Silicon Motion Technology (SIMO) 4 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Silicon Motion Technology Corp's Q4 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] This conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include without limitation, statements regarding trends in the semiconductor industry and our further results of operations, financial condition and business prospects.

based we own believe are from and statements sources, other to such on information our information Although be reliable.

place such semiconductor multimedia customers; industry our uncertainties prices; and risks include, state competitive pressure limited trends pressure statements legal, of and for not for of involve our and changes and expressed effect demand of or differ in uncertainties should economic, political, consumer and undue technology variety in these major them. the in those continued on relationship to, You forward-looking with in unpredictable in These conditions materially the risks from social and not Taiwan. our the change of and but and consumer change electronics; and in market a are implied actual results may reliance statements reasons. Potential

of risks discussions Commission. update see file statements, Strategy. apply documents go sir. first we of conference additional factors, Chris the as which any Director Mr. speaker other date and Relations over For like time with please these obligation uncertainties to the assume time no Securities the and this the from Please the forward-looking and to of We now today, call. I to Investor of Chaney, Thank to hand you. only and would conference ahead, Exchange

webcast. welcome Motion's quarter fourth results and call Silicon morning, to you, everyone, and Good Thank Ajay. XXXX financial conference

Financial Wallace me and our is CEO, my on just President Ajay Director Chief Investor are Officer. Lai, And name mentioned, Chaney, Kou, our Riyadh today As of Relations. this call Chris joining and

will our our developments a review outlook. fourth and Wallace quarter will then our of my and provide key comments, results business discuss Riyadh Following

period. conclude with a We will then question-and-answer

the remind of get you we of at call. Policy, Harbor our like which this was read to Safe beginning I'd Before started,

please Exchange overview the our involved the securities, refer and Securities For in Commission. investing our a comprehensive U.S. risks to with in of filings

to be webcast our Relations filed press X-K results, in close This Investor please replay our details for Form the our on section understanding refer after will of on performance, was available release, yesterday. more For to ongoing financial the which call. financial manage market non-GAAP measures our of enhance discuss information we our time. use To We'll economic this operations. evaluate during for internally limited website investors' non-GAAP a our and of will

We have own perform operating our information to results enable to comparisons a similar therefore to chosen manner provide this results. of our you we in how to analyze operating

less our comparisons consistent earnings upcoming conjunction based We on and review can to in call. with for non-GAAP was financial ask For data of divested issued in release in XXXX. the quarter, May performance quarter more FCI, our it non-GAAP internally GAAP our you this that be fourth found are this reconciliation which measuring year-over-year yesterday. we The

that, to over with Now Wallace. I'd to call turn the like

ADS $X.XX for you, to quarter, Hello, fourth everyone, quarter, and Thank range. Earnings revenue up guidance the $XXX you high Compared the our Chris. XX% than third in joining delivered end per sales, for quarter sequentially. in up $X.XX, thank we about of quarter. the the the In us more X% was were third from fourth today. million

from full when year. was XX% ago. up last Earnings the was a For per up to $XXX revenue compared $X.XX, year, ADS XX% million, year

sales solution controllers through and strongly already and XXXX. especially robust. further for for were Purchase be Our PC full from SSD of were controller through exceed Sales demand. procurement our guidance, we the benefit fourth rest full seasonally purchase on our first Based to order meaningfully first the strong, first and continued expecting however are already robust our quarter stay purchase see order smartphones fourth the year we quarter from guidance. quarter Sales our were year to devices the customers of consumer the strengthen strong orders SSD and of quarter the for soft. quarter our the of we IOT results strength continue exceed impacted, eMMC+UFS to see our our

order however to ability supply. customer our limited by meet product is Our

variability semiconductor quarter current in first sales supply very remained Our inventory, limited is is eMMC+UFS sales controller SSD that Demand much full shortage, limited are today. of of affecting year by our by of the a product growth the and our and foundry strong. also overall industry

working especially as to continue home of sales learning. robust We of from online and a see driven PC need

