2. Silicon Motion Technology Corp. (NASDAQ:SIMO)
Market Cap: $1.89 billion
Forward P/E: 16
Number of Hedge Fund Holders: 34
Silicon Motion Technology Corp. (NASDAQ:SIMO) develops, manufactures, and supplies semiconductor products for the electronics market. Its products include Storage Solutions, Flash Controllers, and others. The company offers embedded graphics, embedded and expandable storage, and radio frequency integrated circuits. It was founded in 1995 and is headquartered in Hong Kong.
2024 was an exceptional year for Silicon Motion Technology Corp. (NASDAQ:SIMO). It delivered 25% year-over-year revenue growth, outperforming its end market. Its gross margin also improved to over 46% from 43%, and its operating margin grew 11.9% compared to 2023. Simultaneously, the company continued investing in next-generation solutions to expand its opportunities for long-term share gains and sustainable revenue growth.
Despite weak end-user demand in the second half of 2024, Silicon Motion Technology Corp. (NASDAQ:SIMO) remained focused on its execution and taped out several advanced controller replacements that led to significant new project wins with customers. The company also successfully entered the enterprise SSD market, adding six customers to its portfolio and beginning the initial shipment of its first new Mount Titan product in the second half of 2024. Since the PC and smartphone market is expected to remain significant, the company’s strategy to diversify its enterprise is off to a strong start and is anticipated to scale over the next few years.
Focus Capital Management stated the following regarding Silicon Motion Technology Corporation (NASDAQ:SIMO) in its Q4 2024 investor letter:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) designs and sells controllers that manage the NAND flash memory ubiquitous in modern computing. Wherever there is NAND flash, there must be a controller, often one from Silicon Motion. SIMO is an ADR (American Depository Receipt) trading on the NASDAQ.
2024 — Growth Across the Board: We just recently discussed at some length in our third quarter letter about Silicon Motion’s strengthening industry position, increasing market share, and growing revenue and margins. Over 2024, revenue has grown 25%+, gross margin has expanded 500 basis points, and net income has about doubled. We will not repeat our points from there at length. We will simply suffice with saying that the future looks even brighter, with continued growth in their core market segments as well as significant growth from their entry into new market segments. Silicon Motion’s entry into the high-end PC market with their PCIe 5.0 controllers is off to a very strong start with major design wins. In fact, Silicon Motion has stated that based on their present design win pipeline, they expect to attain about 50% market share in the high-end PC segment over the next few years, from their present standing start. And their MonTitan enterprise controllers for AI and data centers have already garnered multiple Tier 1 customer wins, with more expected to come, in what is again a greenfield opportunity for the company…” (Click here to read the full text)
