I am not sure what the Intel note today was about the same "3D" nand that the JV is producing because I never heard 1000 time faster as they claimed in today's note. I heard MU/Intel uses a different technology that may allow them to shrink the size (space) between those 3D holes and therefore the cost advantage over Samsung or Hynix (whose holes are more tapered) and thought that was for this generation. I would imagine MU would highlight in their conference call a few days ago if they have a 1000 time faster nand entering production in the coming days...
The guy raised it from $32 to $39 on 4/8, and now lowered it to $34, but kept the buy rating along the way. During this period, SSD became better than expected and eMMC took a reduction, but neither deserves that kind of target price move so I hope he makes up his mind one of these days. He just lost a lot of his credibility - Plus he came originally from Credit Suisse whose research quality. If you read his resume and how he moved around it shows he never really made it up - probably because he is not that smart.
Also, MU and Intel has been talking a lot of their 3D nand and we know they use SIMO controller. MU has experience difficulty launching it but it seems that they finally got it. They use a different technology than Samsung and if they indeed got it, they will have cost advantage so they may take market share away from Samsung in 2016. This should be exciting since Samsung is the largest right now.
Thank you! Me too because I was a little too greedy. SIMO is fairly priced at $37 right now so should have sold and picked up the last few days. But also agree that their 2016 price target should be around $50 when they give 2016 guidance in Q4 conference call.
Personally I want to thank those who sold me at $26.6
So that will be about $2.25-3.35 EPS, lower than current consensus of $2.38? I think analysts will revise upwards so your EPS will have an even bigger gap to consensus...
1. I can see that you can't get over the fact that their numbers do not tie up, but again, I agree and I think they want to over deliver - I am personally familiar with that type of discussion every quarter.
2. I actually like the fact their opex going up first. The last couple of times it happened SIMO got a new life through eMMC and then SSD. It will be good because I have watched from a strategic prospective how Wallace plays and he got a proven record on that.
3. I think Wallace learned his lesson. If you have worked with Samsung (which I have), you know that they want everything for themselves and leaves nothing for anyone else. SK Hynix is not in that position, and so is MU. This is why Wallace has changed his strategy on eMMC and now SSD. He has picked better partners since Samsung. Why do you think he has little business with Samsung now?
4. This is one reason not to break any Shannon's numbers. He is not going to tell his Chinese customers how much he will be making. I know the culture of some of his Chinese customers - they are going to cut his throat if they see his real margins. He does have a 2nd reason - he does not want his competition to know either. Just one question: do you know how relentless Jack Ma is? When he kills a competition, he burries the body in his garden as furtilizers.
5. His margin is actually an excellent story - his product cycle is very short and he always come out with new models that demand MSRP. His legacy card business was different because there was not much innovation there. He does not have to innovate because smartphone is one of the most competitive market right now so nand makers create that demand for him.
It may take a few days, but analysts will have to update their estimate again, and an upside revision for 4Q is pretty obvious. So we will exceed the current 2015. For 2016 which is currently at 10% higher than 2015, an upside revison will also be very likely because now that 10% represents SSD growth only. So what will those revisions do to their price target?
Few more points for 2016 and beyond:
1. SIMO will continue to achieve growth both from market growth and taking market share away from others. This separates SIMO from most of other players in the memory space and enhance its P/E overtime.
2. If anyone read about the company, one should know that Wallace's goal was 40% of the eMMC market a few years ago (slogan on their hallways). He is getting there, and getting there fast also with SSD controllers.
3. His nand partners is using his Shannon as the front to take the Chinese enterprise market share. The worry about the conflict was really off the mark, and his initial declaration of a win-win is becoming reality.
4. His TLC / 3D nand controller is leaving competition in the dust. It looks like his only competition there is Samsung, which does not sell controllers to nand competitors.
5. Something hidden: China just allowed game console to be sold nation wide in China (blocked in 2009). This is a $22bn market in total. Does anyone remember SIMO controller goes into XBOX?
The only explanation is that day traders see this as 90-day dead money. I cannot find any other reason for
this intial reaction. More productively, below is my reaction to the guidance:
1. As Geezer has difficulty to reconcile the 3Q revenue guidance with specific product growth projections, so my interpretation makes more sense that they went ultra conservative because they want to delivery upside, if you recall CFO saying "VERY COMFORTABLE hitting the upper end of $60MM". I do not remember him ever saying something like that even when their eMMC was going up 30-50% a quarter.