Additionally, furthermore, market replacement share and continue to the SSD other based for makers our devices for low NAND compared for HDD. grow NAND this OEM adoption replace with controller expecting pipeline PC we're module flash expand last makers sales design in And of our we the and of of cost - SSD to as year. controller on more growth accelerate year SSD gain wins. market, to stronger OEM Those SSD

the legacy UFS higher eMMC newer gradually, to We build for to value the in cameras. meaningfully, generation continue OEM and more to payer technology processes see mobile from application activity smartphone spec increase as transition OEM storage UFS improve, continue new

controller module starring Chromebooks, costs low remain are speakers Additionally, devices smartphone, eMMC who for of smart maker, to other strong. and solution sales tracking building IOT healthy

to module NAND maker we'll from and over this. discussed, previously eMMC has As makers been flash legacy turning benefit business

will controller seek programs, well NAND captive suppliers. affecting program flash also issue, makers flash are shortage and eMMC+UFS to controller with shortage outsource share our win design of SSD controllers expecting last eMMC+UFS the We other foundry as market of and rationalize because this NAND sales to compared strong growth Because year. capacity controller We emerging our seeing year gains accelerate, pipeline. we controllers believe growing more. as Clearly, are also is makers internal

business more who all adverse than led We meaningfully are controller seeing redirect foundry us. are customer to of to smaller also face has us, merchant shortage supply which issues, their competitors several

key Let now our objectives you plan. strategic me three-year from with share

of With expanding trend OEM better program. our business the growing and we're visibility

party stable billion USDX XXXX, sales operating than revenue. plan and a faster We delivering are margin meaningfully achieve by EPS growing XX% can we of of with incredibly confident margin, gross that strategic our XX%

objective. industrial towards orders next in to limitation, unconstrained for billion Ferri second our With Gen eMMC+UFS already we a enterprise material by this $X SSD are us not Our sampling contribution foundry guidance to be plus year, take full primarily controller wave $X of new half PCIe our book-to-date will sales the from SSD With controller X SSD. our beyond our considerable sales and objective. SSD our controllers to expecting growth contributor year capacity additional billion sales our enterprise

and meaning well channels, as on pipeline, increase primarily from consumer will roughly XX% XX% HDD planning year to three SSD double we continue are has our only contribution XX% increased adhere to devices, OEM, by into years client are sales overall after our XX%. primary rapidly In sales last of enterprise SSD industrial market, adoption material as We combination client of increasing in our aftermarket the controller replace. to PC, product electronic controller units device to win about to SSD SSD gradually XXXX. to and our further in With including SSD from And share XXXX. expect design XX% adoption market supply

with segment share the in design while pipeline have gain in to Our segment segment share our already shares wins to and growth market channel maintain of the and the segment. market high, OEM we where faster is expect OEM of large market we a OEM, in drive rapidly channel low, share and larger high smaller is our growing

controller deliver our and growth We to model expect just based existing to maker the objective, NAND sales SSD on customers. flash

from and growth sales XX% to recently, about Japanese automotive Separately, based selling also networking we expecting UFS that applications. infotainment that module German over our year to adoption three at of three sales extending solutions. are to SSD brands. growth double ability now in increasing industrial, thank also and sold is flash in Again, pipeline the to just next high building quarter most have our strategic us way support I part their system equipment but we a base book years' to by Our continued customer growth a support, our objective. to broad years reverting And into and model also to past because customers. broad a summarize, and year, well controller of like will eMMC+UFS devices already SSD time. expand we ecosystem To extensive availability, to customers. extensive foundry more engagement, maker And SSD, the considerable diversified our NAND by of take data our plan, from which the and are of XX% existing were business also eMMC+UFS sales Ferri last understanding the maker More our will other for confidence start customer to $X without because for XX% supply flash jeopardy. our objectives by customer our a meaningful NAND on we're year smartphones to the these controllers, dashboards years, In sales our flash billion from commercial TSMC market constraints meaningful supply temporary for car only sales our suppliers in components to expecting set as delivering least order of we our this as share combination our NAND deliver to limited facing. and in base be than extraordinary not and XXXX, last and work of driven would meeting we're to

