The interesting news is new products are going to drive SIMO sales from a very weak Q1 2025 of about $165m to a nice Q4 2025 of about $250m. So my suggestion is to just sit in the stock and wait for the sales to roll in.
SIMO has lots of interesting new products. The bread and butter product for 2025 is a new high end PC SSD chips which has so far won more than 50% of the design slots for high end PCs. This chips enters the supply chain sometime in Q2 2025 with full production in Q3 2025 and beyond. It costs more than $10 per chip, has above average gross margins, and for SIMO it's the first time they have participated in the "high end" PC/notebook space. So these are PC SSD sales, but the segment is all new to SIMO. That chip will more than double sales in 2026 due to continued expansion of models in the high end PC space which use the chip, and having a full year of sales rather than 7-8 months of sales in 2025.
So....SIMO sales in 2025 will look something like $170m, $190m, $220m, $250m. I think the stock will like that.
All the share price needs now is time to pass and these sale to materialize. When SIMO has over $200m per quarter in sales (Q3?) I think it's reasonable to expect a share price around $75ish. After that it depends on the outlook.
Mon Titan will do OK also contributing to 2025 sales mainly in the second half, but the compay gave lots of hints that this chip (enterprise flash SSD controllers) has the potential to be really really big. We may have a better idea on this one in 6 to 9 months.
They say in 2027 20% of sales will be to segments outside of PCs and cell phones (auto, Mon Titan, and IoT), and they wouldn't be surprised to see the number higher than 20%, it's just too soon to call that now.
My plan is to just hold SIMO until about $80ish, and then evaluate whether to hold or reduce. I think it gets there sometime this year. |
