Good afternoon, everyone. Joining us today are Dr.

Rick Tsai, MediaTek CEO, and Mr. David Ku, MediaTek CFO.

Mr. Ku will report our first quarter results, and then Dr.

Tsai will provide our prepared remarks. After that, we will open for Q&A.

As a reminder, today's presentation will provide forward-looking statements based on our current expectations. The statements 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 contents provided in this teleconference are for your reference only, not intended for investment advice.

Neither MediaTek nor any of independent providers is responsible for any actions taken in reliance on contents provided in today's call. Now I would like to turn the call to our CFO, Mr.

David Ku, for the first quarter financial results.

Thank you, Jessie. Good afternoon, everyone.

Now let's start with the 2026 first quarter financial results. The currency used here is NT dollar, and the average exchange rate for the first quarter was 31.62 to $1 US dollar.

Revenue for the quarter was $149.2 billion, down 0.7% sequentially and down 2.7% year-over-year. Gross margin for the quarter was 46.3%, up 0.2 percentage points from the previous quarter and down 1.8 percentage points from the year-ago quarter.

Operating expense for the quarter were $46.2 billion, compared with $47.4 billion in the previous quarter and $43.8 billion in the year-ago quarter. Operating income for the quarter was $22.9 billion, up 4.8% sequentially and down 23.8% year-over-year.

Non-TIFRS operating income for the quarter was $26.6 billion. Operating margin for the quarter was 15.3%, up 0.8 percentage points in the previous quarter and down 4.3 percentage points year-over-year.

Non-TIFRS operating margin for the quarter was 15.8%. Net income for the quarter was 24.4 billion, up 5.6% sequentially and down 14.4% year-over-year.

Non-TIFRS net income for the quarter was $25 billion. Net profit for the quarter was 16.3%, up 0.9 percentage points from the previous quarter and down 3 percentage points year-over-year.

Non-TIFRS net profit margin for the quarter was 16.7%. EPS for the quarter was $15.17, up from $14.39 in the previous quarter and down from $18.43 in the year-ago quarter.

Non-TIFRS EPS for the quarter was $15.52. A reconciliation table for our TIFRS and non-TIFRS financial measure is attached in our press release for your information.

That concludes my comments. Thank you.

Thank you, David. Now I would like to turn the call to our CEO, Dr.

Rick Tsai, for prepared remarks.

Thank you. Good afternoon, everyone.

Thank you for joining us today. MediaTek first quarter revenue came in at the high end of our guidance range, thanks to the steady demand from our diversified platforms and a more favorable foreign exchange rate.

First quarter gross margin was around the middle point of our guidance range. During the quarter, the rapid adoption of agentic AI use cases, such as OpenClaw AI agents and other compute-intensive workloads, have marked the inflection point for the industry.

The acceleration of computing requirements under the ubiquitous AI megatrend are not only broadening the addressable market for edge devices, but further expanding AI infrastructure investments. Our differentiated combination of technologies and products propels us to meaningfully benefit from structural growth in both the edge and the cloud.

In edge devices, building on our strong positions across numerous markets, we continue to invest in and deliver advanced SoC and faster connectivity solutions, spanning mobile, computing, automotive, IoT, and beyond. I will elaborate more in the business discussion sections.

In data center, demand momentum is particularly strong. With our comprehensive and solid capabilities across design, integration, and supply chain execution, our first AI accelerator ASIC project for a US hyperscale customer is progressing fairly well.

We are on schedule for production, and now expect AI ASIC business to contribute around $2 billion US dollars in revenue in the fourth quarter of this year. For 2027, based on the capacity we have now secured, we are very confident that this project will scale to multiple billion US dollars.

Meanwhile, design for the other AI accelerator ASIC project is currently underway in close collaboration with our customer and supply chain partners, with mass production targeted to start by the end of 2027. Furthermore, we are actively engaged in several new data center ASIC opportunities, some of which are already in the final stages of discussion.