Riyadh to financial I discuss Now, call outlook. turn to results our would over our the and

data was fourth earnings results and sequentially issued less you, then lower our X% GAAP otherwise million the details primarily and provide hello Wallace our non-GAAP will on everyone. comments of I focus and XX% higher guidance. our discuss to additional unless of yesterday. In results is specifically quarter non-GAAP Thank revenue FCI the quarter, fourth today reconsideration noted. will our included A year-over-year. with $XXX release My

million year-over-year. were earnings XX% and ago. sequentially, year quarter the fourth higher was per higher than full $XXX ADS In XX% lower a revenue For of the XX% year $X.XX,

a year For were $X.XX than per earnings or the ADS XX% year higher ago. full

X% - and XX%, Now line to started of with a our sequentially, sales year. its of eMMC+UFS controller soft our Full XX% substantially customer meaningfully total XX% Full decline sales solution sales to rebounded for controller and from XX% year with key grew were revenue XX% margin XX% in the Full declined sales from grew Gross prior SSD year. XX% SSD with XX% sales inventory to remain faster to total contributions as to in of up increased from some revenue roughly XX%, similar NAND increased of - sales XX% XX.X% our seasonally than prior solution prior XX%, XX% sales revenue market revenue growth. XX% SSD to XX% year. client QX controller year details, market sharp down SSD sales positive XX% increase to total sequentially, worked to the were XX.X% revenue XX%. products. growth. three XX% to prior restocking. starting SSD faster Ferri. to sequentially in controller in faster year actively plan. XX% eMMC+UFS than sales and to XX% slightly increased after to the to prior the to in quarter performance Shannon large the from XX% sales quarter. both controller

higher XX.X% For as $X.X QX X.X% controller higher from a because mix the payout decrease SSD R&D and XX.X% quarter, the due renminbi full $XX.X related gross sales, NT margin a well million, exchange million year, expenses. solution higher dollar to year, expenses lower in gross prior to the of in due appreciation. margin margin. primarily were to higher of gross decreased Also as slight in was OpEx than prior roughly foreign Operating

related this related over the and SSD expenses R&D year, and XX% For project but SSD also related R&D controllers. roughly quarter XX% due the a were of of operating project year, controllers, payouts. million, roughly compensation than half IP our primarily XX%-XX% was prior the expenses our headcount and of full to to $XXX.X for payout, due operating and remainder to were is expense expenses, R&D Last related, for higher headcount higher higher year, other of is expenses. enterprise

higher expenses. X.X% the was QX and operating because XX.X%, operating in exchange full margin the in the was the year. quarter, renminbi prior compared to NT XX% XX.X%, year, dollar higher from lower appreciation. prior Operating margin in XX.X% operating when of expenses roughly year Full For slightly up due were foreign to

expenses dividends was last end the QX in our to rate Stock-based to and first cash end dividend in $XX.X We exclude benefits rate from per differences. QX tax our paid was million in million million installment our of restricted which shareholders, of guidance, due range. cash, announced investments results at the non-GAAP tax was below compensation one-time effective $X.X short-term of of timing quarterly operating and certain our prior had we October. X.X% We to million Our in within $X.X QX guidance million XX% million $XXX.X XX% cash equivalents, $X.X $X.XX compared at the to annual to the that quarter. ADS $XXX.X our

our everyone we asset Shannon about continued to underperform least of and asset me for impairment update cash at are product Shannon sales, which Let test to annually. line, in profitability acquire was an required flow. terms has

assessment, recent our that was the goodwill During remaining off sheet. we asset million on of and wrote our $XX.X impaired determined our Shannon balance

down million obsolescence. flash for Shannon SSDs NAND fair components primarily $X.X inventory, market wrote value, we of Additionally, to and

