Alpha and Omega Semiconductor Limited

Hello, everyone. Thank you for joining us and welcome to the Alpha and Omega Semiconductor Fiscal Q3 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Stephen Palayo, Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call to discuss fiscal 2026 third quarter financial results. I'm Stephen Palayo, 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 6, 2026, 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 recent 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, Stephen Chang.

Stephen? Thank you, Stephen. Welcome to Alpha and Omega's Fiscal 2026 Q3 Earnings Call. I will begin with a high-level overview of our results and then jump into segment details. We delivered fiscal Q3 revenue results slightly above the midpoint of our guidance, primarily reflecting strength in advanced computing, including AI, servers, and graphics cards, offset by softness in PC markets resulting from seasonality and memory shortage headwinds. Tablets also showed strong sequential growth. And the communication segment was also better than expected, driven by year-over-year growth from our Tier 1 U.S. smartphone customer, offset by weaker demand in China. Overall, total March quarter revenue was $163.8 million, down 0.5% year over year and up 0.9% sequentially. Non-GAAP gross margin was 21.7%. Non-GAAP EPS was a loss of 28 cents per share. Our strategy remains consistent and we are executing well. As we have said, we believe the December and March quarters represent a bottom for both revenue and gross margin. reflecting the impact of near-term market conditions and supporting a more constructive outlook going forward. March marks the third anniversary of my journey as CEO of AOS. When I stepped into this role in 2023, my goal was to steer our organization from a component-level supplier towards becoming a provider of application-specific total solutions, a move designed to push us past our $1 billion milestone towards a multi-billion dollar future. At that time, we were just scratching the surface of potential opportunities in front of us. Today, those opportunities have moved to the center of our business. Over the past three years, we have successfully pivoted to higher performance applications where we can expand BOM content and build durable competitive advantages. This strategy is translating into tangible results, particularly in advanced computing, where demand is broadening across AI data center applications. Specifically, we're gaining traction in high-performance medium-voltage MOSFETs used in hot-swap applications and intermediate bus converters, with increasing customer engagement and design activity expected to accelerate and contribute more meaningfully as we progress through calendar 2026. We are actively expanding our medium voltage capacity to support this growth, and our backlog provides us with good visibility. At the same time, we are seeing a broadening of both our solution set and customer base, extending beyond traditional GPU-centric platforms into a wider range of cloud and infrastructure deployments. This reinforces our confidence that advanced computing is becoming a more durable and increasingly important growth driver for the company. As is broadly reported, memory supply constraints and price pressures represent growing headwinds for the second half of calendar 2026. Against this backdrop, we're using three primary levers to protect our growth, steady margin expansion through improved product mix, Further increases in BOM content or our total solutions approach is enabling us to capture more value as seen in transitions to next generation PC platforms such as Intel's Panther Lake and higher charging current requirements in smartphones. continued discipline investment to support the opportunities ahead. We have stepped up our targeted R&D investments in areas where we are already seeing success, including power ICs, high-performance MOSFETs for AI and data center applications, and advanced solutions for smartphones. These investments are highly focused and aligned with clear customer roadmaps and design wins. While calendar 2026 may reflect some near-term variability, we are confident that the combination of expanding advanced computing opportunities, increased bond content across key end markets, and our continued execution will position us well for stronger growth as we exit 2026 and accelerate into 2027 and beyond. 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 2.1% year-over-year and down 0.1% sequentially and represented 49.1% of total revenue. The segment results were slightly better than our original guidance of low single-digit sequential decline. As I mentioned earlier, seasonal declines in PC markets were likely exacerbated by earlier pull-ins in calendar 2025 and potential demand impacts from rising memory pricing. Strength in advanced computing, including AI servers and graphics cards, more than offset such decline and combined more than doubled sequentially and increased more than 40% year over year. The strong growth resulted in advanced computing representing 25% of the computing segment in the March quarter. As mentioned before, we are seeing solid demand for our medium voltage MOSFETs across an expanding list of applications and customer base that includes power supply providers, module makers, cloud service providers, and major hyperscalers. We are shipping our high-performance MOSFET products into applications, including intermediate bus converters that are now moving into the build phase at some leading ODMs for major hyperscale customers. Looking ahead to the June quarter, we expect computing segment revenue to increase low to mid single digits sequentially, driven by strong AI and server demand in advanced computing. While PC-related revenue is largely stable and tablets decline mostly due to seasonality, as well as increased capacity allocation to opportunities in smartphones. We acknowledge that industry forecasts for the PC market continue to be revised lower, and we generally agree with that view, expecting some decline in calendar 2026. That said, we believe our performance should outpace the broader market, supported by continued increases in BOM content driven by our total solution strategy. Near-term PC demand appears stable for the June quarter, but visibility into the second half of the calendar year remains limited given ongoing macro and component-related uncertainties. In advanced computing, we continue to see a strong momentum with demand increasingly centered on our medium voltage solutions, supporting server and AI infrastructure. Importantly, we're seeing a broadening of both our customer base and application footprint with growing engagement across multiple platforms. These solutions are being deployed across both GPU and CPU-based architectures and are benefiting from the ongoing shift towards inference workloads, which are driving higher and more distributed power requirements. While we continue to view 48-volt to 12-volt intermediate bus architectures as the near-term standard that we are benefiting