Annual Report FINANCIAL HIGHLIGHTS
Product Mix Net Sales % of Net Sales / 2009 US$ millions 200 180 180 169 Communications 160
25% 140
120 Multimedia 106 100 12% 91 82 80
Storage 60 62% 40
0 2005 2006 2007 2008 2009
Gross Margin Diluted Earnings per ADS % of Net Sales US$ 60% 3.00
53% 53% 2.00 50% 1.21 0.93 50% 1.00 47% 0.71 0.29 2009 0.00 2005 2006 2007 2008 41% 40% -1.00
-2.00
30% -3.00 -2.61 2005 2006 2007 2008 2009 Dear Shareholders,
Our company faced a very di cult operating environment currently have one of the broadest mobile TV technology this past year. It is therefore very uplifting to report that we portfolios in the world, covering all the major broadcast standards have been recovering with renewed purpose. During the from tuner to demodulator requirements. We believe we are well worst of the downturn, we were resolute in continuing our underway in seeing mobile TV service become a consumer investments to support our marketplace and technology “must-have” and believe we are uniquely positioned to capitalize leadership — investments which are now fueling our recovery on this trend. and putting us back on our secular growth trajectory. Our revenue during the economic downturn reached a trough in the second Review of 2009 and Outlook quarter of 2009 and since then we have been on a gradual path In 2009, as a consequence of the global economic recession, NAND towards recovery. Revenue in the rst half of 2010 was over 28% ash vendors reduced capacity and output and the industry higher than in the second half of 2009. I strongly believe that we experienced its worst supply contraction ever. As a result, our have all the elements in place for further recovery during the business was severely aected. Our controller revenue however balance of 2010, and new market opportunities driving the secular started to recover in the third quarter of 2009, and I am happy to growth of NAND ash controllers and mobile TV IC solutions will report that by the second quarter of 2010, our controller business continue for years to come. will have delivered four consecutive quarters of solid recovery.
NAND ash is one of the largest and fastest growing segments Our mobile TV product line is also showing signs of improvement of the semiconductor industry. It is also at the advanced edge and in the rst quarter of 2010, our sales of mobile TV solutions of the broader industry in terms of pushing innovative outside of Korea exceeded sales for the domestic Korean market, technologies such as multi-level cell architecture (e.g. 2 bits per an indication that the nascent mobile TV market is beginning to cell and now increasingly 3 bits per cell) and the most advanced grow beyond Korea and Japan. process geometries (e.g. sub-30 nanometers). Our controllers are important enablers that facilitate the continued growth of In the rst quarter of 2010, I am pleased to announce our return to ash-based storage solutions because our advanced technologies operating prot since the onset of the global economic downturn, address critical industry issues such as device data endurance, and in the second quarter of 2010, our rst material increase in integrity and retention. cash ow as our business recovered further.
As a result of the NAND ash industry’s drive to reduce cost, I remain excited about our future. We serve end markets increase storage capacity, reduce chip size, and improve with strong long-term secular growth trends, and are well performance and durability, new classes of applications positioned to benet because of our strong fundamentals, continue to be created which require controllers: from memory including our leading-edge technology, strong market position, cards, USB ash drives, and portable multimedia players to motivated employees and solid balance sheet. SSDs and embedded memory for consumer, computing, and communications devices that range from smartphones to PCs to In closing, I would like to thank our customers, suppliers, fellow servers. Given the large and growing addressable market for shareholders, and our employees for your continued dedication NAND ash (and by association, large and growing market for and support of Silicon Motion. You are what makes us successful. controllers), ash makers have restarted aggressive investments to build new manufacturing capacity.
The mobile TV market that our mobile TV IC solutions address continues its long-term secular growth. Mobile TV used to be limited to Japan and Korea, but today, digital mobile TV is also ramping in China and Brazil, and the US is currently eld testing mobile TV as an extension of nation-wide digital TV roll-out. We ABOUT SILICON MOTION
We are a fabless semiconductor company that designs, develops and markets high performance, low-power semiconductor solutions for the multimedia consumer electronics market. We have three major product lines: mobile storage, mobile communications, and multimedia SoCs. Our mobile storage business comprises microcontrollers used in NAND ash memory storage products such as ash memory cards, USB ash drives, SSDs, and embedded ash applications. Our mobile communications business comprises primarily mobile TV IC solutions and CDMA RF ICs. Our multimedia SoCs business comprises primarily products that support embedded graphics applications.
We have headquartered in Taiwan and have o ces and research facilities in the US, Taiwan, Korea, China, and Japan.
Mobile Storage Multimedia SoCS Mobile CommunicationS
Memory Card Controllers Embedded Graphics Mobile TV IC Solutions
USB Flash Drive Controllers CDMA RF ICs
Solid State Drive Controllers
Embedded Flash Controllers
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 20-F