AOSL - Earnings call transcript Q3 2020 | Alpha and Omega Semiconductor Limited

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Alpha and Omega Semiconductor Reports Financial Results for the Fiscal Third Quarter of 2020. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today’s conference is being recorded. [Operator Instructions]

to Jeong. conference like speaker to now So-Yeon today, would hand over the your I you. Thank go Please madam. ahead,

So-Yeon Jeong

results. XXXX afternoon, Good everyone quarter Relations fiscal conference the company. and and Jeong, financial representative third for Alpha Omega welcome Semiconductor’s to call I’m Investor So-Yeon to discuss

seven me Dr. over being is for our www.aosmd.com. in via be recorded broadcasted live Mike With web call CEO; CFO; and our accessed call Liang, today section President. following Chang, Stephen This are the the can Investor and the at our of Chang, the Yifan days Executive Vice and website our link Relations

will Mike we’ll a have financial the results a a provide detailed Then overview business segment and next for report. quarter. the review for of quarter Yifan of guidance with the begin After for the and continue will with quarter, session. Stephen that, question-and-answer review will

Wire close is Xth, on earnings by May XXXX, release release The today, market. the Business after also company’s the website. distributed was the The posted of

release earnings certain non-GAAP presentation and includes financial measures. this Our

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

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

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

our call the impact and the of COVID-XX business I’ll Mike, Now, overview over pandemic. to Mike? provide of CEO, an to our turn

Mike Chang

are joining earnings all safe call. you and you our I everyone, families So-Yeon. us thank your of for you, Thank that hope Welcome for and and healthy. March quarter

you business As it unprecedented and our we on how COVID-XX of we to challenges the resilient. navigate this pandemic, operations think staying we update is important are

begin face them. we a results, we actions Before talk few and and to risks usual the of will about I our take the the mitigate minutes quarterly challenges to review

As last top of and families. our earnings I our said is on health our and priority call, employees well-being their

agencies, to In implemented measures precautionary enacted addition guidelines the and families. safeguard federal, we their established measures regional by our employees and state mandatory to and operating proactively

disruptions mitigate plan, remotely. was instituted work As of impact part sudden had before operations infrastructure connectivity of and full ensured our policy that the business work-from-home our to a helped This to we to continuity required our us it mandatory. the access employees

well, We are running. our thankful our that global safe are currently and of employees are all X,XXX and operations

customers fully our during February, guidance In committed addition trying employees, outlook discussed are quarter China. When factored we to to estimate supporting we an our these in our in lost our early our of production in March times. for safeguarding back

As was February. out, in it severely during production disrupted turned China

XX/X. maintained employees orders ensure When challenges. holiday, of However, throughout people to managing our delivery Year while which the ran more partial and during New fortunate Lunar above we our products their production holiday, were with returned we logistical we various after to roles beyond work governmental complying typical the that went and

quarter. The also the during non-stop Oregon ran fab

the market we level expected. total than demand. has report production manufacturing Since recovered running that we at we footprint faster anticipated. March, pleased quickly level significantly our respond helped to Today, are am I diversified Our us shifting to

COVID-XX our customers. Obviously, impacted negatively

because are are they supply kit an Some epicenters, to more entire of than chain [technical components COVID-XX others. slowly in numerous others greater parts. exposed disruptions, of difficulty] source them complete recovering located the factories to while

and to utmost design-in support logistical closely can. in Travel also dedication, and we are and way evaluation creatively we our ability customers support kits support. to every challenges with our With boards, restricted restrictions customers working demo

demand service by and excellent customers. and with nimble providing our are being We demonstrating production flexible meeting solidarity schedules, with thus

to operating we disruptions As objectives. around to are of achieve our work able temporary this stage,

While March June an the later we of Against on risks guidance backdrop, vigilantly given quarter range. uncertainty mix, provide the limited product within of optimizing quarter accelerating seeking business COVID-XX, will the March with we very of visibility beyond Yifan details our impact call. new quarter and is opportunities results product by managing the revenue our this are reported time-to-market. in-line

