Silicon Motion: Fiscal 1Q23 Financial Results

• First quarter sales decreased 38% Q/Q and 49% Y/Y
• SSD controller sales decreased 20% to 25% Q/Q and 35% to 40% Y/Y
• eMMC+UFS controller sales decreased 70% to 75% Q/Q and 75% to 80% Y/Y
• SSD solutions sales decreased 30% to 35% Q/Q and approximately flat Y/Y

Silicon Motion Technology Corporation announced its financial results for the quarter ended March 31, 2023.

For 1FQ23, net sales decreased sequentially to $124.1 million from $200.8 million in 4FQ22. Net income (GAAP) decreased to $10.2 million, or $0.30 per diluted American Depositary Share (GAAP), from net income (GAAP) of $23.5 million, or $0.71 per diluted ADS (GAAP), in 4FQ22.

For 1FQ23, net income (non-GAAP) decreased to $11.2 million, or $0.33 per diluted ADS (non-GAAP), from net income (non-GAAP) of $41.1 million, or $1.22 per diluted ADS (non-GAAP), in 4FQ22.

Wallace Kou, president and CEO, commented: “Market conditions are currently extremely challenging, a view shared by all our NAND flash maker and other key customers. End-markets for PCs and smartphones remain soft and many suppliers into these products have focused on working down inventory, including client SSD and eMMC/UFS embedded storage devices, which has had a negative effect on our sales. Despite this, we are encouraged to see some of our customers’ order patterns improving in the second quarter, and combined with our strong design win momentum, we are optimistic that this could lead to a stronger market rebound towards the end of 2023.

“We are actively taking steps to right size our business and protect our profitability. We are also working on reducing our manufacturing costs to improve gross margins in the near-term. Regarding operating expenses, we have been taking steps to reduce our compensation-related costs, the largest item in our operating expense, as well as retiring certain unprofitable, non-core product lines and pushing out certain R&D project tape-outs and related expenses. Overall, we believe we are putting the right actions in place to improve our overall profitability throughout 2023.

“Despite today’s difficult operating environment, we are working hard with our customers and our manufacturing partners to continue delivering cost effective, high-performance, differentiated solutions that will enable us to maintain our leadership in the storage controller market. We are confident that we have the right customers, strong design win momentum and are taking necessary steps to ensure the long-term growth of our revenue and profitability.”

During 1FQ23, the company had $13.6 million of capital expenditures, including $7.2 million for the routine purchase of testing equipment, software, design tools and other items, and $6.4 million for building construction in Hsinchu.