We are confident that our proven capabilities can address the rapidly growing AI demands of the market and deliver strategic values to customers. Meanwhile, we continue to invest significantly and have made tangible progress in building best-in-class system-level technology roadmap for future data center architecture.

On the optical front, to address the industry trend towards leveraging silicon photonics to achieve higher bandwidth density, we made a $90 million US dollar investment this quarter in Ayar Labs, a leader in optical engines for CPO, as part of our co-packaged optics partnership. We also announced a successful design with Microsoft Research for the next-generation active optical cable powered by micro-LED light sources, which can significantly improve power efficiency in data centers.

Furthermore, we are making solid progress in the development of enabling technologies for future generations of data centers with successful test vehicles. We are very proud of our status in building next-generation 400G high-speed SerDes, 64G die-to-die interconnect, and advanced 3.5D platform, which covers IP, design enablement, and advanced packaging technologies to realize designs with much larger reticle sizes.

Additionally, our development in custom HBM solutions and integrated voltage regulators, IVR, are also advancing as planned. These ongoing investments will further improve performance per watt and power efficiency of multiple kilowatt XPUs in future data centers, and further strengthen our long-term technology roadmap, positioning us to support the evolving requirements of next-generation data centers and AI workloads.

With that, now let me talk about the recent business performance for our three revenue groups. In the first quarter, our mobile phone revenue declined 17% quarter-over-quarter and 15% year-over-year, accounting for 49% of total revenue.

The current concentration of industry resources on data centers has led to elevated costs for smartphones. Our customers have raised retail prices and shifted their product mix toward higher-end models to manage that.

Given such adjustment will inevitably lower the market demand for smartphones, we expect global smartphone shipment to decline by about 15% this year. For the second quarter, as our customers stay cautious while pending further visibility into end-market demand, we expect mobile phone revenue to decline sequentially, and we will continue to work with our customers and navigate through this period together.

Nevertheless, the indispensable role that smartphones play in our daily life, coupled with accelerating agentic AI innovation, support our view that the smartphone replacement demand will recover when the supply conditions normalize. Therefore, we continue to invest in and empower more advanced smartphones.

We have already secured several design wins for our next-generation flagship SoC, which is our first 2-nanometer product, featuring a meaningful step-up in user experience enabled by stronger computing and AI capabilities. Smartphones powered by this 2-nanometer flagship SoC are scheduled to hit the market by the end of the third quarter, and we anticipate our mobile phone revenue to improve in the second half of the year.

Moving on to smart edge platforms. In the first quarter, this group grew 23% quarter-over-quarter and grew 13% year-over-year, accounting for 46% of total revenue.

Our global market share gains were a key driver of both sequential and year-over-year growth. We also saw a sequential demand recovery, as demand rebounded from a seasonally weak fourth quarter.

We are pleased that several new projects that we have cultivated over the past few years, in collaboration with top-tier consumer brands, notebook makers, telecom operators, car makers, and CSPs, have begun or are expected to start volume production in 2026. We expect smart edge platforms revenue, excluding the contribution from the new data center ASIC project, to grow by double-digit percentage this year.

This is mainly driven by our global share gains across connectivity, computing, and automotive products, and to a lesser extent, higher blended ASP for certain TV SoCs to reflect the increasing DRAM costs. As these drivers continue, we expect smart edge platforms revenue to grow sequentially in the second quarter.

In the future, given our leading technology and product roadmap, together with agentic AI trend discussed earlier, we are seeing structural growth opportunities for edge devices. The strong lineup of our advanced computing solutions allows us to expand in multiple areas, such as high-end computing devices and automotive.

Specifically, last week at Beijing Auto Show, we showcased our 3-nanometer Dimensity Auto agentic AI cockpit solution, which enables active and intuitive in-vehicle agent features for both drivers and passengers. We have received very positive feedback from customers.

