|I listened to one of the SIMO conference call presentations that is on their website last night.|
Interesting points from the presentation are
- client SSDs are expected to be the main growth driver for the next few years
- client SSD revenues in Q1 2018 should be up from Q4 2017 levels (against seasonality)
- eMMC revenues in Q1 2018 should be up from Q4 2017 levels (against seasonality)
- SSD solutions (Shannon and Ferri) revenues in Q1 2018 should be down from Q4 2017 levels (due to seasonality)
- SSD solutions should ramp in both Q2 and Q3 2018 from Q1 2017 levels.
So......who knows how it all comes together in reality, but it sounds like there is a pretty good chance that Q3 2017 will be the revenue low point for, well, quite a while.
And you add in the kicker that if NAND production ever does ramp, all of their business lines benefit strongly from that ramp, it seems like SIMO's revenue outlook is pretty damn good. Even the legacy USB stick and mobile card business - the bottom of the barrel product line for them in terms of tech and gross margins - that should ramp well if NAND production ramps and prices become cheap again.
Morgan Stanley said recently that they think the NAND price has peaked and increased production will cause the peak of the recent NAND cycle pretty soon. Maybe even right now. We all know that the NAND makers are making a ton of money on current NAND production due to high prices, and are increasing production capacity as fast as possible to capture those high gross margin NAND memory production, it just makes sense that since all the NAND makers are ramping production as fast as possible that at some point in the near future production does ramp quickly at many of the NAND makers and over capacity causes prices declines. And then.......
SSD adoption grows meaningfully as PC with superior SSDs are comparable to PCs with inferior disk drives.
Module makers return to the market since they can again make a profit buying cheap NAND and selling 2nd and 3rd tier less branded SSDs.
Shannon gross margins jump since the bill of materials is largely NAND, lower NAND price = higher gross margin for SIMO.
Ali Baba can buy more Shannon systems since the NAND price is lower.
Yes, I think 2018 will be a good year for SIMO. For the NAND makers, who knows, it depends on how the production ramp, NAND price and the lowering of their manufacturing cost plays out, maybe good, maybe bad, we don't know. But the peak has been (I think) higher than usual, hopefully the trough shows a similar lengthy period on the downside as the all over invest to grab share.
Maybe I'll finally sell SIMO in Q3 next year, but until then it's time to wait and watch....