SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

   Technology StocksSilicon Motion Inc. (SIMO)


Previous 10 Next 10 
From: Elroy7/27/2022 6:57:38 PM
   of 2619
 
Listened to the Q2 MXL call. Here are some of their comments about the upcoming SIMO deal.....

Update on Acquisition of Silicon Motion

Acquisition is progressing well with projected close by mid - 2023

Announced that the waiting period under the HartScott-- Rodino Antitrust Improvements Act of 1976 expired on June 27, 2022

Filed with China's State Administration for Market Regulation (SAMR) on July 6

Registration statement on Form S Debt 4 declared effective by SEC on July 13

financing is secured, subject to customary closing conditions, with focus on optimizing structure
------

Q&A

There was a question about SIMO's weak revenues (but strong gross margins) and a request the the MXL CFO give some guidance for SIMO's business. CFO declined to give guidance for SIMO, and said the deal is a long term thing, not quarter to quarter thing.

Not much commentary on SIMO really, other than they are moving forward with the deal as far as we/they know.

Share RecommendKeepReplyMark as Last Read


From: Elroy8/19/2022 1:21:02 PM
   of 2619
 
US, Taiwan to start formal trade talks in autumn

dw.com

This is sort of interesting. I wonder if US MXL's effort to buy Taiwanese SIMO will become part of an international "trade issue"....?

Share RecommendKeepReplyMark as Last Read


From: Elroy8/21/2022 1:29:47 PM
   of 2619
 
Lets call the "deal gap" the amount that SIMO would appreciate from today's closing price to deal closure value if the MXL acquisition went through today.

Currently, the deal gap is 36.5%. It's the highest I can recall since I have been tracking the number.

In plain English, SIMO today is $79.75. If today SIMO received $93.54 cash + 0.388 shares of MXL for each share of SIMO, that "deal value" would be $108.88.

I think the deal is going to go through, but the market appears to disagree.

Share RecommendKeepReplyMark as Last Read


From: Elroy8/29/2022 1:50:10 PM
   of 2619
 
Man, business sounds awful. SIMO hasn't given 2022 revenue guidance since January. They were expecting sales to grow 20%-30%, and perhaps more if they can get more allocation from TSMC. They can likely get more allocation, but doubtful that they need it.

Meanwhile, the MXL - SIMO acquisition SIMO shareholder vote is this Wednesday. It will surely get a Yes, and then we just gotta wait for Chinese regulatory approval. Who knows if that will be granted. My hunch is "Yes", but it's just a hunch.

--

Q3 NAND Flash Product Price Drop Deteriorates to 13~18% on Sustained Weak Demand, Says TrendForce

As rising inflationary pressure continues to weaken the global economy, demand for various consumer applications has been downgraded since the second quarter and is expected not improve until the end of the year. Although server demand is stable, a period of inventory adjustment has been ushered in, which exacerbates oversupply in the NAND Flash market. According to TrendForce investigations, since sellers are no longer locked into fixed pricing, NAND Flash price declines in the third quarter expanded from the original forecast of 8~13% to 13~18% QoQ. If manufacturers' production capacity planning is not curtailed, this decline is likely to continue into the fourth quarter.

In terms of client SSDs, previously prepared inventory resulting from the raw material contamination issue has become a heavy burden due to further downgrades in the shipment outlook of educational Chromebooks and NBs. Therefore, PC brands must continue to digest SSD inventory in 1H22, resulting in another revision of third quarter purchase orders. A background cause of price declines has been a gradual expansion of the supply of 176-layer client SSD products and the optimized cost structure of 176-layer QLC SSD. At the same time, YMTC's low-cost client SSD is striving to be adopted by more notebook customers in 2H22, so TrendForce estimates that price declines will expand to 10-15% QoQ.

