|Lets see, Micron mentioned a few times that client SSDs are going to pick up in 2018, and the consensus view now seems to be that NAND production will increase quite a good bit in 2018. For the NAND makers we don't know if they produciton will outpace demand, or demand will naturally soak up the higher production at lower prices, but no matter how you shake it it seems like the trends are going to turn fairly positive for SIMO's client SSD business in 2018. It will become their largest market segment, it seems.|
So we're then left with eMMC for smartphones, and UFS for smartphones with their new UFS OEM (probably Micron, but who knows?). eMMC seems to be fairly slow moving category compared to the boom year of 2016, but unlike client SSDs it is NOT expencted to pick up meaningfully. I don't really know why, but that seems to be the SIMO guidance. I don't know why SK or the UFS controller OEM can't gain share, probably they can, but I guess you can't forecast that in advance.
Then we've got Shannon and Ferri, both of which should grow well with lower NAND prices, particularly Shannon as long as they hold onto Ali Baba as a customer. There's no guarantee that Ali Baba will continie to procure from Shannon, but until we hear otherwise, we've no reason to believe SIMO/Shannon will lose Ali Baba as a customer.
And increased NAND supply should help the low end module maker customers, 3rt tier NAND-based device makers, to come back into the mix.
And it will be interesting to get the latest update on their enterprise SSD controller programs. I think these are small at the moment, but if they are succeeding in the market this could become another serious sizeable growth driver in 2019 and beyond.
It all seems pretty good unless some unexpected shock to the system appears.
My hunch is that SIMO will guide conservatively for as long as possible, but at some point (Q1 or Q2 in 2018) I'll bet SIMO will handily blow guidance out of the water in the same fashion that happened in the nice growth quarters of 2018. At that point we'll have to see how things end up, and then try to figure out whether the ramp in NAND production is pushing the industry into serious over supply, or whether the demand is strong enough that NAND prices stay high (and the unit growth curve a touch slower). Either one of those things seem pretty good for SIMO, so I'm not sure what is the next big thing to cause problems for SIMO. The story for the past 18 months has been tight NAND supply, which is about to reverse.
So.....bring on the revenue and EPS growth quarters. SIMO today at $53. Yeah, I think it can get to $75 by this time next year, beyond that, it will depend on how the revenue upswing plays out.