MediaTek maintains Neutral as TPU v9’s outcome has become more binary

Overview

This report focuses on MediaTek Inc.’s opportunities and risks in Google’s TPU/AI ASIC programs and reassesses the impact of the smartphone business decline on earnings. JPMorgan maintains a Neutral rating on MediaTek, judging that while TPU v8 orders are broadly confirmed and the 2026 ASIC revenue target of over US$1bn remains attainable, TPU v9 has entered direct competition with Broadcom’s comparable solution, making outcomes more binary. Combined with new entrants into the Google AI Compute ecosystem, prolonged margin pressure, and weak China Android demand, the current share price offers insufficient risk-reward.

Core views

Key views include: first, TPU v9 no longer has the clearer dual-solution coexistence that existed in TPU v8, but is a direct contest between MediaTek’s Humufish and Broadcom’s Pumafish; second, Broadcom has advantages in long-term TPU design-team alignment with Google, 448G SerDes, CoWoS-L, and end-to-end design capability, while MediaTek faces higher design complexity, weaker SerDes, and Intel EMIB-T packaging risk in the back-end; third, Google may bring in another US fabless vendor for SRAM compute engine development, which could weaken the AI Compute TAM available to core TPU and add to future TPU v10 competition; fourth, demand for smartphone SoCs in the China Android market remains weak, with memory price increases pushing device pricing up and suppressing shipments.

Analysis framework

The report combines supply-chain channel research, technology-roadmap comparison, bull-bear scenario analysis, and segment-level valuation. The authors compare Humufish and Broadcom Pumafish across N2P, 3D SoIC, HBM4e, SerDes, I/O die, CoWoS-L, and EMIB-T, and assess whether upside is sufficient to offset execution risk through 2027/2028 estimates of TPU shipments, revenue, EPS, and SoTP fair value.

Methodology notes

• Valuation methodsSoTP segment valuation

  Apply valuation multiples separately to core business and Datacenter ASIC

  The NT$1,600 target is based on SoTP: core business is valued at 15x forward 12-month earnings, while ASIC-related earnings are valued at 25x forward 12-month earnings, reflecting pressure on core-margin and optimistic upside for ASIC projects.

• Scenario analysisBull-bear scenario analysis

  Estimate 2028 revenue, EPS, and fair value based on different TPU v9 win probabilities

  The report sets base, bull, and bear scenarios, with the bull case assuming Humufish reaches roughly one-third of TPU v9 share in 2028 and the bear case assuming Humufish fails to ramp on schedule, capturing only a lower share.

• Industry researchSupply-chain channel research

  Use supply-chain information to judge chip design, packaging, IP, and customer project progress

  The report repeatedly cites channel checks to assess Broadcom and MediaTek TPU v9 design routes, the Google SRAM compute engine project, TPU v8 re-spin progress, and supply constraints.

Asset mapping & comparison

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

• MediaTek Inc. / 2454.TW

  Research subject

  Strengths

  TPU v8 orders are broadly confirmed, and the 2026 ASIC revenue target of over US$1bn remains achievable; flagship SoC demand remains relatively resilient; if TPU v9 Humufish succeeds, there is meaningful upside in ASIC revenue and EPS by 2028.

  Weaknesses

  TPU v9 design complexity has risen materially, with SerDes and packaging routes viewed as disadvantaged versus Broadcom; smartphone business is burdened by weak China Android demand; diversification for DC ASIC customers remains challenging.

  Comparison

  Compared with Broadcom, MediaTek is more of a semi-CoT and partial integration player on TPU v9, while Broadcom is seen as closer to end-to-end design and is working closely with Google’s main TPU team.

  Risks

  TPU v9 may fail to scale on time, Google may choose Broadcom’s solution, margins may be compressed by CoT model and new entrants, and smartphone demand may continue to be revised down.

• Broadcom / AVGO

  Primary TPU v9 competitor

  Strengths

  Works with Google’s main TPU design team and has stronger end-to-end design, 448G SerDes, CoWoS-L, and long-standing collaboration.

  Weaknesses

  The report does not discuss Broadcom’s specific weaknesses in detail.

  Comparison

  Pumafish and Humufish are functionally similar, but Broadcom’s solution is viewed as more robust in IP, packaging, and customer alignment.

  Risks

  If Google adopts a multi-supplier strategy or MediaTek outperforms execution expectations, Broadcom’s share could be somewhat constrained.

• TSMC / Taiwan Semiconductor Manufacturing Co.

  Key manufacturing and advanced packaging supply chain

  Strengths

  N2P, N3, 3D SoIC, and CoWoS capabilities are core enablers for TPU and AI ASIC ramp.

