Product Development - The company introduced over 100 new products in the fiscal year ended June 30, 2025, and 16 new products during the three months ended September 30, 2025, expanding its portfolio to approximately 2,800 products[89] - The company has a patent portfolio consisting of 951 patents and 71 patent applications in the United States, along with 1,067 foreign patents as of September 30, 2025[89] - Research and development expenses are critical for long-term success, with ongoing investments in new technologies and products[109] Financial Performance - Total revenue for the three months ended September 30, 2025, was $182.5 million, an increase of $0.6 million, or 0.3%, compared to $181.9 million for the same quarter last year[124] - Gross profit for the three months ended September 30, 2025, was $42.8 million, a decrease of $1.7 million, or 3.8%, compared to $44.5 million for the same quarter last year[125] - Operating loss for the three months ended September 30, 2025, was $(4.6) million, compared to $(0.3) million for the same quarter last year[122] - Net loss for the three months ended September 30, 2025, was $(2.1) million, compared to $(2.5) million for the same quarter last year[122] Market Impact - The company’s revenue is significantly affected by the PC market, which has experienced a modest global decline, impacting revenue and results of operations[96] - The company is diversifying its product portfolio to reduce reliance on the PC market and improve gross margins through cost control measures[97] Expenses and Costs - The company’s gross margin is influenced by manufacturing costs, capacity utilization, and pricing from third-party foundries[98] - Operating expenses are expected to fluctuate as a percentage of revenue due to cost control measures in response to the declining PC market[108] - Research and development expenses were $24.1 million, an increase of $1.7 million, or 7.4%, compared to $22.5 million for the same quarter last year[126] - Selling, general and administrative expenses increased to $23.3 million for the three months ended September 30, 2025, up by $1.0 million or 4.4% from $22.3 million in the same quarter last year[127] Joint Venture and Investments - The company expects to receive $150 million from the sale of approximately 20.3% of its equity interest in a joint venture, with the first installment of RMB 676 million (or $94.5 million) already received[94] - As of June 30, 2025, the company's ownership interest in the joint venture was reduced to 39.2% after several transactions[93] - An impairment loss of $76.8 million was recorded within equity method investment loss in the fourth quarter of fiscal year 2025[120] - Equity method investment income increased to $1.4 million in Q3 2025, compared to a loss of $1.0 million in Q3 2024, reflecting a change of $2.4 million or 237.9%[132] Cash Flow - Cash, cash equivalents, and restricted cash totaled $223.9 million as of September 30, 2025, up from $153.5 million as of June 30, 2025[142] - Net cash provided by operating activities was $10.2 million in Q3 2025, a decrease of $0.8 million from $11.0 million in Q3 2024[143] - Net cash provided by investing activities increased to $81.9 million in Q3 2025, compared to a cash outflow of $6.7 million in Q3 2024, reflecting a change of $88.7 million[145] - Net increase in cash, cash equivalents, and restricted cash was $70.4 million in Q3 2025, compared to an increase of $0.7 million in Q3 2024[143] Taxation - The effective tax rate is highly dependent on the geographic distribution of worldwide profits or losses and changes in tax laws[114] - A potential 15% corporate income tax may apply to Bermuda companies starting from tax years beginning on or after January 1, 2025, affecting the company's financial position[115] Other Income and Expenses - Other income (loss), net improved to $2.5 million in Q3 2025, compared to a loss of $0.7 million in Q3 2024, representing a change of $3.1 million or 479.7%[128] - Interest income decreased to $0.9 million in Q3 2025, down by $0.4 million or 29.5% from $1.3 million in Q3 2024 due to lower interest rates[130] - Interest expenses decreased to $0.4 million in Q3 2025, down by $0.5 million or 55.7% from $0.8 million in Q3 2024, primarily due to a lower outstanding loan balance[131] - Income tax expense rose to approximately $1.9 million in Q3 2025, an increase of $0.9 million or 85.3% from $1.0 million in Q3 2024[133] Market Risks - No material changes in market risks were reported compared to the previous disclosures in the Annual Report for the year ended June 30, 2025[150]

