MediaTek's Custom Chip Ambitions Hit a Wall — Can It Still Break Into the Data Center Club?

Shares of MediaTek plunged 7.1% to TWD 4,910 on September 30, erasing nearly a week of gains after unconfirmed reports surfaced that prospective data center customers are reluctant to abandon Broadcom and Marvell for MediaTek's custom chip offerings. The sell-off raises a pointed question: how much of MediaTek's recent rally was built on hopes that may now be deflating? MediaTek's Data Center Dream Just Collided With Incumbents' Grip — Is the $2 Billion Revenue Target Still Credible?

Shares of MediaTek cratered 7.1% to TWD 4,910 on September 29, breaking below the NT$5,000 threshold on volume exceeding 6,000 lots , after unconfirmed reports said prospective customers prefer sticking with Broadcom and Marvell for custom AI chips. The sell-off wiped roughly TWD 600 billion off MediaTek's market cap and strikes at the heart of the company's most important growth bet.

• Customers Reportedly Don't Trust the New Kid on the Block. Reports suggested end customers remain hesitant about adopting MediaTek's chips, preferring vendors with proven mass-production track records such as Broadcom and Marvell.

Market speculation also suggested Google may shift the next-generation TPU v9 to Marvell, while MediaTek's v8 sample delivery faces delays. In custom chip design, where a single project can take two-plus years from blueprint to production, switching costs are enormous — and that works against the newcomer.

• A $2 Billion Revenue Promise Hangs in the Balance. MediaTek expects its AI data center custom chip revenue to exceed $2 billion in 2026, scaling substantially next year.

CEO Rick Tsai said in late July that its first AI chip will enter mass production in Q4, and the company raised its 2027 market-share target to 15–20%. If customers are genuinely balking, that aggressive ramp — which underpins the stock's near-record pricing at 87x trailing earnings — could fall short.

• Broadcom and Marvell Aren't Standing Still. Broadcom has stronger lock-in because it controls the entire chip architecture for its customers , while Marvell delivered roughly $8.2 billion in revenue in fiscal 2026, growing more than 40% year-over-year , fueled by AI-driven data center demand. Marvell also acquired two companies in early 2026 to bolster next-generation connectivity , widening its technical lead in the exact areas MediaTek needs to compete.

• Wall Street Is Betting the Rumors Are Wrong — for Now. A U.S. brokerage raised its target price to NT$6,188, citing strong demand for Google's next-generation chips and projecting MediaTek's custom chip revenue could reach $54 billion by 2028.

Across 26 analysts, the average rating remains "Strong Buy" with a 12-month target of NT$5,701. That 23% upside from today's price suggests analysts view the sell-off as sentiment-driven, not fundamental — but the burden of proof now rests squarely on MediaTek's Q4 production ramp and its next earnings report on October 30.