Tidbits from SIMO's presentation at UBS Tech conference yesterday.....
...our Ferri automotive ... we are ramping quickly. Last quarter, we said about 5% of total revenue, but 2026 will be grow to 10% of total revenue.
MonTitan, we started 4 years ago, we grouped the team and focused on controller only and with the firmware.
(For Mon Titan) one of the (tier 1) customers is a NAND maker. So really as a secure (NAND) supply and also we are pretty confident about in the ramp of the volume.
(So one of the tier 1 Mon Titan customers is an Asian NAND maker).
The other Tier 1 customer in U.S. is also ramping in second half next year. And I think if the customer can procure NAND better, we may change our guidance in the second half next year and probably better numbers.
We are very exciting about the (Mon Titan) enterprise business for our growing momentum because our PCIe Gen5 MonTitan is a very unique architecture. Their performance shape is make it more suitable for AI ecosystem because performance and the power can be scalable based on different workloads and they can change dynamically. So most of our CSP customers and also NAND makers, they really like it because it's much more flexible. And as everybody knows, the warm storage demand for high capacity become bigger and bigger, and it's all required 2-terabit QLC mono die to make it cost effective. So this gives us a strong position to focus on the warm storage, although supply is still limited. But I think by second half 2026, we're going to see more NAND maker provide the output. In addition, compute storage is TLC-based, 4 terabytes to 6 terabytes. I think our initial ramp for next year is TLC. Second half will follow by QLC. Even we haven't talked about Gen6. I think the Q2 earnings call next year, we will give a full guidance and picture about the Gen6 development. Gen6 design momentum is much stronger, even our silicon won't be available until second half next year, but the Gen6 design will have multiple Tier 1, including our Gen5, but additional couple of Tier 1 coming for Gen6 controller.
Certainly, there's a lot of demand around QLC high-capacity SSDs. Right now, the gating factor being availability of those dies. But as that opens up, we should be able to give you guys a better understanding as how that scales longer term.
So we starting engage with NVIDIA 2 years ago for BlueField-3 design. Initially, I think we did not see there will be a very big volume will be meaningful revenue for Silicon Motion. But I think lately, we start to ramp in September. The current forecast in the PO is quite large.
So now we see this business become more interesting. We haven't given guidance yet. But in addition for MonTitan business, although the part of MonTitan, but we don't want to miss the investor origin MonTitan focus on controller only, see boot drive will be upside for our revenue growth. I think I cannot tell the number, but I think it will be significant.
But the dollar range per unit will be around 20-something to above $100, depending on capacity, right? So this will be a significant contribution to our top line as well as the profit.
(Ok, one difficult aspect of this "boot drive" product is SIMO is selling both a controller chip AND the NAND memory to make the final "boot drive" product. This inclusion of NAND memory in the sale may be one of many reasons why SIMO's inventory jumped so much last Q. They procured cheap NAND for boot drives expected to ship in the coming quarters. It also is complicated because it may be hard for SIMO to get a 50% gross margin on the NAND memory portion of the boot drive sale. They describe it as "pass through" NAND memory which means (I think) 0% gross margin. So.....the affect of big growth in the boot drives may be a significant up tick in sales along with a downtick in gross margins as SIMO probably will get weak gross margin (if any) on the NAND memory portion of the boot drive sale.)
To cause confusion, the CEO says the NAND memory portion of the boot drive sale is "pass through"
Randy Abrams
UBS Investment Bank, Research Division
Okay. Actually -- and clarify for boot drive, is that one for the NVIDIA solution you have to pass through the memory? And as pricing moves up, can you pass through? So it doesn't affect the margin. It's a pass-through but it's higher revenue.
Chia-Chang Kou
Founder, President, CEO, MD & Director
Yes. That's correct.
---
That question doesn't make sense. Pass through revenue reduces gross margin. The controller may have a 60% gross margin and any pass through sale on the NAND memory with 0% gross margin would reduce the boot drive total gross margin.
And then the CFO says this:
Randy Abrams
UBS Investment Bank, Research Division
But it sounds like even with all the NAND pass-through margins and what you're running this business, it's good margin.
Jason Tsai
Chief Financial Officer
It's good margin.
---
Ok, that's confusing.
But they think the "boot drive" business is a growth space. Both more design wins and higher prices are coming down the pike.....
I think what we've seen here is that when we first started with the first project after the success there and the win there, we're invited into qualifying for additional projects. Those additional projects brings to us additional volume. But on top of additional volume, it's higher ASP because they're higher density. So you're going from products that are in the 20s ASP when you scale up to upwards of 1 terabyte for some of these boot drives, you're scaling up to north of $100.
So not only are we getting the benefit of both the volume increase because of the additional projects that we're winning, but we're also benefiting from the ASP increase from that higher density. So we're very excited by the opportunities. And to Wallace's point, I think over the next few years, this is a business that can to become much more meaningful.
On mobile controllers this sentence sums it up - We feel very comfortable for the high growth for 2026 and into '27 for our mobile controller.
Hmmm, maybe. Actually since H1 2025 was sort of weak for the entire business, 2026 will have high growth if they just flatline with Q4 2025 mobile sales. Still, they do seem to think they'll gain market share in mobile, and either SK or Samsung will become a UFS customer for UFS 5.0. Sounds good.
For consumer client SSD today, as we state, we're 30% market share for PCIe Gen4. But Gen5 controller is even stronger for high-end 8-channel PCIe Gen5, we have more than 4 NAND maker design win and almost 90% module maker design win. So they start to -- currently, I think last quarter, we mentioned Gen5 ramp-up is already 15% of total SSD revenue, but it's not OEM ramp yet. OEM will start to ramp from Q1. |
