SIMO - Earnings call transcript Q4 2021 | Silicon Motion Technology Corporation

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Operator

Good day, and thank you for standing by. Welcome to the Silicon Motion Fourth Quarter 2021 Earnings Conference Call. [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 future results of operations, financial condition and business prospects.

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

that no For see to call. statements, forward-looking Director Please to apply these is the risks with now sir. update to of only additional hand file advised of the Instructions]. which go today, the this date Chris recorded. as we be speaker I'd uncertainties over assume today's from time-to-time and conference Strategy. [Operator discussion Investor first Exchange Relations Mr. like and obligations please documents conference and the any conference other ahead, factors, Securities Please being of and of We your Commission. Chaney,

Chris Chaney

Financial welcome Webcast. Amber. everyone, you, morning, Quarter Call Silicon Conference and Good Fourth Motion's XXXX Thank Results and to

Amber here Director is at As mentioned, Chris Relations name the of Silicon Investor my Chaney, I'm Motion.

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

with key of upcoming fourth Following the and developments, comments, then outlook quarter results my period. year our then We'll business full our Riyadh year. question-and-answer will review a discuss conclude and provide and will our Wallace a for

our call. Amber at I'd started, the like start of safe policy, harbor which this get read we of to remind Before you

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

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

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

Wallace Kou

everyone, year, believe welcome wrapped are for to gearing Thank we you, great up another and Chris. now our and a call. Motion Silicon Hello, up stable just earnings year. we

Our and grew year full fourth sales quarter were sales the XX%. up XX% year-over-year,

Our were over over fourth grew and earnings quarter year-over-year, earnings ADS full year up XXX% XX%. per

not to was are customers using very Our automotive, smartphones, momentum controllers year, strong, OEM for our be Last delivered demand of our IoT and demand devices sales, as of storage who the program used seeing Despite applications. our smart OEMs and strong SSD devices into other OEM storage well tremendous. in continuing from devices XXXX we many were meet and corporate sales. and are controllers continue building And activities could PC XXXX. UFS record very year, embedded categories full we client Last this SSD much for strong. business in we other demand for eMMC and extremely as of

expect be was their for full to to wafer we very limited fabricating RICs. supply change our supply because now year. supply-constrained, don't demand by business Today, are necessary foundry continued this situation We constrained availability this tight meet to and able of

us supply product as As we well This today, product And to year XX% last meaningful wafer incremental communicated arrangements. operations able that pricing this meaningfully sale discussed, foundry remain backlog based was to book and allocation XXXX From point, a was was as significant. customer revenue and year by year, our allocated guidance team for XX% to both upsize Early full optimizing year. growth guidance previously originally XXXX. to for existing on starting last backlogged pricing. XX% significantly our audit mix our sales full growth mix,

Now year. this turning to

already we this again full XX% We XXXX, we for incremental there extremely on full as has delivering be meaningful following For this our supply to additional execute. the optimization, were this Sales controller wafer however, initiatives include us partner. in team more wafer sales with And strategic believe, able controller grow of wafer supply, of even will to SSD year have aim I the grow baseline Upside faster quarters XX%. implementing operations that from are to forward can look baseline. both eMMC+UFS begun strong. our incremental sharing to on our received with product we year better than you foundry Based range. upside opportunity opportunity supply primary successfully pricing. and to and

of in to of year lines. XX% gained year almost makers, module The NAND we half our to controller OEM controller to OEM portion sales to program, extensive adoption to market. flash in of X/X the close close whether PC program controllers. SSD OEM overall significantly year. the XXXX, than to of driven year market, and the our the verification using SSD controller of over our Now direct share, OEM before. OEMs. SSD adopted grow was for of higher SSD talk well with further involving by significance increase. sales is testing by to To launch significantly range. over SSD half of of controller each makers which our our X/X sales market XX% year let using by controller market or controller, the significance address roughly we these our XX% PCIe of account into with of And widely customers one lagged SSD our we our grew we for GenX customers for PC our account client initial OEMs. in of the the because grew likely channel rollout generation channel year, continue launched we Last second the And the strongly. Sale expect SSD than SSD well our the key grew OEM about year, have every for series OEM that program points The of product this our to sale PC X ramp-up full by one of extensive me XX been continued market growth XX%, of share our of and is PCIe to percentage GenX both our by the controller, faster SSD second sales half GenX XXXX, a GenX controller Full OEM. this to In anticipate key of also in first and of controller saw today,