Let mandates, end-demand in and which strong. Even downturn shelter-in-place and with some me need Computing the distancing we are for due higher This learning environment. working-from-home economy, in social now Gaming current online business very key highlights on and power is driving to activities, gaming. computing the near-term for for the touch overall the what are is seeing and the

support has and industry computing expanding The individuals businesses connect and been transforming and to worldwide.

remain we applications, power the leader area. and in home we have computing into the in management, While mobile diversified rapidly especially appliance, such other as

Our to our these, times unwavering In ever. than important years our has more through products us like uninterrupted customers is the this much-welcomed the rewarded with in customers downturn. during computing commitment past supporting difficult business supply of

the sustainable is noteworthy that played a in the meet in in growth. role computing enabling Indeed, strategic highlighted to Also fulfill to our market. Chongqing purpose, plan our its starting critical it is JV demand as surging us for has

As are the you given managing we prudently expenses. environment, expect, would

the pursuing our later expand is and We are and special non-essential critical Stephen more projects, reach projects strategic call. and TAM. reducing team our on with will in to working market R&D these spending, he diligently R&D details order while on also provide

highlight to is Finally, sustained our and I cash consistent flow. generating core business want that

you will position. provide our is balance Our more cash strong. with color Yifan sheet on

we is and power economy. industry mission am employees. with are and to and environment. market We our look a in country, both for rapidly and expand in humbled determined of amazing while supplier our top-tier strong accomplish our quarter, committed by The to and gradual our return performance group I the sustaining our semiconductor performance a and safe this ownership proud become at commitment, to our forward I sense growing, They of and healthy extraordinary a As and to delivered normality look market. large of working

Now, a call detailed I to Stephen? for the report. segment will turn Stephen over

Stephen Chang

you, and afternoon. Mike, Thank good

me Let March total revenue Computing. in our It down of XX.X% Revenue start year-over-year. sequentially the represented X.X% was quarter. with down X.X% and

Starting March, half for especially we demand for of Computing in notebook a the second products, rise in saw PCs. our

of COVID-XX various orders don’t learning. pandemic, are working know optimizing our of picture governments to at from mix result the we play We this in worldwide stay-at-home how have to home in this to a more PCs in people distance As as out moment, but will transitioning the second response demand year, indispensable this become and for surge the production quarter. by satisfy next the half demand are

demand Our been has Graphics business as selling solutions. well strong and cards up. Vcore both graphics also Gaming with been both card MOSFET is have high PC and our DrMOS in performance

We expect mid-single-digit sequential the with growth. Computing to be June strong in quarter,

the it March Revenue revenue of was to in decreased year-over-year. total segment, turning X.X% XX.X% quarter. the represented Now Consumer and down sequentially X.X%

now business June was quarter, grow but we in expect quarter. TV to the it in March the seasonally Our down

into with you an strong year. to this that AOS are a very share has launch expected excited We design is platform upcoming later that to gaming system achieved

processors this and the devices smart as TVS load gaming multiple content as protect Type well has controller to switches DrMOS to sockets, Our in protection surge power system C MOSFETs including ports. and

efficiently. offer Gaming because energy high feature still of system resolutions and performance along the our this higher meet requirements. graphics, solutions coolly systems and while plenty software temperature and power needing with design safety faster features, to to the won needed keep efficiency, AOS operating

ramp-up we anticipate the the segment. quarter the in June growth underway, With Consumer for double-digit

a let’s year-over-year. down COVID-XX impacted sequentially Power for XX.X% our adapters market accounted used for down Supply/Industrial during drop in and smartphones was primarily chargers XX.X% caused March Supply Next, It discuss segment. quarter. disruptions and in the total and and Power business of revenue, This the XX.X% PCs. Industrial China by

