Shares of MediaTek tumbled 6.1% to TWD 3,455 on July 28, erasing nearly a week of gains as investors rushed to lock in profits from a blistering July rally, while fresh U.S. tariff threats cast a shadow over the entire semiconductor sector. MediaTek Sheds 6% in a Single Session — Is the AI Chip Pivot Big Enough to Outrun a Tariff Storm?
Shares slid TWD 225 to TWD 3,455 on July 28, a 6.1% single-day drop that snapped a rally stretching from TWD 3,670 just a week earlier. The trigger: a wave of profit-taking colliding with renewed fears that Washington's semiconductor tariff regime is about to get broader and more punishing.
A Furious Rally Left Little Room for Error. MediaTek's stock has gained roughly 150% year-to-date , powered by a dramatic pivot into custom AI chips for data centers. The stock's 52-week range spans from TWD 1,130 to TWD 4,970 , meaning even after today's drop, shares sit comfortably in the upper half. But a stock that more than doubles in months invites sellers at the first whiff of bad news. MediaTek trades at a trailing price-to-earnings ratio of roughly 58.5 — a premium that demands flawless execution and leaves no cushion for macro shocks.
Tariff Phase 2 Is the Real Threat. As of January 15, 2026, the U.S. imposed 25% Section 232 tariffs on high-performance semiconductors. Phase 1 targeted a narrow set of advanced AI chips, but the Commerce Department's July 1 review could trigger Phase 2 — expanding the 25% duty to all semiconductors, manufacturing equipment, and derivative products.
Taiwan already faces a combined 35% tariff rate on chips entering the U.S. For a fabless designer like MediaTek whose customers sell end products into America, broader levies threaten to inflate costs across the supply chain.
The $2 Billion AI Bet Is Real — But Untested. MediaTek now expects its AI custom-chip revenue to reach $2 billion in 2026, doubled from an earlier $1 billion target.
Foreign brokerages forecast that AI chip revenue could surge to $12.3 billion in 2027, potentially representing 39% of total revenue — a transformation from MediaTek's roots as a budget smartphone-chip supplier. Yet Q1 mobile revenue fell 15% year-over-year while operating margin shrank to 15.8% from 20% , showing the old business is weakening before the new one has fully arrived.
Earnings in Three Days Will Be the Verdict. MediaTek reports its next earnings on July 31 . Investors need to hear whether the Google custom-chip production ramp remains on schedule and whether tariff costs are being absorbed or passed through. At nearly 59 times trailing earnings, the stock prices in a future that must now navigate a trade war. The question is whether a $2 billion AI revenue year — impressive on paper — can justify a valuation built for perfection in an imperfect world.