© 2020 Silicon Motion Technology Corp. All rights reserved.

Company Overview February 2020

Safe Harbor Statement

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This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding trends in the consumer electronics and semiconductor industries, any future growth projections or expectations in such markets and our future results of operations, financial condition and business prospects. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons.

Company Background

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Silicon Motion is the global leader in supplying NAND flash controllers for solid state storage devices and the merchant SSD controller leader

• Supplied over 6 billion controllers in the last ten years, more than any other

• Broadest portfolio of controller technologies & solutions

• Est. 1995 in San Jose, CA; now corporate offices in HK, Taiwan & US

• NASDAQ : SIMO (2005 IPO)

• 2019 revenue = $449m (5-Year CAGR = 13%)

• 1,237 employees (2019 year-end) & 82% engineers

• Design centers in Taiwan, Korea, US & China

Note: FCI results excluded from all years; 2020-2022 analyst consensus

Continuing Proliferation & Expansion of NAND

All Solid-State Storage Devices Need Controllers—We Benefit from This

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Rapid NAND Supply Growth & Improvement in Affordability

Source: Gartner

Rapid Demand Growth for NAND Flash

Solid State Storage Application

Ubiquitous embedded

memory

Smartphones & new

smart, IoT & AI devices

Replacement for

mechanical HDDsClient computing, industrial,automotive

Big memory for

Big Data

Enterprise &hyperscale data centers

Bit Growth 38% CAGR

ASP-18% CAGR

Expanding Portfolio of Growth Drivers

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Market Trends End Applications

Client SSD

Controllers

Falling NAND prices → lower cost SSDs

rapidly displacing HDDs

PCs, game consoles, SOHO storage and other

types of client devices

Datacenter SSD

ControllersProliferation of cloud computing Global hyperscale data centers

eMMC/UFS

Controllers

Large, mobile market, plus broadening base

of new applications

Smartphones and new smart, IoT & AI

devices

Industrial SSD

SolutionsExpanding proliferation of applications

Industrial, commercial, automotive, data

networking & surveillance

Hyperscale SSD

Solutions

Open-Channel SSDs, unique performance-

optimized solutionsChinese hyperscaler data centers

SD Card

Controllers

HD video recording & internal storage

expansionSmartphones, DSCs & videocams

USB Flash Drive

ControllersEmerging markets, back-to-school, gifts Portable personal storage

Products

Embedded

Storage

Expandable

Storage

Value-Added Role of a Controller

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Storage Devices Increasingly Faster, Cheaper & Better:• More Sophisticated Applications: from

Smartphones to PCs to Datacenters• Faster Data Read/Write Speed (IOPS)• Lower Latency• Higher Stability• Better Data Security• Greater Scaled Capacity

NAND Component Increasingly Cheaper, but Weaker:• Issues Arising from: Higher 3D Layer Count & Multi-

Level Cell (MLC, TLC, QLC)• Increasing Data Corruption from Weaker Data

Retention, More Circuitry Noise & Increasing Read/Write Interference

• Lower Endurance

Expanding Value-Added Role of a Controller• Optimized for Performance,

Power, Cost & Ease of Use• Solutions Include LDPC

Algorithms Specifically-Optimized for NAND, RAID Protection & DSPs for Data Shaping

• Rapid displacement of HDDs

• SSDs increasingly as cheap, if not cheaper than HDDs

• Faster, more reliable, lower power & smaller form factor

• Our controller solution:• Customizable H/W + F/W turnkey solutions &

configurable platforms

• Customers: most module makers, 5 flash vendors

• PC OEMs (all top-5 WinTel) & channel markets

• Target high performance, mainstream,

value-line & BGA segments

• Supports latest generation NAND, including QLC

• SATA & PCIe NVMe SSDs

Client SSD Controller—Merchant Market Leader

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Sources: Gartner

eMMC/UFS Controller—Merchant Market Leader

• Standard embedded memory for smartphones, AI speakers

and other IOT devices

• Small BGA form factor, low power, high performance &

cost effective

• Our controller solution:• Used by all top 10 Android phone OEMs

• From flagships to low-costs

• eMMC & eMCP plus UFS & uMCP

• Supports latest generation NAND

• Established eMMC and new generations of

UFS specs

• Customers: SK Hynix (eMMC), Micron (UFS) &

module makers (eMMC & UFS)8

Source: Gartner

Flat unit growth

A Leader in Customized Specialty SSD Solutions

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• Shannon Hyperscale SSDs:• Focused on China, world’s largest internet market

