聯發科（2454）— 2026-10-30 3Q26 法說會逐字稿（英文口述）

逐字稿為音檔 AI 轉寫，專有名詞與數字以公司簡報／財報為準。

校正紀錄

本檔為 AI 語音轉寫，落地前已校正下列轉寫誤植；未列出者為原文。Memo 區塊與 Transcript 區塊同步修正。 - 2027 年營收目標區間高標「16 億美元」→「160 億美元」（Memo 區塊三處；CEO 原話為 approximately US$16 billion，即約 160 億美元） - Memo「上游廠商」段「IBM、TSMC 及基板供應商」→「美國 IDM 封裝夥伴及基板供應商（日、台）」；Transcript「IBM partner」→「IDM partner」（USIDM packaging 同音誤植；內文並未提及 TSMC 為該封裝夥伴） - HPM→HVM（高量產）、advancedHPUs→advanced XPUs、「how many guys are on the trip」→「how many dies have taped out」、「trip set」→chipset／chip、「journey side kick off」→project did kick off - Growth margin→Gross margin（2 處）、four-year→full-year、AHA／AC programs→ASIC、CSV→CSP、per gigawatt→per watt、RTX Box→RTX Spark、Massachusetts→market、open margin→operating margin（多處） - Charlie Chan（MS）問題「first quarter operating margin 約 19%」→ fourth quarter（以 4Q26 財測 GM 45% − 費用率 26% ≈ 19% 驗算）；「revenue for 2024 and beyond」→ 2028 and beyond（期間錯置）；Hass Liu→Haas Liu（BofA） - 財務數字四項交叉驗算：①營收 1,680.58 億 × 毛利率 46.3% ≈ 毛利 778 億，減營業費用 507.46 億 ≈ 營業利益 271 億，÷營收 = 16.1% ✓；②淨利 281.99 億 ÷ EPS 17.50 ≈ 16.1 億股，淨利率 16.8% ✓；③季增率：營業費用 507 vs 474 億 = +7.0% ✓、營業利益 +18.5%（回推上季 228.7 億）；④4Q26 財測 2,101／2,218 億 vs 3Q26 1,680.58 億 = +25.0%／+32.0% ✓ - 資料中心占 4Q26 營收「30%」為 BofA 提問引述，公司未回應；以 4Q26 營收目標 25 億美元÷（財測中點 2,160 億元÷31.7 ≈ 68 億美元）≈ 37% 推算與 30% 不一致 [數字存疑]，memo 不採用 - BofA 提問稱「2026 年 ASIC 由逾 20 億美元上修至 25 億美元」，CEO 作答口徑為「4Q26 營收 25 億美元」；全年與單季口徑未被公司區分，memo 採 CEO 口徑（4Q26） - 其餘英文同音誤植（tape out／tape-out 斷詞、M6／448G 等）依語意判讀，不影響數字；發言者斷句交疊處（如 Gokul／Rick 對答被切段）未重排 - 刪除站方募款與警語宣傳行

