NAND flash device controller supplier Silicon Motion Technology saw sales of its enterprise and industrial SSD solutions increase approximately 50% sequentially in the third quarter, though sales of its other product lines all registered sequential decreases.

Sales of Silicon Motion's eMMC controllers fell about 20% sequentially in the third quarter, while those of its client SSD controllers declined approximately 10% on quarter.

Silicon Motion's overall embedded storage chip sales, which accounted for about 80% of the company's total sales in the third quarter, decreased around 5% on quarter.

"This quarter, NAND flash industry supply increased materially, which enabled us to significantly increase procurement of NAND for both our differentiated Ferri and Shannon SSD solutions," said Wallace Kou, president and CEO of Silicon Motion. "Despite supply improvements, NAND prices remained elevated and high prices, as expected, continued to temporarily affect broader adoption of client SSDs. Our eMMC controller sales declined as previously communicated, the result of our NAND flash partner re-balancing their limited NAND supply away from mobile phones and towards other applications."

Silicon Motion reported net sales for the third quarter decreased 4% sequentially to US$127.2 million, while gross margin slid to 46% from 48.7% in the second quarter.

Silicon Motion's net income (GAAP) slid to US$17.6 million or US$0.49 per diluted ADS from net income of US$24.0 million or US$0.67 per diluted ADS (GAAP) in the second quarter. Net income (non-GAAP) for the third quarter dropped to US$20.3 million or US$0.57 per diluted ADS from net income of US$25.4 million or US$0.71 per diluted ADS in the second quarter.

"We expect our business to gradually rebound in the fourth quarter, and rebound further next year due to increasing availability of 64L 3D NAND and more competitive NAND pricing," Kou continued. "In the fourth quarter, we expect our Ferri and Shannon SSD solutions customers to take advantage of improving supply of NAND flash to procure more than originally forecasted. We expect our client SSD controller sales to increase strongly in the fourth quarter as our pipeline of 2nd generation PCIe NVMe client SSD controllers start entering production."

Silicon Motion disclosed the company has also begun shipping its SATA3 SSD controllers to Micron Technology for the Crucial BX300 SSD series rolled out in the third quarter.

Silicon Motion expects to post revenue growth of 2-7% sequentially in the fourth quarter of 2017 with gross margin ranging from 45.5% to 47.5%.