MediaTek: Rapid ramp into a bigger ASIC market; Outperform

Bernstein reiterates MediaTek as Outperform and the Top Pick of its coverage, and raises the price target. The first ASIC project (TPU v8t) is well into mass production, and MediaTek enjoys the fungibility of shifting wafer capacity from other products to it; the second project (TPU v9), to be packaged with EMIB-T, is gated by substrate supply, but at least three substrate suppliers have been mobilized. Combined with higher tech complexity and higher ASP, this drives a major revenue jump from 2027 to 2028. On the market side, inputs from Marvell, GUC, Alchip and, most importantly, Broadcom lead us to now model a much larger data center XPU ASIC market, and additional demand from Anthropic, OpenAI, Amazon and others should make the market much bigger still. Competition for Google's business is intensifying, but MediaTek's scale, track record, tech/IP breadth, cost and sourcing capabilities should allow it to defend its share at Google and win projects beyond Google. The extended partner