Memo 亮點 • 聯發科 2026 年第三季營收達新台幣 1681 億元，年增 18%，再度超越公司財測區間。AI 加速器業務推動第四季營收指引至 2101 億至 2218 億元，季增 25% 至 32%，年增 40% 至 48%（以 2026-10-30 為基準推估）。全年營收成長將超越原先以美元計算的高個位數百分比目標。 [CFO - 00:01:40] [CEO - 00:04:29] [CEO - 00:13:56] • 首款 AI 加速器於 9 月開始出貨，預計 2026 年第四季貢獻 25 億美元營收，2027 年將達全年目標區間高標（約 160 億美元），佔全球 AI 加速器 ASIC 市場約 20%。 [CEO - 00:05:43] • 成功完成 39 億美元海外可轉債發行，Nvidia 與 Alphabet 參與，強化 AI 基礎設施合作夥伴關係並提升關鍵零組件產能保障。 [CEO - 00:04:47] • 第二代 AI 加速器專案進度良好，預計 2028 年第一季量產，性能與 TCO（總擁有成本）大幅優於前一代，並已完成部分晶片 tape-out。 [CEO - 00:07:08] [CEO - 00:17:54] • 確認取得第二家 AI 雲端 ASIC 客戶，預計 2028 年開始貢獻營收，並已啟動設計階段。 [CFO - 00:26:46] [CFO - 00:30:53] 營收 • 2026 年第三季營收為新台幣 1681 億元，季增 10.4%，年增 18.3%。 [CFO - 00:01:40] • 第四季營收預估為新台幣 2101 億至 2218 億元，季增 25% 至 32%，年增 40% 至 48%（以 2026-10-30 為基準推估）。 [CEO - 00:13:56] • 全年營收成長將超越原先以美元計算的高個位數百分比目標。 [CEO - 00:14:52] 獲利 • 第三季毛利率為 46.3%，較上季上升 0.1 個百分點，較去年同期下降 0.2 個百分點。營業利益為 271 億元，季增 18.5%，年增 22.2%。營業利益率為 16.1%，較上季上升 1.1 個百分點，較去年同期上升 0.5 個百分點。稅後淨利為 282 億元，季增 14.6%，年增 10.8%。淨利率為 16.8%，較上季上升 0.6 個百分點，較去年同期下降 1.1 個百分點。每股盈餘（EPS）為 17.5 元，較上季 15.28 元及去年同期 15.84 元均成長。 [CFO - 00:02:07] • 第四季毛利率預估為 45% 正負 1.5 個百分點，營業費用率預估為 26% 正負 2 個百分點。 [CEO - 00:14:23] • 資料中心 AI ASIC 業務第四季營收佔比將達 30%，但毛利率仍低於公司平均，導致整體毛利率指引略為下修 1 個百分點。隨著規模擴大，資料中心業務營業利益率自第四季起將優於公司平均，且 2027 年起營業利益率可望持續提升，2027 年全年營業利益率預期可達 20% 以上。 [CFO - 00:29:44] [CFO - 00:43:09] 公司展望、未來成長動能 • AI 加速器業務推動公司進入高速成長期，2027 年 AI ASIC 營收目標區間高標為 160 億美元，2028 年預期將持續強勁成長。公司已取得第二家 AI ASIC 客戶，2028 年開始貢獻營收，並持續拓展客戶基礎與產品組合。 [CEO - 00:05:43] [CFO - 00:19:50] [CFO - 00:26:46] • 公司強調 AI 時代下，從雲端到邊緣的完整 AI 運算堆疊與技術組合，將持續帶動長期成長動能，並強化資料中心、AI PC、AI 平板、車用等多元應用佈局。 [CEO - 00:10:57] 訂單 • AI 加速器客戶需求強勁，第四季出貨預計達 25 億美元，2027 年全年目標區間高標為 160 億美元。第二家 AI ASIC 客戶專案已啟動，預計 2028 年開始貢獻營收。 [CEO - 00:05:43] [CFO - 00:26:46] 產品組合 • 2026 年第三季，手機業務營收季減 1%，年減 17%，佔總營收 37%。智慧邊緣平台（含 5G Thin Modem、AI 平板、AIPC、車用座艙）季增 20%，年增 63%，佔總營收 58%。電源 IC 業務季增 1%，年增 18%，佔總營收 5%。 [CEO - 00:11:26] 新產品／新技術 • 首款 AI 加速器於 9 月開始出貨，第二代 AI 加速器專案進度良好，預計 2028 年第一季量產，並已完成部分晶片 tape-out。第三代 ASIC 專案與客戶密切合作中，尚未定義最終規格。 [CEO - 00:05:43] [CEO - 00:24:42] • 公司於 448G SerDes、3.5D 先進封裝、co-packaged optics 等關鍵技術持續取得進展，並強調整合多項先進技術能力為競爭門檻。 [CEO - 00:08:03] [CEO - 00:46:05] • NVLink Fusion 與 Nvidia 合作，協助客戶加速 AI 基礎設施部署，縮短 time-to-market 與 time-to-revenue，並支援 UALink 以強化乙太網架構。 [CEO - 00:08:32] [CEO - 00:49:13] • 448G SerDes 設計已完成驗證，將應用於現有及未來客戶專案，並強化互通性。 [CEO - 00:54:41] 市場競爭策略 • 公司強調 TSMC 為最重要的合作夥伴，並持續與多家供應鏈夥伴合作，確保產能與技術領先。針對競爭對手採取積極融資策略，公司表示若市場需求與客戶條件合適，亦會考慮相關措施。 [CEO - 00:38:19] [CFO - 00:40:58] • 第二代 AI ASIC 產品在性能與 TCO 上大幅領先競爭對手，現階段同類競品尚無法匹敵。 [CFO - 00:52:40] • 公司認為競爭門檻在於整合多項先進技術並量產可擴展產品，並持續與強勁對手競爭。 [CEO - 00:47:05] 上游廠商 • 公司積極與美國 IDM 封裝夥伴及基板供應商（日、台）合作，針對先進封裝良率提升已取得明顯進展，並有信心快速提升良率以滿足客戶需求。 [CEO - 00:21:20] 稼動率 • 公司強調已與供應鏈夥伴協調，確保 AI 加速器產能供應，並持續尋求額外產能以因應強勁需求。 [CEO - 00:06:12] 成本毛利 • 資料中心 AI ASIC 業務毛利率低於公司平均，導致整體毛利率指引略為下修，並有部分價格調整以反映供應鏈成本上升。公司強調新業務模式下，雖毛利率略為稀釋，但營業利益率將顯著提升。 [CFO - 00:29:44] [CFO - 00:44:31] 擴廠規劃 • 公司持續拓展 AI 加速器、資料中心、邊緣運算、AI PC、AI 平板、車用等多元應用領域，並積極擴大客戶基礎與產品組合。 [CEO - 00:10:57] 現金、現金流 • 公司於第三季成功完成 39 億美元海外可轉債發行，強化資本結構並提升關鍵零組件產能保障。 [CEO - 00:04:47] 銷售／管理／研發費用 • 第三季營業費用為 507 億元，較上季 474 億元及去年同期 439 億元均增加。 [CFO - 00:02:07] 營業利益 • 第三季營業利益為 271 億元，季增 18.5%，年增 22.2%。營業利益率為 16.1%。 [CFO - 00:02:36] 業外損益 • 第三季非 TIFRS 營業利益為 279 億元，非 TIFRS 淨利為 289 億元。 [CFO - 00:02:36] 匯率 • 2026 年第三季平均匯率為新台幣 31.99 兌 1 美元，第四季預估匯率為 31.7。 [CFO - 00:01:40] [CEO - 00:14:23] 同業 • 第二代 AI ASIC 產品在性能與 TCO 上大幅領先競爭對手，現階段同類競品尚無法匹敵。公司強調競爭門檻在於整合多項先進技術並量產可擴展產品，並持續與強勁對手競爭。 [CFO - 00:52:40] [CEO - 00:47:05] 下游客戶 • AI 加速器客戶需求強勁，第四季出貨預計達 25 億美元，2027 年全年目標區間高標為 160 億美元。第二家 AI ASIC 客戶專案已啟動，預計 2028 年開始貢獻營收。 [CEO - 00:05:43] [CFO - 00:26:46] 產業供需 • AI 加速器客戶需求強勁，公司積極協調供應鏈夥伴以確保產能供應，並持續尋求額外產能以因應需求。 [CEO - 00:06:12] 公司對市場觀點的看法 • 管理層認為 AI 運算需求未來 1-3 年仍將持續強勁成長，雖然短期市場波動，但公司專注於與一流客戶合作，並有信心在競爭激烈的市場中脫穎而出。 [CEO - 00:34:52] 產品價格 • 資料中心 AI ASIC 業務有部分價格調整以反映供應鏈成本上升。 [CFO - 00:30:02] 股本、增資、可轉換債券、庫藏股 • 第三季完成 39 億美元海外可轉債發行，強化資本結構。 [CEO - 00:04:47] Transcript Presentation Operator - Operator

(00:00:00)Welcome to the MediaTek 2026 third quarter investors conference call. Financial results and presentations for today's call are available on the investor section of the company website at www.mediatek.com. And now, I would like to turn the call over to Ms.Jessie Wang, Deputy Director of Investor Relations. Ms.Wang, please go ahead.

