I’d be betting quite a large amount of money that SIMO is declining by 50% again like it has done many times the next 5 years.
So SIMO is about $98 today. I'll bet you SIMO hits $138 before it hits $58.
The market it operates in are highly competitive and cyclical.
Well, the market they operate in is less and less competitive each year. SIMO is becoming the cash cow winner. For their biggest market (SSD controllers for PC/notebooks) they have greater than 50% market share based on design wins for the leading edge PCIe Gen5 product. That product launched in high end PCs last quarter, and will become mainstream in PCs over the next 3 years. SIMO's current market share in PC flash controllers is about 30%, and it will head toward 40% (and above 50% in the high price high profit leading edge) over the next few years. The lagging edge technologies which were more competitive (where SIMO had a 25%-30% market share) will go away, displaced by the current leading edge product (where SIMO has above 50% market share). Also, the NAND makers (who were big competitors in previous years) are exiting client device controllers to focus on high end controllers (more profit there). SIMO will get more of the client device controller market share as a result, and it's less profitable than the high tech enterprise space, but it's plenty profitable if you're the entity which gets 50%+ market share.
Cyclical? PCs and cell phones? Are they? Perhaps a bit, but they also don't "go away".
I can't call the PC and cell phone cycle. PCs are on the way up at the moment, maybe they slow down.....next summer? I don't know, hard to say. However, I think SIMO's market share gains in PCs and cell phone controllers (and autos) will be larger than any cyclical slowdown, maybe, really hard to say. A bigger issue in this concern is whether the increase in memory prices in Q3 results in a big PC and cell phone slowdown in 2026. Maybe. As I said, I can't call that.
If I knew SIMO were going to go to $60, then back up, I'd sell it now. But I don't know that, and their story is as good right now as it has ever been, so hard to try to time the market and time the cycle rather than just sit and wait and see where the stock is in 18 months.
I'll bet you SIMO hits $138 before it hits $58. Wanna bet? |