socket controller SSD OEM half continue sale of We this we to the projection, market a PC of our OEMs. to which next be share broad-based PCIe year in end GenX of PC expect gain win launch with We year, GenX will sales expect PCIe we of are of adoption controller Based now year our initiating design our this second-generation program accelerating coincide and are this at believe that majority account of all SSD year. for to PCIe and GenX the by scaled. on or controller by when early the GenX GenX

game console bring preparing PCIe a of our Additionally, major the AMD adoption years our Similarly, to NAND new our year variant both of few PCIe with will PCIe CPU the last GenX next cycle year. OEMs work of year. controller GenX continue before flash that for in with for transitioning since GenX likely to next are is PCIe the market. their controller Intel, device we third-generation to upgrade It GenX in customers following to SSD continue upgrade the next launch

enterprise controllers. controller, an Before moving me on provide our SSD let our to update eMMC+UFS

you of have As controller in SSD we investing years been several actively R&D. many know, for enterprise-class

of differentiated necessary the the market We in design much the market to than the The customers. have also large, OEM and cycle investing enterprise complex bringing solution are technology in our compelling longer understanding markets. client been mobile for and and fragmented and

upcoming of flagship qualification. And before launch GenX finally enterprise-class completing sales our the current are testing product customer PCIe this production year. controller moving Our and final to

GenX uniquely the with controller to future performance certain client robust long-tail, firmware with achieving in We the by that customization are as controller believe center GenX operation the SSD well-established differentiated is we enterprise begin with performance architecture controller of design enterprise-class PCIe is this very highly technologies. such SATA enterprise controller compellingly We data for positioned GenX shaping both applications. robust our We on enterprise performance-tuned have firmware, flagship desired positioned well. placement turnkey SMXXXX separately, additionally, a hyperscale SSD repeat large-volume, SSD capability as customers, for are believe sampling enterprise are track is year. and competitive we we market; optimize and area success PCIe our and well out and the in And also rolling to SSD and second half data controller our currently our SSD

from controller continue controller sale Now smartphone gain. share customers OEMs. market aggressively controllers. let UFS our Sales UFS Last grew me its position build primarily year, turn to expand market roughly controller with eMMC our strongly to doubled, flash coming NAND eMMC+UFS U.S. of as to growth with both of and

also sales controller UFS Our from growing customers. to sales other benefited

as in systems began proliferation the new ADAS, this exit eMMC growth as plastic renewed entertainment applications, but use eMMC; that storage clearly load sales the such telematics of flash from of our the automotive makers from opportunity controllers also seeing are order We technology. to NAND with from of capacity many and

the makers supplying to module We into controller from have benefited market. the stepping

only foundry market of are NAND us. Additionally, annual volume eMMC X.X of controllers, who outsourcing we for from makers a is us supply flash are also big approximately This with and are issues facing an meaningful because wafer supplier sales the relatively merchant controller units. market billion attractive the market is eMMC eMMC few

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

Riyadh Lai

reconciliation to sequentially. today will is In will quarter and issued of that and my good were Earnings sales you, higher per year discuss focus our primarily earnings noted. Thank note $X.XX, included of morning, otherwise with GAAP our non-GAAP Please X% sequentially. comments Wallace, growing guidance. million, yesterday. fourth quarter, our I results $XXX details our then fourth which non-GAAP data on were release XX% the provide A additional was unless full the everyone. results specifically and ADS

up were the Earnings year. prior XX% For prior the the versus ADS full year, from per sales up were XX% year. $XXX million, $X.XX,

growth to of to back share. in controller controller for the to year SSD our solutions gain our as third sales. significant sequential growth products. I'll rate controller exceeding quarter production of sequential the key market with between we declined Now quarter's eMMC+UFS X% for to far XX% controllers. grew SSD -- reversing sequentially eMMC+UFS X% we XX% SSD of XX% approximately shares. sales XX% sequentially, XX% XXX%, review significant controller -- sales XX% SSD gained performance XX% to year approximately the far accounted fourth flat SSD SSD year to and the grew XXX% exceeding grew to our grew XX% sharp year quarter in sales we eMMC+UFS fourth sales fourth Full XX%, sales. total market sequentially. as allocated and total reversing sales controllers. quarter, XX% sales approximately accounted X approximately our production sequentially as Full quarter flat as market XXX% market's sales we third Full growth Full --