• Provide enterprise-grade Open-Channel PCIe NVMe –performance optimized for hyperscaler’s data traffic pattern

• Customers: Alibaba, Baidu and others

• Ferri Industrial SSDs:• For industrial & commercial applications that require high-

performance, customized single-chip SSDs for small footprint equipment operating in demanding environments

• Automotive, data networking, server, gaming, commercial & industrial equipment

• Primary customers are OEMs from the US, Japan, Europe & China

• Total controller sales grew Q/Q to a record high

• SSD controller sales increased about 25% Q/Q to a record high

• eMMC+UFS controller sales increased about 70% Q/Q

• SSD solutions sales increased about 60% Q/Q

4Q 2019 Operating Highlights (ex. FCI)

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Business

Note: Non-GAAP results

• Revenue = $153.0m (+35% Q/Q, +32% Y/Y)

• Gross Margin = 49.3% (vs. 49.8% prior Qtr)

• Operating Exp = $38.1m (vs. $31.4m prior Qtr)

• Operating Margin = 24.4% (vs. 22.1% prior Qtr)

• EPS (diluted) = $0.96 (vs. $0.69 prior Qtr)

Financial (Non-GAAP)

• SSD controller sales increased 20% Y/Y and accounted for about 50-60% of sales

• eMMC+UFS controller sales declined about 30% Y/Y and accounted for about 20-25% of sales

• SSD Solutions sales declined about 50% and account for about 10% of sales

• Revenue = $449.4m (-10% Y/Y)

• Gross Margin = 50.1% (vs. 49.1% prior Yr)

• Operating Exp = $129.2m (vs. $112.3m prior Yr)

• Operating Margin = 21.3% (vs. 26.7% prior Yr)

• EPS (diluted) = $2.60 (vs. $3.43 prior Yr)

FY 2019 Operating Highlights (ex. FCI)

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Business

Note: Non-GAAP results

Financial (Non-GAAP)

Non-GAAP Revenue Trends

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Last 3 Years Last 5 Quarters

Note: *Excludes FCI

Non-GAAP Gross & Operating Margin Trends

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Last 3 Years Last 5 Quarters

Note: *Excludes FCI

Non-GAAP EPS Trends

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Last 3 Years Last 5 Quarters

Notes: *Excludes FCI

2015 2016 2017 2018* 2019*

Revenue 361 556 523 500 449

%YoY +25% +54% -6% -10%

Gross Margin 51% 49% 48% 49% 50%

Operating Expenses 96 118 128 112 129

Operating Margin 24% 28% 24% 27% 21%

Long-Term Model

Robust Growth

About 50%

Disciplined Expansion

Up to 30%

Target Financial Model

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1Q 2020 Guidance • Revenue = $130 to 138m

(-15 to -10% Q/Q)• Gross margin = 44 to 46%• Operating margin = 18 to 20%

Note: Non-GAAP results & targets

* Excludes FCI in 2018 and 2019

2020 Guidance• Revenue = $539 to 584m

(+20 to +30% Y/Y)• Gross margin = 46 to 48%• Operating margin = 21.5 to 23.5%

4Q 2019 Non-GAAP P&L

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($m) %QoQ %YoY

Revenue 115.8 100% 113.2 100% 153.0 100% 35% 32%

Cost of sales 57.7 50% 56.8 50% 77.6 51% 37% 35%

Gross profit 58.1 50% 56.4 50% 75.4 49% 34% 30%

R&D 20.0 17% 22.6 20% 28.7 19% 27% 43%

SG&A 7.5 6% 8.8 8% 9.4 6% 7% 26%

Operating expense 27.5 24% 31.4 28% 38.1 25% 21% 39%

Operating profit 30.6 26% 25.1 22% 37.3 24% 49% 22%

Other income/(expense) 1.8 2% 1.7 1% 1.5 1% -9% -14%

Pre-tax earnings 32.4 28% 26.7 24% 38.8 25% 45% 20%

Tax expense/(benefit) 2.5 2% 2.3 2% 5.0 3% 117% 96%

Net income 29.8 26% 24.4 22% 33.8 22% 38% 13%

Dilute ADS (in millions) 36.4 35.3 35.2 0% -3%

Earnings per ADS (diluted) 0.82 0.69 0.96 39% 17%

Q4 2018 Q3 2019 Q4 2019

FY 2019 P&L (Non-GAAP)

