Good morning, everyone, and welcome to Silicon Motion's Second Quarter 2026 Financial Results Conference Call and Webcast. Joining me today is Wallace Kou, our President and CEO, and Jason Tsai, our CFO.

Wallace will first provide a review of our key business developments, and then Jason will discuss our second quarter results and outlook. Following our prepared remarks, we will conclude with a Q&A session.

Before we begin, I would like to remind you of our safe harbor policy, which was read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the US Securities and Exchange Commission.

For more details on our financial results, please refer to our press release, which was filed on Form 6-K after the close of market yesterday. This webcast will be available for replay in the Investor Relations section of our website for a limited time.

To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations.

We have therefore chosen to provide this information to enable you to perform comparisons of our operating results in a manner consistent with how we analyze our own operating results. The reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued yesterday.

We ask that you review it in conjunction with this call. With that, I will turn the call over to Wallace.

Thank you, Tom. Hello, and thank you for joining the call today.

We delivered another outstanding quarter, achieving record revenue of $451 million and gross margin above 50%, driven by continued growth across our core markets. Stronger operating performance translating to record earnings per ADS, reflecting our ongoing solution from the leading NAND flash controller makers into a diversified supplier of controller and solution spanning AI infrastructure to the edge.

During the June quarter, we grew our embedded eMMC/UFS portfolio, delivered both sequential and year-over-year gains in edge SSD controllers, began the initial commercial ramp of our MonTitan enterprise SSD products, and posted strong growth in our Ferri automotive and enterprise boot drive solution business. With expanding consumer market share and rapidly broadening suite of enterprise and AI controller and solution, our competitive position keeps strengthening.

We expect to deliver record revenue in 2026 of more than 100% year over year, setting the foundation for sustained growth in the years ahead. With the right product in the right markets at the right time, we have never been better positioned to capitalize on accelerating demand for intelligent storage from the data center to the edge.

I would like to take a moment to address the current market environment. The AI supercycle has fueled significant demand for HBM, DRAM, NAND, and HDDs, driving substantial price increases over the past year and creating mounting substrate and supply pressure across memory and storage technology.

As component prices, NAND and DRAM in particular, continue to climb, OEMs are finding it increasingly difficult to build affordable consumer products such as smartphones and PCs, especially at the low end. We expect this scarcity to persist, likely until 2028 when new fabs come online and help bring NAND supply back to reduce supply-demand gap.

While the NAND environment will stay challenging through 2028, we have a clear path to delivery significant top- and bottom-line growth. Silicon Motion is in the early inning of a complete transformation to a diversified supplier of NAND flash controllers and solutions from AI infrastructure to the edge, where there is accelerating demand for next-generation storage.

I will now discuss our embedded eMMC and UFS business, which include controller for smartphone and other IoT and connected devices. This business continued to thrive and grow significantly, outpacing the industry despite the supply headwinds as NAND makers increasingly rely on third-party controller while focusing their own resources on DRAM, HBM solutions.

Our outperformance was driven primarily by market share gains as NAND makers deemphasize these solutions to the benefit to our module maker customers. Across the many markets where we sell our embedded eMMC/UFS products, OEMs are trimming specification to offset some of the rising costs of memory and storage.

While we still expect smartphone unit to be down 10% to 15% in 2026, we anticipate strong growth in our mobile business in 2026, driven by continued market share gains and ASP improvement from mix shift toward newer UFS controllers. Our eMMC business delivering strong results as we win new business across a range of markets including automotive, smart glasses, watches, drones, robots, next-generation cable set-top box, smart TV, and more.

With the NAND makers disinterested in these markets, we were operating in an environment of stronger pricing power and profitability. Overall, we expect strong revenue growth in our embedded eMMC and UFS segment in 2026, and I'm pleased with the exceptional performance our team delivered in first half this year.

We expect our growing portfolio of new product, transition to next-generation solution, and expansion into additional markets to drive share gains to keep outpacing the micro-pressure in the smartphone market. Moving on to our SSD business, which include edge and enterprise SSD controllers.

Our edge SSD business improved significantly in the second quarter following a seasonally soft first quarter, delivering 40% to 45% year-over-year growth. We are beginning to see payoffs from our PCIe Gen 5 investment at the edge, with our 4-channel controller ramping steadily since its introduction in the fourth quarter of last year.