Core Insights - Alpha and Omega Semiconductor Limited reported a record quarterly revenue of $182.5 million for fiscal Q1 2026, reflecting a 3.4% sequential increase and a slight 0.3% year-over-year growth [2][22] - The company is transitioning to an 800-volt DC power architecture, which is expected to enhance efficiency and open new design opportunities in high-performance computing and data centers [5][20] - The computing segment showed strong performance with a 27.1% year-over-year increase, contributing 53.2% of total revenue, although a decline of nearly 20% is anticipated for December due to seasonal factors [7][10] Financial Performance - Non-GAAP gross margin for the quarter was 24.1%, down from 25.5% a year ago, primarily due to higher operational costs [22][23] - Non-GAAP EPS was reported at $0.13, compared to $0.21 in the same quarter last year [23] - Operating cash flow improved to $10.2 million, up from negative $2.8 million in the prior quarter [23] Segment Analysis - The computing segment revenue increased significantly, driven by demand from PCs and AI platforms, while the consumer segment saw a decline of 25.8% year-over-year [11][12] - The communication segment experienced a 21.4% sequential growth but a 7.8% year-over-year decline, attributed to weaker demand from Chinese smartphone customers [12][13] - Power supply and industrial segment revenue accounted for 15.3% of total revenue, down 12.4% year-over-year, but growth is expected in December driven by power tools [14][15] Strategic Initiatives - The company is focusing on expanding its market presence in high-performance computing and AI, leveraging its investments in technology and engineering talent [6][19] - A significant portion of the capital from the recent joint venture equity sale, approximately $94 million, is being allocated to strategic investments in technology and talent [6][40] - The shift to 800-volt architecture is seen as a critical opportunity for Alpha and Omega to enhance its product offerings and capture new market segments [5][20] Future Outlook - Revenue guidance for December is projected to be around $160 million, with expectations of a decline in several segments due to seasonal trends [26] - The company anticipates steady growth through 2026, with a stronger upturn expected in 2027 as new programs transition into volume production [20][50] - Investments in R&D are planned to support growth in AI and other high-performance applications, indicating a commitment to innovation and market leadership [19][49]

Core Insights - Alpha and Omega Semiconductor (AOSL) reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, but down from $0.21 per share a year ago, representing an earnings surprise of +30.00% [1] - The company posted revenues of $182.5 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.3%, compared to $181.89 million in the same quarter last year [2] - Alpha and Omega shares have underperformed the market, losing about 29% year-to-date, while the S&P 500 has gained 15.1% [3] Earnings Outlook - The company's earnings outlook will be influenced by management's commentary during the earnings call, and current consensus EPS estimates for the upcoming quarter are $0.03 on revenues of $174.85 million, and $0.10 on revenues of $703.6 million for the current fiscal year [4][7] - The estimate revisions trend for Alpha and Omega was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Electronics - Semiconductors industry, to which Alpha and Omega belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting that stocks in the top 50% of Zacks-ranked industries tend to outperform those in the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $182.5 million, reflecting a slight year-over-year increase of 0.3% and a sequential increase of 3.4% [4][19] - Non-GAAP gross margin was 24.1%, down from 25.5% a year ago and 24.4% in the previous quarter [19] - Non-GAAP EPS was $0.13, compared to $0.21 a year ago and $0.02 in the prior quarter [19] - Operating cash flow was $10.2 million, a significant improvement from negative $2.8 million in the prior quarter [20] Business Line Data and Key Metrics Changes - Computing segment revenue increased by 27.1% year-over-year and 4.6% sequentially, accounting for 53.2% of total revenue [8] - Power IC revenue reached a record high of $72.7 million, up 37.3% year-over-year and 5.9% sequentially [4][19] - Consumer segment revenue decreased by 25.8% year-over-year and 11.6% sequentially, representing 12.9% of total revenue [10] - Communications segment revenue increased by 21.4% sequentially but declined by 7.8% year-over-year [12] - Power supply and industrial segment revenue was down 12.4% year-over-year and 5.6% sequentially, accounting for 15.3% of total revenue [13] Market Data and Key Metrics Changes - Demand for PCs remained strong due to tariff-related orders and seasonal back-to-school demand, but is expected to decline nearly 20% sequentially in the December quarter [9][10] - The consumer segment is experiencing a normalization of demand, particularly in gaming and home appliances, with wearables showing growth [11] - Communications segment demand from US customers remains strong, while demand from China has weakened [12] Company Strategy and Development Direction - The company is transitioning to support 800-volt DC power architecture, enhancing its role in next-generation AI data centers [5][6] - Investments are being made to strengthen technology leadership and expand into higher performance and higher margin applications [6][18] - The focus is on expanding served markets and increasing BOM content across various applications, including smartphones and AI platforms [7][8] Management's Comments on Operating Environment and Future Outlook - Management views the current market corrections as temporary, with underlying growth trends still intact [26] - The company expects steady growth through 2026, with a stronger upturn anticipated in 2027 as new programs transition to volume production [18][36] - Management is confident in the long-term trajectory, emphasizing the importance of power management in the ongoing global transformation [16][17] Other Important Information - The company received approximately $94 million from the sale of a portion of its equity interest in a joint venture, which will be used for strategic investments [6][22] - Capital expenditures for the quarter were $9.8 million, with expectations for the December quarter to range from $14 million to $16 million [22] Q&A Session Summary Question: Can you provide more color on the sequential decline in demand? - Management noted that the decline is partly due to seasonality and a correction period following tariff-related demand, but underlying growth trends remain [25][26] Question: What are the expectations for gross margin trends? - Management expects gross margins to fluctuate with revenue and product mix, anticipating a lower gross margin in the December quarter [27][28] Question: What dynamics are being observed around ASPs? - ASP erosion has been in line with historical trends, and the company aims to reset ASPs through new product introductions [29][30] Question: How will the proceeds from the JV sale be utilized? - Proceeds will be invested in areas where the company has demonstrated strength, such as smartphones, PCs, and AI applications [32][33] Question: What are the expectations for AI-related revenues? - AI-related revenues are expected to ramp up later than initially forecasted, with ongoing engagement in various opportunities [34][35] Question: What segments are expected to perform better next year? - Key focus areas include PCs, AI applications, and smartphones, with expectations for growth in these segments [38][39]

Revenue Performance - Revenue for the fiscal first quarter of 2026 was $182.5 million, an increase of 3.4% from the prior quarter and flat compared to the same quarter last year[10]. - The company expects revenue for the fiscal second quarter to be approximately $160 million, plus or minus $10 million[11]. Gross Margin - GAAP gross margin was 23.5%, up from 23.4% in the prior quarter but down from 24.5% in the same quarter last year[10]. - GAAP gross margin for the next quarter is anticipated to be 22.3%, plus or minus 1%[11]. - Estimated non-GAAP gross margin for fiscal Q2 ending December 31, 2025, is projected to be 23.0%, compared to a GAAP gross margin of 22.3%[25]. Operating Income and Expenses - Non-GAAP operating income was $2.5 million, compared to $2.3 million in the prior quarter and $7.8 million in the same quarter last year[10]. - Non-GAAP operating expenses are expected to be $40.5 million for fiscal Q2 ending December 31, 2025, down from GAAP operating expenses of $47.1 million[25]. - The company reported a non-GAAP operating income of $2,548 thousand for the three months ended September 30, 2025, compared to $7,809 thousand in the same period of 2024, reflecting a decrease of 67%[22]. Cash Flow and Assets - Consolidated cash flows provided by operating activities was $10.2 million, compared to cash flows used in operating activities of $2.8 million in the prior quarter[10]. - Total current assets increased to $531,284 thousand as of September 30, 2025, up from $396,162 thousand as of June 30, 2025, representing a 34% increase[19]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $223,930 thousand, up from $176,222 thousand in the same period of 2024, marking a 27% increase[21]. Liabilities - Total liabilities decreased to $203,445 thousand as of September 30, 2025, down from $211,971 thousand as of June 30, 2025, a reduction of approximately 4%[19]. Net Income and Loss - GAAP net loss for the three months ended September 30, 2025, was $2,122 thousand, a significant improvement compared to a net loss of $77,059 thousand in the previous quarter[22]. - Non-GAAP net income for the three months ended September 30, 2025, was $4,176 thousand, compared to $6,421 thousand in the same period of 2024, indicating a decline of 35%[22]. Strategic Focus - The company is focusing on extending its leadership into higher-growth areas including graphics, AI, and data-center power[7]. Interest Income - Interest income is expected to exceed interest expense by $1.0 million in the upcoming quarter[11]. Power IC Revenue - Power IC revenue increased 37.3% year-over-year, now representing nearly 40% of total product revenue[7].

