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    SIMO
    Earnings call· Mar 2026(Q1 FY26)

    Silicon Motion Technology Q1 FY26 earnings call SIMO

    Apr 29, 2026 Source

    Executive summary

    Silicon Motion Q1 FY26 — Record Revenue Driven by Strong eMMC/UFS and Emerging AI Solutions

    Silicon Motion delivered record Q1 FY26 results, outperforming guidance across revenue and profitability, driven by robust eMMC/UFS performance and early traction in cloud and edge AI solutions. Despite persistent NAND and DRAM supply constraints and rising prices impacting smartphone and PC markets, the company is confident in sustained sequential growth throughout the year, leveraging strategic NAND relationships and expanding its MonTitan and boot drive offerings.

    Highlights

    5

    • Achieved record revenue of $342.1 million, exceeding guidance and representing 23% sequential growth and 105% year-over-year growth.

    • Non-GAAP gross margin of 47.2% and non-GAAP operating margin of 18.2% both surpassed guided ranges.

    • Mobile business (embedded eMMC and UFS) grew 30-35% sequentially and over 140% year-over-year, significantly outperforming the industry due to share gains.

    • MonTitan enterprise controller volume commercial ramp began one quarter earlier than expected, with 5 new CSP customers anticipated by year-end.

    • Secured NAND supply from 3 different makers, providing a critical competitive advantage amidst ongoing shortages.

    Concerns

    5

    • NAND prices rose sharply by 55-60% sequentially in Q1 FY26, driven by AI demand and low bit growth.

    • NAND and DRAM supply constraints are expected to remain challenging throughout 2026 and 2027.

    • Global smartphone unit volume decline is now estimated at over 10% year-over-year for 2026, with greater weakness concentrated in China.

    • PC market unit decline is anticipated in the 10%+ range for 2026 due to tightening NAND/DRAM supply and increased prices.

    • Slower rollout of 2-terabit QLC NAND has led to greater initial demand for TLC-based MonTitan solutions.

    Guidance & targets

    7
    CategoryTargetConfidence
    Q2 FY26 Revenue
    $393 million to $411 million
    high materiality
    High
    Q2 FY26 Gross Margin
    48.5% to 49.5%
    medium materiality
    High
    Q2 FY26 Operating Margin
    21% to 22%
    medium materiality
    High
    Q2 FY26 Effective Tax Rate
    19%
    low materiality
    High
    Full Year FY26 Operating Margin
    Improve as compared to '25
    high materiality
    Medium
    Full Year FY26 Revenue
    Record revenue
    high materiality
    High
    MonTitan Revenue Contribution
    5% to 10% of expanded 2026 revenue expectation
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Embedded eMMC and UFS
    Significantly outperformed the industry due to share gains. Mobile market undergoing rapid shift with NAND manufacturers outsourcing controllers. eMMC business stronger than expected, driven by automotive, smart TV, AI glasses, smart watches, next-gen set-top box. Market for eMMC is large (900M units/year) with decreasing competition.
    		—over 140%30% to 35%—
    Overall SSD Controller Business
    Decline in line with seasonal trend, but benefited from early impact of PCIe 5 and ramp of MonTitan controllers.
    		—approximately 45%approximately 10% decline—

    Operational metrics

    19
    Revenue growth
    23%sequential
    Q1 FY26
    Revenue growth
    105%YoY
    Q1 FY26
    Non-GAAP gross margin
    47.2%above guided range of 46% to 47%
    Q1 FY26

    Capitalized on new product introductions.

    Non-GAAP operating expenses
    $99.2 millionincreased sequentially
    Q1 FY26

    Given increased investments in emerging MonTitan AI and enterprise SSD controller and boot drive storage solutions.

    Non-GAAP operating margin
    18.2%above guided range
    Q1 FY26

    Driven by higher-than-expected revenue and gross margin.

    Non-GAAP EPS
    $1.58
    Q1 FY26
    Stock-based compensation
    $8.4 million
    Q1 FY26

    Excluded from non-GAAP results.

    Cash and investments balance
    $210.9 milliondecreased from $277.1 million at end of Q4 2025
    end of Q1 FY26

    Decrease due to dividend payment of $16.9 million and increase in inventory to support expected strong business ramp.

    Dividend payment
    $16.9 million
    Q1 FY26

    Contributed to cash decrease.

    NAND price increase
    55% to 60%sequential
    Q1 FY26

    AI adoption driving demand across memory and storage technologies.

    Global smartphone unit volume decline
    more than 10%year-over-year
    FY26

    Concentrated in China, especially at the low end due to elevated memory/storage costs.

    PC market unit decline
    10% plus range
    FY26

    Due to tightening NAND and DRAM supply and increased prices.

    eMMC market size
    over 900 million
    annual

    Market for eMMC is large and growing.

    MonTitan customers in production
    2
    current
    MonTitan pipeline customers
    5
    late FY26

    Expected to begin ramping with both TLC compute and QLC SSD solutions.

    PCIe 5 market share
    more than 50%
    current

    Company dominates PCIe 5 market.

    NAND supply partners
    3
    current

    Ensures resilience despite increasing supply constraints.

    Gross margin target
    50%
    near future

    Management is confident this is achievable.

    Typical H1/H2 revenue split
    45/55
    typical year

    Historical revenue split.

    Industry KPIs

    7
    MetricValueDetails
    Backlog order book—
    Ai data center revenue—
    Bookings net order intake—
    Design wins socket pipeline—
    Inventory channel inventory—
    Node platform ramp schedulePCIe 6 MonTitan controller
    End market segment revenue mix—

    Product announcements

    2
    ProductTypeDetails
    4-channel DRAMless PCIe 5 controllerlaunch
    PCIe 6 MonTitan controllerroadmap

    Risks & headwinds

    6
    NAND price increaseQ1 2026, expected to persist through 2026 and '27

    55% to 60% sequential increase in Q1 2026

    Mitigation: Leveraging deep relationships with NAND flash makers to secure supply from 3 different makers; helping module maker and AI smart storage system customers secure NAND.

