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Silicon Motion (SIMO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Jul 30, 2026

Source: earnings call transcript

Executive summary

Silicon Motion Q2 FY26 — Record Revenue & AI/Enterprise Diversification

Silicon Motion delivered record Q2 FY26 results, driven by strong growth across all core markets and outperformance in its Ferri and MonTitan enterprise solutions. The company is undergoing a significant transformation, diversifying from consumer-centric applications to AI infrastructure and edge storage, which is yielding strong revenue and margin expansion. Despite ongoing NAND supply constraints and a slower PCIe 5 transition, management is confident in sustained growth through FY26 and beyond, leveraging new product ramps and expanding market share.

Highlights

5

  • Achieved record revenue of $451 million, exceeding guided range of $393 million to $411 million.

  • Gross margin reached 50.2%, surpassing guided range of 48.5% to 49.5%.

  • Ferri for Automotive & Enterprise Boot Drives revenue more than doubled sequentially, representing nearly 30% of total revenue.

  • MonTitan enterprise SSD controllers entered commercial production with 2 Tier 1 customers, with 5 more expected in H2 FY26.

  • Expects record FY26 revenue, up more than 100% year-over-year.

Concerns

4

  • NAND supply challenges and elevated pricing are expected to persist until 2028.

  • PCIe 5 transition for edge SSDs is proceeding more slowly than anticipated 6 months ago.

  • Smartphone unit decline is expected to be 10% to 15% in 2026.

  • Availability of 2-terabit QLC NAND dies is delayed, impacting QLC-based solution ramp until late FY27/FY28.

Guidance & targets

CategoryTargetConfidence
FY26 Revenue Growth
more than 100% year-over-year
high materiality
High
Q2 FY26 Revenue
$393 million to $411 million
high materiality
High
Q2 FY26 Gross Margin
48.5% to 49.5%
medium materiality
High
Q3 FY26 Revenue
$519 million to $541 million
high materiality
High
Q3 FY26 Revenue Sequential Growth
15% to 20% sequentially
high materiality
High
Q3 FY26 Gross Margin
50% to 51%
medium materiality
High
Q3 FY26 Operating Margin
27.5% to 28.5%
medium materiality
High
FY26 Operating Margin
can exceed 30%
high materiality
High
Long-term Gross Margin
48% to 50%
medium materiality
Medium
MonTitan Revenue Contribution
5% to 10% of our overall revenue
high materiality
High
PCIe Gen 6 MonTitan Market Share
minimum 15% to 20%
medium materiality
Medium
Smartphone Unit Decline
down 10% to 15%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Embedded eMMC & UFS
Continued to thrive and grow significantly outpacing the industry despite supply headwinds. Driven primarily by market share gains as NAND makers deemphasize these solutions. Expect strong revenue growth in 2026.
Market share gainsASP improvement from mix shift toward newer UFS controllers
—significantsequential gains—
Edge SSD controllers
Improved significantly in Q2 following a seasonally soft Q1. PCIe 5 transition is slower than anticipated, but PCIe 5 controllers are gaining adoption. Expect to further increase SSD average selling price.
PCIe 5 4-channel controller ramping steadilyMeaningful share of business across NAND makers and module manufacturers
—40% to 45%improved significantly—
MonTitan Enterprise SSD controllers
Exceptional strong start after several years of investment. Well positioned for rapid growth in compute storage for AI platforms. Next-gen 4nm PCIe Gen 6 controller tape-out in August, with multiple design wins secured.
Entered commercial production with 2 Tier 1 customers in Q2Expect to ramp 5 additional Tier 1 customers in H2 FY26TLC MonTitan solution ramping faster than QLCQLC-based solutions to begin initial ramp in H2 FY26 with multiple customers
————
Ferri for Automotive & Enterprise Boot Drives
Growing rapidly across automotive and AI infrastructure markets. Benefiting from NAND makers exiting automotive. Ferri solution suited for robotics, drones, advanced networking. Enterprise Boot Drive for server CPU, DPU, TPU, MPU, switch makers.
Represented near 30% of total revenue in Q2 FY26Support 3 NAND makers with automotive controller and firmwareEngaged with multiple companies in emerging robotic market
—up from 4% a year agomore than doubled sequentially—

