Qualcomm (NASDAQ: QCOM) stock shed about 2.5% through 12:30 p.m. ET on Tuesday, but the reasons why relate more to what's happening at a rival chip company than to anything occurring at Qualcomm itself.

If you are unfamiliar with MediaTek, it's worth getting acquainted. With a market capitalization of $47 billion, the Taiwan-based "fabless" semiconductor producer is barely one-third of Qualcomm's size. Yet it has been making some impressive moves this week.

Late Monday night, CNET reported that MediaTek is taking a page from Qualcomm's book, aiming to get in on the artificial intelligence action by building a new chip that will make it easier to use "ChatGPT-like" AI services "on-device" on smartphones. The significance of "on-device" is that it aims to provide smartphones with enough internal processing power to give useful AI responses to questions without pinging a data center for a cloud-based answer. This will be especially useful when a device can't get a wireless connection, for example, and can't access the cloud.

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Source Fool.com