Moreover, we will be leading the automotive industry to migrate to 2-nanometer process technology to enable more innovations. In addition, building on our strong connectivity foundation, including Wi-Fi 7, 5G modem, and 10G PON, we continue to lead the market with next-generation Wi-Fi 8 and 5G NR-NTN satellite solutions to achieve faster and more seamless connectivity.

We believe the combination of strong computing and connectivity capabilities will make MediaTek a strong partner for agentic AI device makers. Moving on to power IC, this group accounted for 5% of total revenue in the first quarter, increasing 14% quarter-over-quarter and 11% year-over-year.

In the second quarter, we expect power IC revenue to be flattish. Moving to the guidance.

In the second quarter of 2026, we expect the revenue growth from smart edge platforms to partially offset the weakness in our smartphone business. Quarterly gross margin is expected to be stable within the current range.

We expect our second quarter revenue to be in the range of NT $140.2 billion to NT $149.2 billion, flat to decline 6% sequentially, and down 1% to 7% year-over-year, at a forecasted exchange rate of 31.5 NT dollars to $1 US dollar. Gross margin is forecasted at 46%, plus or minus 1.5 percentage points, and operating expense ratio is forecasted at 31%, plus or minus 2 percentage points.

For the full year, we expect revenue to increase by mid- to high-single-digit percentage in US dollar year-over-year. Meanwhile, through disciplined pricing strategy, we aim to sustain our full-year gross margin within the current quarter guidance range.

We will continue to build long-term growth both at edge and in the cloud. We are highly focused on disciplined execution across our growth opportunities, and expect these efforts to drive significant operating leverage over time.

This concludes my prepared remarks. Thank you.

Thank you, Rick. Operator, we are now ready for Q&A.

May we please have the first question?

Thank you for taking my question. Oh, congratulations for the recent progress for the ASIC project.

I want to ask more about your next project. After you successfully demonstrate your SerDes I/O technologies, which already proven the global tier one, can you do more?

Can you do compute die or other functional die for your customer for the next project? Also for the ASP, as you provide a lot more value compared to the first year, our recent research suggests that the pricing is meaningfully higher than the first one.

It seems to be too good to be or too meaningful to be true, but I want to get some color in case I made a mistake in my assumption. Also, lastly is for the gross margin and operating margin.

As you provide a lot more values, can we assume higher gross margin and operating margin compared to the first project? In summary, my question is, can you do more than I/O die for your next project, and can you update the ASIC TAM in 2028?

Again, first, we cannot comment our customers' chip architecture clearly. However, what we can comment is we are adding more value in various ways, including silicon and packaging, both, and of course, together with our IPs, SerDes, die-to-die, etc.

As you probably can imagine, first, it's a second chip and it's the next generation. If you look at the track record of the previous generations, again, it is fair to view the second-generation chip to a much stronger also bigger chip.

The value covers from both silicon and packaging. We are gaining values in both areas.

With the value going up, we certainly, I think, will have a higher pricing for such much more powerful chip. I think, as I stressed before, we continue to work with our customers to also enhance their own capability.

That's always at the heart of our business model with our customer. It's a win-win situation.

We together add a lot of value to their chips, and the customers can utilize those powerful yet power-efficient chips to implement in their data centers and provide a lot more values to their customers. I think that's basically how I would address your question.

Thank you.

Do you have the update number for the addressable market for ASIC? Because I think last time you were talking about I think is 70 60, 70 billion US dollars in 2028.

Do you have the update numbers?

Yes. Shall we say we have done kind of a first-order estimate.

The market is changing so fast. As you can test from just less than 24 hours ago, all the announcement from the four major CSPs.

Everybody can see that the demand for the data center infrastructure, data center computing power is just continued to grow, and if anything, continue to accelerate. Our estimate, in my mind, is first order in nature and I don't know it's conservative or not, but it's not really aggressive.

We now view the market size to be about $70 billion to $80 billion in 2027. That's our view now.

Thank you.

Thank you. Okay.

