Oct 29, 2026 earnings call — MonTitan and Ferri drive record quarter
Record revenue of $560 million with 53.7% gross margin driven by Ferri automotive, boot drives, Edge SSD and MonTitan enterprise controllers.
Revenue $0.6B (est $0.5B) · EPS $4.35 (est $3.30) · Next-quarter revenue outlook $0.6B–$0.6B
Key quotes
"Our solution business, which includes Ferri and boot drives, delivered the strongest result in the third quarter, with revenue up over 75% sequentially, representing over 40% of our revenue."
"During the third quarter, we taped out our next-generation 4nm PCIe 6 MonTitan controller targeting hyperscalers and CSPs, and expect to begin sampling in the first quarter of 2027."
"We raised an aggregate $1.15 billion with net proceeds to the company of $1.127 billion."
Analyst Q&A 7
Drivers of next-year growth and margins
Q (Neil Young · Needham & Company): He asked what will drive the at least 40% revenue growth and low-50s gross margin next year. He also asked whether Ferri and MonTitan are the main growth sources and about Ferri vs boot drive and robotics.
A: Management said MonTitan is showing significant traction and Ferri for automotive is ramping aggressively as multi-year engagements. They said working with many automakers and, based on backlog and MonTitan growth, they expect to sustain low to mid 50% gross margins; boot drive is also gaining momentum and robotics is still early stage.
"So based upon our backlog, based upon the growth we anticipate from MonTitan, as well as other SSD controllers and Ferri for automotive, we believe that we can sustain these low to mid 50% gross margins." — Jason Tsai (CFO)
Near-CPU boot drive timing and supply
Q (Craig Ellis · B. Riley): He asked whether Near CPU Boot drives will be custom per customer or soon standardized and how early the ramp could start. He also asked if wafer, packaging and other supply can support the 40% growth or more.
A: They said many customers will need customized features and tailored solutions, and they expect firmware and solution readiness by early Q1 with production ramp in the second half of 2027. They acknowledged industry shortages but said they secured 2027 wafers primarily with TSMC and also secured test, assembly and substrate capacity to support the planned growth.
"I think we will be ready for the firmware and solution by early Q1, and production ramp will be second half 2027." — Wallace Kou (CEO)
NAND price exposure and inventory funding
Q (Sebastien Naji · William Blair): He asked how the company will manage greater NAND pricing exposure as SSD share grows and how that could affect growth and margins. He also asked about funding working capital and how quickly inventory turns into cash.
A: They said they manage NAND price increases by negotiating pass-throughs to customers and see NAND price increases moderating, with prices negotiated every six months and contracts covering at least two quarters. They expect about a two-quarter turnaround from getting NAND to generating cash flow, and believe the recent capital raise funds working capital needs for the next couple of years under current expectations.
"I think we definitely manage the NAND price increase and negotiate with the customer to pass through the cost to customers, so we benefit from the sale revenue growth." — Wallace Kou (CEO)
MonTitan demand and OpEx plan
Q (Suji Desilva · Roth Capital): He asked whether HBM or DRAM innovations could reduce the MonTitan/SSD KV cache opportunity and how many MonTitan/SSDs per GPU might be needed. He also asked how OpEx and R&D will grow versus revenue to support the 40%+ plan and the operating margin guide.
A: They said MonTitan demand is broad across AI servers, hyperscalers and NVIDIA ecosystem and can serve both Compute SSD and Storage SSD; momentum for high-capacity QLC should increase demand next year. On OpEx, they will give detailed 2027 guidance in January, said they taped out several 6nm and 4nm products this year, will continue to invest, and expect to deliver operating margin leverage next year.
"Again, we'll talk more about the specific OpEx guidance next year in January, but our expectation is that we will continue to be able to deliver operating margin leverage next year as well." — Jason Tsai (CFO)
Revenue mix and arbitration status
Q (Mehdi Hosseini · Susquehanna International Group): He asked what percentage of revenue comes from Ferri, boot drive and PCIe SSD and how that mix might change next year. He also asked if seasonality from Q4 to Q1 is reduced and for any update on arbitration.
A: They said around 40% of total revenue is from Boot Drive and Automotive solutions and 60% from controllers today, and that solutions might grow toward a 50/50 balance next year. They said enterprise is a growing portion so consumer seasonality should be more muted going forward. On arbitration, they said closing arguments were in March and they are still awaiting the result with no update now.
"I would say we cannot party about detail, but about 40% our total revenue is around the solution from Boot Drive and Automotive, 60% from controller." — Wallace Kou (CEO)
Scale and go-to-market for Near-CPU boot drive
Q (Gokul Hariharan · JPMorgan): He asked how large the Near-CPU boot drive opportunity can be and how quickly Silicon Motion can scale given incumbents. He also asked if wins are per server customer or platform-level, and followed on margins and working capital needs.
A: They said the opportunity could be large—at least $10 billion by 2030—driven by higher density and a supply gap, and they expect to start ramping in the second half with partners; the SM8000A controller fits M.2 22x80 low-power designs and they plan to support two NAND types by Q1 and ramp in second half next year. On margins and working capital, they said they negotiate six-month pricing contracts, expect tight inventory turns, and the recent raise should cover working capital for the next couple of years.
"I think that 10, will be a minimum $10 billion by 2030, because the density is bigger than the DRAMless boot drive." — Wallace Kou (CEO)
China strategy and capital policy
Q (Daniel Yen · Morgan Stanley): He asked about Silicon Motion's strategy in China with NAND makers, module houses and CSPs and about the competitive landscape there. He also asked about dividend policy and capital structure after the convertible bond.
A: They said their strategy is to balance China and the rest of world, collaborate with YMTC and grow local China R&D to support China customers while primarily selling controllers and firmware to enable module makers and NAND makers. They said they feel comfortable competitively and have a strong PCIe Gen 5/6 pipeline. On capital policy, they recently raised the dividend and see three priorities: dividend, opportunistic buybacks, and M&A; the convertible bond improves working capital to drive growth.
"We increased our dividend a couple of weeks ago from $2-$2.30 per ADS per year." — Jason Tsai (CFO)