Silicon Motion Technology (SIMO) 30 Jul 212021 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Silicon Motion Technology Corporation’s Second Quarter 2021 Earnings Conference Call. [Operator Instructions] And please be advised that today’s conference is being recorded. [Operator Instructions] And 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 limitations, statements regarding trends in the semiconductor industry and our future results of operations, financial condition and business prospects.

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

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

financial welcome webcast. Annie. everyone, you, morning, quarter call Silicon conference and Good second Motion’s XXXX Thank results and to

Annie Director is As mentioned, Chris Relations. name the of Investor my Chaney, I’m

our on call Lai, today CFO. President Riyadh are this and me and Joining Wallace Kou, CEO; our

and then with And discuss comments, provide outlook. a our will will business a Riyadh Wallace period. my developments, second of question-and-answer Following conclude and quarter review our we’ll then our results key

of just safe I read to harbor Annie which of the started, you like our get we would call. Before at the start policy, remind

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

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

financial to comparisons our enable information therefore operating matter be We with to Wallace. to to issued results a data provide to conjunction in over ask our call earnings that of our results. of this with I’d found now how And similar review it we to non-GAAP call. can perform release The the yesterday. chosen GAAP that, in like you have We own operating in reconciliation you analyze this turn to

everyone, higher earnings. and second and Thank quarter, a joining record higher-margin $XXX you more us eMMC+UFS you, growth Revenue delivered selling possible, costs. quarter second we controllers Chris. quarterly product repricing a up the mix another for per of earnings controllers allocating quarter a and both record and million cover today. ADS achieved sequentially of Hello, accounts $X.XX. and product Sales delivered record profitability, grew grew In where manufacturing for record XX% in by the and We products, and thank to richer to SSD to primarily of better-than-expected sales. sales

this mix pronged better growth this growth XXXX communicated the this sales and we year is year. capacity processes remain and been billion back team our rest had better for tuning gross processes now manufacturing manufacturers initiative year, tune allocation, Based the actively X product and for Earlier profitability is pricing capped continued products, our costs. manufacturing with value-add critical to when our on lower to of objective working costs This upselling are elevated. initiative, of fusion expecting $X has of manufacturing and discipline and of the Additionally, road operation also creating contract we map. margin end yield richer optimizing our improve manufacturing of

on projection, earlier. achieve billion We already much latest by our likely fourth be sales target least quarter. our this annual is this year’s at will $X Based expected run to rate

sales year next as already foundry richer us a of of exceed next higher we execution PCIe ultimately upselling scaling SSD from include includes our prong capacity high-volume $X will the products. expect add We billion value, GenX of incremental X which of initiative, continued and to meaningful rapid controller. mix committed Sales a year

us provided today exceeds year, next also the have the customers for $X.X and already order orders with book Our billion. purchase

minute procurement Our customers. hard work. strong the opportunistic result all shelf of of order book parts is of many audit No by years a last

We years, have many purchase to these been building for our leading business orders. pipeline

sales, some What assurance OEM to start with Several have gaining initial quality NAND manufacturing storage market share our gaining develop systems. start depending been of are X and Tier Projects our controller include features wallet that controllers. SSD on our adoption for book, the X and analysis, flash to OEM and requirement X the PC end and and in of and comparability, to of marketplace. development off before verification, with automotive product Our been and order applications is module customers to in have of projects product firmware we hardware continue capacity. and typically defining wins and actively and customization before SSD our share product from grow years in UFS product before sales our solutions clear and performance design our UFS support maker manufacture and new consoles activity customers kick game smartphones, using we customers.

and XXXX, runs design delivery XXXX. through book wins Our of order year include beyond our pipeline full

our key controllers. me starting SSD our with talk about first products, let Now,

sequentially. controller to SSD to XX% market grew grew This significantly share. than sales quarter, market gain as XX% Year-to-date, SSD controller SSD our sales XX% XX% year-over-year, we faster growth

supplying are book, GenX of driven further expect PCIe X modestly to of customer Based PCIe a primarily sales by controller OEM. Tier be controller to continues all set sale of GenX SSD next scaling grow growth to maker our PC SSD flash we diversified our leading to Our our through and NAND year. order on module SSD who

introduce as ramp PCIe growth we Our SSD will overall our SD and controller controllers. sale continue up momentum GenX

generation controller Our will quarter annually module rapidly win GenX performance ramp year, sales XXXX. XXXX. design upgraded, NAND and be to of makers we and maker our controller count this X customers SSD generation Three third GenX successive of through PCIe will ramp XXXX cost sales of controller flash successive expect OEM X and with PCIe to to annual layer start the introduced The from solutions in GenX Tier higher flight reduction and support.

