Alpha and Omega Semiconductor Limited

Good afternoon, ladies and gentlemen. Thank you for joining today's Alpha and Omega Semiconductor Fiscal Q2 2024 Earnings Call. My name is Tia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the call over to your host, Stephen Palo. Please proceed.

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call to discuss fiscal 2024 second quarter financial results. I'm Stephen Paleo, 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 seven days following the call via the link in the Investor Relations section of our website. Our call will proceed as follows today. Stephen will begin business updates, including strategic highlights and a detailed segment report. After that, Yvonne will review the financial results and provide guidance for the March quarter. Finally, we will have the Q&A session. The earnings release was distributed over the wire today, February 6, 2024, after the market closed. The release is also posted on the company's website. Our earnings release and this presentation include non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release. We remind you that during this conference call, we will make certain forward-looking statements, including discussions of the business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update the information provided in today's call. Now, I will turn the call over to our CEO, Steven Chang. Steven?

Thank you, Steve. Welcome to Alpha and Omega's fiscal Q2 earnings call. I will begin with a high-level overview of our results and then jump into segment details. We delivered fiscal Q2 results in line with our guidance. Revenue was $165.3 million. Non-GAAP growth margin was 28%, and non-GAAP EPS was 24 cents. The bottom line finished at the high end of our guidance, primarily driven by overall operational control. These results were driven by continued recovery across notebooks, desktop computing, and smartphones, offset by ongoing inventory correction in gaming and weak demand for quick chargers and solar. Looking back on the full calendar year 2023, it was undeniably a challenging period for our entire industry. AOS revenue experienced a significant decline of 19% following a record-breaking 2022. This drop was primarily due to the inventory correction in PCs and smartphones that commenced in late 2022 and broader macro headwinds. In the second half of calendar 2023, our performance was further hampered by inventory corrections and slowdowns in demand across other segments. While revenue declined in calendar 2023, I think it's important to recognize the challenges resulting from the post-COVID semiconductor cycle are nearing completion and we are approaching the recovery phase of the next cycle. Over our 23 years history, We have navigated many boom and bust cycles in this industry, emerging each time stronger and more resilient on the other side. Looking forward, we expect stabilization across most of our business lines, notwithstanding normal seasonality. While near-term visibility is limited, we remain cautiously optimistic about a broader market rebound in the second half of calendar 2024. Fundamentally, we are extremely well positioned for future growth as the market recovers. Today, our market position is stronger than ever, supported by our leading technology, more diversified product portfolio, and tier one customer base in all of our business segments. More importantly, whether it's AI accelerators, digitalization, advanced connectivity, electrification, or the transition to a low carbon society, Power management lies at the core of these trends. We remain committed to executing our technology roadmap, introducing innovative new products and solutions to our customers, and focusing on long-term growth drivers that will allow us to surpass industry growth rates and establish ourselves as a sustained outperformer in the long run. With that, let me now cover our segment results and provide some guidance by segment for the next quarter. Starting with computing, December quarter revenue was up 12.3% year-over-year and up 2% sequentially and represented 43.4% of total revenue. These results were ahead of our original expectation for a low single-digit decline sequentially and were driven by a continued recovery and stabilization in shipments across notebook and desktop computing applications. The recovery has been driven by high-end driver ICs and mosfets for powering cpus looking forward into the march quarter we expect the segment to be down mid single digits on normal seasonality and the impact of chinese new year notably the inventory correction in graphics cards is coming to an end and tangential markets such as ai accelerators are becoming a meaningful portion of our data center related business in summary We are not immune to seasonality and broader market conditions, but solid rebounds expected in graphics cards and continuous contributions from AI-related products demonstrate the diversity of our computing segment. Turning to the consumer segment, December quarter revenue was down 50.2% year over year and down 24.4% sequentially and represented 14.2% of total revenue. As we indicated last quarter, gaming is undergoing an inventory correction after extremely strong shipments into the number one console manufacturer between mid-calendar 2022 and mid-calendar 2023. Similar to what we saw in PCs and smartphones in early calendar 2023, given the speed of the current correction, we believe demand will revert back to a new normal in a couple of quarters. factoring in that the console is now in its mid-life part of the platform cycle. Further, we see opportunities to increase bond content within the current console platform as part of its refresh this year. Longer term, we believe our relationship with this customer is very strong and are already engaged in discussions for their next model design. For the March quarter, we anticipate stabilization in this segment and are forecasting a low single-digit sequential decline. Next, let's discuss the communications segment. Revenue in the December quarter was down 18% year-over-year and down 6.6% sequentially and represented 17.5% of total revenue. Shipments to the Korea and China-based smartphone OEMs were strong. However, this was more than offset by a pullback in shipments to the Tier 1 US smartphone customer. Note that customer has strong shipments in the September quarter in 2023 ahead of their fall device launch. Looking ahead, due to strong shipments from Chinese OEMs, we anticipate this segment to remain flat sequentially, outperforming seasonality. Now let's talk about our last segment, power supply and industrial, which accounted for 21.1% of total revenue. December quarter revenue was down 15.4% year-over-year and down 16.6% sequentially. These results were driven by reduced quickchargers following our peak season shipments to our Tier 1 US smartphone customer in the September quarter and continued weakness in solar. Power tools were a notable standout in the December quarter, further solidifying their strong growth and contribution throughout calendar 2023. For the March quarter, we expect this segment to further decline in the mid-teen sequentially, mainly due to reduced quick chargers following the peak season and lower solar demand. While power tools will also see a seasonal decline, we expect strong sequential growth in our e-mobility segment driven by deepening customer relationships for e-bikes and e-scooters. In closing, we delivered fiscal Q2 in line with our expectations. While we are not immune to the macroeconomic headwinds, there are indications that the cycle has bottomed and we are looking forward to the recovery phase. Therefore, it is important to emphasize that our core fundamentals remain strong, a testament to the strategic investments we have made over the past years. These investments have positioned us well for growth and we continue to focus on driving the company towards growth beyond our $1 billion revenue target on the other side of the cycle. supported by our leading technology, more diversified product portfolio, tier one customer base in all of our business segments, and expanding manufacturing capability and supply chain. With that, I will now turn the call over to Yifan for a discussion of our fiscal second quarter financial results and our outlook for the next quarter. Yifan?