AOSL - Earnings call transcript Q1 2022 | Alpha and Omega Semiconductor Limited

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Operator

Good day, and thank you for standing by. Welcome to the Alpha and Omega Semiconductor Fiscal Q1 2022 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your host, Mr. Gary Dvorchak. begin. may you Sir,

Gary Dvorchak

With and discuss Alpha financial fiscal Dvorchak, Chang, for am everyone, Chang, Dr. conference CEO; our results. Omega call Gary Stephen AOS. representative Relations to XXXX Investor today welcome afternoon, are and Mike to Semiconductor’s I me the Good first our the days web. Relations is will A Investor recorded President; be our link following broadcast website. and available call Yifan This Liang, seven the replay via call live in and for our of CFO. being over section quarter the

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

will the release question-and-answer The services website. we the have wire over XXXX, on earnings market. close November of distributed posted company’s The today, also session. was X, release is after the Finally,

measures. expectations projections. expectations. presentation our Our non-GAAP We non-GAAP financial release. materially operating this from involve These forward-looking we risks will forward-looking to about GAAP these by statements, earnings our should differ during are remind we release make and earnings actual the and could performance this information comparable cause provide. measures to statements investors measures and in non-GAAP on certain business and the including GAAP that that include we you with reconciliation be conference such current management’s outlook results A We call, they uncertainties discussions that based useful measures the included conjunction because measures of considered use believe provide in is financial that certain of

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

Dr. Chang, Now, will turn strategic CEO, to call our Mike? to provide the Mike I over highlights.

Mike Chang

highlights speaking be call. will to would moment to am again today. In which of you September to a I welcome were excited with quarter, I like the all everyone the Gary. I operating today’s of Thanks, review strong.

this milestone; that and when power is believe want we legitimately earnings quarterly and EPS that, of I over because means that of a broader we economic do you $X.XX business more EPS share past growth AOS, levelize in share We achievable, Today achievement on $X a of momentum power earnings most power over to our than see we of our Why it non-GAAP the sustainable? this per will industry, our important real cyclical Think context. demonstrated fluctuate, of built. $X two a over Yes, $X is this what of reflects in the believe of I achieved because basis. are you in ahead. basis quarterly the we Because in milestone earnings Before but of $X per about the earned years; the share per so highlight prospects a have years. over to the quarters we for years think and that history a have earnings, we annual in annually. on we the the we is do what believe earnings have an

appliances, computing in diversify applications computing cover in a smartphones, silicon strong portfolio IC a the consumer, of beyond and new IGBT allowed next broadened industrial success has We This base developed our us generation have today we performance DMOS of voltage to and and to This markets. offer applications. module our to line-up We range also SAM to home into and communications, solutions. led see products. a and higher established full have platforms expand to our packaging and addition technology Power

trusted translates strategic sophisticated, work not count that All but and earnings in their our with world, only leaders engaged base among of into also most expanding are customer our have companies We partner. mobile strengthened gaming. the electronics some into in well-known, this and power. have earnings, We become successful computing, customers, giants and the relationships, phones,

is outstanding, but R&D portfolio more in because competitive even fresh, product keep is valuable, our will product and Our our capability relevant years ahead. the line it

design even design more years sales because and are wins are the Our will valuable, wonderful, teams but ahead. in drive marketing our wins more they

power Today only demonstrated us, The milestone we value. nine team to has ensure a a also not our is times earnings single justified, earnings our state a valuable in joy just seven a $X times come at decade intend of to the a organization effort, to our lifetime day build we in earning continue work. is on of our make of this your earnings a power go you better, our but more. and quarter. this long-term to we it When our long-term support. energized This that $X we the all an art, a industry, mid-$XX to We quarter, annually. and more earnings of $X source celebrate single more the see we even power be between mean or your beginning. for multiple now. of shareholders. power. does With grow because customers a capacity earnings, In our even share to clearly even has our in of a create which today for from better share That power, us team production look our will Earnings confidence is products and our value teams but production even the competitive, come of to from thank the price serve is comes milestone assigning company, can Our it and in and difference market more state-of-the-art stock is they even is range, which

me other quarter. highlights Now, to turn let’s important the of

gross million, quarter double-digit margin results was segments We with in $XXX XX.X%, profitability, bottom-line market the fiscal record quarterly growth outstanding our and across share each whole of delivered per non-GAAP earnings was First and revenue, performance. excellent P&L. were non-GAAP were $X.XX. strong Revenue