Jessie Wang - MediaTek, Investor Relation

(00:00:27)Good afternoon, everyone. Joining us today are Doctor Rick Tsai, MediaTek CEO, and Mr. David Ku, MediaTek CFO. Mr.Ku will report our third quarter results, and then Doctor Tsai will provide our prepared remarks. After that, we will open for Q and A. As a reminder, today's presentation will provide forward-looking statements based on our

Jessie Wang - MediaTek, Investor Relation

(00:00:49)statements that are subject to various risks and factors, which may cause actual results to differ materially from the statements. The presentation materials supplement non-TIFRS financial measures. Earnings distribution will be made in accordance with financial statements based on TIFRS. For details, please refer to the safe harbor statement in our presentation slides.In addition, all content provided in this teleconference is for your reference only, not intended for investment advice. Neither MediaTek nor any independent provider is responsible for any actions taken in reliance on content provided in today's call. Now, I would like to turn the call to

David Ku - MediaTek, CFO

(00:01:37)our CFO, Mr. David Ku, for the third quarter financial results. Thank you, Jessie. Good afternoon, everyone.Now let's start with the 2026 third quarter financial results. The currency used here is NT dollar, and the average exchange rate for this quarter was NT 31.99 to US one dollar. Revenue for the quarter was 168.1 billion dollars, up 10.4 percent sequentially and up 18.3 percent year-over-year.

David Ku - MediaTek, CFO

(00:02:07)Gross margin for the quarter was 46.3 percent, up 0.1 percentage point from the previous quarter and down 0.2 percentage point from the year-ago quarter. Operating expense for the quarter were 50.7 billion dollars compared with 47.4 billion dollars in the previous quarter and 43.9 billion dollars in the year-ago quarter.Operating income for the quarter was 27.1 billion dollars, up 18.5 percent sequentially and up 22.2 percent year over year. Non-TIFRS operating income for this quarter was 27.9 billion dollars. Operating margin for the quarter was 16.1 percent.

David Ku - MediaTek, CFO

(00:03:01)Up 1.1 percentage point in the previous quarter and up 0.5 percentage point year over year. Non-TIFRS operating margin for the quarter was 16.6 percent. Net income for the quarter was 28.2 billion, up 14.6 percent sequentially and up 10.8 percent year over year.Non-TIFRS net income for the quarter was 28.9 billion dollars. Net profit margin for the quarter was 16.8 percent, up 0.6 percentage points from the previous quarter and down 1.1 percentage point year over year. Non-TIFRS net margin for the quarter was 17.2 percent. EPS for the quarter was 17.5 dollars.

David Ku - MediaTek, CFO

(00:03:55)Up from 15.28 dollars in the previous quarter and up from 15.84 dollars in the year-ago quarter. Non-TIFRS EPS for the quarter was 17.92 dollars. A reconciliation table for our TIFRS and non-TIFRS financial measures is attached in our press release for your information. And that concludes my comments.Thank you.

Jessie Wang - MediaTek, Investor Relation

(00:04:20)Thank you, David.

Rick Tsai - MediaTek, CEO

(00:04:29)And now, I would like to turn the call to our CEO, Doctor Rick Tsai, for prepared remarks. Good afternoon, everyone. Thank you for joining us today. MediaTek's quarter revenue exceeded our guidance range again, achieving 168 billion NT dollars with an 18 percent year-over-year growth.This was primarily driven by better-than-expected customer demand and improving supply. Gross margin for the quarter was in line with our prior expectations. During the quarter, we successfully completed an overseas convertible bond offering of 3.9 billion US dollars.

Rick Tsai - MediaTek, CEO

(00:05:13)With participation from Nvidia and Alphabet. This not only strengthened our partnership with key AI infrastructure partners but also enhanced our ability to secure capacity for critical components for business expansion. In addition, we continue to drive solid progress in our data center and edge device businesses. For data center,demand for our first AI accelerator remains very strong. We have already commenced initial shipment in September and are confident of delivering 2.5 billion US dollars revenue in the fourth quarter. For 2027, we expect this program to achieve the high end of our revenue target range.

Rick Tsai - MediaTek, CEO

(00:06:12)Of approximately US $16 billion, representing around 20 percent of the total AI accelerator ASIC market. This confidence is underpinned by our solid supply outlook. We are working closely with our supply chain partners for additional capacity to meet the strong customer demand.A successful report of our first AI accelerator map is an important milestone demonstrating our ability to integrate industry-leading interconnect IP, advanced process, and advanced packaging technologies together with our capabilities to orchestrate global supply chain.

Rick Tsai - MediaTek, CEO

(00:07:08)We are now able to deliver a highly competitive custom silicon for data centers. For our second AI accelerator project, the development is progressing well, and we are on track for high-volume production in the first quarter of 2028. This chip is purpose-builtto power our customers' next generation AI infrastructure. MediaTek incorporates cutting-edge technologies across every critical aspect of the design to deliver multiple times higher performance per watt with significantly lower TCO. We expect this project to further strengthen our market position

Rick Tsai - MediaTek, CEO

(00:08:03)and contributes substantially to our revenue growth. Meanwhile, we continue to make solid progress across key enabling technologies, including 448G SerDes, 3.5D advanced packaging, and co-packaged optics. We are also broadening our customer base as we expand our business scope.Beyond silicon to offer more comprehensive system and rack solutions. We connect custom XPUs to the NVLink ecosystem through our NVLink Fusion partnership with Nvidia and we also support UALink for Ethernet-based rack architecture. This creates significant value to our customers

