Q1 2026 Silicon Motion Technology Corp Earnings Call

April 29, 2026

Operator: Good day, and thank you for standing by. Welcome to the Silicon Motion Technology Corporation's Q1 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. At which time, if you wish to ask a question, you will need to press star one one on your telephone keypad. Please be advised that today's conference is being recorded. This conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include, without limitation, statements regarding trends in the semiconductor industry and our future results of operations, financial condition, and business prospects.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. At which time, if you wish to ask a question, you will need to press star 11 on your telephone keypad.

Speaker #1: Such forward-looking statements include, without limitation, statements regarding trends in the semiconductor industry and all future results of operations, financial condition, and business prospects.

Speaker #1: be advised that today's conference is being recorded. This conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended.

Speaker #1: Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them.

Operator: Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties. Actual market trends and our results may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, continued competitive pressure in the semiconductor industry and the effect of such pressure on prices, unpredictable changes in technology and consumer demand for multimedia consumer electronics, the state of, and any change in our relationship with our major customers, and changes in political, economic, legal, and social conditions in Taiwan. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission.

Speaker #1: These statements involve risks and uncertainties and actual market trends in our results may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons.

Speaker #1: Potential risks and uncertainties include, but are not limited to, continued competitive pressure in the semiconductor industry and the effect of such pressure on prices, unpredictable changes in technology and consumer demand for multimedia consumer electronics, the state of and any change in our relationship with our major customers, and changes in political, economic, legal, and social conditions in Taiwan.

Speaker #1: For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission.

Speaker #1: We assume no obligation to update any forward-looking statements which apply only as of the date of this conference call. And with that, I'll now hand you over to Mr. Tom Spenzis, Senior Director of IR and Strategy.

Operator: We assume no obligation to update any forward-looking statements which apply only as of the date of this conference call. With that, I'll now hand you over to Mr. Tom Sepenzis, Senior Director of IR and Strategy. Please go ahead.

Speaker #1: Please go ahead.

Speaker #2: Good morning, everyone, and welcome to Silicon Motion's first quarter 2026 financial results conference call and webcast. Joining me today are Wallace Kou, our President and CEO, and Jason Tsai, our CFO.

Tom Sepenzis: Good morning, everyone, and welcome to Silicon Motion's Q1 2026 financial results conference call and webcast. Joining me today is Wallace Kou, our President and CEO, and Jason Tsai, our CFO. Wallace will first provide a review of our key business developments, and then Jason will discuss our Q1 results and outlook. Following our prepared remarks, we will conclude with a Q&A session. Before we begin, I would like to remind you of our safe harbor policy, which was read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the US Securities and Exchange Commission. For more details on our financial results, please refer to our press release, which was filed on Form 6-K after the close of the market yesterday.

Speaker #2: Wallace will first provide a review of our key business developments and then Jason will discuss our first quarter results and outlook. Following our prepared remarks, we will conclude with a Q&A session.

Speaker #2: Before we begin, I would like to remind you of our Safe Harbor policy, which was read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the US Securities and Exchange Commission.

Speaker #2: For more details, on our financial results, please refer to our press release, which was filed on Form 6K after the close of the market yesterday.

Speaker #2: This webcast will be available for replay in the Investor Relations section of our website for a limited time. To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call.

Tom Sepenzis: This webcast will be available for replay in the investor relations section of our website for a limited time. To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results in a manner consistent with how we analyze our own operating results. The reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued yesterday. We ask that you review it in conjunction with this call. With that, I will turn the call over to Wallace.

Speaker #2: We use non-GAAP financial measures internally to evaluate and manage our operations. We have therefore chosen to provide this information to enable you to perform comparisons of our operating results in a manner consistent with how we analyze our own operating results.

Speaker #2: The reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued yesterday. We ask that you review it in conjunction with this call.

Speaker #2: With that, I will turn the call over to Wallace.

Speaker #3: Thank you, Tom. Hello, and thank you for joining us today. I'm pleased to report another quarter of better-than-expected results, highlighted by record revenue of $342.1 million.

Wallace Kou: Thank you, Tom. Hello, and thank you for joining this call today. I'm pleased to report another quarter of better than expected result, highlighted by record revenue of $342.1 million. Growth and operating margin both exceeded our guidance. A stronger than anticipated revenue drove improved overall profitability. We saw strong performance across embedded eMMC and UFS, as well as our Ferri and BlueDrive solution, driving solid growth this quarter. Following an exceptional start and given our current pipeline of wins across all our markets, I'm confident that we will deliver meaningful growth throughout what should be a record revenue year for Silicon Motion. Now, let me first address the current market environment. The memory and the storage market continue to create significant challenges across the market in which we operate.

Speaker #3: Growth in operating margin both exceeded our guidance. A stronger-than-anticipated revenue drove improved overall profitability. We saw strong performance across embedded eMMC and UFS, as well as our Ferri and Bujai solutions, driving solid growth this quarter.

Speaker #3: Following an exceptional start and given our current pipeline, a win across all our markets, I'm confident that we will deliver meaningful growth throughout what should be a record revenue year for Silicon Motion.

Speaker #3: Now, let me first address the current market environment. The memory and storage market continue to create significant challenges across the market in which we operate.

Wallace Kou: NAND prices continue to rise sharply with a sequential increase above 55% to 60% in Q1 2026. AI adoption has driven significant demand across all memory and storage technologies, including HBM, DRAM, NAND, and HDD. Growing demand from hyperscaler and cloud service provider for AI infrastructure deployment, combined with a low NAND bit growth and insufficient DRAM capacity, has led to significant scarcity, negatively impacting many market, including smartphone and PC, particularly in the low end. Despite these challenges, we executed well in Q1 with our backlog design win and new opportunity ramping throughout the year. We are confident in our ability to deliver solid growth. We have spent many years developing deep relationships with the NAND flash makers, which have allowed us to gain share as NAND makers outsource more of their controller requirements.

Speaker #3: NAM prices continue to rise sharply, with a sequential increase of over 55 to 60 percent in the first quarter of 2026. AI adoption has driven significant demand across all memory and storage technologies, including HBM, DRAM, NAM, and HDD.

Speaker #3: Growing demand from hyperscalers and cloud service providers for AI infrastructure deployment combined with a low NAM peak growth and the insufficient DRAM capacity has led to significant scarcity.

Speaker #3: Negatively impacting many markets include smartphone and PC, particularly in the low end. Despite these challenges, we executed well in the first quarter, with our backlog design win and new opportunity ramping throughout the year.

Speaker #3: We are confident in our ability to deliver solid growth. We have spent many years developing deep relationships with the NAM flash makers, which have allowed us to gain share as NAM makers outsource more of their controller requirements.

Wallace Kou: These strong relationships have also allowed us to secure NAND in the difficult environment as we ramp our Ferri and enterprise BlueDrive business and help our module maker and AI Smart Storage Assistant customers secure NAND, making us an even more valuable and strategic partner. While we expect the NAND shortage will remain challenging throughout 2026 and 2027, we have never been better positioned. We have and will continue to benefit from the fundamental shift by the NAND maker toward higher end and higher capacity enterprise and data center solution, driving a greater reliance on Silicon Motion to serve the consumer market and opening a new opportunity in automotive and lower density storage solution.

Speaker #3: These strong relationships have also allowed us to secure NAM in the difficult environment as we ramp our Ferri and enterprise Bujai business and help our module maker and AI smart storage system customers secure NAM.

Speaker #3: Making us an even more valuable and strategic partner. While we expect the NAM shortage will remain challenging throughout 2026 and '27, we have never been better positioned.

Speaker #3: We have continued to benefit from the fundamental shift by the NAM maker toward higher-end and higher-capacity enterprise and data center solutions, driving a greater reliance on Silicon Motion to serve the consumer market and opening a new opportunity in automotive and lower-density storage solutions.

Speaker #3: As a company, we are at the start of the wholesale transformation as we scale our new cloud AI opportunity with our enterprise Mount Titan controller and Bujai storage products.

Wallace Kou: As a company, we are at the start of a wholesale transformation as we scale our new cloud AI opportunity with our enterprise MonTitan controller and BlueDrive storage products, which will drive meaningful growth to both our top and bottom line going forward. We are also benefiting from our edge AI opportunity, including smartphones, PC, automotive, IoT, and other applications where we are seeing a rapid shift toward next-generation storage capabilities. Silicon Motion is playing a pivotal role with an expanding pipeline of products spanning edge AI and cloud AI platform in 2026 and beyond. Given our current backlog and design win pipeline, we expect sequential growth across our product portfolio in 2026 as we capitalize on our investment, gain share in existing markets, and benefit from our diversification strategy, starting with another strong sequential quarter of growth of 15% to 20% in June.

Speaker #3: Which will drive meaningful growth to both our top and bottom line going forward. We are also benefiting from our edge AI opportunity, including smartphones, PC, automotive, IoT, and other applications where we are seeing a rapid shift toward next-generation storage capabilities.

Speaker #3: Silicon Motion is playing a pivotal role with an expanding pipeline of product spanning edge AI and cloud AI platforms in 2026 and beyond. Given our current backlog and design win pipeline, we expect sequential growth across our product portfolio in 2026 as we capitalize on our investment, gain share in existing markets, and benefit from our diversification strategy.

Speaker #3: Starting with another strong sequential quarter of growth of 15 to 20 percent in June. I will now discuss our embedded EMC and UFS business, which include controllers, for smartphones and other IoT and connected devices.

