MediaTek: Rapid ramp into a bigger ASIC market; Outperform

We raise price target to NT$5,500, and reiterate MediaTek is the Top Pick of our coverage. We revise up our MediaTek ASIC revenue forecast to US$2/16/44B in 2026/27/28. The first project (TPU v8t) is well in mass production & MediaTek enjoys the fungibility of shifting wafer capacity from other chips to this project. The 2nd project (TPU v9) will be packaged with EMIB-T. Substrate thus will be the most critical bottleneck but fortunately at least three substrate suppliers have been mobilized. Share gain in a much larger ASIC market. Inputs from Marvell, GUC, Alchip & most importantly from Broadcom make us now model the data center XPU ASIC market to be US$250-300B in 2028, up from US$140-160B before. We expect MediaTek to gain share at Google, & the additional demand from Anthropic, OpenAI, Amazon, etc. should make this market much bigger & benefit many. More vying for Google's business, but MediaTek is competitive & may enter other customers. Partnership with NVIDIA is an upside risk