dealing we the constraints industry. a are Let the issue: me chain update semiconductor with you broader on how supply critical in

our We supply. venture to are production joint fab Oregon details we our on industry-wide relationships sure doing strategy leveraging We call. We believe any foundry want and Stephen managing partners wafer our outstanding capacity secure chain in to interruptions in production our will an later provide our in the on constraints. Chongqing, we fab, this job ramping expanding in be are to our customers. minimize with our more supply

of support external thankful is team again an strong team’s in am tight, business. are at our position both capacity work. to summary, this and once our the In strength have and we supply execution to While our of very excellent access proves quarter we I for tireless internal own and AOS. proud the

we the We growth place that continue that the to scaling to technology successful believe our we and ensure right foundation business. for in in have long-term are right

More importantly, power people ensure in earnings expands the more years have we and ahead. that even capabilities the to our

We track a a global technology being to on semiconductors. portfolio of a our mission achieve supplier broad are power trusted of of partner and

segment our for call over turn business will Stephen? a update on an report. Stephen the I and detailed to Now,

Stephen Chang

start for will and detailed Mike, everyone. then you, September I highlights on quarter. Thank provide the good an our with segment afternoon, and update business

we and the share As are today this to and maintain capability in if Mike earnings power, built years, but leadership ensures have our but noted come. our time, a we can for in not discussing products, market decades, continue point revenue,

allows packaging, of to Our technical silicon, to power deliver invest us platforms. technology enables of core our variety competences product This and complete us expertise in broader our more discrete the target power of as offerings solutions develop and for We a foundation IC applications. technology. expand power product and ICs

provider. have to a evolved component solution Over years, a the we supplier from

customers engagement. product current in several appliance to and those we to but a both could on deliver strategically the power we availability, multiple customers. growth optimize these limited production markets, quarter, number focused supplier mix provider. Like that strategic for relentlessly chain was To In revenue manufacturer, manage gaming smartphone our believe needs responsiveness industry meet peers, while number and component Furthermore, sell into one Tier we manufacturer, are position, strategic and competitive leverage to fulfill. component we managing We customers, than lead maker, valued us shifted global customer September number strong become on enable to to in and longer demand these number value market meet to margin. X and one and have the Tier allocation, shortages, closer our We are times console one gross customer supply capacity stay tool global greater commitments. one we Xcustomers. enables our the products end environment us relationships driving This customer home to focus

capacity we of our grow to our approach three-pronged technological and enhancing the a sophistication the demand First, to taking expanding for fab. products: Oregon growing are We capacity meet are our

$XX $XXX will us including revenue. million $XX this we upgrade approximately believe When to to expansion our complete, capacity. invest an in million, annual million generate capabilities $XX will enable We to million additional expand and

come the December XXXX. to expect capacity We of new the in online quarter

the plan global technology semiconductor supply as competitive advantage growth to own to is as chain investments control our expect the want for in shortages, a possible. we Importantly, strengthen sustainable the long-term target and our industry, improvement. our in current and challenges strategic With of we part capacity markets. This especially our much

We capacity of reached I into The million Phase target company JV how fab ramp our well is revenue complete. the process X. the Phase JV run rate the Chongqing will of determining annualized it $XXX is implement in in Second, September quarter. of at the

and we wafer Third, partners, with are them with multiple working additional close foundry actively have relationships for supply.

drill figures the noted, our XXXX. otherwise me following refer business down into let of Unless September of to Now, quarter segments. each the

year-over-year Computing. our and total X.X% up with revenue. of This Let’s Revenue start XX% XX.X% sequentially. represented was segment up

to Computing especially products end best was To demand desktop the expected, we for As and tablet, and production allocate support notebook, our shifted strong. applications. resources capacity, segment,

component shifted business graphic the capacity in production as the down strategically support hand, other the segments of was sequentially other to we face temporarily card shortages. On

be in the expect December we Looking to Computing up ahead, modestly quarter. revenue

continue demand strong expect for ODM customers We to at our desktop.

grow graphics growth to level. and and rebound our September will decline our a This expect in we notebook addition, in we slight graphic desktop partially our to In the be business quarter resources by from cards. support allocate significantly offset as card

