About Silicon Motion Technology

Silicon Motion Technology Corporation (Silicon Motion) operates as a global leader in developing NAND flash controllers for SSDs and other solid state storage devices. The company engages in developing specialized processor ICs that manage NAND components and deliver market leading, high- performance storage solutions widely used in data centers, PCs, smartphones and commercial and industrial applications. The company has one of the broadest portfolios of controller intellectual properties developed from the company’s deep understanding of NAND characteristics, which enables the company to design both unique, highly optimized configurable IC plus related firmware controller platforms and complete turnkey controller solutions. The company has shipped over six billion controllers, more than any other company in the world. More NAND flash components, including current and up-coming generations of flash produced by Intel, Kioxia, Micron, Samsung, SK Hynix, Western Digital and YMTC, are supported by Silicon Motion controllers than any other company. The company’s customers include NAND flash makers, module makers, hyperscalers and OEMs. The company is a world leading supplier of SSD controllers used in PCs and other client devices and leading merchant supplier of eMMC/UFS controllers used in smartphones and IoT devices. The company also leverages its controller expertise to supply specialized small single-chip form factor SSDs for industrial, commercial and automotive applications. The company markets its controllers under the ‘SMI’ brand and single-chip SSDs under the ‘FerriSSD,’ ‘Ferri-eMMC,’ and ‘Ferri-UFS’ brands. Market and Products The company focuses primarily on designing, developing and marketing: NAND flash controllers for solid state storage devices, primarily SSDs used in PCs and other client devices and eMMC and UFS mobile embedded storage used in smartphones and IoT devices; and SSD solutions, primarily small form-factor specialized SSDs used in industrial, commercial and automotive applications. In 2022, 45% to 50% of the company’s net sales were of SSD controllers, 35% to 40% were eMMC and UFS controllers and 5% to 10% were SSD solutions. NAND Flash Controllers The company offers a broad range of controllers for developing different categories of solid state storage devices that are used in a wide variety of applications. The company provides controllers for computing-grade SSDs used in PCs and other client devices, enterprise-grade SSDs used in data centers, eMMC and UFS mobile embedded storage used in smartphones and IoT devices, flash memory cards and flash drives used as expandable storage and specialized SSDs used in industrial, commercial and automotive applications. For most of these applications the company offers customers controllers, which are designed for a range of different price-performance trade-offs that enable the targeting of different market segments, such as value-line, mainstream and premium. The company’s controllers are a combination of integrated circuits and firmware and are offered as configurable platforms or turnkey solutions, which provide customers with options to customize products to achieve desired differentiation or focus on fast time-to-market. Since SSDs and mobile embedded storage products are defined by continuously evolving industry standards such those relating to, but are not limited to, the PCIe host interface, NVMe data transfer protocol and UFS storage specification, the company provides controllers for the latest versions of these industry standards and design the company’s solutions for customers to build storage devices with competitive product performance and compatibility with host devices. The company’s controllers are also designed to support the majority of the latest next generations of NAND flash components manufactured by vendors such as Kioxia, Micron, Samsung, SK Hynix and its subsidiary Solidigm, Western Digital and YMTC, which enables customers to have wide choices of components for developing and building storage devices. Controllers integrate technologies that are critical to their functionality and these include advanced error correction codes (‘ECC’) and digital signal processing (‘DSP’) engines for ensuring data reliability and sophisticated wear-leveling algorithms for maximizing the usable life of NAND flash components. The company may also incorporate other technologies in the company’s controllers such as encryption, power-loss protection, multimedia digital rights management and active temperature monitoring. SSD Solutions The company uses its unique controller technology to develop Ferri SSD solutions. The company’s FerriSSDs, Ferri-eMMCs, and Ferri-UFS products are highly reliable industrial-, commercial- and automotive-grade single-chip SSDs, which are developed for a wide-range of embedded applications that require high data rate, small form factor and compliance with industry standards. The company offers customers firmware customization for performance tuning as a value-added service. Customers The company sells its products to NAND flash makers, module makers, hyperscalers and OEMs worldwide. Most of the company’s high performance flash memory storage controllers are supplied to NAND flash manufacturers. The company is a leading supplier of SSD controllers used in data centers, PCs, automotive and other client devices and a leading merchant supplier of eMMC and UFS controllers used in smartphones and IoT devices. In 2022, the significant customers were Micron and SK Hynix. Sales and Marketing The company markets and sells its products worldwide through a combination of direct sales personnel and independent electronics distributors. The company’s direct sales personnel are strategically located near the company’s NAND flash manufacturer, leading technology OEM and modular maker customers in Taiwan, Korea, China, the United States, and Japan. Approximately 79% of the company’s sales in 2022 were attributable to the company’s direct sales force while the remainder was attributable to distributors. To supplement the company’s direct sales, the company has independent electronics distributors and sales reps located throughout the world. The company selected these distributors and reps based on their ability to provide effective field sales, marketing communications and technical support for the company’s products to its customers. Manufacturing The company designs and develops its products and electronically transfer the company’s proprietary designs to independent foundries for the manufacturing and processing of silicon wafers. The company’s strategy of outsourcing wafer fabrication, packaging and testing enables the company to benefit from the research and development efforts of leading manufacturers without having to commit the company’s own substantial capital investments. The company’s fabless business model also provides the company with the flexibility to engage vendors who offer services that best complement the company’s products and technologies. Wafer Fabrication: TSMC and SMIC are the company’s primary foundries that manufacture most of the company’s semiconductors. The company uses their fabs in Taiwan, Singapore, and China to fabricate the company’s devices using CMOS process technology, primarily with process nodes from 16/12 to 55 nanometers. Assembly and Testing: Following wafer fabrication, the company’s wafers are shipped to its assembly and test subcontractors where they are probed, singulated into individual dies, assembled into packaged chips, and undergo the process of electronic final testing. The company engages companies, such as SPIL, OSE, Huatian, and KYEC as the company’s primary subcontractors for the assembly and testing of the company’s products. Competition The company faces competition from a number of competitors, including Marvell and Phison, the company’s flash memory customers and small Chinese merchant controller suppliers. Research and Development The company’s research and development expenses were approximately U.S.$188.5 million for the year ended December 31, 2022. Intellectual Property As of March 31, 2023, the company had 2,490 patents and 1,203 pending applications worldwide. The company has registered ‘Silicon Motion’ and its logo (a three-dimensional cube depiction of the letters ‘SM’), ‘NANDSustain,’ ‘NANDXtend,’ ‘SSDLifeGuard,’ ‘SSDLifeSaver,’ ‘TurboMLC,’ ‘FerriSSD,’ ‘Ferri-eMMC,’ ‘Ferri-UFS,’ the powered by SiliconMotion logo, ‘InstantView,’ the Shannon Systems logo, ‘PCIe-RAID,’ ‘DIRECT-IO,’ ‘Hyper-IO,’ ‘Bigtera,’ the Bigtera logo, ‘VirtualStor,’ ‘CloudStor,’ and ‘StorVisor’ as trademarks in the United States, Taiwan and/or other countries. History Silicon Motion Technology Corporation was founded in 1995. The company was incorporated in the Cayman Islands in 2005.