Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 29, 2026 · Beat 6 of last 7 quarters
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Silicon Motion's record quarter and accelerating enterprise/AI product ramp (MonTitan, boot drives) underscore the broadening of the AI infrastructure buildout beyond GPUs into storage and compute-storage. The company's ability to secure NAND supply and its design wins with leading AI GPU/TPU customers position it as a key enabler of AI data center expansion, with growth expected to continue through 2027–2028.
Silicon Motion delivered record revenue of $451 million in Q2 2026, up 32% sequentially and 127% year-over-year, with gross margin of 50.2% and EPS of $2.43. Growth was broad-based, led by Ferri automotive/enterprise boot drives, embedded eMMC & UFS, and the initial commercial ramp of MonTitan enterprise SSD controllers with two Tier 1 customers. The company also noted the PCIe 5 transition at the edge is slower than expected, but its 4-channel controller is gaining adoption. Cash declined to $181.8 million due to dividend payments and inventory build to support growth.
Management expects Q3 2026 revenue to grow 15–20% sequentially to $519–541M, with gross margin improving to 50–51% and operating margin expanding to 27.5–28.5%. They reaffirmed full-year 2026 revenue to more than double year-over-year, with operating margins exiting the year above 30%. MonTitan enterprise SSD controllers are on track to reach 5–10% of revenue exiting 2026, with TLC-based solutions ramping first and QLC-based solutions beginning late 2026 but becoming more meaningful in 2027–2028. The company expects NAND supply constraints to persist until 2028, but sees strong growth across all segments driven by share gains and new enterprise/AI products. Management also highlighted the next-generation 4nm PCIe Gen 6 controller tape-out in August 2026, with multiple design wins already secured and volume ramp expected in 2028.
“We delivered another outstanding quarter, achieving record revenue of $451 million and gross margin above 50%, driven by continued growth across all our core markets.”
on Q2 performance
“Silicon Motion is in the early inning of a complete transformation to a diversified supplier of NAND flash controller and solution from AI infrastructure to the edge where there is accelerating demand for next-generation storage.”
on Company transformation
“In second quarter '26, Ferri and Boot Drive solutions more than doubled sequentially and represent near 30% of our total revenue, up from 4% a year ago, and we are just getting started.”
on Ferri and Boot Drive growth
Can you give us the approximate Boot Drive revenue contribution in 2Q or the percentage split between enterprise Boot Drive and Ferri? And are you still guiding to that 10% revenue run rate exiting 2026 for MonTitan?
Jason Tsai declined to provide granularity but said growth is driven by both categories. He confirmed MonTitan is on track to reach 5–10% of revenue exiting 2026, with TLC-based solutions contributing more initially and QLC shipments beginning late this year but becoming more meaningful in late 2027–2028.
Given your exposure to Chinese smartphone makers, are you seeing signals of a potential recovery in the second half, or are you seeing anything different?
Wallace Kou said the China smartphone market is very challenging due to rising DRAM and NAND prices, especially for low-end devices where memory/storage can be ~56% of BOM cost. However, Silicon Motion's demand for UFS and eMMC continues to grow due to share gains and collaboration with NAND makers and module makers, and the impact on their business is relatively small given limited low-end exposure.
Could you help us size the boot drive market and discuss competition? Also, what is the market opportunity for MonTitan with PCIe Gen 6?
Wallace Kou said the boot drive market is large, with 30–40+ boot drives per server rack, and Silicon Motion has a unique position with DRAM-less solutions for DPU/TPU/switch applications. He sees limited competition from NAND makers or module makers. For MonTitan Gen 6, he noted more than a dozen Tier 1 customers waiting for samples, with a target of 15–20% market share initially, and expects Gen 6 to ramp faster and bigger than Gen 5.