This products grew segment customer Turning which expected. growth both sockets. the out Power XX.X% XX.X% IC was to at due MOSFET played system as X.X% up gain with share Gaming and and up sequentially. of to multiple a double-digits year-over-year segment, our in both revenue, and total major Consumer

Japan. home Our volumes Korea, overall growth China, appliance in module appliance demonstrated solid customers across key higher and home shipped of solutions different geographies. We business also to

we and the strength with Looking percentage, expect single-digit low to gaming a increase Consumer in by appliances. the quarter, December segment to home

up our XX.X% played and the which This demand discuss global inventory at the of segment, battery the expected, was as for smartphone was customers revenue, segment as total let’s also models. up shipments to sequentially. That protection due our year-over-year said, to Communications declined in quarter. of Next, an new China support of cleanup to XX.X% XX.X% strong launch two out

by we decrease quarter, to Communications expect mid-single sales December digits the sequentially. For segment

major manufacturers are shortage. navigating the smartphone U.S. While China’s peak the production December in expect reach decline smartphone in shipments the Korea we component to expected smartphone are players to quarter, and the as

designs We global in have protection the as continue excellent major to battery growth we next makers. smartphone believe position couple at the of secured over in an quarters for are we all

The year-over-year the and let’s couple revenue. factors. and Supply for about total growth Industrial up XX.X% segment, This XX.X% to sequentially. of Finally, which accounted was segment was due X.X% a of talk up solid Power

for supplies Taiwan. medium-voltage power adaptors design for power with with strong was customers incremental supply AC-DC laptop the major First, in demand engagement

brushless a U.S. strengths is industrial tools Power medium and our low was targeting for with solutions from for synergy application strong. demand us an motors. voltage management the our battery and major product customer great products power in Second, given emerging in tool DC

to Power this the to system our power. slightly by in a the segment Supply quarter offset sum, ACDC attributable are decrease end shortages start we solar due to expect Industrial production slow-down December XXXX. we temporary great to power largely and ahead, business In year off growth fiscal and in to Looking in supply

diligently and strategy right products which working the semiconductor Despite momentum have deliver strong generating customers. component to industry-wide we place, continues, are our is shortages, results. the to business ongoing Our in we

of ability and many opportunities that, results for record on will track I in first capitalize of execution discussion quarter our over With our ahead our Our the call to confidence turn outlook gives consistent now the of the growth us. fiscal Yifan a quarter. next us for to financial

Yifan Liang

was to the noted, you, figures quarter million, quarter refer $XXX XX.X% last September the and XXXX. the us. Good prior and year. thank for Thank same Stephen. quarter of afternoon, from you up joining Revenue Unless from everyone, up the following otherwise X.X%

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

The quarter, non-GAAP each in and quarter revenue the as quarter-over-quarter was margin mainly last gross mix. quarter XX.X%, quarter million the excluded million quarter XX% by service of the Assembly quarter year. XX.X% last $X.X better for year. $X.X compared Non-GAAP of $X purchased increase from gross $X.X the September the million same in last was driven quarter, prior gross was to for from amortization margin margin last up million year. and same up in same and the IP product Non-GAAP prior

was of same prior compensation operating $XX.X million, $X.X million the compared for the quarter charges, prior $XX.X quarter the compared In last million excluded for to year. were $X.X addition, to last the last Non-GAAP prior quarter and related $X.X quarter-over-quarter for for compensation non-GAAP compared last year. for gross for and to share-based as million of quarter for was quarter million as investigation expenses million $X.X and legal of legal and for Non-GAAP expenses $XX.X well quarter prior million financial related Income to share-based Non-GAAP charges year. same and last million and the to primarily million AOS the expenses quarter investigation government to the $X.X margin same $X.X share-based expense $X.X the same million $X.XX investigation. performance. year. year. due to million to of compensation to $X $X.X quarter tax and excluded charges share-based This operating compared quarter, higher $X.X prior related was The increase $X.XX outstanding compensation charges legal of reward million this to the quarter million the $X.X compares million million, the $X.X attributable for quarter our as expenses accruals compensation variable same share the $X.XX of EPS to of expenses for as the per

quarter at net of cash let’s year generated capacity. operating from grew On flow, in $XX.X was not cash and to a quarter, secure operating generated the flow In AOS we JV, nicely. including was look cash GAAP million. flow was stand-alone and ago the deposits Now $XX.X the flow. million customer The non-deposit June cash million, same non-deposit $XX.X a basis, million operations, $XX.X $XX.X