Wallace Kou: I will now discuss our embedded eMMC and UFS business, which include controllers for smartphone and other IoT and connected devices. AI is fundamentally reshaping how memory and storage makers are allocating capital. Memory and storage makers are increasingly redirecting internal resources toward DRAM, HBM, and other high-performance memory technologies for AI workload. Stepping back from edge market, including phone and other smart devices. For Q1, our mobile business was up between 30% to 25%, 35% sequentially and over 140% year-over-year, significantly outperforming the industry. The share gain further fuel strong growth for our business. The mobile market is undergoing a rapid shift as NAND manufacturer accelerate the outsourcing of controller to third party, especially Silicon Motion. Some NAND makers are also finding increasingly attracted to monetize wafer rather than investing in development of complete eMMC and UFS solutions for smartphone.

Speaker #3: AI is fundamentally reshaping how memory and storage makers are allocating capital. Memory and storage makers are increasingly redirecting internal resources toward DRAM, HBM, and other high-performance memory technologies for AI workloads.

Speaker #3: And stepping back from edge markets including phones and other smart devices. For the first quarter, our mobile business was up between 30 to 25, 35 percent sequentially and over 140 percent year over year.

Speaker #3: Significantly outperforming the industry, the share gain further feels strong growth for our business. The mobile market is undergoing a rapid shift as NAM manufacturers accelerate the outsourcing of controller to third parties, especially Silicon Motion.

Speaker #3: Some NAM makers are also finding it increasingly attractive to monetize wafers rather than investing in development of complete eMMC and UFS solutions for smartphones. Module makers have stepped in to fill this gap, and they rely heavily on Silicon Motion controller in the firmware.

Wallace Kou: Module maker have step in to fill this gap, and they rely heavily on Silicon Motion controller in the firmware. Our relationship with the NAND supplier and our ability to assist our module maker customer in securing NAND put us in the best position to benefit from the rapidly shifting landscape in the mobile market. Looking ahead, the smartphone market is likely to stay pressured due to ongoing NAND and DRAM supply constraints. Chinese handset OEM are expected to face greater headwinds than Apple, given Apple's purchasing scale, and Samsung, given its captive memory supply. At the start of the year, we projected global smartphone unit volume would decline by 5% to 10% in 2026. However, recent estimates suggest the decline could be more than 10% year-over-year, with a greater weakness concentrating in China.

Speaker #3: Our relationship with the NAM supplier and our ability to assist our module maker customers in securing NAM put us in the best position to benefit from the rapidly shifting landscape in the mobile market.

Speaker #3: Looking ahead, the smartphone market is likely to stay pressured due to ongoing NAND and DRAM supply constraints. Chinese handset OEMs are expected to face greater headwinds than Apple, given Apple's purchasing scale, and Samsung, given its captive memory supply.

Speaker #3: At the start of the year, we projected global smartphone unit volume would decline by 5 to 10 percent in 2026. However, recent estimates suggest the decline could be more than 10 percent year over year.

Speaker #3: With the greater weakness concentrated in China. Importantly, much of this unit pressure is occurring at the low end of the smartphone market, where we have limited exposure.

Wallace Kou: Importantly, much of this unit pressure is occurring at the low end of the smartphone market, where we have limited exposure. Elevated memory and storage costs make it increasingly difficult to produce low-cost smartphone, a dynamic we expect to persist through the, at least, the end of 2026 to 2027. Our eMMC business remains stronger than expected, driven by multiple markets, including automotive, smart TV, AI glasses, smart watches, next generation set-top box that demand higher capacity storage, and many others. The market for eMMC are large and growing at over 900 million units sold every year. With major flash maker essentially gone from this segment, competition is decreasing and our revenue contribution from this market is growing.

Speaker #3: Elevated memory and storage costs make it increasingly difficult to produce low-cost smartphones. A dynamic we expect to persist through the at least the end of '26 to '27.

Speaker #3: Our EMC business remains stronger than expected driven by multiple markets including automotive. Smart TV, AI glasses, smart watches, next-generation set-top box. That demand higher capacity storage and many others.

Speaker #3: The market for EMC are large and growing at over 900 million units sold every year. With major flash maker essentially gone from this segment, competition is decreasing and our revenue contribution from this market is growing.

Speaker #3: Based on our current backlog, customer forecasts, and continuing share gains, we expect another very strong year of growth in our embedded EMC and UFS business.

Wallace Kou: Based on our current backlog, customer forecast, and continuing share gains, we expect another very strong year of growth in our embedded eMMC and UFS business, with share gains dramatically outpacing the macro pressure on smartphone unit sale. Moving on to our SSD business, which include edge SSD and enterprise controllers. In Q1, our overall SSD controller business revenue declined approximately 10% sequentially, in line with the seasonal trend. was up approximately 45% year-over-year as we benefited from the early impact of PCIe 5.0 on our mix and early ramp of our MonTitan controllers. For our edge SSD business, our client SSD controller are utilized in a variety of products, including PC, gaming console, and PC workstation. The PC market has been a challenging area so far this year, given supply constraints and high prices associated with both NAND and DRAM.

Speaker #3: With share gains dramatically outpacing the macro pressure on smartphone unit sales. Moving on to our SAD business, which includes edge SAD and enterprise controllers.

Speaker #3: In the first quarter, our overall SAD controller business revenue declined approximately 10 percent sequentially, in line with seasonal trends, but was up approximately 45 percent year over year.

Speaker #3: As we benefited from the early impact of PCIe 5 on our mix and early ramp of our Mount Titan controllers. For our edge SAD business, our clients need controller are utilized in a variety of products including PC, gaming console, and PC workstation.

Speaker #3: The PC market has been a challenging area so far this year, given supply constraints and high prices associated with both NAND and DRAM. PC manufacturers are lowering specifications for new computers and passing on higher NAND costs to consumers.

Wallace Kou: PC manufacturers are lowering specification for new computers and passing on higher NAND costs to consumer, which we expect will contribute to overall unit decline in the PC market in 2026, especially at the low end. Fortunately, for Silicon Motion, our product span market from value line to the high end, and we continue to gain share across the range of devices as the NAND market makers exit the consumer segment. 2026 will be a defining year for our client SSD business. PCIe 5 begin to displace older technologies. Our eight-channel PCIe 5 controller lead the market in performance and ramp steadily throughout 2025. While we expect a DRAM supply constraint could limit growth of this high-end controller in 2026, it is still highly sought for its unmatched power and performance.

Speaker #3: Which we expect will contribute to overall unit decline in the PC market in 2026, especially at the low end. Fortunately, for Silicon Motion, our product spend market from value line to the high end, and we continue to gain share across the range of devices as the NAM market makers exit the consumer segment.

Speaker #3: 2026 will be a defining year for our clients' business. PCIe 5 began to displace older technologies, and our eight-channel PCIe 5 controller leads the market in performance and RAM steadily throughout 2025.

Speaker #3: While we expect a DRAM supply constraint could limit growth of this high-end controller in 2026, it is still highly sought for its unmatched power and performance.

Wallace Kou: In December, we launched our 4-channel DRAM-less PCIe 5 controller, aimed at the mass market, and we expect this to become the volume-leading PCIe 5 chip in our portfolio this year. This controller bring PCIe 5 performance to a broader audience at a more accessible price point and remove a significant component hurdle for our customer at a time when DRAM availability is constrained and the costs are elevated. We have our NAND flash maker customer for each of our PCIe 5 controller. Well, as nearly all the module makers expected to drive high ASP and improve margin in our client C business throughout 2026 as PCIe 5 grow as a percentage of our sale mix. Entering this year, we estimate that the PC market will experience unit decline of 5% to 10% in 2026, given the tightening NAND and DRAM supply and increased prices.

Speaker #3: In December, we launched our four-channel DRAMless PCIe 5 controller as a mass market product. And we expect this to become the volume-leading PCIe 5 chip in our portfolio this year.

Speaker #3: This controller brings PCIe 5 performance to a broader audience at a more accessible price point and removes a significant component hurdle for our customers at the time, when DRAM availability is constrained.

Speaker #3: And the costs are elevated. We have our NAND flash maker customers for each of our PCIe 5 controller, as well as nearly all the module makers, expected to drive high ASP and improve margin in our clients' business throughout 2026.

Speaker #3: As PCIe 5 grows as a percentage of our sale mix. Entering this year, we estimate that the PC market will experience unit decline of 5 to 10 percent in 2026, given the tightening NAM and DRAM supply and increased prices.

Wallace Kou: Current expectations are being lowered. We anticipate unit decline now in the 10%-plus range. Despite this, we expect to grow our SSD business through a combination of increased market share and higher ASP as our PCIe 5 controller continue to ramp and as NAND flash maker to retrieve from edge market in favor enterprise and cloud AI. For our MonTitan enterprise controller business, our cloud AI opportunity in the data center and AI infrastructure are growing rapidly, and we are in the early inning. NAND is an essential part of enterprise and AI infrastructure deployment, spanning warm storage, compute storage, and increasingly near-CPU and near-GPU storage applications. The need for speed, lower latency, greater power efficiency is driving a technological shift in the data center, and MonTitan is squarely in the middle of the transition.

Speaker #3: Current expectations are a bit lower with anticipated unit decline now in the 10 percent plus range. Despite this, we expect to grow our edge SAD business through a combination of increased market share and higher ASP as our PCIe 5 controller continues to ramp.

Speaker #3: And as NAND flash makers retrieve from the edge market in favor of enterprise and cloud AI, for our Mount Titan enterprise controller business, our cloud AI opportunity in the data center and AI infrastructure are growing rapidly.

