Alpha and Omega Semiconductor Limited (AOSL) 6 Nov 232024 Q1 Earnings call transcript

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Investor Relations Representative for AOS. With me today are Stephen Chang, our CEO; and Yifan Liang, our CFO. This call is being recorded and broadcast live over the web. A replay will be available for 7 days following the call via the link in the Investor Relations section of our website.

as proceed will call follows today. Our begin a detailed will with business and highlights strategic including segment updates, Stephen report. After that, for guidance results and Yifan will review the the December financial provide quarter.

was Q&A XXXX, X, the the markets is earnings have company's today, release after session. The posted we'll the wire the release Finally, that also distributed close. website. over November The on

be provide these Our in considered A performance measures because non-GAAP measures. We earnings use operating conjunction in release and investors to is release. reconciliation our believe by this comparable useful they with presentation that measures. included about include measures earnings GAAP should non-GAAP non-GAAP financial GAAP the information we the the measures of

the that call, risks projections. this conference financial our you based certain These materially. we forward-looking remind to statements forward-looking that management's uncertainties during actual involve outlook discussions and bins results current expectations differ are and make We cause of could on and will statements, including

For recent and a assume to more detailed provided refer update SEC. the subsequent in no with and to We obligation information risks the please uncertainties, call. filings today's description of these our

that, now I call the to CEO, With Stephen Stephen? turn our Chang. over will

afternoon, high-level will We and by across was holiday gross everyone. shipments and device today margin These non-GAAP with QX begin results driven a QX and fall fiscal delivered EPS were and smartphones the Non-GAAP season. XX.X%, million. Thank Yujia, jump into $XXX.X you, was our desktop strong launches computing with overview for $X.XX. results notebooks, and was Revenue guidance. good results our details. of I then segment in line

execution in inventory end am pleased some solid amid headwinds macroeconomic and that corrections I team our markets. delivered

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increasing to portfolio global address Product trends. power

continue in automotive core centers invest are technology AI, to for data power we advanced in and and supply leveraging strength energy example, an battery, adjacent new like motor As markets and computing, and IP our generation.

that will markets existing content. drive we solutions more deeper higher into with taking integrated products In our BOM are core addition,

in we new side markets cycle. well adjacent on emerge as we into of as be believe going positioned will ever investing to deeper markets, other than By well the this our core stronger

The encouraging following inventory is of correction. and rebound in multiple PCs smartphones quarters

cautious of we inventory constraints is quarter. sustained recovery in has as we Moreover, other demand which rate correction broader remain geopolitical going the which significant interest for signs uncertainties. the are as us gaming, effects seeing end last are a revenue driver about through markets, environments However, persistent high indicated an been a and of now we feeling

macroeconomic have to for strategic cannot we the positioned core headwinds, the important over past immune Many our it better reiterate strong. be is to growth. sustainable us our While that remain years fundamentals investments of

record We our across strategic of markets. Tier of are excited share number to many have partnerships market applications X in growing and a customer end

current navigate continue We than better environment that the expect to to broader serve. market the we

me shipments across for XX.X% our in tablets year-over-year applications. driven revenue. been that, recovery CPUs. were notebooks, September The for cover by recovery segment ICs MOSFETs provide quarter. revenue XX.X% driver has driven results total With and high-end by sequentially guidance desktop results of now but computing. with and XX.X% and solid powering These computing the let next quarter down up represented Starting and was some segment by

September Looking single quarter. low expect into following be we digits forward December down the to segment this quarter, strong a

Turning revenue. and sequentially down XX.X% total year-over-year to revenue of represented XX.X% was and Consumer down segment. XX.X% quarter the September

of strong gaming XX the going months As an shipments after manufacturer. we through correction indicated an last quarter, #X extremely console is into inventory

of is of back Similar in now quarters, believe couple current the new part the given demand cycle. that of the earlier to we factoring year, what revert we smartphones will midlife a normal platform in saw this PCs a console speed to and in in production, its the

with we to is year. Longer part of our BOM However, the its console model next very relationship as within content strong. for discussions their engaged platform term, refresh next see customer do we already design. this are in opportunities increase current and

quarter, segment. this a For anticipate further mid-XX% we decline December the in

the discuss total was the segment, let's down represented and X.X% but Next, Communications up Revenue year-over-year XX.X% September in quarter sequentially of X.X% revenue.