2. Not trying to claim credit, but some of my earlier projections are coming true:
a. They will go through the roof in 2016. 50% client SSD growth is about 10% total revenue growth. eMMC will be at least 10%, and Shannon 1-3%. If card declines by 10%, it will be only -2% on rev as embedded becomes 2/3. So full-year growth in the 20% range already, before PCiE yet and any other new products.
b. No impact on GM in a super price competition environment.
c. Becoming largest SATA SSD controller maker - sorry Marvel. Marvel cannot afford to buy SIMO, and it cannot afford the resources to compete. Wallace is really a master thief. if you also look at the projections for Shannon.
d. Geezer's concern on UFS 2.0 is addressed - SIMO is actually working with Hynix to develop a \mainstream UFS2.0. That is a very polite way of saying that SIMO will get the bulk of the business and Hynix's own is a niche. More importantly, SIMO is also working with another nand partner on the same.
e. More imminent threat is TLC eMMC and it is great that SIMO is actually doing that with Hynix (but also a small volume with a 2nd nand).
f. Higher opex due to higher head count, coupled with more working capital requirements all points to a much busier 2H/15 and earnings upside.
So runway is clear for 2H/15 upside and accelerated growth in 2016. Too bad day traders cannot see this.
You are correct they do not add up thus my point yesterday that it sets up nicely for a 3q upside. You can hear from analysts asking questions but not pointing out this and those analysts will come up with the right revenue numbers.
This guidance should be the best in the memory space, and it looks SIMO is confident that it will blow it away in Q3. The mid point is for revenue to go up by $8+MM, but the details show it will be more:
1. SSD grew by 40% before programs scale up. SIMO project SSD to scale in the next 2 quarters, which fit consistently with how Intel will launch Skylake so this alone will generate more than 50% of the Q3 growth. SIMO will be the largest merchant SSD controller by year end? How many companies does that? Hello Marvel?
2. eMMC has 60 design wins - they must have taken most of the new models outside of Samsung and iphone. Considering most of these models are not on market yet (only a few new models are out as of last week), it is pretty clear that eMMC will grow the 15-20% range in Q3, consistent with Media-Tek's 20% Q3 AP growth projection.
So without Shannon, we already have everything laid out to exceed, and it demonstrates my theory that SIMO's growth does not come from market growth. It comes from taking market share away from competitors. This model will ensure SIMO to be an exception in the space!
Geezer's forecast is possible because the latest forecast of smartphone AP sales grow in that same range for 2H/15. Separately, there are forecast that 4G chipset price to fall by 50% in a year as QCOM, Media-Tek and others compete for orders and foundries ready to support because their relatively low utilization
10% sequential shall be pretty good as most others guides flat to demonstrate that SIMO is indeed growing market share. I think they will probably guide in that range and come out way ahead in Q3. Q2 is becoming a lost cause so to speak since the macro condition is bad (and if anyone notices, we just entered a correction cycle) so all the listed companies are using this opportunity to get the bad news out so they have a better Q3.
I am even less concerned with the UFS 2.0 now, and my guess is that no analyst will ask that question tomorrow morning. I think instead they will focus on how much a slow down in China will impact SIMO's eMMC and Shannon. I agree with how Wallace put it the last quarter on UFS 2.0 because there are only 2 real high-end smartphone markers in terms of market share (Apple and Samsung), and SK Hynix is only in a small % of Apple (TLC, w/o SIMO controller). In an economic slow down, cost controll is that much more important as makers kicks into the survival mode. That means development of UFS 2.0 into mid range smartphone is delayed by at least one year. SK Hynix forecasted UFS 2.0 to be 2-3% of its 2016 sales, which was immaterial to start with. If that gets cut even more, one can see how it becomes a non-impact factor for the coming quarters.
I still think SSD will continue to go up because depressed DRAM sales is pushing all memory makers to get whatever revenue they can get, and SSD remains to be one of a few bright spot so competition there will intensify, prices will continue to fall, and unit will continue to grow. It will become a more intensified war between memory makers and Western Digital and Seagate, and benefit SIMO.
Because smartphones are basic necessity now, and push to 4G by all Chinese carriers forces consumers to upgrade. That is the demand base. If people feel they need to save money, especially the middle class who have been the main force of Apple's skyrocketing sales growth, they will not buy as much 5000+RMB Apple or Samsung models. Instead, they will buy
Exactly. SNDK was helped by new consumer and business products launches, most of them SSDs. One of them is the Z400 family which has a SIMO controller in it