Silicon Motion Technology saw its pipeline of SSD controller projects with NAND flash makers increased over 50% sequentially in the second quarter. The company expects sales of its SSD controllers to surge more than 30% in 2018.

Silicon Motion reported net sales increased 6% sequentially to US$138.1 million in the second quarter, while net income (GAAP) grew to US$30.7 million or US$0.85 per diluted ADS from US$23.1 million or US$0.64 per diluted ADS in the prior quarter.

On a non-GAAP basis, net income for the second quarter surged to US$33.2 million or US$0.92 per diluted ADS from US$25.6 million or US$0.71 per diluted ADS in the previous quarter.

"In the second quarter, our client SSD controller sales continued to grow sequentially as well as year-over-year," said Wallace Kou, president and CEO of Silicon Motion. "Separately, our SSD solutions grew strongly while our eMMC sales declined slightly."

Sales of Silicon Motion's embedded storage products comprising primarily eMMC and client SSD controllers, and data center and industrial SSD solutions increased approximately 7% sequentially to account for about 85% of the company's total revenues in the second quarter. Sales of client SSD controllers grew about 5% on quarter, while eMMC controller sales decreased 5%. Meanwhile, SSD solutions sales climbed about 35% sequentially in the second quarter.

"As NAND prices continue to decline and SSD affordability and adoption are improving, we are now increasing our full-year SSD controller growth expectation to at least 30%, with strong third quarter sequential growth," Kou continued. "However, due to a one quarter delay of large SSD solutions sales to a hyperscaler customer, we are now expecting our third quarter net sales to be stable sequentially despite strong SSD controller growth with revenue growth expected to improve in the fourth quarter."

Silicon Motion expects to post revenues of between US$136 million and US$142.9 million in the third quarter of 2018, which will represent an up to 3.5% growth or an up to 1.5% drop sequentially but a 7-12% on-year increase. Gross margin and operation margin will rise to 48.5-50.5% and 25-27%, respectively, from 47.5% and 24.6% in the prior quarter, thanks to a more favorable product mix, the company said.

Silicon Motion reiterated revenues for 2018 are forecast to increase 5-10% on year, with a gross margin of between 47.5% and 49.5%.