OEM with chipset Intel’s notebook SSD their first platform of product introduction our quarter can align next-generation have refresh rapid PCIe year. We timed so year of GenX next the this much CPU third volume platform and introduction in higher their and second-generation controller, of

the our We GenX customers. with two will ramp start first-generation of

We year will next then with expand X quickly customers second-generation customer solution. our GenX from X our base to

follow Our XXXX. third-generation in will

make X progress targets. unit million of follow-up of developing our Separately, manufacture expect then ramped project the the half to solid we’re X projects. data to upcoming makers, OEM PCIe SSD milestone. ramping in with XXXX customers of in application, controller for SSD When will our approximately continues Of in controllers. X We first GenX center the end all PC our GenX PCIe we our our following enterprise-class year first by are fully and towards SSD are of of second-generation series SSD be the year, OEM our half customers next our toward

year PCIe expected Our lay end our and firmware potential GenX controllers. the hardware by enterprise-class GenX unique of shipping U.S. Feedback controller be continue such to Kingston to and PCIe and as SSD and With enterprise-class X Baidu positive. continue track design in Gen this to towards milestones of year plus the following turnkey SSD for to sale meet customers second doubling PCI China hyperscale foundation half upcoming start from Alibaba, very flagship enterprise controller, upcoming and we SSD years. the customers next

Next, controllers. our eMMC+UFS I discuss will

eMMC+UFS XX% overall significantly market controller faster to customers the sales to Our XX% grew our our and grows XX% as XX% sales share. the than market quarter. smartphone during year-over-year, second eMMC+UFS gain use Year-to-date, we grew

DRAM is gain NAND market customer very industry-leading positioned with NAND well Our share. and UFS further technologies to

maker which activity maximizing market. new incremental eMMC to solution Additionally, will effecting eMMC continue as sales a and makers create controllers. focusing from year, market. growing EMC large of who low-density Since the supply XX set of intention exit smartphone low storage as to IoT well NAND in unit are support the and diversified this elsewhere, their a our is are we this storage X sole embedded capacity business next we and marketing the low-cost fragmented usually eMMC of merchant controllers and EMC large communicated for opportunity billion-plus standard on smart have devices most module the growing large China to in generally US the at a Manufacture now that gigabyte. density,

partners game We applications product ensure work OEMs other low-cost controller dongles, a and foundry smart with consumers. and more drones, to availability TV, to eMMC from chain box, our smart watches console smart market to smartphones also speakers, range this for have responsibility to setup Chromebooks, streaming large popular TV other and supply many wearables, portable with

adoption or embedded vehicle. designing of multiple compliant and automotive storage we And as Automotive eMMC UFS ACQXXX and involving and into increasing real going now multiple seeing relating proliferation public based as and story and devices other in data decision drive smartphones, design storage system, devices dashboard also cards memory in with locations. safety and we activity and electronic as NAND data growing furthermore, eMMC are and seeing SSD category uStar console and central USB ADAS automotive recognition, spice and a infotainment just more more vehicle the design activity embed design image are devices now instrumentation systems per UFS based system, eMMC route Since to seen that for content navigation solution, grows. We initially low increasing entertainment well PC activity solution we in or smart OEMs parking. of vehicle And are and are of enhance to the use seeing XXXX, recording cars and center. IoT From explosive applications. for have

deliver commotion in due are position In OEM market application with delighted few our current enhanced growing availability. so share to believe profitability. and successful share design resources We and current broad program favors favorable comparison, years. next range in continuing results remain and our scales our gains believe to customers are by in a to NAND conditions for activity far our you value large supplier higher condition smaller chain could controller pronged our We with partnership of the the in We merchant market relatively unchanged X supply disadvantaged. optimizing initiative in and product managing and market

turn and Riyadh our over will the I call to results Now, financial our outlook. tie to

