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Silicon Motion (SIMO)
NASDAQ:SIMO
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Silicon Motion
(NASDAQ:SIMO)
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Rating:70Outperform
Price Target:―
Silicon Motion demonstrates robust financial performance with strong revenue growth and a solid balance sheet, although the decline in free cash flow is a concern. Technical indicators suggest mixed momentum, while the valuation offers a balanced view of growth and income. The company's strategic wins and product demand outlook, as reflected in the earnings call, support a positive long-term view, although immediate challenges remain.
Positive Factors
Strong Revenue Growth
The company's robust revenue growth indicates strong demand for its products and effective market penetration, supporting long-term business expansion.
Zero Debt and Strong Balance Sheet
A strong balance sheet with zero debt enhances financial stability and flexibility, allowing the company to invest in growth opportunities without financial strain.
Design Wins and Strategic Partnerships
Strategic design wins and partnerships with industry leaders like NVIDIA enhance competitive positioning and open new revenue streams, supporting long-term growth.
Negative Factors
Decline in Free Cash Flow
A significant decline in free cash flow raises concerns about the company's ability to generate cash, which could impact its capacity to fund operations and growth initiatives.
Sequential Revenue Decline
A sequential revenue decline suggests potential challenges in maintaining sales momentum, possibly due to weaker demand in key markets, impacting short-term performance.
Increased Operating Expenses
Rising operating expenses due to investments in new products may pressure margins and profitability, requiring careful management to ensure sustainable growth.
Silicon Motion (SIMO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.19B
Dividend Yield2.11%
Average Volume (3M)379.48K
Price to Earnings (P/E)39.5
Beta (1Y)1.63
Revenue Growth-0.29%
EPS Growth1.47%
CountryUS
Employees1,819
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.69
Shares Outstanding33,983,670
10 Day Avg. Volume466,793
30 Day Avg. Volume379,484
Financial Highlights & Ratios
PEG Ratio-0.35
Price to Book (P/B)2.35
Price to Sales (P/S)2.26
P/FCF Ratio55.53
Enterprise Value/Market Cap0.73
Enterprise Value/Revenue3.00
Enterprise Value/Gross Profit6.37
Enterprise Value/Ebitda22.49
Forecast
1Y Price Target
$97.14Price Target Upside3.15% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Silicon Motion Business Overview & Revenue Model
Company DescriptionSilicon Motion Technology Corporation (SIMO) is a global leader in developing NAND flash controllers for solid-state storage devices and specialty DRAM and embedded graphics processors. The company primarily operates in the semiconductor sector and is known for its high-performance, low-power semiconductor solutions for managing NAND components in storage devices. Silicon Motion's core products include controllers for solid-state drives (SSDs), embedded storage, and other flash-based storage solutions, catering to a broad range of consumer electronics, enterprise, and industrial applications.
How the Company Makes MoneySilicon Motion makes money through the sale of its semiconductor solutions, primarily NAND flash controllers and SSD solutions. The company's revenue model is driven by the production and distribution of these controllers to SSD manufacturers, module makers, and device manufacturers. Key revenue streams include sales of controllers for client SSDs, eMMC, UFS controllers for smartphones, and industrial embedded NAND controllers. Additionally, Silicon Motion capitalizes on its partnerships with major NAND flash manufacturers and device OEMs, leveraging these relationships to integrate its technology into a wide range of storage products. The company's ability to innovate and deliver high-performance, cost-effective solutions also plays a significant role in maintaining its competitive position and driving its financial performance.
Silicon Motion Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted several positive developments, including exceeding revenue and operating margin guidance, strong growth in mobile and PCIe5 segments, and significant expansion in the automotive market. However, challenges such as increased operating expenses, currency fluctuations, and limited resources for new projects were noted. Overall, the sentiment reflects optimism for continued growth and improved performance.Q2-2025 Updates
Positive Updates
Exceeded Revenue and Operating Margin Guidance
Silicon Motion exceeded its revenue and operating margin guidance for Q2 2025, driven by strong performance in new product segments.
Strong Revenue Growth in Mobile and PCIe5 Segments
Revenue increased by 19.3% sequentially to $198.7 million, driven by a rebound in mobile demand and growth in PCIe5 client SSD business.
Automotive Segment Expansion
Silicon Motion experienced a significant breakthrough in the China automotive market, leading to increased demand and expectations of automotive revenue accounting for at least 10% by 2026-27.
Enterprise Business Momentum with MonTitan
Strong design momentum for MonTitan with four Tier 1 customers, expected to ramp significantly in 2026.
Gross Margin Improvement
Gross margin increased to 47.7%, driven by new product introductions and an improving product mix.
Positive Outlook for Second Half of 2025
Revenue is expected to increase by 10% to 15% in Q3 2025, with expectations to reach a $1 billion revenue run rate by year-end.
Negative Updates
Increased Operating Expenses
Operating expenses increased to $69.3 million due to investments in new products and the impact of a stronger Taiwan dollar.
Currency Fluctuation Impact
The strengthening of the Taiwan dollar versus the US dollar impacted operating margins by over 1 percentage point.
Limited Resources for New Projects
Silicon Motion is unable to support all potential new projects due to limited resources, impacting potential growth.
