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Silicon Motion Boosts Q2 Guidance; Lifts Micron On IoT Chip Release

Weekend Chip Chat....


Chipmaker Silicon Motion hit an all-time high Thursday

Silicon Motion Technology (SIMO) stock climbed to an all-time high Thursday on strong preliminary Q2 guidance that easily topped Wall Street views, and lent support to fellow flash memory-chipmaker Micron Technology (MU), which jumped after the company released a new internet of Things chip.
Silicon Motion stock closed up 5.1% at 50.39 on the stock market today, after earlier flying as much as 10%. Shares have jumped more than 50% this year, outperforming IBD's 41-company Electronic-Semiconductor Fabless industry group, which is flat.
For Q2, Silicon Motion now expects 23%-25% sequential growth vs. the guidance it issued April 28 for 5%-10% growth. That puts Silicon Motion's Q2 sales at about $138.6 million to $140.9 million, which would be up 60% year over year at the midpoint. The company is slated to release Q2 earnings on July 21 after the close.
Last year, Silicon Motion sales rose an average 5% sequentially each quarter.
The consensus of 11 analysts polled by Thomson Reuters modeled $119.3 million. Analysts also expect Silicon Motion to post 66 cents earnings per share ex items, which would be up 29% vs. the year-earlier quarter. Silicon Motion said gross margins will be in the upper half of its outlook for 47%-49%.

Rosenblatt analyst Kinngai Chan is bullish on Silicon Motion stock and says the company will likely surpass its full-year guidance as solid-state disk (SSD) adoption continues to accelerate. In April, Silicon Motion guided to 27%-32% growth for 2016.
SSD prices are likely to come in line with hard-disk drive prices later this year or in early 2017, he said, boosting major players like Intel (INTC), Micron, Samsung and Toshiba as they enter the 3D Nand (flash memory) market.
But Silicon Motion maintains "a sizable lead in the mainstream turnkey client SSD systems-on-a-chip controller market as its competitors struggle to keep pace with the advances in Nand flash technology," Chan wrote in a research report.
Silicon Motion has a highest-possible IBD Composite Rating of 99, meaning it performs in the top 1% of all stocks based on key metrics such as earnings and sales growth. Nvidia (NVDA), a graphics-chipmaker and Tesla Motors (TSLA) partner, also has a 99 C

Meanwhile, Micron stock finished 4% higher at 12.20, after the company announced a new flash-chip optimized for IoT and automotive applications. Industry tracker Gartner predicts the IoT endpoint hardware and services market will be a $3.5 trillion