to details additional GAAP comments on discuss you, morning, and will A reconciliation Thank data sequentially XX% year-over-year. yesterday. with today Earnings our XX% earnings a focus specifically were release results will Wallace, the good issued second unless provide per In our higher otherwise quarter higher included results higher $X.XX, second our XX% then is million, quarter, XX% sequentially non-GAAP of ADS My and $XXX of guidance. I the everyone. revenue record and year-over-year. noted. primarily non-GAAP our higher reached and

our year-over-year. to Growth performance XXX% through a X XX% our Now XX% PCIe to are XX% SSD during were controller increased the solutions eMMC+UFS XX% year-over-year. by sales XX% Gen XX% controllers. sales and to also down XXX% was the sequentially SSD our OEMs key entirely of UFS primarily Growth I and year-over-year. XX% and to controller products quarter. high, record was first to XX% driven sequentially which increased will growing for XX% XX% sales X by to reached driven sequentially controllers, SSD walk

while Shannon in Our Ferri in year-over-year, products slightly from to margin quarter second prior our the sharply. quarter. products the XX% grew Gross increased XX.X% declined

from an our As second our first a of allocation, the up of pricing million better margin pronged upselling, $X.X of manufacturing X in products, processes. came ago. the discipline gross prior from Operating quarter the quarter quarter, was second million, XX.X%, to Wallace initiatives had guidance expenses from better of higher accruals. product and primarily optimizing discussed from richer XX.X% and in compared increase the compensation mix earlier, execution XX.X% Operating margin the were higher quarter $XX.X significantly in a the year than tuning

offset to guidance Our operating growth XX.X% stronger to this XX% quarter operating than higher partially revenue the margin, expenses. gross better due margin XX% higher and by is

operating We and margin are operating our progress delivering XX% good leverage making strong towards targets.

within at to compared $X.X and effective results, XX.X%, in the was to we quarter. million XX% operating the of lower cash rate of to second $X $XXX.X second slightly Stock-based at the million. compensation We dividend Our guidance quarter non-GAAP our rate than tax had end million our end the short-term tax quarter cash $XXX exclude investments from quarter, million million our in in guidance. expense, was million $X our $XX.X which paid second cash, restricted in We first of equivalents, the the shareholders. of

our last announced per quarterly $X.XX annual October. that ADS installment of third The was dividend

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

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

revenue We from controllers controller offset growth by partially expect strong SSD solution and sales, continued declining SSD eMMC+UFS sales.

the of X gross XX.X%, is than and months Wallace ago X our which margin range the higher margin result quarter our to in of is Third initiative, prong discussed XX.X% to previously. outlook expected be of which execution the gross significantly

the quarter, range XX.X% in of to $X.X expect be should $X.X we to million. range In third the in XX.X%. margin operating quarter the Third compensation stock-based of

are year now $XXX $XXX to to following: XX% the million the expected For to is revenue expecting grow we range the XX% full in now of million. XXXX, to

which XX% the quarter further XX.X%, guidance sequentially. be range Wallace gross had Operating Our in margin expected margin previously XX.X% and up year be gross initiatives, our to gross provided up full ago result our the margin months last approaching the expected range successful much prong our full the in is to XX.X% margin from of XX.X% year, discussed. of sharply again, our execution of previously from range, to is than of should year previous to higher and target. Fourth flat be XX.X% X X now

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

We and incremental profitability year additional our year-to-date and effective sales supply. we rate to for foundry to without XX%, in rate. conclude, our this ahead expect pull be power tax our the be year, about able To will similar targets strategic wafer to

add strong our our by least next on deliver top mix. this richer $X a run which upselling a at for to sales capacity target. -- on This reiterate fourth billion run sales wafer team we year year rate expect is the our book committed quarter $X me that foundation the from incremental billion, product $X.X will is continued order of to rate likely of basis, Let meet or the growth Already, this. and ensure next currently foundry working year, meet and can billion $X is we of million we

our quarter, will guidance. of work. our And next provide the we Next will at year, start on update an provide we revenue official XXXX

R&D to open remarks, we of core continue invest the our activities well to your SSD, applications, automotive. Additionally, UFS our will resources to This new and now our expansion and as into relating such expand eMMC concludes prepared as as questions. to pipeline call controllers we

of comes question from line Needham [Operator of Instructions] and Ariel First the Company.

