Exhibiting how AI continues to drive the expertise trade

Key Level

Silicon Movement designs and develops NAND flash reminiscence controllers to supply cellular, knowledge heart, and enterprise storage options.
The AI increase has elevated the demand for NAND flash reminiscence with its high-speed entry and knowledge storage capabilities.
Silicon Movement faces stiff 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., Ltd. Nasdaq: SIMO is a fabless laptop and expertise semiconductor firm specializing within the design and improvement of NAND flash reminiscence controllers. This controller permits stable state drives (SSDs) to function seamlessly and manages communication between NAND flash reminiscence and laptop techniques. The unreal intelligence (AI) increase is driving an insatiable demand for reminiscence chips, particularly Micron Know-how's non-volatile NAND flash reminiscence. NASDAQ:MU Utilized in SSD gadgets by main corporations reminiscent of Seagate Know-how PLC Nasdaq: STX and Western Digital. Nasdaq: WDC.

AI-driven demand tailwinds

The AI revolution has elevated the demand for high-speed storage options. Coaching AI fashions requires massive quantities of information, so SSDs are anticipated to be in excessive demand. AI not solely calls for knowledge capability, but additionally quick entry and switch. NAND reminiscence is non-volatile. This implies it could actually retain knowledge even with out energy, not like risky reminiscence like DRAM, which loses knowledge when the ability is turned off. Silicon Movement derives most of its income from his SSD controllers.

It additionally makes cash from cellular storage used on tablets, smartphones, and cellular gadgets. These gadgets make the most of common flash storage and knowledge embedded in USB flash drives. Silicon Movement's Information Middle and Enterprise Options division supplies storage options that meet the calls for of massive knowledge analytics and cloud computing.

Intense competitors within the NAND flash market

Silicon Movement has fierce competitors within the NAND flash reminiscence market. The highest three rivals are Samsung Electronics Co., Ltd. OTCMKTS: SSNLF (an enormous developer of its personal NAND flash reminiscence semiconductors and flash controllers), Western Digital (whose SanDisk division is a risk within the NAND market), and Marvell Know-how Inc. NASDAQ:MRVL (We specialise in NAND storage controllers for enterprises and knowledge facilities).

upcoming competitors

The demand for high-speed knowledge storage and entry is driving the race to usher within the subsequent huge storage expertise. HDDs are less expensive and have way more storage capability, however they’ve transferring components that make them a lot slower and extra unwieldy than SSDs. Resistive RAM (ReRAM) is a promising expertise that allows sooner knowledge write instances, elevated sturdiness, and decrease energy consumption. Micron Know-how and Samsung are his two pioneers at present within the analysis stage of ReRAM expertise. That hasn't occurred but, as corporations are nonetheless making an attempt to assemble prototypes.

each day bull flag

SIMO's each day candlestick chart exhibits a bull flag breakout sample swinging from a rebound to help on the bull flag low of $74.66. The inventory worth soared to a peak of $83.96, however a pullback threatens to push it above the bull flag lows. The each day relative energy index (RSI) fell under the 50 band. Pullback help ranges are $74.66, $71.07, $67.43, and $62.68.

Stable quarterly EPS beat

Silicon Movement reported fourth-quarter 2023 EPS of 93 cents, beating consensus estimates by 20 cents. Income was $202.38 million, up 0.8% 12 months over 12 months and 17% sequentially, beating consensus estimates of $196.52 million. eMMC+UFS controller gross sales elevated 25% to 30% sequentially and 20% to 25% 12 months over 12 months. SSD options gross sales decreased %-10% sequentially and 45%-50% year-over-year. The Firm declared an annual money dividend of $2.00 per ADS. Non-GAAP gross margin was 44.1% and working margin was 13.8%.

Full-year 2023 non-GAAP web gross sales decreased 32% 12 months over 12 months to $639.1 million, with working margin of 11.9% and earnings of $2.27 per diluted ADS.

upward steering

Silicon Movement supplied upward steering for first quarter 2024 income of $172 million to $182 million, in comparison with the consensus estimate of $169.19 million. Non-GAAP gross margin is predicted to be within the greater vary of 44% to 45% initially anticipated. Full-year 2024 income was in keeping with the consensus estimate of $767.72 million, at $765 million to $800 million.

CEO insights

“Our fourth quarter outcomes exceeded expectations as demand for almost all of our merchandise elevated from the earlier quarter as a result of vacation demand and normalization of channel inventories,” mentioned Silicon Movement CEO Wallace Kou. ” he mentioned.

“Demand for each eMMC+UFS and SSD controllers grew considerably throughout the quarter, reflecting our crew's continued dedication to offering controller options that allow our prospects to serve a broader market,” mentioned Kou. I’m assured that they may proceed to contribute to growing our market share sooner or later.” It will function the inspiration for sturdy progress from 2024 onwards. ”

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