Speaker #3: And we are in the early inning. NAM is a central part of enterprise and AI infrastructure deployment spanning warm storage, compute storage, and increasingly near CPU and near GPU storage applications.

Speaker #3: The need for speed, lower latency, and greater power efficiency is driving a technological shift in the data center. And Mount Titan is clearly in the middle of the transition.

Speaker #3: Mount Titan when paired with the TLC NAM power high performance CMX KV cache and compute SAD using near CPU and near GPU environment. When paired with QLC NAM, Mount Titan enables high capacity, high performance enterprise and AI data storage.

Wallace Kou: MonTitan, when paired with the TLC NAND, power high performance CMX, KV cache, and Compute SSD using near-CPU and near-GPU environment. When paired with QLC NAND, MonTitan enable high capacity, high performance enterprise and AI data storage. During the Q4, end user qualification of TLC base and high-performance Compute SSD powered by MonTitan began with multiple customers. These qualifications have been progressing well, and these end customers are now expected to begin volume commercial ramp in the Q1, one quarter earlier than expected. Currently, we see greater demand for TLC-based CMX, Compute, and the KV cache SSD controller than for QLC, given a slower rollout of 2 terabit NAND than initially expected. While we anticipate more initial revenue contribution to come from TLC-configured MonTitan solution, we believe QLC-configured solution will begin contributing more meaningful later this year and long term.

Speaker #3: During the December quarter, end user qualification of TLC-based and high-performance compute SAD powered by Mount Titan began with multiple customers. These qualifications have been progressing well, and these end customers are now expected to begin volume commercial ramp in the current quarter.

Speaker #3: One quarter earlier, then expected currently, we see greater demand for TLC-based CMX compute and KV cache SAD controller than for QLC given a slower rollout of two terabyte NAM than initially expected.

Speaker #3: While we anticipate more initial revenue contribution to come from TLC configurate Mount Titan solution, we believe QLC configure solution will begin contributing more meaningful later this year and long term.

Wallace Kou: High-capacity warm storage SSD leveraging QLC NAND will represent the largest addressable market for MonTitan, and we expect to begin ramping multiple customer as broader availability of the next generation 2 terabit QLC NAND dies become available for nearly all NAND maker and as supply return to more normal levels. Our QLC solution offer a meaningful advantage over HDD for AI inference workload, faster access, higher speed, lower power consumption, and improving cost to journey. I'm excited to announce that our MonTitan customer plan to begin ramping of 3 tier one Asian CSP and 2 US tier one CSP later this year, with both TLC Compute and QLC warm storage SSD solutions. In Q3, we expect to tape out our first 4-nanometer controller, a PCIe 6.0 MonTitan controller, targeting hyperscaler and CSPs.

Speaker #3: High capacity warm storage SAD leveraging QLC NAM will represent the largest addressable market for Mount Titan. And we expect to begin ramping multiple customers as broader availability of the next generation two terabyte QLC NAM dies become available from nearly all NAM maker and as supply return to more normal levels.

Speaker #3: Our QLC solution offers meaningful advantage over HDD. For AI inference workload. Faster assets, higher speed, lower power consumption, and improving cost trajectory. I'm excited to announce that our Mount Titan customer plan to begin ramping of three tier one Asian CSP and two US tier one CSP later this year, which both TLC compute and QLC warm storage SAD solutions.

Speaker #3: In the third quarter, we expect to tape out our first 4-nanometer controller, the PCIe 6 Mount Titan controller, targeting hyperscalers and CSPs. It has been developed in close collaboration with multiple partners and customers.

Wallace Kou: It has been developed in close collaboration with multiple partners and customers, and we expect it to drive the next phase of MonTitan growth beginning in the 2027, 2028 timeframe. Importantly, we have already secured design win with multiple tier one customers, with volume expected to ramp meaningfully in 2028. Given the traction we are seeing and the progression of end user qualification for both TLC and QLC implementation of MonTitan, we are increasingly confident that the business will grow rapidly throughout this year and exit at our target run rate of 5% to 10% of our now expanded 2026 revenue expectation, with a further growth anticipated in 2027 and beyond as our entry into the enterprise market scales meaningfully over time. Finally, I would like to provide an update on our Ferri and the BlueDrive storage business.

Speaker #3: And we expect it to drive the next phase of Mount Titan growth beginning in the 2027–28 timeframe. Importantly, we have already secured design wins with multiple tier-one customers, with volume expected to ramp meaningfully in 2028.

Speaker #3: Given the traction we are seeing and the progression of end user qualification for both TLC and QLC implementation of Mount Titan, we are increasingly confident that the business will grow rapidly throughout this year and exit our target runway of 5 to 10 percent of our now expanded 2026 revenue expectation.

Speaker #3: With further growth anticipated in 2027, and beyond. As our entry into the enterprise market scales meaningfully over time. And finally, I would like to provide an update on our fair ride and the boot dry storage business.

Wallace Kou: Our Ferri and BlueDrive storage business delivered exceptionally performance in the March quarter as we began scaling several new projects in Ferri for automotive, as well as in our emerging enterprise BlueDrive business. These business are growing rapidly this year. Sourcing is becoming more critical to our long-term success. Our unparalleled relationship with the NAND maker has become a key differentiation and has enabled us to secure NAND from three different makers, which will ensure we will remain a resilient supplier of Ferri solution and boot drive for our customer, despite the increasing supply constraints. NAND supply allocation for 2026 were largely finalized by all flash maker by May last year. Our ability to secure NAND has given us a meaningful competitive advantage, as we are one of few supplier globally able to consistently source NAND to support our customer accelerating requirement.

Speaker #3: Our fair ride and boot dry storage business delivered exceptional performance in the March quarter. As we began scaling several new projects in fair ride for automotive, as well as in our emerging enterprise boot dry business.

Speaker #3: For this business, we are growing rapidly this year. Sourcing NAM is becoming more critical to our long-term success. Our Impalo relationship with the NAM maker has become a key differentiation and has enabled us to secure NAM from three different makers.

Speaker #3: Which will ensure we will remain a resilient supplier of fair ride solution and boot dry for our customer despite the increasing supply constraint. NAM supply allocation for 2026 will largely finalize by all flash maker by mid last year.

Speaker #3: Our ability to secure NAM has given us a meaningful competitive advantage as we are one of few supply supplier globally able to consistently source NAM to support our customer accelerating requirement.

Wallace Kou: Boot drive storage is rapidly becoming one of our most exciting growth opportunity, as we are actively engaged with multiple customer to build solutions that operate across a variety of platform. This includes leading DPU, Ethernet, and NVLink switches, and other opportunity across different AI infrastructure architecture. In Q4 2025, we began volume boot drive shipment to a leading AI GPU manufacturer for their current DPU product. In Q1, we worked with that customer to qualify next generation DPU design, as well as Ethernet and NVLink switches of their new GPU, CPU platform to be launched in the H2 of this year.

Speaker #3: Boot dry storage is rapidly becoming one of our most exciting growth opportunities, as we are actively engaged with multiple customer-to-build solutions that operate across a variety of platforms.

Speaker #3: This includes leading BPU, Ethernet, and AV link switches, and other opportunities across different AI infrastructure architecture. In the fourth quarter of 2025, we began volume boot dry shipment to a leading AI GPU manufacturer for their current DPU product.

Speaker #3: In the first quarter, we worked with that customer to qualify next generation DPU design, as well as Ethernet and AV link switches of their new GPU CPU platform to be launched in the second half of this year.

Wallace Kou: As our customer transition to the next generation GPU, CPU platform, our opportunity is increasing rapidly with a much broader footprint beyond the DPU boot drive and with the density that increased two to four times from the previous generation. We anticipate strong revenue contribution and growth with this customer this year and throughout 2027. In addition to this customer, we have recently won a design with a leading telecommunication infrastructure provider, and we'll be ramping initial scale with them later this year. We are also sampling with a leading search engine company for its TPU architecture as well. We will continue to develop a new boot drive storage device built around our leading controller to drive future growth.

Speaker #3: As our customer transitioned to the next generation GPU CPU platform, our opportunity is increasingly rapidly with a much broader footprint beyond the DPU boot dry and with the density that increased two to four times from the previous generation.

Speaker #3: We anticipate strong revenue contribution and growth with this customer this year and throughout 2027. In addition, to this customer, we have recently won the design with a leading telecommunication infrastructure provider and will be ramping initial scale with them later this year.

Speaker #3: We are also sampling with a leading search engine company for its TPU architecture, as well. And we will continue to develop a new boot dry storage device built around our leading controller to drive future growth.

Wallace Kou: Our Ferri business is experiencing strong demand from automotive and industrial customer as the NAND maker continue to shift away from lower density solution to focus on higher ASP, higher density enterprise solution. Our more than 10 years of developing automotive-grade Ferri solution provides significant differentiation by offering reliable supply, proven technology, dedicated technical support, and the qualification expertise tailored to the automotive market. As a result, these investment demand from global automotive OEM and their subsystem supplier continue to accelerate across the US, Europe, China, and Japan. We are gaining meaningful share, creating a strong pipeline of near-term revenue and long-term sustainable growth opportunities. In conclusion, the first quarter was exceptional, delivering our highest quarterly revenue at Silicon Motion as we continue to drive meaningful share growth across our markets.

Speaker #3: Our fair ride business is experiencing strong demand from automotive and industrial customers, and the NAM maker continues to shift away from lower density solutions.

Speaker #3: To focus on higher ASV, higher density enterprise solution. Our more than 10 years of developing automotive grade fair ride solution provides significant differentiation by offering reliable supply, proven technology, dedicated technical support, and the qualification expertise tailored to the automotive market.

