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    SIMO
    Earnings call· Jun 2026(Q2 FY26)

    Silicon Motion Technology Q2 FY26 earnings call SIMO

    Jul 30, 2026 Source

    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

    12
    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

    4
    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—

    Operational metrics

    11
    Non-GAAP Gross Margin
    50.2%exceeded guided range of 48.5% to 49.5%
    Q2 FY26

    Exceeded the guided range due to capitalizing on new product introductions.

    Non-GAAP Operating Expenses
    $122.1 millionincreased sequentially
    Q2 FY26

    Increased due to investments in new controller and solution development, tape-out expenses, and higher headcount.

    Non-GAAP Operating Margin
    23.1%exceeded guided range of 21% to 22%
    Q2 FY26

    Exceeded the guided range, driven by higher-than-expected revenue and gross margins.

    Non-GAAP EPS
    $2.43record
    Q2 FY26

    Reflecting strong operational performance.

    Cash and investments balance
    $181.8 millioncompared to $210.9 million at the end of Q1 FY26
    Q2 FY26

    Cash decreased due to dividend payments of $16.9 million and an increase in inventories.

    Stock-based compensation
    $3.4 million
    Q2 FY26

    Excluded from non-GAAP results.

    Dividend payments
    $16.9 million
    Q2 FY26

    Contributed to the decrease in cash balance.

    Ferri and Boot Drive Solutions Revenue Share
    near 30%up from 4% a year ago
    Q2 FY26

    Represents a significant increase in contribution to total revenue.

    SSD Business Growth
    50%compared with last year first half
    H1 FY26

    Growth driven by market share gains despite PC market unit decline.

    NAND/DRAM BOM cost
    almost 56%
    current

    Represents the proportion of total bill of materials cost for low-end smartphones.

    Boot Drive units per server rack
    more than 30, 40
    current

    The number of Boot Drives needed per server rack, indicating a large market opportunity.

    Industry KPIs

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

    Product announcements

    1
    ProductTypeDetails
    Next-generation 4-nanometer PCIe Gen 6 controllermilestone

    Risks & headwinds

    7
    Continued competitive pressure in the semiconductor industry

    null

    Unpredictable changes in technology and consumer demand for multimedia consumer electronics

    null

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

    null

    NAND supply challenges and elevated pricingpersist 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 products2026

    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 anticipated6 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 availabilityuntil probably late '27 into '28

    much longer time

    Mitigation: our controllers are here. Our controllers are ready

    What to watch in Q3 FY26

    5

    MonTitan Enterprise SSD customer ramp

    second half of the year
    Current2 Tier 1 customers in commercial production
    Target5 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.

    Q&A highlights

    8

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

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