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   Technology StocksSilicon Motion Inc. (SIMO)


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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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To: Elroy who wrote (2570)7/18/2022 6:33:51 PM
From: Maurice H. Norcott
   of 2621
 
I don't know if it makes any sense but maybe SIMO isn't yet big enough to be of interest to a major Semi company in the dollar sense. I recently learned that one of the cigarettes/cigar brands I used to indulge in was discontinued by the parent company, the reason was it only earned $500mil a year as a boutique brand so it was deemed too small a contributor to the bottom line.

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To: Maurice H. Norcott who wrote (2571)7/19/2022 10:57:36 AM
From: Elroy
   of 2621
 
Perhaps, but SIMO isn't that small.

ADI is a huge semi company, it does $2.7b per Q in revenues.

SIMO should be doing $400m per Q by 2024 (if not 2023).

So SIMO is about 15% the size of ADI. It's not that small.

Yeah, down the road MXL-SIMO may be large enough to attract more potential buyers.

But I thought SIMO might be appealing due to its unique product line. MXL + SIMO looks to me to be sort of a random mess in terms of products segments (flash controllers, wifi, some mixed signal stuff, other stuff).

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