SIMO's recent history is
end of 2020 - Covid caused a supply chain tightening everywhere, including semis. SIMO's sales go to about $240m-$250m due to the supply chain issues (customers all double and triple ordering), when SIMO's sales probably should have been closer to $180m-$200m if there had been no supply chain shock.
Q2 2022 - MXL agrees to acquire SIMO for about $105 at the very end of the supply chain shock.
H1 2023 - SIMO's sales (and almost all semi sales, other than AI stuff) collapse as the supply chain becomes OK, and all the customers have too much inventory due to over ordering during the supply chain shock. This collapsing revenue kills SIMO's profits.
Q3 2023 - MXL reneges on the acquisition deal. The two parties go to court.
H1 2024 to now - SIMO starts spending like crazy to develop new products, including high end and mid-range PC controllers, and also Mon Titan enterprise controllers. Spend spend spend.
2024 - The new PC controllers are very well received, and win 50%-60% of design slots. That's 2024.
H2 2024 - The Mon Titan has some design wins, they go into production in Q4 this year, but it's hard to tell the volume. In addition SIMO is spending and spending and spending for new products - including more Mon Titan models - which will (hopefully) produce big sales two years from now.
So SIMO has said that they increased expenses a lot over the past two years for new product development, and the fruits of that spending are starting to appear now. It's how we get Q1 2025 sales of about $168m become Q4 2025 sales of about $250m, and more in 2026 and beyond.
The lower profits of the past few years are at first caused by the sales collapse as the supply chain unwound over ordering post Covid, then after that the lower profits are caused by significantly increased R&D expenses by SIMO. The coming sales growth (starting now, really) is the result of increased spending and successful design wins (and market share gains of new products).
As for China taking over Taiwan, and how it would affect SIMO, I don't know. Can't be good. No one would want to own Taiwanese companies if that happens. But if China nationalizes all the Taiwanese companies, SIMO would be a minor thing in the tech world, losing TSMC would be mega, and perhaps drive WW3.
Or maybe Taiwan agrees to a 25+ year merger plan with China, and it's done smoothly, sorta like what happened with Hong Kong. Or maybe nothing happens. I don't know, but that is a SIMO risk. |
