Silicon Motion Sees Revenue Growth of at Least 40% in 2027 on Backlog Strength
Key Facts
Silicon Motion expects revenue to grow at least 40% in 2027, with gross margin remaining in the low-to-mid-50% range, management said on its third-quarter results call held on October 29, 2026. Management attributed its confidence to the strength of the backlog across the company’s businesses. The guidance followed third-quarter net sales of $560.2 million, up 24% from the previous quarter and 131% from the same period in 2025. The company said sales exceeded the high end of its previous range of $519 million to $541 million. It also posted a fourth consecutive quarter of record revenue, according to the earnings call.
Growth varied sharply across product lines in the third quarter: SSD controller sales rose 55% to 60% year over year, while eMMC and UFS controller sales increased 35% to 40%. Ferri and Boot Drive solutions sales surged 2,580% to 2,585% from the corresponding quarter of 2025. The company said Ferri serves automotive and edge AI applications, while Boot Drive solutions target enterprises. It added that SSD controllers for edge and enterprise applications also contributed to performance, as MonTitan products aimed at enterprise and AI began to scale. These drivers place the annual outlook in the context of a business mix shifting toward enterprise storage solutions and AI-related applications.
Gross margin improved to 53.6% on a GAAP basis in the third quarter, compared with 48.6% a year earlier, while non-GAAP gross margin was 53.7%, versus 48.7% in the same period of 2025. Non-GAAP operating margin rose to 32.1%, from 23.1% in the second quarter and 15.8% a year earlier. However, GAAP earnings fell quarter over quarter, according to the angle presented in the company’s results. On demand, management said enterprise and AI demand for storage is absorbing a larger share of available supply and pushing NAND memory prices higher. The company said enterprise customers and the Ferri business prioritize securing supply over price, while higher memory costs have put pricing pressure on some consumer-device segments.
In the near term, Silicon Motion expects fourth-quarter 2026 revenue of $588 million to $616 million, equivalent to sequential growth of 5% to 10% and year-over-year growth of 111% to 121%. The company said it was on track to post record annual revenue in 2026, with growth of more than 100% from the previous year. It added that enterprise and AI products remain in the early stages of contributing to annual revenue. On the results call, management said the backlog across all businesses gave it confidence in achieving growth of at least 40% in 2027, with gross margin in the low-to-mid-50% range. Management expects to begin ramping production of Near CPU Boot Drive products with DRAM in the second half of 2027.
The stock posted a muted reaction during trading on October 29, 2026, falling 1.7% to $215.87, according to Investing.com, despite sales exceeding the high end of the company’s previous range. The report said investors were weighing the results beat against the near-term outlook. The 2027 outlook remains tied to the strength of the backlog cited by management, while the near-term outlook centers on the announced fourth-quarter revenue range. The company links continued growth to an expanding contribution from enterprise and AI solutions, alongside automotive and edge-storage products. The second half of 2027 is also the date management set for beginning to ramp production of Near CPU Boot Drive products.