However, the transition from PCIe Gen 4 to PCIe Gen 5 is proceeding more slowly than we anticipated six months ago. OEMs are increasingly pairing the latest-generation, more cost-effective NAND with PCIe Gen 4 SSD in value and mainstream PC, as this offers a way of reducing the overall bill of material.

We are securing a meaningful share of this business across both NAND makers and module manufacturers with our leading controllers. Despite the slower pace of PCIe Gen 5 transition, our 4-channel DRAM-less PCIe Gen 5 controller continued to gain adoption among customers seeking leading performance in the mid- to high-end segment of the PC market.

We therefore expect to further increase edge SSD average selling prices as we progress through the remaining of the year. I would now like to provide you with an update on our new MonTitan enterprise SSD business.

Our new enterprise SSD business entered commercial production in the second quarter with two tier-1 customers, and we expect to ramp five additional tier-1 customers in the second half of the year. This is an exceptionally strong start after several years of investment in our enterprise AI-class controllers.

NAND is an essential and growing technology across enterprise storage ecosystem, spanning warm storage and compute storage applications, and MonTitan is well-positioned for rapid growth. Our first customers are targeting the compute market using TLC NAND, which is in growing demand for next-generation AI platforms that leverage NAND to support compute storage solutions that deliver high-speed, low-latency storage dedicated for near-GPU and near-CPU KV cache.

Several customers are leveraging MonTitan to target this market and will be ramping production throughout the remainder of this year. We continue to believe that TLC MonTitan solutions will ramp faster than QLC-based solutions until 2-terabit QLC NAND dies become more broadly available.

High-capacity warm storage SSD leveraging QLC NAND remains a large addressable market for MonTitan for long-term growth, and we expect the QLC-based solution will begin their initial ramp in the second half of this year with multiple customers. We are seeing increasing inbound interest in our MonTitan for QLC solutions to drive long-term growth.

Finally, we are completing the tape-out of our next-generation 4-nanometer PCIe Gen 6 controller in August of this year, targeting hyperscaler and CSPs. We developed this controller in close collaboration with several customers, and we have already secured multiple design wins with both flash makers and CSPs.

We expect this new controller to be a significant growth driver in 2028. With TLC and QLC MonTitan controllers already in customer qualification and clear rollout plan in place, I'm confident we will hit our revenue target this year, and I expect significant growth in 2027 and beyond as the business scales.

Our customer base is strong and expanding, and MonTitan is well-positioned to drive meaningful revenue growth from here. I look forward to sharing further updates.

Finally, I would like to provide an update on our Ferri automotive and enterprise boot drive storage business. Our Ferri automotive and enterprise boot drive storage business is growing rapidly across automotive and AI infrastructure markets.

NAND makers are leaving the automotive market as the volumes are not meaningful to their business, and the quality and technical support demand are significantly greater than in other markets. As the NAND makers exit automotive, the module makers show seemingly likely successors, but they do not have the infrastructure, the resources, the certification process, or the expertise to deliver automotive-grade products.

This has benefited Silicon Motion significantly, as we know the automotive market, the customers, and supply chain extremely well. We have developed our automotive products and certifications for over a decade and already support three of the NAND makers with automotive controller and firmware.

Our success in automotive has generated interest in our Ferri solutions for additional large and growing markets including robots, drones, advanced networking, and other applications. In the emerging robotic market, we are now actively engaged with multiple companies that want to leverage our storage products.

We believe there are multiple opportunities in the emerging physical AI market for storage in humanoid robotics including vision systems, LIDARs, computing storage, balance systems, and many others. In fact, it appears that from our initial conversation, the opportunity in robotics may be larger than automotive, and our Ferri solutions will be ideally suited to support this future opportunity.

Moving on to our growing enterprise boot drive storage business. This is a new and growing market.

Enterprise boot drive for server CPU have been around for over 30 years, and the NAND makers have supported this market with solutions that employ both DRAM and the NAND. As we move into next generation of AI and enterprise applications, enterprise CPU customers will continue to use enterprise boot drives with DRAM to enhance read and write performance and reduce latency.

Most other customers, including DPU, TPU, and switch makers, are looking for enterprise boot drive solutions with our unique DRAM-less technology that offer enhanced security and is our primary focus today. While some NAND makers may choose to continue the support of conventional architectures, they do not have DRAM-less PCIe SSD controllers, and they are not likely going to dedicate the R&D resources necessary to develop them for a comparatively low-volume market.

