MediaTek’s latest announcement on the deepening of its long-term partnership with Nvidia repeatedly uses the term “rack-scale.” This is the key to understanding the announcement, and it directly validates the central conclusion of my research from more than two months ago: MediaTek has upgraded the strategic positioning of its AI business from "IC / ASIC design" to "system-level design." The announcement link: The announcement also explains how MediaTek plans to put this new positioning into practice. By working with Nvidia, MediaTek can bring custom chips and XPUs into Nvidia’s mature rack-scale ecosystem, so that once chip development is complete, they can be integrated more quickly into rack-scale systems for deployment in data centers and AI factories. For MediaTek, Nvidia’s mature rack-scale systems ecosystem means it does not need to start from scratch, giving this new strategy a much clearer path to execution. For Nvidia, MediaTek’s custom silicon design capabilities and customer base can help extend Nvidia’s rack-scale ecosystem further into the custom silicon market. This also explains why “rack-scale” is the key term in the announcement: it is where the two companies need each other most. MediaTek can move from chips to systems, while Nvidia can extend its rack-scale ecosystem into the custom silicon market, creating a win-win that opens up new growth opportunities for both.