Alex A.C.
Value/GARP Investor, Semiconductor & Financial Analysis, Electronics MEng
Silicon Motion's new products are taking off and driving another blowout quarter. It remains a solid core holding, though it is a bit expensive after the rally; dips below $200 would be an opportunity to add. x.comÂ
Silicon Motion sells the NAND controller nobody can design around, as wafer output is allocated into 2027 and every die needs one. Qualification with Micron, SK hynix and hyperscalers takes years per socket, so won share moves slowly, though Phison and in-house teams fight for each design. Latest-quarter revenue grew 127% with 48% gross and 22% operating margins, net cash and a 0.70 PEG at 14.9x forward. The risk: top-five customers dominate revenue and NAND is brutally cyclical. x.comÂ
Silicon Motion's merchant-controller moat is widening, making it one of the cleanest growth-at-a-reasonable-price semiconductor plays. Gross margins held near 46.5%, insulated from NAND spot swings, and Edge AI is speeding a shift to higher-priced PCIe Gen5 and UFS 4.0 controllers. Enterprise SSD wins are on schedule, and NAND makers moving capex to HBM are cutting controller R&D, handing SKUs to Silicon Motion. It trades near 15 times ex-cash forward earnings with no debt. x.comÂ
Silicon Motion, which makes the controller chips that manage how data moves, reads and writes inside flash memory, is holding its quarterly moving averages on the weekly chart. Nvidia's earnings should start the next leg up in it and similar names. x.comÂ
Silicon Motion is an underappreciated beneficiary of Micron's capex through its flash controllers and AI boot drives, which grew 1,600% last quarter. It raised $1B of 0% convertible debt to buy NAND for the boot drives, locking in prices, and the drives are going into data-center racks and sampling with Google. Lower oil and yields would help; with the 30-year yield at 6%, financing everything would be tough. x.comÂ
Silicon Motion looks cheap for its forward growth after crushing earnings. Hedgeye, which counts it among its top long ideas, says its guidance beat Bloomberg consensus by 23 percentage points and calls it a relatively unknown storage play that should be more resilient in the volatile memory cycle. x.comÂ
Rising memory contract prices strengthen the case for memory stocks still far below their highs. JPMorgan forecasts Q4 DRAM prices up 13% and NAND up 18%; Micron is 28% below its 52-week high, Seagate 44%, Sandisk 47% and Western Digital 55%. x.comÂ
Kioxia is gaining NAND share as AI eats through storage, while Samsung and SK hynix shift resources to HBM. Staying focused on NAND has given it production costs 20-30% below competitors. Its quarterly operating profit hit $3.8B, passing Toyota as one of Japan's most profitable businesses, with about $15B of net income expected in 2027. Even after rising 2,000% in a year it trades at 8.9x forward earnings and is preparing a US listing. The key question is whether NAND pricing holds. x.com x.comÂ
Micron's surging memory revenue points to a supercycle. Its segment and NAND revenue charts show a sharp recent acceleration, while the stock tests its rising 30-week average. x.comÂ
Sandisk benefits because AI needs more storage, and long-term customer commitments could make NAND demand and pricing more predictable. x.comÂ