8. Silicon Motion Technology Corp. (NASDAQ:SIMO)
Average Upside Potential as of March 28: 38.99%
Number of Hedge Fund Holders: 39
Silicon Motion Technology Corp. (NASDAQ:SIMO) designs and markets NAND flash controllers, which are essential components for solid-state storage across various applications. Its products power SSDs in PCs, data centers, mobile devices, and industrial applications. This enables efficient and reliable data storage solutions for a global customer base.
The company’s core growth driver is its data storage controller segment which specializes in NAND flash controllers for SSDs, eMMC, and UFS. In 2024, its SSD controller business expanded by 20%, which helped the company capture over 30% of the market. It has a leading position in high-performance PCIe 5 SSD controllers and is developing new models for 2026, alongside its strong presence in portable SSD controllers.
The company’s eMMC/UFS controller business saw a 70% revenue increase in 2024, which was driven by expansions into non-smartphone data storage applications. It has entered the enterprise SSD market with its Mount Titan platform, which has secured six customers and aims for 5% to 10% of total revenue by 2026-2027. This includes developing next-generation PCIe 6 controllers and high-density 128TB SSDs specifically for AI-driven data storage.
Focus Capital Management is optimistic about Silicon Motion Technology Corp. (NASDAQ:SIMO) due to its exceptional 2024 growth, expanding market share, and successful entry into new high-growth markets like AI and high-end PCs. It stated the following in its Q4 2024 investor letter:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) designs and sells controllers which 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)