Company Guidance
During the Silicon Motion Technology Corporation's Q2 2025 earnings call, the company reported exceeding its revenue and operating margin guidance, driven by the introduction of new controllers, capturing higher market share, and expanding into new markets. The company emphasized its strong position in the NAND flash environment, where rising flash prices and reduced inventories are positively impacting business. Silicon Motion is capitalizing on the growing demand for high-density, cost-effective QLC NAND solutions in client SSDs, smartphones, and enterprise storage. The company expects to exit 2025 with a $1 billion revenue run rate, attributing this growth to its diversified backlog and design win momentum. For Q3 2025, they project revenue growth of 10% to 15% and gross margins between 48% and 49%. The company remains optimistic about its automotive and enterprise business segments, seeing significant design win activity, particularly with products like MonTitan and PCIe controllers. Silicon Motion also highlighted its strategic partnerships with major flash makers and module makers, underpinning its confidence in achieving long-term revenue and profitability growth.Silicon Motion Financial Statement Overview
Summary
Silicon Motion exhibits strong revenue growth and operational efficiency with a solid balance sheet. The company has zero debt and substantial cash reserves, enhancing financial stability. However, the decline in free cash flow is a concern, suggesting a need for improved cash generation.Income Statement
Silicon Motion has demonstrated solid revenue growth with a significant increase from $639 million in 2023 to $803 million in 2024. The gross profit margin improved to 46.1%, indicating effective cost management. However, net profit margin remained relatively stable at around 11.3%, suggesting room for improvement in profitability. EBIT and EBITDA margins are healthy, at 11.5% and 14.9% respectively, showing good operational efficiency.75
Positive
Balance Sheet
The company maintains a strong balance sheet with zero debt as of 2024, reducing financial risk. The equity ratio is high, at approximately 75%, indicating a strong capital structure. Return on equity is solid at 11.7%, reflecting efficient use of equity capital. The company’s liquidity position remains robust with significant cash reserves.80
Positive
Cash Flow
Free cash flow experienced a decline from $98.8 million in 2023 to $32.7 million in 2024, raising concerns about cash generation. However, operating cash flow remains positive, indicating the company’s ability to generate cash from operations. The operating cash flow to net income ratio is stable, reflecting consistent cash generation relative to profits.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 772.09M | 803.55M | 639.14M | 945.92M | 922.10M | 539.52M |
| Gross Profit | 363.61M | 370.90M | 270.39M | 465.83M | 460.80M | 260.16M |
| EBITDA | 102.93M | 119.60M | 83.04M | 233.25M | 263.03M | 99.33M |
| Net Income | 80.03M | 90.72M | 52.87M | 172.51M | 200.00M | 79.75M |
Balance Sheet | ||||||
| Total Assets | 1.03B | 1.03B | 1.01B | 961.25M | 971.33M | 742.06M |
| Cash, Cash Equivalents and Short-Term Investments | 208.03M | 276.07M | 314.30M | 232.18M | 360.08M | 342.96M |
| Total Debt | 0.00 | 0.00 | 2.34M | 3.20M | 2.90M | 3.06M |
| Total Liabilities | 244.80M | 259.12M | 273.26M | 228.65M | 313.75M | 184.32M |
| Stockholders Equity | 788.88M | 773.75M | 734.70M | 732.60M | 657.58M | 557.74M |
Cash Flow | ||||||
| Free Cash Flow | 30.35M | 32.74M | 98.77M | 50.97M | 150.04M | 97.11M |
| Operating Cash Flow | 81.07M | 77.19M | 149.08M | 83.75M | 176.87M | 115.89M |
| Investing Cash Flow | -50.44M | -44.19M | -49.09M | -32.78M | -30.34M | -20.78M |
| Financing Cash Flow | -92.17M | -67.25M | -16.69M | -183.10M | -99.73M | -73.91M |
Silicon Motion Technical Analysis
Neutral
94.17
Price Trends
84.46
Positive
77.16
Positive
64.16
Positive
Market Momentum
2.54
Positive
42.32
Neutral
16.71
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SIMO, the sentiment is Neutral. The current price of 94.17 is above the 20-day moving average (MA) of 93.37, above the 50-day MA of 84.46, and above the 200-day MA of 64.16, indicating a neutral trend. The MACD of 2.54 indicates Positive momentum. The RSI at 42.32 is Neutral, neither overbought nor oversold. The STOCH value of 16.71 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SIMO.
Silicon Motion Risk Analysis
Silicon Motion disclosed 37 risk factors in its most recent earnings report. Silicon Motion reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
The restrictions on our ability to solicit or engage in negotiations with respect to other potential acquisition proposals may discourage other potential transactions that may be favorable to our shareholders. Q4, 2022
2.
Some of our directors and officers may have interests that may be different from, or in addition to, the interests of our shareholders. Q4, 2022
3.
Our shareholders could file claims challenging the Merger, which may delay or prevent the closing of the Merger and may cause us to incur substantial defense or settlement costs, or otherwise adversely affect us. Q4, 2022
Silicon Motion Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $3.19B | 39.50 | 10.16% | 2.11% | -0.29% | 1.47% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $3.71B | ― | -9.89% | ― | -14.77% | -261.91% | |
55 Neutral | $2.16B | 65.26 | 4.68% | 2.24% | 7.16% | -21.24% | |
55 Neutral | $4.43B | ― | -9.71% | ― | 29.66% | 47.97% | |
53 Neutral | $2.64B | 14.47 | -3.34% | ― | 11.98% | -138.59% | |
50 Neutral | $3.63B | ― | -15.77% | ― | 57.91% | 51.16% |
* Technology Sector Average
SIMO
Silicon Motion
85.80
28.61
50.03%
IPGP
IPG Photonics
80.68
4.46
5.85%
POWI
Power Integrations
34.64
-29.32
-45.84%
SLAB
Silicon Laboratories
122.18
5.74
4.93%
SYNA
Synaptics
62.02
-12.42
-16.68%
AMBA
Ambarella
72.88
12.79
21.28%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.