Rick Tsai - MediaTek, CEO

(00:09:01)by greatly reducing the complexity of deploying AI infrastructure for different architectures and substantially accelerating customers' time-to-market and time-to-revenue. We continue to expand engagement with several customers and deepen our collaborations with major industry players across the AI ecosystem.With our proven track record and the substantial value we offer, we believe we will be a trusted long-term partner for data center customers in years to come. On the edge computing side, RTX Spark AI PC powered by the N1X chip integrating Nvidia GPUs

Rick Tsai - MediaTek, CEO

(00:09:58)with MediaTek SoCs became commercially available in mid-October through major PC OEM partners. RTX Spark brings powerful on-device agent AI capabilities to users and has received strong market interest. Building on this momentum, development of our second generation SoC is already underway,further expanding our long-term collaboration with NVIDIA. In addition, our flagship Dimensity 9500 is featured in the latest Samsung Galaxy Tab S12 series AI tablets. This marks the third consecutive generation of Samsung AI tablets powered by MediaTek flagship SoCs.

Rick Tsai - MediaTek, CEO

(00:10:57)All of these developments underscore the strength of MediaTek's comprehensive AI compute stack from edge to cloud. With our established technology portfolio and strong market presence, we aim to capture the exciting growth opportunities across advanced AI compute, physical AI, automotive,AI infrastructure market in the future. With that, I will now talk about the recent business performance for our three revenue groups. In the third quarter, mobile phone declined one percent quarter over quarter and declined seventeen percent year over year, accounting for thirty-seven percent of total revenue.

Rick Tsai - MediaTek, CEO

(00:11:53)Flagship performed in the third quarter as our customers began to introduce new AI flagship smartphones, powered by MediaTek SoCs, including our first two-nanometer Dimensity 9600 Pro. Moving on to smart edge platforms. This group grew twenty percent quarter over quarter and grew sixty-three percentyear over year in the sub-quarter, accounting for 58 percent of total revenue. The significant year-over-year growth was partly driven by the volume production of several new projects, including 5G Thin Modem for new smartphone customers, new AI tablets, AIPCs, and automotive cockpits.

Rick Tsai - MediaTek, CEO

(00:12:53)DTV SoC revenue also increased, reflecting higher DRAM content than a year ago. Moving on to Power IC, this group grew one percent quarter over quarter and eighteen percent year over year in the third quarter, accounting for five percent of total revenue. The year-over-year growth was mainly driven by share gains in data-centric related business.

Rick Tsai - MediaTek, CEO

(00:13:25)Moving to guidance, driven by the ramp of our AI accelerator business, we expect strong sequential revenue growth in the fourth quarter despite a high base in the third quarter. Our underlying growth would have been even stronger without the seasonal softness in consumer electronics. Quarterly gross margin is expected to be within the current range.We expect our fourth quarter revenue to be in the range of NT 210.1 billion dollars to NT 221.8 billion dollars. Growth of 25 percent to 32 percent sequentially and up 40 percent to 48 percent year over year.

Rick Tsai - MediaTek, CEO

(00:14:23)At a forecasted exchange rate of 31.7 NT dollars to one US dollar. Gross margin is forecasted at 45 percent plus or minus 1.5 percentage points and operating expense ratio is forecasted at 26 percent plus or minus two percentage points based on our fourth quarter guidance.We now expect our full-year revenue growth to exceed our previous target of high single-digit percentage growth in US dollars. This again showcases the slotted foundation MediaTek has built for the AI era, including our diversified Edge AI portfolio and our strong capability to deliver value in data centers.

Rick Tsai - MediaTek, CEO

(00:15:22)We believe our expanding presence across edge and cloud will pave the way for MediaTek's sustainable growth in the era of ubiquitous AI.

Operator - Operator

(00:15:46)This concludes my prepared remarks. Thank you. Thank you, Rick. Operator, we are now ready for Q and A session. May we please have the first question？ Yes, Jessie. Ladies and gentlemen, we are now in Q and A session. If you would like to ask questions, please press star key and one on your telephone keypad, and please ask your questions after your name is announced, and please limit your questions to two at a time to allow more participants to join the discussion. After two questions, we will move to the next column. Should you have more questions, please press star key and one again to come back to the queue. And to cancel your question, please press star key and two.

Operator - Operator

(00:16:22)And as a reminder, it is greatly appreciated that you turn off the speakerphone mode of your device to prevent possible echo effect. We thank you for your cooperation. Thank you. Now, please press star key and number one if you would like to ask questions. Thank you. First one to ask questions, Gokul Hariharan from JPMorgan.Go ahead please.

Q&A Gokul Hariharan - JPMorgan, Analyst

(00:16:48)Right, good afternoon, thanks Rick, David, and Jessie. Congrats on your start of your data center basic shipments as well. My first question is actually on your second generation data center ASIC.There's been a lot of talk in the market about potential delays in design and tape-out. So you just reaffirmed your previous guidance that you are ready for HVM in early 2028 or Q1 2028. Could you talk a little bit about any changes in schedule you have seen and what exactly are the potential kind of milestones that you're watching for here.

Gokul Hariharan - JPMorgan, Analyst

(00:17:33)And could you also take a quick stab at what your revenue and m

Rick Tsai - MediaTek, CEO

(00:17:54)arket share or time and market share potential is going to be in 2028 as your amp this second generation ASIC which is definitely higher ASP and higher performance. Thank you for the question. Let me first address the second ASIC product accelerator. It is as I said in my remarks, it is on track, on schedule. We understand there is some noise about the tape schedule. What I want to say clearly is the I cannot say how many dies have taped out but for the very very advanced XPUs you all know there are multiple dies on the chip and I can say clearly also a couple dies have been taped out already, a big obviously much more complex die will tape out also on schedule which

Rick Tsai - MediaTek, CEO

(00:18:58)because it's big and complex it will take a couple of three weeks longer than the other dies so we are very happy with the progress as in both our partner our customer and our team are performing tremendously well and they have been collaborating tremendously well so that the

David Ku - MediaTek, CFO

(00:19:28)see these tables are such complex guys are very challenging and those guys my hands are off for them they are making their schedules. About the revenue of the guidance actually for second project.Maybe I'll take it out. OK, normally we don't give out the detail for '28, but I think the better way to think about that actually is, I think we're kind of talking about for '27, you know, like risk guidance right now. We are aiming for the higher end of the 16 billion range, and for '28 year 2028, we're looking for another year of strong growth.

