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   Technology StocksSilicon Motion Inc. (SIMO)


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To: Sam who wrote (2560)6/28/2022 10:07:47 AM
From: Elroy
   of 2621
 
Is that a big deal? It sounds like all they need now is Chinese approval, and SIMO shareholder's vote?

The gap between deal close and current price is about 30%, still fairly large.

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From: Elroy7/1/2022 1:09:14 PM
2 Recommendations   of 2621
 
From the MU call

There are consumer demand and inventory-related headwinds impacting the industry and consequently our fiscal Q4 outlook.

Across the industry, there are cost challenges stemming from supply chain and inflationary pressures; however, we continue to expect our cost reductions to outpace those of the industry this year,

Despite COVID-19 control measures in China that created challenges for the global electronics supply chain, Micron’s strong execution enabled record assembly output in fiscal Q3, supporting record quarterly revenue. However, these COVID-19 control measures in China impacted our outsourced assembly and test subcontractors and led to some impact to fiscal Q3 results.

We are also driving a portfolio mix shift toward higher growth and more stable markets. Fiscal 2021’s 55 to 45 revenue split in favor of the more mature mobile, PC and consumer markets is expected to shift, by fiscal 2025, to a 38 to 62 split in favor of the higher growth data center, auto, industrial, networking and graphics markets. Several of these end markets also exhibit more stable profitability. Our fiscal Q3 new product launches and customer qualifications reflect solid execution toward this portfolio transformation.

Data center fiscal Q3 revenue grew by a double-digit percentage sequentially and well over 50% year-over-year. Data center end demand is expected to remain strong in the second half of calendar 2022, driven by robust cloud CapEx growth. Despite the strong end demand, we are seeing some enterprise OEM customers wanting to pare back their memory and storage inventory due to non-memory component shortages and macroeconomic concerns.

In fiscal Q3, we achieved client revenue growth in the mid-teens percentage range sequentially, driven by DRAM shipments and share gains in client SSD.

A number of factors have impacted consumer PC demand in various geographies. As a consequence, our forecast for calendar 2022 PC unit sales is now expected to decline by nearly 10% year-over-year from the very strong unit sales in calendar 2021. This compares to an industry and customer forecast of roughly flat calendar 2022 PC unit sales at the start of this calendar year.

Smartphone unit sales expectations have declined meaningfully for calendar 2022. We are now projecting smartphone unit volume to decline by mid-single-digits percent range year-over-year in calendar 2022, well below the industry and customer expectation earlier in the year of mid-single-digit percentage growth.

Near the end of fiscal Q3, we saw a significant reduction in near-term industry bit demand, primarily attributable to end demand weakness in consumer markets, including PC and smartphone. These consumer markets have been impacted by the weakness in consumer spending in China, the Russia-Ukraine war, and rising inflation around the world.

COVID-19 control measures in China have exacerbated supply chain challenges for some customers, and the macroeconomic environment is also creating some caution amongst certain customers. Several customers, primarily in PC and smartphone, are adjusting their inventories, and we expect these adjustments to take place mostly in the second half of calendar 2022.

Fiscal Q3 NAND revenue was $2.3 billion, representing 26% of Micron’s total revenue. NAND revenue increased 17% sequentially and was up 26% year-over-year. Sequential bit shipments increased in the high-teens percent, and ASPs declined slightly.

We achieved record SSD revenue, with both data center and client SSD revenues reaching all-time highs.

Now turning to our outlook for the fiscal fourth quarter. Long-term demand trends remain constructive; however, select market weakness and macroeconomic uncertainty are impacting our near-term outlook and visibility. Currently, we do project sequential bit shipments to be down for both DRAM and NAND in fiscal Q4.

Q: Sanjay, I’m curious, do you think this Q4 outlook is the bottom of the cycle, or do you think the risks can extend into Q1? Because you mentioned that the consumer headwinds could continue to play out during the second half of the calendar year and also because cloud inventory is at elevated levels. So, I guess, my specific question as much as I realize you don’t guide out more than a quarter is, do you think Q1 sales and margins are more likely to be flat, up or down sequentially?

A: we expect these inventory adjustments to be working themselves out over the course of second half of the year. We have pointed out that the inventory adjustments primarily are taking place in PC and the smartphone market.

