Silicon Motion Technology Corporation (NASDAQ:SIMO) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 08:00 am ET
Thank you so much. [Operator Instructions] And our first question comes from the line of Craig Ellis from B. Riley FBR. Craig, your line is now open.
Yes. Thanks for taking my question. Wallace and Riyadh, thanks for all the information. I wanted to start by following up on a couple of the newer developments in the business. Can you give us some sense for the incremental contribution that we could expect to see in calendar '21 from first the second UFS customer? And then secondly the increased project diversity that you're seeing at Baba?
Wallace C. Kou
The USS controller sales we believe were back to normal growth for '21 due to smartphone recovering. Our second manufacturer NAND flash design win for USS the ramping will be second half of 2021. For our new design from the PCIe Gen four the first customer will start to ramp in Q3 of 2021 majority will be aligned with the Intel, Adela which will be late Q4 and early 2022.
Craig, let me also add more to what Wallace said. In terms of both pieces our UFS momentum as well as our client SSD momentum from the addition of new customers we -- these are the new customers will be overlaying on top of existing customers who we expect to continue to grow. For example, on UFS our existing -- our first NAND flash customers' UFS programs will continue to grow next year. And on top of that growth we have the growth coming from our new customers who then fold into on top of that growth curve. On the SSD -- the client SSD side, we have our existing base of five NAND flash makers who have been selling primarily PCIe NVMe these are the Gen three products. We also have the module maker customers. And for both of these blue two customers we expect sales to continue to grow. Then on top of that we then overlay the PCIe Gen four products from our five customers. And so it's a net increase of overall sales momentum from our perspective.
That's helpful. And then the follow-up question. The implied fourth quarter guidance, given third quarter and full year is up about 9% sequentially. The question is just given what you're seeing with the way your NAND OEMs are allocating capacity. And given some of the things that you're seeing on the smartphone side with inventory digestion, what's your sense for the ability to continue to grow sequentially off the fourth quarter into the first half of the year? Are there other headwinds that could be looming, or do you think the fourth quarter begins a period of continued growth for the business? Thanks, guys.
Wallace C. Kou
I think we see the -- because our sales really factory end result has been weaker-than-expected this year as most of our U.S. controllers are using flagship phone. With smart OEM managing elevated level of inventory, we've seen the memory supplier customers have had a revised downward Q3 U.S. module production.