ByteDance is reportedly close to reaching an AI data center chip agreement with MediaTek, while Qualcomm, Broadcom, and Nvidia may come under pressure.

According to Jinse Finance APP, Qualcomm (QCOM.US) and Broadcom (AVGO.US) share prices have become a market focus after reports emerged that ByteDance is close to reaching an agreement to purchase custom AI chips for data centers from MediaTek, Taiwan. MediaTek will supply ByteDance with Application-Specific Integrated Circuits (ASICs), a type of chip designed for specific computing tasks. MediaTek is a major supplier of Google's Tensor Processing Units (TPUs).

This deal signals competition for Qualcomm and Broadcom. Earlier this year, ByteDance agreed to purchase millions of AI chips from Qualcomm, while this agreement will allow MediaTek to strengthen its foothold in a market where Broadcom is already deeply entrenched.

If ByteDance shifts more AI workloads to custom ASICs and reduces dependence on GPUs, despite US restrictions on exports of advanced chips having forced Chinese companies to seek alternatives, Nvidia (NVDA.US) may also come under pressure.

Growth in the ASIC Chip Market, Global Chip Stocks Sell Off

As AI companies seek alternatives to general-purpose GPUs, ASIC demand continues to rise. Major cloud service providers and AI developers such as Amazon and Google are increasingly investing in self-developed chips to reduce costs.

It is reported that ByteDance may consider capital expenditure as high as $70 billion this year, more than double last year's total, to build AI infrastructure.

MediaTek expects AI chip sales this year to reach about $2 billion, and aims to capture a 15% share in an $80 billion market next year.

Global semiconductor stocks extended their losses on Thursday. US inflation data came in higher than expected, heightening concerns over interest rates, and adding to worries about AI spending and intensifying competition from China.

iShares Semiconductor ETF (SOXX.US) fell for the seventh consecutive trading day on Wednesday, dropping another 1.7% overnight; Korea's Kospi Index plunged more than 7% on Thursday, with Samsung and SK Hynix leading the decline.

Qualcomm, Broadcom, and Nvidia continued to slide in pre-market trading.

On Stocktwits, retail sentiment for Qualcomm is "bearish," while for Broadcom and Nvidia it is "extremely bearish."

A trader wrote, "Nvidia, I can only say the stock market is too volatile. Today Nvidia is changing the world, tomorrow the world is going bankrupt. The level of manipulation is unbelievable. The storylines are not changing every few weeks—they’re changing every few days."

Year to date, Qualcomm shares are up 2.5%, Broadcom up 0.5%, and Nvidia up 19%.