Nvidia is investing $3.5bn in Taiwanese chipmaker MediaTek as the US semiconductor company expands its financial and technological ties across the artificial intelligence industry.

The investment forms part of MediaTek’s $3.9bn overseas convertible bond offering. Alphabet also participated in the fundraising, although MediaTek did not disclose the value of the Google parent company’s investment.

The agreement will deepen a partnership between Nvidia and MediaTek as both companies pursue the rapidly expanding market for AI computing.

Under the deal, MediaTek customers will be able to use Nvidia technology when designing customised AI chips capable of connecting directly to Nvidia’s larger computing systems.

The technology, known as NVLink Fusion, provides connections and specialised memory that enable custom processors to work within Nvidia’s data-centre infrastructure. The approach could reduce the time and engineering resources required for companies developing specialised AI hardware.

Nvidia and MediaTek are also expected to continue collaborating on chips for personal computers and technology for AI-powered vehicles. The companies previously worked together on the RTX Spark PC chip, intended to bring more AI capabilities to laptops and desktop computers.

Nvidia’s growing financial relationships within the industry have attracted scrutiny over the extent to which its investments may also encourage demand for its own technology. Chief executive Jensen Huang has rejected suggestions that the MediaTek arrangement amounts to circular financing.