    NAND and DRAM supply constraintsThroughout 2026 and '27

    Negatively impacting smartphone and PC markets, particularly low end; low NAND bit growth and insufficient DRAM capacity.

    Mitigation: Strategic relationships with NAND makers for supply allocation; diversification into higher-value segments (AI, enterprise, automotive) less exposed to low-end market pressures.

    Global smartphone unit volume declineFY26

    More than 10% year-over-year in 2026

    Mitigation: Limited exposure to the low end of the smartphone market; strong share gains dramatically outpacing macro pressure; diversification of eMMC into automotive, IoT, smart TV.

    PC market unit declineFY26

    10% plus range in 2026

    Mitigation: Gaining market share across PC range; higher ASPs from PCIe 5 controllers; NAND market makers exiting consumer segment benefits Silicon Motion.

    Slower rollout of 2-terabit QLC NANDCurrent, expected to improve later this year and long term

    Greater initial demand for TLC-based MonTitan solutions

    Mitigation: Focusing on TLC-based MonTitan solutions for compute SSDs and KVCache; helping customers secure NAND supply for QLC; expecting broader availability of 2-terabit QLC NAND die from more makers.

    BGA substrate material tightnessCurrent

    Very, very tight and supply is very limited

    Mitigation: Operation team working hard with Japan customers directly and Taiwan manufacturers to overcome challenges and manage supply.

    What to watch in Q2 FY26

    5

    Sequential Revenue Growth

    Q2 FY26
    Current23% sequential growth in Q1 FY26
    Target15% to 20% sequential growth in Q2 FY26

    Why it matters

    Sustained sequential growth is a key indicator of the company's ability to navigate market headwinds🌐 and capitalize on new opportunities.

    For the second quarter of '26, we now expect revenue to grow 15% to 20% sequentially to $393 million to $411 million.

    Q&A highlights

    7

    Which segments are expected to grow the most and least in Q2?

    All segments are expected to grow. Automotive, Ferri, and boot drives are in early stages of ramping and are anticipated to show stronger growth. MonTitan is also expected to ramp more meaningfully.

    “We do anticipate stronger growth from those products [automotive, Ferri, boot drives]. And then certainly, the rest of the other products continue to grow as well throughout the -- for the quarter.”

    asked by Neil Young · answered by Jason Tsai

    2 min read6 chapters

    Detailed Narrative

    01

    NAND Market Dynamics and Strategic Positioning

    The memory and storage market faces significant challenges with NAND prices rising 55-60% sequentially in Q1 FY26, driven by AI demand and low bit growth. Silicon Motion leverages deep relationships with NAND flash makers to secure supply, enabling share gains as NAND makers outsource controller requirements and focus on higher-end solutions. This positioning is critical for their Ferri and enterprise boot drive businesses and supports module maker and AI smart storage system customers.

    02

    Mobile Business Outperformance and Diversification

    The embedded eMMC and UFS business saw mobile revenue increase 30-35% sequentially and over 140% year-over-year, significantly outperforming the industry. This growth is fueled by share gains as NAND manufacturers accelerate controller outsourcing and module makers rely on Silicon Motion. Despite projected global smartphone unit declines of over 10% in 2026, particularly at the low end, the company expects strong growth in this segment due to market share expansion and diversification into automotive, smart TV, and IoT.

    03

    Client SSD Transition to PCIe 5

    The overall SSD controller business declined 10% sequentially but grew 45% year-over-year, benefiting from early PCIe 5 impact. While the PC market faces unit declines of 10%+ due to NAND/DRAM constraints, Silicon Motion expects to grow its client SSD business through market share gains and higher ASPs from PCIe 5 controllers. The launch of an 8-channel PCIe 5 controller and a 4-channel DRAMless PCIe 5 controller positions them to capture market share across various price points.

    04

    MonTitan Enterprise Controller Expansion

    The MonTitan enterprise controller business is rapidly growing in data center and AI infrastructure. End-user qualification for TLC-based high-performance compute SSDs began volume commercial ramp one quarter earlier than expected. The company anticipates ramping 3 Tier 1 Asian CSPs and 2 U.S. Tier 1 CSPs later this year with both TLC compute and QLC SSD solutions. A PCIe 6 MonTitan controller, targeting hyperscalers and CSPs, is set for tape-out in Q3 FY26, with design wins already secured for volume ramp in 2028.

    05

    Ferri and Boot Drive Storage Growth

    The Ferri and boot drive storage business delivered exceptional performance in Q1, scaling new projects in automotive and emerging enterprise boot drives. Volume boot drive shipments to a leading AI GPU manufacturer began in Q4 2025, with next-generation DPU designs and NVLink/Ethernet switches qualifying for H2 2026 launch. The company is also engaged with a telecommunication infrastructure provider and a search engine company for TPU architecture, expecting strong revenue contribution and growth through 2027.

    06

    Strategic NAND Sourcing and Future Supply Outlook

    Silicon Motion's ability to secure NAND from three different makers is a key competitive differentiator, ensuring resilience despite increasing supply constraints. While NAND supply was challenging for 2026 due to late purchase orders, the company secured full supply. For 2027, they plan to provide demand in advance, anticipating more severe NAND/DRAM shortages, with some relief expected for DRAM in late 2027/2028 and NAND in early/late 2028.

    AI-generated summary of the company’s earnings call. Not investment advice.