MediaTek has experienced a remarkable surge in its stock value, achieving a 19% increase over a two-day period. The Taipei-based semiconductor manufacturer saw an 8.6% rise on Monday, culminating in a record closing price. This significant boost is attributed to the company”s expanding collaboration with Google on tensor processing units (TPUs), essential components for artificial intelligence systems.
This surge not only highlights MediaTek”s growth but also contributed to pushing the broader Taiex index to new heights. While other Taiwanese chip manufacturers like Nanya Technology and United Microelectronics are also enjoying positive market conditions, MediaTek stands out for its transition from traditional smartphone chip production to specialized AI hardware, a move that has captured the attention of major investors.
MediaTek”s rising profile comes at a time when fund managers are seeking alternatives, as many have reached their exposure limits with TSMC, which has seen a dramatic increase in stock prices since the advent of ChatGPT in late 2022. Currently, TSMC occupies nearly 12% of indexes such as MSCI Emerging Markets and Asia Pacific Ex-Japan, prompting active managers with 10% single-stock caps to look for new opportunities.
According to analysts, MediaTek is a promising prospect not only because of its partnership with Google. Research from Morgan Stanley indicates that there is substantial potential in MediaTek”s AI application-specific integrated circuits. They also noted that while Google collaborates with Broadcom, MediaTek may still capture additional market share as it reallocates resources towards AI chip development.
Furthermore, Morningstar analyst Phelix Lee described MediaTek”s outlook as “conservative,” suggesting that the company”s forecasts only account for Google”s orders through October, with market expectations leaning towards an upward revision. This optimism is reflected in the recent 19% rally, as traders appear confident in MediaTek”s future performance.
With TSMC currently under scrutiny due to a crowded stock, investors are exploring ways to capitalize on the chipmaker”s potential through ETFs heavily invested in TSMC, or by utilizing structured products and hedges. The ongoing demand for AI technology, combined with low borrowing costs, has created a complex trading environment, where short sellers are wary of potential losses.
TSMC remains a key player in the semiconductor space, providing chips for giants like Google, Apple, and Nvidia. As TSMC approaches its earnings report due Thursday, market watchers are keenly awaiting indications of whether the company will increase its annual capital expenditure, potentially fueling further growth in the sector.
