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Technology Stocks : Silicon Motion Inc. (SIMO) -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (2483)	4/8/2022 6:20:58 PM
From: Elroy	Read Replies (1) \| Respond to of 2980

China has thrown hundreds of billions of dollars at trying to duplicate DRAM and they have nothing to show for it DRAM, yes, that seems like it's going to be attractive going forward. I was thinking more about NAND - when NAND gets down to 3 companies, then it may act more like DRAM. But until then, why would Samsung (in NAND) not do the exact same thing it did over the years in DRAM? We've got 5/6 established NAND makers (counting Intel-SK as one NAND company now I guess), and one "new" entrant (Yangtse, or whatever the Chinese NAND maker is). One would think it would follow the same path as DRAM, cut throat competition until fewer competitors are around. SIMO has one merchant controller competitor (Phison), and SIMO says they are 4x the size of Phison in SSD controllers. SIMO is the Samsung of NAND controllers. One would think that the competition in flash controllers would be getting less and less, and it does seem to be progressing that way. All the indications are that the internal controller groups at the NAND makers are ceding more and more of the basic controller share to SIMO, and that's where the big unit volumes are. Samsung has 66% of eMMC controllers when they were the big thing in cell phone memory. The latest word is Samsung is exiting the eMMC controller market, leaving SIMO as a monopoly in eMMC controllers. SIMO says they had about 25% of the total market for client SSD controllers a few years ago, and they will have 50% of the total market for gen 4 SSD client controllers exiting this year. In other words, they have won the battle. But instead of an increasing PE multiple as they should receive the bulk of the profits from the merchant controller industry (the largest player in tech generally does that), they are getting a contracting PE multiple. No real idea why. SIMO's market leadership and market share position is strengthening, sales are exploding, and the PE is contracting as a result. It's the type of semi stock that AVGO used to acquire years ago, at huge 100% premiums. If SIMO makes $9.00 in 2022 and ends the year with $15 per share cash, 20x PE would be $180 + $15 cash = $195 share price. Why is it $71?