Key takeawayMediaTek has raised its near-term ASIC revenue guidance and confirmed the mass-production schedule for its next-generation product and a second customer. J.P. Morgan consequently expects revenue growth and margin expansion, but 2028 revenue and packaging yields remain key variables.
How have recent results and ASIC guidance changed?
- MediaTek’s third-quarter 2026 revenue was 168.058 billion New Taiwan dollars, up 18% year on year and 4% above market consensus; earnings per share were 17.58 New Taiwan dollars, 11% above consensus.
- The company raised its fourth-quarter 2026 data-center ASIC revenue guidance to 2.5 billion US dollars. J.P. Morgan believes this comes mainly from TPUv8 and expects the business’s revenue could reach 16 billion US dollars in 2027, with further upside if supply is sufficient.
Why does the next-generation product matter for growth in 2028?
- The company confirmed that its next-generation ASIC is progressing on schedule: some chiplets have completed tape-out, the rest are scheduled to tape out within weeks, and mass production remains slated for the first quarter of 2028, in line with the schedule stated in July 2026. J.P. Morgan believes the product is TPUv9.
- Management is optimistic about the new generation’s performance per watt and total cost of ownership, and is therefore confident of securing a high share. J.P. Morgan expects MediaTek to be a major ASIC supplier for TPUv9, with a significantly higher average selling price.
- Packaging continues to affect the pace of the ramp-up: EMIB-T packaging yields are improving, and the company expects them to rise significantly over the coming quarters before mass production. The bank believes suppliers have passed the technical validation stage and are preparing to expand capacity and bring in new suppliers.
What could the second customer and the Nvidia partnership bring?
- The company confirmed a second data-center ASIC customer outside China, which is expected to contribute revenue in 2028. J.P. Morgan speculates that the customer could be SpaceX and that a revenue ramp-up is more likely later in 2028.
- J.P. Morgan believes the NVLink Fusion partnership with Nvidia can help shorten the time to market for ASIC customers’ products, narrow MediaTek’s gap with Broadcom in scaling chip interconnects, and drive more customer engagements over the coming quarters. The bank also identifies as a risk that Nvidia expands partnerships with other chipmakers, causing progress in the two companies’ partnership to be slower than expected.
- The company has yet to provide clear ASIC revenue guidance for 2028, while market estimates at the time had already reached 40 billion to 50 billion US dollars; J.P. Morgan expects more information in early 2027.
How will the ASIC ramp-up affect the profit outlook?
- The company guided for an operating margin of 19% in the fourth quarter of 2026 and above 20% in 2027. J.P. Morgan forecasts 23% for 2027 and believes margins will improve during the year as ASIC revenue makes up a larger share. However, the company’s guidance may be slightly below the higher expectations of some buy-side investors.
- Based on contributions from ASIC projects and operating leverage, J.P. Morgan expects market consensus for MediaTek’s 2027 earnings per share to rise by 6% to 8%. The bank maintains its overweight rating and has a June 2027 price target of 5600 New Taiwan dollars.
