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   Technology StocksSilicon Motion Inc. (SIMO)

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To: franklin1 who wrote (2028)3/21/2019 6:34:55 PM
From: Elroy
   of 2782
MU announced an internal controller for their latest NVME SSD models. That's bad, it means MU may go internal going forward. More likely they will use SIMO controllers for some models and internal controllers for others, and it will then depend on how each model does in the market.

But pretty bad news all around. I get the impression SIMO should do great in the next round of client SSD growth, and then after that it will have more competition from internal controllers from the NAND makers. Offsetting the MU and WDC trend to go internal is MRVL's decision to exit client SSD controllers completely. I get the impression that SIMO kicked MRVL's butt in client SSD controllers, so they exited the market, now we've gotta see how the internal teams do against SIMO. While a controller may not be that super difficult to make, I think SIMO's appeal is that they have the controllers ready for usage BEFORE the supply chain is ready to make design wins, so with SIMO you get a functional controller (hopefully a great one, but who knows) on time, while with the NAND makers internal teams it may he harder to meet deadline and such. SIMO has millions of R&D dollars to throw at making controllers, the internal teams must be limited on how much they can spend and still be more cost effective than just buying from SIMO.

It's all market share. SIMO can amortize one controller across 20 customers, the internal teams have to amortize their internal program against one product line. If that line just does so so, the internal team could be on the chopping block in the next downturn.

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From: Elroy3/25/2019 5:30:47 AM
1 Recommendation   of 2782

Memory module firm Team Group looks to revenue and profit growth in 2019
Siu Han, Taipei; Jessie Shen, DIGITIMES
Monday 25 March 2019

Taiwan-based memory module maker Team Group will be aggressively expanding sales of its high-margin gaming and industrial products to enhance further its profitability in 2019, according to company chairman Danny Hsia.

Hsia also expressed optimism about Team Group's SSD shipments this year, driven by memory chip prices that have been falling since 2018. The company enjoyed robust SSD shipment growth in the first two months of 2019, when revenues increased 11.7% from a year earlier.

Team Group's overall shipments this year are expected to be 30-40% higher than 2018 levels, said Hsia, adding that revenues will grow around 10% on year. Falling chip prices have affected the company's product ASPs but driven shipment growth, Hsia continued.

Nevertheless, DRAM and NAND flash prices are likely to stop falling in the third quarter of 2019, Hsia commented. Team Group expects revenues this year to hit another record high of nearly NT$8 billion (US$259.5 million), with an on-year increase in profits.

Team Group posted revenues of NT$7.2 billion in 2018, up 5.5% on year and hitting a record high. EPS for the year came to NT$3.04.

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From: Elroy3/26/2019 5:47:28 AM
   of 2782
Samsung Warns on Q1 Profit As Weak Memory, Smartphone Demand Weighs on Chipmaker

Samsung Electronics warned that its first quarter profits, already hit by slowing semiconductor sales and limp smartphone demand, would likely miss estimates as the world's biggest chipmaker provided a rare pre-earnings update to market regulators Tuesday.

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From: Elroy4/9/2019 8:45:06 AM
2 Recommendations   of 2782
Silicon Motion Announces Preliminary First Quarter 2019 Revenue and Earnings Conference Call Details

TAIPEI, Taiwan and MILPITAS, Calif., April 09, 2019 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NasdaqGS: SIMO)(“Silicon Motion” or the “Company”), a global leader in NAND flash controllers for solid state storage devices, announces that based on its preliminary first quarter financial results, revenue is expected to be within 5% below the low-end of the original guidance range of $97.5 million to $103.6 million that the company issued on January 30, 2019. Gross margin (non-GAAP) is expected to be within 50 basis points above the high-end of the company's original guidance range of 47.0% to 50.0%.


Stinks! But we knew this quarter stunk. Future is the key.

Strange to have weak sales and above average gross margins. Perhaps controller sales were strong, but eMMC was weak as they were supposed to be dumping old low gross margin eMMC in the Q.

With those results, I think we get

$94m sales
$47.5m gross margins
$33.5m operating expense
$14m operating profit
$12m net profit

34m shares out,

So.......~34 cents EPS? Not too good......

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From: Elroy4/18/2019 12:48:35 AM
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The China Flash Market web page tracks memory prices. After being stable for a good while, the prices of SSDs are (finally) collapsing.

A 256GB TLC SSD has gone from $35 in the beginning of the year to $28 today. That type of price decline should drive adoption across the board....

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From: Elroy4/19/2019 11:54:21 PM
   of 2782

NAND flash price falls to slow
Siu Han, Taipei; Jessie Shen, DIGITIMES
Friday 19 April 2019

NAND flash prices are expected to fall less than 10% sequentially in the second quarter of 2019, and will likely stop falling later this year, according to industry sources.

Having fallen since 2018, NAND flash prices dropped further in the first quarter of 2019, said the sources. Samsung Electronics started cutting its NAND flash quotes in the first quarter aiming to clear out inventory, sending other NAND flash chipmakers following suit, the sources indicated.

Samsung is likely to continue its low-price strategy, but at a moderate pace, in the second quarter, the sources noted. Meanwhile, other NAND flash chipmakers intend to not follow suit this time given that prices are approaching their cash costs, the sources said.

NAND flash chipmakers have seen their inventory levels pile up since the second half of 2018, due mainly to a slowdown in demand for datacenter applications. Inventory build-ups already prompted Samsung to take the lead in cutting prices, the sources suggested.

