SILICON MOTION TECHNOLOGY CORPORATION Annual Report 2013 Financial Highlights Product Mix % of Net Sales (2013) Mobile Storage 82 % Mobile Communications 14 % Others 4 % Net Sales US$ million 2009 89 2010 133 2011 224 2012 281 2013 225 Contents Financial Highlights 01 Letter to Shareholders 02 About Silicon Motion 04 Form 20-F Directors and Executives Gross Margin % of Net Sales 2009 41% 2010 47% 2011 48% 2012 47% 2013 47% Diluted Earnings per ADS US$ 2009 - 2.54 2010 - 0.18 2011 1.28 2012 1.40 2013 0.81 01 Letter to Shareholders Dear Shareholders, 2013 was a transitional year for Silicon Motion as sales of removable storage controllers for mature card and USB flash drive markets declined while sales of SSD plus embedded storage controllers, especially for eMMC growth markets, grew rapidly. 2013 was also a transitional year for our LTE transceiver products as the market quickly moved to the significantly enhanced LTE-Advanced standard. While the negative effects of the transitions were dramatic from the perspective of revenue and profitability, we believe we have built a strong foundation for renewed, long-term growth by focusing on eMMC, SSD, and other embedded storage applications and are confident this will lead to strong growth in upcoming years. In 2013, sales of our SSD plus embedded products grew almost 100% year-over-year to account for almost half of our Mobile Storage sales. Sales of eMMC controllers, our largest SSD plus embedded product, are now already larger than our card and USB flash drive controllers sales, and account for roughly a third of our total revenue. Our eMMC controllers are designed for both SK Hynix and Samsung eMMC solutions and account for 15 to 20% of the overall eMMC controller market. Last year, our two NAND flash partners supplied eMMCs with our controllers to 8 out of the top 10 non-iOS smartphone OEMs for both their flagship and other devices, to leading Android and Windows tablet OEMs, and for other applications such as game consoles, set-top-boxes, smart TVs, and automotive infotainment systems. We have been expanding our engineering resources, and have added a third NAND flash partner that will focus on TLC NAND eMMC solutions, with sales to begin in the first quarter of 2014. We expect the eMMC market to continue growing rapidly in 2014 and believe we are very well positioned to grow our eMMC sales well in excess of market growth next year. 02 We have also been expanding our R&D resources to support our many SSD controller initiatives. Our first SATA 3 client SSD controller began commercial sampling in mid-2013, has been receiving very positive third-party reviews, and should contribute material revenue in 2014. We will introduce a SATA 3 client SSD controller to support TLC NAND flash in 2014 and our first PCIe SSD controller in late 2014 or early 2015. We have been marketing our SSD controllers to NAND flash vendors, other OEMs, and module makers and believe the success of our SSD controller market roll-out is important for our long-term growth. Sales of our older LTE transceiver parts declined throughout 2013. In the second half of 2013, we introduced a new LTE-Advanced transceiver for pairing with Samsung’s new LTE-Advanced baseband. This new LTE-Advanced chipset will complete testing at Samsung in early 2014 and enter production soon afterwards. While our revenue and profitability declined in 2013, we believe this setback is temporary as we transition our controller business from mature removable storage applications to long-term SSD plus embedded growth opportunities, and we believe we are on track to grow again in 2014. Once again, I want to thank our customers, employees and shareholders for their continued support. Sincerely, Wallace Kou President & Chief Executive Officer 03 About Silicon Motion We are a fabless semiconductor company that designs, develops and markets high performance, low-power semiconductor solutions to OEMs and other customers in the mobile storage and mobile communications markets. For the mobile storage market, our key products are microcontrollers used in solid state storage devices such as SSDs, eMMCs and other embedded flash applications, as well as removable storage products. For the mobile communications market, our key products are handset transceivers and mobile TV IC solutions. Our products are widely used in smartphones, tablets, and industrial and commercial applications. For further information on Silicon Motion, visit www.siliconmotion.com. Mobile Storage Market Mobile Communications Market More NAND flash products, especially next We are the dedicated provider of 4G LTE transceiv- generation flash, whether produced by ers for Samsung’s smartphones and tablets and are Samsung, SanDisk, Toshiba, Micron or SK Hynix a leading provider of mobile TV SoCs. We market are supported by Silicon Motion controllers than our Mobile Communications products under the any other company. Silicon Motion is the “FCI” brand. leading merchant supplier of controllers for eMMC embedded memory used in smartphones and tablets and is increasingly focused on client SSD controllers for PCs and other applications. We market our Mobile Storage products under the “SMI” brand. 04 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F ‘ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ‘ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report: N/A For the transition period from to Commission file number: 000-51380 Silicon Motion Technology Corporation (Exact name of Registrant as specified in its charter) Cayman Islands (Jurisdiction of incorporation or organization) 8F-1, No. 36, Taiyuan St., Jhubei City, Hsinchu County 302 Taiwan Tel: +886 3 552 6888 Fax: + 886 3 560 0336 (Address of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Ordinary shares, par value US$0.01 per share* Nasdaq Global Select Market American Depositary Shares, each representing four ordinary shares * Not for trading, but only in connection with the listing on the Nasdaq Global Select Market of American Depositary Shares, or ADSs, each representing four ordinary shares. Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities registered or to be registered pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 131,630,180 ordinary shares as of December 31, 2013, US$0.01 par value per share. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No È If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filed. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ‘ Accelerated filer È Non-accelerated filer ‘ Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP È International Financial Reporting Standards as issued Other ‘ by the International Accounting Standards Board ‘ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ‘ Item 17 ‘ Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ‘ No È TABLE OF CONTENTS PART I 1 ITEM 1. IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS 1 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1 ITEM 3. KEY INFORMATION 1 ITEM 4. INFORMATION ON THE COMPANY 16 ITEM 4A. UNRESOLVED STAFF COMMENTS 23 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 23 ITEM 6. DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES 40 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 48 ITEM 8. FINANCIAL INFORMATION 48 ITEM 9. THE OFFER AND LISTING 50 ITEM 10. ADDITIONAL INFORMATION 50 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 55 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 56 PART II 57 ITEM 13.