MediaTek (2454.TW): Positive news on AI ASIC execution and project win; reiterate OW

We expect MediaTek shares to react positively to the AI ASIC developments. Management confirmed a second customer win, which is not a China CSP and could be a US CSP; we model US$2.5bn revenue from this customer in 2028, though management expects higher demand. TPU v8 is expected to contribute US$2.5bn in 4Q26 (versus prior guidance of over US$2bn), while TPU v9 remains on schedule to tape out and start mass production in 1Q28, easing delay concerns; management is confident in Intel EMIB-T substrate yield improvement and is working with the customer on TPU v10. 4Q26 revenue is guided up 25-32% Q/Q with a 45% gross margin and operating margin rising to 19% from 16.1% in 3Q26, implying a 25-30% AI ASIC operating margin at scale. We maintain our NT$6,188 price target, Overweight rating and Top Pick designation.