In another example of what some criticize as “circular financing,” Nvidia is investing $3.5 billion in convertible bonds issued by MediaTek, with MediaTek adopting the Nvidia NVLink Fusion platform and collaborating on RTX Spark™ and DGX Spark™ PC chips. Some analysts say this gives Nvidia a competitive edge, while others argue “circular financing” adds further risk.

Jon Markman for Forbes says the deal makes Nvidia a “tollbooth for the custom chip era,” with a structural defense mechanism that ensures Nvidia’s architecture and plumbing will be needed to plug into data center racks, even when companies choose to design their own specialized AI processors.

Nvidia’s Jensen Huang in his announcement said, “together, we’re building platforms that bring NVIDIA accelerated computing to new markets and give customers the freedom to create differentiated AI systems at enormous scale.”

Rick Tsai, vice chairman and CEO of MediaTek said “by combining NVIDIA’s leadership in accelerated computing and AI software ecosystem with MediaTek’s expertise in a diverse AI technology portfolio from edge to cloud, and our leadership position in custom silicon, we can accelerate innovation for our customers.”

Indeed, with this move, Nvidia goes beyond just GPUs and extends its reach into the AI infrastructure ecosystem, which understandably, makes some on Wall Street critical of vendor-financed rather than organic growth. But still there are others that tout this as as a masterstroke that turns the shift toward custom AI processors into a major win for Nvidia’s bottom line.