Silicon Motion Technology Corporation Piper Sandler 5th Annual Growth Frontiers Conference

Thanks for having me. Yeah, you're welcome.

Sure. Silicon Motion is the leading merchant supplier of NAND flash controllers in the world. We have grown to close to 40% of the PC market, ex Apple and 20%-25% of the mobile market, ex Apple. That historically, up until about 12 months ago, was 95% of our business was with mobile devices, including smartphones and PCs. Over the course of the last year, we've started a pretty massive transition to enterprise class controllers and full solutions, which would mean a multi-chip module or an SSD, in the automotive market and also in the boot drive market, which boot drives are used across a wide variety of applications in AI infrastructure and enterprise infrastructure for data centers.

Well, it's changing almost daily depending on NAND price.

Good thing. Also, as we learn more applications, we got into the boot drive market with our first customer, which is the world's largest GPU maker.

Last year, we started shipping to them in the December quarter. They're having a transition from their Blackwell program to now the Rubin program. That is actually providing us with a lot more content opportunity, both from a unit perspective and from an ASP perspective, because they're increasing the capacity of the drives. But we've since won a large telecommunications provider as well, which we're going to start shipping to late this year or early next year. We're looking at the world's largest search engine, who's using our controllers. We're trying to convert them to a boot drive manufacturer, and we have probably about three or four other customers that we're in negotiations with now, companies that build servers for AI.

It's a large market. Okay.

It's growing almost daily as we find out, because we're getting a lot of interest in our DRAMless controller for DPUs and TPUs and switches. Now customers are coming to us and asking us to see if we can make a controller that comes with DRAM, for CPU intensive tasks.

Yeah. Typically, the NAND makers, they've been in mobile, they've been in smartphones, they've been in PCs, boot drives, automotive. What they're finding is right now, everybody's got a limit on engineering resources. They're taking a lot of their resources, and they're moving them over to HBM and DRAM, which typically, when you're making a full solution, you're going to get a higher gross margin, and a higher ASP from HBM and DRAM than you would for NAND. Also, if you look at the NAND makers, they're getting very high margins just selling NAND now. When they make a full SSD, they're actually taking their gross margins down, which they don't want to explain to investors, right? They're less and less interested in providing a full solution and more interested in just selling the NAND.