Silicon Motion has the right technical know-how, the leading controller and firmware technology, and the right relationship to deliver turnkey enterprise boot drive solutions, and this is why we are winning in the market. The Ferri and boot drive storage solution segment is growing rapidly, and we expect new customer design wins in both automotive and AI infrastructure to drive strong growth for the future.

One of the most important reason of our success in the solution business has been our long-term relationship, which have allowed us to secure NAND from multiple suppliers despite recent supply shortage. A significant and enduring differentiator.

In second quarter 2026, Ferri and enterprise 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. In conclusion, we reported our second consecutive quarter of record revenue for Silicon Motion as we executed across our rapidly diversifying business.

We are fundamentally a much stronger company today than we were just a year ago, with a broad suite of products to support the increasing demand from AI, from the data center to the edge. This gave us a strong balance across our markets and greater flexibility to capitalize on pockets of strength while overcoming end-market challenges like those we are seeing today in PC and smartphones.

I'm extremely proud of our teams for building a durable, diversified business that benefit from best-in-class technology, expanding share, and entering to new end markets, all while monetize the strong relationship we have built with OEMs, module makers, and NAND makers over the past two decades. I'm more confident than ever that we will deliver broad-based, sustainable growth across our business in 2026 and beyond.

Now, let me turn the call to Jason to go over our financial performance and outlook.

Thank you, Wallace, and good morning to everyone joining us today. I will discuss additional details of our second quarter results and then provide our outlook.

Please note that my comments today will focus primarily on our non-GAAP results, unless otherwise specifically noted. A reconciliation of our GAAP to non-GAAP data is included in the earnings release issued yesterday.

Our second quarter performance was even stronger than expected. Sales increased 32% sequentially and 127% year-on-year to $451 million, coming in well above the high end of our guided range of $393 to $411 million, delivering our third consecutive quarter of record revenue.

We experienced strong growth across all our businesses in the second quarter, with standout growth in Ferri for automotive, enterprise boot drives, and embedded eMMC and UFS. Gross margin was 50.2%, exceeded our guided range of 48.5% to 49.5%, as we capitalized on new product introductions.

Operating expenses increased sequentially to $122.1 million, given increased investments in new controller and solution developments, new tape-out-related expenses, and higher headcount. Operating margin was 23.1% and exceeded our guided range of 21% to 22%, driven by higher-than-expected revenue and gross margins during the second quarter.

Our earnings per ADS was $2.43. Total stock-based compensation, which we exclude from non-GAAP results, was $3.4 million in the June quarter.

We had $181.8 million in cash, cash equivalents, and restricted cash at the end of the second quarter, compared to $210.9 million at the end of the first quarter. Cash decreased in the second quarter through a combination of dividend payments of $16.9 million and an increase in inventories to support our growing business.

We continue to navigate the memory and storage supply challenges effectively. Investments in new advanced geometry products for both our established markets and our emerging enterprise markets are ongoing, and we are building a balanced and resilient portfolio of products that target everything from AI infrastructure to the edge.

These investments will continue throughout 2026 as we support the growing demand for our new enterprise portfolio and fuel our growing market share across our consumer portfolio. For the third quarter of 2026, we now expect revenue to grow 15% to 20% sequentially to $519 to $541 million.

We expect growth across nearly all our product segments, led by Ferri for automotive, enterprise boot drive solutions, and our new MonTitan enterprise SSD controllers. Gross margins are expected to increase sequentially to 50% to 51% in the September quarter given the product mix, assisted by greater contribution from MonTitan and our PCIe Gen 5 controllers.

Operating margin is expected to grow substantially to 27.5% to 28.5%, as strong revenue growth drives leverage to the bottom line. Our effective tax rate is expected to be 22%.

Stock-based compensation and dispute-related expenses is expected to be in the range of $14.9 to $15.9 million. 2026 is on track to deliver record revenue for Silicon Motion, with top line expected to more than double this year.

While we continue to invest heavily in R&D this year to expand our portfolio with leading-edge solutions, we're confident that along with much higher revenue and improved gross profitability, our operating margins can exceed 30% exiting this year. We are navigating today's memory and storage supply constraints and elevated pricing with remarkable success, a direct result of the relationships we spent more than two decades building with NAND flash makers.