Alibaba of were NAND the operating write-down, inventory standard internal channel SSDs an other Shannon data but for customers Gross SSDs Sales open grew of makers. off expectations, of profitability of sales plans. China significant competition million. flash with to to $X in was line center our sales Shannon environment product of Although brutal differentiate and significantly line sales incurred loss year, the center enterprise considerably underperform soft also because lower about demand were from SSDs SSDs the our excluding NVMe and data last in

to senior profitability. product this working restructure operating are Shannon our restore to and team, included last growth and many the year of which continue We departure to line managers

margin And fewer lower expect meaningfully this down Shannon before further also sales. operating and on contract in We our its loss of from but focus our suppliers SSDs inventory other With Shannon elevated of XXXX procured higher are sales, sales large as worked widen we to levels last restocking. us year expecting customer we to year.

me let and our business to full and trends. turn Now quarter first year guidance forward-looking

increase expect sequentially $XXX $XXX XX% quarter, first the million. X% we to For million approximately revenue to to to

million we XXXX, $XXX revenue XX% year to expect XX% increase $XXX to million. to full For to

significantly available to based The SSD are current is made range, already controller were us, and more first discussed, on allocations. foundry faster. we revenue sales relating us. to available even the has our uncertainties guidance limited In If purchase range more Wallace than SSD expecting we for have more are that As we solutions I orders what guidance primarily foundry strong capacity by grow could provided and modest growth foundry sales capacity just eMMC+UFS quarter, to growth. capacity

and controllers solution flat. than faster and we controller For are expecting the our full our grow had Wallace sales SSD both be sales year, to highlighted, as eMMC+UFS much SSD to last year

quarter gross margin should the First in range XX% of be to XX%.

gross year, full increasing. packaging supply flat the The in to range. arrangements to are prices contractual pricing hold certain in substrate on and are they are: For we based to assumptions we the subject costs assumptions expecting unless expect margin are XX% agreements. XX% And

lower able higher ad be However, execute higher and cost. negotiate if we prices able successfully our reduce our costs, to initiatives guidance. separately could could our were prices we higher product If are margins be to than margin increase gross gross our to

to margin XX%. XX% to in operating the first quarter expect be of We range

range. to the expect year, we operating XX% the full XX% in margin For

you at had considerably, $X.X dollar the exchange of last of the stock-based second last As first to our in compared renminbi grants strengthened timing end to in NT rest expect rates X.X%. many seasonal rates If know, year million, amounts years. for compensation we in to year the $X.X RSU are we are we year. which million range impact expenses the with X% the and of quarter, past year assuming, especially consistent is the In operating of approximately that to half estimate maintained the of

$XX million the in million For of compensation consistent prior with we range the year, the full to year. expect $XX stock-based

and XX% year with spent in building. range, next the construction in this cost spent the XXXX rate $XX effective million We of tax XX% purchase for to the $X quarter office year Hsinchu range. rate our of expect Construction in budgeted for land. $XX first $XX the tax break of million spent the for ground with million the million will is half we in lower On our year. XXth, to the We February

on and complete the expect to building. we'll back completion, sale Upon This questions. prepared now, in of construction remarks call lease open plan We our concludes we and a XXXX. to the your

question We the ahead. Please go first Instructions] from of from [Operator Cowen. Karl have Certainly. line the Ackerman

gentlemen morning West evening and Coast. good Good the on

provided question to on he And internal First your your facing some year about to their I you how in willingness remarks, supply, about solutions. me, move customers full to easing from spoke outlook also spoke on Wallace are new you competitors bring and appreciate some the prepared challenges OEMs are with NAND platform. how enabling

what hoc full volumes that sort help XXXX? question commitments of ad to support able or through are So, would secure due my year are your and and opportunistic these is, both volume you guide

we no from stated, foundry as year fulfill to have can current higher. So, guidance full question. makers, plan be foundry we allocation additional our we makers, our in our our wafer supply for XXXX our guidance wafer incremental committed will There's XX%. If