My next question is for the packaging solution for your ASIC business. It seems to me that MediaTek choose a different path for your next chip, which is not the mainstream solution, at least not for now.

Can you provide some color that how you manage the execution risk? Do you have a back-up plan if things are not moving the right direction, or you are comfortable with the recent technology progress at your partner?

I think this one is definitely one of the biggest concern from the investors, and any color would be appreciated.

Again, we cannot comment specific technologies we are doing together with our customers, but I think suffice to say that we are investing in two packaging technology solutions, both because in the industry, the demand in the AI infrastructure being so demanding, packaging is now becoming a really, really critical part of the overall total solution. We need to invest in various technologies so that we can better prepare ourselves for various demands from various customers.

We believe we understand your question. We believe a second approach of the packaging solution has merits, very good merits.

Technology-wise, execution is getting quite good. Again, we are working closely with our partners for both packaging solutions, and we will provide high-yield solutions to our customers.

I have no doubt about that in my mind. Thank you.

Thank you. I'll go back to the queue.

Thank you very much for taking my questions, and congrats on the very encouraging progress made for the cloud ASIC project. My first question is double check, Rick, did you just mention now you're expecting the addressable market for cloud ASIC to be 70 to 80 billion by 2027, not by 2028?

Correct. You're correct.

Yes.

You are still expecting a share target to be 10%

to 15%? We keep that for now.

Yes.

Right. Good to know.

My first question is given what the CSP client released on the product last week, it seems like the project that you're working on should be for training, and I think that's a bit surprising. That should be a good setup in terms of the volume potential.

Now if your project is indeed for training, then how should we think about the fair split of your project in terms of the overall volume within the client portfolio in 2027 and 2028?

Sunny, number one, it's the architecture of the customer's data center. Of course, it's their decision.

Say there are two chips. Both chips probably can do the job.

It's more a rack topology architecture decision. With all that, again, the market, if you look at the total market size, as I just said, in our last meeting, we said $70 billion market size for 2028, and today we say $70 billion to $80 billion in 2027.

The first-order effect is the total growth, the rapid growth of the market, of the demand. We have a tremendous chip together with our customers, and it will be used extensively.

I have no worry about that. I think what we really focus on is execute to deliver the very strong demand from our customer, be they training or influencing.

I think whether it's a T or I, tell the truth, it's second order in nature. Thank you.

No problem. Very clear.

My second question is if we think a bit beyond, and so you just guided up the expectation for 2027, and you just also mentioned that the next project, which should be ramped by late 2027, I believe, and so meaningful contribution going to 2028. How should we think about the trajectory of the growth beyond 2027?

If you are able to provide more value, and then the product itself, the value is also a lot higher, then should we expect the growth into 2028 to also be quite significant, like maybe you can double or even more than double?

Sunny, I think in general, based on the two project we are executing on [cough] I think for the growth profile from this year to '27, '28, that's very clear. In terms of magnitude, especially if you're asking for '28, I think right now maybe it's too early, because that's a combination of what's availability for the overall capacity and also what's the customer's actually demand profile.

Overall, if we think about the year-over-year growth, that one is certain. In terms of magnitude, I guess, actually after all, right now is only April 2026.

I think it will be a little bit too early to talk about that. If you're judging from TAM and SAM perspective, I think we're positive about that.

Got it. Sure.

No problem. Thank you very much.

Yes. Hi.

Thank you very much for taking my questions, and also congrats for the great outlook. My question is also similar to how should we think about that the company's product mix profile in a two, three years perspective?

Like Rick just mentioned, if we're assuming $2 billion US dollar contribution for this year, and also assuming that the same a run rate quarterly into next year, or even based on 10%, 15% market share in 2027, that means that the AI accelerator revenue contribution could be 50% higher. I'm just wondering that in the longer term, how should we think about our product mix profile?

The smartphone, of course, Rick also mentioned that will resume the growth momentum, but just for maybe a longer-term perspective, how should we think about the priorities and also business outlook for MediaTek? That's my first question.