Core Insights - The electronics stocks market is expected to show growth driven by the expansion of artificial intelligence infrastructure and data center buildouts globally, with demand for specialized semiconductors and advanced electronic components increasing due to the deployment of generative AI applications and cloud computing services [1][9] Industry Overview - High-bandwidth memory (HBM) shipments are projected to grow significantly due to extraordinary demand from AI training workloads, positively impacting industry performance in Q3 2025 [2] - The automotive electronics market is experiencing steady growth, driven by increased use of electronic components in electric vehicles and advanced driver assistance systems, alongside rising consumer demand for connected and safety-centric vehicles [3] - The proliferation of Internet of Things (IoT) devices, smart home systems, and connected industrial equipment is expected to support demand for sensors and connectivity solutions [3] Challenges - Companies face mixed demand patterns across end markets, with traditional automotive and industrial segments showing slower recovery and margin pressures due to weaknesses in certain customer categories [4] - The memory market is experiencing complexities, with oversupply concerns in traditional DRAM and NAND segments potentially offsetting strengths in AI-specific memory products [4] - Geopolitical uncertainties and evolving trade policies are anticipated to remain concerns, influencing near-term performance across the electronics sector [4] Company Performance - Lam Research (LRCX) and FormFactor (FORM) have reported results that surpassed expectations, indicating positive trends in the electronics sector [5] - Alpha and Omega Semiconductor (AOSL) is expected to report revenues of $183.05 million for Q1 fiscal 2026, reflecting a 0.64% year-over-year increase, although earnings are projected to decline by 52.38% [10][11] - Arm Holdings anticipates revenues of $1.07 billion for Q2 fiscal 2026, indicating a 26.2% year-over-year increase, with earnings expected to rise by 10% [13] - Qualcomm (QCOM) is projected to report revenues of $10.77 billion for Q4 fiscal 2025, reflecting a 5.16% year-over-year increase, with earnings expected to increase by 6.69% [15] - SkyWater Technology (SKYT) expects revenues of $135.5 million for Q3, indicating a 44.43% year-over-year increase, although a loss of 17 cents per share is anticipated [18] - MKS Inc. (MKSI) is projected to report revenues of $962.01 million for Q3, reflecting a 7.37% year-over-year increase, with earnings expected to rise by 4.65% [20]

Core Insights - Alpha and Omega Semiconductor Limited (AOSL) is in a significantly improved position compared to eight months ago when the previous analysis was conducted [1] Company Overview - The company is focused on technology, infrastructure, and internet services, emphasizing strong fundamentals and growth potential [1] Analyst Background - The analyst has a background in petroleum and gas engineering and has transitioned into finance, driven by an interest in business growth and market reactions [1] - The analyst holds FMVA® and BIDA® certifications from the Corporate Finance Institute [1] Investment Philosophy - The focus is on long-term returns rather than short-term market fluctuations, with an aim to share investment ideas and connect with other investors [1]

Core Insights - Alpha and Omega Semiconductor Limited (AOS) supports NVIDIA's innovative 800 VDC architecture aimed at powering next-generation AI data centers [1] Company Summary - AOS is a designer, developer, and global supplier of a wide range of discrete power devices, wide bandgap power devices, power management ICs, and modules [1] Industry Summary - The 800 VDC architecture is expected to facilitate megawatt-scale racks to accommodate the exponential growth in AI data centers [1]

Core Insights - Alpha and Omega Semiconductor will participate in the 17th Annual CEO Investor Summit 2025, indicating the company's commitment to engaging with investors and showcasing its strategic direction [1] Company Participation - The participation in the summit highlights Alpha and Omega Semiconductor's focus on investor relations and transparency [1] - The event serves as a platform for the company to present its business model, growth strategies, and future outlook to potential investors [1] Industry Context - The CEO Investor Summit is a significant event in the semiconductor industry, attracting key players and investors, which underscores the importance of investor engagement in this sector [1]