EBITDAS the Looking was the $XX.X operating Consolidated by JV quarter the year. in $XX.X the used for cash to $XX.X was $X.X and million Company million used was $X.X for Chongqing, JV prior last $X.X last cash compared flow for of year. prior $XX.X year. quarter cash as compared $XX.X flow to million, GAAP quarter million the the and for the last of to $XX.X prior provided by for attributable quarter million the million, last and as the year. million for Company for million quarter to compared same in to million Company the by the to same quarter $X.X Company was quarter same $X.X the million, quarter flow EBITDAS AOS JV and $XX.X EBITDAS prior same million million JV compared

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

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

prior compared for $XXX.X million the last were $XXX.X quarter. for JV September the from Company. million, last million up Plant and slightly the were inventory $X.X up Net quarter, Net same the and JV sales $XXX.X quarter. compared expenditures million million from XX outstanding $XXX the for and inventory were million to existing $X.X the and and up the was million quarter the the million $XX.X $XXX.X quarter days quarter, as end, the repaid prior from Average receivables to Net prior the at AOS of quarter, During compared million respectively. were in quarter last trade loans, year. Company year. AOS days up XXX and million to Equipment $X.X and year. days last XX Property, from million, at days, the in end of days at was quarter quarter Capital term million in including $XXX.X Days prior million million $XX.X for $XX.X $XX.X $XX.X at in quarter XXX

would like discuss to I guidance. Now, December quarter

margin expenses IP $XXX be approximately minus of $X.X to expenses expense be Non-GAAP tax plus gross million Non-GAAP of expenses revenue be margin XX.X% Income of million. of $X plus to minus amortization plus gross the expect, or million. or million or expected estimated exclude Non-GAAP $X range of million estimated in range gross X%. the to relating government share-based approximately interests X%. operating or We investigation. $X operating to XX.X% share-based $X.X non-controlling $XX.X $X.X or be $XX.X operating the to to are We Loss minus $X.X $X.X in anticipate and charges legal GAAP attributable and be million, compensation of million. million million to be minus million. million expenses GAAP to minus non-GAAP be to charges. $X.X estimated million. compensation approximately $X.X to excludes plus acquired million plus margin

Stephen. shareholder upcoming to annual to Stephen? back will turn voted on I meeting. He the a Before we shareholder be call discuss the open proposal line questions, for at will the briefly

Stephen Chang

at meeting for shareholder proposal annual a attention We week. want vote to your next a call our up coming to

As the SEC. to Proposal proxy that our has statement supplement proposal, described filed million meeting, one ISS in recommended the number the incentive technical primarily an We equity plan. reasons three be against in proxy authorized annual outlined with requests understand for our the vote shares under for additional certain a

our encouraging are the shareholders to We vote FOR proposal.

our we shareholders price These period, directly non-executive be achieves shares stock and benefits to if certain additional to the additional company As revenue the hard-working potential explained will shares expect incentivize use employees. supplements, earned multi-year in a proxy criteria only over statement despite and growth appreciation our which these dilution.

stay employees Our Mike people the work the described and of Technology that they equity our companies want face create diligently for AOS best intense incentive us power to talent, day every call. at and participate motivate show enable. in start the critical up to sustain wealth awards earnings and creation and therefore, are our competition to retain our to We like employees. for

us incentives in to common of employees meaningful range share the offering All broadest performance a of possible. interest

proxy You and We reasoning filings. the for the our can will about the start will proposal you learn more proposal please session. vote our three. Q&A With that, call Operator, hope in FOR for we open agree questions. now

Operator

[Operator first Instructions] from Securities. Craig Riley is Ellis from Your question B.

open. Your is line

Craig Ellis

for the question. start taking guys. questions financial strong wanted on and congratulations the of Thanks longer-term a Yes. to results I and more with outlook,

in that wafers it So deposits in the needs and question now shipments has the in, so have quarter. company done taken work expansion. that actually customer Oregon are the looks fourth you start come And the fab needed was that deposits visibility customer that the the producing other and with that like will to really on that the that, have fund the be essentially tools into nothing can

that in your expansion wafers and fourth the quarter So, in color just confidence next can capacity some of how year? is generation out on and getting coming revenue provide you

