Key Factors

  • Silicon Movement designs and develops NAND flash reminiscence controllers and gives cell, information middle and enterprise storage options.
  • The AI increase is driving demand for NAND flash reminiscence with its quick entry and information storage capabilities.
  • Silicon Movement faces heavy competitors within the NAND controller market from Samsung, Micron Know-how and Western Digital.
  • 5 shares we like higher than Silicon Movement Know-how

Silicon Movement Know-how Co. NASDAQ: SIMO is a fabless semiconductor firm within the laptop and expertise sector specializing in designing and growing NAND flash reminiscence controllers. The controllers allow solid-state drives (SSD) to function seamlessly, managing the communications between the NAND flash reminiscence and the pc system. The substitute intelligence (AI) increase is driving insatiable demand for reminiscence chips, notably non-volatile NAND flash reminiscence by Micron Know-how Inc. NASDAQ: MU utilized in SSDs units by giants like Seagate Know-how PLC NASDAQ: STX and Western Digital Co. NASDAQ: WDC.

AI-Pushed Demand Tailwinds

The AI revolution has pushed demand for high-speed storage options. SSDs are seeing large demand as AI fashions want oceans of knowledge to coach them. Not solely does AI demand information capability, however high-speed entry and transfers are a necessity. NAND reminiscence is non-volatile, which means it may retain information with out energy, not like risky reminiscence like DRAM, which loses information as soon as energy is turned off. Silicon Movement derives nearly all of its revenues from SSD controllers.

It additionally generates revenues from the cell storage utilized in tablets, smartphones and cell units. These units make the most of information embedded in common flash storage and USB flash drives. Silicon Movement’s information middle and enterprise options phase gives storage options catering to large information evaluation and cloud computing calls for.

Heavy Competitors within the NAND Flash Market

Silicon Movement has heavy competitors within the NAND flash reminiscence market. Its high three opponents are Samsung Electronics Co. Ltd. OTCMKTS: SSNLF (which has an enormous scale as a developer of its personal NAND flash reminiscence semiconductors and flash controllers), Western Digital (whose SanDisk division makes it a risk within the NAND market), and Marvell Know-how Inc. NASDAQ: MRVL (which focuses on NAND storage controllers for enterprise and information facilities).

Future Competitors

The demand for quick information storage and entry has fostered a race to usher within the subsequent large storage expertise. Whereas HDDs are less expensive and have a lot higher storage capability, the shifting elements make them vastly slower and clunkier than SSDs. Resistive RAM, or ReRAM, is a promising expertise that permits sooner information write instances, larger endurance and decrease energy consumption. Micron Know-how and Samsung are two pioneers which might be at the moment within the analysis section of ReRAM expertise. It hasn’t materialized but, as firms are nonetheless making an attempt to assemble a prototype.

Each day Bull Flag

The SIMO day by day candlestick chart illustrates a bull flag breakout sample reeling from a pullback to assist at $74.66 the bull flag low. Shares triggered a spike as much as the $83.96 peak, however the pullback threatens to interrupt via the bull flag low. The day by day relative power index (RSI) has fallen via the 50-band. Pullback assist ranges are at $74.66, $71.07, $67.43 and $62.68.

Strong Quarterly EPS Beat

Silicon Movement reported This fall 2023 EPS of 93 cents, beating consensus estimates by 20 cents. Revenues grew 0.8% YOY and 17% QOQ to $202.38 million, beating consensus estimates for $196.52 million. eMMC+UFS controller gross sales rose 25% to 30% QOQ and rose 20% to 25% YOY. SSD answer gross sales fell % to 10% QOQ and 45% to 50% YOY. The corporate introduced a $2.00 per ADS annual money dividend. Non-GAAP gross margins had been 44.1%, and working margin was 13.8%.

Full-year 2023 Non-GAAP web gross sales fell 32% YOY to $639.1 million, producing an 11.9% working margin and $2.27 earnings per diluted ADS of $2.27.

Upside Steerage

Silicon Movement offered upside steerage for Q1 2024 revenues of $172 million to $182 million versus $169.19 million consensus estimates. Non-GAAP gross margins are anticipated to be within the excessive vary of the unique estimates of 44% to 45%. Full-year 2024 revenues had been in line at $765 million to $800 million versus $767.72 million consensus estimates.

CEO Insights

Silicon Movement CEO Wallace Kou stated, “Our fourth quarter outcomes exceeded expectations as demand throughout nearly all of our merchandise elevated sequentially, pushed by vacation season demand and normalizing channel stock.”

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