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) AOSL is a global power semiconductor designer and supplier, integrating R&D and manufacturing for diverse markets [Forward Looking Statements](index=5&type=section&id=Forward%20Looking%20Statements) The report contains forward-looking statements subject to 'safe harbor' provisions, based on management's beliefs and assumptions, which involve known and unknown risks and uncertainties that could cause actual results to differ materially[13](index=13&type=chunk) [Overview](index=5&type=section&id=Overview) - AOSL is a designer, developer, and global supplier of approximately **2,800** power semiconductors, introducing over **100** new products in **FY25**[14](index=14&type=chunk) - The company expanded its MOSFET portfolio and developed new technologies for consumer, communications, industrial markets, IGBTs, and power ICs for PC, advanced computing, and gaming applications[15](index=15&type=chunk) - AOSL's ownership in the JV Company (Chongqing Fab) was reduced to approximately **39.2%** as of **June 30, 2025**, following an investment by a third party[17](index=17&type=chunk)[18](index=18&type=chunk) - A **$76.8 million impairment** of the equity method investment in the JV Company was recognized as of **June 30, 2025**, due to its fair value being lower than carrying value, based on an implied valuation from a planned sale of **20.3% interest for $150 million**[19](index=19&type=chunk) [Our Industry](index=6&type=section&id=Our%20industry) - The semiconductor industry is segmented into analog and digital, with analog semiconductors processing physical signals and having longer product life cycles due to design complexity[21](index=21&type=chunk)[22](index=22&type=chunk) - Power semiconductors, a subset of analog, manage and switch electricity, comprising discrete devices (MOSFETs) and integrated circuits (Power ICs)[23](index=23&type=chunk)[24](index=24&type=chunk) - Market drivers include demand for power efficiency in consumer/computing electronics (low voltage MOSFETs, Power ICs), energy conservation in AC-DC power supplies (medium/high voltage MOSFETs), and motor control in white goods/industrial applications (IGBTs)[25](index=25&type=chunk)[26](index=26&type=chunk) [Our Strategies](index=7&type=section&id=Our%20strategies) - AOSL aims to balance proprietary technology development at in-house facilities (Oregon Fab) with the use of third-party foundries to accelerate new product introduction and improve financial performance[29](index=29&type=chunk) - The company is diversifying its business beyond the Computing market into consumer, communications, and industrial sectors, while also expanding its computing business into new areas like AI[30](index=30&type=chunk) - Strategies include expanding the product portfolio to increase bill-of-materials content, leveraging power semiconductor expertise for new technology platforms, and increasing direct relationships with OEM and ODM customers, especially Tier 1[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - AOSL maintains a strong relationship with the JV Company for foundry capacity, with a guaranteed monthly wafer production capacity[35](index=35&type=chunk) [Our Products](index=8&type=section&id=Our%20products) - AOSL's product portfolio includes power discretes (low, medium, high voltage MOSFETs, IGBTs, **1200V** SiC products) and power ICs (DrMOS, SPS, EZBuck, smart load switch, multiphase controllers)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - Power ICs leverage proprietary MOSFET and advanced packaging technologies for integrated solutions, offering higher power density and faster product updates[43](index=43&type=chunk) Product Families and Typical Applications | Product Family | Description | Product Categories within Product Type | Typical Application | | :--- | :--- | :--- | :--- | | Power Discretes | Low on-resistance switch used for routing current and switching voltages in power control circuits; High power switches used for power circuits | DC-DC for CPU/GPU, DC-AC conversion, AC-DC conversion, Load switching, Motor control, Battery protection, Power factor correction | Smart phone chargers, battery packs, notebooks, desktop and servers, data centers, base stations, graphics card, game boxes, TVs, AC adapters, power supplies, motor control, power tools, E-vehicles, white goods and industrial motor drives, UPS systems, solar inverters and industrial welding | | Power ICs | Integrated devices used for power management and power delivery; Analog power devices used for circuit protection and signal switching | DC-DC Buck conversion, DC-DC Boost conversion, Smart load switching, DrMOS power stage, Transient voltage protection, Analog switch, Electromagnetic interference filter | Flat panel displays, TVs, Notebooks, graphic cards, servers, AI datacenters, DVD/Blu-Ray players, set-top boxes, and networking equipment; Notebooks, desktop PCs, tablets, flat panel displays, TVs, smart phones, and portable electronic devices | [New Product Introduction](index=9&type=section&id=New%20Product%20Introduction) - In **Q4 FY25**, AOSL launched mega IPM-7 series (BLDC motor drives), AOTL66935 (**100V** AlphaSGT MOSFET for AI servers), Gen3 **1200V** αSiC MOSFETs, AMD SVI3 multiphase controller, and **25V** MOSFET in **DFN3.3x3.3** source-down packaging[46](index=46&type=chunk)[47](index=47&type=chunk) - **Q3 FY25** saw the introduction of a **16-phase** controller for AI servers/graphic cards and new advanced MOSFET package options for high-current applications[48](index=48&type=chunk) - **Q2 FY25** product releases included the AOZ23567QI EZBuck™ Regulator for Intel Arrow Lake and the AOZ73004CQI, the first **4-phase** controller for Blackwell GPUs[49](index=49&type=chunk) - **Q1 FY25** introduced the highly robust **LFPAK 5x6** package