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($m) %YoY

Total Revenue 500.2 100% 449.4 100% -10%

Cost of sales 254.5 51% 224.4 50% -12%

Gross profit 245.7 49% 225.0 50% -8%

R&D 78.9 16% 94.3 21% 20%

SG&A 33.4 7% 34.9 8% 5%

Operating expense 112.3 22% 129.2 29% 15%

Operating profit 133.5 27% 95.8 21% -28%

Other income/(expense) 6.1 1% 6.5 1% 7%

Pre-tax earnings 139.5 28% 102.3 23% -27%

Tax expense/(benefit) 15.3 3% 10.4 2% -32%

Net income 124.3 25% 91.9 20% -26%

Dilute ADS (in millions) 36.3 35.4 -2%

Earnings per ADS (diluted) 3.43 2.60 -24%

2018 2019

4Q 2019 Non-GAAP Reconciliation

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($m)

Non-GAAP % of Stock-Based SSD Solutions FX Gain GAAP % of

Revenue Comp. restructuring / (Loss) Revenue

Revenue 153.0 100% 0.2 153.2 100%

Cost of sales 77.6 51% 0.1 1.8 79.6 52%

Gross profit 75.4 49% (0.1) (1.6) 73.6 48%

Research & development 28.7 19% 5.2 33.9 22%

Sales & marketing 5.3 3% 0.8 6.1 4%

General & administrative 4.1 3% 1.2 0.9 6.3 4%

Total operating expenses 38.1 25% 7.2 0.9 46.2 30%

Operating income 37.3 24% (7.4) (2.5) 27.4 18%

Other income / (expense) 1.5 1% 0.1 1.6 1%

Income before income taxes 38.8 25% (7.4) (2.5) 0.1 29.0 19%

Provision for income taxes 5.0 3% (1.4) 0.0 (0.0) 3.6 2%

Net income 33.8 22% (5.9) (2.5) 0.1 25.4 17%

Earnings per ADS, diluted 0.96 0.73

Diluted ADS 35.2 35.0

Effective tax rate 13% 12%

FY 2019 Non-GAAP Reconciliation

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($m) Amortization Gain on

Non-GAAP % of Stock-Based of Intangible Litigat. SSD solutions FCI Disposal of Long FX Gain GAAP % of

Revenue Comp. Assets Exp. restructuring Divestiture Investment / (Loss) Revenue

Revenue 449.4 100% (2.5) 10.4 457.3 100%

Cost of sales 224.4 50% 0.3 5.7 4.7 235.1 51%

Gross profit 225.0 50% (0.3) (8.2) 5.7 222.2 49%

Research & development 94.3 21% 9.8 6.0 110.1 24%

Sales & marketing 21.5 5% 1.8 1.8 25.0 5%

General & administrative 13.4 3% 2.6 (0.0) 0.9 0.9 17.8 4%

Amortization of intangible assets 0.0 0% 0.8 0.8 0%

Impairment loss of goodwill & intangible assets 0.0 0% 16.0 16.0 3%

Total operating expenses 129.2 29% 14.1 0.8 (0.0) 16.9 8.7 169.7 37%

Operating income 95.8 21% (14.4) (0.8) 0.0 (25.1) (3.0) 52.5 11%

Other income / (expense) 6.5 1% 12.4 0.5 0.1 19.6 4%

Income before income taxes 102.3 23% (14.4) (0.8) 0.0 (25.1) 9.4 0.5 0.1 72.1 16%

Provision for income taxes 10.4 2% (2.6) 0.0 0.0 0.0 0.0 0.0 (0.1) 7.7 2%

Net income 91.9 20% (11.8) (0.8) 0.0 (25.1) 9.4 0.5 0.2 64.4 14%

Earnings per ADS, diluted 2.60 1.82

Diluted ADS 35.4 35.3

Effective tax rate 10% 11%

© 2020 Silicon Motion Technology Corp. All rights reserved.

www.siliconmotion.com