MediaTek's AI ASIC push seen as crucial test for 'second guardian mountain' status

MediaTek, a leading IC design company, is making a significant push into AI ASICs (Application-Specific Integrated Circuits), a move that financial commentator Hsieh Chin-ho believes is pivotal for the company's future. Hsieh suggests that MediaTek's success in this burgeoning AI market could elevate it to the status of Taiwan's second "guardian mountain," a term often used to describe national tech champions like TSMC.

In recent months, MediaTek's stock has surged dramatically, climbing from NT$1,430 to NT$4,970, with its market capitalization reaching approximately US$250 billion. This impressive growth has allowed MediaTek to surpass industry rival Qualcomm and even outperform former tech giant Alibaba. Hsieh attributes this turnaround primarily to MediaTek's strategic shift from being solely a mobile chip manufacturer to becoming a key supplier in the AI ASIC supply chain, notably through its work with Google on TPUs (Tensor Processing Units).

The company's new challenge lies in competing directly with Broadcom (AVGO). Hsieh points to Broadcom's recent financial report, which, despite strong performance, saw its stock price drop significantly after its AI revenue fell slightly short of market expectations. This market reaction suggests a growing anticipation of competition, potentially from MediaTek. Broadcom's chairman, Hock Tan, dismissed emerging competitors as "ankle biters," but the market's sharp response indicates that threats to Broadcom's dominance are being taken seriously.

Several financial institutions are revising their outlooks for MediaTek. Macquarie Securities, for instance, has raised its target price to NT$10,000, projecting AI ASIC revenue to grow from US$18 billion to US$40 billion by 2028, with an estimated EPS of NT$285.6. Other firms like UBS, Citi, and Morgan Stanley have also increased their target prices, reflecting optimism about MediaTek's AI ambitions. Hsieh draws a parallel to TSMC's rise, noting that its market value was similar to MediaTek's current valuation before it became a global semiconductor powerhouse. If MediaTek can successfully challenge Broadcom and achieve the "ten-thousand-dollar stock" milestone, its market value could reach NT$16 trillion, solidifying its position as Taiwan's second major national tech asset.