David Ku - MediaTek, CFO

(00:20:13)So I think probably the better way to think about that, because the reason we don't want to give out the detail is actually for '28, there are so many moving pieces on the supply chain situation. We're still in the process of finalizing the supply chain situation, but overall this will be another year of strong growth for '28 versus '27 based on the demand profile.

Gokul Hariharan - JPMorgan, Analyst

(00:20:34)Got it.Let me also on the second generation, I think there have been so many discussions about the packaging choices you are making with the USIDM vendor.How confident are you now in terms of the packaging choice, or do you think that you will still need to hedge your bets a little bit given the supply chain situation that you mentioned？And do you think that is the primary limiting factor in terms of your ability

Rick Tsai - MediaTek, CEO

(00:21:20)to service the demand from your customer given that second generation chip you will be the primary vendor for that customer's 2028 ASIC shipment？ OK, right now we are working on this USIDM packaging process. Let's solve episode first priority, and we actually now have a very strong manufacturing team within MediaTek, well led by actually some very experienced staff operating executive I would say retired.And we are working very closely with the IDM partner and substrate suppliers. First and foremost on the yield improvements. I'm glad to say that many of you know my background. I came from manufacturing.

Rick Tsai - MediaTek, CEO

(00:22:27)I have seen the progress. I have witnessed the clear identification of the key difficulties and also the way people are working together to resolve the problem and implement them in the factory. I have confidence, very high confidence that yield will go up.Very quickly, because once we figure out the couple of two or three key problems, once they are implemented, yield will go up quite quickly. Then we will continue to explore the next level of sources of defect, but those these are the things that we have seen before, we have done before.

Rick Tsai - MediaTek, CEO

(00:23:24)I'm very happy that our own team were worki

Gokul Hariharan - JPMorgan, Analyst

(00:23:42)ng with the Japanese supplier, were working with Taiwanese supplier, and we're going to make this second generation of ASIC a great success. Thank you. All right, that's very reassuring. Thank you, thanks Rick.I'll go back to the queue.

Sunny Lin - UBS, Analyst

(00:23:53)Next one to ask questions, Sunny Lin from UBS. Good afternoon, thank you very much for taking my questions and congrats on the very good progress for your key ASIC programs. So my first question.Ethon maybe the even the third generation ASIC. I know it's a bit far away, but it's also pretty essential for us to think about your ASIC revenue sustainability in the coming few years. So for that one maybe ramping in late 2029, any progress that you could share with us？ How is MediaTek positioned against the competition and how should we think about the overall term for MediaTek should continue to grow into '29 and '30.

Rick Tsai - MediaTek, CEO

(00:24:42)We certainly cannot speak for our customer, but we can say we are working very closely with them on the next generation ASIC. Again, our customer is very aggressive in moving forward and upward in the performancedownwards for the TCO, I guess. So this is going to be another challenging trip. So I think it takes some time to define, to finalize the definition. So where areas right now, as you said, we are plenty busy in getting our first one right now in mass production and second one into production, and we will happy to discuss with you about the next one when time is right. But as I said, I'd like to remind you as I said in my remarks the second generation a 6

Sunny Lin - UBS, Analyst

(00:26:06)It's a very powerful chip from both performance per watt point of view and also from the lower TCO point of view. Thank you. Thank you very much, very helpful. So my second question is earlier you talk about potential for new clients and several engagement for cloud ASIC.So any color you could share with us in terms of the progress that you are making for new projects and how should you think about maybe the combine or drizzle market for new projects and the potential sales that you could recognize maybe in '27.

David Ku - MediaTek, CFO

(00:26:46)Sunny, I think we just confirmed we do have the second customer okay. The new project right now is kicking off and working on right now, and we're talking about going to see the first revenue coming in in 2028. Again, normally actually we will disclose more detail later on, but this is just to confirm we do have a second customer and the MP the revenue coming in in 2028. Got it, well so second customer is different customer from the key project that you are referring to rightYes, second customer,

Operator - Operator

(00:27:25)so different customer. Yeah, okay, got it. Thank you very much. Now we have Haslu from Bank of America.Go ahead please.

Haas Liu - BofA, Analyst

(00:27:31)Hi Rick, Dave, David and Jesse, congrats on the great results and thanks for taking my questions. I would like to start with your near-term ASIC outlook. You provided new 2.5 billion US dollar guidance for cloud ASIC contribution for this year, which is better than your previous guidance of slightly higher than two billion. I was just wondering what drives the incremental strength？Is it because the smooth production ramp driving the unit upside or the chipset pricing upside reflecting the cost hike？

Haas Liu - BofA, Analyst

(00:27:59)And relatedly with cloud ASIC reaching 30% of your quarterly revenue in fourth quarter this year, I was just wondering it is of course very encouragi

Rick Tsai - MediaTek, CEO

(00:28:23)ng to see that your gross margin is still kept at 44 to 46 percentage range, but just wondering if you could provide more detail on the factors keeping your margins resilient during the quarter. Thank you. Today's guidance for fourth quarter 2.5 billion indeed comes from a very robust customer demand and with a robust customer demand actually we have been working very hard with our supply chain partners and I'm also very glad toto say that the borrow you probably understand how hard nowadays to get the right amount of supply in order to meet the demand and I'm very happy that our team has been successful in rounding up multiple various supplierSo we continue to perform our team and I w

David Ku - MediaTek, CFO

(00:29:44)ould certainly hope and expect we do that going forward. For the gross margin analysis we kind of gave out the guidance early on for the blended gross margin on the data center side currently is still below the corporate average so that's why you see for our guidance actually we guided down notch one percentage point.