Speaker #3: As a result, these investments demand from global automotive OEM and their subsistence supplier continue to accelerate across the US, Europe, China, and Japan. We are gaining meaningful share creating a strong pipeline of near-term revenue and long-term sustainable growth opportunities.

Speaker #3: In conclusion, the first quarter was exceptional. Delivering our highest quarterly revenue at Silicon Motion as we continue to drive meaningful share growth across our markets.

Wallace Kou: Despite the ongoing supply constraints and price increases associated with the NAND and DRAM, we continue to expect that we will deliver sequential growth throughout 2026 as we reap the benefit from the investment we have made over the past few years. This growth were across all our major business, propelled by our growing cloud AI opportunity with our enterprise AI product, including MonTitan and our emerging boot drive storage business that are just beginning to ramp. We are in the strongest position in our company history with a deeper product portfolio, growing foothold in edge and cloud AI, with multiple opportunity growing in tandem in the legacy and new markets. The successes we have made through the partnership with all the NAND makers over the past many years have given us an unparalleled advantage that we leverage this relationship to gain access to NAND supply.

Speaker #3: Despite the ongoing supply constraint and price increases, associated with the NAM and DRAM, we continue to expect that we will deliver sequential growth throughout 2026 as we reap the benefit from the investment we have made over the past few years.

Speaker #3: This growth will across all our major business propelled by our growing cloud AI opportunity with our enterprise AI product including Mount Titan and our emerging boot dry storage business that are just beginning to ramp.

Speaker #3: We are in the strongest position in our company history with a deeper product portfolio. Growing foothold in edge and cloud AI. With multiple opportunity growing in tandem in the legacy and new markets.

Speaker #3: The successes we have made through the partnership with all the NAM makers over the past many years have given us an unparalleled advantage as we leverage these relationships to gain access to NAM supply.

Speaker #3: This relationship is a strategic differentiation for our company, and I am extremely confident in our ability to deliver broad-based, sustainable growth as we scale both established and emerging opportunities across the business in 2026.

Wallace Kou: This relationship is a strategic differentiation for our company, and I am extremely confident in our ability to deliver broad-based, sustainable growth as we scale both established and emerging opportunity across the business in 2026 and beyond. Now, let me turn the call to Jason to go over our financial performance and outlook.

Speaker #3: And beyond. Now let me turn the call to Jason. To go over our financial performance and outlook.

Speaker #2: Thank you, Wallace. And good morning everyone for joining us today. I will discuss additional details of our first quarter results and then provide our outlook.

Jason Tsai: Thank you, Wallace. Good morning, everyone, for joining us today. I will discuss additional details of our Q1 results, and then provide our out-

Jason Tsai: Thank you, Wallace. Good morning, everyone, for joining us today. I will discuss additional details of our Q1 results, and then provide our outlook. Please note that my comments today will focus primarily on our non-GAAP results, unless otherwise specifically noted. The reconciliation of our GAAP to non-GAAP data is included in the earnings release issued yesterday. This was an outstanding start to the year for Silicon Motion, as our investments over the past several years are bearing fruit. We're gaining share across our entire portfolio in a difficult macro environment and rapidly expanding into new opportunities in edge and cloud AI applications, which should continue to drive significant top and bottom line outperformance. In the March quarter, sales increased 23% sequentially and 105% year on year to $342.1 million, coming in well above the high end of our guided range, delivering our second consecutive quarter of record revenue.

Speaker #2: Please note that my comments today will focus primarily on our non-gap results unless otherwise specifically noted. The reconciliation of our gap to non-gap data is included in the earnings release issued yesterday.

Jason Tsai: Please note that my comments today will focus primarily on our non-GAAP results, unless otherwise specifically noted. The reconciliation of our GAAP to non-GAAP data is included in the earnings release issued yesterday. This was an outstanding start to the year for Silicon Motion, as our investments over the past several years are bearing fruit. We're gaining share across our entire portfolio in a difficult macro environment and rapidly expanding into new opportunities in edge and cloud AI applications, which should continue to drive significant top and bottom line outperformance. In the March quarter, sales increased 23% sequentially and 105% year on year to $342.1 million, coming in well above the high end of our guided range, delivering our second consecutive quarter of record revenue.

Speaker #2: This was an outstanding start to the year for Silicon Motion as our investments over the past several years are bearing fruit. We're gaining share across our entire portfolio in a difficult macro environment and rapidly expanding into new opportunities in edge and cloud AI applications which should drive which should continue to drive significant top and bottom line outperformance.

Speaker #2: In the March quarter, sales increased 23% sequentially and $105% year on year to $342.1 million. Coming in well above the high end of our guided range.

Speaker #2: Delivering our second consecutive quarter of record revenue. Outperformance in the quarter came primarily from our embedded eMMC and UFS controllers, and strong growth in our FerriDrive and boot drive storage business.

Jason Tsai: Outperformance in the quarter came primarily from our embedded eMMC and UFS controllers and strong growth in our Ferri and boot drive storage business. Gross margin was 47.2%, above our guided range of 46% to 47% as we capitalized on new product introductions. Operating expenses increased sequentially to $99.2 million, given increased investments in our emerging MonTitan AI and enterprise SSD controller and boot drive storage solutions. Operating margin was 18.2% above our guided range, driven by higher than expected revenue and gross margin during the March quarter. Earnings per ADS was $1.58. Total stock compensation, which we exclude from non-GAAP results, was $8.4 million in Q1 2026.

Speaker #2: Gross margin was 47.2%, above our guided range of 46 to 47% as we capitalized on new product introductions. Operating expenses increased sequentially to $99.2 million given increased investments in our emerging Mount Titan AI and enterprise SSD controller and boot drive storage solutions.

Speaker #2: Operating margin was 18.2% above our guided range driven by higher than expected revenue and gross margin during the March quarter. Earnings per ADS was $1.58.

Speaker #2: Total stock compensation which we exclude from non-gap results was 8.4 million in one Q26. We had 210.9 million cash cash equivalents and restricted cash at the end of the first quarter compared to 277.1 million at the end of the fourth quarter of 2025.

Jason Tsai: We had $210.9 million cash equivalents and restricted cash at the end of Q1, compared to $277.1 million at the end of Q4 2025. Cash decreased in Q1 due to a combination of dividend payment of $16.9 million and an increase in inventory to support our expected strong business ramp. Our team is executing exceptionally well in this challenging NAND and DRAM pricing and supply environment. We continue to invest in advanced geometry products for both our established markets and our emerging enterprise markets, including MonTitan SSD and enterprise boot drive storage solutions. These investments will continue throughout 2026 as we support the growing demand for our enterprise portfolio.

Speaker #2: Cash decreased in the first quarter due to a combination of dividend payment of 16.9 million and an increase in inventory to support our expected strong business ramp.

Speaker #2: Our team is executing exceptionally well in this challenging NAN and DRAM pricing and supply environment. We continue to invest in advanced geometry products for both our established markets and our emerging enterprise markets including Mount Titan SSD and enterprise boot drive storage solutions.

Speaker #2: These investments will continue throughout 2026 as we support the growing demand for our enterprise portfolio. For the second quarter of '26, we now expect revenue to grow 15 to 20 percent sequentially to $393 to $411 million.

Jason Tsai: For Q2 2026, we now expect revenue to grow 15% to 20% sequentially to $393 to 411 million. We see strength across nearly all our product segments, with an emphasis on continuing market share gains and new cloud AI opportunities with our MonTitan and boot drive business as they ramp. Gross margins are expected to increase sequentially to 48.5% to 49.5% in Q2, given the product mix, assisted by greater contribution from MonTitan and our PCIe 5 controllers. Operating margin is expected to be in the range of 21% to 22%, and our effective tax rate is expected to be 19%. Stock-based compensation and dispute related expenses is expected to be in the range of $3.6 to 4.6 million.

Speaker #2: We see strength across nearly all our product segments with an emphasis on continuing market share gains and new cloud AI opportunities with our Mount Titan and boot drive business as they ramp.

Speaker #2: Gross margins are expected to increase sequentially to 48.5 to 49.5 percent in the June quarter given the product mix assisted by greater contribution from Mount Titan and our PCI5 controllers.

Speaker #2: Operating margin is expected to be in the range of 21 to 22 percent and our effective tax rate is expected to be 19%. Stock-based compensation and dispute-related expenses is expected to be in the range of 3.6 to 4.6 million.

Speaker #2: 2026 is on track to deliver record revenue for Silicon Motion with strength across all of our major product lines. We expect sequential top line growth for the remainder of the year with further improvements in profitability.

Jason Tsai: 2026 is on track to deliver record revenue for Silicon Motion with strengths across all of our major product lines. We expect sequential top line growth for the remainder of the year with further improvements in profitability. We still anticipate additional development costs which will drive higher operating expenses in Q2 and Q3 of this year, which will be more than offset by higher revenue and gross margin performance. We anticipate our full year 2026 operating margin to improve as compared to 2025, despite our higher investments this year. We're navigating the current memory and storage supply constraints and high pricing environment with remarkable success, driven by a relentless strategy of relationship building with NAND flash makers over the past 20-plus years.

Speaker #2: We still anticipate additional development costs which will drive higher operating expenses in the second and third quarters of this year which will be more than offset by higher revenue and gross margin performance.

Speaker #2: We anticipate our full year 2026 operating margin to improve as compared to '25 despite our higher higher investments this year. We're navigating the current memory and storage supply constraints and high pricing environment with remarkable success driven by our relentless strategy of relationship building with NAN flash makers over the past 20 plus years.