Okay. Again, the macro environment everyone I think has a pretty clear picture.

I don't need to preach the choir. There's no question that the, quote, unquote, AI megatrend continues, now that not only from the infrastructure, computing power point of view, but also from agentic AI point of view.

If anything, this thing is continue to accelerate. It's probably also right to say that for MediaTek, the data center AI business and the revenue will grow quite a bit faster than our more mature SoC business.

For the mobile business, of course, this year is facing a pretty strong headwind because of the DRAM supply and pricing. That's being said, we view mobile to resume its replacement cycle in a year or a little more than a year.

The growth momentum for the mobile business, I think overall, it's going to be lower than the data center AI business. We expect, however, the agentic AI disruption will bring in new revenues for the edge devices, including mobile phones.

On that front, we are quite optimistic, and we will be aggressive in pursuing that new revenues. Everything being said, I still feel data center AI revenue growth will have a higher rate compared to our other SoC business.

Thank you.

Sure. Thank you very much.

My second question is also about the business model. You work with your CSP customers, we know that seems like the trend of the COT, customer-owned tools, is also kind of emerging.

We understand that MediaTek can provide more value, maybe just not the SerDes going forward, and also more of the technology integration, back ends, design, etc. I'm just wondering your view that how the COT business model could impact MediaTek's profit margin or the value of your future design?

Thank you.

Truthfully, I think this market is growing fast with size, with scale. Again, the first-order issue for me, or for us, is to expand our presence, our penetration in this continuing, accelerating large market.

I'm very confident we will also be getting more design wins in this market. Overall, in different cases, I believe we will provide various degree of values for different customers, depending on customers also.

In general, overall, if we look at our revenue and the margin, both gross and operating, I think we will do very well. I don't really worry about that.

Thank you.

Thanks for taking my question. Hi, Rick, David, and Jessie.

Good afternoon. Just want to follow up on the ASIC Rudy question.

I believe MediaTek can really continue to add value for next-generation 2-nanometer project, but just in terms of financial assumption, given very large scale of revenue, are we going to see gross margin decline, and whereas the operating margin, net margin probably can keep at the same level? Just want to get a sense about the margin assumption.

Thank you.

Charlie, as we explained actually quite a while ago, overall, all the data center project are really operating margin accretive in a very positive way, and mainly due to the large scale, large revenue size. For the gross margin, again, it will depends on case-by-case based on different business model.

Overall, if you think about two-way, the EPS earning accretion, I think that's certain, sizable, and also operating margin accretion, that's also certain as well. Gross margin will depend, but because each project, different business model may be varied.

I see. Can I follow up a little bit on this ASIC and move to my second question?

Because your industry peer and also kind of end customer also talk about full system support, right? I'm not sure if MediaTek also want to develop a similar kind of customer support for the full racks.

If that's the case, whether MediaTek's market share assumption, you just mentioned 10% to 15%, can further go up?

I think I'm assuming you're talking about the rack solution, selling as a rack. I think that's actually part of the business scope as well.

That's something we are discussing with our customer as well. Oh,

really? Okay.

Because that was a little bit concerned, some end customer like Anthropic, specific require this kind of support, I was very concerned if you can only supply the chip, they will constrain your market share upside. It's great to hear that you're also working with customer for more value-to-add for system level.

Switching gear to my second question, I also asked the same question last quarter to Rick, right? Last quarter, I asked about agentic AI for China, and it was specific on Doubao.

Recently, also pick up a trend that Google is trying to offer AI agents on the phone to link all the different kind of Android apps. I'm not sure if Rick, you would become more excited about the agentic AI becomes the killer apps or trigger for the smartphone resumption cycle?

Want to get your thoughts about this Android agentic AI developments.

Thank you, Charlie. I strongly believe that agentic AI will be creating a lot more new value and new revenue.