XX% were for quarter year, the prior our full the For with XX.X%, in to to X% sales and XX% total Gross declined the sales. consistent SSD X% quarter. approximately margin solutions of accounted fourth

million due $X.X the repricing fourth lower mix to increases. the quarter, quarter year, from the year's year. bonuses. For for salaries sequentially than primarily $XX.X expenses. expenses mainly the points Operating to leverage increased were fourth Operating XX.X% $XX.X as from operating year, year the were margin. were significantly customer Operating a the margin our from was for tape-out were costs. and our due the routine as XX.X%, year full quarter were percentage account optimizing million, from percentage million up our XX.X%, in higher of for lower and highest we Tape-out the prior as significant full we $XXX.X operating than gross quarter the year, history. allocation XX.X% to margin higher higher expenses was to million, and wage primarily also on for a in prior prior benefited product the prior the year expenses from corporate prior products higher as XX.X%, XX.X% full X.X in engineers prior year the XX% headcount, higher slightly the R&D Full expanded in in implemented full XX% Operating revenue gross expenses as we in our up recent and down margin focus

in temporarily at tax quarter rate was effective fourth the Our lower XX%.

fourth year, effective expenses, of of million the the cash at the was $XX XX%, $X which equivalents, $XXX.X non-GAAP our our and restricted quarter. tax low comparable our cash, our results, to Stock-based compensation of and the For $XXX.X the fourth the from $X had rate full end end the in We investments XX% close million million tax end to was quarter mobile million cash of at short-term we operating to third million exclude the quarter, rate. at guidance.

foundry prior XX levels quarter extremely and and ago. remains very of lean than Our less inventory, X robust. quarter, fourth days XXX the continues days than inventory demand tight remain be year a the as to had we less days In capacity

-- leaner is SSD of solution, -- at our XX% end December are -- at even our inventory Our leaner the SSD than and December inventory the at XX% of for of for less couple of are XX% controller dividend of as of as inventory end solutions $XX.X the December paid end to controller or declared October. annual products total per only provide million of to We of sell. We $X of the ADS sales. installment was have in our inventory quarterly we currently in shareholders, dividend weeks a first finished last that

our We are $XX shares. In the spent fourth shares. our quarter, million repurchasing aggressively we repurchasing

to by $XX remaining January $XXX million and year. million repurchase We of another in this the June expect

also other had of in we million uses $XX.X major terms In of cash, CapEx.

with me turn Now revenue our and forward-looking guidance guidance. let our to trends, business starting

this entirely are expecting driving grow in XX% the XX%. growth to based this year, allocation For of year rest incremental wafer -- This timing this incremental in this year. sequential foundry half note, second the on growth growth of received is revenue we full revenue And first through the for important supply is revenue Also we of half. the is wafer to the our forecast supply. more an versus factor forecast

The are target successful mentioned, undertaking baseline I'd deliver upside as revenue of well our our As this certain upsizing is is initiatives. initiatives to range, on and guidance this. to operating we dependent the execution of

we less in availability of supply means the in and of timing which QX. fewer certain will sequentially. key primarily have wafer Wafer First quarter for XX% factors: impact supply revenue This is to our of result channel not us will is nodes QX be cleanup. the XX% expected sequential sell. year, of We China decline but meaningful supply supply linear inventory and is parts market the to received incremental wafer in decline will X high-demand QX, than to timing this