were devices. results Chinese and their for smartphone to driven These demand phone for strong shipments from U.S. by the high-end OEMs launch strong their smartphone manufacturer #X continued

by to we and spring OEMs ahead, to current Chinese of remain continued anticipate Looking driven shipments ahead launches. at their healthy this winter segment levels, strong

revenue. below quick for let's chargers and Now quarter smartphone but results accounted last prior to our sequentially. strong for slightly of Tier X.X% revenue in increasing and total September which by for power Industrial, year-over-year season These expectations, U.S. peak by were customer X XX.X% offset our tools. our talk about shipments was Supply driven segment, Power X.X% weakness

peak expect to in mainly For chargers the segment teens the December decline due season solar this lower quick and we quarter, demand. following the to reduced low sequentially

a QX. solid we delivered In fiscal closing,

We are headwinds. macro dynamics closely market monitoring and

our target other technology, billion chain. the capability by the However, our our and manufacturing more product customer diversified side are portfolio, we base are segments business and expanding revenue on growth $X strong, the our focused of fundamentals positioning beyond leading supply in towards all on Tier and driven X company cycle,

the financial turn a outlook first quarter the will discussion results With our quarter. to call for now over of our Yifan for next and fiscal that, I

you, was down you Good Thank XX.X% afternoon, for and up Revenue Stephen. sequentially everyone, $XXX.X for quarter year-over-year. million, joining thank XX.X% the us. and

XX.X% $XX.X quarter and mix, revenue product XX% sequentially million, $XXX.X a Power In of up down terms and million, over from year XX% ago. prior XX.X% revenue was the down IC year. from DMOS was last

was quarter $X.X and the quarter last million to million compared million last $X.X revenue for as same service $X.X Assembly year.

for the compared and and service License gross in engineering ago. was Non-GAAP XX.X% prior margin was a $X.X quarter year the quarter. XX.X% million versus million $X.X revenue to the prior XX.X% quarter in

quarter last Non-GAAP year. last $XX.X operating mix quarterly were and compared million a expenses professional and The EPS quarter-over-quarter the increase was to $X.XX compared $X.XX was improvement. prior margin million increase Non-GAAP quarter-over-quarter higher R&D to for was year in by mainly $XX.X quarter $X.XX the service The expenses primarily fees. and to ago. non-GAAP due gross $XX.X engineering driven million

Moving flow cash quarter flow. comparison, customer deposits. including cash was positive Operating $XX.X million of was a and in to ago. repayment By million, negative $XX.X operating cash prior flows $X.X of year on million the million $XX.X

year. and million EBITDA last for to the quarter $XX.X compared million quarter was the $XX.X $XX.X million for last same quarter

at let quarter. Now of $XXX.X turn sheet. of end a September completed $XXX.X with balance balance We our compared to quarter to me the last million cash million

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with first Stifel. Instructions] question [Operator Our Jeremy is from Kwan

could market the And you talked normalized peak? you see the where potentially run maybe expect rate, gaming of you where understand Maybe guess, rate. about might push as gaming just maybe Can was go, that is you end What new us normalized as And hitting big a revenue? a it a on finally, the that this the to consumer of at to how first percent gaming we run question the new where I of kind settle it cycle? out? mid- help

pretty there's in PC. about is content and into segment of gaming we're an excited the Yes, Jeremy. specialized segment systems for a going much quite bit and because these important general us, a like Sure,

also into into we solutions gaming. have goes BC going So the all

cycle. about years about console years. X time, consoles other correction. up of saw it's to drop X we're at The the generally has X-year has now, look about if like correction that it's just life that shipments into some. of And that And we that we correction. place right a taking a in in right But of in to in. we're And in correction you markets go middle that some that the sell Even annual the gaming lifetime now. to And previous the now, of that start to

