Alpha and Omega Semiconductor Limited

fiscal quarter three 2024 earnings call. My name is Jayla and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference call back over to our host with Alpha and Omega. Please go ahead.

Good afternoon everyone and welcome to Alpha and Omega's Semiconductors conference call to discuss fiscal 2024 third quarter financial results. I am 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, Yifan will review the financial results and provide guidance for the June quarter. Finally, we will have a Q&A session. The earnings release was distributed over the wire today, May 7, 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 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 report and subsequent filings with the SEC. We assume no obligations to update the information provided in today's call. Now, I'll turn the call over to our CEO, Steven Chang. Steven?

Thank you, Steve. Welcome to Alpha and Omega's fiscal Q3 earnings call. I will begin with a high-level overview of our results and then jump into segment details. We delivered fiscal Q3 results in line with our guidance for revenue and gross margin. Revenue was $150.1 million, Non-GAAP growth margin was 25.2%. Non-GAAP EPS was slightly better than expectation at a loss per share of $0.04. This quarter, we saw seasonal declines in computing and smartphones and continued inventory corrections in gaming, quick chargers, and solar. Looking at a broader view of the overall semiconductor cycle, inventory corrections across the majority of our end markets are now approaching their conclusion. positioning us for a gradual rebound as we move forward into the rest of calendar year 2024. For example, the rate of decline in gaming and quick chargers slowed during the quarter, and we saw sequential growth in tablets, appliances, and e-mobility. In addition, during the March quarter, we saw an increase in demand for newer applications, such as graphics cards and AI applications. As we stated last quarter, we are approaching the recovery phase of the next cycle. While the exact trajectory is hard to predict, we are coming out of the downturn an even stronger and more resilient company. Starting from the June quarter, we forecast a rebound in gaming and continued strength from tablets, graphics cards, and AI. Looking beyond, we anticipate the second half of this year will be stronger than the first half as customers gear up for new product launches in smartphones as well as PCs. Looking beyond 2024 to the growth phase of the next cycle, ALS is transitioning from a component supplier to become a comprehensive solution provider, enabling us to go deeper with increasing BOM content and penetrating new products and verticals. We have built upon our core competencies of high-performance silicon, advanced packaging, and intelligent ICs to expand our product offering. For example, we now have multi-phase controllers in addition to smart power stages to power not only computing vCore, but also extending to graphics and AI data center applications for advanced computing. We also continue to leverage our core technology IP and strengths in other applications such as battery, motor, and power supply while investing in R&D into adjacent markets. With that, let me now cover our segment results and provide some guidance by segment for the next quarter. Starting with computing. March quarter revenue was up 80.4% year over year and down 4.3% sequentially and represented 45.8% of total revenue. These results were in line with our original expectation for a mid-single-digit decline sequentially due to seasonality and the impact of Chinese New Year. As mentioned before, sequential growth in graphics cards, tablets, and AI accelerators helped partially offset the seasonal decline that was mostly for notebooks. Looking forward into the June quarter, we expect the computing segment to grow mid to upper single digits on continuous strength in tablets, AI, accelerators, and graphics cards. Turning to the consumer segment, March quarter revenue was down 47.1% year-over-year, up slightly 0.3% sequentially, and represented 15.7% of total revenue. The results exceeded our forecast for a low single-digit sequential decline driven by strength in home appliances and LCD TV. The inventory correction in gaming continued in the March quarter, but as we suggested last quarter, we see opportunities to increase BOM content within the current console platform as part of a product refresh coming very soon. We also remain engaged in deep discussions for the next generation model design. For the June quarter, we forecast double-digit sequential growth in the consumer segment due to an end to the inventory correction in gaming, which is expected to drive a strong rebound. Next, let's discuss the communications segment. Revenue in the March quarter was up 39.2% year-over-year and down 7.4% sequentially, and represented 17.9% of total revenue. These results were below our expectations as continued strength in March quarter shipments to the Korea and China-based smartphone OEMs were offset by a seasonal decline in shipments to the Tier 1 US smartphone customer, as well as a slowdown in networking. Looking ahead, we anticipate a strong sequential rebound in shipments to our Tier 1 US smartphone customer as they prepare for their fall launch, while we forecast a sequential decline from Korea and China OEMs. Even with a sequential decline, our China OEM business remains strong and up significantly year over year. Overall, we estimate the communications segment will be flat sequentially in the June quarter, which is notably higher year over year because of our BOM content and market share increases. Now let's talk about our last segment, power supply and industrial, which accounted for 16.5% of total revenue. March quarter revenue was down 6.5% year over year and down 29% sequentially. These results were driven by a continued inventory correction in quick chargers following the peak season shipments to our Tier 1 U.S. smartphone customer in the September quarter last year, and a sequential decline in ACDC power supplies, power tools, and solar. As mentioned last quarter, we saw strong sequential growth from the e-mobility segment driven by deepening customer relationships for e-bikes and e-scooters. For the June quarter, we expect this segment to increase mid to upper single digits sequentially mainly due to the end of the inventory correction in quick chargers and continuous strength in e-mobility. In closing, we delivered fiscal Q3 in line with our expectations. Over the past year or so, we have experienced rolling inventory corrections in nearly every one of our end markets. We believe the bulk of the adjustments are now behind us. Seasonality is starting to return as we prepare for PC and smartphone launches in the fall. Looking into the next cycle, we are poised for growth. Bolstered by advanced technology, a diversified product portfolio addressing a broadening array of end markets and a premier customer base across all business lines. Power management underpins key trends such as AI, digitalization, connectivity, and electrification, especially as we move towards a sustainable low-carbon society. We're steadfast in executing our technology roadmap. Customers increasingly view us as a total solutions provider, allowing us to capture a greater portion of the bill of materials and ultimately supporting growth that outpaces industry over the long run. With that, I will now turn the call over to Yifan for a discussion of our fiscal third quarter financial results and our outlook for the next quarter. Yifan?