David Ku - MediaTek, CFO

(00:30:02)On top of that or outside of that we also have some price adjustment in order to reflect about the cost increase for the whole supply chain soon a blended basis actually that's actually the guidance we give out and again we want to highlight the focus for the new data center business I think we really see this as a very attractive and operating margin side and as you can see starting from fourth quarter and likewise starting from next year I think that will be the focus.

Haas Liu - BofA, Analyst

(00:30:32)OK got it so just a quick follow up on that one the commentary that your operating margin for the AC business is already going to be appreciative as compared to your corporate average starting from fourth quarter is that the correct understanding？ Yeah starting from fourth quarter the operating margin will become attractive to the overall company.

Haas Liu - BofA, Analyst

(00:30:53)OK got it and my second question is just a follow up on the second customer for the AI business that you mentioned that the mass production timing or the revenue contribution from mass production for their projects new project new customer is going to kick off in 2028 does that suggest that the chip is already under design milestone or how should we read it thank you yes actually I think the project did kick off already but again we will provide more detail later

Charlie Chan - Morgan Stanley, Analyst

(00:31:25)Thank you so much, I'll be back in the queue. Next one to ask questions Charlie Zhang from Morgan Stanley. Hi Eric, thanks for taking my question.I actually have several follow up if I may. So first of all on the operating margin implication right I meant the guidance implies fourth quarter operating margin to be around the 19 percent so if I think about the data center revenue is like thirty percent of your total revenue then it seems to be like your data center operating margin is like ten percent above corporate average is that the right way to think about it or you'll be even more creative when the project goes for higher scale

David Ku - MediaTek, CFO

(00:32:24)I'm sorry Charlie can you repeat you say

Charlie Chan - Morgan Stanley, Analyst

(00:32:33)I didn't hear you clearly you say your operating margin for data center was 10 percent or 10 percent higher 10 percent higher than corporate average based on your fourth quarter revenue mix and your fourth quarter operating margin guidance OK first of all I think it's higher but we probably won't be able to quantify that because actually it's like I explained in fourth quarter we also have to affect about price adjustments starting from third quarter for non data center business as well overall is higher is higher but we will not be able to comment the magnitude about the operator margin for the individual segment okay okay thank you and can I say my next two questions because I love to know the answer for both one is also a clarification about your second customer can we give a little bit color is it kind of AI lab type of customer

Charlie Chan - Morgan Stanley, Analyst

(00:33:24)you said kind of related to your recent MVLink fusion progression can you give us a little bit more color about this as second customer and also a question to Rick right so I think the recent capital market seems to be very concerned aboutnear cloud financing ARR decelerations so there's some concern about AI infrastructures low down right so want to get management's view about if sales fees at Capex were slowed down or cut do you think customer will prioritize GPU which is smaller general purpose or they should prioritize their own ASIC for the future spending in a better market thank you

David Ku - MediaTek, CFO

(00:34:11)So Charlie maybe the first customer again currently we probably won't be able to provide more detail but yeah I think in general it actually is maybe the easier way to think about it I understand there are some rumors out there but at least one thing we can say the second customer is not come from China okay maybe that much we can talk about that for any more detail please bear with us actually we'll provide more detail later

Charlie Chan - Morgan Stanley, Analyst

(00:34:37)ron And can I get a manager'

Rick Tsai - MediaTek, CEO

(00:34:52)s view about what would be prioritized, is it ASIC or GPU, if the CSP's budget is going to shrink？ Well, Charlie, there's certainly quite a bit of market movement, there is no question about it during the last several weeks almost. But my view is the if we look at it one year two year out maybe even up to three year out the demand for AI the growth the demand growth for AI which means the demand growth for compute will continue absolutely sure the rate of which may vary somewhat.But if you look at from the time point of view, it's a huge time. It's a huge time. And what we definitely focus on is to ensure we are working with the first class customer first class products.

Rick Tsai - MediaTek, CEO

(00:36:09)That will stand the test to use this cliche stand the test of time but it's a very accurate cliche. We are as I said again in my remark the chips we're designing together when designing and making together with our customers is really really powerful chips especially during the tough time.Those chips will win of course I'm absolutely sure also the GPU will they will also have very great chips too but I cannot say every other chips will be successful. I'm very sure the chips we are making is already very successful and will be very very

Rick Tsai - MediaTek, CEO

(00:37:09)competitive in the in this kind of a kind of a rocky market in the next year maybe but I'm actually I've been thinking about that and I'm quite confident that the immediate attack will come out better and stronger thank you great thanks Rick thanks David

Operator - Operator

(00:37:41)Next one to ask

Robert Sanders - Deutsche Bank, Analyst

(00:37:51)questions, Robert Sanders from Deutsche Bank. Go ahead, please. Yeah, thanks for taking my question.I guess you seem pretty dependent on EMIB right now.If I were working at Intel, I would probably tell Google.In the future, there are only packaging deals if you use

Rick Tsai - MediaTek, CEO

(00:38:19)our foundry, which would obviously have implications for you because it would force you to work with Intel's frontend foundry, which is obviously more dangerous given their execution. Would that be something that concerns you about your dependency on EMIB？ First of all, we are not dependent on one supplier. It is critical to make it clear. We continue—let's say TSMC is our most important partner, period. So definitely, what we are doing is the market is expanding so fast, the customer requirement is changing also so fast, and we actually, as a very capable supplier, we are

Rick Tsai - MediaTek, CEO

(00:38:59)adapting to those challenges and making good, powerful chips for our customers, whatever they would like to choose. I think I would really credit that as a major capability for MediaTek. However, we also understand clearlyTSMC is our most important partner, and we are working with them closely in every part of the technology chain. So packaging has become a major redefining technology.For this AI era, MediaTek is