for high-reliability applications and an ideal diode protection switch for multiport USB-C applications[50](index=50&type=chunk) [Distributors and Customers](index=10&type=section&id=Distributors%20and%20customers) - AOSL maintains direct relationships with key OEMs (e.g., Dell, HP, Samsung) and ODMs (e.g., Compal, Foxconn), with most products sold through distributors[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) Revenue Contribution from Largest Distributors | Distributor | FY2025 Revenue Share | FY2024 Revenue Share | FY2023 Revenue Share | | :---------- | :------------------- | :------------------- | :------------------- | | WPG Holdings Limited | 51.3% | 46.0% | 35.6% | | Promate Electronic Co. Ltd. | 22.1% | 25.0% | 21.6% | [Sales and Marketing](index=10&type=section&id=Sales%20and%20marketing) - The marketing division identifies high-growth markets and applications, supported by field application engineers (FAEs) who provide local technical support and facilitate design-ins[53](index=53&type=chunk) - The sales team is strategically positioned globally, with offices in Asia, Europe, and the US, complemented by application centers[54](index=54&type=chunk) - The sales cycle typically ranges from **six to eighteen months**, with power discrete and Power IC products in Computing and Consumer segments having shorter cycles, while IGBT and Module products for industrial applications have longer cycles[55](index=55&type=chunk) [Competition](index=11&type=section&id=Competition) - The power semiconductor industry is highly competitive and fragmented, with major competitors including Infineon, ON Semiconductor, STMicroelectronics, Toshiba, Diodes, and Vishay for power discretes, and Monolithic Power Systems, Richtek, Semtech, and Texas Instruments for power ICs[56](index=56&type=chunk) - AOSL competes through its integrated technology platform, design capabilities, extensive patent portfolio, strategic global business model, expanding product suites, diversified customer base, and efficient time-to-market[57](index=57&type=chunk) [Seasonality](index=11&type=section&id=Seasonality) - AOSL's business is subject to seasonal fluctuations, particularly due to its involvement in consumer electronic products, with historically weaker sequential revenue growth in the March and December quarters[58](index=58&type=chunk) [Research and Development](index=12&type=section&id=Research%20and%20development) Research and Development Expenditures | Fiscal Year Ended June 30, | Expenditure (Millions USD) | | :------------------------- | :------------------------- | | **2025** | **$94.3** | | **2024** | **$89.9** | | **2023** | **$88.1** | - R&D focuses on advanced packaging technologies for smaller form factors and higher power density, specialized process technology (e.g., vertical DMOS, Shielded Gate Trench, SuperJunction, trench-stop IGBTs, BCDMOS), and new product platforms across low, medium, and high voltage power discretes, IGBT, and power ICs[61](index=61&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) [Operations](index=12&type=section&id=Operations) - Wafer fabrication is split between the in-house Oregon Fab (critical for proprietary technology) and third-party foundries, with third-party accounts supplying around **30%** of total wafer supply[65](index=65&type=chunk)[66](index=66&type=chunk) - Packaging and testing are primarily handled by in-house facilities in Shanghai, China, and partially by the JV Company, with additional outsourcing to subcontractors[67](index=67&type=chunk)[68](index=68&type=chunk) - In-house packaging and testing capabilities provide a competitive advantage in proprietary technology, new package introductions, cost reduction, and profit margin improvement, with a combined capacity of over **600 million parts per month**[69](index=69&type=chunk) [Quality Assurance](index=13&type=section&id=Quality%20assurance) - Manufacturing operations in China and Oregon are certified to ISO9001 and IATF16949:2016 quality management standards, and products comply with RoHS **3.0**[70](index=70&type=chunk) - A supplier management and process engineering team monitors third-party foundries and subcontractors to ensure compliance with process controls and product requirements[71](index=71&type=chunk) - Raw materials, including silicon wafers, gold, copper, and various chemicals, are sourced from numerous suppliers, with strict qualification processes[72](index=72&type=chunk) [Intellectual Property Rights](index=13&type=section&id=Intellectual%20property%20rights) - AOSL's intellectual property portfolio includes **949** issued US patents (**855** active, expiring **2025-2043**) and **961** foreign patents (expiring **2025-2043**), along with **165** pending patent applications globally[73](index=73&type=chunk)[74](index=74&type=chunk) - In **February 2023**, the company entered a license agreement for its proprietary SiC technology and engineering services for **$45.0 million**, with all revenue recognized and consideration received by **June 30, 2025**[73](index=73&type=chunk) - The company relies on patents, trademarks, copyrights, trade secret laws, and contractual provisions to protect its IP, acknowledging the risk of infringement