And I’ll just point out that from the past history as well, that once inventory adjustments begin in a certain part of the segment, then it takes a couple of quarters for them to work out. And here, we, of course, have macroeconomic uncertainties as well. It has been a rapidly changing and uncertain environment. And this is what we have to keep in mind when we look at when does normally see return in terms of demand. And that’s why, just like Mark pointed out here in response to the last question, we will be using inventory to address the demand next year. And we will continue to closely with our customers to understand their overall demand environment.

We think that sometime in fiscal ‘23 is when -- in our fiscal ‘23 is when demand will rebound, but more importantly, it’s really about the supply-demand balance. And with respect to supply-demand balance, you can see, that we are taking actions immediately in terms of curtailing our supply growth for fiscal year ‘23 by sharing the plans with you that we are bringing down our CapEx versus our estimations earlier. So, that’s an important step. And of course, industry has shown that in DRAM that it has CapEx discipline as well. We believe our actions will also contribute toward returning the industry health sooner.

So, I would expect that sometime in our fiscal year ‘23 demand will rebound as well as industry demand supply environment, there’s a store to a healthy level. But again, I will point out that, look, this is a highly uncertain rapidly changing environment. We are, of course, responding fast and -- in terms of any changes we see. So we are not been pointing to any specific quarter at this time.

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From: Elroy7/5/2022 10:43:53 PM
   of 2621
 
I wonder if we will still get the regular SIMO pre-announcement of revenues and gross margins? I sort of doubt it, but who knows?

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From: Elroy7/8/2022 6:29:48 PM
1 Recommendation   of 2621
 
TAIPEI, Taiwan and MILPITAS, Calif., July 07, 2022 (GLOBE NEWSWIRE) -- Silicon Motion, a global leader in NAND flash controllers for solid state storage devices, announces that it will release its second quarter 2022 financial results after the market closes on July 27, 2022. The company will not be conducting its customary earnings conference call due to restrictions associated with the pending merger with MaxLinear, and thus will not be providing updates regarding the transaction or additional financial details or guidance beyond what will be made available in the earnings press release. Any further material information relevant to the transaction will be provided in subsequent press releases or public filings with the Securities and Exchange Commission.

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From: Elroy7/12/2022 10:34:18 AM
1 Recommendation   of 2621
 
Flash device controller production capacity loosening

digitimes.com

The supply of SSD and other NAND flash device controller chips, which are manufactured using 55nm, 40nm and 28nm process technologies at 12-inch fabs, has become less tight as foundries release more available fab capacities for such ICs, according to...

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To: Elroy who wrote (2565)7/12/2022 12:28:14 PM
From: Maurice H. Norcott
   of 2621
 
I will be SO happy when this chip shortage is over, Car dealers have been price gouging based on chip scarcity (I'm looking at you Ford dealers) $10-20K markups not uncommon

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To: Maurice H. Norcott who wrote (2566)7/12/2022 1:15:38 PM
From: Elroy
   of 2621
 
SIMO said when they gave 2022 full year revenue guidance (up 20% to 30%) that they would increase the forecast if they receive more allocation from TSMC as the year progressed.

It seems likely that they've received more allocation from TSMC. Now we gotta wonder whether their backlog has held up despite the slowdowns in cell phones and PCs, or not.

I'm hoping SIMO can produce really strong Q2 and Q3 results, and perhaps that encourages another buyer to outbid MXL. It's a bummer than SIMO management is prohibited from doing the normal investor calls and providing forward guidance due to the MXL merger agreement. But the quarterly reports don't lie, we're going to get to see the Q2 and Q3 numbers before the deal closes. I would imagine there is some revenue number for Q2 and Q3 that encourages other interested parties to bid more than MXL. Maybe!

I think the fit with MRVL is so good it's hard to believe they wouldn't bid for SIMO. MRVL could make an all stock bid well above MXL's bid, and MRVL could use a cash cow (client flash controllers) to fund the research and development in it's more advanced tech segments. Hopefully they're watching.

I can also see MediaTek perhaps step up in an effort to keep things in Taiwan.

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From: Elroy7/15/2022 8:24:09 PM
   of 2621
 
I see that the SIMO shareholder vote on the MXL acquisition is scheduled for Aug 31st 2022.

