MediaTek: Q2 revenue up 1.2%, but EBITDA and profit fell by double digits

On August 27, MediaTek reported Q2 2026 results. Revenue grew 1.2% YoY to TWD 152.2 billion, but EBITDA fell 15.5% to TWD 29.7 billion and net profit dropped 12.6% to TWD 24.3 billion. Given weak profit dynamics and a rich valuation, the shares look rather unattractive.

Key takeaways

— Q2 revenue grew only 1.2% YoY, but it was the first positive quarterly growth in four quarters

— EBITDA margin fell from 23.4% to 19.5% – the worst reading in five quarters

— Net profit declined 12.6% to TWD 24.3 billion, driven by operating margin compression

— Operating cash flow in Q2 was TWD 24.3 billion, but capex rose to TWD 15.0 billion – nearly double a year ago

— Net debt is negative: minus TWD 157.3 billion, equivalent to -2.0 times EBITDA over the last twelve months

— Trailing dividend yield is 1.16%, below the three-year average yield

— Shares trade at P/E of 76.4 and EV/EBITDA of 63.3 – far above the three-year average of 17.7

Attractiveness

Key figures, TWD bn

Q2 revenue grew only 1.2% YoY, but it was the first positive quarterly growth in four quarters

In Q2 2026, MediaTek's revenue reached TWD 152.2 billion, up 1.2% YoY. This was the first positive quarterly growth after three quarters of decline: in Q1 2026 revenue fell 2.7% YoY, and in Q3 and Q4 2025 the declines were even steeper.

The positive dynamics are still weak, but they point to stabilisation in demand after a period of correction. The question is whether the company can sustain growth amid competitive pressure and a maturing smartphone market.

EBITDA margin fell from 23.4% to 19.5% – the worst reading in five quarters

EBITDA in Q2 2026 was TWD 29.7 billion, down 15.5% YoY. EBITDA margin fell from 23.4% to 19.5% – the lowest level in five quarters.

Margin compression is happening against stagnant revenue, pointing to higher cost of goods sold or operating expenses. The company has not been able to offset price declines or a shift in product mix toward lower-margin products.

Net profit declined 12.6% to TWD 24.3 billion, driven by operating margin compression

Net profit in Q2 2026 was TWD 24.3 billion, down 12.6% YoY. Operating profit fell from TWD 29.4 billion to TWD 22.9 billion, reflecting deteriorating operating efficiency.

The decline in profit is faster than in revenue, confirming that the issue is not demand but profitability. Unless the company restores margins, even modest revenue growth will not translate into profit growth.

Operating cash flow in Q2 was TWD 24.3 billion, but capex rose to TWD 15.0 billion – nearly double a year ago

Operating cash flow in Q2 2026 was TWD 24.3 billion, a significant improvement from Q1 when it was negative (minus TWD 17.7 billion). However, capex rose to TWD 15.0 billion from TWD 8.4 billion a year ago.

The near-doubling of capex may be related to investments in new technologies or capacity expansion. This reduces free cash flow, which after such spending was only about TWD 9.2 billion for the quarter.

Net debt is negative: minus TWD 157.3 billion, equivalent to -2.0 times EBITDA over the last twelve months

At the end of Q2 2026, MediaTek's net debt was minus TWD 157.3 billion, meaning the company has a significant net cash position. Net debt to EBITDA over the last twelve months is -2.0, indicating financial strength.

Over the quarter, the net cash position decreased by TWD 1.6 billion, and over the last twelve months by TWD 18.7 billion, driven by higher capex and dividend payments. Nevertheless, the company remains a net creditor.

Trailing dividend yield is 1.16%, below the three-year average yield

Over the last twelve months, MediaTek paid dividends corresponding to a yield of 1.16% at the current price. This is below the three-year average yield, which we estimate at around 2.5–3%.

The low yield is explained by both the high share price and moderate payout levels. If the company maintains the current dividend, the yield will remain low, making the share less attractive for income-oriented investors.

Shares trade at P/E of 76.4 and EV/EBITDA of 63.3 – far above the three-year average of 17.7

The current EV/EBITDA multiple is 63.3, almost 3.6 times higher than the three-year average (17.7). P/E is also high at 76.4. Such valuation implies that the market expects significant profit acceleration, which is not yet visible in the reports.

According to the portal's model, the upside to fair value is -5%, confirming that the current price is stretched. Even with a strong balance sheet and leadership in semiconductors, the current valuation leaves little room for error.

Valuation on the latest reported figures

Bottom line

In Q2, MediaTek showed its first revenue growth in a year, but that growth was accompanied by double-digit declines in EBITDA and net profit due to margin compression. The company maintains a strong balance sheet with negative net debt, but capex is rising and dividend yield remains low. At the current valuation – P/E of 76.4 and EV/EBITDA of 63.3 versus a three-year average of 17.7 – the shares look rather unattractive. A change in the verdict would require margin recovery and faster revenue growth.