UBS Key Call: MediaTek Inc.
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UBS reaffirms a Buy rating on MediaTek, raising the 12-month target price from NT$5,500 to NT$6,500, based on 27x the average 2027-2028 price-to-earnings multiple. The investment case rests on two significant catalysts: a comprehensive product price hike and expanding cloud ASIC opportunities. Industry checks indicate MediaTek will negotiate 5-10% price increases across all product lines starting September 2026, driven by rising costs in advanced nodes, backend processing, and substrates. Advanced process products, including smartphone SoCs, could see price increases near 10%, while mature products rise approximately 5%.
Simultaneously, MediaTek's Google TPU opportunity is substantial. UBS increased its 2027 and 2028 Google TPU sales forecasts to $18 billion and $35 billion, respectively, with TPU die shipments projected at 4 million and 9.3 million units. Strong demand for the v8t TPU and an earlier-than-expected production start for the next-generation v9 TPU, utilizing TSMC's N2 and Intel's EMIB-T packaging by late 2027, substantially outpace competitors.
These catalysts drive accelerated financial projections. Revenue is forecast to grow 41% sequentially in the fourth quarter of 2026 and 93% year-over-year in 2027, well above the market consensus of 55%. Operating leverage will expand operating margins from 15.4% in 2026 to 25.4% and 28.7% in 2027 and 2028. Consequently, UBS raised its 2027 and 2028 EPS estimates by 11% and 16% to NT$180.60 and NT$299.18, respectively. Trading at 24.7x and 14.9x forward earnings, the stock offers meaningful re-rating upside.
Key exhibits
Exhibit 1
Exhibit 2