you on and Yes. elaborate that book order further you’re you’re what your you’re secondly, book. those to you great you. could I’m the has year, wondering TSMC that order with like? about been within And Thank What’s your if allocation next conversations regarding congratulations much what uptick that indicating capacity the How then momentum in now those on have to the talk been seeing. capacity billion. can $X.X points support you driving Thank targets? growth? When allocated seeing conversations

backlog, the come year. some I and think billion majority from come book, the regarding we order our OEM from this ship order, from projects $X.X cannot

end this see backlog. we higher So a solid By believe our $X.X we of have billion. much in even should we year,

all see technology investment will has until also not XXXX. Regarding XXXX announced the the XXXX the to because contribute probably through as continue entire wafer will TSMC, new you probably know, the mature discussion everybody TSMC allocation -- with they the

have With of in increase company to supply, grow our to we the sales confidence XXXX with revenue fair wafer amount incremental percentage.

in However, discovery will and very maker from supply worldwide we order TSMC large continue to foundry the of amount to to other negotiate demand increase meet wafer our customers.

how the I’m actually quarter. increase towards the can the to release press where respect mentioned you’re the in sustainable engaging margins now that margin -- a seeing higher in you’re gross products, upside in shift price. you higher-value that is, wondering shift With in you gross

I think pricing these set what that’s where contracts. about a of believe talked I before, was in some you change the

bit of So higher, mix maybe mix terms terms of in dynamics also of those about you of could in talk pricing products? a X little and richer

current We feel very good about situation. our

the costs. With into had higher-margin products up initiatives where Wallace initiatives our we’ll execute of mix are of executing, and more next that of manufacturing we’re possible, the rest the the that to rollout repricing focusing out pointed higher to cover products, on year all a and richer allocating year. These to accounts throughout earlier, selling continue and already products

are feel very extending gross possibly, into levels, today’s So margin we and indicating, this a up right fairly now, our margin doing more our but even take of year about. that And margins lot we if numbers feel about, do. we next at through we’re there where opportunities, are to the comfortable talked gross we’d that there’s those to guidance about good work than are just And we gross love for year. what

from Stoss is of line of question Anthony Craig-Hallum. the Next

Riyadh, you. business? bucket, you kind if of for notebook then you’re growth seeing? us you the And rates that of after non that. might What probably will, of Can your give a IoT of I kind breakdown what had percent revenues be, a follow-up

very the related notebooks eMMC+UFS products for So PC, as our noble SSD primarily to PC oriented. controllers are

popular of given list were part smartphone, And very of large eMMC smart but non of this I smart other application, Was TVs going to XX% bucket, applications. very year lot of mentioned have year, consumers, including they smart the growth. those -- we speakers. eMMC+UFS, a applications into long a is with and also are last a a sales XX% it expect we the to up inch for Now strong this about and that within

are and these are to products expect that this over of future. part still grow market to the the modestly So we continue growing, foreseeable

follow-up, get question I is asked most amounts from investors a buyback. share increasing just then Okay. recently And that as the a and

You visibility. have incredible

You’re haven’t heading you of visibility, over just share that cash. It astounds you a at year, guys investors into me got and -- order X talking buybacks. worth billion an $X.X book stock next of years X about trading a initiated an

So call, hear Board on has thoughts this share haven’t I’m love listened your to to a your and why you hoping initiated I’d buyback.

to payments. capital flow. cash shareholders of dividend up half means to primary paid our our returning is historically, free of our from we Tony, And

performance strong dividend it very the into next Board operating consider good that and dividend our XXXX, Given they likely in paid a our visibility last could year. something is during what October, we than higher declaration

of Next Ellis line Craig B. question Riley Securities. from the of is

were the on of to it up bit to your the I the Congratulations inquired market a you up to more talked for business. controllers like I performance left you focuses look start of quarter’s question very pick dominant is outsource really opportunities. trends about a and where is the And little strong do customers seeing with again different, Wallace, wanted the in want And of about with on kind off question where the and what I on SSD as I eMMC lined call a today. you controller last Wallace. sure the

the you’re going controller have the works? are, you benefit a of do their you NAND the very you disproportionately or Given OEMs from PCIe to are more to extent of benefit get And what starting that they to outlook outsource sense move? GenX, more to that the think such robust do for extent

solution want good they maximize NAND we their all profitability. day question. NAND to a general, very see maker, It’s In

lot XX Maximum is it’s eMMC, in see XXX XX gigabyte. the of few even very very every application. gigabyte. because We the gigabyte For day It’s eMMC, a natural small. is