risk holding products ago. willing Positively, the now are their of of action terms a this both operating makers holiday. with activity availability, are module as very with market, temporary controllers. We seeing ago, low goods levels As inventory weeks have recovery had New a reduced to module we in before business sentiment of to as supply as long Year are market minutes said reduce China's finished to than the trying are at we of better before couple as holiday. procurement channel long quarter currently just build few inventory inventory clean a their in module makers believe up for Furthermore, of makers Chinese more well is parts offering the I channel

market the actively maker their NAND customers targeting us module with controllers about are procurement. to Our support now discussing channel upcoming flash

new new not over affected and next and Fortunately, these accelerate these are will OEM our are quarters. beginning pick as programs -- programs the up few only programs

in improvement and We quarter. are through first already next way see quarter the X/X of the good sales

wafer through growth the the OEM growth allocated which from already to with scheduled the supply coming ramp will sequential new of the by of be incremental us. expect year We timing of supported rest programs,

Let me our now guidance. turn margin gross to

For year, We believe gross we gross our XX% the products target margin manage XX% continue margin. the to to expecting in are full can around our range. we XX%

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

Turning our to guidance. operating margin

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

are We delighted our towards margin. now that delivering target we are XX% operating

in in tape-out of And than quarter First quarter fourth because operating margin higher modeling be range lower to XX.X% XX.X%, of expenses. our for assumptions. other key should the the

in $XX stock-based full the range. compensation For million to $XX the we to be million expect year,

million should compensation the stock-based quarter $X be $X range. in to First million

effective XXXX XX%. approximately be our expect to for We tax rate

year, CapEx, full building CapEx million $XX will Taipei of the Hsinchu which our routine of we be office construction. expect approximately For for and for million $XX million $XX and

be be million $X quarter $XX remarks. prepared concludes This of approximately which First CapEx our should will and office for million, CapEx $X for million building. our routine

We your will call questions. the now open to

Operator

question from line Our Securities. Ellis B. first Instructions] Craig comes the Riley from of [Operator

Craig Ellis

Team, congratulations start bigger on calendar performance a question. off 'XX. in the longer-term very wanted maybe strong I to with picture, Wallace,

look as all strength had mix in growth and markets, product So really sounds And in then back that that could it XXXX. it and augment ramp I a and product new looks of XXXX, XXXX. order in share at you solutions demand persistent like is gain strength growth SSD your and like strong that has your

growth did is this share context the UFS, gain as way year. company in and the last for and the confidence you growth look across in question against ability put saw type you of at to and last today eMMC the the controllers, that this, your potential So the execute SSD business that you when

Wallace Kou

Great.

asked good very think you I questions.

the will picture, enough of continue the X do client in next X growth believe eMMC a and big a -- to to momentum lot can grow, X for SSD, you UFS we supply, we wafer if we at years. And the If we see have secure look particularly headroom controller.

we we SSD clients achieve NAND maker. from For makers, and eMMC by for have to we benefiting continue NAND that. believe should are major at will XXXX, the with And believe They project client all least to confidence grow SSD, have our controller X we outsourcing.

share We are popular new more we becomes UFS and all with with to maker smartphone smart and will into incremental when devices, continue additional us, smartphone. NAND gained customers. in the also device the low-end UFS, we including momentum applications IoT market for grow grow Some believe the also market.

if project think major wafer, keep I execution in continue time can to So all for we recruit years. talent our in can we the will growth for and program get a R&D X we the next momentum and X sufficient

Craig Ellis

et And question, X was well through very of over initiatives that year helpful. Riyadh. executing things that characterized cetera, to different That's last company it to regarding execute management, on out year. switch I'll the fulfillment, for played which margin, the follow-up cost the my gross Riyadh, one the was

have quarter's As through have things you decrease year? as on what the you imply on we you gross The look the year? does momentum what that through is gross benefited pressures margin levers gross at of do year it margin full the is the margin to what some operationally some that and offset last And guidance the those? potential are guidance, And look the this: question year. first