However, as production and we a recovers, in to expect demand. China see rebound

been watts. with and watts even watts charger opportunity content for higher power XX competitors, to higher performance-driven to our from market comes products. migrating output, has well increasingly quick suited fewer voltage is The value This XX medium XX to and and up application

in for quick recovers. demand chargers to We June expect quarter as a segment return growth chargers smartphone the and this notebook the in

Finally, severely demand impacted was let’s segment, XX.X% was X.X% revenue COVID-XX down quarter, market which year-over-year. the the is the move in smartphone and sequentially Communications to production but by globally. the of and The on in pandemic, up XX.X% disruption spreading

rebound June While telecom we the to have quarter. clear the we market XG demand business this we seeing We in think on for our are in continues segment’s revenue out. can in roll don’t maintain near-term, smartphone the as visibility

comments that, over With to call and Yifan will additional I turn now for guidance. the

Yifan Liang

down for Revenue X.X% Good the the million, quarter afternoon, X% same from and everyone quarter last Thank prior quarter for you, you from was thank year. us. joining and the $XXX.X down March Stephen.

mix, $XX.X was In million, MOSFET and XX.X% terms revenue product down year-over-year. flat of sequentially

Power up year IC $XX.X and from the revenue was prior a quarter from ago. X.X% XX% down million,

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

year. the Non-GAAP of prior the prior and the was quarter to $X.X share-based $XX.X million the quarter $X.X million for XX% compensation quarter compared margin Non-GAAP quarter March for XX.X%, XX.X% from gross for down for period. million from last for prior quarter margin for same up March million and as – year the gross charge excluded the $X.X

of production relating million year. and same ramp-up for joint the to the million as quarter the quarter prior costs million gross venture for compared also Non-GAAP excluded margin $X.X to for March the $X.X Chongqing last quarter $X.X

million compensation the prior last million quarter operating to the March government expenses share-based the investigation. $XX.X million Non-GAAP expenses excluded legal charge, million operating $X.X quarter same for were Non-GAAP the the $XX.X compared for and $X.X for of year. of million to $XX.X quarter related quarter costs for

related of $X.X million compensation to held prior quarter $X.X related compared as the impairment year. And last quarter $X.X $X.X the in and charge same share-based joint company investment compensation the million million and for start-up of charge for a to charge to of an million company expenses privately venture pre-production share-based

power non-GAAP the the million same last prior quarter quarter million quarter and Both GAAP $X for compared of and for as operating included the $X.X digital $X.X for expenses to million expenses year.

development securing at graphics a card digital is win progressing a to well, close we maker. design Our are power also and

$X.XX AOS prior the year. quarter quarter from $X.XX benefit and share quarter the quarter attributable tax the expense $X Act. was Income tax and CARES EPS year. the same relief same for for tax driven to primarily quarter for last by last tax per million both the as million benefit The Non-GAAP to of the quarter prior compared for the was to was $X.X compared $X.XX for

quarter stand-alone last $XX.X quarter quarter in as the the generated March quarter the AOS the for was in March $XX.X quarter. and flow Working to flow operating operations same prior management the year. $XX.X in $X.X compared to in Cash $X.X million JV cash in basis on the the attributable quarter million and capital same the for of $XX contributed million compared prior for used the million million million Company last quarter year. $XX.X to million

was $XX.X million quarter the million year. the $X.X $XX.X the same compared for for last quarter $X.X million quarter AOS $XX.X EBITDAS $XX.X prior million quarter last same the Consolidated March EBITDAS to to the for to the and and attributable for was prior as year. compared million for million for quarter quarter

This million the cash million last at at at Company. quarter $XXX.X million $XX.X at which and including AOS $XX.X completed and million with cash AOS the the $XX.X let’s Company. the million $XXX.X equivalents end balance million, compares of at JV $XX.X included quarter, look the March sheet. JV at Now, of to We and

