Maintain neutral on MediaTek: TPU v9 outcome is binary, smartphone business under pressure

Overview

This report focuses on MediaTek’s earnings outlook on two core lines: AI data-center ASIC/TPU and smartphone chips. JPMorgan keeps a neutral rating, believing short-term delivery goals for TPU v8 remain reasonably achievable, but the ownership and scale-up prospects of TPU v9 starting in 2028 are highly uncertain, while core smartphone business remains under continued pressure from weak Android demand in China, higher memory costs, and intensifying competition.

Core views

The core view is that MediaTek’s AI ASIC story has upside potential, but the risk-reward profile is not compelling. TPU v9 may play out as a direct competition between MediaTek’s Humufish and Broadcom’s Pumafish, with Google likely to choose only one solution for high-volume mass production. JPMorgan thinks Broadcom has advantages in key IP, SerDes performance, packaging path, and long-term partnership with Google, so MediaTek has limited probability of delivering very high TPU revenue in 2028. At the same time, weak China Android smartphone shipments weigh on mobile business revenue and margins.

Analysis framework

The report combines business-segment valuation, scenario analysis, and supply-chain research: it values core business at a 15x forward P/E and ASIC business at a 25x forward P/E, while also building bull, base, and bear scenarios around 2027/2028 TPU total demand, MediaTek shipment share, revenue, and EPS, and assessing project-success probability through TPU v8/v9 architecture, packaging, HBM supply, Google’s internal demand, and competitor positioning.

Methodology notes

• Valuation methodsSoTP segment valuation

  Valuing core business and ASIC business separately

  The report values the core business at a 15x forward P/E and the data-center ASIC business at a 25x forward P/E to arrive at the NT$1,600 target price.

• scenario analysisBull/base/bear scenarios

  TPU v9 project share and 2028 revenue sensitivity

  It assumes Humufish gains high share, maintains base share, or delays ramp-up, and calculates 2027/2028 TPU revenue, EPS, and fair value in each case.

• supply chain researchComparing supply chain and technical roadmaps

  Humufish versus Pumafish architecture comparison

  The report compares MediaTek’s and Broadcom’s TPU v9 approaches on N2P process, 3D packaging, CoWoS-L/EMIB-T, HBM4e, SerDes speed, and key in-house IP capabilities.

Asset mapping & comparison

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

• MediaTek, Inc. (2454.TW)

  Subject company

  Strengths

  The TPU v8 project is still expected to ramp in the second half of 2026, and data-center ASIC revenue has strong potential to grow quickly from a low base.

  Weaknesses

  The fate of TPU v9 is highly uncertain, while the smartphone business is pressured by weak China Android demand and rising cost structure.

  Comparison

  Compared with Broadcom, MediaTek is considered weaker in key IP, SerDes performance, and execution experience for large-scale advanced packaging.

  Risks

  Loss on TPU v9, delayed mass production of Humufish, HBM/N3/CoWoS supply constraints, and continued decline in core mobile business.

• BROADCOM INC (AVGO)

  Primary competitor

  Strengths

  Close collaboration with Google, significant self-developed IP, a Pumafish approach using N2P, 3D SoIC, and CoWoS-L, and access to 448G SerDes.

  Weaknesses

  The report does not focus heavily on Broadcom’s own risks.

  Comparison

  In direct TPU v9 competition, the report leans that Broadcom is more likely to win the project.

  Risks

  If Google adopts dual sourcing or if MediaTek’s Humufish succeeds, Broadcom’s share could fall below the optimistic case.

• ALPHABET INC (GOOGL)

  Customer and demand source

  Strengths

  Continues to expand in-house AI compute and TPU roadmap, driving demand for TPU v8/v9/v10.

  Weaknesses

  Changes in internal compute architecture and multi-supplier competition may alter traditional TPU share allocation.

  Comparison

  Google is both a source of opportunities for MediaTek and a key variable that can also introduce competitive pressure through Broadcom and new SRAM compute chips.

  Risks

  Google may choose mass production for only one TPU v9 solution, or shift some inference workloads to SRAM/LPU-type chips.

• TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (TSM.US)

  Key manufacturer and AI semiconductor beneficiary

  Strengths

  N2/N3, 3D packaging, and CoWoS capacity are the foundation for TPU ramp-up; the report sees a clearer AI benefit path for TSMC.

  Weaknesses

  Capacity constraints could limit customers’ ramp schedules.

  Comparison

  Compared with MediaTek, TSMC benefits are more diversified and do not depend entirely on the success or failure of a single TPU v9 project.

  Risks

  N3 and advanced packaging supply shortages could delay customer chip volume ramp.

Key data

• RatingNeutralJPMorgan maintains a neutral rating on MediaTek.
• Target priceNT$1,600Based on a 15x forward P/E for the core business and a 25x forward P/E for the ASIC business.
• Current priceNT$1,790The report’s quoted price date is April 15, 2026.
• Base-case TPU revenue forecast2027E US$5.1bn; 2028E US$10.6bnUnder the base case, MediaTek shipment is about 1.5m/1.85m units with a share of about 20%.
• Bull-case TPU revenue forecast2027E US$8.8bn; 2028E US$25.3bnAssumes Humufish captures about one-third of TPU v9 sales in 2028; assigned probability is 15%.
• Bear-case TPU revenue forecast2027E US$4.2bn; 2028E US$6.1bnAssumes Humufish cannot ramp production on schedule and share in 2028 is about 13%-14%; assigned probability is 30%.
• TPU v8 shipment forecast2026E 400k units; 2027E 1.5m unitsThe report expects at least 300k units of TPU v8x to be delivered in the first batch, with 2026 second-half revenue likely above US$1bn.
• Smartphone revenue forecastabout -10% YoY in 2026Mainly due to weak Android smartphone demand in China and higher memory prices.
• China smartphone shipment viewMediaTek-related Android shipments down 15%-20% year-over-yearApple’s China sales were up more than 20% year-over-year, while Android shipments were down about 10%.

Impact & implications

The investment implication is that MediaTek’s short-term AI ASIC revenue growth can sustain market attention, but further share upside would require a bull-case execution of TPU v9. If the project lands with Broadcom or is diluted by Google’s internal SRAM compute chip initiatives, MediaTek’s 2028 ASIC revenue and EPS could be materially below optimistic market expectations. By contrast, the report believes TSMC, ASE, and packaging substrate/equipment vendors have a more direct AI benefit path, with earnings gains less dependent on a single project outcome.

Risks

• TPU v9 is ultimately awarded mainly to Broadcom for mass production, making it difficult for MediaTek Humufish to scale.
• Humufish design complexity rises with four compute chips, 3D packaging, and EMIB-T, creating high execution risk.
• MediaTek’s SerDes capability is weaker than Broadcom’s, potentially reducing TPU v9 competitiveness.
• Google develops SRAM compute engines or brings in a new U.S. fabless supplier, diverting traditional TPU demand.
• Tight N3, CoWoS-S, and HBM3e/HBM4e supply may cap TPU v8/v9 ramp-up.
• Weak China Android demand and higher memory prices may continue to pressure mobile revenue and margins.
• ASIC customer competition from AWS, Meta, Microsoft, and Tesla is intense, making diversification for MediaTek harder.

What to watch

• Guidance on Q2 revenue, gross margin, and smartphone demand in MediaTek’s 2026 first-quarter earnings call.
• Completion timing of TPU v8x redesign, progress of first 300,000-unit delivery, and whether 2026 ASIC revenue exceeds US$1bn.
• Design validation, mass-production selection, and final procurement arrangement by Google between TPU v9 Humufish and Broadcom Pumafish.
• Whether TSMC’s N3, CoWoS-S, and SK Hynix HBM3e/HBM4e supply can meet 2027 ramp demand.
• Whether Google’s SRAM/LPU-style compute chips and TPU v10 solicitation introduce new competitors.
• Trends in China Android shipments, Apple’s China market share changes, and memory price movements.
• Whether MediaTek can win large-scale ASIC orders outside Google from AWS, Meta, Microsoft, or Tesla.