Speaker #2: We're also beginning to reap the benefits of our multi-year investments in ESSDs for enterprise and AI with Mount Titan and our growing boot drive storage business beginning to ramp in volume.

Jason Tsai: We are also beginning to reap the benefits of our multi-year investments in ESSDs for enterprise and AI with MonTitan and our growing boot drive storage business beginning to ramp in volume. Our leading position in merchant controller, combined with unmatched NAND maker partnerships, will drive higher share across eMMC and UFS, client SSDs, enterprise, automotive, boot drives, and the high-performance, high-capacity enterprise and data center storage markets. We expect this will lead to significant revenue growth for Silicon Motion in 2026 and the years to come. I look forward to sharing more detail on our progress when we report next quarter. This concludes our prepared remarks. I'd like to open up for questions now. Operator?

Speaker #2: Our leading position in merchant controller combined with unmatched NAN maker partnerships will drive higher share across EMMC and UFS client SSDs enterprise automotive boot drives and the high performance high capacity enterprise and data center storage markets.

Speaker #2: We expect this will lead to significant revenue growth for Silicon Motion in 2026 and the years to come. I look forward to sharing more detail on our progress when we report next quarter.

Speaker #2: This concludes our prepared remarks. I'd like to open up for questions now. Operator.

Speaker #3: Thank you. To ask a question now, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: A moment for our first question. We will now take our first question from the line of Nick Doyle of Needham & Company. Please ask your question, Nick. Your line is open.

Operator: Thank you. To ask a question now, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. A moment for our first question. We will now take our first question from the line of Neil Young of Needham & Company. Please ask your question, Neil. Your line is open.

Speaker #3: A moment for our first question. We will now take our first question from the line of Neil Young of Needham and Company. Please ask your question, Neil.

Speaker #3: Your line is open.

Nick Doyle: Hey, everyone. Thank you for letting me ask a question. It obviously sounds like everything is supposed to grow quarter on quarter throughout the year, you know, maybe specifically looking to Q2, could you sort of rank the segments on what you think should grow the most and what you think should grow the least? Thanks.

Neil Young: Hey, everyone. Thank you for letting me ask a question. It obviously sounds like everything is supposed to grow quarter on quarter throughout the year, you know, maybe specifically looking to Q2, could you sort of rank the segments on what you think should grow the most and what you think should grow the least? Thanks.

Speaker #4: Hey, everyone. Thank you for letting me ask a question. So, it obviously sounds like everything is supposed to grow quarter-on-quarter throughout the year, but maybe specifically looking to Q2, could you sort of rank the segments on what you think should grow the most and what you think should grow the least?

Speaker #4: Thanks.

Speaker #5: We anticipate growth, as I said, across all of our business segments. I think, obviously, we've had some very strong growth in EMMC and UFS early on in the year.

Jason Tsai: We anticipate growth, as I said, across all of our business segments. I think, you know, obviously we've had some very strong growth in eMMC and UFS early on in the year. If you take a look at our automotive, Ferri, and our boot drives, we're just in the early stages of that ramping. We do anticipate stronger growth from those products. Certainly the rest of the other products continue to grow as well throughout the quarter.

Speaker #5: If you take a look at our automotive, fair ride, and our boot drives, we're just in the early stages of that ramping. So we do anticipate stronger growth from those products.

Speaker #5: And then certainly the rest of the other products continue to grow as well throughout the throughout the for the quarter.

Speaker #4: Okay. Thanks. And then I have a follow-up. So within the EMMC and UFS business, it sounds like it's diversifying a little bit away from handsets.

Nick Doyle: Okay, thanks. I have a follow-up. Within that eMMC and UFS business, it sounds like it's diversifying a little bit away from handsets. Could you maybe update us on the mix of handset revenue in the business versus sort of the broad markets that you talk about? Thank you.

Neil Young: Okay, thanks. I have a follow-up. Within that eMMC and UFS business, it sounds like it's diversifying a little bit away from handsets. Could you maybe update us on the mix of handset revenue in the business versus sort of the broad markets that you talk about? Thank you.

Speaker #4: Could you maybe update us on the mix of handset revenue in the business versus sort of the broad markets that you talk about? Thank you.

Wallace Kou: For our eMMC and UFS controller business, UFS majority is in handset, as the eMMC majority is in the smart devices such as smart glasses, IoT device, smart TV, new set-top box, smart door lock, and many others is going to the automotive. I think the, although the smartphone unit shipment will decline, but our overall eMMC plus UFS controller shipment will continue to grow throughout the year.

Speaker #5: So far, EMMC and UFS controller business, UFS majority is in handset, as in EMMC majority is in the smart devices such as smart glasses.

Speaker #5: And IoT device, smart TV, new set of box, and smart door lock. And many others is going to the automotive. So I think the although the smartphone unit shipment will decline, but our overall EMMC plus UFS controller shipment will continue to grow.

Speaker #5: Throughout the year.

Jason Tsai: you know, we also anticipate MonTitan to begin to ramp more meaningfully starting the Q2 as well. That'll be another growth vector for our Q2.

Speaker #6: Neil, we also anticipate Mount Titan to begin to ramp more meaningfully in the second quarter, starting in the second quarter as well. So there'll be another growth factor for our second quarter.

Jason Tsai: We also anticipate MonTitan to begin to ramp more meaningfully starting the Q2 as well. That'll be another growth vector for our Q2.

Speaker #4: Okay. Thank you.

Nick Doyle: Okay, thank you.

Neil Young: Okay, thank you.

Operator: Thank you. We will now take our next question from the line of Mehdi Hosseini of Susquehanna Financial Group. Please ask your question, Maddie.

Operator: Thank you. We will now take our next question from the line of Mehdi Hosseini of Susquehanna Financial Group. Please ask your question, Mehdi.

Speaker #3: Thank you. We will now take our next question from the line of Maney Hosseini of Susquehanna Financial Group. Please ask your question, Maney.

Amy: Hi. This is Amy filling in for Mehdi. Thanks for taking my question. The first one is with the new SM8008 product launch in March, can you give a bit more color on the boot drive revenue trajectory? I know the contribution of revenue is small this year, how should we frame the ramp from here? What does a more meaningful contribution year look like? I have a follow-up. Thanks.

[Analyst] (Susquehanna Financial Group): Hi. This is Amy filling in for Mehdi. Thanks for taking my question. The first one is with the new SM8008 product launch in March, can you give a bit more color on the boot drive revenue trajectory? I know the contribution of revenue is small this year, how should we frame the ramp from here? What does a more meaningful contribution year look like? I have a follow-up. Thanks.

Speaker #7: Hi. So this is Amy filling in for Maney. So thanks for taking my question. The first one is with the new SM 8008 product launch in March, can you give a bit more color on the boot drive revenue trajectory?

Speaker #7: I know the contribution of revenue is small this year. So how should we frame the ramp from here? And what does a more meaningful contribution year look like?

Speaker #7: And I have a follow-up. Thanks.

Jason Tsai: We don't break out those segments specifically, but as I said before, we do anticipate boot drives and Ferri to be more meaningful contributors of revenue in Q2 as well as throughout 2026. SM8008 is a boot drive controller that was introduced, and that will be part of the portfolio solutions that we have in this category of products, but we have other solutions here as well that have been ramping.

Speaker #5: So we don't break out those segments specifically, but as I said before, we do anticipate boot drives and fair ride to be more meaningful contributions of revenue in the second quarter as well as throughout 2026.

Speaker #5: SM 8008 is a boot drive controller. That was introduced. And that will be part of the portfolio solutions that we have in this category of products.

Speaker #5: But we have other solutions here as well that have been ramping.

Speaker #6: So I mean, let me add some comments. Well, SM 8008, our PCIe Gen 5 high-end boot drive controller, a primary with SOLINX controller in the firmware to the customer who make a boot drive solution.

Wallace Kou: I mean, let me add some comment. Well, SM800A, our PCIe Gen5 high-end boot drive controller, it primarily we're selling the controller and the firmware to the customer who make a boot drive solution. Our, for this year, most of our boot drive solution were not based on A thousand A controller. This is only ship specific to certain customer, major customer, but will start to ship by late this year.

Speaker #6: So our for this year, most of our boot drive solution will not based on 8008 controller. This is only ship specific to certain customers, major customers, but will start to ship by late this year.

Amy: Got it. Really helpful. My next question is regarding the revenue diversification. Do you remain on target to have 20% of your total revenue from a mix of MonTitan, boot drive, and auto?

[Analyst] (Susquehanna Financial Group): Got it. Really helpful. My next question is regarding the revenue diversification. Do you remain on target to have 20% of your total revenue from a mix of MonTitan, boot drive, and auto?

Speaker #3: Got it. Really helpful. And my next question is regarding the revenue diversification. Do you remain on target to have a 20% of your total revenue from a mix of Mount Titan boot drive and auto?

Speaker #5: Yes. We definitely will reach the goal. I think we're quarter by quarter bigger. We didn't give a full year guidance, but wait for our next quarter.

Wallace Kou: Yes. We are definitely will reach the goal. I think we're quarter by quarter, because we didn't give a full year guidance, but wait for our next quarter result in the guidance for Q3.

Speaker #5: Result in the guidance for Q3.

Amy: Got it. Thank you.

[Analyst] (Susquehanna Financial Group): Got it. Thank you.

Speaker #3: Got it. Thank you.

Speaker #1: Thank you. We will now take our next question from Sujie DeSilva of Roth Capital. Please ask your question, Sujie. Your line is open.

Operator: Thank you. We will now take our next question from Suji Desilva of Roth Capital. Please ask your question. Suji, your line is open.

