Company Overview May Silicon Motion Technology Corp. All rights reserved.

Transcription

1 Company Overview May Silicon Motion Technology Corp. All rights reserved.

2 Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding trends in the consumer electronics and semiconductor industries, any future growth projections or expectations in such markets 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. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. 2

3 Company Background Silicon Motion is the global leader in supplying NAND flash controllers for solid state storage devices and the merchant SSD controller leader Supply 750+ million controllers annually, more than any other Broadest portfolio of controller technologies & solutions Est in San Jose, CA; now corporate offices in HK, Taiwan & US NASDAQ : SIMO (2005 IPO) 2016 revenue = $556m ( CAGR = 27%) 1,122 employees (2016 year-end) & 82% engineers Design centers in Taiwan, Korea, US & China Non-GAAP results 3

4 Continuing Proliferation & Expansion of NAND All Solid State Storage Devices Need Controllers We Benefit from This Rapid NAND Supply Growth & Improvement in Affordability Bit Growth = +39% CAGR Rapid Demand Growth for NAND Flash Solid State Storage Application Ubiquitous embedded memory Smartphones & other smart devices Replacement for mechanical HDD Client computing 50 0 $/GB = -25% CAGR Big memory for Big Data Enterprise servers & hyperscale data centers Source: Forward Insights 4

5 Expanding Portfolio of Growth Drivers Products Market Trends End Applications Client SSD Controllers Accelerating HDD displacement Notebooks & desktop PCs, non-mission critical data center applications Embedded Storage emmc Controllers Industrial SSDs New classes of devices, emerging markets & replacement demand Expanding proliferation of applications Smartphones, tablets & IOT devices Industrial, commercial, automotive, datacom/telecom & surveillance Hyperscale SSDs Pervasive cloud computing, big data & IoT Data center servers database virtualization & transaction facilitation Expandable Storage SD Card Controllers USB Flash Drive Controllers HD video recording & external storage capacity Emerging markets, back-to-school, gifts Smartphones, DSCs & videocams Portable personal storage 5

6 Value-Added Role of a Controller Storage Devices Increasingly Faster, Cheaper & Better: More Sophisticated Applications: from Smartphones to PCs to Datacenters Faster Data Read/Write Speed (IOPS) Lower Latency Higher Stability Better Data Security Greater Scaled Capacity NAND Component Increasingly Cheaper, but Weaker: Issues Arising from: Geometry Shrink, Multi- Level Cell (MLC, TLC, QLC) & Higher 3D Layer Count Increasing Data Corruption from Weaker Data Retention, More Circuitry Noise & Worse Read/Write Interference Lower Endurance Expanding Value-Added Role of a Controller Optimized for Performance, Power, Cost & Ease of Use Solutions Include LDPC Algorithms Specifically- Optimized for NAND, RAID Protection & DSPs for Data Shaping 6

7 Client SSD Controller Merchant Market Leader SSD cost rapidly converging with HDD Faster, more reliable, lower power & smaller form factor Rapid displacement of HDD driving 20%+ CAGR Our controller solution: Highly customizable H/W + F/W turnkey solution Customers: 3 flash vendors & module makers PC OEM (all top 5 WinTel PC OEMs) & channel markets Target high performance, mainstream, DRAM-less cost competitive & BGA markets Supports MLC, TLC & 3D NAND SATA & PCIe NVMe Sources: WDC, Forward Insights Quarterly SSD Volume & Market Penetration SSD Market Shipments -- m Units HDD Market Shipments -- m Units SSD as % of HDD+SSD 1 Q 14 2 Q 14 3 Q 14 4 Q 14 1 Q 15 2 Q 15 3 Q 15 4 Q 15 1 Q 16 2 Q % 20 % 15 % 10 % 5 % 0 % 7

8 emmc Controller Merchant Market Leader emmc standard embedded memory for Android smartphones, tablets & other smart devices Small BGA form factor, low power, high performance & cost effective Smartphone demand + new AI & IoT applications Our controller solution: Used by all top 10 Android phone OEMs From flagships to low-costs emmc & emcp plus UFS & umcp Supports MLC, TLC & 3D NAND emmc 4.5, 5.0 & 5.1; UFS 2.1 Primary customer: SK Hynix Source: SIMO Estimates, Industry Analysts, Brokerage Forecasts 8

