From mobile chips to automotive electronics! MediaTek teams up with DENSO. Can the box-shaped restructuring become the starting point for a valuation re-rating?

Short-term Adjustments Masking Long-term Opportunities

MediaTek (2454) closed today at NT$1,385, up slightly by 0.36%, halting its recent decline. Since the beginning of the month, the stock has been oscillating within a range of NT$1,380 to NT$1,460, repeatedly testing the NT$1,400 level but failing to stabilize above it. Behind this technical correction, three market concerns are evident: first, the sales momentum of flagship mobile chips in early 2026 remains uncertain; second, the pressure from foreign and domestic institutional investors at year-end closing; third, the uncertainty surrounding the global smartphone inventory adjustment.

Currently, MediaTek’s P/E ratio stands at 20.74, which already incorporates AI and automotive premiums compared to pure mobile chip stocks. However, relative to high-end AI ASIC peers, it is still in the early stages of value discovery. This means that as the market re-recognizes its business transformation, a breakout from the range-bound pattern is not far off.

Strategic Breakthrough: Deep Collaboration with DENSO Reshapes Industry Imagination

For a long time, the investment market has simplified MediaTek as a “mobile chip manufacturer,” causing its stock price to fluctuate dramatically with global upgrade cycles. The market has lacked appreciation for its diversified growth potential.

This perception is about to change—MediaTek announced a deep partnership with DENSO, a leading global automotive component supplier, to jointly develop advanced driver-assistance systems (ADAS) and customized system-on-chips (SoC) for smart cabins. This is not just a commercial collaboration but a major breakthrough for MediaTek in the automotive market, potentially serving as a catalyst to break the current range-bound stock price pattern.

Three Core Advantages Supporting the Collaboration Value

1. Custom Automotive-Grade Safety-Certified Chips

The SoC developed through this partnership follows ISO 26262 functional safety standards, aiming for ASIL-B/D levels. This is not just a technical ornament but a “hard threshold” for entering the supply chain of mainstream global automakers. MediaTek’s Dimensity Auto platform, with its strengths in high-performance, low-power computing, and AI technology, combined with DENSO’s deep expertise in system integration and automaker relationships, makes this customized SoC inherently capable of mass production.

2. Multi-Sensor Fusion Perception Capabilities

The new chip adopts a heterogeneous computing architecture, integrating AI/NPU accelerators and advanced image signal processors (ISP), supporting multi-sensor fusion from cameras, radar, and lidar. This will significantly enhance perception accuracy for autonomous and assisted driving, directly boosting the chip’s competitiveness in the smart vehicle wave.

3. Pre-Verification Advantage Shortening Industryization Timeline

Using pre-verified automotive-grade IP and AUTOSAR-compliant development tools, both parties provide a platform ready for immediate mass production. For traditional automakers and new entrants eager to outpace competitors in electric and smart vehicles, this time advantage is a compelling attraction.

2026: From Chip Manufacturer to Multi-Engine Growth Turning Point

MediaTek’s current stock valuation is at a critical inflection point. CEO Cai Li-xing expects automotive business to grow quarter by quarter in 2025. Although mass production of high-end chips like N1X is projected to become significant only after 2026, the strategic alliance with DENSO has already secured a long-term ticket into the global mainstream automaker supply chain.

More imaginatively, the growth of AI ASICs (enterprise-grade customized chips) is also promising. MediaTek has provided clear guidance: by 2026, this business will contribute approximately USD 1 billion (about NT$320 billion) in annual revenue. Supported by flagship mobile chips, institutional investors are optimistic that MediaTek’s EPS in 2026 could hit a new record high.

The Logic Chain of P/E Ratio Recovery

Historically, MediaTek has been constrained to a P/E ratio of 15 to 18, viewed by the market as a cyclical industry. In contrast, ASIC peers like Broadcom and Unigroup-KY often maintain P/E ratios of 25 to 30, making MediaTek’s valuation gap evident.

As AI ASIC deployment takes shape and automotive markets gradually contribute revenue, the market’s valuation of MediaTek is poised for a recovery. The collaboration with DENSO will shed the “over-reliance on mobile” negative label, revealing a platform company with diversified growth potential.

Patience Behind Range-Bound Consolidation

In the short term, MediaTek faces technical pressures such as high-level market volatility and foreign institutional adjustments, causing its stock to oscillate within a range. However, from a long-term perspective, its business transformation provides solid support.

By 2026, MediaTek will no longer be just a mobile chip vendor. Automotive business offers a stable long-term revenue base, while AI ASICs provide explosive profit potential. As long as the USD 1 billion ASIC target progresses as planned, the probability of breaking through the current range and initiating a new valuation re-rating is very high.

Investors need patience and recognition of this transformation, rather than short-term technical chasing.