At the same time, our leadership in the merchant controller market and our multi-year investments in enterprise and AI SSDs are starting to pay off, with MonTitan and our enterprise boot drive storage business now ramping in volume. Our diversification strategy to expand beyond consumer-centric applications into automotive and enterprise is beginning to yield outsized results.

Our wins in these new markets are for solutions that bring much better visibility, much longer product cycles, and much higher barriers to entry that ensure strong, long-term revenue and profitability growth for Silicon Motion. We will be less subject to consumer cyclicality as these new wins scale in a diverse range of end markets, and our visibility and predictability will further improve significantly.

Together, these drivers are the foundation of the transformation Wallace spoke about earlier and will set the stage for significant revenue growth at Silicon Motion in 2026 and well beyond. I look forward to sharing more on our progress next quarter.

This concludes our prepared comments. I'd like to open it now for questions.

Operator?

Hey, everyone. Thanks for letting me ask a question.

It sounds like there's some bigger contribution from Ferri that I think people have expected. I was wondering if you could give us the approximate boot drive revenue contribution in 2Q, or maybe some idea of the percentage split between enterprise boot drives and Ferri, and maybe what's embedded in the 3Q guidance between the two of those.

Then I have a follow-up. Thanks.

Yeah. Neil, we're not giving out that level of granularity.

I can tell you, though, that we are seeing tremendous growth across both of those categories. This isn't really driven by one or the other.

It's driven by both. For Q3, again, we're not going to be providing that much detail, but certainly from the backlog that we have in building, and the order patterns that we're seeing, we're seeing very strong contributions across all these SSD solution products.

Great. Thanks.

That's helpful. Then on MonTitan, you obviously gave the update on the customers in production and sort of what you're expecting for the rest of the year.

Are you still guiding to that 10% revenue run rate exiting 2026? Then maybe helpful if you could distinguish the timing of the TLC compute and the KV cache programs from the QLC warm storage programs.

Just what you're seeing there. Thanks.

We're still on track. Wallace had mentioned that we're well on track to achieve that 5% to 10% of our overall revenue coming from MonTitan exiting this year.

We are confident that we can achieve that. In terms of where we're seeing more contribution, certainly initially we're seeing more contribution from TLC-based solutions, but we are seeing early QLC shipments that will begin late this year.

We don't expect QLC to become more meaningful until probably late '27 into '28 as 2-terabit dies become more affordable. Thank you.

Thank you.

Yes. Thanks for taking my question.

I think this is for the team. I think it would be very helpful for us and the investment community if you guys could elaborate on a revenue mix by end market, like enterprise, consumer, and auto, and how it would map to specific products.

I understand you don't want to be specific, but any kind of a qualitative view on how end market and products are mapping would be great. I have a follow-up.

I think as we said in the past, all our product line are growing in 2026. Of course, our edge SSD, I think because PC market unit declined, but however, due to the market share gain, we continue grow 50% compared with last year first half.

Our enterprise, because the base is small, we grow faster, enterprise controller. For Ferri and for automotive and our boot drive, we do have a multiple major customers supporting our growth trend.

We expect to see continued growth through the 2026 and to 2027.

I think another way to look at it also is the majority of eMMC and UFS is really going to be consumer-centric. Today, SSD controller sales, the majority of that is going to be consumer-centric, going to edge SSD controllers, but certainly as we exit this year, getting to that 5% to 10% coming from MonTitan contribution.

Ferri and boot drives, Ferri for automotive and boot drive, enterprise boot drive solutions, again, you can imagine those are being less consumer-centric.

Okay. Moving on to my next question, the 2-terabit die and the timing of the QLC ramp, it's been more than a year of waiting, and I'm just wondering if Wallace could share with us, is that the qualification that's an issue?

Is that the capacity? Or is it something else?

I'm asking this question in the context of, would this actually provide an opportunity for controller suppliers like Silicon Motion, or is it just the manufacturing ramp that is delayed? Any color will be great.

I think you ask a very good question. We have been waiting for also a very long time, too.

The 2-terabit QLC is supposed to be the great darling for the NAND industry and to drive the QLC-based storage SSD to be a next level. However, due to the price increase, supply shortage, I think high-capacity data storage drive is less attractive because the price is too high.