Speaker #8: Hi, Wallace, Jason, Tom. Congratulations on the progress here. Perhaps you can give us some fundamental color here. Maybe understanding how the second half versus first half half over half revenue would be this year, perhaps versus typical years.

Suji Desilva: Hi, Wallace, Jason, Tom. Congratulations on the progress here. Perhaps you can give us some fundamental color here. Maybe understanding how the H2 versus H1, half over half revenue would be this year, perhaps versus typical years. Is 50% gross margin potentially in the near future or any puts and takes there would be helpful?

Speaker #8: And is 50% gross margin potentially in the near future or any puts and takes there would be helpful?

Speaker #5: I think, first of all, 50% gross margin is definitely achievable. We're confident for this year. But second is we cannot give you the—we just say quarter by quarter, sequentially.

Wallace Kou: I think, first of all, 50% gross margin is definitely achievable. We confident for this year. Second is, we cannot give you quarter by quarter sequentially. We're continue grow quarter by quarter, but we cannot give you a percent regarding H1, H2.

Speaker #5: So we'll continue to grow quarter by quarter. But we cannot give you a percent regarding the first half and second half.

Speaker #8: Okay. Jason, can you write us what a typical year is, or do you have that data?

Suji Desilva: Okay. Jason, can you remind us what a typical year is, or do you have that data?

Speaker #6: Yeah. I mean, typically, we're about 45, 55. Somewhere in that ballpark.

Jason Tsai: Yeah, I mean, typically we're about 45, 55, you know, somewhere in that ballpark.

Speaker #8: Great, thanks. And then my other question is around Mount Titan. Can you give us an update on how many customers are ramping today, how many are going to ramp start near term, and how many you have in the pipeline?

Suji Desilva: Great. Thanks. My other question is around MonTitan. Can you give us an update on how many customers are ramping today that are gonna ramp start near term and how many you have or pipeline? Any update on MonTitan number of customers would be helpful.

Speaker #8: Any update on Mount Titan number of customers would be helpful?

Speaker #5: So Mount Titan, we are ramping today in production with the two customers. But we are going to have a five additional major customer from CSP by late this year.

Wallace Kou: Our MonTitan, we are ramping today in production with the 2 customers, but we are going to have 5 additional major customers from CSP by late this year, 3 from Asia, 2 from US.

Wallace Kou: Our MonTitan, we are ramping today in production with the two customers, but we are going to have 5 additional major customers from CSP by late this year, three from Asia, two from US.

Speaker #5: Three from Asia, two from US.

Suji Desilva: Excellent. Thank you, Wallace. Thanks, guys.

Speaker #8: Thanks. Excellent. Thank you, Wallace. Thanks, guys.

Speaker #3: Thank you. We will now take our next question from Gokou Harihara of JPMorgan. Please go ahead, Gokou. Your line is open.

Operator: Thank you. We will now take our next question from Gokul Hariharan of J.P. Morgan. Please go ahead, Gokul. Your line is open.

Speaker #9: Yeah. Hi. Great results. So Wallace, just wanted to begin a little bit on your comment about having more interest on the Mount Titan solution from TLC, NAND, and KVCash, especially for the CMX piece of the equation.

Gokul Hariharan: Yeah. Hi. Great results. Wallace, I just wanted to dig in a little bit on your comment about having more interest on the MonTitan solution from TLC NAND and KV cache, especially for the CMX piece of the equation. Could you talk a little bit about what has changed there, given previously, you were a lot more optimistic about the QLC NAND solution, and that was kind of like the key selling point for MonTitan given the Silicon Motion's experience in managing QLC NAND. In addition to that, can you also talk a little bit about how is the adoption that you're seeing from a lot of these customers on the CMX solution or the previously called ICMA solution?

Speaker #9: Could you talk a little bit about what has changed there? Given, I think, previously, you were a lot more optimistic about the QLC NAND solution, and that was kind of like the key selling point for Mount Titan, given Silicon Motion's experience in managing QLC NAND.

Speaker #9: And in addition to that, can you also talk a little bit about how the adoption has been that you're seeing from a lot of these customers on the CMX solution, or the previously called ICMS solution?

Gokul Hariharan: Is that largely the five customers or at least the two non-Asia customers that you're seeing ramping up among the CSPs? Is that related to the CMX solution?

Speaker #9: Is that largely the five customers or at least the two non-Asia customers that you're seeing ramping up among the CSPs? Is that related to the CMX solution?

Speaker #5: Okay. You had a very long and good question. So let me try to answer one by one. First of all, because NAND price increased dramatically.

Wallace Kou: Okay. You have a very long and a good question, let me try to answer it one by one. First of all, because NAND price increased dramatically and because the NAND supply is shortage, the most of the majority output taken away by the CSP customer. Now, because the NAND price increased dramatically, the customer who originally designed with the QLC, with the 128 TB, even higher capacity, they have certain drawback because the price increased almost 5 to 10 times compared with a year ago. It's very, very unlikely. We see more demand, either the QLC capacity reduce or they're shifting more for compute storage. As everybody know, compute storage, we say, is the Compute SSD, which is next to CPU.

Speaker #5: And because of the NAND supply shortage, and most of the majority output is taken away by the CSP customer. Now, because the NAND price increased dramatically, the customers who originally designed with the QLC with the 128 terabyte, even higher capacity, they have certain drawbacks because the price increased almost 5 to 10 times compared with a year ago.

Speaker #5: It's a very, very unlikely. So we see more demand either the QLC capacity reduced or they're shifting more for compute storage. As everybody knows, compute storage, we say, is the compute SSD, which is next to CPU.

Speaker #5: And the new compute SSD, which is coming by NVIDIA CMX content memory storage, is with for KVCash for AI inference. There's also used TLC because latency is very, very important.

Wallace Kou: The new Compute SSD, which is coined by NVIDIA CMX, content memory storage, for KV cache or AI inference, it's also use TLC, because latency very important. We're seeing more and more customer moving to TLC with a smaller capacity like 8, 4, and 16 TB. This is really benefit for Silicon Motion because we ship more controller. For QLC, we also still have 2 customers continue and ramping later this year. We help them to secure NAND supply. Because the QLC 2 TB today, only have 3 NAND maker can provide the production. I think wait for 1 more year, we see all the NAND maker can produce TB QLC, availability will be better. We'll see more demand for high capacity QLC.

Speaker #5: So we see more and more customers moving to TLC with the smaller capacity like A4 and 16 terabyte. And this is really a benefit for Silicon Motion because we ship more controller.

Speaker #5: But for QLC, we also still have two customers continuing and ramping later this year. And they are able—we can help—we help them to secure NAND supply because QLC 2-terabyte today only has three NAND makers can provide the production. I think, wait for one more year, we see all the NAND makers can produce 2-terabyte QLC, availability will be better.

Speaker #5: We'll see more demand for high-capacity QLC. And the supply will become more normal. So that situation we see regarding the CSP customers become Mount Titan are one of the unique technology called performance shaping which is very, very good for AI inference because when AI inference goes to KVCash, you need to have managed multiple tokens.

Wallace Kou: Supply will become more normal. That's situation we see. Regarding the CSP customer, because MonTitan are one of the unique technology called PerformaShape, which is very good for AI inference. Because when AI inference go to KV cache, you need have manage multiple token, and our MonTitan have the architecture, can handle 4 token simultaneously. That's why the many leading customer and CSP like the great architecture. That's why we see demand is very high from US to Asia.

Speaker #5: And our Mount Titan has the architecture can handle four tokens simultaneously. That's why the many, many leading customers and CSP like the great architecture.

Speaker #5: That's why we see demand is very, very high from US to Asia.

Gokul Hariharan: Got it. That's very clear. Thank you. Just on the client SSD controller side, I do notice that the strength is still very robust, even in a reasonably challenging PC market. Do you sense any pull-forward demand from some of these customers? Because this is something that we hear from some of the other vendors, that even though end demand has been not that great, there's been some pull-forward demand, customers trying to stock up inventory ahead of cost hikes and price increases. Is that something that you're seeing among your customers? Secondly, when you talk about NAND makers exiting this market, does it change the threshold in terms of what kind of market share you could eventually have of client SSD?

Speaker #9: Got it. That's very clear. Thank you. Just on the client SSD controllers side, I do notice that the strength is still very robust even in a reasonably challenging PT market.

Speaker #9: Do you sense any pull-forward demand from some of these customers because this is something that we hear from some of the other vendors that even though end demand has been not that great, there's been some pull-forward demand customers trying to stock up inventory ahead of cost hikes and price increases?

Speaker #9: Is that something that you're seeing among your customers? And secondly, when you talk about NAND makers exiting this market, does it change the threshold in terms of what kind of market share you could eventually have of client SSD?

Speaker #9: I think previously we've talked about maybe 50%, or 40% to 50%. Is that threshold increasing, given the industry trends that you're seeing?

Gokul Hariharan: I think previously we've talked about maybe 50% or 40%, 50%. Is that threshold increasing given the industry trends that you're seeing?

Speaker #5: Okay. I think you asked a very good question. As everybody knows, NAND supplies shortage and the NAND maker allocate less SSD to PC OEM customers.

Wallace Kou: Okay. I think that's a very good question. It's, as everybody know, the NAND supply is shortage, and the NAND maker allocate less SSD to PC OEM customer. This trend benefit for Silicon Motion because first of all, we get a more outsourcing project from NAND maker for PC OEM. Second, because the module maker, they step up to fill the gap, because we own almost majority module maker to design our controller for PC OEM. That's why although we see the PC unit shipment might decline 10% or more, but we will continue gain market share, and we see the clients' business continue grow. When the PCIe 5 moving from high-end to mainstream and PC OEM and shipping more PCIe 5, we benefit much more because ASP higher, and also we dominate for PCIe 5 more than 50%.

