Good afternoon. Thank you for joining the Alpha and Omega Semiconductor Fiscal Quarter Three 2024 Earnings Call. My name is Gemma and I will be your moderator for today. I would now like to turn the conference call back over to our host with Alpha and Omega. Please proceed.

Good afternoon, everyone and welcome to Alpha and Omega Semiconductor’s conference call to discuss fiscal 2024 third quarter financial results. I am Stephen Pelayo, 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 7 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 with 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 on May 7, 2024, after the market close. 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, Stephen Chang.

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 dive 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 gross margin was 25.2%. Non-GAAP EPS was slightly better than expectations 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 the 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. Additionally, 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 that trajectory is hard to predict, we are coming out of the downturn as 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 prepare for new product launches in smartphones as well as PCs. Looking beyond 2024 to the growth phase of the next cycle, AOS is transitioning from a component supplier to 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 the Chinese New Year. The financial growth in graphics cards, tablets, and AI accelerators helped partially offset the seasonal decline that was mostly from notebooks. Looking forward into the June quarter, we expect the Computing segment to grow mid to upper single digits on continued 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 TVs. 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 soon. We also remain engaged in deep discussions for next-generation model design. For the June quarter, we forecast double-digit sequential growth in the consumer segment due to the end of 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 U.S. smartphone customer as well as a slowdown in networking. Looking ahead, we anticipate a strong sequential rebound in shipments to our Tier 1 U.S. 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 Communication segment will be flat sequentially in the June quarter, which is notably higher year-over-year due to 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. sparkling customer in the September quarter last year and a sequential decline in AC-DC 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 the 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 are 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 the 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.

Thank you, Stephen. Good afternoon, everyone and thank you for joining us. Revenue for the quarter was $150.1 million, up 13.2% year-over-year and up 9.2% sequentially. While the March quarter is historically our seasonally lowest revenue quarter due to the technicality of consumer spending, the year-over-year growth indicates the strength of our recovery from the inventory corrections. In terms of product mix, DMOS revenue was $93.8 million, up 15.9% over last year, and down 13.8% sequentially. PIC revenue was $50 million, up 5.4% from a year ago and 10.6% from the prior quarter. Assembly service and other revenue was $1.2 million compared to $1.6 million for the same quarter last year and $0.7 million last quarter. License and engineering service revenue was $5.1 million for the quarter versus $5.5 million in the prior quarter and $3.6 million for the same quarter a year ago. Non-GAAP gross margin was 25.2%, compared to 25.1% a year ago and 28% last quarter. The quarter-over-quarter decrease was mainly driven by lower utilization and ASP erosion, partially offset by a better mix. Non-GAAP operating expenses were $38.9 million compared to $36.2 million last year and $37.9 million for the prior quarter. The quarter-over-quarter increase was primarily due to higher payroll tax expenses given the start of a new calendar year. Non-GAAP quarterly EPS was a loss of $0.04 compared to a loss of $0.21 a year ago and $0.24 earnings per share last quarter. Moving on to cash flow, operating cash flow was $28.2 million, including $9.9 million of repayment of customer deposits. By comparison, operating cash flow was $11.6 million last year and negative $23.5 million in the prior quarter. We expect to refund about $4.5 million in customer deposits in the June quarter. We also repurchased 287,000 shares of employee restricted stock units vested during the quarter for $6.7 million. EBITDAS for the quarter was $11.6 million compared to $6.5 million for the same quarter a year ago and $20.7 million in last quarter. Now let me turn to our balance sheet. We completed the March quarter with a cash balance of $174.4 million compared to $162.3 million at the end of last quarter. Net trade receivables decreased by $18.7 million sequentially. Days sales outstanding were 15 days for the quarter compared to 18 days for the prior quarter. Net inventory increased by $6.4 million quarter-over-quarter, while average days for inventory were 153 days compared to 141 days in the last quarter. CapEx for the quarter was $7.4 million compared to $9.1 million for the prior quarter. We expect CapEx for the June quarter to range from $6 million to $8 million. Now, I would like to discuss June quarter guidance. We expect revenue to be approximately $160 million plus or minus $10 million; GAAP gross margin to be 24.7% plus or minus 1%. We anticipate the non-GAAP gross margin to be 26.3% plus or minus 1%; GAAP operating expenses to be in the range of $47.9 million plus or minus $1 million; non-GAAP operating expenses expected to be in the range of $39.5 million plus or minus $1 million; net interest expense to be approximately $0.5 million; and income tax expense to be approximately $0.9 million. With that, we will open the call for questions. Operator, please start the Q&A session.

Our first question comes from David Williams with Benchmark. David, your line is now open.