Riyadh Lai

look doing were ways our a continuing similar for year Craig, what and we look to that, business our improve with to to we at ago. are business

the which relating wafers initiatives product mix, certain pricing, execute. into are are to and looking plan there we to costs -- that we other are We

is mix to margin results potentially and there upselling better -- continue same. did also we product processes. furthermore, the the we results relating year. line gross we terms products the certainly press communicated. are are did also very we on we deliver top quite year; tune our while of reflect customers, carefully better to And of where Where remains costing, of of opportunities year; our baseline richer yields in There we'll be so ahead that. this The about the a that allocation And to and of opportunities also pricing to last mix; our which we on what optimization side, better in discipline baseline to the had look growth which, also sales again, manufacturing continue better pressing cost will last to nicely can

other of into the terms the manufacturing continuing we're So are of this is in There end opportunities our well that as of in look elements improve to our processes. fabrication the products both profitability. back order and to as

Craig Ellis

horse, year? the cash given the executive entertain view the one could And in more operating on and half happen how the what program the on needs been would into and And flow first That's all the of something the risk flow through program you program. above a dividend if buyback is before the back you teams to putting just back for strong visibility the execute on talk buyback free the level the cart CapEx before after underway queue. I share helpful. I half and Is And about first appreciate could late? enhanced the the the that's nicely bit sneak Congratulations start of the in of the in that's little hopping go the year. Board's as building of the share of the the you at degree well new can half just cash company which

Riyadh Lai

a great question. that's Craig,

highly We a have generative. that's cash business

to a million to fourth our CapEx the quarter were elements. of start and million quarter and you despite at over of of quarter, share $XX shareholders dividends other at little end If our the paid changed cash look is $XX repurchase, of balance the plus

shareholder program this So of of initiative attractive But this certainly we do continue complete lot and or our into other can program, initiatives share a the have to initiatives -- buyback we flow us shareholder to year. of our clearly look to boost later first let type current value. cash continuation

Operator

Needham comes from question from next of line Gill Our Company. Raji the &

Raji Gill

based you XX% a and that you Wallace about And 'XX, my on variables, driven about be to of the thinking is cetera, the the results will were -- and supply, it wafer XX% outlook certain wondering and when you're saying upside be that. congratulations to to baseline I'm incremental by product on optimization, the Riyadh, and et calendar how clear 'XX. on very look target timing stellar the

in is of of revenue that in capacity the happening. the driven QX mentioned sequential timing You because not decline

my at incremental question that XX% will the the gives if a providing capacity get you to is that throughout to that So not timing more you is, get to year? essentially And say you if are only supply that upside confident outlook what XX% need? to that reassurance you you but confidence, -- provide how TSMC there the could be we

Wallace Kou

good raised So think you I a very question.

TSMC us we to think, are the nodes, mentioned, well certain XX-nanometer. advanced half. technology we We in So regarding first the nodes, baseline as -- second primary shortage think how allocation technology severe move and I half XX-nanometer from additional the I in on XX-nanometer and how from to we are from to rely in including we all pull can confident as guidance wafer wafer supply to the upside? as

supply. XX-nanometer in However, I comfortable think we are wafer

We are XX-nanometer]. just [balancing

if a cannot with TSMC, better from mix the we of we how week, customer. pricing And can discussing depends so benefiting we be wafer with supplier. could from on XX-nanometer and momentum. supply almost there's utilize potential see supply the we a product our But primary So fully wafer it we all every with far, and believe some get with foundry positive any additional we are

from supply wafer get to us helping also customer TSMC. primary our addition, In

will that direction and I and positive. be helpful think very momentum

Raji Gill

to channel cleanup on the the understand. in inventory That's which Great. And is decline -- in to starting a QX, helpful China, QX XXXX. leading Okay.

progress could that a little I'm the makers elaborate these sales. to inventory thinking that support makers starting the great further very a controller programs that's bit build will indications or products -- you about and we to flash of holiday year. X/X that's are more The hear wondering it's season module to strong, this trying the mentioned makers as But You that and NAND they represent module the of bit get this of of post procurement. how module that are year. understanding if to their throughout kind on OEM the do are

Wallace Kou

Okay.