Product announcements

ProductTypeDetails
Next-generation 4-nanometer PCIe Gen 6 controllermilestone

Risks & headwinds

Continued competitive pressure in the semiconductor industry

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Unpredictable changes in technology and consumer demand for multimedia consumer electronics

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Changes in political, economic, legal and social conditions in Taiwan

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NAND supply challenges and elevated pricing persist likely until 2028

substantial price increases

Mitigation:diversified supplier of controller and solution, spanning AI infrastructure to the edge

OEMs finding it increasingly difficult to build affordable consumer products 2026

smartphone unit to be down 10% to 15% in 2026

Mitigation:strong growth in mobile business in 2026, driven by continued market share gains and ASP improvement from a mix shift toward newer UFS controllers

PCIe 5 transition proceeding more slowly than anticipated 6 months ago

null

Mitigation:securing meaningful share of business across both NAND makers and module manufacturer with our leading controllers (PCIe 4)

Delay in 2-terabit QLC NAND die availability until probably late '27 into '28

much longer time

Mitigation:our controllers are here. Our controllers are ready

What to watch in Q3 FY26

MonTitan Enterprise SSD customer ramp

second half of the year
Current 2 Tier 1 customers in commercial production
Target 5 additional Tier 1 customers ramping

Why it matters

Indicates the scaling and adoption of a key new enterprise product line.

Our new ESD business entered commercial production in the second quarter with 2 Tier 1 customers, and we expect to ramp 5 additional Tier 1 customers in the second half of the year.

Find out whether SIMO delivers this. Inve re-checks your case every morning.

Q&A highlights

Seeking more granular revenue split for Ferri and Boot Drive in Q2 and Q3 guidance.

Management stated they do not provide that level of granularity but confirmed tremendous growth across both categories, driven by strong backlog and order patterns.

“Yes. Neil, we're not giving out that level of granularity. I can tell you, though, that we are seeing tremendous growth across both of those categories. So this isn't really driven by one or the other. It's driven by both.”

asked by Neil Young · answered by Jason Tsai

2 min read 5 chapters

Detailed narrative

AI Super Cycle Impact and NAND Supply

The AI super cycle has significantly increased demand for HBM, DRAM, NAND, and HDDs, leading to substantial price increases and supply pressure. This scarcity is projected to continue until 2028, when new fabs are expected to come online. OEMs are adjusting product specifications to mitigate rising memory and storage costs, particularly affecting low-end consumer products like smartphones and PCs.

Embedded eMMC & UFS Business Outperformance

This business segment continues to thrive, significantly outpacing the industry despite supply headwinds. This outperformance is primarily driven by market share gains as NAND makers increasingly rely on third-party controllers and focus resources on DRAM HBM. Strong revenue growth is anticipated in 2026, fueled by a mix shift towards newer UFS controllers and expansion into diverse markets such as automotive, smart glasses, and smart TVs, where the company enjoys stronger pricing power and profitability.

Edge SSD and PCIe Transition Dynamics

The edge SSD business saw significant improvement in Q2 FY26, achieving 40%-45% year-over-year growth. While the transition from PCIe 4 to PCIe 5 is slower than initially expected, the company's 4-channel PCIe 5 controller is gaining adoption in mid- to high-end PCs. To reduce overall bill of materials, OEMs are increasingly pairing cost-effective NAND with PCIe 4 SSDs, a segment where Silicon Motion is securing meaningful market share.

Ferri for Automotive & Enterprise Boot Drives Rapid Growth

The Ferri for Automotive & Enterprise Boot Drives business is experiencing rapid growth, benefiting from NAND makers' exit from the automotive market due to low volume and high technical demands. Silicon Motion, with over a decade of expertise and certifications, supports three NAND makers with its automotive controllers. The Ferri solution is also attracting significant interest in emerging markets like robotics, drones, and advanced networking, with robotics potentially offering a larger opportunity than automotive by 2030.

Expanding Enterprise Boot Drive Market Opportunity

The enterprise Boot Drive market is expanding beyond conventional server CPUs to include DPU, TPU, MPU, and switch applications. These new applications favor DRAM-less PCIe SSD controllers that offer enhanced security and good performance. Silicon Motion holds a unique competitive advantage in this growing market, as NAND makers have less interest and expertise in developing solutions for this relatively smaller, but high-volume per server rack, segment.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.