It is now I think in my mind, quite clear. Different ecosystem company, be they in China, ByteDance, Alibaba, or in the US, Google, Meta, OpenAI, etc., will come out with their solutions for their models and their business models.

You use smartphone as in your question, let me use as the example. For smartphone, we are collaborating closely with Android to ensure the agentic AI applications will be incorporated in our SoCs.

Even beyond the smartphones, I think there's a spectrum of devices from the wearables all the way to automotive that will add a lot more value with agentic AI. I'm very very positive and excited about that.

Thank you.

Right. To realize that, do you need four TOPS like your NPU capacity to become bigger, or do you think your approach is to enable or empower your mainstream phone will have this kind of AI compute power?

What would be your strategy and when these concepts can become kind of concrete projects for MediaTek?

We don't view this as a mobile-only play. We do not.

We view as a multiple platform play, all the way from wearables such as AI glasses to mobile to IoT to PCs to automotive, for instance. Of course, automotive, obviously, the power budget is much, much higher than the mobile.

Mobile is about what is 8 watts, and there is about 40, 50, 80 watts. In different type of, quote, unquote, devices, the computing power implement will be very different.

As agentic AI comes up, CPU is having a resurgence. The architecture of the computing system for this agentic AI era within the multiple platforms is a challenge, but also a major opportunity.

Thank you.

Hey, hi, Rick, David, and Jessie. Thank you and congrats to the strong guidance by ASIC.

I have two questions. First one actually is similar to Laura just asked.

When we think about these smartphone revenue make up 49% of the total, what's the implication to MediaTek's resource allocation, i.e., the 3-nanometer silicon allocation, and also your IP acquisition strategy, your team? Thank you.

This is my first question.

I think overall, when we look at the AI, we really think about from cloud to edge. They all have opportunity.

Because when you think about the application side, agentic AI will happen on every nodes, again, from cloud to edge. Currently, due to the overall supply chain situation, the smartphone obviously this year is having some hiccup.

Doesn't mean that's due to the demand issue. It's mainly due to the supply issue, or the memory supply issue, to be precise.

When we think about to two to three years time frame, we still believe the whole AI demand, if you like, will be across the board, both from cloud to edge, okay? By saying that, when you look at the addressable market and also from the growth rate perspective, the data center obviously will play a very important role.

Doesn't mean actually the edge device including, but not limited to, smartphone. Don't forget, when we talk about edge device, which also including the computing device, the automotive, even for the IoT.

That's how we see from the market perspective. With that, internally, how do we develop the technology, also develop the resources, the computing technology is the foundation.

The process technology is also the foundation. Also the package as well.

We will invest all those foundation technology, and maybe at different time, we'll have different application on different segments. It's not exclusive.

It's not exclusive. Obviously, from last year to this year and also go for next year, the investment for data center will actually almost doubled up, okay, almost doubled up.

Oh,

thank you, David. The second question actually also recall last time you guy told us that you will disclose the ASIC revenue when visibility go higher, right?

Thanks that this time actually we are prudent to revise up the guidance. Can you share with us what's the timing you decide to separate the ASIC revenue?

I think we will consider probably starting from next year. Yeah.

Okay. Got you.

Thank you.

Yeah. Thanks for taking my question.

I just had a question around ARM server CPU. I think you've licensed CSS.

I was just wondering if there's an opportunity to not just sell ASICs for TPUs, but also to do CPUs for the head node, maybe do LPU equivalents? I have a follow-up.

Thanks.

I think for the [cough] CPU and also for the edge server, I think that's definitely within the possibility. Currently, I think our focus was start to ramp our ASIC solution first as the first stage.

Internally, we also have a team to actively monitor and working on that. Far, at least for the next two to three years, I think the focus will be the ASIC opportunity, because after all, the addressable market is huge, and that's something we would like to put as our top priority.

Got it. Just a quick follow-up on co-packaged optics.

How would you compare your capability today to sort of best-in-class? Would you say you're 6 months behind, 12 months behind, or on parity with best-in-class, just so we understand a bit more about your capabilities in-house versus what's out there in the market?

