| | | Quick review of the SIMO Q1.
Good news is there are plenty of growth drivers which seem to kick in starting with Q3 2025, and continue for perhaps quite a while.
1. SIMO fabbed a 6nm PCIe Gen5 8 channel SSD controller about 15 months ago. This high end PC SSD controller chip has won 4 out of the 6 NAND makers as OEMs, and won designs with virtually every module maker. This controller serves the very high end of the PC market, a segment where SIMO has had ZERO sales historically. This chips goes into production beginning in July 2025 and is expected to ramp each quarter for about a year or so. SIMO thinks they have won AT LEAST 50% of the high end PC SSD controller market, and all this revenue is brand new revenue (a sale displaces a competitor's controller, not an existing SIMO controller). This chip has about 2x the regular SSD controller price and above average gross margins.
2. SIMO fabbed a 6nm PCIe Gen5 4 channel SSD controller about 10 months ago. This mid to high end PC SSD has also won 4 out of 6 NAND makers as OEMs, and had design wins at virtually every module maker. This chip is targetting the mid-range PC market segment. This chip goes into production in Q4 2025, ramp for about a year, and will be a workhorse for years to come. Again SIMO thinks they have won 50% of the market share in this space as well. This chip has a nice selling price and above average gross margins.
These two chips are big contributors to the forecast massive revenue ramp between Q1 ($166m) and Q4 ($250m) in 2025.
As these two chips grow to full production SIMO expects their overall SSD controller market share will grow from about 32% today to 40%. In other words, SIMO's PC SSD controller sales are going to grow for a few years despite the near zero growth of the PC market.
3. Auto-related controllers are doing well, and will grow steadily. They listed lots of major auto companies (Tesla, BMW, Toyota, Honda, Chinese auto/EV makers) that use SIMO's chips.
4. This is a biggie. Mon Titan (their enterprise controller) still goes into production at their two tier one customers in H2 2025 with significant growth expected in 2026. The "new news" is that SIMO's Mon Titan controller is qualified with Nvidia's upcoming Bluefield 3 DPU system which launches in Q4 2025. I'm not going to claim complete understanding of this Bluefield 3 DPU product, but here's my guess: Each Bluefield 3 system has 32 ports that are intended to connect to an enterprise SSD which may be up to 128TB in size. SIMO and one other controller maker are qualified to work well with the Bluefield 3 DPU system, so ....... I think now SIMO is going to go to all the 128TB SSD makers and try to get them to use SIMO's Mon Titan controller in their SSD. If SIMO wins that sale (against the other qualified controller maker and/or an internal group at the SSD maker) then voila, that's a new customer for Mon Titan and when that customer buys NVDA's Bluefield 3 DPU they will buy 32 Mon Titan chips to sit between the Bluefield 3 DPU and the 322 SSDs.
SIMO says they expect the NVDA relationship will going forward become a major contributor to Mon Titan sales. They also say that now that they have some view into NVDA's forward plans they are able to make Mon Titan controller chips which will help NVDA achieve their future plans as it relates to NAND storage SSDs. In plain English, Mon Titan is going to hopefully grow along with NVDA's storage related projects.
Boom! If successful, this means YEARS of revenue growth. This means PE mulitple expanstion. This means SIMO becomes more and more attractive as an acquisition target. This is potentially huge, and we will start to see it roll out beginning in Q4 2025.
5. eMMC and UFS were described as doing well, and there is a NAND OEM for SIMO's 2 channel UFS 4.1 mobile controller which starts production in Q4 2025, and grows thereafter. And SIMO is also selling eMMC and UFS controllers to module makers who are packaging them with NAND and then beating the NAND makers on price, causing SIMO's sales to do OK despite the loss of Micron for UFS 4.0 and beyond, and also causing the NAND makers to perhaps come back to SIMO in a OEM relationship (although this was unclear). This segment is supposedly gaining share, and doing OK, but it's small and uninteresting compared to the above stuff.
At this point the forecast sales growth in PC SSDs, autos and Mon Titan is over top awesome. SIMO's biggest issue as a stock is the tariff / geopolitical situation as negative headline news may crush electronics supply chain stocks, and SIMO is in that group. But the most seriously negative tariff news can do is modestly slow SIMO's forecast growth by a quarter or two. Less than 3% of SIMO's mobile sales touch the USA, and SIMO says the USA is only 20% of the global PC market, so ..... I think it's safe to say that 85%+ of SIMO's sales are unaffected by US tariffs, and 10%-15% of SIMO's sales which flow into the USA can cause a small hit to sales growth, but it's nominal in the scheme of things.
6. Perhaps the best part of the SIMO story is that 2026 sound like it will have meaningful growth over the Q4 2025 $250m level. Mon Titan will grow in 2026, the NVDA relationship will likely grow in 2026, and both of those should grow QUITE A LOT, the new PC chips will grow in 2026 with a full year of sales instead of 6 months (8 channel PCIe Gen5) and 2 months (4 channel PCIe Gen5), and autos will grow regularly for years. So........$250m for Q4 2025 is great, but it's probably not the near term peak for quarterly sales.
And semiconductor stocks which grow sales, increase gross margins, and ...... enter NVDA's ecosystem, well, they trade at 25x or 23x, not at 12x like PC and cell phone stocks. I think as this story materializes (if it materializes) SIMO is going to experience both EPS growth and significant multiple expansion.
I can see it at $100 without much problem at some point in 2026, if the tariffs don't blow up the world economy. |
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