Thanks. Good afternoon and thanks for taking my question. Congrats on the return to growth here. And it sounds like you guys are a lot more positive than we have heard in some time, so that’s great to hear. I guess Stephen, just one of the first things I wanted to ask was on smartphones and handsets. You talked about them being a little bit better or seeing strength quarter-over-quarter. Is that when you would typically begin to see that order pull in for those flagship launches? And how do you think that compares relative to prior years? Do you have any – do you think you are seeing any changes in those order patterns or would you describe it maybe as typical?

Certainly, we have commented that smartphones are doing better than normal seasonality. In a typical year, we would usually see the March quarter as a low season for smartphones, kind of opposite of the fall launches that we normally prepare for. This year, actually we saw strength in the March quarter. It is generally still not – it still dropped a little bit compared to the December quarter, but actually remained at a very high level. I think the key difference for that is the strength in the China market, especially in the premium phones. That has helped offset some of the normal seasonality we see in the other phone makers.

Okay. And as a matter, are you guys able to ship into Huawei on any products there, or are they still not a customer?

Yes, right now we do not ship to Huawei.

Alright. Perfect. Thanks. I then just noticed you talked a little bit about some of the new products. It seems like you put out quite a few, especially on the compute side. I am just wondering if you can quantify the magnitude of what these new products could bring into that compute market and how that can help you grow your content relative to what you have discussed in the past on just combat CPU upgrades or generational changes. How much additional content do you think you can capture from the new products that you are releasing into that market?

Sure. There is actually quite a bit going on in the computing space. In the normal computing, I would say it’s the client computing side. We are expanding our bond content by going after total solutions. Not only going after the threats and being able to power stages, but we are also introducing multi-field controllers to sell a total solution into that powering V-core solutions. We are seeing BOM content grow. It used to be in the $2 range, and it’s now going into the $3 range. Depending upon the configuration, it can push harder than that. But that’s helping us in general because with the latest power maps being used with the CPUs, we are seeing more driver mass being lowered, more phases, which basically means more content for us and going into powering the CPU. In general, we are expanding not only from the client PC side but also going into advanced computing. We have been sharing about our success in the graphics market and seeing a return to growth for the graphics side. We feel more confident that the inventory correction is behind us. The other new area that I would say that’s in the computing space is AI. We are starting to get some business because of our success in graphics cards. One of our customers is using a similar solution in their AI accelerators. We are seeing some contribution coming there.

Lots of great color there, certainly appreciate that, and it’s good to hear the progress. I guess maybe lastly for me is just on home appliances. You talked about that being a greenfield opportunity still relatively under-penetrated. But you have got the new products, and it sounds like that market is performing a little bit better. Just wondering how you see the appliance market, not just in the short-term but the longer term. How much share do you think you can have there, and what do you think that can mean in terms of total opportunity for you and from a revenue standpoint as you look out the next 12 to 18 months? Thank you.

Sure, home appliances are definitely one of our target end applications. We have been addressing this with our IGBT as well as our modules based on those IGBTs going after the compressor motors in refrigerators and the drum motors used inside washing machines and dryers. This is a great market for us. We are just starting in this space. Overall, this is like a $2 billion market where we have somewhere around 1% market share. So, there is quite a bit we can do in this space. Right now, we are trying to catch on to the general trend towards inverter motors to power those motors used inside home appliances. While there are some headwinds in this end market due to its tie to the overall global housing market, we do see some strength at least in the next quarter or so. We hope this can continue going forward. It is an important end market for us, and we continue to invest in this space.

Thank you for the time.

Thank you, David. Our next question comes from Craig Ellis with B. Riley Securities. Craig, your line is now open.

Yes. Thank you for taking the question and congratulations on getting through the cycles, guys. I wanted to start with the follow-up on a point made in the prepared remarks, I think by you, Stephen, regarding share content gain occurring across all your end markets. My question is, as we look at what’s happening in the content gain in PCs with dollar content going from $2 to $3 in some systems or with share gain you might have in the communications end markets. Can you rank which end markets would benefit the most this year from those company-specific gains down to the least benefit? How do we think about the relative contribution of that as we consider what’s going on in the business this year? That’s the first question.

Sure. I would say generally, the smartphone impact is probably the biggest one. We are talking about the short-term, due to the strength in the China phones, and regarding the BOM content increase, our products are doing particularly well in the higher-end phones. A general trend is moving towards higher charging power, where the end customer wants to charge their phone much faster. Therefore, you have to push more power through our devices to charge the battery or operate the phone, increasing performance and the BOM content for those applications. Both share gain and BOM content increase are beneficial there. On the PC side, we talked about the general BOM expansion contributing there. We are starting to see more IC content going there. However, the PC market is still not out of the down cycle yet and will take longer to recover. We are better positioned with more content addressing the PC. Meanwhile, we are also diversifying within computing to get into more on the graphics side and AI portion.