$XX.X Our including the ago million, $XXX.X a at cash at JV million year and balance million Company. $XX.X AOS was

at balance million the AOS million borrowing $XXX.X including $XXX.X at end the Company. March million, bank The and $XX.X JV of was at

$X.X the existing quarter, $X.X of obtained Venture the loans, Company JV loans. respectively. and working During the repaid The March Joint Company capital AOS $XX.X of million million and million

X also believe of plan to We at quarter that be end, JV would the local the the total achieve JV $XX million. banks Subsequent Company. sufficient this to Company a two into with entered Phase largely the for loan agreements

the $XX.X end the at quarter. XX quarter trade quarter in XX as $XX.X Net prior million were $XX.X the compared prior to the same receivables quarter for days to and compared year. for last million outstanding days, Day were million, of sales

days quarter $XXX.X from inventory the $XXX.X for from up million days at $XXX.X XXX last end, in to prior Net the days quarter prior million quarter, up Average the compared and million XXX year. in in inventory quarter. the was was

including range expenditures Company. capital to Net were million million million, total and $XX.X property, equipment the plant the in million for be the the estimate $XXX.X Capital alone $XXX.X XXXX. for as quarter year revenue to X% the AOS $XX.X and million for was at compared quarter, fiscal $X.X of X% We the to year. million and last at prior JV $XXX.X of that expenditure AOS

move JV Company. for quarter, next guidance I the like the progress to I to Before at you on update the on would the

the China. quarter, than test During and facility fab March in assembly performed the of considering we the and XX-inch outbreak expected, the COVID-XX conditions better

situation this rate. and resulting determine ramp XX-inch fab global Phase economic are the our its is into Given the run very market unable to point, visibility of target recession, limited. At up this the beyond pandemic demand can to we June overall when we quarter X

when and gain conditions continue more will we visibility. evaluate to monitor We further provide and guidance market closely

our volumes support capacity. is as Oregon sequentially For the quarter, business full at we opportunities JV June fab production the to running increase growth our to expect Company

now quarter. that, guidance like I to the would discuss the With next for

to between million or million; X%. margin plus non-GAAP We gross $XXX be minus and to $XXX margin to plus be be revenue or X%. We expect gross XX%, anticipate minus GAAP XX.X%,

excludes to plus be estimated ramp-up production that costs estimated non-GAAP relating the GAAP $X range million, share-based gross expenses $X.X Note of JV compensation million. the in million million Company. of $X operating and of to $XX or minus margin

minus in plus are expenses range and $XX.X to or power digital estimated Both operating operating the to of expenses $X.X our $X.X $X million business. relating expenses the million million, Non-GAAP include of to be expected development million. GAAP non-GAAP of

to Income $X.X estimated $X million. $X million of $X.X professional $X.X million approximately compensation. expense government million Non-GAAP million million. related non-controlling fees the attributable Loss to of to interests share-based and exclude to be investigation $X.X tax expenses to be estimated around operating to

million. basis, On to JV is costs non-GAAP $X.X ramp-up item be Company, excluding approximately this a estimated expected relating production to the

not information. any part As obligations practice, we’re this normal of assuming update our to

questions. we call will the start Q&A the open With that, please for Operator, session.

Operator

Please comes David go from Williams [Operator Capital. Loop from Instructions] Your question first ahead.

David Williams

bit taking Hey. question of of be little in high revenue. and of of of talk looks or you guidance. a Thanks a revenue. kind look over about of kind level your the level very years, that for is is the Good Can And to fairly a evening. strong maybe demand where range? the I on quarters couple last confidence level what’s greatest guidance congratulations and my back if couple That’s the

Yifan Liang

primarily surge Gaming area This guidance Sure, and in are seeing reflected we the demand David. right for Computing the quarter that the June now.