Thank you.

I would say we are a latecomer. I think there's no denial of that.

However, I think, again, the technology now is a lot more mature compared to even a year ago or 18 months ago, and we now have a very strong partner in Ayar Labs that I think we can catch up and accelerate our progress in the coming couple of years. If you look at the real needs, well, depending on who you talk to, of course, but I think it's probably more in the 2029s or after 2028, 2029 time frame that the CPO will become a must.

We feel confident and comfortable that we will be there when the need is there. Thank you.

Thanks a lot.

[unclear] jump on the call a little bit late, apologize if there is any repeat questions. I think my first question is just regarding the comment just now that you are also working with your hyperscaler customer on the potential rack solution.

Does that mean you are actually in addition to working on the collaboration on the hyperscalers' AI accelerator ASIC, you are also working on the networking switch or the switch ASIC project, and how should we size up that part of the opportunity? Is it part of the

ASIC market size Excuse me. Bruce Lu, we cannot really hear you, actually.

Your background noise actually is very strong. We can't really hear you.

Okay. Can you hear me better now?

Not really, okay, not really. For some reason, actually, we're [unclear].

I'm not sure if this is our side or the operator hear the same thing. Operator, do you hear the same thing?

Can you hear it?

Hello, can you hear me better this way?

Yeah. This is much better.

This is much better, okay.

That sounds good. Sorry.

I just wanted to ask when you discuss that you are working with your customer on the potential rack solutions, system-level solutions, does that suggest that in addition to the core AI accelerator project you are working with your customers, you are also engaged with your customers on the potential networking switch and also the related peripheral chipsets and the system-level solutions? If so, how should we size up that part of the opportunity?

Is it part of the ASIC opportunity you mentioned earlier on this call? Thanks.

I think it's too early to comment all the detail, because that's something we're still developing and working with our customer, because after all, we need to start to ship our ASIC solution first, and the customer will turn our ASIC actually into the rack. If we get into there, at least based on what the customer providing is actually for the whole rack solution, technology-wise, because that will becomes the customer's product, will provided by the customer.

We don't need to worry about all the detail, but it's more of the business model, okay? Again, it's too early to provide all the detail.

We will provide more detail when it becomes material.

Got it. Just a very quick follow-up on this, is if there's a business like this, should we consider margin dilution from this kind of project, or not really?

Thank you.

Again, it will depends on the final business model, and it's too early to comment right now. Yeah.

For this year and next year, when we talk about the gross profile, we are not factoring in any rack business, just for the record. It's purely ASIC business.

Okay. Sounds good.

Okay.

That's very clear. Second question is just regarding the scarce of the industry supply across memory and also logic wafers, and I would like to specifically focus on logic wafers.

That this year, because of the mobile demand is probably weaker, that you could reallocate the capacity you got from your foundry partners converted more easily to your other ASIC projects. In 2027, since the scarce of the supply across industry on the 2-nanometer, 3-nanometer wafers is still going to continue, I was just wondering how you are going to allocate the wafer supply you could get from your foundry partners between your ASIC project versus your own core merchant business?

Thank you.

Of course, this question not just for us, it's the industry-wide issue. I think certainly we're talking about advanced process wafers, let's just talk TSMC.

TSMC's investment is increasing significantly. I forgot the numbers, $60 billion

or

capex. They are certainly accelerating their capacity for the advanced technology, 3-nanometer, 2-nanometer.

We work very closely with our partner, and I cannot speak for TSMC, but I do believe when a customer like MediaTek provides tremendous value for the industry, for our customers, and our customers are really doing fairly well in their market, there will be supply from that point of view. That I cannot say exactly how much percentage-wise, but I believe, as a long-term strategic partner with our supplier, we will get our fair share of the supply.

Thank you.