I that. revenue SSD the loss least Okay, is will XXXX? guess coming the solution then, relative from at you SSD? I the your impact enterprise guess qualitatively you. widened profitability shift expectation could Thank model That's and business, discuss I to how appreciate my consignment question. XXXX in operating your only in versus

product relates loss related line. the operating that consignment to data our That's and Shannon specifically the center Yes. to SSD

as So, revenue delivered under product of flow call, about talked cash terms we and profitability the our in during growth, had Shannon line generation.

of full were of determined so remaining the of regular our goodwill. acquisition, a our assets and our that testing And took valuation we over the as impaired write-down had part acquisition, so, the

corporate of that NAND. our purchase products amount below of of the So, gross have by because of we're our our building, terms the the requiring average profitability been margins in business, significant

year to moving issue. based give Alibaba, us. one NAND procures they where we of on the specific for the for SSDs So other model that customer a we Alibaba that, as was started part consignment business Last build and this NAND what

gross our - customers. significantly we're Shannon lower. buying our products gross But customers, margins we also of these majority margins are are for a lot to are have sales of and of non-Ali the And standard - our our lot NAND a margins other for Most this. SSDs in customers. of So, improved because fact, NVMe our so

you. Thank

Thank you.

We from Please the line have Company. Needham go Rajvindra of coming our question Gill ahead. from next &

momentum, the ambitious. and you're very you, wanted terms target, congratulations a up sales Riyadh, is get and just cadence to sense about I how this that. think billion impressive. of which very Wallace to of on Thank $X in putting the

look at I'm guidance, your XXXX I in allocation. you get extremely wrong at If the be in recent correct me $XXX year overall believe wafer company in that the if highest full it's But history for if your the high and higher could revenue, of that's there. terms more midpoint, million you

higher that So, base of the that's $X outside I'm curious once of other in a there. kind a PCs? in How sense Is being to this is just some the seeing XX% get do think of sustainable color we And adjacent of markets you combination market driven to on really growth. driven working the basis? cash you're kind get about consistent, of gains? rates that billion, of from on by about year-over-year it by share cadence terms being

you definitely think prepare guys are questions. answer questions. very to I the good We're

controller $X financial through as major years, strong very three controller. mobile client from billion a as our have to pipeline achieve our SSD well eMMC+UFS objectives We confidence within design

of technology to two in I pipeline gaining focus the three increased think from to since our And on momentum ago. XX-nanometer. we the think going I why Mobile, investment, you cook two product to we're a R&D we're share, year lot really moving design now. for that's XX, in R&D last development, yea-by-year. But expense start to market years new really win see X-nanometre move years

can XX, year. can next different wafer wafer found I will this nanometer for in with and constraints work to and XX is the continue customer hand, Yes, than right us current year technology why XX% meet make we start the sales it higher XX to XXXX carry to sure we supply XX, now TSMC year to nanometer, from get from XX%. design restriction we our OEM much to for that's the there our PO gave requirements sufficient pipeline, our be XX, why in That's think significant know no all confidence supply, guidance hand, major current full supply for backlog for our momentum to from XXXX. our

long-term course, we relation good half more then So can get years, I and from a in commitment is XX now. this the have with right a there's we of think allocation probably TSMC, year, support have significant them a of TSMC, past second we no

three for base So, maybe on a for investor. better to come years, confidence guidance they've have a will billion target, make we midway for much supply the achieve to year be only we can to $X the full goal earlier. But the

excellent That's I Riyadh, us give begin to target? get that. with have some for Any news. know you TSMC be upside potential to a way that the sense, quantify, And you from wafer about what which relationship Thank it to would could you hard on allocation if great more XXX think but be if with. might you

operating the on. the a an infrastructure and R&D revenue Rajvi, lot leverage. that's rest to it's this that teams, question. to expense operating that our infrastructure about infrastructure, load we of we considerable teams, have The infrastructure is has another operating Hi have our operating The marketing think ability more built, our our can way sales excellent

just and we no the profitability we incremental this for bottom-line. the deliver through wafer, there's wafer, on to to what beyond P&L levels able event, flow secure revenue we're able so, And we're what and our higher in this have If secure achieve to have would our of we're today, guided. if able much additional year, additional