Yifan Liang

Sure.

in our investing million Oregon in last are call, we stated fab. our over $XXX we earnings As

construction started So the room been already. clean has

purchase already So placed – two of the and purchases. most orders for

are – additional we XXXX. we calendar at get online So December can of we point, quarter capacity in this are expecting the the year

current So expectation. that’s our

Craig Ellis

Yifan. That’s real helpful,

may more be better The to directed second Stephen. near-term question a question, is of

were communications-related lower-end other out Obviously, shipments suppressing remarked some have X some that there in companies calendar Communications side I been there’s and OEMs that more, fourth is been could issues calendar season in about chain the Tier softer supply quarter be chip quarter on news this But on quarter. there into the So fourth reporting think, have demand a supply with the Smartphone the there Android. first cycle product – revenues in some catch-up first just Android view releases the above seasonal quarter. that

So little color you a first as what further gives about into little can as the would be helpful takes first bit the any across you and well. see look segments out talk bit you for the a And other quarter quarter? on

Stephen Chang

only talking shortages, system are definitely, And segments we to Sure. you. components, necessary customers other and are power end systems. our are produce facing That’s many but seeing great of in of not still to that our their components

an we softness season. did and than in get demand. It’s lack there, for to possible tied not Android and of of if certain for further that Smartphone, to market the do extend that’s typical supply lack lack a the strictly ability Specifically of this see phones demand will gaining China components,

Just observed delays prolonged of Smartphone season last as because But also got to was supply launches. of the a how – tied that kind also, some which year, Smartphone the in because too. it’s we of

especially slowdown, is preferring a more we the that of More a There yes, difficulty quite bit China components. in challenging us. for market. mainly possible little So other to do the is nearly see, in due

Craig Ellis

Or year? environment into you sounds like being you to bring it its opportunities. for part, and able capacity – demand And for have, you is that highest fourth should order at from But on the just order meaningfully equilibrium? you it. capacity and see is book do company do the and the through persist you the into whatever reason with that quarter think that the the best areas navigating most allocation the see look commentary or and do likely serve you back still Got backlog to position next highest Stephen, the that to allocation, margin activity

Stephen Chang

be for a now, – few Right with peak typical allocation a regular are season. that a will I in year, it do we more be us still will in quarters. a work think

So you demand. have Smartphone

You lining same And into the demand would other also quarter. into have December and time. PC be the quarter the March seasonality things up going there at and normally,

I is everyone allocation our and orders, I’m may subside a up of customers talking backed do think backlogged we still some because that that be will ongoing. bit, their expect about – demand being but in

As we they are when you. customers, are that – being fulfill is with able demand we move frequently and sustainable that they our shipping not demand. that they told the we to to And have demand not are to that they see

So I form at do few that still think, in next the of timeframe. we’ll form in quarters, at midterm least for be some least allocation, of

Craig Ellis

Got That’s the queue. into guys. it. I hop helpful. Appreciated back

Operator

question [Operator Benchmark. Instructions] Your from David is from next Williams

open. is line Your

David Williams

afternoon also think, one all another good billion congratulate but on so $X of to when above market fronts congratulations Hey about I EPS and market in nearly over the milestone you there. I and cap, wanted $X, on

Mike Chang

Thank you.

Stephen Chang

David. Thanks,

David Williams

you year? already kind on there demand what they in you discussed allocation You of we’ve you’re experienced the think you’re that growth building your – But of fund? there. available given like capacity you’ve about Or are just of of to been job And this capacity kind do going on longer-term feel short other especially to what you’ve and terms have? about of you thinking and gross maybe capacity be think guess still opportunities just to outside newfound time driving are plans as some your additions, do you the for the doing margin help executing, you kind that I guys your

Stephen Chang

about Yes. in the this We’ve past. talked

next three-pronged capacity the will talked in in X-inch and there, on quarter that forward approach. Our coming are of fab we grow that expansion latter the a about capacity going our in-house last be Oregon investing through is We half year. to

our work with as also but Venture well. also, continue them, additional we’re additional same Joint to to We’re to capacity also time, with continuing foundry grow – foundries with the at working

plan demand that a and to is of do business. up to have balanced strong, with establish sources approach, more keep supply order in that we quite we So need our to and more we believe

