Nvidia Puts $3.5 Billion Into MediaTek Bonds, Deepening Circular Financing Debate

Nvidia announced Monday, August 31, that it purchased $3.5 billion of convertible bonds issued by Taiwan's MediaTek, according to Reuters, which first reported the deal. The bonds were part of a record $3.9 billion overseas offering, with Alphabet contributing an undisclosed additional amount, according to Tech Times.

The deal isn't just a loan. Convertible bonds let the holder swap debt for equity at a preset price. Nvidia's payoff grows if MediaTek's stock rises, and MediaTek's stock is likeliest to rise if its AI chip business expands, according to Tech Times' breakdown of the structure. That business expands largely by building custom accelerators for hyperscalers that plug into NVLink Fusion, Nvidia's own proprietary interconnect standard.

Nvidia's financial upside on the bond is tied to the success of Nvidia's own infrastructure standard. Korea Herald and BNN Bloomberg both confirmed the same terms in near-identical Reuters-sourced reports: the agreement includes MediaTek formally adopting NVLink Fusion, plus continued collaboration on AI PC chips and automotive platforms, building on the RTX Spark chip the two companies unveiled in June.

Critics say this pattern is becoming a habit. Tech Times counts three major Nvidia financing moves in 2026 alone: a $30 billion equity investment in OpenAI that closed in February, a $105 billion infrastructure guarantee backing OpenAI's Ohio data center disclosed in an August 17 SEC filing, and now the $3.5 billion MediaTek bond purchase.

Bernstein Research analyst Stacy Rasgon warned after the OpenAI guarantee that "the action will clearly fuel 'circular' concerns," a line Tech Times reports was aimed at the broader pattern, not just MediaTek. Short-seller Michael Burry went further, posting "Whistling past the graveyard" and pointing to Nvidia's 10-Q filing as evidence of what he characterizes as a self-reinforcing financial loop, according to Tech Times.

The concern: if Nvidia is financing the very companies that buy its chips and adopt its standards, reported demand for AI compute could look stronger than genuine end-user demand actually is. Nigel Green, CEO of deVere Group, told CNN the underlying economics are unproven territory. "Chips have never been treated as a bankable, long-duration asset before, because chips depreciate fast and lose value the moment a newer generation arrives," Green said, adding that lending against compute the way banks lend against buildings "only works if the underlying asset actually holds its value over time."

That skepticism sits alongside a separate financing push CNN reported: Nvidia signed a preliminary agreement with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to arrange more than $500 billion in lending so AI companies, including smaller startups, can buy compute. Jensen Huang called AI compute an "investable asset class" in a statement posted on X, describing the shift toward what he termed "AI factories" that can be financed as productive infrastructure rather than one-off purchases.

Huang rejected the circular financing label directly in a Bloomberg TV interview Monday. "This is not circular because obviously they do their own business," he said, arguing that MediaTek and other partners operate independent commercial operations regardless of Nvidia's investment.

David Wagner, head of equities at Aptus Capital Advisors and a self-described Nvidia bull, told The Washington Post's AI & Tech Brief newsletter that fears of circular financing are overblown, though the newsletter did not print his full reasoning.

There's a real business behind the concern, too. Nvidia's own numbers, reported August 26, back up the underlying demand story independent of the financing structure. The company posted $96.2 billion in fiscal second-quarter revenue, up 106% year-over-year and 18% from the prior quarter, according to the Epoch Times. Net income hit $59.7 billion, a 126% jump from a year earlier. Data center revenue alone reached a record $89 billion. Nvidia's third-quarter guidance calls for $108 billion in revenue, a figure that assumes zero data center compute revenue from China.

Nvidia's Ohio data center project, backed by the $105 billion guarantee, has already drawn political pushback. Rep. Michael Rulli (R-OH) publicly opposed the roughly $500 billion OpenAI-Nvidia data center project in a Fox Business interview, according to Breitbart, though no regulatory investigation into Nvidia's financing structure has been announced by any agency named in these reports.

The open question isn't whether Nvidia's chips are in demand right now. The revenue numbers say they are. The question is whether NVLink Fusion adoption by partners like MediaTek reflects independent customer demand or partly reflects the fact that Nvidia is now a major creditor and shareholder of the same companies buying in. Nvidia's fiscal third-quarter results, expected later this fall, will be the next data point either side can point to.