Got it. I think just a very quick follow-up before I jump back to the queue is that in an extreme scenario, for example, you only get 80% of the allocation versus what you are demanding for those supply on the wafer level, I was just wondering how you are going to prioritize for your customers' ASIC projects versus your core business, because how are you going to manage it or balance it?

Thanks.

Again, just like our CEO talk about, that's the common question all industry player are facing. We will probably not be able to disclose internally what's our rules and policy or strategy.

Overall, I guess what we need to consider is all different factors, but we will not be able to comment this publicly.

Hey, good afternoon, and thanks for the opportunity to ask a question. On the data center ASIC business, Rick, I think your bigger competitor has signed this long-term five-year deal with the customer.

Now that you have kind of executed your milestone on taping out and potentially starting to ramp up this business with this customer, should we expect that MediaTek also kind of gets elevated to that kind of a strategic partner status, potentially look to sign some multi-year deals, given that there's a lot of noise in this business, right? If you can give some longer-term clarity to your investors, it's probably helps you and also helps you to plan your business on a multi-year basis.

Any thoughts around that, Rick, in terms of how you're thinking about that?

Gokul, David here. I think first of all, we don't really have the detail about so-called all those partnership announcement agreement.

Sometime, actually, to be honest, actually, nobody knows the detail. I think probably the best way to judge is really what's our guidance for the revenue guidance.

This is what it matters. Because we can sign or you can sign or anyone can sign whatever agreement you like, but by the end of the day, usually whether or not we can deliver the target revenue or higher, like what we upsized this time.

I think this is what it matters.

Got it. Understood.

Secondly, for the second or the next-generation project that you're working with this customer, I think Rick mentioned that you are working on two packaging solutions, competing packaging solutions. Just wanted to understand how do you kind of manage that like any risk of execution on this kind of project?

I think there is a view out there in the market that I think the packaging solution becomes a critical factor in terms of the success of the project. Could you comment about your perspective on that, or is it the packaging solution is not really the critical part, it's more on the other areas of execution that basically drive the success of this second project?

Gokul. I think first of all, we will not be able to comment in specifically project at what technology, because after all, that's the confidentiality.

To answer your question, maybe let me try to answer from different perspective. Like our CEO say, we actually invest on two different packaging technology, and probably it's a better way to say it's actually we are the front-runner on both technology, okay?

When customer or the industry need for this technology, we want to make sure we are fully ready and we're the front-runner for that. That's point number one.

Point number two, go back to TSMC CoWoS specifically, I think we've been working with TSMC very closely on all the leading-edge packaging. For example, for the N2 on N2 SoIC, I think we probably will be the first one to have the test chip out in September this year.

Again, I understand there's a lot of fuss and worry or concerns out there, but the better way to think about that is actually we are the leading player for all different packaging technology. We're not override or underwrite any one of that.

It's a really balanced strategy, and to provide the best solution to the customer.

Got it. Just one follow-up on CPO.

I think based on your conversation with the customer, what is the timeline for your ASIC customers to potentially need CPO-related solutions? Is it in the second generation that you're working on itself, or is it probably follow on after that?

I'm sorry, Gokul. You say TPU or?

CPO.

Co-packaged optics. Sorry.

The current project we're working on is actually TPU, I'm not quite following.

No, I was saying CPO, co-packaged optics.

Oh, CPO. Okay.

I think currently, like our CEO say, at least right now for all those projects we are working on and some of them they are bidding on all the way to '28, '29, so far, the CPO is not a hard requirement. That's why we think most likely will be a '29 '28 and '29 beyond.

That's why we actually say to have a jump start to prepare that. I think overall, we don't think we are behind, especially if you're judging from when the industry requires CPO, because after all, you're not going to see anything come out until late '28, probably early '29.

Far looks actually we should be okay.

Got it. Thank you very much.

Thank you.

Ladies and gentlemen, this concludes MediaTek 2026 first quarter conference call, and an audio replay will be available in one hour after the call at a investor section of MediaTek website. We would like to thank you for your participation, and you may now disconnect.