claims as it diversifies its product portfolio[73](index=73&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) [Human Capital Resources](index=14&type=section&id=Human%20Capital%20Resources) - As of **June 30, 2025**, AOSL had **2,428** employees globally, with **770** in the US, **1,475** in China, and **183** elsewhere[78](index=78&type=chunk) - The company invests in employee training and development, promotes from within (over **50%** managerial positions filled internally), and fosters an open, diverse, and people-oriented culture[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - AOSL offers competitive compensation and benefits, including base salary, bonuses, an employee stock purchase plan, and long-term equity compensation, with independent consulting firms evaluating executive compensation[82](index=82&type=chunk) [Environmental Matters](index=14&type=section&id=Environmental%20matters) - AOSL's manufacturing processes generate air emissions, liquid wastes, and industrial wastes, managed by pollution control equipment and recycling systems in China and Oregon facilities[83](index=83&type=chunk) - Manufacturing facilities in China and Oregon have implemented ISO 14001 environmental management systems, and products comply with RoHS in Electrical and Electronic Equipment and QC080000 certification[85](index=85&type=chunk)[86](index=86&type=chunk) - The company has been in material compliance with applicable environmental regulations and standards, and with conflict minerals rules as of **June 30, 2025**, **2024**, and **2023**[84](index=84&type=chunk)[87](index=87&type=chunk) [Export Control](index=15&type=section&id=Export%20Control) - AOSL is subject to export and import control laws and trade regulations, and has implemented revised processes and training programs to ensure compliance[88](index=88&type=chunk) [Executive Officers](index=15&type=section&id=Executive%20Of%20icers) Executive Officers as of August 15, 2025 | Name | Age | Position | | :--- | :-- | :--- | | Stephen C. Chang | 48 | Chief Executive Officer and Director | | Mike F. Chang, Ph.D. | 80 | Chairman of the Board and Executive Vice President of Strategic Initiatives | | Yifan Liang | 61 | Chief Financial Officer and Corporate Secretary | | Wenjun Li, Ph.D. | 56 | Chief Operating Officer | | Bing Xue, Ph.D. | 61 | Executive Vice President of Worldwide Sales and Business Development | [Corporate Information](index=16&type=section&id=Corporate%20Information) - AOSL was incorporated in Bermuda on **September 27, 2000**, with its registered office in Hamilton, Bermuda, and a U.S. office in Sunnyvale, CA[95](index=95&type=chunk) [Available Information](index=16&type=section&id=Available%20Information) - SEC filings and company information are available free of charge electronically on AOSL's website (www.aosmd.com) and the SEC's website (www.sec.gov)[96](index=96&type=chunk) [Item 1A. Risk Factors](index=17&type=page&id=Item%201A.%20Risk%20Factors) AOSL faces risks from industry downturns, PC market volatility, geopolitical tensions, operational challenges, and IP disputes [Risk Factor Summary](index=17&type=section&id=Risk%20Factor%20Summary) - The summary highlights risks related to business operations, including industry downturns, PC market decline, diversification challenges, geopolitical conflicts, and operational issues[98](index=98&type=chunk) - Specific risks related to doing business in China, such as tax changes, trade tensions, and regulatory policies, are also summarized[99](index=99&type=chunk)[102](index=102&type=chunk) - Risks concerning the corporate structure and common shares, including stock price volatility and anti-takeover provisions, are noted[100](index=100&type=chunk)[102](index=102&type=chunk) [Risks Related to Our Business](index=17&type=section&id=Risks%20Related%20to%20Our%20Business) - Operating results are vulnerable to semiconductor industry downturns, end-market demand shifts, and macroeconomic trends, with the PC market decline posing a material adverse effect[100](index=100&type=chunk)[103](index=103&type=chunk) - Diversification into new market segments (consumer, communications, industrial) may not succeed as expected and could strain resources[104](index=104&type=chunk)[105](index=105&type=chunk) - Revenue can fluctuate significantly due to distributor ordering patterns, seasonality, and the inability to introduce new products or win sufficient designs in a timely manner[110](index=110&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Operational risks include significant fixed manufacturing costs at the Oregon Fab, potential product defects, rapid decline in average selling prices, and challenges in accurate demand forecasting[117](index=117&type=chunk)[118](index=118&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - Reliance on third-party foundries and the JV Company for manufacturing capacity exposes AOSL to risks of supply constraints, quality issues, and lack of control[130](index=130&type=chunk)[131](index=131&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - The recent sale of equity interest in the JV Company is subject to closing conditions, and failure to meet them could adversely affect financial results