Silicon Motion Q3 Revenue Rises 131% to $560.2 Million

Silicon Motion Technology Corporation (SIMO ) reported net sales of $560.2 million for the quarter ended September 30, 2026, an increase of 24% from the second quarter of 2026 and 131% from the year-ago quarter, according to the company’s third-quarter earnings release. Net income on a GAAP basis decreased sequentially to $65.3 million, or $1.91 per diluted American depositary share (ADS), from $136.1 million, or $3.99 per diluted ADS, in the second quarter. On a non-GAAP basis, net income increased sequentially to $149.2 million, or $4.35 per diluted ADS, from $83.1 million, or $2.43 per diluted ADS. The release is dated October 29, 2026, with a Taipei, Taiwan, and Milpitas, California, dateline, and all figures are in U.S. dollars.

Revenue in the year-ago quarter was $242.0 million. GAAP gross margin was 53.6% in the third quarter, compared with 50.2% in the second quarter of 2026 and 48.6% in the third quarter of 2025; the non-GAAP gross margin was 53.7%. GAAP operating margin was 29.0%, compared with 22.4% in the prior quarter and 12.1% a year earlier, while the non-GAAP operating margin was 32.1%. GAAP gross profit was $300.4 million and GAAP operating income was $162.6 million, up from $101.1 million in the second quarter. GAAP operating expenses totaled $137.9 million, including $115.812 million of research and development expense.

By product line, the company reported that SSD controller sales increased 20% to 25% sequentially and 55% to 60% year over year. Sales of eMMC and UFS controllers decreased 10% to 15% sequentially and increased 35% to 40% year over year, while sales of Ferri and Boot Drive solutions increased 75% to 80% sequentially and 2,580% to 2,585% year over year.

“Silicon Motion is rapidly evolving from a consumer-focused NAND flash controller supplier into a diversified leader in controllers and storage solutions, serving markets from AI infrastructure to the edge,” said Wallace Kou, the company’s president and chief executive officer. Kou attributed the third-quarter growth in revenue, gross margin, and operating margin to the Ferri product family for automotive and edge AI, enterprise boot drive solutions, and the SSD controller businesses, including edge and enterprise SSD controllers, and said the company’s new MonTitan enterprise and AI controllers are beginning to scale.

The sequential decline in GAAP net income occurred alongside a swing in non-operating items: the consolidated income statement shows a net realized and unrealized loss on investments of $77.972 million in the third quarter, compared with a gain of $74.727 million in the second quarter. Income before income tax was $87.435 million and income tax expense was $22.127 million in the quarter. For the nine months ended September 30, 2026, net sales were $1,353.323 million, compared with $607.166 million in the same period of 2025, and net income was $268.220 million, or $7.88 per diluted ADS, compared with $74.886 million, or $2.23 per diluted ADS.

Convertible Notes and Shareholder Returns

Cash, cash equivalents, and restricted cash totaled $953.6 million at September 30, 2026, up from $181.8 million at June 30, 2026. Third-quarter capital expenditures were $23.0 million, comprising $20.1 million of routine purchases of testing equipment, software, and design tools and $2.9 million for building construction. The company repaid $59.2 million of bank loans during the quarter. Total assets stood at $2,754.344 million and inventories at $870.916 million at quarter end, per the consolidated balance sheet.

On August 13, 2026, the company completed the issuance of $1.15 billion aggregate principal amount of 0.00% Convertible Senior Notes due 2031, including the exercise in full of the initial purchasers’ option to purchase an additional $150 million. The notes are senior, unsecured obligations of the company, do not bear regular interest, and mature on August 15, 2031, unless earlier repurchased, redeemed, or converted. The company may redeem the notes on or after August 20, 2029, if the last reported sale price of the ADSs equals or exceeds 130% of the conversion price for a specified period. The notes were issued in a private offering under Rule 144A to persons reasonably believed to be qualified institutional buyers, and the company said it intends to use the net proceeds of $1,125.9 million for general corporate purposes and the repayment of outstanding borrowings under its credit agreement with CTBC Bank Co., Ltd. The notes are reflected as a long-term liability of approximately $1.1 billion on the September 30, 2026 balance sheet.

On October 16, 2026, the board of directors declared a $2.30 per ADS annual dividend, a 15% annual increase, payable in quarterly installments of $0.575 per ADS. The first installment will be paid on November 19, 2026, to shareholders of record as of the close of business on November 5, 2026. On August 20, 2026, the company paid $16.9 million as the fourth installment of the prior $2.00 per ADS annual dividend declared on October 27, 2025.

Fourth-Quarter 2026 Guidance

For the fourth quarter of 2026, management expects revenue of $588 million to $616 million, which the company said represents an increase of 5% to 10% sequentially and 111% to 121% year over year. The company projects GAAP gross margin of 53.8% to 54.8% and non-GAAP gross margin of 54.0% to 55.0%, with the non-GAAP figure excluding approximately $1.0 million of stock-based compensation. It projects GAAP operating margin of 29.9% to 31.4% and non-GAAP operating margin of 36.0% to 37.0%, with the non-GAAP figure excluding $34.6 million to $35.6 million of stock-based compensation and dispute-related expenses.

In the release’s business outlook, Kou said growing demand for enterprise and AI storage is absorbing a larger share of NAND industry supply and pushing NAND flash prices higher, and that NAND manufacturers are increasingly prioritizing high-capacity enterprise SSDs while pulling back from certain consumer-oriented segments. He said the company’s enterprise and Ferri customers have generally prioritized supply assurance over price. “Based on results to date and current visibility, we believe we are on track to deliver record annual revenue in 2026, representing more than 100% growth over the prior year,” Kou said.

The company’s non-GAAP measures exclude stock-based compensation, dispute-related expenses, foreign exchange gains and losses, and realized and unrealized gains and losses on investments, as defined in the release. Management will host a conference call at 8:00 a.m. Eastern Time on October 29, 2026.