from today, we see this as a stepping stone towards higher voltage systems, including 800-volt architectures expected to begin emerging around 2027. In graphics, we expect a more muted environment in calendar 2026, given the current product cycle and allocation priorities, with the next major refresh opportunity tied to future platform transitions. Overall, we expect another quarter of strong sequential growth for advanced computing. Turning to the consumer segment, March quarter revenue was down 9.8% year over year and up 0.8% sequentially and represented 11.8% of total revenue. The results were below expectations for mid-single-digit sequential growth, as recovery in gaming following a sharp inventory correction in the December quarter was offset by softness in home appliances. On a year-on-year basis, wearables continue to see strong year-on-year growth, driven by market share gains, new customer engagements, rising BOM content, and a broader mix of end applications. For the June quarter, we expect consumer segment revenue to remain relatively flattish sequentially. In gaming, demand is tracking in line with our expectations as the current console cycle matures. While near-term production levels reflect seasonality as well, we remain closely engaged with our leading customer on their next-generation platform. We believe our established relationship and strength in high-performance power solutions position us well to participate more meaningfully as that platform ramps, with a greater impact expected beginning in 2028. home appliance demand remains relatively soft and continues to reflect a cautious consumer demand environment with limited signs of near-term recovery. That said, we continue to see ongoing design activity that supports longer-term opportunities, particularly in emerging markets. Wearables are progressing through their typical seasonal patterns following recent strength, and we continue to benefit from solid customer engagement and a broadening mix of applications. Next, let's discuss the communications segment. March quarter revenue was up 18.7 year-over-year and up 1.9% sequentially and represented 20.6% of total revenue. The results were ahead of our expectations for a mid-single-digit decline driven by a strong year-over-year growth from our Tier 1 smartphone customer and bomb content expansion. Offset by softness in China due both to a weaker market and our prioritization towards premium models in the U.S., Looking ahead to the June quarter, we expect communication segments to decline slightly sequentially, but sustain the high year-over-year growth experienced in the March quarter as demand from our Tier 1 U.S. smartphone customer remains robust. As mentioned, we are prioritizing capacity for our tier one US smartphone customer in order to prepare for upcoming product cycles. We continue to benefit from strong positioning in premium models where our differentiated silicon and packaging technologies for battery protection are enabling higher bond content. In particular, increasing charging currents across new smartphone platforms are driving incremental content opportunities, reinforcing our ability to capture greater value per device. At the same time, we remain mindful that rising memory pricing could impact overall smartphone demand, particularly in more price sensitive segments and regions. However, we believe premium tier demand will be more resilient and our strategic focus on higher end platforms positions us well to navigate this environment. As a result, we expect continued growth in calendar 2026, driven by both content expansion and continued engagement with leading global smartphone customers. Now let's talk about our last segment, power supply and industrial, which accounted for 17.4% of total revenue and was down 13.1% year-over-year and up 5.3% sequentially. Overall, the results were in line with expectations for mid-single-digit sequential growth as sequential growth in quick chargers and DC fans more than offset continued sluggishness both sequentially and year-on-year in solar, power tools, and e-mobility. Looking ahead to the June quarter, we expect power supply and industrial revenue to increase mid-single digits on a sequential basis, primarily driven by momentum in e-mobility, particularly in the India market, where we have built a solid backlog heading into the quarter. DC fans also remain an area of strength, benefiting from continued demand tied to data center and AI infrastructure build-outs. Lastly, power tools are also forecast to increase modestly in the June quarter. However, overall tool demand remains subdued. In closing, as we move into the June quarter, we expect a return to sequential growth, along with margin expansion supported by improving product mix and a greater contribution from higher value applications, particularly within advanced computing. We are seeing encouraging signs of traction in areas such as AI infrastructure, where demand is broadening across a wider set of applications and customers, and where our solutions are gaining adoption in both GPU and CPU-based platforms. This momentum, combined with increasing bond content across key end markets, positions us well as we enter the second half of the year, even as overall visibility remains somewhat limited. At the same time, we are executing consistently against the strategy we have outlined. Our focus on becoming a provider of application-specific total solutions is enabling us to expand both our product portfolio and our customer reach. We are seeing tangible progress in advanced computing, where our medium voltage and power IC solutions are addressing a growing range of use cases, and where our customer base continues to broaden across hyperscalers, cloud service providers, and platform partners. In parallel, we continue to benefit from structural drivers, such as rising power requirements and increasing charging currents, which are driving higher bottom content in both computing and smartphone applications. Looking across calendar 2026, we expect a dynamic environment with some uncertainty in consumer related demand, particularly given the impact of memory pricing on end markets such as PCs and smartphones. However, we believe these pressures will be partially offset by our increasing exposure to higher performance, less price-sensitive segments, such as our ability to capture greater value per system through our total solutions approach. Importantly, we are investing with discipline to support these opportunities with targeted R&D focused on areas where we have clear differentiation, strong customer alignment, and a path to sustainable margin expansion. As we look beyond 2026 and into 2027, we expect the benefits of these investments and design wins to become more pronounced as new programs ramp into production. The combination of expanding participation in advanced computing, increasing bond content, and a broader and more diversified customer base are expected to drive stronger growth and improve profitability over time. 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?