the also supply they see maker, NAND constrained. So wafer

to and we higher supply will support. we to to wafer, see we our more electronic move solution out maker, wafer continue have density we to not consumer why solid direct our meter variable product. company, many, much controller the demand devices. So try from a tremendous module maker, they for effort than move the That’s can industrial But eMMC breakdown NAND from many leading and eMMC

opportunity. we strong record because third-party and For NAND can SSD, a more Because with line long tendency all today, with are the a we to -- do that’s Frankly speaking, start candidate have another a like standard NAND default they project we take the mainstream have we support. makers makers, to track we history to have resorting outsource project to we opportunity that become silicon see value story, than motion.

and controller and endurance can important this is the compensation NAND very, even new This important make us It’s to provide well very, R&D So and profound knowledge very or very, critical XXX maker is OEM beyond because layer project closely consumer. sufficient of is really moment. so very one for layer grow the it solution maker work work various We customer for to very is recruit successful. work important. and technology beyond to closely We’ll continue deep we or on as have generation continue for join very new deliver the as retention. talent with maker, with can NAND NAND NAND to

a is opportunity we very will all see we opportunity, and source to NAND position opportunity on the this trend in So from makers. take the are continue, favorable a great

improvement? What’s provided on seeing each significant improvement the my X is gross in expectations. were the Very relative the factors back greatest factors Riyadh, as contribution which and factors look year for has potential? over be we’re higher calendar that I of ‘XX, And that it the from to the the for mentioned? then those And that prior in for significant you’ve to that gross my further helpful of we that wanted leading framework to to gross would how margin provided very from of the that follow-up margin. margin question, Riyadh. Wallace’s And flip And change question are half

need driver product in which to allocation our higher The of products relating piece initiatives reprice our to the our the largest that products reflect seek do products said, seeing biggest higher going also towards cost relates to accounts. contributing that the terms includes to where of gross of into mix, moves Craig, been what margin. these higher to to we have deliver. to possible, we we’re better our also But

line of Ackerman question next of Karl is from & Cowen Our Company. the

is XX-nanometer the This foundry There your this by XX,XXX capacity per month of largest that year. will I a from Karl been end of for have to partner wafers have couple Eddie Ackerman. questions. reports increase XXX,XXX

enable should fulfill that you decisions While NAND any to you as orders, incremental line? on next customer existing earlier seen outsource capacity to resourcing OEMs to the year from have indication

have and to comment cannot their because for no political some I some because TSMC re capacity insight, sorry. they guidance issue, factory really relate expansion have also we and

However, as opportunities have we from large sale know from do we OEM automotive maker sectors. the customer NAND the well very including do from -- many directly come customers, other major as out

financial It’s Now decision it’s resources has to how -- have so because to R&D IP, sure use to condition, order quality very the everything when wisely support the have careful to manage can is don’t just it worry important. development, return. a very we our the really we we commit, opportunities constraint And sufficient business about be today. We to under in count. development, very, many supply all and shortage get we our make a people, wafer supply. the make really really We resource put

meet in customers’ important the more that’s on secure for to thing most year focus and we to So XXXX. order supply demand next should and

it’s talked believe me has direction The to investments Wallace about us. NAND outsourcing earlier. the Eddie, with of add not at going have change reason the also to do we partners been our let TSMC announcing,

further And and field SSDS. is silent, has in NAND OEMS, not outset you another you. prioritizing OEMs past, are NAND why became address demand current question work results. in for NAND capacity on thank our congrats And then indicates sense capacity to And the growth challenge high reasoning appears supply the environment. and may SAs and enterprise the a May that you, make as

we’re the our the picture. about for underlying business more is This condition it’s year, that supply facing

significantly is our outstripping that ability demand have to We deliver.