that some last As saw. level you that know other the areas are not performing we to year

smartphone the areas For in example, definitely industrial some areas, down. are those area,

a provided surge this why that’s secured we month us, production our know time, March started, say strong this for you demand. of production. capacity Computing products, flexibility venture, For in our Computing we And this commitment and time, venture the so our joint actually you the adjusted joint a and sudden know, much with pretty in support with us saw area, to needed long-term in of would we surge saw demand I our

those are mean, surge, and going this managing opportunities. after business we I So

want about we a the But on the other cautious year. demand be don’t surge for not hand, or this whether to the I extend outlook or I second for half the of know be will while. mean, short-term can it of

to this mean Chongqing have supply. So for very at add? us you happy Venture and anything Joint in – I support point, much you do the needed we’re this Mike, want

Mike Chang

you question. thank David Well, for Yifan you, very the we’re Actually, thank and thankful.

that bit maybe as speak JV, surging. a time, have Yifan the And about mentioned such about PC let me we god thank it. a know You difficult little the in business Chongqing

really from venture. got we time, joint this a this also benefit And

all technology will our technology to volume us and know, The along. also demand more you model is new create enable extend benefit core course and of to customers. As business newer

business However, to capacity this will support. new need

capacity. JV knew time. And in it’s Oregon beginning, since And our be capacity – very know to it we coming And fab, is from year, full limited. right is that this started we course very indeed, last of – the

very good to some start up and thankful. to course, takes it’s it us. now, to very we this a and surge are produce right coming bring And serve Of thankful we very, there to time result that are

David Williams

about It’s out the Fantastic kind how maybe revenue quantifies JV too. the came JV? of thanks capacity by for can that flexibility, us quarter, very of think and that to comment how of we If much anything much maybe or level you helpful. this was provided give what the

Yifan Liang

and because the the year overall the know now, Sure. second market you of I right right demand, half then point, mean, – the about it’s to I about at now. hard of mean say this the uncertainties

up when to this target So the Phase now ramp are determine to we can unable rate. we X

Given tell I our from supported these all incremental June can Chongqing you by our Joint you quarter’s but know mean are that, guidance, Venture. revenues

even now, know capacity our out you demand quarter know know half Over market play there, in you much that is and that so if Right beyond of this second there’s very June still we visibility support that to the have you year. uncertainty the higher limited. well the

the So closely accordingly. monitor that’s – we’ll and then market react

So we’ll see. that

David Williams

Okay, fantastic.

Mike Chang

Might we business. some Okay. JV more? still I more in have Yes, the bit to a indeed, little – for add capacity Chongqing

the flow. really first to is in the However, cash our phase reach plan is breakeven

So not much, not do in have – words. other the we overly too but capacity,

to And near-term. so support not its

the fact. thank Okay Yeah, that’s you.

David Williams

Okay.

demand in the feel coming So additional you JV? in comfortable you the that say quarter can through the solid a June capacity

Mike Chang

Yes, yes.

David Williams

any you or concern channel? give just overstocking it. of orders would of Got health, have a any pull-in inventory the seeing the that generally maybe the channel anything maybe inventory if sense And you of you or health are terms in

Yifan Liang

to our of target, quarters of the know, the sure. – now, months. inventory. like the at we in you right of inventory end we’re know, channel Channel at couple you low months two And mid-range three in Okay, last are

recovery, recovery actually from of production we so this on we that surge. the quarter, better-than-expected this benefited you This because demand serve know can production better

right was area, in channel much-needed our inventory the this so Computing now, – So much that pretty June quarter. incremental for the the channel which customers – provided is for inventory – to

David Williams

you one And more, the I’ll helpful little you maybe past an fantastic. think and back Okay, year in and that up – year a I about jump controller the the about know there. Do end? I there’s and sorry, you said opportunity before How progress controller bit just accelerate queue. here can to that the end. drive But the revenue in the if talked

Stephen Chang

Stephen. is Yeah. this David, Hi.

that. comment Let me on

digital So graphics telecom. has addressing one been is the One to two computing, actually, design has markets. power pretty advanced we’re advanced a a card maker. and our computing close at side getting been second on actually the actually win And