Let me try we situation, faced. the regarding QX clarify to the

lot because is of of they're so I are I the there's reduce module expecting pricing, still inventory a opportunity of coming, Samsung's NAND price impact risk. all think Chinese they our Year takers. of think the try although to customers, Samsung continually. uncertainty, lockdown module Because New Xian production NAND to But decline And the makers, all most reduce makers, Fab of output. the the them,

So they hesitate to volume don't they very more really NAND, a so large need inventory. of controller capture

in all However, we the which lately, very, they these QX. QX we very see in across the our by actually see major from module customers customers from and actively new program, discussed are are backlog really procurement do from China, our the Taiwan. and China And all

China, and activity very the now also very So we in channel check the this good see like looks become very has very as a momentum. we low actively. -- And with It is the channel. inventory

for is late QX And very recover QX. market from we So with China node. the strongly late legacy our this strong in helpful and this even technologies, increase mature backlog confidence see positive will particularly to us move, very up the a to moving is

Operator

Ackerman and question Our from the Cowen of comes next Karl from line Company.

Karl Ackerman

from moderation you in or controllers. for X quantify pushout in given that And March cemented question, is in Two to PC way address these a questions, of a hoping a beyond the these may. supply for you Riyadh, bridge was impact revenue could gives volume PCIe year the March have guide orders assembly? the there SSDs help as chain snapback client March quarter. big discussing disruptions impacting I signed customers That if you confidence me the whether I by and the full outlook the or

Riyadh Lai

from relating question your Wallace Karl, question for defer to that GenX this. to who PCIe provide into insight our better orders customer, purchase I'll

Wallace Kou

OEM GenX different PCIe our with program different module that PC X NAND simultaneously. have X from PCIe makers and we think GenX I makers is multiple program

own the is on their based internal So ramp-up program process.

very a The see NAND the we there's procurement. So intensive qualification do testing, schedule. and -- not also

OEM, track. For on of are they some

issue resource are due a out little then delay internal from For the our their own and some, decision. to they pushed they make both

the any we are we And very new not I demand So strong. backlog. comment impact XX-nanometer node. have the all think did Frankly immediately. We the GenX I on just But technology PCIe cannot will revise guide support fill. very, is from see sufficient, major the the we backlog to wafer detail. to enough If have speaking, don't

our TSMC addition in is controller -- uses For UFS that is X.X XX-nanometer.

We customer our but compared they're TSMC XXXX. meet with a demand have amount Even the enough increased severe in also shortage. not in XXXX, to

work wafer baseline so to But with us. continue guidance, based allocated to additional current supply. we'll XX% -- So XX% gain but customers, growth our together wafer to to that's with TSMC on our

Karl Ackerman

that. That's very appreciate helpful. I

my follow-up, PCIe enterprise to I did touch controllers. X For on want your

indicated driver? And that available engagements you have could to that you X both as broadly, enterprise growth that controllers a for you production into big is are you of question, today? of design driver, moving I small outlook? also sort enterprise have What guess as products the a address full you You year well on driver PCIe X your controllers PCIe year. as the discuss But this

Wallace Kou

probably did I speak think not I clearly.

in sampling second year. of half will to PCIe controller enterprise production It are year half We GenX be of next this XXXX. our going second in the

a providers. we especially for be as lot enterprise will that win a uniquely very flagship well design customer quite data major and enterprise So center we the for product GenX high-performance customers, PCIe this of And as believe server enterprise high-end, driver controller, for positioned design. will hyperscale a believe high-end

going but ramp potential some a a are We up customers. And of Currently, who with frequently the year, our controller, are second ramping this also leading SATA high enterprise we're major -- customers. PCIe controller, half with we year. GenX controller volume, not in we to the win is this incremental our and in discuss

Operator

comes from Our from line ROTH of Desilva Suji next the question Capital.

