MediaTek (2454): Morgan Stanley reiterates Overweight on MediaTek after management refuted concerns over TPU shipment delays.

Overview

This update addresses investor concern that MediaTek's TPUv8 production could slip to 2Q27 after the stock fell 7.1% on September 29, versus a 0.82% decline in the Taiex. Morgan Stanley says management's comments support its existing TPU forecasts and reiterates Overweight.

Core views

Morgan Stanley's central conclusion is that MediaTek's TPU program remains on schedule despite market concern following press reports of a TPUv8 production delay. Management reiterated guidance for more than US$2 billion of TPU revenue in 4Q26, which the report believes primarily refers to TPUv8. Shipments to customers have already begun, and management said there is no shipment delay to 2Q27. The firm therefore expects TPU revenue to meet its forecasts and views the preceding 7.1% share-price decline as a buying opportunity. On next-generation production, management said Intel EMIB-T substrate output for TPUv9 is tracking MediaTek's plan. As a result, it does not currently need TSMC's CoWoS support for v9. Management has discussed potential CoWoS adoption with TSMC for later-generation chips; Morgan Stanley believes this could refer to v10 IceFish. The firm also maintains that its forecast of 3 million units of v9 HumuFish in 2028 is achievable, based on industry checks, although management did not comment on the forecast. Management indicated that global customers are making more ASIC production requests, subject to acceptable margins and export-control compliance. Morgan Stanley expects Tesla AI6 to remain with Global Unichip Corp, which it rates Overweight, while seeing potential for MediaTek to consider China cloud-service-provider projects, including ByteDance. Management said it would not rule out China projects that comply with U.S. design requirements and TSMC production guidelines. Morgan Stanley sees a high probability that MediaTek can secure new customers, supporting its positive stance.

Analysis framework

Morgan Stanley compares the reported delay concern with management's shipment and revenue guidance, then assesses production feasibility through Intel EMIB-T availability and potential TSMC CoWoS use. It also considers prospective ASIC customer demand, margin requirements, export-control compliance, and residual-income valuation assumptions.

Methodology notes

• Valuation methodsRIM (Residual Income Model)

  Base-case residual income model

  The report values MediaTek using a residual-income framework with a 9.2% cost of equity, 12.0% intermediate growth, and 3.0% terminal growth. It also presents a residual-income framework for Global Unichip using a 9.2% cost of equity, 14.5% intermediate growth, and 5.0% terminal growth.

• Competition & strategyValue chain analysis

  TPU production-chain assessment

  The analysis links TPU shipment timing to substrate availability, advanced packaging support, foundry collaboration, customer ASIC demand, and export-control constraints.

Asset mapping & comparison

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

• MediaTek (2454.TW)

  Primary covered company and TPU/ASIC beneficiary

  Strengths

  TPU shipments have begun; management reiterated more than US$2 billion of 4Q26 TPU revenue; Morgan Stanley sees potential new customer wins.

  Weaknesses

  ASIC opportunities must satisfy margin requirements and export-control compliance.

  Comparison

  The stock fell 7.1% on September 29 versus a 0.82% decline in the Taiex.

  Risks

  Smartphone demand deterioration in China and other emerging markets, pricing competition, weak new-product demand, market-share loss, and more severe margin dilution.

• Global Unichip Corp (3443.TW)

  Covered ASIC company linked to Tesla AI6

  Strengths

  Morgan Stanley expects Tesla AI6 to remain with Global Unichip.

  Weaknesses

  AI and other high-growth projects could lose meaningful customer traction.

  Comparison

  MediaTek may pursue other compliant ASIC opportunities, including potential China CSP projects.

  Risks

  A longer-than-expected customer inventory correction or lower contribution from 5nm-and-below ASIC projects.

Key data

• MediaTek TPU revenue guidance>US$2bnManagement reiterated expected TPU revenue in 4Q26.
• MediaTek share-price move-7.1%September 29 move, compared with a -0.82% Taiex decline.
• MediaTek target priceNT$6,188.00Morgan Stanley's stated target price, implying 26% upside from the Sep 29 close.
• MediaTek closing priceNT$4,910.00Closing share price on September 29, 2026.
• TPUv9 HumuFish volume forecast3mn unitsMorgan Stanley's 2028 forecast, which it considers achievable.

Impact & implications

The report argues that confirmed TPU shipments and unchanged 4Q26 revenue guidance counter the reported production-delay narrative. It also sees the planned EMIB-T supply as sufficient for TPUv9, while future CoWoS collaboration could support later chip generations and new ASIC projects could broaden MediaTek's opportunity set.

Risks

• MediaTek could face weaker smartphone demand in China and other emerging markets.
• Competition could intensify and lead to pricing pressure or more severe margin dilution.
• New products could see weak demand, causing market-share losses.
• For Global Unichip, high-growth projects could lose customer traction, inventory correction could last longer than expected, or advanced-node ASIC project contribution could disappoint.

What to watch

• MediaTek's execution against its more than US$2 billion 4Q26 TPU revenue guidance and shipment timing.
• Whether Intel EMIB-T output continues to track TPUv9 requirements.
• Any decision to adopt TSMC CoWoS for later-generation TPUs.
• New ASIC production requests, their margin profile, and compliance with export-control and TSMC production requirements.
• Customer traction for AI and advanced-node ASIC projects.