you. Thank

The go from question to question, next next Riley line of comes you. the Thank Craig Please Securities. Can from the we sir? B. ahead. move

constraint in to that wanted you down just Wallace Hi, Wallace you're were theory, did that And that XX% higher said have is right guys. the This currently the constraints, supply supply said the there XX% seeing XX%, XX% drill now? in right? when So, Congrats. something been no if the is guidance [Indiscernible] to amount would that to question. I Craig. last on of understand for I

saying XXXX can current and guide committed, growth we've our XX% but grow guided foundry can comparable higher based an much is I'm XX% we incremental get with wafer if higher allocation No. on we to much for supplier.

it. Got

Okay.

Sorry miscommunication. about the

So, come new question doing to customers the that customers that already confident smaller that a is bunch your bunch of suppliers, they hold due supply you you how you're on have to my are second you you new you on are way kind guys a mentioned of these come of or the constraints? supply What given constraints. towards can as and

new these demands another of really major customer. Most are

makes a before additional existing XX% our just it we estimation maybe for than the come in than now can us goal, XX%, business growth or demand, I is offer us. XX% is you get they But others now in probably worse the park through us to of with use player, to past some to really so maybe player order controller customers. is allocation XX% think many But even maker with found our of what our globally, lot but the supply customer controller demand. order give use cannot the XX% pie our XX year-over-year, know, our our customers, even why small XX% our because to years. That's worse even in - wafers As controller, in shortage wafer now main stronger a that

it. Got

target. not of you a with point. one of forward, much of say calendar be fiscal that me. - 'XX impacting model? moving out gross all quick going and gross are to in 'XX? then that we increases expected expected - quicker ultimately, this at get higher to now year of the XX% Obviously, margin to one all this Okay. any to last assuming I out would to the guided from trying the understand sales back the just the that in percentage that kind the that insight get - and It Shannon, gross kind for number margin the 'XX, XX.X% margin, than fair of things in And come beyond margin why that and maybe given seems smaller the price gross can of wanting about to as mentioned couldn't saw year then But margin, sense 'XX? calendar be look XX% inputs isn't higher gross this why With XX% upside to Just number on me I what's provide it calendar

I are improve Theoretically, we definitely correct. show XXXX. margin think in you gross our

think I the for. looking is this goal we all

the However, depend shortage, our they all price will reduce not contract with this I going annually. will Because whether wafer program have some of major provider, think we regular all on discount some is severe foundry price. to they wafer continue the they're a Instead, increase wafer price.

obligation different model make we sure as than to shareholder guidance, conservative scenario can expectation. a have seen, to the So, we you we to our that's result the conservative to prepare all give play then have better

it. Got

guys. Thanks, Okay.

Thank you.

Morgan. from We line Gokul of JP have question the next Please ahead. Hariharan the from go

and question my taking congrats for great thanks Hi, results. on Yeah. the

similar do you about the had roughly going think Is talk think to be to probably similar that and XX% little I is mobile think wanted just now understand, revenue the about billion XX% about what when reasonably target, is have mix product the right to now? right $X to to we then our have bit controller So and I going mobile XX% how a we and we think that be XX% question. follow we think up we'll So, XX% get to about SSD a when there? I solutions. about about mix we or fairly XX%

maintained the same. will the mix roughly I think be

don't on able our have module in we customer, within don't said we I our $X statement, customer customer years. existing the maker three As target and achieve to We NAND the we new maker count billion based today. are

from Gen to eMMC target X.X-X.X. can $X UFS don't pipeline years. have billion enterprise We to think count don't We we within X, PCIe even we from even UFS X Gen three achieve enough We So, design on PCIe X.X. controllers. count

the sales, over product our add Gokul, controllers our well, that faster expecting bit $X should SSD also it But similar are the eMMC+UFS, let what is me mix to next little a we're mobile when would I add quite be grow also controllers achieve years. billion today. to than we few

Got it.