Based on what happened with the AMD-XLNX deal at some point after that vote (assuming the deal is approved), China's SAMR approval will likely be received, and then about 2-4 days later the transaction will go through.

Does anyone have any idea on how long it might take China's SAMR to grant approval? I know there is no way to know for sure, but any opinions? Theoretically, China could grant approval before Aug 31st, and then the deal would go through the first week of September.

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From: Elroy7/17/2022 7:55:16 PM
   of 2621
 
There's an interested timeline of the acquisition negotiations in the SIMO - MXL prospectus.......

On Feb 28 MXL bid about $110, with the acquisition being 85% cash and 15% MXL stock. MXL at the time was $74.

Goldman inquired with 5 other prospective SIMO buyers after MXL made their offer. Two responded with interest.

Later on March 2, 2022, representatives of Goldman Sachs contacted representatives
of each of the Potentially Interested Parties regarding their respective interest in engaging in discussions about potentially acquiring the Company. Representatives of two of the Potentially Interested Parties, a strategic company (“Bidder A”) and a private equity sponsor (“Bidder B”), expressed interest in further engaging in the process, while the other three Potentially Interested Parties, all of which were strategic companies, ultimately declined to explore the opportunity to potentially acquire the Company.

Both interested parties entered into confidentiality agreements with SIMO-Goldman

The first interested party bid $95 cash!

The second interested party bid $96 cash!

SIMO told the first interested party they need to pay $115-$120.

MXL upped it's bid to about $115, again 85% cash and 15% MXL stock. MXL was $69 at that time.

The first interested party increase its bid to $115 cash!

The second interested party called SIMO to say they were going to raise their bid, but after that they never called back! funny.

On March 31, 2022, representatives of Bidder B called representatives of the Company’s management team to inform them that Bidder B would try to improve the March 24 Bidder B Proposal. However, following this call, Bidder B did not again contact the Company or any of its outside advisors regarding the March 24 Bidder B Proposal or any improvements thereto.

Wow - then Party A - a strategic customer of the company (INTC? MU? SK Hynix? Samsung?) - contacted Goldman Sachs to discuss purchasing SIMO. SIMO declined to enter into acquisition discussions with a strategic customer. Idiots!!

The first interested party said it would not improve its' bid, and that its' bid could no longer be relied upon. Bastards! They think it is because regulatory issues would be a problem for the deal, and first interested party would get stuck with the a "no merger" penalty.

MXL revised its offer to $90 + 0.4532 shares of MXL per SIMO share. That was then worth $110.

Holy Crap, the first interested party sends a letter that says some other (new) private equity firm "Party B" wants to join with the first interested party to make a bid for SIMO! Goldman says hurry the fuck up!

It sounds pretty wild. There was more than four interested buyers. It is in the deal prospectus on about page 79.

They discuss regulatory issues often, and seem concerned about them.

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To: Elroy who wrote (2569)7/18/2022 3:49:32 PM
From: Elroy
   of 2621
 
Based on that negotiation timeline I posted in the previous post, it seems there were a few entities with interest to acquire SIMO. MediaTek was one of the interested buyers, and there was a NAND maker significant customer, and a few private equity shops.

So.....here's my take. SIMO will report Q2 on Jul 27, and then the shareholder vote is scheduled for Aug 31st. If a competitive bid is going to appear, it is likely to appear between those two events. So hopefully August may be interesting for us.

I sort of doubt another entity will bid, but I also don't understand why lots of larger semiconductor firms have determined that they don't want to own SIMO. With SIMO's growth forecasts (provided in the deal prospectus) it seems clear that by 2024 SIMO will be close to a monopoly in eMMC and client SSD flash controllers. Their position in UFS controllers is harder to measure, but in eMMC and client SSD SIMO is going to be the leading dominant provider who gets all the profit from those segments. The segments are necessary, very large, and in the case of eMMC modestly growing, and in the case of client PC SSD probably flat, and "other client SSDs (game consoles, autos, other stuff) growing.

Why don't the big semi boys want to own that market? It's on sale now, and once the sale closes, the opportunity to own it lessens quite a bit - you'd have to buy all of MXL to get it, and MXL may be a good semi story, I don't really know, but MXL is not monopolistic in any of its categories, and being monopolistic is the way to go in tech.

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