Alphabet-owned Google is planning to tie up with Taiwan’s chip maker MediaTek to design and produce the next generation of its artificial intelligence (AI) chips Tensor Processing Units (TPUs), the Information reported on Monday.

The AI chips are expected to be produced next year.

The technology giant chose MediaTek partly because the Taiwanese company has a strong relationship with Taiwan Semiconductor Manufacturing Co. (TSMC) and charges less per chip as compared to Broadcom, the report added.

However, none of the two companies have made any official announcement regarding the partnership.

Google also has a partnership with chip designer Broadcom for the AI chips.

While Google is reportedly working toward developing more AI chips in-house, it is still expected to rely on external partners such as Broadcom and MediaTek for chip production, packaging, and quality testing, The Information report said.

Last year, Google had launched its sixth-generation Tensor Processing Units in a bid to give itself and its Cloud customers an alternative to Nvidia chips, which are the most sought-after processors in the industry.

Google had spent between $6 billion and $9 billion on TPUs in 2024, according to a Reuters report citing research firm Omdia.

Google’s TPU chips are key to its AI strategy, powering internal AI research, cloud computing, and services such as Google Search, YouTube, and Gemini AI models.

Following the Google-MediaTek tie-up report, shares of Broadcom dropped on Monday. The stock fell as low as $187.50 at the open before recovering slightly to $193.82, down 0.9 per cent.

Shares of Google’s parent Alphabet were trading at $166.81, down 0.48 per cent.

Intel’s new CEO plots overhaul of AI operations

In a separate developmemt, Intel’s incoming CEO Lip-Bu Tan has considered significant changes to its chip manufacturing methods and artificial intelligence strategies ahead of his return to the company on Tuesday, Reuters reported.

Intel shares gained more than 7% on Nasdaq after the report.

Last week at a town hall meeting following his appointment as CEO, Lip-Bu Tan told employees that the company will need to make “tough decisions,” Reuters reported.