drive other enterprise the Those flash on business supply decisions now, how the more demand whether dynamics So no the NAND hand. the into to real we capacity can for our that is or industry impact the relates their we on to it given applications. towards the side, conditions as have supply shifting underlying side Right about material focus is of allocation the picture. conditions, products us key of more have

question Next is Desilva Capital. Roth the Suji of from line of

on Congratulations here. momentum the

maker your one I’m So given situation, leaning future. that the if allocation mix higher shipments historically module correct NAND of And get wondering get is of if toward that’s you’re back makers gross in OEM. might factors the the supply the margin if versus if demand tailwind module OEM the

think good it’s very question. I a

I choice wise balance. make the but think a company has every to keep

with want die many of XX us project Our allocate OEM we is At definite want that’s or same also OEM make for because commit. because what market the because more maker. and them years. time, being to XX project we important supply margin have to sufficient to the balance wafer we don’t We majority the

have we to -- sure sometimes But weight. and the at as net supply. they to the really, all stores, I of really multiple the to a priority. customer we have complicated pretty try that, the through are supply a It’s and also can among reduce decision put gross the equation. the we review think products important will -- But fulfill make all look we itself have we sole the insisting margin we the for from supplier, If customer, product chain. a will

from Motion. a we we percentage, meet more matter to very shortly for feel large all So feel sorry the this that the work to comfortable because secure situation. think percentage That’s customer every to Silicon why is small it wafer try We very I customer, they based demand. thing hard doesn’t very

makers are some PC -- like very sophisticated ability also to engaged taking our module in and the projects of Suji, and add, are let our me with OEMs very now already and OEMS. large

really makers, sophisticated bringing or NAND the with makers. the the is is flash depends we of module better profitability, necessarily are treat It mean of the And so one don’t these projects. that than level It differently any that class the profitability And we really large for asset that matters. customers the them other. value doesn’t it on

SBC where business step business, And that? that a moving have margin Solutions is revenue that’s be from? there? level to away Shannon I is further implications the away kind imagine then trying a of that to as from And understand you down manage now, you’d also the the lower-margin going what

make sure shine that really coming Regarding why because with margin. NAND carefully due do goal customer Shannon the major maker that have customers. OEM we overall controller also major wafer Shannon for with a to as business so also we net and maintained however, certain many NAND has will constrained due our well gate we really continue That’s procurement part I development really do lower it’s we But allocation. in -- customer, important with business, challenging. But a have market. have our gross also this transition GenX Alibaba some relationship think dilute to maintained grow is it’s have to by want demand OEM from waiting year the to We PC technology Shannon our to not because main smartphone margin and and the allocate to

SIG. from is Next Hosseini of the of question line Mehdi

versus elaborate, should what into thanks if about And ‘XX is, And question follow-ups. lower for revenue think providing you key assumptions fastest want $X.X I sectors? of to also, the growth the with of for for thanks the how relatively here growth I don’t And segment? the visibility billion. couple minimum have -- A and are growth different

I continue to grow. will our client revenue will say,

that PC very very rate but will GenX of year almost PCIe X GenX strong the Gen large next we PCIe different so a with our be stated year. year to and Although we next PCIe XX% modestly, customer, maker carry share higher NAND OEM. by grow have will in X We next on design have because end ramping growth controller

foundry in For mature XX, revenue eMMC+UFS, wafer continue of grow up we XX-nanometer many secure say very we a grow because billion to also we’ll to this and allocation how But wafer guarantee to But wafer, work next secure. mature the going exceed technology not the to think we are in meter, continue XX certain can very, severe will many very We by it’s from level, end these also we especially pile is in year. $X all more makers. will It for depends backlog eMMC are technology hard strongly. year. of

with So that the as fast as foundry grow business. this TSMC can can how porting, is well overall other we eMMC+UFS very critical, work

of Wallace, is used correct? segment commercial X.X for PCIe that Is the notebook.

It’s used both commercial and consumer.

have We one to GenX year, next be XX-nanometer use majority XX-nanometer, One nanometer. generations PCIe XX will we’re ramping transition XX more year, X This of mentioned nanometer. with use controller.

silicon notebook in highlight roll may like think grow was But concern way? been percent I positive right trying Am on, to the for consumer significant a think commercial turn the I that’s is catalyst I is over. I and segment, which motion. perpetuity. quiet muted, about a XX-some could relatively Chromebook per a that plus year has or can’t what It thinking this there

portion SSD, majority just they’re me get total the this And is consumer Chromebook SSD, in we small units And for business. small. million very using commercial up impact have XX use a notebook. today mainstream the not our for Let volume corporate XX talk of around Chromebook try eMMC, to are Chromebook relatively to year, accounts we And going very the SSD. is And embedded and for to down, million no notebook. it both about straight. going and for in really

