Silicon Motion: Fiscal 4Q20 Financial Results
Revenue at $144 million, 14% higher Q/Q and 6% lower Y/Y, more than half billion dollar company expecting $1 billion in 2023
This is a Press Release edited by StorageNewsletter.com on February 9, 2021 at 2:16 pm| (in $ million) | 4Q19 | 4Q20 | FY19 | FY20 |
| Revenue | 153.2 | 143.9 | 457.3 | 539.5 |
| Growth | -6% | 18% | ||
| Net income (loss) | 25.4 | 25.3 | 64.4 | 79.7 |
Silicon Motion Technology Corporation announced its financial results for the quarter ended December 31, 2020.
For 4FQ20, net sales increased Q/Q to $143.9 million from $126.0 million in 3FQ20.
Net income (GAAP) declined to $1.4 million or $0.04 per diluted ADS (GAAP) from a net income (GAAP) of $24.3 million or $0.70 per diluted ADS (GAAP) in 3FQ20.
For 4FQ20, net income (non-GAAP) increased to $29.9 million or $0.86 per diluted ADS (non-GAAP) from a net income (non-GAAP) of $26.7 million or $0.76 per diluted ADS (non-GAAP) in 3FQ20.
4FQ20 Review
“Fourth quarter results were stronger than expected as customer procurement continues to be robust,” said Wallace Kou, president and CEO. “Sales of our eMMC+UFS controllers for smartphones and IOT devices were especially strong and our SSD controllers continued to benefit from strong PC demand. Sales of our SSD solutions were however seasonally soft.”
During 4FQ20, the company has had $5.6 million of capital expenditures for the routine purchase of testing equipment, software, design tools and other items.
Returning Value to Shareholders
On October 26, 2020, the board of directors declared a $1.40 per ADS annual dividend to be paid in quarterly installments of $0.35 per ADS. On November 25, 2020, the firm paid $12.1 million to shareholders as the first installment of our annual dividend. On November 21, 2018, the board of directors had authorized a new program for the company to repurchase up to $200 million of our ADS over a 24-month period. On October 26, 2020, the board of directors of the company authorized the extension of the expiration of this program to November 21, 2021. Since the start of this program, the firm have repurchased $84.8 million of our ADSs and $115.2 million remains available for repurchase under the program. There were no share repurchases in 4FQ20.
Business Outlook
“We are kicking-off 2021 with what we believe will be an unseasonally strong first quarter and an extremely strong order book for the year, with sales growth currently capped by foundry supply availability,” said Kou. “We are seeing strong, broad-based OEM demand and design activities for our SSD and eMMC+UFS controllers and expect this momentum to carry over to 2022. PC OEMs are driving strong demand for PCIe NVMe SSD controllers and smartphone and IoT OEMs for UFS and eMMC mobile embedded storage controllers.”
For 1FQ21, management expects revenue between $154 million to $161 million (+7% to +12%.)
For the FY21, it expects revenue between $650 million to $700 million (+20% to +30% Y/Y.)
Comments
In 4FQ20, revenue was $144 million, 14% higher Q/Q and 6% lower Y/Y.
For FY20, revenue of $540 million was 18% higher than a year ago.
Sales of eMMC+UFS controllers for smartphones and IoT devices were especially strong, and SSD controllers continue to benefit from strong PC demand. Sales of SSD solution were however seasonally soft.
First quarter sales are limited by a variability of product in inventory, and full year sales growth was limited by the current foundry supply shortage, that is also affecting much of the overall semiconductor industry.
Demand of SSD and eMMC+UFS controller remained strong as Silicon Motion continues to see robust sales of PC driven especially as a need of working from home and online learning.
eMMC+UFS controller sales rebounded 65% to 70% Q/Q, after a sharp decline 3FQ20, as large NAND customer worked down its inventory and started actively restocking. FY20 sales grew 35% to 40% sequentially, substantially faster than market revenue growth. Sales increased to 25% to 30% of total revenue from 20% to 25% in FY19.
OEM adoption of SSD in PC and other devices continues to grow as more low cost NAND for SSD for replacement of HDD. Furthermore, the firm expands its SSD controller market share gain to accelerate based on its pipeline of design wins. Those with NAND flash makers and module makers for the OEM market, the company is expecting stronger SSD controller sales growth this year compared to last one.
SSD solution sales were seasonally soft and declined 30% to 35%. FY20 sales grew 35% to 40%, with positive contributions from both Shannon and Ferri. They increased to 10% to 15% of total revenue from roughly 10% the prior year.
The manufacturer continue to see OEM smartphone build activity improves, more meaningfully, the transition from the legacy eMMC mobile in value storage to newer UFS technology continue to increase gradually, as OEM payer UFS for new generation application processes and higher spec cameras.
Additionally, sales of eMMC controller to module maker, who are building healthy tracking starring solution for low costs smartphone, Chromebooks, smart speakers and other IoT devices remain strong.
The maker is expecting strong eMMC+UFS controller sales growth this year compared to last year. SSD and eMMC+UFS controllers market share gains will accelerate, because of growing design win pipeline.
Foundry capacity shortage is also affecting NAND flash makers with captive controller programs, as well as other emerging controller suppliers. Because of the shortage issue, the company is seeing NAND flash makers rationalize internal controller program and seek to outsource more.
In 1FQ21, it is expecting strong SSD and eMMC+UFS controller sales growth and more modest SSD solutions sales growth. For FY21, it previews both SSD controllers and eMMC+UFS controller sales to grow much faster than last year and SSD solution sales to be flat.
On February 24, Silicon Motion will break ground for the construction of its Hsinchu, Taiwan office building. It spent $59 million in 2018 for the purchase of land. Construction is budgeted to cost $77 million with $7 million spent this year and $34 million next year. The complete construction is expected in 2024. Upon completion, the company plans on a sale and lease back of the building.
The manufacturer hopes to achieve its plan of delivering $1 billion of sales by 2023, with a stable 20% gross margin.
With its design win pipeline, it expects roughly double its SSD controller sales in 3 years from its combination of SSD adoption in client devices, including from 60% to 65% last year to 80% to 90% by 2023. And overall market share is expected to increase to about 40%.
Sales of eMMC+UFS controllers are expected to more than double by 2023.
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