Just been years, have question, to to million range for asking me revenues $XXX visibility $XXX the gives pardon probably four for million right. and three related in what but essentially the you

us makers have module gives extent So, just to the given the for wanted also understand fairly side consumer to needs and are the in business some what expertly visibility mobile the volatile. for been

kind gives on that Second, what this clearly customers, of of [ph] past module the and change customers in that? have that your like a So, suddenly and about you let's concerns for interval factor customers think foundry PC when forecasts inflated especially et what customer? you your visibility we discount about say cetera. from or when XXXX eMMC to How you lot do the this had appeals like is XXXX, confidence orders in shortages we from

PO XXXX, Okay, you on $X to current The by high our billion let give we based the confidence me question. hands target for in just booking it's have answer reason backlog first XXXX. achieve first for

than backlog growth are we XX% a from are we coming supply XXX% number. confidence hand the already, XXXX. variable on our said bigger and to PO we As based in But, much wafer to XX% reach wafer, this

the So, you hopefully that very we to at know difficult to it's well, with that well also this very XXXX hard this as to wafer. change customer But and TSMC, because going pipeline provide very a can major and design more continue moment. customer major design continue through is

from to and XXXX. answer suffer sales will question, you last to very decline, be we the NAND down we controller general And then a eMMC major maker suffer second year, business And very, that of the revenue for started factor to of one yes, peak use it small so, counted.

I going X.X, picking X.X, will UFS next For from UFS to stay to think three years. for start is X.X XXXX. up

very, So, our eMMC strong. business we confidence, customer growing model have our very high and very are

provider are all We size NAND eMMC of dominating makers.

the target. as that maker share the today. align show $X you confident customer. count probably confidence as grow we to controller don't own which That's why strong us And business if to So, of NAND we are sales billion X% very to how market mobile are for well SSD reach client gives we can on

clearly the that some you Got PO I inflated of about there usual? how discount like degree this, think health or PO it. about board, your from a you at the for OEM we that gets the tell shortage you book is it you books some talk like, also and about that order module across the when is little bit customers even So, how book and Could think order you maker are of about, hear order taking think times something us can book? the or

think I as that's module small maker for PO, contribution very a portion a some revenue. for

the us visibility months much major because and see PO three year can cannot OEM, the So now we because our are better, full that's XXXX us normally major also they worry gave why get gave through OEM demand they visibility six the forecast, only why months PO, supply, customer. they they gave that's for they

you. Thank it. Got

you. Thank

of Anthony ahead. line next the have question the J. Please from Stoss. We go

Hi guys.

covering the or including is Silicon us the pipeline give why in not still And if to can for can maybe pipeline keeping excitement. there's color guys? Why of also, I not years revenue XX share you just seen guys visibility behind market we Maybe Thanks. am kind that lastly if it XXXX underperform, serious, ordering the continues for Riyadh, you anymore talk goal. you you're more would you a be or Motion, are helpful? never Shannon then operational? think enterprise Shannon? from away about, maybe that plan, controller you detail, if walk scrub in XXXX, strength double you of from this just and from have mainly And there's through that I then chance Going

on So, first your question. let me comment

more major I see year, share expect up for NAND start on have SSD but design year. OEMs, so in think many gain market to focused we That's all this ramp last why, to we also we not just global for module XXXX. they ship much And maker. for And client controllers. we maker

we how think from to the shortage PCIe a expect This momentum even technology can PCIe provide we from the know, Gen will However, major see SATA Gen supply due our to from the to momentum is the migration partner. such TSMC X, to only clients dependent originally I we a makers, the we but SSD. wafers X, much and for guidance, can stronger foundry from full PCIe X from have Gen we on continue get pipeline

and six mobile module in five And the stated, these Regarding practiced of prepared a makers. I to the controller makers of XX% and global - UFS as eMMC more than years. we from been past we have lot NAND outside design has the

gaining controller share. design they set-up this maker understand, value finally, TV. have NAND in together smartphone, and and sales Chromebook line Now maker please to and mobile box the smart close are They to from market revenue. are low module And smartphone to revenue entered