Robert Sanders - Deutsche Bank, Analyst

(00:40:15)investing money, especially in people and in our ecosystem partners' relationships. Thank you. Just as a follow-up, if you look at the frontier model custom silicon projects, your major competitor is using very aggressive financing, buy now pay later type terms.I know you have a small financing and you've raised this debt, but is it worth engaging with these loss-making frontier model companies given the scale of the balance sheet support that your competitor is using？ Or do you think it's still worth engaging with these companies given your smaller relative size？

David Ku - MediaTek, CFO

(00:40:58)Well, Robert, I think the market is so dynamic right now. You're talking about all of, depends on somebody called about vendor financing or support by the chipset vendors. I think if it's necessary, you know, I think we will consider as well because actually right now, especially due to the new frontier model, at least one of the new frontier models is actually about to file by appeal. We're going to see more and morepop information coming out. We actually see quite a few positive signals, for example, for the revenue or return versus the capex investment. Obviously, we see quite a bit improvement quarter over quarter in the last six quarters. So with that trend, we still strongly believe

David Ku - MediaTek, CFO

(00:41:43)for the capex invest, regardless for CSP or frontier model, you will generate enough revenue and cash flow to fulfill that. But actually, there's a transition period to support that capex spending in order to reach the final stage or stable stage about cash generating. So again, difficult long way to answer your question is if the market require, if we have the more, importantly, if we have the right customer, okay, and actually we will consider as well.

Arthur Lai - Macquarie, Analyst

(00:42:13)Got it, thank you. And right now we have Afterlife from Macquarie, go ahead please. Hi Rick and David and Jessie, congrats on strong fourth quarter operating margin beat, and question two number one is on the operating margin discussion. Number two is on the technology learning curve.So starting from number one, if you look at the Q3 operating margin and Q4 operating margin, can you give us a longer-term operating margin guidance or how we think of the Q4

David Ku - MediaTek, CFO

(00:43:09)operating margin is sustainable？ How should we forecast？ Thank you. I think first of all, long answer short, I think Q4 operating margin, Q4 should be the starting point people to see of the improving operating margin. Okay, so it's not going to be just sustainable. I think we are looking forcontinue to enhance, given us the awareness shift more on the topline, and so it is sustainable. And also, we are looking for continuing improvement. And if we talk about next year guidance for the operating module,

David Ku - MediaTek, CFO

(00:43:42)I think overall we are looking for 20% plus, if not slightly higher again. There are reasons we probably won't be able to give out the detailed guidance because there are still some moving pieces, but overall we feel comfortable for the full year basis. Next year, the operating margin should be above 20%. So from year-over-year perspective, we're going to see is a pretty good question that's on the operating margin side, and again, that's allin line with what we talked about right now. Probably almost like 1.5 years ago, we say the business model or the new

Arthur Lai - Macquarie, Analyst

(00:44:31)business model, if you like, we are adopting right now is actually the gross margins compared to what we have right now may be slightly dilutive, but operating margin will be impressive. I think that's the strategy of the business model. Yeah, that's great. Second question is follow-up upon Rick's opening remark mention that we are doing the leading tech, and I think the investor actually asking about the EMIB technology and also HBM5. And if we think about in maybe two years later, your company probably will be the one and only one who can have a track record to handle these two technology with track records, so

Arthur Lai - Macquarie, Analyst

(00:45:06)by then, how is the entry barrier in the market？ Think if you already handle this

Rick Tsai - MediaTek, CEO

(00:45:29)very tough technology and how many years you will be ahead of your major competitor. Well, it's a good and tough question. I want to be careful in responding your question. We are quite excited about our progress in the multiple fronts of the technology capability required for such acomplex and dynamic AI era, and you know, as you mentioned the packaging capability, the HBM5, and we have, I think we have the world-class state-of-the-art 448 gig tremendous power consumption, low power consumption

Rick Tsai - MediaTek, CEO

(00:46:35)capability, for instance, we are. But I think on top of those things, the way the capability to integrate all those technology capabilities and make them into a highly manufacturable, scalable product for our customers for them to be successful, that'sthat is and will continue to be the barrier, the competitive barrier. It's many things together, not just one thing or two things, and we also recognize we have very strong competitive competitors, so we will notthink that we will be very much ahead of our competitors. We always have

Operator - Operator

(00:47:58)a very tough fight against our competitors. And I'm very sure we will win our part of the business. Thank you. Thank you, Rick. Returning to Q&A now we have Gokul Hariharan from JPMorgan. Go ahead please.

Gokul Hariharan - JPMorgan, Analyst

(00:48:05)Yeah, hi, thanks for taking my follow-up question.First of all, on the NVLink Fusion partnership, Rick, could you, I know that you cannot talk about the specific case yet, but could you give us a little bit more pointers in terms of how you are integrating NVLink Fusion？And what are the benefits your customers could be getting？ I think one of the factors that your competitor has is definitely their scale-up technology based on Ethernet. So this is completely kind of balanced out the potential kind of networking related edge that your competitor has when it comes to new customer engagement and maybe alsotalk a little bit about the customer

Rick Tsai - MediaTek, CEO

(00:49:13)interest levels for this NVLink Fusion-enabled ASIC offering that you're bringing to the market. Gokul, first, NVLink Fusion model, of course, it's a business model but with a very, very high and strong technical content. Let's talk about technical content first. I think you mentioned credentials. I can say I think clearly that with some videos and MediaTek together, I think our credentials can match anybody in the business in the market.

Rick Tsai - MediaTek, CEO

(00:49:49)That I think I can say in competence. So technically, I think first the thing we're doing, the value of the model is set in the remarks also actually back in the announcement of the collaboration. In one of the interviews, I always stress that we can accelerate, we canenable customers' time to market and time to revenue, time to money, and so we work together with NVIDIA first to build a chassis with which the customer can really—I wouldn't call that plugin, but it will be much more easily put in their design, be they XPU or CPU or some other use.

Rick Tsai - MediaTek, CEO

(00:50:48)And putting into the character, get into a rack and sell the rack, for instance. So that's the essence, I think, of this business model. There are a lot of other things we must do together to convince various potential customers to adopt such model. Thank you. Got it.