David Williams

any And JV in Very that thinking we said the could you second in about Okay. good. terms And in of the planning – phase? there how around you maybe Has are of anything updates of efforts? planning What on maybe terms that? phase expect what you’re JV that. been do currently there? second new world You

Stephen Chang

I The JV process phase of I takes And when and years mean the like and is to time, how mean, next it establish determining well Sure. – Company is some their will the a into this time, of its it or two process growth expansion. last thing three believe implement took joint they need some I agreement. to come that to brings I to back who will this right? much but to – So this, venture we And time more those how will it good – things patients in compete be mean comes. this don’t it me disclose saying wait,

David Williams

your And that the you’re or a standpoint breadth China manufacturing specific, Okay. are or just kind consumer softer trends? maybe from the China, maybe be given product in and spreading I even seeing? seem impacted the Perfect. of of materials? footprint you issues Anything, Thanks. And anything maybe then have guess, seeing there by to geographic there maybe COVID some just kind you of of Is infections been on the power exposure, in that your the geographies. raw

Stephen Chang

right Well, now...

Yifan Liang

ahead. Go

I think this XXX%. is

Stephen Chang

Okay. Well, factories this providing one, and our there. – Chongqing, not in so ventures is far, on we have Shanghai joint well encounter in

– but supply continues negating seen outage impacting and far, power have there, So us. we issues start not some may

increased inventory increasing on materials hand, we case. and in and we intentionally parts raw some quarter So so some up operational – September spare are that’s for and built in the why just example, some

David Williams

great. Okay, thanks of Best gentlemen. again Well, quarter. luck in the

Stephen Chang

thank Alright, you.

Yifan Liang

Thanks, David.

Operator

Nicolaus. Kwan Jeremy next is question from Instructions] [Operator Your Stifel, from

is line open. Your

Jeremy Kwan

you. Thank Yes.

strong Let very me on my to add execution. congratulations the a team

is to exiting are product certain as everyone guess, I it – that the something for Is is experience first, Maybe how lines. content, retain question gains of going versus share a insight some competitors Just growth this for in to sometimes and socket? seems of quarters seeing the in industry maybe terms much like had portfolios recent you? new you’re that your you

Stephen Chang

the question, hear just – asking it? but that is I’m socket? share is us, little a gain a to trying of I new it Is hard For think you’re to or bit

Jeremy Kwan

that’s Yes, right.

Stephen Chang

Yes.

think very in PC, home So positioned was wins have that think and the we appliances, these because we because I grown well markets growth definitely, surge still I – Smartphone were are biggest in have revenue of this markets. our core the and and design our And of secured. year part our

it a ramping in, further ago And business of to share, a module And of With business. in even there. one is to project choosing is out about getting this. up also other are for big its them more more from and more these to into and So great customer The new Korea it home some further. example are appliance roll designed time projects. our they’re certain IGBT, takes our allocate that existing designs is the our years X.X it to probably solutions, strategic

And for see we in that applications that appliance use area is solutions whole so existing app because that part of customer. the in new our of growth in within

very for because it much new but grow to leading to a right not time and where existing be our customers in this shortage So in are also time, to sockets us is want only actually business, now, great supply. design we

parts alignment. receptive So to getting they’re new very a

Jeremy Kwan

on just Great. follow-up That’s very the fab. another Oregon helpful. And

potential – your kind your of understanding revenue and utilization and So just broadly. more

if that got $XXX JV the you’ve million reached be run rate. It’s utilized. to annualized revenue seems So – the fully

there us you of XXXX? is have Oregon might picture? to up Can Or there is help year. sight fab between expansion of December kind see against until in? limits – bump some of not wait and now online fab, as next you be that the expansion to just a sort for going kick some of that you to growing keep line do Is Oregon Your December you

Stephen Chang

Yes. Sure.

on grow, plan So there’s for us, continue we a allocation to are yes, to we But and lot do we do can actually the now. within allocation.

we supplying. of of one of are debottleneck working the supply. And all, just of more First trying working squeeze leading to to earlier on in to output fronts to and we mentioned expand the our I find of as questions, on are sources ways out

In capacity. the shortage streamline the the Oregon, So things to other during yes, meantime, one part counting working and mix. is doing optimize to the been two areas of to – time product of other you’ve we’re grow this also we’re on our but on

see we’ve solutions. higher-value put more the newer cards or of because solutions on consoles. mean ICs, it module could some that MOSFET the sockets higher-end mean as such you in success can could and emphasis that And our even the So having Power the graphics or been we segments our gaming

believe we it. coming in allocation we strategic Got accounts, product the with just that that grow quarters. there on can focusing a we believe the and and So mix on still better

Mike Chang

the Q&A? This is I Can up Mike add Chang.