Suji Desilva

on there. a Wallace, congrats strong year

Looking capacity? you perhaps feels the in did in the be of does chain setup beginning sounds differences. you're ahead and calendar with 'XX, allocation. the 'XX, kind calendar to it upside the wafer and from terms How for it the like way 'XX same beginning the where of different of of the upside guide at setting potential supply just Just another up then curious numbers 'XX,

Wallace Kou

that supply. wafer technology early as we mentioned XXXX in TSMC XXXX. And that we from to think XXXX severe we XXXX, more I supply, node for what wafer are understand particular, the than start

an much I have We recognized and certain in controller difference market-leading go the -- year. broader UFS sector, position position so technology customers because UFS a difference controller with major do -- XX-nanometer much major year, provider in stronger get think eMMC of and we the -- our is wafer, will we the we both incremental have and importance a TSMC we market and XX- technology this as from node. production this clients multiple OEM-based especially customer So for --

Now -- allocation we grow face XX%. only do the even got, guidance, XX% to wafer can we as our the we

we last us helping which wafer additional set model TSMC. opportunity, also this is asking to a like supply will from our However, year, customer major

So wafer if there's half any might customer an this incremental the we opportunity, cancellation or I get second any think in able be to of year.

for to try are what we just I maximize using a that keep think product doing focus So mix. and on wafer the we're we

revenue are XX-nanometer, As a could little the XX-nanometer allocation sales better without nodes. in a additional I comfortable. to even wafer do gain allocation incremental in advanced mentioned, We technology we

Suji Desilva

growth is that year? Thank is landscape your think should ago. subtle differences I general. competitive the for where controller Can enterprise helpful. And the then XX the been from It's any you or different way, how, understand gained how that many opportunity controllers there enterprise we about months SSD business want high-end if SSD competitive just and note. SSD talk I strong XX% controller share so you to you've really dynamics, next in this contrast versus this

Wallace Kou

Yes.

we do tremendous As We now. for X gain well, spent almost you lessons. know right years for controller enterprise investment

experience technology from generations. gain previous X and also We

steers we Now enterprise the, the found SSD the leader behind second-generation architecture-wise, I market. controller think the our that -- in leading

However, combination to firmware how key learn and to the computer the really lessons custom the SSD also and performance performance-tuning for the with algorithms the great really do do all -- latency the controller We in architecture addition, the in in silicon. teams. enterprise-type PCIe and modeling dedicated adds meet enterprise customer features spent And all we rewrite deliver really and also into GenX our create effort architecture is we to to third generation. the and controller enough particularly expectations, also demand a

or pretty be have Now a level same similar we and position controller, pretty a decent that's technology have market believe launch leader PCIe And the SSD GenX SSD why our good enterprise should market. today. confidence we we will with firmware the the when in we in

Operator

next comes from Craig-Hallum. question Your the line Anthony of Stoss from

Anthony Stoss

up calendar side. yet? updating samples entering order the Is something is solutions you a you while? learn half quickies and you, then based Riyadh, conversations it since just -- the known limitation the QX And you've did you're market to recent? enterprise in to exuding And also for of are like controller TSM, of I follow sampled with that PC this you on also it getting also when just ton Wallace kind second just that now this shipping maybe bit did The year, that Ahead then of for the well. OEM confidence you book Is on for wanted a haven't Or side, as of little change? size. a maybe of it from X more Wallace.

Wallace Kou

I X think questions. X you probably or have different

a and Let's just is do we said, The start try volume enterprise this PCIe do we start controller I SATA think controller to we -- side. enterprise incremental shipment as our enterprise, GenX year. the have sales. for to

next not a as the half are which in PCIe understand vehicle in second to half year. a controller, GenX the be we sell we'll secure enterprise today, able introduce GenX customers Although of second but PCIe production the this to that's our leading year to sampling of and we few controller

based breakdown. need maker, look cannot several critical think balance sector. allocation the to market on the is foundry to discussion wafer they side short sectors market There's avoid automotive primary So avoid right? and TSMC, the But side and other discuss long with I and also most and probably the the I definitely Regarding supply, details. the

the allocation. they to and So do surveying the end market, feedback on on need the customers' based based look

have believe all strong our of a very do we will program We PCIe very, PC occupy probably think I GenX design OEM. win, specially from XX% PCIe GenX.

significant. TSMC node major the our supply for that's consider the a have because shortage cause And chain So problem shipment. to would for certain definitely may

foundry for incremental UFS comment major maker. very, for very the smartphone discussions In supply thing We believe going the is the half all some are year. same the this addition, this and cannot get second customers, smartphone, I important can of wafer I on an so we there on. on think for detail. Hopefully,