And pretty that, going this excited – we’re of one. of kind more it’s a that’s but of into side consumer about

expecting We’re closer year end of once to hoping to generate and this revenue ramps project the up. the the

we as revenue. So come that to expect near-term

in still The development portions, development, think the we’re other the in customers. phase of I working terms with

still it anticipating revenue some the for So business. to we’re – will time the the of other take portion develop

nutshell, to in just into kind expect we expect will out XXXX. start short-term, of – small, do we business with be in it a the mild but some more So going some with, growth and

David Williams

thanks on and Well, the healthy, quarter. again Stay luck great. Okay, please. of best

Stephen Chang

you. Thank

Yifan Liang

Thank you.

Operator

Svanberg from Your question Stifel. from comes next Tore

Tore Svanberg

margin. gross Yes, question thank you. on A

the million quarter. I So to I little full, higher do but Oregon was bit more is fall expecting $XX $XX June through in a million the from recognize revenue the fab

margin a revenue is So lower of just function mix? pure gross the the

Yifan Liang

guidance much higher quarter, of know, for the the June couple increase you did revenue the not there. Hi, we A you things. Tore. know, over margin, This –

some that expect we ASP the recession would you erosion. there’s some know we price know is, know know you would other baked erosion, in some one we areas So you economic that know, expect at you time, and you

this is, supported our is thing incremental revenue joint by venture. you pretty Another know much

So the you reduction. tell production joint forma, in know, venture the and by will cost production reflected pro be cost, ramp-up ramp-up margin that you providing actually, can benefit the

with the so. or $X.X pro forma of the you out million know So then quarter, in March

$X For the about a the expecting from production know million June ramp-up venture. quarter, you joint there we’re cost

that it. agenda So will the be of

Tore Svanberg

the million Could and down to as CapEx go or terms $XX usage debt the And helpful. far little of down that of loan? elaborate that is loan. to Phase eventually as ramp spent that going to going as on be pay mentioned is a a JV you X up that you very to bit you That’s continue And money, Phase more some on X? the of

Yifan Liang

loans for of CapEx million capital. and $XX for working This are

a capital a remaining much for So and and for the some payment interest the X are their – bit range for will is for for before. in working loans, previous to down, CapEx pretty similar similar terms our the company. be actually, This the in to than five used rate better and little Phase and years the rate

Tore Svanberg

you have this year? for Great and JV do a the number CapEx for

Yifan Liang

that the will payment. CapEx, just be you of That this million then March mean think bit $X the for quarter, June little quarter’s than CapEx this a fiscal I depends year, or timing higher would $X payment. the million on

there for payment to everything they then wouldn’t equipment. the and time after then then and for So they checked and make those you run the make dry some then out of last then know and got the period need payment remaining a are installed equipment

Tore Svanberg

That’s Thank very you. helpful.

Yifan Liang

Thank you.

Operator

next question B. comes [Operator FBR. Your Craig Ellis Riley from from Instructions]

Craig Ellis

the environment. doing of a just for good March job and quarter, taking a Thanks real such question, with volatile in I a congratulations team Yeah. clarifications. to start navigating the on couple wanted

to in I one first looking for The understand had a different $XX.X for quarter the a ramp environment. we we’ve and ramp, the revenue target the JV September respect prior million much got been with to

but there into that that just is wins is the thought have? But that two the wins you those kits maybe from that and aren’t wanted because other wins about volumes the design you it in than would maybe different things to or go design now on wins concerned get that the or is to fine those I that the suppliers $XX.X parts is uncomfortable you’re related are are are is, to guidance, what million the there, unit with sticking company to dig design reason the

are understand relative run other just things, to to $XX.X factors a to where specific overall get needed design that wins but that I’m the you for and facility? what the trying rate are are to it’s Maybe million

