J.P. Morgan maintains Overweight on MediaTek, with a target price of NT$5,300

Overview

This report is a company research update on MediaTek Inc. from J.P. Morgan. The report maintains its Overweight rating and NT$5,300 target price, while raising FY27/28 EPS forecasts by 8%/7% to reflect stronger data center ASIC demand, TPUv9 Humufish progress, and better operating leverage.

Core views

The core view is that MediaTek's ASIC business is shifting from a valuation catalyst to an earnings driver: the TPUv8t program is scheduled to ramp in 4Q26, TPUv9 Humufish is expected to ramp in early 2028, and TPUv10 Icefish still has a high probability of winning. The report believes the market is concerned that Google moving to a full CoT model for TPUv10 could reduce MediaTek's dollar content, but research indicates that high-speed SerDes, I/O Dies, die-to-die interconnect IP, packaging design, and full-chip implementation may still be handled by MediaTek, leaving room for upside in ASP and revenue contribution.

Analysis framework

The report evaluates MediaTek by combining company guidance, J.P. Morgan supply-chain checks, TPU shipment and ASP assumptions, sum-of-the-parts valuation, and financial-model revisions. Valuation uses a SoTP approach: the core business is valued at 8x 12-month forward core earnings, while ASIC-related earnings are valued at 30x 12-month forward earnings.

Methodology notes

• Valuation methodsSoTP sum-of-the-parts valuation

  Separate valuation of the core and ASIC businesses

  The NT$5,300 target price is based on 8x 12-month forward core earnings plus 30x 12-month forward ASIC-related earnings, reflecting the coexistence of weak smartphone demand and ASIC growth.

• Earnings forecastsEPS and revenue forecast revisions

  Raising FY27/28 EPS and data center ASIC revenue assumptions

  FY27/28 EPS is raised by 8%/7%, respectively; data center ASIC revenue forecasts are increased to approximately US$2bn/US$15bn/US$43bn in 2026/2027/2028.

• Industry researchSupply-chain checks and customer RFQ assessment

  Validating TPUv9, TPUv10, and new-customer progress

  Based on supply-chain checks, the report concludes that TPUv9 yield issues are manageable, the TPUv10 business model will broadly continue, and a new data center ASIC customer may be confirmed by the end of 2026.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MediaTek Inc. (2454.TW)

  Research subject; J.P. Morgan maintains its Overweight rating

  Strengths

  Stronger ASIC momentum, improved TPUv9/TPUv10 visibility, strong operating leverage, and a potential second customer that could reduce single-customer concentration.

  Weaknesses

  Smartphone demand remains weak, while core-business gross margins are affected by cost pressures and competition.

  Comparison

  Compared with pure design-service providers such as Alchip and GUC, MediaTek's semi-CoT model may be more attractive in terms of TCO and system-level capabilities; it is also considered to have a TCO advantage over Broadcom.

  Risks

  Further pressure on smartphone SoC gross margins, slower-than-expected progress in the NVDA partnership, and TPU project share or business models falling short of expectations.

• Alchip / GUC

  Potential outsourced providers of certain TPUv10 backend design work and market comparables

  Strengths

  Pure design-service capabilities are attracting market attention.

  Weaknesses

  The report believes the overall TPUv10 value chain has not yet been determined, and MediaTek may still retain key IP and packaging/full-chip implementation.

  Comparison

  The market is concerned that a more advanced CoT model could shift some dollar content to pure design-service providers, but J.P. Morgan's checks indicate that the impact may be limited.

  Risks

  A higher proportion of TPUv10 backend design outsourcing could change the assessment of MediaTek's revenue content.

• Google TPU supply chain

  Core source of demand for MediaTek's ASIC growth

  Strengths

  Google Cloud revenue grew more than 80% in 2Q26, while TPU demand and expectations for Gemini model launches provide sentiment support.

  Weaknesses

  Customer concentration is high, and the TPUv10 solution remains at the RFQ stage.

  Comparison

  Continuity in the business models from TPUv8 and TPUv9 to TPUv10 is key to the report's assessment of MediaTek's valuation re-rating.

  Risks

  Delays in the TPUv10 decision, changes to the CoT model, or a higher proportion of internal Google design.

Key data

• RatingOverweightJ.P. Morgan maintains its Overweight rating.
• Target priceNT$5,300.00The target price is set for Jun-27.
• Current priceNT$3,555.00As of July 31, 2026.
• Implied upsideApproximately 49.1%Estimated based on the NT$5,300 target price and NT$3,555 current price.
• FY27 adjusted EPSNT$137.95Previously NT$128.04, up 7.7%.
• FY28 adjusted EPSNT$296.89The report forecasts FY28 EPS growth of 115.2% year over year.
• Data center ASIC revenue forecastUS$2bn/US$15bn/US$43bnForecasts for 2026/2027/2028, respectively.
• Company revenue mix: DC ASICApproximately 11%/45%/70%For 2026/2027/2028, respectively.
• Operating margin forecast16%/22%/26%For 2026/2027/2028, respectively, driven by ASIC operating leverage.
• Gross margin view44%–46%Expected to remain broadly stable over the next few quarters, although ASIC ramp-up will cause some dilution.

Impact & implications

If TPUv9 ramps smoothly, TPUv10 share increases, and a second customer is confirmed, MediaTek's earnings growth trajectory and valuation range could be revised further upward. A rapid increase in the ASIC revenue mix would significantly improve operating margins, but weak smartphone SoC demand means the core business is still unlikely to contribute meaningful expansion.

Risks

• Further pressure on smartphone SoC gross margins due to rising costs and intensifying competition.
• Slower-than-expected progress in the NVDA partnership, particularly as NVDA expands cooperation with Intel and other chipmakers.
• TPUv9 or TPUv10 ramp-up, yields, share, and ASP falling short of expectations.
• High data center ASIC customer concentration; delays in confirming a second customer could affect market confidence.
• Weak end-market smartphone demand could limit improvement in core-business margins.

What to watch

• TPUv9 Humufish yields, component availability, and customer guidance ahead of its expected ramp-up in early 2028.
• TPUv10 Icefish RFQ results and MediaTek's actual role in high-speed SerDes, I/O Dies, die-to-die interconnect IP, and packaging design.
• Whether SpaceX or another second data center ASIC customer is confirmed by the end of 2026.
• The impact of Google Cloud growth, TPU demand, and the launch of new Gemini models in 2H26 on supply-chain sentiment.
• Whether smartphone-business price increases in 2H26 can offset cost pressures from foundry, OSAT, and substrates.