  Weaknesses

  N3 utilization and CoWoS supply-demand imbalance could constrain upside in TPU v8/v9.

  Comparison

  The report sees AI-semiconductor enablers like TSMC as less dependent on a single binary outcome than MediaTek.

  Risks

  Tight advanced-node and advanced-packaging capacity could affect customer ramp schedules.

• Marvell / MRVL

  Potential competitor and historical comparison reference

  Strengths

  Has a competitive position in AI ASIC and custom chip projects and could participate in Microsoft MAIA or other Google-related new projects.

  Weaknesses

  The report does not detail Marvell’s specific weaknesses.

  Comparison

  The report compares TPU v9 competition to the 2024-2025 Trn3 battle between Alchip and Marvell, and notes Marvell could become a more active competitor via Google’s new SRAM compute engine or future TPU projects.

  Risks

  Benefits are uncertain if opportunities do not materialize or customers select alternative suppliers.

Key data

• RatingNeutralNeutral rating maintained.
• Target priceNT$1,600.00Dec-26 SoTP target price.
• Current priceNT$1,790.00Price date is 15-Apr-2026.
• 2027 earnings estimate revisionDown 2%Due to TPU binary risk and smartphone business pressure.
• Base-case TPU revenue2027E US$5.1bn; 2028E US$10.6bnAssumes MediaTek ships 1.5mn/1.85mn TPU units in 2027/2028 at about 20% share.
• Bull-case TPU revenue2027E US$8.8bn; 2028E US$25.3bnAssumes Humufish reaches about one-third of TPU v9 share in 2028, with a 15% probability.
• Bear-case TPU revenue2027E US$4.2bn; 2028E US$6.1bnAssumes Humufish does not scale on time, with TPU v9 family share around 13% in 2028.
• 2028E EPS scenarioBull case NT$176; bear case about NT$84Bull case is about 72% above base case; bear case is about 18% below base case.
• Smartphone revenue forecastDown about 10% year on year in 2026Mainly driven by weak China Android demand and memory price increases.
• 1Q26 earnings-call 2Q26 guide focus2Q26 revenue down low-to-mid-single digits sequentially; gross margin 45-46%JPM estimates revenue down 3% QoQ and gross margin at 45.8%.

Impact & implications

The investment implication for MediaTek is cautious: while the AI ASIC narrative offers long-term upside, valuation is increasingly tied to whether TPU v9 can win and ramp in a complex design environment. By contrast, beneficiaries like TSMC, ASE, substrates, and advanced packaging equipment are viewed as having more sustained EPS upgrades in AI semiconductors and lower dependence on a single binary outcome. The smartphone business weakness further weakens earnings floor in the core business, making it harder for the market to assign a large premium based solely on optimistic ASIC scenarios.

Risks

• Final TPU v9 project award goes to Broadcom, and MediaTek Humufish fails to enter high-volume production.
• Humufish design complexity rises markedly from Zebrafish, with four compute dies, 3D packaging, HBM4e, and I/O upgrades increasing execution risk.
• MediaTek’s SerDes IP is weaker than Broadcom’s, and Intel EMIB-T back-end packaging path is considered to carry higher risk.
• Google AI Compute ecosystem introduces SRAM compute engines and a new fabless vendor, potentially reducing core TPU wallet share and compressing long-term margins.
• TPU v8 still faces uncertainty around server-level testing, N3 and CoWoS-S capacity, HBM3e supply, and internal demand.
• Weak China Android smartphone demand, rising memory prices, and strong Apple performance in China may continue to pressure MediaTek smartphone SoC revenue.
• DC ASIC customer concentration remains high, and expansion beyond Google into clients such as AWS, Meta, Microsoft, and Tesla is highly uncertain.

What to watch

• Guidance on 2Q26 revenue, gross margin, and smartphone demand in the 1Q26 earnings call.
• TPU v8x Zebrafish re-spin outcome, first shipment of at least 300K units in 2H26, and the 2027 shipment target of 1.5mn units.
• Design progress of TPU v9 Humufish and Broadcom Pumafish, Google’s final project selection, and production ramp schedule.
• Progress of Google TPU v10 RFI, and Broadcom Icefish plus other suppliers’ second/third design opportunities.
• Supply conditions for TSMC N3, CoWoS-S, 3D SoIC, and SK Hynix HBM3e/HBM4e.
• China Android phone shipments, memory price trends, and flagship SoC demand resilience.
• Progress of MediaTek ASIC projects with non-Google CSP customers, including potential opportunities at Meta, Microsoft, and Tesla.