see be but going to -- believe it's few So back, revert that the we a rate, from that we quarters above when ago. peak will the to it below going is current

about So it I in with peak, question, work your opportunities particular in to business. just about of and our in to is it up almost now, consumer up probably around with think segment. something continue that's I content. this XX% answer But console closely it's to somewhere also more We And back designing or would was total during maker maybe consumer expect right. the correction. to to XX% bounce Right in somewhere XX% again. range, the do half the But say of we overall, maybe between that

question from next Our Benchmark. is David Williams with

environment. Congrats this on navigating challenging

couple of quick So a things.

AI this is talked You stage you address there controllers having But you've talked about your this been for And some an a data little know time. in I to area power and market. working center the script. on just good bit and about opportunity

market. or share you're new in that how wondering Just that opportunity can there's anything seeing there if just your generally you

such stage including power address intelligence addresses processor. cards topologies being some getting of the hardware. we're it, because applications kind that to very basically is The computing Gratis of can that load similar any and circuit actually good to highly seeing today. the of we're AI we for the graphics as of artificial in for parallel terms type point you're How of And business especially a from powering solutions card controller in high applications, have type that used

to client do moving us, from So on for center going business us, the a we're some do AI see working lot have potential also the addressing now. We for side. forward. we small data to But for more over transitioning side

process. in are efforts those all and that So

And in the and slated to content that we bit release Great. on the should That the and the talk maybe the benefits side. year. begin about client next during between little then December just of Rapid and Metor increases pull Lake helps. ready period you side PC as you if for end the get those a for see Can Lake

we up rolling going to But the themselves, $X deploying in even time used are out bump above you quarter. on sure opportunity And into adopt new Intel be $X to and platforms, see they believe PCs Generally, we to of it $X up And some content. process that -- customer in the for are once as marketplace, we're of the content. to more mentioned more yes, September will solutions to coming for $X dollar see or content, before, seeing we is our the certain and yes, are those. to take $X dollar pleased as what bonds we the controller for base to some adopted, are starting our is their --

at as But goes seasonal the with about these be are through another There content comes that we bond in excited additional will general, the ecosystem just pattern. platforms. seasonality play new

Great. looking last me of time. the than from lift kind could still the optimization the gross a you it IC at we've seen here one mix discretes margin back on cycle, had of there. help part if the of peak that a is And during efforts side. margin. the we're and little nice were just of And And the for largest driver had percentage the the you, the then bit margins some really in lower like last biggest power quarter, If revenues seems were you

guess Power reversion where trying of But discretes quarter, the And square of we how business this had your power and power lift but up. how is terms slight ICs in and understand sequentially? saw margin maybe and to lower came kind we've given the your the a getting improvement that kind I'm of balance discrete business compares a we're to just I IC

higher the products margins general, in doesn't in higher But Ian, Sure. it Power given margin mean have that, a for IC us. segment. we that in discrete products carry don't the

product So by And power And then slightly. basis the mean even the revenue up. improved gaming IC still points quarter, though hurt I the then drop. got in September mix

areas, other so on shipped provided hand, but us. the in some for January, -- those more to we higher So which margins vehicle

mix improvement. So overall, is portion gross I mean, our big of I mean a margin

Okay. a Was tailwind? this utilization Great. better quarter? Was that

generally for productions It's as pretty our at fab is than a Oregon quarter in good utilization similar because the range last our level. internal

a Our bit back end is lower. little

and the same the on in last So overall utilization mix, as quarter. is roughly at

Craig is Ellis Securities. Riley question B. from next with Our

about overall, really a retain But go you It a a that challenging comment in back cautious do you demand. to stance environment I see. prepared talk a macro. wanted regarding what bit understand could is it's and I sounds I like Stephen, the pretty -- you was little the to hoping remarks

to talk looking are normal you you're were the inventories in through gaming, more are qualitatively, As being quarter back first look which that fiscal calendar, you encouraging third can more And challenging? visible things of into where outside pretty where confident correction. versus more maybe excess about quarter is going a levels now