Riyadh Lai

-- Tony, of sizing other order question address third your to try to the book. our our your relating now question, I'll

continued had grow. in while his that touched little Wallace briefly has book order Our to upon ago. a comments

So broad ratio our sales. continue order to remained the versus at book last our ratio books way order just is look this actual similar it grow. has to as was versus to what today year a look -- one our at And to remains year This ago.

to visibility book it that -- we're But year strong what even we remains quality and our our the year in about very makers talk of discounting visibility, our with it strength able bear our we're order ago. we're more deliver the sizable. mind, orders module when where stuff. to order about quite our book So we -- remained was focusing quality are more from order look also to still talking this comparable on the book, opportunistic with higher book significant what order -- higher our more the limited a and at adjusted quite we has But when

Operator

from Teng question next Donnie Our Nomura. comes from

Donnie Teng

strong Two CFO, XXXX and CEO on congrats questions. results. a very

if opportunity year, I'm in one heard is, game correctly. first the business for this So I console interested

more could console one, are for opportunity? it's are the additional replacing OEM Is this the you this Or you on suppliers like also, this to kindly you suppliers? existing or So aftermarket? elaborate And opportunity? game

Wallace Kou

be launch. refresh. will is -- This the a I this year year no as mentioned, So new is XXXX generation, it

want not want refresh customers to So solution we player continually. -- console cycle. the to same in Game the maintain are

I I X win we existing maker. next year. NAND additional controller go to through think will the replace console whether player makers comment game socket we cannot or

Donnie Teng

Got an aftermarket or OEM it. it business? Is business

Wallace Kou

business. OEM. OEM

Donnie Teng

to second my And the UFS. question regarding is

new right? this leading with And I or XXXX-UFS so have IC we our this year right? So I'm new powerful very half X.X just maybe a controller, think do U.S. upgrade second beyond curious, customer? far, generation have any the also, for we the UFS considering full quickly UFS growth SSD your So just would replacing regarding think growth to and you sales been has controllers guidance, XX% between controllers? also XX%, curious, how to this momentum eMMC controller year, year about

Wallace Kou

Okay.

product to you, cannot NAND, probably X for is X.X new I give going But product the -- DDR One UFS just road coming year. this support or new of -- half to this go other probably is tell The X.X, to the X.X. me XXXX map. the generation should for our you XXXX. Let whole second the I more is really of to DDR also a of is new the Because over the generation is NAND. have

need that don't you NAND. channels So many for

very design more this be because in [XXXX]. cost and And suitable have the as to to be value-add So for we TLC end, cheaper for of in maker we even redesigned even [indiscernible], well better. want And architecture ahead will especially NAND a customers. makers also or to be UFS above cost-effective new a more especially is new controller. be as QLC for NAND. Performance X.X provide -- order XXX so high XXX-layer And the can NAND beyond, and than high could for some performance, layer we the

revenue, cannot is for -- much I than demand you I sale that I support. just because Regarding just comment cannot tell can the UFS more I can the

very So Still even support additional enough to hard customers our wafer. consign not the try to demand.

Riyadh Lai

me not is Don, but balanced. add, also year, our it's this very let quite also strong, growth only

SSD We from client strong have our controllers. growth very

coming from below, you X of of legs that strong into controls. layer have when not is because one the is very look of We growth both UFS from but + our coming also X just growth legs of eMMC+UFS growth rather And eMMC, eMMC.

well as strong strong from from into next carry and this growth our eMMC as controllers, over will controllers UFS So growth believe year. our we

Operator

remarks. questions. Thank further I'll now you. back are CEO the for to call There turn no closing

Wallace Kou

everyone, for today in and Motion. us Silicon you, Thank for continuing joining interest your

website. corporate tonight. of We our now. posted these Relationship joining The section you, of will conferences over investor will be on the Goodbye attending Investor schedule Thank be virtual everyone, several for next events for months. the few

Operator

Thank you. for today. participating. Thank our That does conference conclude for you

You may all disconnect.

Silicon Motion Technology (SIMO) 27 Jan 222021 Q4 Earnings call transcript