NAND not module like very maker. between a it's and gap maker So, big

So, very is the strong. very, see we transition

module this some just also for turning year to markers UFS, also a angle much pipeline, give us not XXXX. eMMC the into XXXX And are looking and XXXX they beyond broader customers

cannot investors. also And We we to we will major have materialized, now. when several talk comment programs, right our which these become

third Shannon question has let important of it's to business me strategically a us. But your also about address disappointment we're - the also Tony, Shannon. been us. piece to clearly

to SSDs controllers, Shannon, as And have this directly growth we line's by hyperscalers, using is product controllers so, strategic sell controllers. important without and not do to merchant actively be working mean because own What engineering grade their able to will to restore I SSD the enterprise develop we're SSD Chinese not profitability. capabilities they

and facilitate controller street So the market, market. Shannon our helps to provide We're enterprise also credibility SSDs grade new controllers designs, to and controllers. sell our SSD using into therefore, our this enterprise these

Shannon. it's street in to credibility so, develop important And

credibility. exposure we're at street So of was Chinese gaining our Shannon a hyperscalers also the experience lot

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we enterprise underestimate think, complexity for business. the controller SSD and enterprise I

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and So, customer, for we Shannon several Alibaba, from and especially learn much leading Baidu hyperscalers. so [indiscernible]

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that mistaken, Thank that I'm given not to you're the XXXX controller billion any in revenue about play conservative Is you just Wallace. your did [Indiscernible]? you forecasts? what for say the said including if that from $X enterprise roughly you just not But

correct. Exactly. That's

All right. Awesome. Great guys. job Congrats.

Thank you.

next the We have SIG. of from Mehdi Please our Hosseini ahead. go question line from

is Yes. Mehdi Hosseini This from SIG.

two wafer up. you say already did for Riyadh, margin price XXXX? Just follow into your guide gross any is that dialed increase

this Mehdi, we're wafer year. not increase costs expecting that

reflected substrates and we expecting costs margin packaging. the guidance that And have that's from in however, are We provided. gross

Okay, clear.

able capacity Just be that? to a at offset but if is incremental higher becoming cost curious you would available, there

mobile important our end the line more need supply. upon because without any need for Depends desperately to product line customers high very

to And higher XXXX, question bit think so Got UFS you But asked. I comparing offer late, do little about growth? has expect if been to and mobile opportunities, the apologize SSD which then Okay. already a the it. I joined segment you it call controller for when

already NAND mobile Riyadh is therefore be client base because gross major maker higher the three for SSD rate I dollar smaller. still is And had I only because total the DRAM. little a amount for mobile think, a is controller think and faster mobile bigger, mentioned, will has

stronger figure that's major momentum easy the grow mobile why it's design very DRAM. to three will in we have with and the maker So, NAND out

Great, China you mix demand players? comes from contribution from expect then capacity then mobile would thank And especially capacity China, as online, your increase from domestic or you. to and

output, When mobile to I'm customers makers benefit they're our the high-end not [Indiscernible]. of the going China a will makers. module also the lot were they're NAND from eMMC, from but back sure the increase will the are China business NAND how being like much we NAND because use now this output. eMMC the valuable probably But Because in definitely

it. Got

you. thank Okay,

Thank you.

back As there would any closing for no I presenters like our further the are remarks. hand to to questions, call

Motion. some I for everyone and Silicon us to in today Thank joining you would for like you, interest your leave thoughts. continuing with final

our safer we our volatility Coronavirus. forward In quite be world business. have spite pandemic, to Our of continue been confident achieve caused of business never the a We the devastation continues free by look well. to I of to resilient. to more business by caused

target. sharing this our forward with We look expected to business growth rapid progress of also billion towards our the year XXXX and you $X revenue

schedule on will call. for Investor investor several for will you listening in The Thank to the our virtual posted We conferences be Goodbye next be and for interest attending your few now. continued months. our which Relations website.

all disconnect does and Ladies now. you. for Thank for conclude Thank you that conference today. may And participating. Thank you gentlemen, you.