The first orders higher PC was quarter, the sockets impacts terms smartphones of a we segments a and ICs little resumption a more saw the Sure. see we the in as quarter Seasonality, of of this didn't market, half I for products, other affecting we that think, September PCs the and in including strong more. and year. performance mentioned,

beginning this into season be March big correction the for believe there that's that woods of do good correction yet. starting Typically, our looking for And kind to outplay. the to products. signs we correction we year. into and I kind year. that nothing see of the the in seasonality say lowest March fresh can't suggesting, any inventory it's quarter of yes, as you're to encouraging saw expect die that out, so And the quarter, -- see great that do going calendar like the PCs will is the down. some but very out some the X of clear that And of is quarters some orders we're But at we

PCs We we're or that overall much state take longer to X to quarters will than especially just recovery get little better in ago. was already full believe a a a a quarter what back it but

going believe it's we towards that but So seasonal pattern. go of a a through normal back more seasonality, handing little will PCs forward, getting

signs how it your obviously, customer And the of like starting And to we of next encouraging communications. market? could the that? to if great would you're it And performing sounds you see market see smartphone in more Android Android about lead growth some recovery a of you well. be? the see better within talk can get big But U.S. for see life from what potential to year And out the

here in base too. our Korea the multiple the of customer we Sure. smartphone well, in customers about in the are and as that and thing great And is business China the U.S., most in all big

U.S. And season the side. on right now, the launch

are in there's for launch high-end which a been even phones, On still of for China, the side, they're Korea a quite we preparing bit the in. decent for February. And demand participating

are -- I still in well diversification see it's high-end overall, is fairly do these to all smartphones think in phones. recovery play the the still it's shipments play. system good So Overall, But at mode. we --

So to going give us momentum into March some, least at guess, helps I the that quarter.

demand would base. like PCs, the at be decent or now, just coming a demand, will some from but it's at Again, there we right same seasonality I the time, play do say, see China strong

queue. in gross before maintenance or the question last my For the impacts to we see direct quarter, just it hopping either Oftentimes therefore, utilization, to back New Yifan. first in I'll Lunar Year margin. annual I fab think

calendar we As potentially ahead reason, some things what those would early out in next look historic differently dynamics be for to play year? Or XQ play?

the lower arrange I quarter, and typical a and around December a the also lower I be I will and quarter. Great. yes, so September would than also we lunar than mean quarter Year little expect New the Sure. utilization expect is then -- March even some bit season that maintenance it would

could That's indicate pricing TI little not more characterize normalizing, ONE relates a so that environment that margin. right helpful. that's would seemed guys? but And the picking aggressive. there How you in sneak up out to then to maybe now gross pricing getting was bit, I

environment. pricing calendar This say, returned favorable after the normal year, I last Yes. traditional years, pricing it of environment. say would characterize couple as trends, would would I I to environment historical

Stifel. with Kwan Jeremy from question follow-up a have We

pricing Maybe quick a follow-up question. to that

a Just of wondering couple things.

kind do you quarters was the you your now, pricing? set pricing? mid-ending I from portfolio. of has you kind suppliers ago, your increased a negotiate much could and impacted load of think and on guess, insight I your how an a is competition the year And offer year? give something of that that is would of basis? an of secondly, ongoing this on even at customers beginning Is how often that helpful. that wondering First, mentioned local you if couple update ago I be us has Or Chinese maybe can it of Any

ongoing, always and demand we the in where balance the are of overall is versus up always global Pricing to Sure. supply economy. it's in

negotiate the So negotiate really is year, ones for Certain just how industry every but customers the whole faring. can will on depends we overall once quarter. certain it

good resumption of us face the kind competition, performance of a really of for the in products. terms high to leverage of basically performance power room more of gives sockets In it's that again of some the and is in see competition. This lot competition less terms