Speaker #5: But this trend benefits for Silicon Motion because, first of all, we get more outsourcing projects from NAND maker for PC OEM. Second, and because multi-maker, they step up to fill the gap because we own almost the majority multi-maker to design our controller for PC OEM.

Speaker #5: And that's why although we see the PC unit shipment might decline 10% or more, but we will continue gain market share and we see the client SSD business continue to grow.

Speaker #5: When the PCIe 5 moving from high-end to mainstream and PC OEM and shipping more PCIe 5, we benefit much more because ASV is higher and also we dominate for PCIe 5 more than 50%.

Speaker #5: So we see a market share gain continually when PC OEMs start to ramp the four-channel during this PCIe 5 controller.

Wallace Kou: We see a market share gain continually when PC OEM start to ramp the 4-channel dual-lane PCIe 5 controller.

Gokul Hariharan: Got it. Yeah. Thanks a lot. Thank you very much.

Speaker #9: Got it. Yeah. Thanks, Wallace. Thank you very much.

Speaker #1: Thank you. We will now take our next question from the line of Sebastian Naji of Willen Bear. Please go ahead, Sebastian. Your line is open.

Operator: Thank you. We will now take our next question from the line of Sebastian Nagy of William Blair. Please go ahead, Sebastian. Your line is open.

Operator: Thank you. We will now take our next question from the line of Sebastien Naji of William Blair. Please go ahead, Sebastien. Your line is open.

Sebastian Nagy: Yeah. Thank you. Good morning, and congrats on the strong results and guidance. My first question is on the share gain momentum that you're seeing, particularly in the mobile and PC markets. How do you think about the trajectory of those share gains? In other words, have you seen maybe more meaningful share gains been front-loaded here, Q4, Q1, Q2 of this year? Is there significantly more runway for you to keep taking share as we move into the H2 and even into 2027?

Speaker #10: Yeah. Thank you. Good morning and congrats on the strong results and guidance. My first question is on the share gain momentum that you're seeing, particularly in the mobile and PC markets.

Sebastien Naji: Yeah. Thank you. Good morning, and congrats on the strong results and guidance. My first question is on the share gain momentum that you're seeing, particularly in the mobile and PC markets. How do you think about the trajectory of those share gains? In other words, have you seen maybe more meaningful share gains been front-loaded here, Q4, Q1, Q2 of this year? Is there significantly more runway for you to keep taking share as we move into the H2 and even into 2027?

Speaker #10: How do you think about the trajectory of those share gains? In other words, have you seen maybe more meaningful share gains been front-loaded here, Q4, Q1, Q2 of this year?

Speaker #10: Or is there significantly more runway for you to keep taking share as we move into the second half and even into 2027?

Wallace Kou: Our goal is continue gaining market share. When NAND maker, now they have limited R&D resources, and they probably will out-sort more project to Silicon Motion. We try to reserve all the R&D, and we're very busy to catch all these sourcing opportunity. We see we continue gain the embedded eMMC and the UFS controller business, as well as client SSD for PC OEM. Because retail for client SSD almost almost gone. It's very, very low. We see the PC OEM, but we have a much broader customer to provide the SSD solution to PC OEM, not just NAND maker. There'll be more module maker coming too.

Speaker #5: Our goal is to continue gaining market share. When NAND maker now they have a limited R&D resources, and they probably will outsource more projects to Silicon Motion.

Speaker #5: So we'll try to reserve all the R&D, and we're very busy to catch all these outsourcing opportunities. And we see we'll continue to gain the embedded EMC and the UFS controller business as well as client SSD for PC OEM.

Speaker #5: Because retail for client SSD is almost gone. It's very, very low. We see the PC OEM, but we have a much broader customer to provide the SSD solution to PC OEM, not just NAND maker.

Speaker #5: There'll be more multi-maker coming too.

Speaker #10: Great, great. Okay, that's nice to hear. And then my follow-up is just on the boot drive opportunity. Can you just remind us what the competitive landscape looks like?

Sebastian Nagy: Great. Great. Okay. That's nice to hear. My follow-up is just on the boot drive opportunity. Can you just remind us what the competitive landscape looks like? Who else might be in a position to provide these types of boot drive controllers? Relatedly, how should we think about your share in that market? Should it be higher than in some of your other sub-segments, or should it be pretty similar? Any pointers there?

Sebastien Naji: Great. Great. Okay. That's nice to hear. My follow-up is just on the boot drive opportunity. Can you just remind us what the competitive landscape looks like? Who else might be in a position to provide these types of boot drive controllers? Relatedly, how should we think about your share in that market? Should it be higher than in some of your other sub-segments, or should it be pretty similar? Any pointers there?

Speaker #10: Who else might be in a position to provide these types of boot drive controllers? And then relatedly, how should we think about your share in that market?

Speaker #10: Should it be higher than in some of your other subsegments, or should it be pretty similar? Any pointers there?

Speaker #5: So, for our first engagement for the DPU Boot Fair 3, there will be three makers providing the solution. Two other NAND makers also use the Silicon Motion controller, but it's a different controller and different NAND.

Wallace Kou: For our first engagement for the DPU BlueField-3, there will be 3 maker provide the solution. 2 other NAND maker also use a Silicon Motion controller, but different controller, different NAND. We also, with our additional different controller to support. I think, through the engagement, I believe the customer will either to focus on the new generation DPU and also provide much more deeper NVLink and Ethernet NVLink Switch project to us. For the new generation boot drive, security become very critical. I believe today we are probably only one have a specific security in our ROM code and hardware in our controller.

Speaker #5: And we also with our additional different controller to support. But I think through the engagement, I believe the customer will like to focus on the new generation DPU and also provide much more deeper NVLink and Ethernet CX9 switches project to us.

Speaker #5: Because the for the new generation boot drive security becomes very critical, I believe today we are probably only one have a specific security in our RONCO and hardware in our controller.

Speaker #5: And the we have a unique firmware with to manage the NAND into a pseudo LCD mode, provide specific function for the end customer. So that's why we believe we probably have a majority of the new generation boot drive in this particular customer.

Wallace Kou: We have a unique firmware with to manage the NAND into a pseudo-SLC mode, provide specific function for the end customer. That's why we believe we probably have a majority of the new generation boot drive in this particular customer.

Speaker #10: Great. Great. Okay. Thank you very much and congrats again.

Sebastian Nagy: Great. Great. Okay. Thank you very much, and congrats again.

Sebastien Naji: Great. Great. Okay. Thank you very much, and congrats again.

Speaker #1: Thank you. We will now take our next question from Tiffany Ye of Morgan Stanley. Please ask your question, Tiffany. Your line is open.

Operator: Thank you. We will now take our next question from Tiffany Yeh of Morgan Stanley. Please ask your question. Tiffany, your line is open.

Speaker #11: Yeah. Thank you, gentlemen, for taking my question and congrats on the great result. And my first question would be could you show with us your latest view on the TAM for the Mount Titan or the overall ESSD market?

Tiffany Yeh: Yeah. Thank you, gentlemen, for taking my question, and congrats on the great result. My first question would be, could you share with us your latest view on the TAM for the MonTitan or the overall ESSD market? Also, your targeted market share in the overall market. I have a follow-up. Thank you.

Speaker #11: And also, your targeted market share in the overall market? And I have a follow-up. Thank you.

Wallace Kou: We see where MonTitan now gets tremendous attention and a very, very broad design win. We're very happy in our progress. We see we'll continue to gain market share. We see MonTitan, even for PCIe Gen 5 and associated products, we will grow to at least 5% to 10%, along with our expanded 2026 revenue and 2027. Our PCIe Gen 6 MonTitan even stronger. Even before we tape out, we have multiple design wins from tier one customers, including two NAND makers and several CSP customers. This is bringing a very, very broad and a long-term commitment for development. We see our PCIe Gen 6 MonTitan also has a very, very unique technology with 16K by LDPC and support both TLC and QLC for next generation QLC.

Speaker #5: We see where Mount Titan now gets tremendous attention and very, very broad design wing, very, very happy in our progress. We see we'll continue to gain market share.

Speaker #5: We see Mount Titan even for PCIe Gen 5 and associate products. We will grow to at least 5 to 10 percent, aligned with our expanded 2026 revenue.

Speaker #5: And 2027, our PCIe Gen 6 Mount Titan even stronger even before we tape out, we have a multiple design wing from Tier 1 customers including two NAND makers and several CSP customers.

Speaker #5: So this is bringing a very, very broad and long-term commitment and for development. We see the our PCIe Gen 6 Mount Titan also have a very, very unique technology with 16K by LDPC.

Speaker #5: And support both TLC and the QLC for next-generation QLC. So we have a very, very broad customer waiting for the product. And we'll continue and ramping PCIe Gen 5 and waiting for PCIe Gen 6 for design wing pipeline.

Wallace Kou: we have a very, very broad customer waiting for the product and will continue and ramping PCIe Gen 5 and waiting for PCIe Gen 6 for design win pipeline.

Tiffany Yeh: All right. It's very clear. Thank you, Wallace. My second question would be, as we see elevated, material costs and also the offset costs, would you consider conduct price hike on your product to pass through all these costs to your customer?

Speaker #11: Got it. Very clear. Thank you, Wallace. And my second question would be as we see elevated material costs and also the all-set costs, would you consider conduct price tag on your product to pass through all these costs to your customer?

