Revenue Hits Record High but Stock Plunges Instead
MediaTek's third-quarter revenue hit a record high, yet its share price slid all the way from its September high of 5480 to 3915 on October 30, a decline of nearly 30% in just over a month, leaving investors who chased the rally trapped. The 00947 Taishin Taiwan IC Design investment team notes that the stock market trades on future expectations, not realized earnings results, and the market cares more about whether profit growth can materialize as scheduled in the next one to two years; the current price correction mainly reflects concerns about the outlook.
Analysts Point to 4 Major Correction Pressures
First is noise around the AI ASIC mass-production schedule. The past sharp rally mainly reflected prospects for customized AI chip orders from cloud service providers, but recent market reports suggest advanced packaging yields, design tape-outs and mass-production progress could be delayed, raising investor worries that the timing of AI business profit contribution will be pushed back. Second is smartphones entering the traditional off-season. Third-quarter revenue hit a high on early stocking for flagship smartphone chips, but demand usually softens from the fourth quarter through the first quarter of the following year, and with the end-device handset market recovery still modest, follow-on restocking momentum may be hard to sustain.
Next is that the share price had already priced in excessive growth expectations, with the P/E ratio at a relatively high historical level. Once the earnings bullish news materialized, coupled with volatility in international semiconductor stocks, foreign and institutional investors chose to take profits, further adding to selling pressure. Finally is competitive pressure from international chipmakers such as Qualcomm. Whether in high-end smartphones, AI PCs or smart cockpits, MediaTek must keep fighting for market share to justify the high valuation assigned by the market.
Semiconductor Long-Term Trend Unchanged, Diversified Approach Advised
The 00947 investment team points out that recent semiconductor weakness partly reflects rising U.S. Treasury yields weighing on tech valuations, but U.S. tech companies reported solid earnings with a still-positive 2027 outlook, which could provide support for buying. TSMC's investor conference also reaffirmed strong global chip demand, with AI continuing to drive new orders for advanced processes and the supply chain. As AI applications spread from data centers to edge devices, robotics and other areas, IC design and memory demand are expected to benefit together. November will bring U.S. midterm elections and Taiwan local elections, and the market still needs to digest uncertainties, but the semiconductor growth trend remains intact. The investment team advises against rushing in just because the decline is deep. Investors holding cash or semiconductor ETFs can accumulate in stages via sector ETFs focused on AI, IC design and memory, while those already trapped should reassess position sizing to avoid over-concentration in a single stock, and keep tracking AI chip mass-production progress and corporate earnings changes.