So is fierce. that helps to situation. the kind of competition I say competition, would local normalize

be aggressive And also to adjust So our they're not well. when we we be which are, them, we where based we have everywhere. will to engage need but with also on competitive. we pricing they as --

talk Great. And -- how JV your you the them? you to seeing trends very you guess, with capacity JV there. your at may maybe requirement. pricing at if insight And offer some -- have us of from the you? you Can also be terms of what about again your look tell in available just Maybe can we -- Any funding the much could China helpful. have would I that insight you're

sure. already year, a couple of years production Okay, have JV ago. ramped they their up Yes. a

right process level, breakeven. on So they're funds now, already raising to They their in -- expand EBITDA the capacity. achieved the further they of additional

though we their portion now, even June on in our loss. cash quarter's the But the So they recorded side, of quarter, right are September self-funded.

have still as we same yes, capacity, of terms In capacity before.

nothing there. changed So

much How can offer still what about, know just a left the I most do for more year Got where 'XX. for at fiscal December even talked guided guess look your maybe million funding for is update this it. Can $XX guidance quick quarter. enhanced, think you give process? CapEx us $XX you that And to could -- Can I are guess, and you CapEx, I your if I million we about you of have in you ago. that we a you

sure. I spending Okay, X% X% CapEx-wise normal right the to were of mean would normally, mean would we I period. as And we now, target CapEx I then revenue. in our

Our Oregon had expansion completed. fab

not now, whole of a right CapEx remaining. So lot payment

So factory project this expansions don't right any we for have at major point. now,

question. that license much impact great. revenue with be -- Great. is would into And for through can walk us come much us baked licensing see through engineering the the How here. And one costs you quarter? of that And the -- the December financial revenue? steadily just if guidance how also, how could the margin? last nice like give to pretty the that is Is kind gross you scheme, there of help on associated flows just in

Okay, the sure. our for engineering more hours depends teams spend for licensing Listen, and is the revenue total service versus actual engineering expected period. recognition this XX-month on hours

fluctuating it's So to from quarter quarter.

hard the similar it's licensing revenue. now we of and for engineering So guidance, to quarter December level say right estimated a

to impact margin? the And gross

margin margins. specific or elements product licensing a for the it definitely Yes, higher don't and engineering the product margin breakdown We line than here. Sure. product the yes, service, our at is by in

David We a with Williams have follow-up question from Benchmark.

on curious about it's you've an being largely area but Stephen, that talked today. the for Just of know greenfield And -- you. opportunity appliance I side.

what curious should particular seeing -- you're or the you of worse in about? kind Just improved Has there appliance optimistic in be market. anything you'd or that

market slowed because quite real overall past in a to still bit down housing tied that it's now, the estate year Right the bit it's slow a globally, so. or and and

is key this thing here it. core our based a do longer of on business. can shorter much We as selling well not Again, term. term, overall, we're our the the IGBTs. Overall the is we're in part expecting So still as in too those modules the

the with to competition. macro, least subsegment. is We contend a than But solution that at that have have overall does for it smaller

the a just too term. the exciting term, we're don't in in term, the billion-plus the see too shorter this I longer surface. is -- scratching $X and But So shorter market, in much

All Great. just then me Okay. one for right. And the last here.

order? cadence between of of of change orders the quarter, the through quarter end maybe the and there Just the beginning the was any the

been of and fresh some other this mean, by mean, I positions December time I our reflected in inventory guidance. quarter And in large, period of been has quarter think has I after steady a orders Backlog, and correction. came

Kwan Jeremy with from follow-up additional an Stifel. have We

one follow-up. Just last

flow, exclude if quarter? customer be On included the the it repayment so it -- operating flow cash cash for deposit this, the would operating $XX.X we million

Correct.

how much it. your And at in is remaining this Got point? deposits customer

return have at still the next also. we'll around $XX in about million expect deposits this $XX We calendar customer point. would million-ish a We year, probably

this There additional at questions waiting are no time.

pass So any remarks. the for conference closing to back the team I'll management

forward This in concludes Thank again today. to our look AOS, you. earnings Thank you for you to your call quarter. next interest and talking we

you. Thank

That concludes Thank for your call. you today's participation. conference