We also see the DRAM, NAND maker, they definitely put more focus and cap into the DRAM, HBM. That's why the development for 2-terabit, how to fine-tune the quality to next level, is to take a much longer time.

This is why it's at the current market situation, definitely, I think the DDR5 HBM is more attractive and driving more high profit. It just takes some time.

We believe because the high demand through the AI inference for the data storage. Demand for storage is much bigger than the current supply.

Through the new cap that we see the arrangement, 2028 will see meaningful recovery from NAND supply. That's why we see all the NAND makers should have a 2-terabit QLC by that time.

I want to make it clear, Mehdi, that the delays here are on availability of NAND side. Our controllers are here, our controllers are ready.

As we said, we're going to be starting early ramp of some of the QLC-based solutions with our customers by the end of this year. This isn't something that's a controller issue.

This is an industry availability issue of the NAND. Thank you.

Thank you.

Thanks. Congratulations on the great results.

Just with gross margins, given how strong the embedded piece was and that's typically a lower gross margin segment for Silicon Motion, I would have expected a little bit of a headwind there. Can you talk a little bit about the puts and the takes that affect with the gross margin line in Q2?

Yeah. I think what we've always said is that, our MonTitan controllers are margin accretive, and so as those have begun to ramp, that's been able to help offset and drive strong gross margins for us here in the second quarter.

As well as, in the back half of the year, the back half of the year we're also going to benefit from additional growth in our PCIe Gen 5 controllers, for example. That's all of these things are going to be margin accretive that's going to offset some of the margin pressure that we see from the solutions business.

Jason, just when we're thinking about things moving forward with MonTitan seemingly being as successful as it's been, I know longer term we've talked about kind of gross margins being a little bit below 50. Should we be rethinking that if MonTitan is going to ramp like this?

Any commentary there would be really helpful.

I think we're still comfortable with the 48% to 50%. As I think we've said in the past, we're going to see a little variability in that depending on mix in any given periods.

We're still targeting 48% to 50%, certainly in certain periods like Q2, Q3, when we're seeing a little bit above that. We're certainly going to be able to take advantage of some of these mix benefits in the near term, but long term, we still expect to be in that 48% to 50%.

Awesome. Thank you.

Good morning, and thank you for taking the questions. Congrats on another quarter of record results here.

First, I just wanted to ask about what you're seeing in the mobile market, and specifically at the Chinese smartphone makers. Last night, Qualcomm reported and posited that calendar Q2 will be the trough for China handset demand in their business, and given your exposure to some of those vendors, could you maybe just comment on whether you're seeing the same signals that point to a potential recovery in the second half or if you're seeing anything different?

We see the China smartphone market is very challenging due to the price increase of both LPDDR5 and also the storage product. See for value, especially value line, I think they suffer much more because if we're looking for the DRAM and the NAND, almost 50%, 60% of the total BOM cost for the low-end smartphone.

This is a serious challenge. However, because we work with the NAND maker outsourcing to us in certain model, and module maker continue to gain market share, and we benefit from collaborate with the smartphone maker directly through the QLC development.

We see our demand for smartphone for our UFS and eMMC they continue grow from Q2 and also moving to next quarter. I think we do not have a significant market share in the low end.

That's why the impact for our business is relatively small.

Got it. That's helpful.

Then maybe for my follow-up, just on the boot drive business, can you comment on whether you're starting to see the benefit of BlueField-4 sales in either Q2 or your Q3 guidance as Nvidia starts to ramp their Vera Rubin platform, or has much of the growth so far been tied to the first-generation BlueField-3 program?

We cannot comment specific regarding the time, but I think the BlueField-4 definitely will go with customer announcement, right? We do have a pretty large share for BlueField supply for the boot drive.

We're very happy when they ramp up in the second half this year.

Great. That's helpful.

Thank you.

Thanks for taking the question. Team, congratulations on the AI solution evolution that you're entering with the business.

Wallace, I wanted to start by seeing if you could characterize the growth that we could expect to see in the Ferri and DPU business over the next few quarters versus what we've just seen, that 110% rise, and similarly help us frame the right expectations for MonTitan. I wanted to see if in so doing, you could also help us understand if you thought the MonTitan business could over time rise to the size of what you're seeing with Ferri and DPU.

Yeah. We cannot comment specific customer, but what I can tell you, the boot drive business is going to grow very strong, not just through one customer, through multiple customers.