Jeremy Kwan

Yes, please.

Mike Chang

me? you Can hear

Jeremy Kwan

Yes.

Mike Chang

many very trust in strong beginning, and AOS. year loyalty lot from and shortage and very last sincerity value to since the to And much partnership of corrugate about and very how it’s pay a a we the credibility. of attention with recognize customers AOS of of – period our the customers, our care this sales, the the

a as with long can working see money, are deposit AOS you multiple time, right attitude. for now from collaboration. the So symbolic the acoustic They years those of

secure our further each business So growth.

I’d share is like Thank with investor. this our you, So something Jeremy. to

Jeremy Kwan

job like and done thank No, field. gaining tremendous you those your top customers said, guys you a X Yes. Tier you in Mike have

even that? bit kind of are mentioned, can for this back – I for assume to a Power So area your little other validation that’s the this dig third and into certainly constraint? a help MOSFET, deeper Is is at guess Or I you your Stephen. going strategy. actually that you business? IC three-prongs mentioned, prong, That if the just the it’s to you looking you the of execution us foundry,

Stephen Chang

our business lines of growth. to accommodate ahead looking the at actually, in point do our we growing product pretty need each quickly. one are future – a And both We’re

on well working IC. for for as we’re fronts, both multiple MOSFET as So

Jeremy Kwan

us impact some in will and as there well. hearing of your any give so in everywhere And to of terms up insight presumably, And we’re on nodes. going generation capacity dynamics they’re type for margin terms the what be lagging that prices kind are foundry especially, the forward? are Because both going gross Can pretty you there? thoughts of

Stephen Chang

you you because, of have multiple products. gets to I as that again, margin. it certainly, profit we’re outside, think But washed go share sort addressing out

– – also in-house And for not don’t outside. too. us, us either difference between some in-house be MOSFET. increasing, costs are at supply, a for mind products, are IC Some think that are in and our huge keep may I our the

materials because their you. raw us prices increasing to is for are up foundry are up. going going also So

bit using basically burden share is line we’re think as help a supply to as, more bottom to help So the our in that. yes, that our customers getting time to also ways going with in select pricing. to I But

Jeremy Kwan

And... it. Got

Stephen Chang

list? – they that are Why

Mike Chang

I say, their reasonable. material they are Jeremy. partnership, all So have mature, price also like them. also long-term much we reflect reasonable foundry, on to can big professional of Okay, okay? other very Thank to their our and a to are would extremely maintain That’s also but they raw they will costs, and thank increase yes? level. why you, They we fairly Those

Jeremy Kwan

might like Mike. have going And question. between waiting of out can you Why when for there can stepping that the more discussions so squeeze and I maybe Phase just there the well. fab? quarters more the they It’s Thank if that a is ramp bit financing maxed can kind where Is in kind looking at seems It JV, the us access are of and you It the of one And the a as had to maybe on certain maybe picture, JV a – when maxed X. seems scenario guess kicking financing? product about Oregon a the again, been like one suited the some you’re before you, couple like built at help lag JV you in could a the need to for shell just for quarters. of a on – you additional bit is out. It there’s talk Philippines, fab? capacity? you to in going be China seems out of little Oregon back couple I the ones big this little wouldn’t get

Yifan Liang

just as this product. the approach different we’ve three-pronged different mean, one, emphasize, I Stephen taken that and Jeremy, and and they’re the producing fabs, locations different

the fab is of Oregon their Company and and there. our the process – for also, the we invest needs need saw financing. in JV doing to then the in are we And we So we expand, yet,

their into with working well are to At we foundries also same that capacity So so process. the expand us. to their time, supply third-party

continued are at working to we our all fronts growth. So the support

Jeremy Kwan

And That’s – very you have since the here. I fair. Yifan sorry, just on last question JV

Yifan Liang

Sure.