In terms of enterprise SSDs, demand for enterprise orders is trending conservative as the global economy slows down. The purchasing momentum of enterprise SSDs in the third quarter showed signs of decline, while orders from Chinese cloud service providers did not improve. Shipments of next-generation server platforms expected by suppliers has been repeatedly delayed and has lost its demand backstop, resulting in a bleaker 2H22 enterprise SSD market compared to the first half of the year. As the average price of NAND Flash in consumer products is relatively low and the demand outlook poor, the supply side hopes to support revenue growth by increasing shipments in the enterprise SSD category. Looking at buyers’ attitudes, with the expectation that prices will fall at least until 2Q23, eager seller promotions have not stimulated purchasing and sellers have had to increase the scope of price concessions. Third quarter declines in contract prices is estimated to expanded further to 10-15% QoQ.

In terms of eMMC, Chromebook demand is poor and TV shipments have been further downgraded throughout the year. While networking product shipments are relatively good, it is still difficult for this one product category to bridge the gap in demand created by other eMMC applications. As inventory risk remains high, buyers have set destocking as their primary goal in the third quarter. Most buyers are in no hurry to procure goods, so eMMC pricing continues to fall. Due to the stable supply of 2D eMMC products, oversupply in 3D high-capacity products, and a negative purchasing attitude among end customers, the target price range has been lower than sellers’ psychological bottom line for this quarter, forcing sellers to reconsider and accept buyer price proposals. Therefore, the decline in eMMC contract pricing in the third quarter was adjusted to 13-18% QoQ.

In terms of UFS, its primary product application, the smartphone market, remains poor. In the third quarter, Samsung and Chinese brands focused on destocking and the shipment target of new phones was conservative. Therefore, the UFS market in 2H22 remains pessimistic. Due to the poor progress of terminal inventory digestion, buyers are strictly enforcing inventory control. In order to facilitate transactions, sellers are furiously persuading major first-tier customers to commit to certain quantities in advance and offering large discounts to attract orders. Sellers are, similarly, conceding to pricing proposals from second- and third-tier customers. Therefore, TrendForce expects declines in UFS contract pricing in the third quarter to expand to 13-18% QoQ.

In terms of NAND Flash wafers, significant support for wafer demand has not appeared due to a sluggish terminal demand outlook and module manufacturers retaining a strategy of purchasing small amounts of items. Factory wafers are still being sold at reduced prices and, until the demand outlook improves, wafer quotations will continue to drop quarter by quarter in 2H22. Since manufacturers continue to expand the supply of wafers, YMTC’s new manufacturing facility has also begun to contribute to its production capacity. Various production capacity plans and technological advancements from SK Hynix, Samsung, and Micron will not change despite poor market conditions. With increasing inventory pressure, manufacturers has been psychologically prepared to shoulder the drop in average NAND Flash pricing and eroded profits. The forecast decline in the contract price of wafers in the third quarter will remain at 15-20% QoQ.

Share RecommendKeepReplyMark as Last Read


From: Elroy8/31/2022 12:06:04 PM
   of 2619
 
Silicon Motion Securityholders Approve MaxLinear Merger at Extraordinary General Meeting

MaxLinear, Inc. (NASDAQGS: MXL) (“MaxLinear”), a leading provider of radio frequency (RF), analog and mixed-signal integrated circuits, and Silicon Motion Technology Corporation (NasdaqGS: SIMO) (“Silicon Motion”), a global leader in NAND flash controllers for solid state storage devices, today announced that at Silicon Motion’s extraordinary general meeting (the “EGM”) of shareholders, held on August 31, 2022, shareholders of Silicon Motion approved the previously announced merger agreement under which MaxLinear will, subject to the terms and conditions thereof, acquire Silicon Motion, and approved other proposals related to the transaction.

