GF Securities: Market undervalues the potential cooperation between MediaTek and Alphabet Inc. Class C. Orders of Broadcom Inc. (AVGO.US) and Qualcomm (QCOM.US) may be affected.

Alphabet Inc. Class C (GOOGL.US) is undergoing a profound transformation in the supply chain landscape of its new generation AI chip TPUv9 (codenamed "Triggerfish"). According to the latest report from GF SEC, Alphabet Inc. Class C has chosen MediaTek (2454.TW) instead of Broadcom Inc. (AVGO.US) or Qualcomm (QCOM.US) to build its ninth-generation tensor processor (TPU), signaling a major shift in Alphabet Inc. Class C's custom chip strategy. Previously, Broadcom Inc. confirmed during its June earnings call that Alphabet Inc. Class C was seeking to introduce other chip suppliers, indicating that Broadcom Inc. would lose its exclusive supply position for TPU-related designs. Following this news, Broadcom Inc.'s stock price plummeted by approximately 13%, marking the company's largest single-day decline on record. Technical Battle: How 336G SerDes Defeated 448G The key to MediaTek's victory in this instance lies in the choice of high-speed transmission interface technology. Supply chain sources indicate that Alphabet Inc. Class C had originally planned to incorporate a 448G SerDes architecture in TPUv9 to increase chip bandwidth. However, due to limitations in signal integrity, power consumption, and thermal challenges, progress fell far short of expectations. Analysts believe that the DSP required for the 448G optical module may need to use a 2-nanometer process, with mass production capacity not expected until at least 2028-2029. To avoid delays in TPUv9 development, Alphabet Inc. Class C instead decided on a transitional specification using 336G SerDes. Leveraging its years of experience in high-speed interface IP capabilities and collaborative experience with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in advanced processes, MediaTek successfully completed the customization design and secured a major development opportunity. Broadcom Inc., which had originally bet on the 448G SerDes, lost its leadership position due to technical maturity and product scheduling pressures. Alphabet Inc. Class C TPU Generational Evolution: From "Zebrafish" to "Triggerfish" Evolution The product strategy for Alphabet Inc. Class C TPU is undergoing a significant upgrade. The previous TPUv8 series has been split into two distinct product lines: TPUv8i "Zebrafish" optimized for inference scenarios developed by MediaTek, and TPUv8t "Sunfish" tailored for training scenarios developed by Broadcom Inc. With the ninth generation product, Alphabet Inc. Class C aims to create an "all-in-one" computing solution - a single chip capable of simultaneously handling training and inference tasks. The core highlight of TPUv9 "Triggerfish" is the inclusion of a significantly increased capacity large static random access memory (SRAM) and the addition of an independent CPU core by MediaTek, which is integrated with the main computing core in the same package, allowing for seamless switching between AI training and inference tasks. According to renowned supply chain analyst Ming-Chi Kuo, Triggerfish will support the next-generation HBM4E memory, with the larger SRAM capacity allowing for more active workloads to be retained on the chip, reducing data movement and improving inference efficiency. In terms of production schedule, the TPUv9 series is expected to begin volume production in the third quarter of 2027, with the first model being "Humufish." Triggerfish is set to start production in the fourth quarter of 2027, and both chips are expected to achieve significant volume shipments in 2028. Kuo estimates that the lifetime shipment volume of Humufish will be around 4 to 5 million units, with an additional 1 to 2 million units for Triggerfish. Institutions predict that the overall shipment volume of Alphabet Inc. Class C TPU in 2027 will be around 10 to 11 million units. GF SEC: Market Underestimates Triggerfish's Potential, Raises MediaTek's ASIC Revenue Outlook to $2.3 Billion GF SEC analyst Jeff Pu clearly stated in the latest report that the market underestimates the potential of MediaTek's Triggerfish processor. He pointed out: Firstly, the significant increase in average selling price (ASP). The average selling price of Triggerfish is expected to reach $18,000, higher than the $13,000 for Humufish and $5,500 for Zebrafish. Triggerfish is expected to account for around 50% of the v9 platform. Secondly, expanding business boundaries. Leveraging its large-capacity SRAM and simulator CPU, MediaTek is expanding its business from training (v8t) to the inference market - an area where Broadcom Inc. traditionally excels. Thirdly, an exclusive position in the 2nm process. For the v9 version, GF SEC believes that Humufish will be the only SKU to utilize the 2nm process, with a low likelihood of competitors introducing 2nm products. Previous rumors about Broadcom Inc.'s 2nm "Blade Runner" project have not made progress. Fourthly, a leading edge in the v10 project. GF SEC believes that MediaTek is also a leader in Alphabet Inc. Class C TPUv10. Based on these assessments, GF SEC has raised MediaTek's ASIC-related business revenue forecast for 2028 to $2.3 billion. GF SEC's overseas electronic industry chief analyst, Daniel Pu Yu, further raised MediaTek's ASIC revenue forecasts for 2026-2028 to $2.5 billion, $1.8 billion, and $73 billion, with a 3% increase in earnings for 2027 and a target price increase to 6,420 New Taiwan dollars. Industry Landscape: MediaTek's Transformation from a Smartphone Chip Manufacturer to an AI ASIC Challenger In the past year, MediaTek has clearly surpassed its traditional foundation in the smartphone business and has become a strategic partner for several American technology giants in customizing AI hardware. MediaTek has recently deepened its cooperation with NVIDIA Corporation on the GB10 Grace Blackwell Superchip and a more extensive AI computing plan; at the same time, it has expanded its collaboration with Microsoft Corporation in the area of edge AI, demonstrating the operation of Microsoft Corporation's Phi model on MediaTek chips in a cloud-to-device AI workflow. It is understood that MediaTek has revised its estimated revenue for AI accelerator ASIC to $20 billion in 2026, with further growth expected to reach billions of dollars in 2027. MediaTek CEO Rick Tsai previously stated that the global data center ASIC market is expected to reach $70 to $80 billion by 2027, with the company aiming for a market share of 10% to 15%. Counterpoint Research estimates that by 2028, MediaTek will contribute a quarter of the global AI ASIC server computing chip shipments. With Zebrafish expected to begin volume production by the end of 2026 and Humufish ramping up in 2028, MediaTek's position in the Alphabet Inc. Class C TPU supply chain will continue to solidify. However, Broadcom Inc. has not completely exited the competition. Industry experts believe that as AI data centers continue to evolve towards optical communication architectures, the difficulty of high-frequency data transmission will continue to rise. Broadcom Inc. is expected to introduce a new TPU product in 2028 - Whalefish (or Sunfish x2). However, it is at a disadvantage in terms of process nodes and HBM, leading to limited shipment volumes.