition grow, and we're going to be looking to see MediaTek continue to execute. innovate, deliver on low power in order to earn its seat at the table. But it sounds like you guys are off to a great start. I do want to continue to ask you to drop customer names and give us more detail. We enjoyed that very much. But in the meantime, we also understand that these partnerships and the work that you're doing behind the scenes It's really important. It's really important to those companies that you are collaborating with. Gentlemen, I would love to offer you to come back, you know, find some time. Let's talk about this in six months, a year, this industry is moving so fast. We know there'll be a lot more to say at that point. So let's definitely do that. I appreciate you both making the time and see you soon.

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Rahul Sandil:

Thank you. Hey, thanks so much, Dan. Thanks, Pat. And definitely look forward to seeing you guys. Thanks for having us.

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Daniel Newman:

And thank you, everybody, for being part of this episode of The Six Five. Great to have this conversation on custom silicon with the team at MediaTek. Hit subscribe, join us for all of the content, all the coverage here on The Six Five. We appreciate you being part of our community. Hope to see you all soon. Bye bye.

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