Nomura says MediaTek sharply raises AI ASIC sales targets as 3Q26 guidance addresses market concerns
MediaTek (2454.TW) guided for third-quarter 2026 revenue to be flat to up 5%, with gross margin maintained at 46% plus or minus 1.5 percentage points.
MediaTek (2454.TW) guided for third-quarter 2026 revenue to be flat to up 5%, with gross margin maintained at 46% plus or minus 1.5 percentage points. The guidance was broadly in line with Nomura's forecast.
The main highlight was a sharp increase in the company's AI ASIC sales targets. MediaTek raised its 2027 ASIC sales target to USD 12 billion-16 billion from USD 7 billion-12 billion previously. The total addressable market assumption increased from USD 70 billion-80 billion to USD 80 billion, while the target market share rose from 10%-15% to 15%-20%. The 2026E target starts at more than USD 2 billion.
MediaTek's first AI accelerator is scheduled to begin production in the fourth quarter of 2026. The second AI ASIC, believed to be TPU v9, will use EMIB-T packaging and is expected to reach high-volume production in 2028E.
MediaTek has confirmed that it will raise prices to pass through supply-chain costs. Its board approved a USD 5 billion financing budget for data-center expansion.
The note says the stock is currently trading at 15 times earnings, well below a target multiple of 25 times. Nomura maintained its positive view of the company. The note concludes that MediaTek's sharply higher AI ASIC target and accelerated data-center strategy are not fully reflected in the current valuation.
The note identifies MediaTek as a beneficiary, citing 63% upside, and names Taiwan Semiconductor Manufacturing Co. (2330 TT) as another beneficiary through its DTCO and advanced-packaging partnerships. It also sees potential benefits for the AI ASIC and data-center supply chain, including advanced packaging, SerDes, CPO and substrate suppliers. The smartphone segment is viewed as neutral to slightly negative, with global shipments expected to decline 15%.
The note says the market has not fully priced in the upside from AI ASICs. MediaTek's share price has fallen sharply from its highs between April and June, leaving the stock at a valuation of just 15 times earnings and, in the note's view, not yet reflecting the incremental value from the higher ASIC targets.
Potential catalysts identified in the note are: production of the first AI accelerator in the fourth quarter of 2026; 448G SerDes readiness in the second half of 2027; high-volume production of the second AI ASIC, believed to be TPU v9, in 2028E; the launch of a 2nm SoC in the third quarter of 2026 for flagship phones with agentic AI; and progress on design wins with other ASIC customers and improvements in EMIB-T substrate yields.
The main highlight was a sharp increase in the company's AI ASIC sales targets. MediaTek raised its 2027 ASIC sales target to USD 12 billion-16 billion from USD 7 billion-12 billion previously. The total addressable market assumption increased from USD 70 billion-80 billion to USD 80 billion, while the target market share rose from 10%-15% to 15%-20%. The 2026E target starts at more than USD 2 billion.
MediaTek's first AI accelerator is scheduled to begin production in the fourth quarter of 2026. The second AI ASIC, believed to be TPU v9, will use EMIB-T packaging and is expected to reach high-volume production in 2028E.
MediaTek has confirmed that it will raise prices to pass through supply-chain costs. Its board approved a USD 5 billion financing budget for data-center expansion.
The note says the stock is currently trading at 15 times earnings, well below a target multiple of 25 times. Nomura maintained its positive view of the company. The note concludes that MediaTek's sharply higher AI ASIC target and accelerated data-center strategy are not fully reflected in the current valuation.
The note identifies MediaTek as a beneficiary, citing 63% upside, and names Taiwan Semiconductor Manufacturing Co. (2330 TT) as another beneficiary through its DTCO and advanced-packaging partnerships. It also sees potential benefits for the AI ASIC and data-center supply chain, including advanced packaging, SerDes, CPO and substrate suppliers. The smartphone segment is viewed as neutral to slightly negative, with global shipments expected to decline 15%.
The note says the market has not fully priced in the upside from AI ASICs. MediaTek's share price has fallen sharply from its highs between April and June, leaving the stock at a valuation of just 15 times earnings and, in the note's view, not yet reflecting the incremental value from the higher ASIC targets.
Potential catalysts identified in the note are: production of the first AI accelerator in the fourth quarter of 2026; 448G SerDes readiness in the second half of 2027; high-volume production of the second AI ASIC, believed to be TPU v9, in 2028E; the launch of a 2nm SoC in the third quarter of 2026 for flagship phones with agentic AI; and progress on design wins with other ASIC customers and improvements in EMIB-T substrate yields.