In addition to MRVL's focus on mobile chipset, it also have issues with its market share now. 3Q and 4Q are negatively impacted by the winding down of 3G chipsets, because MRVL's biggest customer is Samsung on that. On the 4G front, MRVL has to fight against QCOM and MediaTek, both have deeper relationships with Chinese smartphone makers. This may lead the theory that MRVL's controller division may not get sufficient attention from the top, which may benefit SIMO. History says dominant players never pay enough attention to their little competitors until too late and we see this so regularly in the tech sector.
Does not appear that they are focused on competition which is good. SIMO does not need the biggest player's notice at this phase go the game. I still think that M is putting its brain power on mobile chipset since that is much bigger for them. So competitive landscape will still be good for SIMO for 2015.
Not too worried about Marvel thinking about emmc or 4 channel ssd. I read a while ago that one of Marvel controllers' weakness is that Marvel not that good on total solutions. With some many product fronts to deal with, it may also be difficult for ssd division to get all the resources, especially if Marvel continue to focus on its 3-4G chipset, the bigger fish for them, against Mediatek, QCOM, intel.
Latest report: 10%+ growth through 2018, with Asia Pacific at 20% and overtakes other markets by 2016. Timing of SIMO industry first SSD package for automotive pretty perfect...
Glad to see I am no longer the only one talking about SIMO as MA target for Marvel. W. Said SIMO strategy is to move up on ssd. After SIMO pcie controller becomes popular I think marvel's alternative will be narrowed...
I think today's spike may be related to MU talking about its labs around the world to get into the "connected cars", and today's cars have $100+ component vs. only a few years ago of $12 per car. This really shows how little SIMO is because when SIMO announces its industry-first, no one pays attention. It also shows how well SIMO understands the market trend. MU works on auto makers and SIMO supply the controller shows how smart SIMO is in utilizing their customers's market capabilities to grow its own market by enticipate demand, develop a solution before the customers has done the same, and when customer realize this is a market opportunity, gives the customer the solution and use customers' market cloud to sale own product.
To me, this seems to indicate that we have bottomed for the time being, so even Japan is in recession technically, and chips are mostly down, SIMO is not. Separately, the Chinese 4Q smartphone shipment forecast is up from 3Q - market seems to indicate that Asian mobile market has also bottomed in 3Q. Was this the reason?
It sounds like you work for a trading house. I have no idea how people model methmatically near term movements and am not a trader but I could see some of your short-term calls were pretty good. Good luck and I hope you are right. I have a sizable position, added more this week, and may do again next couple of weeks so hope I get your projected dip. I also think $23 range reasonable by Jan but real break out will be April. But by that time US economic growth will slow down due to lower oil prices (those cooks in N. Dakota will no longer make $400K flipping bergers for oil drillers) so I have no idea how high SIMO can get with a blowout Q1/15.
Question - was 20x their comments or yours (20x would get to higher than $32)?
Reports says even 64GB 6 and 6+ have TLC in them - if others follow, we can see SIMO supplying 2 major players in 2015 which should make it almost certain that SIMO will grow faster than market.
I have not seen much targeted counter from Marvel on SSD controller (lower power consumption), and Phison is 1-yr late. On top of that SIMO really just replaced Sandforce (thanks, Seagate) so it is nice MS picks that up. SIMO CFO really showed with his tune 2015 will be SIMO's first year in SSD controller mass production so they are less confident on its true potential. With a tradition to low ball before feeling certain, this should lead to upside surprises.
You are correct - we have a better Q than expected, a good peek of 2015 (no formal projection, but nothing changes from prior projections). On top of that we have 2 conference call with (to me) better than expected insight of 2015 programs. Yet the shares are keeping drifting and no analysts are coming out. For that reason, I have tried to dig what are the potential threats out there and just kept coming out empty handed. To say strange may be an understatement.
SNDK is still 13% lower than its recent peak after going up $2 today. Analysts were pointing to the sky to projecting MU share prices just a few weeks ago , but SNDK went below 3Q expectation on revenue and margin and Samsung annouced a $15bn fab investment by 2017. All these were cyclical signs watched closely. Then Microchip did the kill by annoucing the commencement of industrywide correction. The huge drop all the semis followed immediately, a clear sign of sector going out of favor. Clear signs of Euro economies (German) slow down also helped. Then, Apple suppliers recovered first, and now key semi players are the process to recover.
You are correc those shares are recovering (I explained in reality capacity expansion will be slow), but I am just saying investors are less agreesive buying semis.
SIMO is different because it's fabless - no need to invest in production to expand faster than market, and its new revenue comes from SSD which does create too much additional nand demand for it replaces Sandforce. Seagate will eventually launch new products that will consume nand but it should consume less because going hybrid is the key for Seagate. But until the public sees this, we will not see SIMO going up too much.
Another headwind - Marvel just got downgraded today. G said SIMO is not different to understand, but its competitive landscape is not easy to appreciate either. Assuming SIMO keep its current rough 2015 picture in early January, I think market will act more accordingly.
What we are seeing now is the poor retail investors who bought at $25, $26, or $27 spilling F words and breaking their keyboards because they have lost 10-20%. What do they do? Unfortunatley many of them will sell to cut loss because they do not understand the underline business. Sad.