What we said last time, we are boot drive not only winning for DPU, also winning for TPU and the telco company. We see we're all engaged with the leading server maker, too.

Our boot drive will grow very broadly. Definitely with the leading GPU company, it will go even much stronger and even for next year.

Our MonTitan, it's very exciting. We have a two tier-1 customer ramping from second quarter.

We'll add five more customer come in second half. We believe next year we're going to ramp much more revenue growth than this year.

With our PCIe Gen 6 have much broader design win even before we tape out. We have very, very high confidence our MonTitan Gen 5, Gen 4 going to carry significant growth for company for long-term growth and the profitability.

I'd also point out, Craig,

that

our solutions business, the boot drive, just a reminder, it's controller plus NAND. ASPs here are going to be naturally much higher than what you're going to see on a controller only.

While certainly we're excited about the scale and opportunity of MonTitan, just keep that difference in mind where ASPs are going to be certainly lower on MonTitan than relative to the boot drive side.

That really relates to my follow-up question, Jason. Thanks for the color.

The question is this. Given the company's unusually long and broad expertise with NAND makers as a controller designer, and given the evolution we're seeing in the memory industry where customers really want full solutions, to what extent are customers asking for more of a full solution beyond what you're providing today in businesses that may be auto-related or associated with MonTitan, and to what extent would that look attractive for you as a way to further evolve the business model?

Thank you.

You raised a pretty good question. I think as today, MonTitan controller business, they are totally independent of boot drive business.

However, I think in certain cases, we see they add value together as a package sale and penetration. Because we do see our boot drive solution business have very unique position, because first of all, NAND maker does not have a DRAM-less enterprise SSD controller.

Second, they have less interest to invest for because it's a relatively smaller market compared with enterprise SSD solution. We are in very unique position to grow the enterprise boot drive business.

In the same time, we can also offer the MonTitan controller business together to support the tier-1 customer who don't get the enough supply from NAND maker directly. That is how we play and try to grow together.

Far, MonTitan, because we already have very, very strong momentum, and we don't even have enough R&D resources to support so many projects. It's very exciting to see the position we are today, but we'll continue invest, and we definitely going to see much stronger growth in 2027.

Thank you very much, Wallace. Good luck, team.

Hi. This is Gokul.

Can you hear me, Jason?

We can hear you.

Hi. This is Gokul from J.P.

Morgan. First question on the boot drive market, Wallace, could you help us kind of size this market a little bit?

Because it feels like this market is growing much faster and become much larger than what we would have expected or even you would have expected maybe a year back when you outlined this market for us. Secondly, could you also address how the market share and competition you're expecting to shape up here given it looks like right now Silicon Motion is kind of large majority of the market?

Do you feel like there will be some competition entering this market in the next maybe one or two generations?

Okay. I think the boot drive business have a very, very wide range opportunity.

Near-CPU boot drive, that's with conventional enterprise controller with the DRAM together, right, because with DRAM, you have a much better random write performance and with low latency. That is for server CPU, doesn't matter Intel or AMD or even Vera.

They have a boot drive with DRAM. That business belong to NAND maker.

It's conventional, traditional, and we don't compete that sector. However, I think some of server maker come to Silicon Motion, they would like have a solution.

We do provide some controller to either NAND maker or to module maker to support that portion with the DRAM for boot drive. For the rest of other sector, like DPU, like TPU, NPU, like PCIe switch, like NVLink switch, like Ethernet switch, the boot drive they need, and today they favor DRAM-less because the cost is better without DRAM, and we have a specific security support, and performance also very good.

As long we can secure the NAND supply, that portion is really our crown jewelry to grow in the next few years. We do see the demand is stronger because the boot drive number per server rack, that's a huge.

That's more than 30, 40, it depends the server rack. This is really, really great opportunity we see, and not only the number of boot drives, also capacity might be increased in the next few years, right?

This really can boost our sale revenue growth in the top line and the bottom line.

Any thoughts on competition, Wallace, from either regular NAND makers or any of the other module makers that you do see coming into this market, or you think you've got this largely locked down for the next couple of generations?

Far, we see we are comfortable in current position. We did not see more competition and really to NAND maker because the density is really 256, 512 gigabyte, compared with enterprise drive, 16 terabyte, 30 terabyte, is much more smaller.