Yifan Liang

demand Sure, of we Craig. I surge saw we volatile. the primarily you market, down you shift, mean, in we the because I the in I know the dramatically. last. point, And of you you of and in mean, the a mobile Okay. I on know related overall so mean know and of to And is later with saw this then this for like know and this lot it Computing. a demand. then know demand quarter, things it’s at quarter, roller the there’s so market the know, is pandemic, a mean market This end also March how all coaster will you kind uncertainties don’t long those

will impact overall wave not then a out. when unknowns lot our another I going to also winter I be COVID-XX down economy, you going and you in cities recessions whether we’re reopening know the And But after be how a know. on then for then, and those know mean, recession – severe, sure, of that right And this are mean, then how know, even for now. mean, does people there’s and to then, and seen, in time road demand to the I or products. things then don’t second And global or and you the of we behave are and how of long vaccine react,

you mean, when I’m to run more then we guidance We’ll can So ramp that provide the we it, target point, visibility. further will know up just of give when you unable we guidance rate this and gain at Phase monitor X. to closely I

Craig Ellis

Okay.

quarter. Tore it quarter, I was on than Going fiscal better the fourth clarification expected. points XXX third on out gross margin. about basis to a fleshed back the But

in the So had the to in what were given obviously, so estimates costs inter environment? some any to just we environment. allowed choppy quarter, COVID that incremental COGS quarter reduced there was offset the you perform incremental likely what But allowed of company And a well? positives

Yifan Liang

better March level. more came know we the was mean, yes, than gross expected. decline margin you In our quarter, recovery I production higher of production than Sure. guidance. our the expected And primarily in was we our because in It

to our lockdowns and they I shortage China, know, got to I of this and give through then So especially the fought much February mean, most And for you pretty of credit employees. the March. in then labor time,

they workforce but an overtime, it. know a produced know situations with you level. lot much for demonstrated commitment and not through through output higher ownership or the So us only the know And then – there. and really labor, given over materials of room limited mean over through also this know some – shortage they down you logistics, the there, shortage to I they of a on disruption know a you clean while, masks. the of were a some mean, low fought even you you for I pretty

mean, than I the our we for contributed to overall better gross and expected margin performed March. So then, that

Craig Ellis

moving – Okay, consumer got then the it. And to

Mike Chang

– to Yeah. is Let me back you you Mike take don’t mind. this the if Chang,

should recession – forecast. of be however, and Let like is in out about Chongqing the more the we the and point the me unknown to a we loading I in COVID-XX impact, the maybe in add But Yes, this JV improving. I’d words the conservative. think few facing Chongqing – JV the progressively progress accordingly

So cannot performance. very the anything. forecast this really, pleased you. We But I’m by cannot much Thank beyond we moment, comment at anything. June,

Craig Ellis

got it. Mike. Okay, that Thanks for

ramps. Moving on consumers’ to gaming

looks right like growth, if quarter. I’ve June modeling bottoms-up half sequential the it accounting the the gaming for got in So of about is

gaming in the June you of benefits respect will we growth design once will – the you with we further be the there quarter? the Or you September? where June When question. really to exit twofold know realize So Is quarter, coming that win all in ramp?

it back win, design to in growth is win, the with this fair connecting volume average? be then is a half since decline gross and going coming in that margins, the design and And would question, this given corporate high Tore’s sequential maybe assume below it’s in

Stephen Chang

Yeah. This is Stephen.

on me comment the Gaming Let thing.

half systems to on Gaming are a definitely, go, as we in sockets able this for this of you The be to anything, Gaming multiple not share this, see release system. It’s going point. excited anything because Hopefully, at the to year. yet. winning in we system preparing pre-production don’t no delays but pretty as of second yet. released or this there’s We’re is they’re And know

expect continue on all grow, ramp-up the with definitely depends own to We our business to rate. it do but customer’s this

further. know especially would a then believe and growth you launch, be these think is, that And a they area this But pretty to things us. push push, see trying there’s how for then it for usually whenever big after we do Christmas. they that, I you they’re acceptance good know,

we’re it, coronavirus cautious, given about time. also So especially excited we’re but this

