Release Date: April 30, 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) delivered revenue at the high end of their range for the first quarter, indicating strong financial performance.
- The company experienced gross margin expansion due to the successful introduction of new products and a shift towards higher-end PCIe and UFS products.
- Silicon Motion is benefiting from increased controller outsourcing by NAND flash maker customers, which is expected to continue as controller capacity increases.
- The company secured significant design wins, including with NVIDIA's BlueField-3 DPU platform, enhancing their market position.
- Silicon Motion is well-positioned for long-term growth with investments in next-generation technologies and expansion into new markets such as enterprise, AI storage, and automotive.
Negative Points
- Sales decreased by 12.9% sequentially in the first quarter, reflecting weak end-user demand for PCs and smartphones.
- Operating expenses increased due to investments in new enterprise storage products and new product tape-outs, impacting profitability.
- The company faces macroeconomic uncertainties, including geopolitical challenges and tariffs, which could affect demand.
- Silicon Motion's exposure to the US market is limited, which may restrict growth opportunities in the PC and smartphone sectors.
- The company is cautious about the potential negative impact of tariffs on demand, which could affect their ability to achieve revenue targets.
Q & A Highlights
Q: Can you provide an update on the enterprise SSD MonTitan program and its future prospects?
A: Wallace Kou, President and CEO, explained that the MonTitan program is on track with six major customer engagements, separate from the NVIDIA BlueField DPU platform. These customers are expected to ramp up from the second half of 2025, with more significant revenue growth anticipated in 2026 and beyond. The NVIDIA BlueField DPU design win offers additional opportunities, particularly with high-density 128-terabyte QLC SSDs, enhancing the MonTitan family’s growth prospects.
Q: How is the company progressing with its transition to 6-nanometer technology, and what are the future plans for node transitions?
A: Wallace Kou stated that the company plans two more 6-nanometer tape-outs in the next three quarters and one 5-nanometer tape-out for mobile controllers. A 4-nanometer tape-out for PCIe Gen6 enterprise SSD is expected around mid-next year. Jason Tsai, CFO, added that the company does not anticipate moving beyond 6-nanometer for client applications in the foreseeable future, focusing on new designs for new generations of flash or interfaces.
Q: Can you elaborate on the potential market size and significance of the NVIDIA partnership?
A: Jason Tsai highlighted that the BlueField-3 product is expected to ramp significantly in 2026 and beyond, contributing meaningfully to the MonTitan business. The total addressable market (TAM) depends on factors like enterprise storage market growth and global demand. Wallace Kou added that NVIDIA’s focus on storage, particularly for AI applications, presents a significant opportunity for Silicon Motion.
Q: What is the outlook for the notebook market, particularly regarding the 8-channel and 4-channel products?
A: Wallace Kou noted that PC OEMs are expected to ramp up the 8-channel PCIe 5 from July, with the 4-channel DRAM-less controller designed for 2027 production. The company has secured design wins with four of six NAND makers and nearly all module makers, aiming for a 30% market share for the 8-channel and 50% for the 4-channel in the mainstream market.
Q: How does the company plan to achieve its $1 billion run rate by Q4 2025, given the current macroeconomic environment?
A: Wallace Kou stated that the $1 billion run rate is based on existing design wins in mobile controllers and PCIe Gen5, without relying on enterprise business from the BlueField design. Jason Tsai added that new programs, such as the 8-channel PCIe 5 and UFS 4.1, are expected to scale in the second half of the year, supported by market strength in PCs and smartphones.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