Meanwhile, falling NAND flash prices are driving greater SSD adoption in PCs and other client devices, while the memory content per box for smartphones and other end devices continues to increase. End-market demand is expected to rise starting from the third quarter, bringing stability to NAND flash prices, the sources said.

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To: Elroy who wrote (2034)4/23/2019 1:14:58 PM
From: Debt Free
   of 2782
what do you think of SIMO going forward, are you still bullish on them?

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To: Debt Free who wrote (2035)4/23/2019 10:37:30 PM
From: Elroy
1 Recommendation   of 2782
No, I'm not nearly as optimistic on SIMO today as I have been in the past. There are lots and lots of moving parts, some very positive, others very negative, and I don't know which will win over the other.

The good

Shannon product sales to the 2 major Chinese cloud service providers should commence in Q2 this year, and then may ramp strongly, hopefully for years and years.

Client SSDs are supposed ramp strongly as NAND prices are super low

MRVL has exited the client SSD controller space, leaving it to SIMO. At the beginning of 2019 SIMO says they have 70% more client SSD design wins that at the beginning of 2018.

SIMO is buying back shares. Maybe they really believe the current slowdown is temporary, and their sales will rebound strongly. If so, buying shares now is good idea. But still.....

The bad

eMMC is getting displaced by UFS as the cell phone memory connectivity technology. SIMO's market share in UFS is likely to be lower than it was in eMMC, so this segment should decline going forward. It's about 30% of sales.

Both WDC and now MU have created internal client SSD controllers. Those two NAND makers also buy SSD controllers from SIMO. If their internal client SSDs with their internal controllers do well, that's market share loss for SIMO.

Q1 2019 sales are downright awful. SIMO says full year 2019 sales should be equal to full year 2018, but that requires a MASSIVE revenue increase from Q1 2019 to the rest of the year. Often, massive revenue increases do not occur.

The confusing (things not working out the way they are supposed to.....)

NAND prices have fallen sharply over the past year. Everyone in the industry knew and expected this. As NAND prices fall, we would expect client SSD adoption in PCs to accelerate significantly, and general NAND usage in device to accelerate significantly. So here we are one year into the NAND price decline, and SIMO is reporting 2-3 year low revenue levels. Should be the opposite, and It's unclear why the decline in NAND price is not driving significant increases in NAND controller sales (which always happened in previous NAND downturns).


So, currently SIMO has lots of headwinds, and uncertain tailwinds, so it seems more of a mystery than a solid BUY selection. In order for the share price to do well, I think it needs a massive jump in revenues. What tech stock won't do well with a massive jump in revenues? In other words, the thing that makes SIMO stock work now (huge jump in sales) is not something that gives you confidence as an investment pick. ANY tech stock will do well with a massive jump in revenues.

If I didn't own it now, I wouldn't buy it now, that's for sure.

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From: Elroy4/24/2019 1:29:55 AM
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Micron Introduces New Series of High-Performance NVMe SSDs for Cloud and Enterprise Markets

I don't see any mention of whether these new high end SSDs use a MU controller or merchant controller.......that's good.

In this previous SSD announcement on Mar 19th MU wrote - BOISE, Idaho, March 18, 2019 (GLOBE NEWSWIRE) -- Micron Technology, Inc. (Nasdaq: MU), today announced a new solid-state drive (SSD) portfolio featuring support for the NVM Express™ (NVMe™) protocol, bringing increased bandwidth and reduced latency to client computing markets. The Micron® 2200 PCIe™ NVMe SSD is a vertically integrated solution — including 3D TLC NAND, internally designed ASIC drive controller and firmware in an M.2 form factor.

So since today's press release doesn't mention an internal MU controller, maybe it doesn't have one!

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From: Elroy4/25/2019 8:38:35 PM
1 Recommendation   of 2782
INTC reported Q1 results. The press release only says the memory segment was down 12% year on year. That sounds pretty good considering what's going on in NAND! Not sure what all is in INTC's memory business, but the conference call will perhaps explain it better.

The press release does single out a challenging NAND environment.

Hard to understand why NAND prices appear to be really really collapsing, but cheap NAND is not yet resulting in massive unit increases in SIMO NAND controllers. This is the biggest SIMO mystery for me at this time. If NAND today costs 40% to 50% of what it cost a year ago, then lots of new devices which use disk drives or other storage media a year ago should be using NAND today. And yet, instead all that seems to be happening is nobody is buying anything.......

Here's INTC's Q1 presentation:

Q1 Non-GAAP Operating Margin 28%, 2 points lower .... lower spending and ASP strength (??) offset by impact of 10 nm ramp and NAND reserves (!!)

What's a NAND reserve?? Whatever it is, doesn't sound good......

It's only one data point, but impressive that INTC actually delivered non-GAAP EPS up 2 cents over the year ago quarter. The more pure play memory makers are going to do much much much worse than that. I guess that's a benefit of diversification....

There is something called NSG (meaning??) in their presentation, which I think is the NAND group. NSG sales are only down ~11% year on year. I think that's excellent compared to WDC and MU. INTC says price pressure is a problem, but bit production increases are good, so the result is sales down 11%. Seems excellent in comparison to the regular NAND makers. I wonder why INTC's NAND is doing way way way better than the other NAND makers' NAND segments?

Market weakness results in inventory revaluation (I guess that's the "reserve"), and they are reducing NAND output. So......some of their NAND inventory on their balance sheet is worth less than cost, I suppose. Not sure why else they would need to write it down. I think it means going forward NAND gross margin is expected to continue to decline.....

I'm sure there is more in the conference call, but NAND is listed under all the presentation areas that are "problems".

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