Jason Tsai: I think we've developed a very good relationship with our back-end packaging and testing as well as our suppliers. Look, I think our goal here is to maintain our gross margins in this 40% to 50% range, and we're comfortable through our existing relationships with our suppliers as well as our relationships with our customers that we can maintain that pricing. We're not gonna go into specifics about pricing changes with customers, but we're confident that we can maintain our margin levels.

Speaker #5: I think we've developed a very good relationship with our back-end packaging and testing as well as our suppliers. Look, I think our goal here is to maintain our gross margins in this 48 to 50 percent range.

Jason Tsai: I think we've developed a very good relationship with our back-end packaging and testing as well as our suppliers. Look, I think our goal here is to maintain our gross margins in this 40% to 50% range, and we're comfortable through our existing relationships with our suppliers as well as our relationships with our customers that we can maintain that pricing. We're not going to go into specifics about pricing changes with customers, but we're confident that we can maintain our margin levels.

Speaker #5: And we're comfortable through our existing relationships with our suppliers as well as our relationships with our customers that we can maintain that pricing. We're not going to go into specifics about pricing changes with customers, but we're confident that we can maintain our margin levels.

Speaker #4: Let me add a comment. It's is not in the price increase regarding manufacturing site. Our main concern is the TCON material for the BGA substrate because it's very, very tight and supply is very limited, whether fiber with all the US Tier 1 customers.

Wallace Kou: Let me add a comment. At the moment, our concern is not in the price increase regarding manufacturing side. Our main concern is the T-CON material for the BGA substrate, because it's very, very tight and supply is very limited. We identify with all the US tier one customer. Our operation work very hard. We work with Japan customer directly and work with all the Taiwan manufacturer. We try to overcome the challenging and manage the supply to make sure we can meet the customer demand.

Speaker #4: But our operation works very hard. We work with Japan customer directly and work with all the Taiwan manufactured. And so we tried to overcome the challenging and manage the supply to make sure we can meet the customer demand.

Speaker #1: Thank you. Do you have any follow-up question, Tiffany?

Operator: Thank you. Do you have any follow-up question, Tiffany?

Tiffany Yeh: No. That's all from me. Thank you.

Speaker #11: No, that's all from me. Thank you.

Speaker #1: Thank you. We will proceed. We are next question from the line of Craig Ellis of B Riley Securities. Please ask your question, Craig. Your line is open.

Operator: Thank you. We will proceed with our next question from the line of Craig Ellis of B. Riley Securities. Please ask your question, Craig. Your line is open.

Speaker #10: Yeah. Thank you for taking the question and congratulations on the great performance, guys. I wanted to ask an intermediate to longer-term question. Wallace, congratulations on what appears to be really significant Mount Titan customer diversification through this year and you've got boot drive position that seems to be broadening out significantly and next-generation drives through the year.

Craig Ellis: Yeah. Thank you for taking the question, and congratulations on the great performance, guys. I wanted to ask an intermediate to longer term question. Wallace, congratulations on what appears to be really significant MonTitan customer diversification through this year and you've got boot drive position that seems to be broadening out significantly and next generation drives through the year and auto with Ferri expanding nicely as well. The question is this: as we look at reports saying that the memory related order pipeline is happening deep into 2027, and as you exit this year with a much broader customer and program footprint, how do you feel about supply availability next year? And are you seeing from your customers extended order visibility? And if so, where is that happening?

Speaker #10: And Otto with Ferry is expanding nicely as well. So the question is this: as we look at reports, seeing that memory-related order pipeline is happening deep into 2027.

Speaker #10: And as you exit this year with a much broader customer and program footprint, how do you feel about supply availability next year? And are you seeing from your customers extended order visibility?

Speaker #10: And if so, where is that happening?

Wallace Kou: I think for this year, NAND supply is a little challenging to us. It's not because the NAND maker won't provide the NAND supply to Silicon Motion, because we provide the PO were late last year. Because the NAND maker and DRAM maker, they almost finished allocation before August timeframe. But through our strategic relationship and deep partnership and personal relationship with the NAND maker, we're able to secure the full supply for 2026. Now, for next year, we will start to provide our demand to our NAND partner in advance. We're pretty sure, and we are able to secure all the NAND we need for 2027 growth. I believe 2027, DRAM and NAND, the supply will be more severe than 2026.

Speaker #5: I think for this year, NAND supply is a little challenging to us. It's not because it's not because the NAND maker won't provide the NAND supply to Silicon Motion because we provide the PO were late.

Speaker #5: Last year because the NAND maker and DRM maker, they almost finished allocation before August timeframe. And this is why we but through our strategic relationship and deep partnership and personal relationship with the NAND maker, we're able to secure the full supply for 2026.

Speaker #5: Now for next year, we will start to provide our demand to our NAND partner in advance. So we're pretty sure and we are able to secure all the NAND we need for 2027 growth.

Speaker #5: And I believe 2027 DRM and NAND, the supply will be more severe than 2026. But the DRM will get an easier from late 2027 to 2028 because all the new mega fabs start to ramp from second half of 2027.

Wallace Kou: DRAM will get easier from late 2027 to 2028 because all the new mega fab start to ramp from H2 2027. I think Micron, the second fab in Boise will ramp from H2 2028. I think the NAND will start to see release probably from early 2028 or H2 2028, but still in shortage. We will try to maintain the position, make sure we secure all the NAND in advance, meet our customer demand and meet the growth demand.

Speaker #5: And I think Micron, the second fab in Boise, will ramp from second half of 2028. But I think the NAND will start to see release probably from early 2028 or second half of 2028.

Speaker #5: But still in shortage. But we will try to maintain the position, make sure we secure all the NAND in advance, meet our customer demand, and meet the growth demand.

Speaker #4: And also keep in mind, Craig, we have we're sourcing from three different flash makers. So we've got a really good range of suppliers to work with.

Jason Tsai: Also keep in mind, Craig, we're sourcing from three different flash makers, so we've got a really good range of suppliers to work with.

Speaker #10: That's really helpful, guys. Thanks. And then for the second question, I think there just thinking near-term about how some of the hydraulics play out in the second half of the year with product-related investments.

Craig Ellis: That's really helpful, guys. Thanks. Then, for the second question, I think that, just thinking near term about how some of the hydraulics play out in H2 of the year with product related investments. Sounds like there'll be some asset costs for PCIe Gen 6, but you're also looking for much higher revenue and higher gross margin. Can you talk a little bit more the gives and takes that we should be thinking about in the middle of the income H2 of the year? Thanks so much.

Speaker #10: Sounds like there'll be some asset costs for PCIe Gen 6, but you're also looking for much higher revenue and higher gross margins. So can you talk a little bit more to gives and takes that we should be thinking about in the middle of the income back half of the year?

Speaker #10: Thanks so much.

Speaker #4: Yeah, I think from an OpEx standpoint, we will have our OpEx obviously higher this quarter. And then that'll probably tick up a little bit in the third quarter as well, as some of these tape-out costs come in.

Jason Tsai: Yeah. You know, I think from an OpEx standpoint, we will have, you know, our OpEx obviously higher this quarter and then, you know, that will probably tick up a little bit in Q3 as well as some of these tape-out costs come in. Our expectation for timing is that Q4, we should have a lot less those development costs, so that will come down. Overall, we expect to see margins continue to improve, operating margins continue to improve throughout this year.

Jason Tsai: Yeah. I think from an OpEx standpoint, we will have, you know, our OpEx obviously higher this quarter and then, you know, that will probably tick up a little bit in Q3 as well as some of these tape-out costs come in. Our expectation for timing is that Q4, we should have a lot less those development costs, so that will come down. Overall, we expect to see margins continue to improve, operating margins continue to improve throughout this year.

Speaker #4: And then our expectation for timing is that, in the fourth quarter, we should have a lot less of those development costs, so that will come down.

Speaker #4: Overall, we expect to see margins continue to improve. Operating margins continue to improve throughout this year.

Speaker #10: Thanks so much, guys. Good luck.

Craig Ellis: Thanks so much, guys. Good luck.

Wallace Kou: Let me add some comment. Silicon Motion procurement is not like a normal customer. We are strategic partner for NAND maker because we are a mutual business, and we engage their projects to many, many large scale customer too. They treat us a partner, not just a normal buyer for NAND.

Speaker #5: Yeah. Let me add some comment. Silicon Motion procure NAND is not like a normal customer. We are strategic partner for NAND maker because we are a mutual business and we engage their project to many, many large-scale customers too.

Speaker #5: So they treat us as a partner, not just a normal buyer for NAND.

Speaker #1: Thank you. We have reached the end of the question and answer session. Thank you all very much for your questions. I'll now turn back to Mr. Wallace for his closing comments.

Operator: Thank you. We have reached the end of the question and answer session. Thank you all very much for your questions. I'll now turn back to Mr. Wallace Kou for his closing comments.

Operator: Thank you. We have reached the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn back to Mr. Wallace Kou for his closing comments.

Speaker #5: Thank you, everyone, for joining us today, and for your continued interest in Silicon Motion. We will be attending several investor conferences over the next few months.

Wallace Kou: Thank you everyone for joining us today and for your continuing interest in Silicon Motion. We will be attending several investor conferences over the next few months. The schedule of this event will be posted on our investor relationship section on our corporate website. We look forward to speaking with you at these events. Thank you.

Speaker #5: The schedule of this event will be posted on our investor relationship section or corporate website. And we look forward to speaking with you at this event.

Speaker #5: Thank you.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Q1 2026 Silicon Motion Technology Corp Earnings Call

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