Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Silicon Motion Technology Corp (SIMO, Financial) achieved over 25% revenue growth year-over-year, significantly outperforming the end market.
- Gross margin improved from 43% to over 46%, with operating margin increasing from 11.9% to 15.3%.
- The company successfully entered the enterprise market, adding six customers and beginning initial shipments of a new product.
- Automotive business grew to over 5% of sales, with a strong backlog entering 2025.
- Silicon Motion Technology Corp (SIMO) introduced a high-end 6-nanometer 8-channel PCIe 5 SSD controller, securing a dominant market position.
Negative Points
- Weak end-user demand persisted through the fourth quarter, creating an unseasonably weak holiday season for PCs and smartphones.
- Sales decreased 10% sequentially in the December quarter due to weaker demand for PCs and smartphones.
- Revenue is expected to decline 12.5% to 17.5% in the first quarter of 2025, reflecting near-term market challenges.
- The NAND market is experiencing ongoing weakness, with prices not expected to recover until the second half of the year.
- Operating expenses are expected to grow in line with revenue, driven by increased development costs and higher R&D headcount.
Q & A Highlights
Q: How should we think about the OpEx and R&D increase for 2025, and what should we assume for CapEx?
A: OpEx is expected to grow in line with revenue, primarily driven by R&D costs. CapEx for the year is projected at $65 million, with $29 million for routine expenses and $36 million for new office construction.
Q: Given the maturing NAND market, what strategic changes or new markets are you evaluating?
A: We see opportunities to gain market share in client SSD and module controllers as NAND makers scale back investments. We're also focusing on growing our enterprise and automotive businesses, with plans to expand R&D for enterprise storage and explore potential acquisitions or joint developments.
Q: Can you provide more details on the MonTitan platform's customer expansion and expected shipments?
A: We have secured six customers, including two Tier 1s. Initial production is expected late this year, with significant volume ramping by mid-2026. The U.S. market demands high-density QLC, while China focuses on TLC.
Q: How do you plan to achieve the $1 billion annual revenue run rate by Q4 2025?
A: Growth will be driven by the PCIe 5 8-channel high-end product line, which will ramp significantly in Q3. Additional contributions will come from module controllers and new UFS products, including UFS 4.1.
Q: What are the expectations for gross margin improvement to 48%-50% by year-end?
A: The PCIe 5 8-channel product will be a major driver, along with high-margin UFS controllers. Our diverse product portfolio supports this margin target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
