Morgan Stanley | MediaTek (Asia-Pacific): NVIDIA and Alphabet Invest in Convertibles, Deepening ASIC Collaboration; Overweight Maintained, Top Pick
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Morgan Stanley notes MediaTek's successful US$3.9bn offshore convertible pricing drew key AI-infrastructure partners—NVIDIA investing US$3.5bn, alongside Alphabet and leading global institutions. The two companies will deepen long-term collaboration on an AI edge-to-cloud platform, spanning multi-generational cloud AI factories, on-premises AI computing and automotive. MediaTek will adopt NVIDIA's new NVLink Fusion platform, letting customers' custom XPUs plug into NVLink-interconnected rack-scale AI factories. MediaTek did not change its 2027 ASIC TAM or share guidance and says results take time, but Morgan Stanley believes the deal raises the probability of winning a second CSP customer; management confirmed engagements with several customers in an August 31 interview. Proceeds will fund the chip supply chain—likely HBM and ABF substrate purchases and foundry capacity prepayments. Three drivers—higher odds of a second or third CSP win, added stocking revenue, and a strengthened Alphabet TPU partnership—support upside to 2028 ASIC revenue assumptions. Morgan Stanley keeps Overweight and Top Pick with a NT$5,588 target, ~42% above the August 31, 2026 close of NT$3,925; price targets span 12–18 months.