Craig Ellis

sense do for And is any have your share fee? what that sockets with you

Stephen Chang

The asking? mean, is share our that you’re in share, or there I what

Craig Ellis

you Are do or you’re think you share? the to you the majority sockets Yeah. that have in self-sourcing

Stephen Chang

it what it is. think socket depends I on

The thing want number Some a few these so and quite things sockets talking for none better a you’re share. one which sole-sourced, here systems. we don’t. sources Others, have them they of inside, about. are it have we we depends always good is multiple But actually of

Craig Ellis

to Okay, great. markets. connecting end then And the just

comms toward team? with highs then strength back or So, and that that near-term the PCs And into were can some as in comms. driver, to sequential be PCs. that thinking was we question you some the we seeing this allocating went year growth know, to going secondly, you’re fancy year-on-year seen capacity footwork the to of The get the realize ahead, last we year, had the we strength look

we’re Clearly, stable some in ‘XX in have, you to would really But of see to back opportunity current do to able back do growth look you’ve the revenues calendar before to business or levels? June, funnel design you calendar the the half win the that like significant headwinds. from really revenue you you that feel half of got in year, as have look the unit we grow

Stephen Chang

Yeah that me and answer let one too.

So down about PCs, regarding year, the is regular we’re Normally very definitely a growth typically QX in season. in excited PCs. a

we’re only pretty the you thing percentage So in actually first quarter just of a points at, for to few dropping big us. unusual a where know, is – type

of PCs business, we to as and strong. We’ve our all ICs of to grow we’ll always we do And and content that. along higher to to areas continue DrMOS. also computing with there continue do stuck expect So one into be core power continue – we’ve to

continue our PC. foothold we grow and to expect do in So to maintain

the going we last overall is our current good. Of course, least for, there what’s is you position this this all how We at don’t but know pending market. in surge know to is believe long

actually Regarding communications, quite in overall how this shipments September seen what we quarter, coming at in in know, going we’re sharply. – know remains be is is to peak be quarter. smartphone And phone to December actually least the and the quarter down were that March you season

you as the protection actually, also wasn’t our down actually But market. battery was but down, as business know it overall compared to

they’ll But course, to how You this know pretty see shipments good positions be you season. we’re of own know some the in at makers. global phone upon we’re still peak in dependent doing their upcoming

lot So dynamics have is yes, there’s we there a I well. think for also account possibility as growth, that but of to for

potentially, half yes, But going into number second just and to second a further. half. hesitate the we put be we growing could even the into So firm

Craig Ellis

of to in example, further designed you see XG design interface are the just clarify whether half that you a that phone back it will the wins For is is be XG half, to X.Xx different? but of Stephen. have? unit to last point, or dynamics the first obviously you’re a visible the near, phones Can in you into Half-on-half, the XG And up to year, X are going nowhere good. to the dramatically that likely XG because be phones be

on XG So, or whether you’re in any visibility XG?

Stephen Chang

but We get in. confident the feel least we’ve released, at we were been which that at position-wise, where don’t pretty phone makers know know, each we’re finally of about things design-ins until necessarily model you always the

ramp a we actual think happen know how in it of I terms we’re ramp in to be. would But right good position going preparing happens. you the course, what’s of would until you don’t what know strong are volumes know it know for design-in-wise, there what that’s – of a So be don’t preparing we a we now

Craig Ellis

for the Okay, great. Thanks team. Good all luck, help.

Stephen Chang

Thanks.

Mike Chang

Thank you.

Operator

over There presenters. further questions. the time, would call back At to are turn no I this the

Yifan Liang

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

Mike Chang

Thank you.

Operator

for today’s gentlemen, conference this you participating. Thank call. Ladies concludes and

disconnect. You may now

Alpha and Omega Semiconductor Limited (AOSL) 10 May 202020 Q3 Earnings call transcript