portion, will strongly and consistently SSD. So that top I think, grow sure. without is And very the OEMs PC to that X use MX.X

going margin margins of follow-up seems one in gross the a mix for the Is revenue that going the back then to lid that growth, just the despite it mix? of product guide just year-end is because Or operating are it is your Is And down. half of better understand, to I’m a put like margin conservative? sequential it is because gross that margin trying base? is Riyadh. higher a to And calm year on

love expectations to our the than Mehdi, work our take second be of still of had for significantly guided. we’ve We the we is to gross lot what even to about. talked than margin going we year just originally a obviously, higher do. higher But gross what half margin have

be the continued allocate product the we execution X talked to our accounts, to richer upselling coming higher-margin is this Wallace more relating of to products. product also possible -- initiatives where processes to mix, how mix so hard that also better products from relating our to furthermore, accounts our about reprice manufacturer back to operations we profitable relating costs to towards And the prong team going our the to had see that we’re debottleneck higher ability working can the are our reflect working And have in that contract we very our services. how with end initiatives

gross to even still But than better are what initiatives, work can the decided. gross we a are And execution. we our we’d margins about we we’re our are able what these of And if talked execute higher margin up the baseline, to as in the take our love could margin be. X we guiding. more gross all better, So

side, execution And managing capital. the executing flawlessly you’re on working on

Your cash June quarter flow XX%. for was free margin the

could again. I why You mid-teens, I why cash strategic about of billion of aggressive and us, options base your to have cash. ‘XX valuation just know share. buyback? a the if for how the not price. go is earlier, grown assumption with there share just question management I’m is changing, with And but it net execution, ask trying on become margin not the can take team Is think revenue, towards I’m $XX Or to the And going cash your thinking cash free consider offer not up, cash reconciling $X.X valuation flow because something up you per going came more

answer think, question. I So me let just the

outstanding I Silicon looking shares. Motion diluted today, our million for think share total you’re XX

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will of we’ve with last one -- our our coming dividend. so upcoming paid And be third installment just quarterly our The soon.

by given a visibility at we’ll next a October is to this one. dividend declared October, being likelihood on upcoming decide and good have strong year, the the year, quarters. And So of the time, good of performance business that of our into higher the dividend our X for in

And the back about we you the And to so payments. shareholders. your is mean to do dividend our question, continue primary And our will to what do return through is our cash. for us, we with answer to

Our Morgan. Gokul is of line next of question from JP Hariharan the

Congrats on the great results.

much all, market, about almost that of could the growth How still half, little in how controllers? still market could per context average is Wallace have your you’re same we ASP you volume growing roughly? the SS XXX% share you the SSD much in the much bit controller market pace. looks in at or $X.XX a of talk a at is First continue give you the of $X SSD Riyadh, range? to first bit that the controller SSD of growth? in terms And How of Are in addressable consumer controllers, looking going around like us pricing is also rate to of

the cannot business. grow the SATA can PCIe PCIe assure client regarding dollars, growth. the ASP We market is SSD GeX. So our we to higher in comment GenX than GenX why you, controller continue PCIe also but controller, higher But will than we we outperformed

growth GenX. next for expect definitely we So because of PCI our year strong

controller ASP should higher. go every client So for

XX% will year, to the X% XX%. to around market share, we believe, between year market Regarding grow XX% for last are we share this

around roughly it’s XX% -- range. to we So XX%

to beyond build just demand. not have a more We how and we serve depends. R&D especially team XX% quickly more ambition makers. depends to really NAND demand, and It’s can It grow our

Okay.

little is it is assume and it growth coming from price. most coming improvement, to fair So not year really this is a the units that from of mix of bit

the from mix price improvement. Also

Okay. to Maybe move second question. on the

motion mind feels about I It which talked is problems, either current you silicon there the doing is the SSD of ASP terms the think potentially controller addressable but well is I Could motion the adjacency I of or is think units, of evaluating that else think Silicon you one about least addressable initiatives you’ve talk like that still in eMMC address you something obviously, M&A. to that an that that given and market controller, market has TAM limited SSD executed primarily terms in market, newer in in of at this is any market? have the upgrade. extremely some

us Same with to still opportunities device coming the lot natural smartphone includes a there is up for in The the what’s cap really XX%, already that XX%. pieces. right? thing But Gokul, part this well there. So client UFS SSDs addressable. cap. market, device are to a again, to XX% upside we’re of doing clearly, in probably But a There’s and last smartphones. market, the the of opportunity year. account for in incremental We’ll in there terms a of be client is of couple

just SSD -- milestone. first million controller first We’ve piece enterprise market. year-to-date, getting The is we’re our our to

our have GenX. We upcoming

X. our We’re Gen still executing with enterprise-class

a blue continue addition additionally, be sky a of in our the will opportunity how So huge when rapidly to That beyond us. this for But devices we of SSD grow client-based start to enterprise-class piece controllers. is big plateauing.

