Company's Profile: Silicon Motion Technology

Company
Silicon Motion Technology Corp.

Location
HQs and offices in Hong Kong, Taiwan and USA (Milpitas, CA); design centers and sales offices in Taiwan, China, Japan, Korea and USA

Date founded
November 1995

Financial results

For FY17 revenue of $523.4 million, -6% Y/Y, net income of $75,0 million;
For 3FQ18 ended last September, revenue of $138.6 million, up 9% Y/Y and flat sequentially, net income of $29.2 million
For 4FQ18, management expects revenue between $120.5 million to $127.5 million or -13% to -8% Q/Q

Main executives
James Chow, chairman since April 2005, has been the chairman of Concord Financial Co., Ltd. since 1993. This latter is an investment holding company and was one of Silicon Motion’s significant shareholders.

Wallace C. Kou, president, CEO and director, founded Silicon Motion in 1995 and has been president and CEO since company’s founding. Prior to that, he was the VP and chief architect at the multimedia products division of Western Digital Corporation, which developed graphics processors for notebook PCs and was sold to Philips Semiconductor in 1995. Before Western Digital, he worked for Wyse Technology.

Riyadh Lai, CFO, joined the company in April 2007 from ING Corporate Finance, Asia, where he was the head of the technology group. Previously, he was also an investment banker at Morgan Stanley and ABN AMRO and finance manager at PepsiCo in Hong Kong and New York. He has 20 years of financial management and M&A transaction experience.

Nelson Duann, SVP marketing and OEM business, mobile storage since July 2015, joined Silicon Motion in August 2007 as product marketing director and R&D team leader. He has almost 20 years of experience in the semiconductor industry in product design, development and marketing. Prior to Silicon Motion, he worked for Sun Microsystems Inc., focusing on UltraSPARC microprocessor projects.

Number of employees
1,292

Technology
Silicon Motion develops NAND ﬂash controllers for SSDs and other solid-state storage devices. It has over 20 years of experience developing specialized processor ICs that manage NAND components and deliver storage solutions widely used in smartphones, PCs, data centers and commercial and industrial applications.

It has a broad portfolio of controller IPs developed from it understanding of NAND characteristics, which enables to design both optimized configurable IC plus related firmware controller platforms and complete controller solutions.

In the last ten years, the firm has shipped ﬁve billion controllers, “more than any other company in the world.“

NAND ﬂash components, including 64-, 72- and 96-layer 3D TLC and QLC flash produced by Intel, Micron, Samsung, SK Hynix, Toshiba and Western Digital, are supported by Silicon Motion controllers.

Proprietary NANDXtend ECC technology combines LDPC hard and soft decoding with RAID protection. These technologies extend the P/E cycle performance of 3D NAND, prolonging the SSD’s lifespan and ensuring data integrity. The provision of a LDPC engine with a firmware algorithm improves power efficiency, decoding efficiency and correction capability. This means that the SSD can maintain consistent data throughput and provide a better user experience, even while the bit error rate increases due to the ageing of the NAND flash array.

Most recent results by products
During most recent quarter, flat sequentially and up 9% Y/Y at $138.6 million, two US NAND flash makers, Intel and Micron, began shipping first client SSDs with their 4-bits per cell QLC 3D NAND using firm’s controllers, but SSD solutions declined.

Sales of mobile storage products that include embedded storage products (eMMC+UFS and SSD controllers and data center and industrial SSD solutions) and expandable storage products (SD memory cards and USB flash drive controllers) were stable quarterly and up 11% Y/Y.

Kou stated during conference call: “Our client SSD controller sales momentum continues to improve as the cost of NAND has been falling and SSDs are becoming increasingly affordable. Full-year sales of our client SSD controllers are now tracking towards a 35% growth rate. We believe this positive trend will extend further next year. However, both our SSD solutions and eMMC+UFS controller sales are tracking below prior expectation due to product transition timing and weaker end-market demand. Nevertheless, in spite of weaker than expected sales for the full year, we anticipate that our full-year margins will be better than expected because of stronger SSD controller sales and believe our earnings growth remains strong.”

He added: “The NAND industry is currently being oversupplied and the price of the NAND will continue to fall rapidly. With NAND industry’s supply expected to continue to grow, we believe current oversupply conditions will continue, likely through the middle of next year and possibly even through the second half of next year.”

Sales of SSD solutions business declined sharply as sales relating to new project were delayed and will be further delayed.

According to Lai, “In Q3, sales of our SSD controllers grew approximately 35% sequentially and nearly 80% Y/Y. In Q4, we expect our SSD controller sales to be stable sequentially but up 50% Y/Y. For full-year 2018, we expect our client SSD controller sales to grow 35%, much stronger than the 20% we were expecting at the start of the year and better than the 30% growth expected three months ago. We expect strong SDD controller sales to continue through next year.” He added: “In Q3, sales of our SSD solutions declined approximately 40% sequentially. In Q4, we expect our SSD solutions sales to decline further and rebound in the middle of next year when our new Shannon SSDs are expected to ramp and scale.”

Products

Embedded storage