Silicon Motion Technology Corporation Q4 FY2025 earnings call

• Delivered excellent Q4 performance, exceeding revenue and near high end of operating margin guidance, positioning for record 2026. • Benefited from strong demand across markets and new controller solutions. • AI growth driving demand in memory/storage, with Silicon Motion well-positioned. • eMMC and UFS business outperformed smartphone market, expecting continued growth. • Client SSD business saw growth with PCIe 5 controllers, expecting continued growth in 2026. • Enterprise business expanding in data centers/AI, with MonTitan controllers ramping and new 4-nanometer chip in development. • Enterprise-grade full drive storage business evolving, with volume shipment to AI GPU maker and work with other customers. • Ferri storage solutions in demand, balancing revenue growth with margin stability.

The company's segments include eMMC and UFS, which grew 25% for the full year 2025, outperforming the smartphone embedded market. Client SSD business saw a turning point with the success of new PCIe 5 controllers. Enterprise business, including MonTitan controllers and enterprise-grade full drive storage, is expanding with opportunities in data centers and AI infrastructure. Ferri storage solutions have strong demand from automotive and industrial customers. Revenue contribution details were not provided in absolute terms but growth and market position were highlighted.

• Q1 2026 revenue expected to grow 5%-10% to $292M-$306M, up sequentially. • Gross margins expected 46%-47% in Q1 2026, recovering to 48%-50% later. • Operating margin expected 16%-18% in Q1 2026, with full-year 2026 as record revenue year, sequential growth each quarter. • Anticipate higher operating expenses in Q2-Q3 due to tapeout and development costs. • Full-year 2026 operating margins expected to improve despite higher investments.

• Continued competitive pressure in semiconductor industry affecting prices. • Unpredictable technology and consumer demand changes. • Changes in relationship with major customers. • Political, economic, legal, and social conditions in Taiwan. • NAND and DRAM supply constraints and price increases impacting business.

Q: How should I think about the mix of eMMC, UFS revenue, especially in the back half of the year exiting this year?

A: UFS controller majority is smartphone, eMMC controller majority in IoT, smart devices, etc. Around 50% for smartphone, 50% for nonsmartphone area.

Q: How will revenue contribution from BlueField play out?

A: BlueField boot drive solution requires procuring NAND at market price, challenging but ongoing, impacts gross margin but margin pass-through managed.

Q: How is revenue from the boot drive opportunity and MonTitan segmented?

A: Boot drive is part of SSD solutions, MonTitan is part of controller business; details to be provided appropriately.

Q: What point do you anticipate revenue from next-gen boot drive and switch opportunities to begin ramping?

A: Next-generation DPU revenue expected to begin in back half of 2026.

Q: Which segments will have the highest percent or dollar contribution to growth in 2026?

A: Enterprise controller and boot drive have high growth percentage, mobile controller, eMMC, UFS have bigger dollar contribution.