Exactly, but a lot of investors would still prefer SNDK or MU than SIMO because those are dominant players (suffer often, die almost never type). And as I mentioned few times, SIMO with 500K daily volume,
Agree - more realistically, the likely outcome is 2015 revenue of $350-400MM, $2.2-$2.6, so 12x to 15x multiple generating a price range about $27-$39. It is trading at a discount of that, but as I explained in another message, people want to confirm delivery before buying because macro condition (nand space) is not being treated favorably now (I also explained why in my other message). If anyone to blame, blame the STUPID CEO of Microchip because he tried to use industry correction to hide his own incompetence a month ago. FFFFFK him!
I do not think so. It would be a stretch to go 2016-18 to answer the question he was asked. But it was funny for him to talk about 2nd customer with TLC being used by a trend setter (without mentioned iphone name), when current reports of iphone TLC memory problems should definitely delay adoption. More important - he shed the light that phone makers decide which type of flash they want to use (because they have to deal with recalls if there is problem). To be honest, no one knows when TLC may replace MLC, if ever, but it's important to know that SIMO has controllers that are compatible to TLC and 3D from all nand makers. The message is clear - they are ready when the market gets ready. I do not think anyone can do better than that!
SIMO shed light on 2 very important risk factors:
1. eMMC IP jointly owned, products customer designed, 2015 road map already decided!
2. SSD OEM programs replace competitor's, not new ventures, 45-60MM rev. risk weighted, more certain.
There are many other good new, solid eMMC growth because of aiming at right market segment that can continue to grow, TLC controller for 2nd customer with iphone as trend setter has the potential to grow with its appeal of lower cost, GM & OM will improve, etc. So why a very depressed share price? I do not agree with Arb's root cause, and here is mine:
Nand is a cyclical bus. Makers need invest heavily to grow capacity. In past cycles, they overshoot capacity which led to price competition, lower utilization & margin. But lower prices stimulate demand and expand application that eventually allow makers to improve utilization and margin. The 2014 share price runup for SNDK, MU, etc., were the result of improving utilization and margin, but from now on capacity growth is needed. So SNDK and MU are coming off their highs because investors should have margin concerns next, which I have pointed out several times. Investors group SIMO into that group, and it took time for them to realize the difference between SIMO and nand players in the last cycle, and it will take time ago. SIMO management cannot do much about this.
What has to happen is not only for SIMO to project 2015 growth (excellent in WF call), but to show it can deliver for shares price to go up. If nand makers can also maintain margins into 2015, that will be the turbo in the engine for shares to go up fast. The truth is, Samsung's $15bn investment annoucement will not become production capacity in 15, so there is a good chance nand maker margin will stay health for the coming quarters. Back to SIMO, it has a very solid base to get $2+ earnings per share so really market will decide whether it should be a $24 stock (10-12 P/E) or a $30+ stock to include its growth
Use Wallace's words, your 30% topline growth seems reasonable, and to be honest, I bought more today so totally agree with your accumulation comment. With a market cap of
If anyone can call ST up and downs accurately, he won't have time to write here. For that, Arbitrager_z should be given a break.
A may be correct that management does not know about "creating shareholder value" (higher share prices). But there is a lot of market mis-understanding - one such worry is SK Hynix using in-house eMMC controller (risk with relying revenue on a few customers), the LTE business as a quick reminder. But SIMO has a great track record in keeping its customers (and LTE is really issues on the Samsung side). A is likely right that until we get Q4 update in early Jan, SINMO share may not move much because it is unlikely that SIMO will work hard on PR to help short-term share price. So it is depressing for ST play.
But current level provides very good buying opportunity. 4G chipset order is up in October after Sepatember dip. Low end chipset sales has been growing near 25% for S.E. Asia markets and may grow faster (a few hundred MM users out of near 2 billion pop). This is the market SK Hynix focus in. Wallace always focused on volume. W used cost effective model to become a dominant player in card. Now W is doing the same in eMMC. In the meantime, W raises barrier by offering complete hard/firmware solution. And W stays away from Samsung (Samsung always wants everything in-house). On SSD side, W went after DIY market and got recognition. Now his volume programs about to start. W may be conservative on 2015 SSD revenue for now, but PC with DRAM cache and SSD drives appear to be more common features now, providing support to potential upside surprise.
First, it is confirmed that the controller is made by Anobit, which was bought by Apple in 2011 and supposely have the best error-correction technologies - haha. Second, it is rumored that Apple will stop using TLC for 6 and 6+ 64 and 128GB models to ensure quality for now.
So what does this have anything to do with SIMO?
1. I think SK Hynix will continue to march on TLC becuase it stores 1.5 times more compared to MLC (so cheaper, fits better for its low and mid range customers). But without Apple as a customer, it can allocate more TLC nand to other customers, and SIMO is the controller maker.
2. It is not that easy to build a TLC controller. If SIMO's controller works as advertised, its position should be more secure.
Can this be a big deal? I wonder because many tech related websites carry this news today. Does this have anything to do with the "industry-first" claim (a true industry first)? Can any expert advise?
I have to say that by reading the details, one aspect does interest me - true sleep mode for energy savings. If I do not lock my car, I can always hear that hard drive spinning inside and I always suspect that being the reason that I have had to change battery 3 times now in 6 years owning it.