More specifically, at the EGM, securityholders of Silicon Motion approved, by the requisite vote, the acquisition of Silicon Motion by MaxLinear, including the approval of: (a) the Agreement and Plan of Merger, dated May 5, 2022 (as it may be amended from time to time, the “Merger Agreement”), by and among MaxLinear, Shark Merger Sub, an exempted company incorporated and existing under the laws of the Cayman Islands and a wholly-owned subsidiary of MaxLinear (“Merger Sub”), and Silicon Motion, pursuant to which Merger Sub will merge with and into Silicon Motion with Silicon Motion continuing as the surviving company and becoming a wholly-owned subsidiary of MaxLinear (the “Merger”); (b) the plan of merger required to be filed with the Registrar of Companies in the Cayman Islands; (c) the Merger itself, on the terms and subject to the conditions set forth in the Merger Agreement; and (d) all other transactions and arrangements contemplated by the Merger Agreement.

The remaining requirements for closure of the transaction are customary closing conditions set forth in the Merger Agreement, including approval from the State Administration for Market Regulation (SAMR) of the People's Republic of China. As previously announced, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired with respect to the proposed acquisition.

------

And so.....we wait.

Share RecommendKeepReplyMark as Last Read


From: Elroy8/31/2022 4:42:21 PM
   of 2619
 
New filing by SIMO

The Merger remains subject to review and clearance by the State Administration for Market Regulation (“SAMR”) in the People’s Republic of China. MaxLinear and Silicon Motion filed a simplified filing with SAMR on July 6, 2022. On August 31, 2022, SAMR advised the parties to refile under the normal procedure, which the parties intend to submit to SAMR as promptly as reasonably practicable. MaxLinear and Silicon Motion cannot predict with certainty the length of review under the normal procedure, but expect a final determination by SAMR in the second or third quarter of 2023, or even later.


Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Elroy who wrote (2586)9/20/2022 12:21:59 PM
From: Madharry
   of 2619
 
SIMO
anythinig new on this deal? i see simo keeps dropping.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Madharry who wrote (2587)9/20/2022 12:40:39 PM
From: Elroy
   of 2619
 
The deal awaits Chinese regulatory approval, which is expected to be received some time in summer 2023.

There is unlikely to be any deal news until then.

There is a huge discount between the SIMO current share price and the SIMO value if the deal goes through. Today SIMO is $70 while the deal value ($93.54 cash + MXL stock) is about $105.

This indicates a significant share of investors think China will (for some reason) reject the deal.

All we can do is wait.

Since SIMO has not updated guidance since January 2022 it's hard to tell how the decline in the consumer semi space is affecting their business. I am sure it is hurting their business, but by how much is anyone's guess.

The good thing is if the deal collapses and it gets announced next summer, by then it seems reasonably likely that the semis will be out of their funk and on the way higher, so SIMO on it's own may be worth $70 regardless of the deal.

However, without any forward guidance it's pretty hard to vaule SIMO.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Elroy who wrote (2588)9/20/2022 12:48:03 PM
From: Madharry
   of 2619
 
what do you think the odds of approval are?

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Madharry who wrote (2589)9/20/2022 1:25:46 PM
From: Elroy
   of 2619
 
I don't think any investor or even the companies have a good idea of whether it will receive Chinese regulatory approval, or not.

To my knowledge there is no precedent of a US tech company buying a Taiwanese tech company.

The Chinese regulator that needs to approve the deal is supposed to look at whether the deal will decrease compeition in the industry. It will not.

However, with the US constantly discussing Taiwan recently, and the US constantly banning sales of high end semis and semi capital equipment to China, it's possible that China blocks the sale of a major Taiwanese semi company to the US........just because.

On the other hand, flash controllers are not a key ingredient to national security, and if China blocks this sale then one would imagine the US may block lots of future Chinese acquisitions......just because.

So I have no good idea.

I think the sale will be approved by China, but it's really just a guess.

If the sale doesn't get approved by China, then it likely devalues all the Taiwanese stocks since they're are not free from Chinese control. That could stink.

Share RecommendKeepReplyMark as Last Read
Previous 10 Next 10