We don't see competition from NAND maker come here, and we are largest for merchant company, we also don't see the competition from module maker either.

Understood. That's clear.

My second question is on MonTitan, and could you talk a little bit about your market opportunity, especially as you migrate to PCIe Gen 6 with your next-generation MonTitan platform? What does the competitive landscape looking like?

Because as I remember, several enterprise controller companies are kind of terminating or slowing down their development in PCIe Gen 6. Could you help us understand your market opportunity when it comes to MonTitan with PCIe Gen 6?

I think originally it was mostly about QLC, but it definitely feels like you've kind of expanded beyond just the QLC opportunity to KV cache offloading and some of the TLC opportunities as well.

I think our MonTitan Gen 5 had already set a foundation for our customers. When we develop Gen 6, not only Gen 6, Gen 5 customer all sign in, but we attract many tier-1 customer from NAND maker and CSP.

There's more than a dozen tier-1 customer waiting for our MonTitan PCIe Gen 6 sample, and this have a very unique architecture. We have we offer and particular focus on and either AI inference, especially around the Nvidia CMX architecture, but also particularly for the data storage, right?

We have a multiple dimension and support, and support multi-host, and also it will be very efficient under the new AI era. As we work with closely with NAND maker and also leading server maker as well as the CSP.

This particular sound feature we is exclusively designed for certain customers. We believe when MonTitan PCIe Gen 6 start to ramp will be much stronger and faster, quicker than our PCIe Gen 5.

Got it. Any idea about how much of the market can you address with this PCIe Gen 6 solution?

Do you think you can address maybe 30%, 40% of the market already with that, or that is too high an expectation?

We set a market just minimum 15% to 20% at the beginning. Hopefully, we can grow faster.

Got it. Thank you very much.

Hi, Wallace. Hi, Jason.

Congratulations on the progress here. Maybe the first question for Jason, with the mix that's steadily shifting, would we think that seasonality would be more muted in the '27 timeframe or '28 perhaps, and linearity be greater, more steady, or would that still be kind of a further out trend?

We're not going to comment on '27 yet at this time. We're only guiding one quarter out.

Stay tuned on that. To your point, there are a lot of moving pieces depending on how quickly certain businesses scale.

That could certainly limit the seasonality that we historically would see. Right now, given how much we're in the early stages of some of these businesses ramping and some of these new customers coming on, it's hard for me to say right now, and we're not guiding that far out.

No, fair enough, Jason. Thanks.

Then maybe the second question for Wallace perhaps, the Ferri roadmap, how are you evolving that to support newer end markets like robotics? When might that be a meaningful contributor?

How far out could that be?

It's a very good question. We have been constantly monitoring the survey and engaged with robot developers from China and US, also including the drones.

We see the drones were coming earlier with a high volume, and robot will probably come later. However, the diversified so many new opportunity for the storage and not just one solution per robot, there's multiple.

There's many we would like to engage and also provide certain reference as well as the custom design to show the differentiation with the robot maker. Now, I think the initial for next year, the volume is still pretty small, but we believe 2029, 2030 will be much higher volume, and we want to start in the early stage and make sure we can occupy the higher market share.

Okay. Thanks, Wallace.

Thanks, everybody.

Yes. Thank you.

A couple of follow-ups. First one, would it be possible if you could just elaborate on the mix of eMMC and UFS, either the mix of the specific product or mix by a smartphone versus other consumer electronics?

I do have another follow-up.

Within the eMMC and UFS business, majority of revenue comes from UFS just given that it's a much higher ASP product. Unit volumes in eMMC are still very strong, but given the much lower ASPs in eMMC, it's a smaller contributor to our overall revenue.

The vast majority of our UFS business is going to smartphones. The majority of our eMMC business is going to really more IoT, consumer-centric connected devices.

Gotcha. Thanks.

Then I'm not asking for a guide, but when I look into 2027, your commentary and excitement around new product ramp suggests to me that Ferri and boot drive could at least be a third of your revenue mix. Is that in the ballpark?

Look, I think certainly the backlog we have and the strength we're seeing in the pipeline with our customers and new customers ramping, I think that's certainly a possibility.

Thank you.

Thank you, everyone, for joining us today and for your continued interest in Silicon Motion. We will be attending several investor conferences over the next few months.

The schedule of these events will be posted on the Investor Relations section of our corporate website, and we look forward to speaking with you at these events.