That’s helpful, Stephen. The follow-up question is really two-fold. First, very specifically regarding PCs, if Intel is on track to ship 40 million Meteor Lake units this year in the back half for their target, then I think it’s 60 million next year. Is that where you are getting some content gain, and are we seeing some of that in the guidance for fiscal Q4? The broader question, beyond just compute, I think three months ago when you talked about mid-year and the second half of the year, you saw the potential for there to be a seasonal rise in the business that looks like we are starting to see that. Can you discuss how your expectations for the back half of the year, or the fiscal first half of ‘25 has changed in the last three months? What’s improved, and has anything ticked lower? Thank you.

Sure, regarding PCs in the calendar year, we believe that the second half will be stronger than the first half. However, it’s hard to predict the strength beyond the peak season in September. We believe the seasonal patterns are returning, but we hesitate to call it a full recovery. We will know better once we are into that second half in terms of whether it will persist into the December quarter. Overall, we think the PCs will be stronger going into the September quarter, but we will be careful watching that.

Yes. Lastly, one for you, Yifan; nice to see gross margins performing a little better than at least our model. My question is this: as you look beyond June, what are some of the bigger gives and takes that we should be aware of for gross margin and really the pace of expansion? What do you need to see to be confident that gross margins can move back to that 30% level and then at some point higher? Thank you.

Sure. Yes. As we guided for the June quarter, we expect to see some gross margin pickup there. There are many factors that could affect gross margin, including utilization, product mix, and the overall ASP environment. At this point, we still think our mid-term target model, one in which we reach $1 billion in revenue, expects to get to a 30% gross margin on a non-GAAP basis.

Yes, thank you. I guess I’ll follow up on the gross margin question. Yifan mentioned at the $1 billion mark, a 30% gross margin. Can you help us bridge that gap from now to there? How much do you see coming from revenue absorption and how much from better mix? Can you help quantify how you see pricing and the pricing environment factoring into that forecast? Thank you.

Sure. When we get to the $1 billion level, we expect most of the gross margin improvement would come from product mix. By reaching $1 billion, our product mix will be improved significantly in terms of power IC products and some higher-socket products even in the MOSAID businesses. Overall, I expect the majority of the gross margin improvement to come from product mix. The ASP environment is currently a bit worse than normal since we are still in inventory correction mode.

And just as a reminder, the normal environment is that mid to high single digit declines. Currently, it’s maybe high single digits. Can you help us quantify that a little bit more in terms of the pricing environment?

Yes, typically it will be in the mid to high single digits decline, and right now there’s more annual basis trending toward the high single digits.

Great. I guess in terms of the competitive landscape, I think you mentioned before seeing more competition at the low end. Has that changed appreciably in the last three months? Any clarity on how much of your portfolio it affects would be very helpful.

In the past three months, I don’t see a significant change in terms of product mix. In certain application end markets, we do see some improvements, for example, in smartphones and graphics cards.

Got it. And one final question. Going back to gaming, do you have a sense of how much of that recovery in the June quarter is coming from inventory headwinds going away and maybe even restocking? How much of it is coming from the higher BOM content you have? Do you anticipate like a step function BOM increase over this mid-cycle refresh platform in terms of the BOM content? Yes, any more details would be helpful. Thank you.

Sure, Jeremy. For the gaming consoles, we just remind that they are in about year four or five of their seven-year lifecycle. That’s where the inventory correction was coming from as they enter the second-half of that lifecycle. We are happy and encouraged to see the orders coming back for the June quarter. I don’t have a hard number, but roughly half-and-half impact. We are definitely seeing the return of orders for the existing parts in the BOM and also seeing a ramp-up for the derivative product they’re bringing out towards the end of this year.

Okay. Hi, it’s Stephen Pelayo. Before we conclude, I’d like to briefly mention two upcoming events. Management will be participating in and will be available for one-on-one meetings at the B Riley 24th Annual Institutional Investor Conference on May 22nd in Beverly Hills and the Stifel 2024 Cross Sector Insight Conference on June 5th in Boston. If you wish to request a meeting, please contact the institutional sales representative at each of the sponsoring banks. This concludes our earnings call today. Thank you for your interest in AOS, and we look forward to talking to you again next quarter. Thank you.

That concludes our Alpha and Omega Semiconductor fiscal quarter three 2024 earnings call. Thank you for your participation and enjoy the rest of your day.