-- applications, We unit And products, a flash opportunity eMMC. exit plus NAND also with an exiting we’re our talking about X us with eMMC have the to to for opportunity billion this low-density where creates step the makers beginning in.

for into. step is so us area another interesting And to this

at of their lot And we’ve and projects. But can to in. is what already, lot automotive of Wallace OEMs by a these a design talked been early seeing stage. this automotive partners, about Additionally, a we’re involved also and we still pretty extensively play the relating the in applications activities

as XX new Let XX, very majority traditionally, great around eMMC, -- there’s return, when some density, from similar. me become moving today XX or the probably limited. and interest business the looking But NAND gigabyte, mature maximum product for comment density, the higher for into move the ex example, financial the XXX see just higher model, for because gigabyte. NAND even of it’s one to add the maker eMMC, performance. a manufacturing generation you storage is a the last maker But as the this a And because example is and

However, a huge growing consumer than we There’s provide the seller it’s Our what become solution, supply really maker at from electronics devices, Xx IoT -- that all demand is right? a controller standard. because we and can merchant is huge today. and backlog from

to new continue quite XD there’s lot So supporting NAND. we controller things because new develop of a upcoming

in kind to also unique So won’t because is product do want R&D very, this NAND have clients revenue use this for sell is And position. do probably a really trend important their thing Same being very products future. We we it. mature. some for a the that makes talk maker about small. not of resources us larger to really because

we controller, not Going bigger because we on and to I very talk the much investor become are we analysts ambition than counting will Silicon a mature, where just try to Motion, we are a with think few today. have

Last line question Wedbush Matt of is Bryson Securities. of the from

the investors for hear cyclicality is of markets prominent end concern NAND. SMI from So I pushback or around to the probably

opportunities handsets, So you order that existing those new to characterization, Is could much to a PCS, customer follow-on can of Wallace, book $X.X very we tied Like way you existing what of number orders described be at wins, of secular as designs billion provide any look XXXX, versus either that business in how are UFS talk helpful. think it’s opportunities there much the whether for of incremental I that very to how design are new company any would designs? or incremental about eMMC you’re that just with new you’ve PCIe it’s specific, have IoT growth you? talking what whether customers. GenX

lot it grow. I how how the a of investors our concern have in consistency. couple So years, looked regarding the a like think the stable past show not growth That’s of can fast why commotion really and business

next Now and I on business or X all moving designing ago. are working from for we And year healthy is more model, this sales we year XXXX. while and working revenue beyond year today are think is year our to last the years next

any need that’s of rock to our will I’m we number sure wafer up pretty can So the the main many, really pile and today. we That’s happen end solid. And is higher And year. have book demand why is book secure design they the very, this from goal very And that’s very why new really order to by fulfill is stable. that even many more such customers. doesn’t

smartphone, Some for. for very, We a PC, have do speak But haven’t not diversified the see new really really are I critical, we project, not very portfolio. a consumer very, product just not important innovation. just for have just quite -- very lot for very all electronic for automotive some devices, We think sector.

We have very very strong, broad base. customer

We have many, many opportunities.

the Now we capacity very growth market our And to our and our manufactural that think Motion fill consistent fact. try and very, is have solid leverage favors more we a really gain share. product a technology want Silicon our to market customers That’s and and trend base, to the demand.

conference sir. Now, like Mr. go the back Please closing for Wallace hand ahead, I’d to Kou to remarks.

joining for the conferences for Goodbye over on remain we next today virtual Thank this investor you, Silicon for everyone, Motion. of section Relations the be Thank event The now. us Investor of months, website. you, all joining We’ll your interest few continuing events. will believe today. for of attending posted be everyone, corporate several and in schedule which our us

call. for Thank today’s gentlemen, you. Ladies conference this participating. Thank concludes you and

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