Google is set to collaborate with Taiwan's MediaTek on the next generation of its Tensor Processing Unit (TPU) chips, which are expected to be produced next year.

The partnership is partly driven by cost considerations, as MediaTek offers Google a lower price per chip than its long-time partner Broadcom. MediaTek's close ties with Taiwan Semiconductor Manufacturing Company (TSMC) also played a role in Google's decision.

Despite the new partnership, Google has not severed ties with Broadcom, which has exclusively worked on its AI chips for several years.

Broadcom remains involved in the project, and an employee at the company confirmed that the relationship with Google is still intact. Google has been developing its own AI server chips, allowing it to reduce reliance on Nvidia, whose processors dominate the industry.

Google introduced its sixth-generation TPU last year to provide itself and its cloud customers with an alternative to Nvidia's highly sought-after chips. The company reportedly spent between$6 billion and$9 billion on TPUs in 2023, based on revenue targets from Broadcom.

By bringing MediaTek into the fold, Google aims to strengthen its AI chip strategy while managing production costs more efficiently.