Jeremy Kwan

negative would at utilization. quarter, cash in the With my neutral the cash understanding was flow free be full that flow it

is we’ve of on the million and in so flow cash got like $X CapEx. operating top negative And that the

Maybe can rising a So this of of us like of picture help kind on? JV? things different energy, are that. Can there – what’s prices, help Or you is in dynamics better get a kind like the a onetime the there’s on issue? timing a going going

Yifan Liang

I mean, on Phase our target mean cost basis the this originally gather on our cost. – XX-inch Sure. wafer wafer with X-inch was for par I and a per X to day

So target. that was the

from the I in by doing expansion. mean free the for in then this of mean I flow, large, and capital – further around they working the time that’s I process So to the are is terms the cash mean financing time, in changes, mean, CapEx why impacted there I of by and then it’s thing payments.

Jeremy Kwan

in I’ll Okay, the thank you jump Yifan. queue. you. Thank back

Yifan Liang

you. Thank

Operator

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

open. is line Your

David Williams

Hey a I thank have you. follow-up.

that we’re far? time Just curious there? automotive And updates still any has – how away, your the on around any wanted if had and maybe activity seen how some to that maybe been see design color so efforts then practice you’ve you just but or traction

Stephen Chang

We’re still ago. the phase definitely area but And we as released we that way. time it’s automotive before, still now. talked right products into, few an a we at is early are an And in entering quarters

portfolio We’re stage releasing automotive still in of the of the early products.

don’t about I in talking for So no be engagement the – is term. this to going on, short expect not but

again, automotive three is or the design into design for cycles As out between [indiscernible] the when four of even roles years know, the automobile to longer you floor.

big get the – So that with. but have something time market, that to to it something in revenue we realization, aside are the past, to will is but engaged starting we a put take that it’s are will definitely, of and be address. It it’s part

David Williams

thank you. Great,

Operator

from And Kwan we have Stifel. a from fellow Jeremy

is open. Your line

Jeremy Kwan

guys. hi Yes,

new $XX the when for to ramp that the is you that ramp Or the us you that of Oregon help the initial run the from? from rate? fab, this see expansion, ramp getting start of the go million you – from when quarter? that terms In shape can December is can Is revenue X

Yifan Liang

But of can fab level. producing start couple the rate, Oregon December expect to we the $XX higher that quarters. quarter, X From in million run take will a a we at – start

Jeremy Kwan

ramp, and own foundry we you the throughout have like gross puts any also ramp-up and talk looking shape where the insight Thanks you being and agreements it. about of Got cost, at kind to can impact margins your the do expensive year, next you equipment as all looking then into that? And any costs? between of gross And at more as look margin might takes like your looking move at things

Yifan Liang

like neutral Okay. fab, impact Oregon Sure. point, I at When assume say, this margin. expanded it’s you can on we would our gross

will longer the point mean – margin of term, we gross the mainly This our I I last to product quarters. in better a in I I and you margin think terms saw near growth then for term gross mix. the discuss more. few when think mean we or get reflected

We more products are higher margins. selling with

company-specific product We drivers. are mix. customer growth optimizing mix We some and do have

overall product accounts for of revenue line saw grew product Right you annual $XXX our quarter. million in June from example, XX% over the quarter. there. for business $XX And right Power IC IC like Power now, Power the line September I grew XXX%. crossed line that XX% million already I revenue. our per in mean, it almost I the So almost now, quarter, IC product the that’s mean, think year-over-year

products what and large – So X then product discrete I some our for to Kind high-value and more there very selling line, yes, we mean for too. more growing more well, Tier are more customers.

we that to we – So mix mitigate to that’s mix some then impacts. increases all, and improve. And adjusted I mean the nowhere that we all selling price and of our can our see believe then as input where we those well. cost do this continue And course, in product

on at non-GAAP can this least mid-XX% we maintain that gross basis. think I overall, So a margin

Jeremy Kwan

very very thank It’s Great, much. you helpful.

Yifan Liang

you. Thank

Operator

to turn any for And I’m further would management additional showing or comments. time. the at I this call no back closing questions to like now

Mike Chang

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

Yifan Liang

you. Thank

Operator

you this conference. conclude gentlemen, day. your participation, for Thank have does today’s great and a and Ladies

Alpha and Omega Semiconductor Limited (AOSL) 6 Nov 212022 Q1 Earnings call transcript