Silicon Motion’s Q3’23 Results Reveal Impressive 23% Sales Surge from Previous Quarter

Silicon Motion Technology Corporation reported a sequential increase in net sales and net income on a non-GAAP basis for the third quarter of 2023, with President and CEO Wallace Kou expressing satisfaction with the company's performance and outlook for the fourth quarter.

Sequential increase in net sales to $172.3 million
Non-GAAP net income for the third quarter rose to $21.1 million
Strong performance and growing customer base for SSD and eMMC+UFS controllers

Silicon Motion Technology Corporation, a leading provider of storage controllers, has announced its financial results for the third quarter of 2023. The company reported a sequential increase in net sales to $172.3 million, up from $140.4 million in the previous quarter. However, net income decreased to $10.6 million, or $0.32 per diluted ADS, compared to $11.0 million, or $0.33 per diluted ADS, in the second quarter.

On a non-GAAP basis, net income for the third quarter rose to $21.1 million, or $0.63 per diluted ADS, from $12.6 million, or $0.38 per diluted ADS, in the second quarter. This increase reflects the company’s strong performance and growing customer base for SSD and eMMC+UFS controllers.

Wallace Kou, President and CEO of Silicon Motion, expressed satisfaction with the company’s performance in the third quarter. He noted that inventory levels in the channel have normalized and OEM order patterns have accelerated ahead of the anticipated holiday season demand. The rebound in eMMC+UFS sales and sequential growth in SSD controller sales are also positive indicators for the company’s long-term growth.

During the third quarter, Silicon Motion made capital expenditures of $17.1 million, including investments in testing equipment, software, design tools, and building construction in Hsinchu.

In terms of acquisition updates, Silicon Motion had entered into a merger agreement with MaxLinear, Inc. on May 5, 2022. However, MaxLinear recently terminated the merger agreement without providing any factual basis. Silicon Motion believes this termination constitutes a breach of the agreement and has filed a claim in the Singapore International Arbitration Centre seeking payment of the termination fee of $160 million, along with substantial damages, interest, and costs.

Looking ahead, Silicon Motion expects its business to continue rebounding in the fourth quarter as channel inventory normalizes and OEM demand improves. The company anticipates better-than-seasonal sequential revenue growth, driven by improved order patterns and visibility. With inventory levels back to normal and a strong pipeline of design wins, Silicon Motion is well-positioned for growth in 2024.

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Technology Explained

SSD: A Solid State Drive (SSD) is a modern data storage device that employs flash memory technology to store data electronically. Unlike traditional hard disk drives (HDDs), SSDs have no moving parts, resulting in significantly faster read and write speeds. This leads to quicker boot times, faster application loading, and smoother overall system performance. SSDs are known for their durability, shock resistance, and energy efficiency, making them ideal for laptops, ultrabooks, and other portable devices. They come in various form factors, including 2.5-inch, M.2, and PCIe cards, and are favored for their reliability, quiet operation, and reduced heat generation