Gokul Hariharan - JPMorgan, Analyst

(00:51:17)Any feedback, initial feedback that you're hearing from the customers on this model now？Google right now, we are in discussion together with NVIDIA with several potential customers. I think overall some of the customers like it. I think one of the key advantages about having the eminent switch or eminent fusion model is for potential customers. I think their time to computation power is actually much, much faster.

David Ku - MediaTek, CFO

(00:51:28)Because traditionally, they're going to work on the chips at first, you know, worry about the packaging, then talk about the system. So it sometimes takes a long time to find idea to computation power online. But with the infinite fusion, that provide a great advantage for time to computation power and given the strong demand

David Ku - MediaTek, CFO

(00:51:50)on the end market side, I think that's where you provide lots of revenue, lots of opportunity. So without a critical positive feedback, I think it's hopefully it's a near term we can officially announce some cases. Got it, that's very good. Maybe second question just wanted to address again the second generation ASIC is a much more powerful, much better TCO kind of chip.

Gokul Hariharan - JPMorgan, Analyst

(00:52:10)What does it do to your competitive position within this customer？ Like, do you think that you will kind of become like the majority source when it comes to 2028？ Because there's like a lot of discussions around this, as you can imagine. So this generation obviously you've proven with the ramp in Q4, but could you talk a little bit about your competitive position within this lead customer when it comes to the second generation？

Gokul Hariharan - JPMorgan, Analyst

(00:52:40)Gokul, I think the key is really just like Rick talked about during the opening remark for the second generation or the second project. I think the performance is multiple times better on the performance per watt and also which also mean much better TCO. And to be honest, actually, based on what we see, are the so-called quote-unquote competing projects,

David Ku - MediaTek, CFO

(00:53:09)they are actually not even close from the overall performance perspective on that one. Actually, we feel very comfortable because by end of the day, the market is looking for the performance and TCO, and as long as our product can win from that front, I think we feel comfortable. OK, that's very clear, thank you very much.With the interest of time, we are going to take the last quarter. And also returning to Q&A, Charlie Zhang, Morgan Stanley. Thanks for taking my follow-up question. So I want to ask you about the 448 gigabit series. And we know that for the third generation

Charlie Chan - Morgan Stanley, Analyst

(00:54:00)a project with major customer or it will beapplied soon for this circular second customer. Can we clarify your progress for 448 gigabyte service adoption？ Oh, gigabit, I'm sorry. First of all, we certainly serve our current customer first, and 448 is a must going forward. M6 design with a very stringent power consumption requirements that we have taken out already. So we are quite, you know, after the second take measurement verification, all those things, but yeah, we are our team

Rick Tsai - MediaTek, CEO

(00:54:41)our service team is very, very capable, and they have done this multiple, multiple generations. They know what they're doing, and I'm very confident that we will deliver 448 gigaservice M6. It will not be on the critical path, and in addition, we will work onwe will use this IP to put in

Rick Tsai - MediaTek, CEO

(00:55:49)some extra works so that it has the right interoperability for the broader customer base going forward. Thank you. And we are also looking forward to your more projects and not just the emitting fusion that David just mentioned, but we are. We believe you'll have a great opportunity with other USCSP or AI lab customers. But for the already announced second customer win, maybe we get a rough kind of perimeter size or margin profile, for example, compared to

Charlie Chan - Morgan Stanley, Analyst

(00:56:06)your AI ethic learning this year is around the two billion US dollars in the first year, right？ So if you think about the second customer in 2028, would there be a bigger room size and would the margin profile be similar？Thank you, Richard. Right now, it's a little bit too early to talk in detail, but in general, I guess actually the demand the customer would like actually is pretty strong. But again, for 2028, we are still in the process about finalizing the supply, so we probably would provide some more detail later. But so far, as you can see from the marketplace, everyone is talking about, you know, further increase the capacity and demand.

David Ku - MediaTek, CFO

(00:56:56)So if we only judge it from the demand side, that looks good, but we also need to take into consideration other factors as well. So give us some more time； we will come back with some more clarification. But right now, the key is really 26. You know, we deliver a great result of 2.5 billion, mainly for the fourth quarter.Next year is actually, we actually...

Charlie Chan - Morgan Stanley, Analyst

(00:57:56)Talking about the high end of the guidance, and once we can deliver that, we're going to be based on a pretty solid ground to deliver the new revenue for 2028 and beyond. David, you mentioned substrates several times； that is a key factor, right？ So just in case EMIB supply cannot fulfill customer demand, do you think your current circular first-generation project will extend the life cycle, or will the demand go to your competitor in the US by using TSMC cost？

David Ku - MediaTek, CFO

(00:58:24)I think for the current generation, the demand looks good, and also, like with the guidance given out, actually, we should feel fairly comfortable to deliver what the customer wants for generation one, for Gen Two, based on the current yield profile and also the title market. I think we still feel comfortable to deliver what the customer wants basically. And in the meantime, as you can guess, the customers actually for the second generation are looking for some upside, so we are still working with our supply chain partner to provide upside.

David Ku - MediaTek, CFO

(00:58:53)But I think overall, the key is really going back to my earlier...

Operator - Operator

(00:59:14)Comment： the performance we can deliver together with our customer right now—you can't really find a so-called replacement or substitute for it. I think that's the key. Thank you, thank you, gentlemen, very helpful. Okay, ladies and gentlemen, we thank you for all your questions. Now I'll hand it over to Ms. Jessie Wang for closing comments.Wang, please proceed.

Jessie Wang - MediaTek, Investor Relation

(00:59:23)Ladies and gentlemen, this concludes MediaTek's 26th quarter conference call. An audio...

Operator - Operator

(00:59:40)Replay will be available one hour after the call at the investor section of MediaTek's website. We would like to thank you for your participation, and you may now disconnect. Yes, we thank you again for your participation in today's conference. You may disconnect now. Thank you and goodbye.