9 A Leader in Customized Specialty SSD Solutions Shannon Hyperscale SSDs: Focused on China, world s largest internet market Provide high-performance enterprise-grade SSDs customized for specific low latency, high IOPS, high capacity, high stability and low power consumption requirements Primary customers are China s hyperscalers Ferri Industrial SSDs: Target industrial and commercial applications that require customized solutions Provide high-performance industrial-grade single-chip SSD solutions for space-constrained applications that operate in demanding environments Primary customers are Japanese OEMs 9

10 1Q 2017 Operating Highlights Financial Revenue = $127.3m (-12% QoQ, +13% Y/Y) Gross Margin* = 51.0% (vs. 50.2% prior Qtr) Operating Margin* = 26.4% (vs. 30.4% prior Qtr) EPS* (diluted) = $0.70 (vs. $0.95 prior Qtr) Business Embedded Storage sales decrease approx. 10% Q/Q and accounted for about 80% of total sales, similar to previous Qtr Client SSD controller sales decreased approx. 20% Q/Q emmc controller sales was approx. flat Q/Q SSD Solutions sales decreased approx. 10% Q/Q Secured first design-in with leading handset OEM for UFS controller *Note: Non-GAAP results 10

11 Product & Revenue Trends Last 3 Years Last 5 Quarters Others QoQ YoY Expandable Storage Embedded Storage 11

12 Gross & Operating Margin Trends Last 3 Years Last 5 Quarters Note: Non-GAAP results 12

13 EPS Trends Last 3 Years Last 5 Quarters QoQ YoY Notes: Non-GAAP results; EPS is earnings per ADS 13

14 Target Financial Model Revenue %YoY +25% -20% +28% +25% +54% Gross Margin 47% 47% 52% 51% 49% Operating Expenses Long-Term Model Robust Growth About 50% Disciplined Expansion Operating Margin 23% 20% 24% 24% 28% 2Q 2017 Guidance Revenue = $134 to 140m (+5% to 10% Q/Q) Gross margin = 48.5 to 50.5% Operating margin = 25.5 to 27.5% Up to 30% 2017 Guidance Revenue = $556 to 612m (0% to +10% Y/Y) Gross margin = 49 to 51% Operating margin = 27.5 to 29.5% Note: Non-GAAP results & targets 14

15 1Q 2017 P&L (Non-GAAP) ($m) Q Q Q %QoQ %YoY Mobile Storage % 12% Mobile Communications % 32% Others % -13% Total Revenue % % % -12% 13% Cost of sales % % % -13% 12% Gross profit % % % -10% 14% R&D % % % 7% 25% SG&A 8.7 8% 7.5 5% 8.8 7% 16% 0% Operating expense % % % 10% 17% Operating profit % % % -23% 11% Other income/(expense) 0.4 0% 0.6 0% 0.7 1% 21% 76% Pre-tax earnings % % % -23% 12% Tax expense/(benefit) 6.3 6% % 9.3 7% -12% 46% Net income % % % -26% 3% Dilute ADS (in millions) % 1% Earnings per ADS (diluted) % 2% 15

16 1Q 2017 Non-GAAP Reconciliation ($m) Amortization Non-GAAP % of Stock-Based of intangible Litigat. FX Gain GAAP % of Revenue Comp. assets Exp. / (Loss) Revenue Revenue % % Cost of sales % % Gross profit % (0.1) % Research & development % % Sales & marketing 5.1 4% % General & administrative 3.6 3% % Amortization of intangible assets % Total operating expenses % % Operating income % (3.1) (0.5) (0.0) % Other income / (expense) 0.8 1% (0.3) 0.4 0% Income before income taxes % (3.1) (0.5) (0.0) (0.3) % Provision for income taxes 9.3 7% (2.4) (0.0) 6.9 5% Net income % (0.8) (0.5) (0.0) (0.3) % Earnings per ADS, diluted Diluted ADS Effective tax rate 27% 23% 16

17 Silicon Motion Technology Corp. All rights reserved.