and reputation[140](index=140&type=chunk) - Dependence on distributors (WPG and Promate accounted for **73.4%** of **FY25** revenue) carries risks related to inventory write-downs, price adjustments, and sales efforts[141](index=141&type=chunk)[142](index=142&type=chunk) - Cybersecurity threats and disruptions to IT systems, loss of key personnel, and failure to protect intellectual property are ongoing risks[152](index=152&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Risks Related to Doing Business in China](index=18&type=section&id=Risks%20Related%20to%20Doing%20Business%20in%20China) - AOSL is exposed to increased income taxes and changes in tax rules across multiple jurisdictions, including potential Bermuda corporate income tax from **January 1, 2025**, if revenue thresholds are met[174](index=174&type=chunk)[176](index=176&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - China's economic, political, and social conditions, government policies, and evolving foreign investment laws (e.g., Foreign Investment Law, Negative List) could significantly impact business operations and growth[190](index=190&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk)[201](index=201&type=chunk)[204](index=204&type=chunk) - Continuing trade tensions between the U.S. and China, including increased tariffs, could adversely affect supply chain, costs, product margins, and business relationships[196](index=196&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - Limitations on transferring funds to and from China subsidiaries due to currency exchange controls and government restrictions on investment repatriation could impact liquidity and expansion[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - PRC labor laws, including the Labor Contract Law and regulations on paid annual leave, may increase employee-related costs and affect workforce management[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - Relations between Taiwan and China could negatively affect AOSL's business due to significant customer and personnel presence in both regions[217](index=217&type=chunk) [Risks Related to Our Corporate Structure and Our Common Shares](index=18&type=section&id=Risks%20Related%20to%20Our%20Corporate%20Structure%20and%20Our%20Common%20Shares) - The company's share price may be volatile and subject to wide fluctuations due to operating results, market conditions, analyst expectations, and other factors[218](index=218&type=chunk)[219](index=219&type=chunk) - Anti-takeover provisions in the company's bye-laws could make an acquisition more difficult and prevent shareholder attempts to replace management[222](index=222&type=chunk)[223](index=223&type=chunk) - As a Bermuda company, shareholder rights under Bermuda law may differ from U.S. laws, potentially complicating enforcement of judgments[224](index=224&type=chunk) [Item 1B. Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments were reported - No unresolved staff comments were reported[226](index=226&type=chunk) [Item 1C. Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) AOSL manages cybersecurity risks with technical solutions, policies, training, and board oversight, following NIST framework [Risk Management and Strategy](index=40&type=section&id=Risk%20Management%20and%20Strategy) - AOSL utilizes technical solutions, security policies, employee training, and regular security audits to manage cybersecurity threats, including advanced monitoring tools, firewalls, and encryption protocols[227](index=227&type=chunk) - The company has established incident response procedures to contain threats and restore operations, and conducts periodic risk assessments based on the NIST Cybersecurity Framework[227](index=227&type=chunk)[228](index=228&type=chunk) - Stringent processes are in place to oversee cybersecurity risks with third-party service providers, including risk assessments and compliance monitoring[229](index=229&type=chunk) [Governance](index=40&type=section&id=Governance) - The senior management team, including the cybersecurity team, is responsible for day-to-day implementation and management of cybersecurity risk processes[231](index=231&type=chunk) - The Board of Directors, through its Audit Committee and a Cybersecurity Subcommittee, provides active oversight of the company's cybersecurity risks[232](index=232&type=chunk) - The Cybersecurity Subcommittee's responsibilities include oversight of security policies, IT systems quality, incident response preparation, and public disclosures related to cybersecurity[233](index=233&type=chunk) [Item 2. Properties](index=42&type=section&id=Item%202.%20Properties) AOSL's principal properties include R&D, wafer fabrication in Oregon, and packaging/testing facilities in China Principal Properties as of July 31, 2025 | Location | Square Footage | Primary Use | | :--- | :--- | :--- | | Sunnyvale, California, USA | **57,000** | Research and development, marketing, sales and administration | | Hillsboro, Oregon, USA | **252,950** | Wafer fabrication facility | | Shanghai, China (Songjiang District) | **221,301** | Packaging and testing, manufacturing support | | Shanghai, China (Songjiang Export Process Zone) | **250,198** | Packaging and testing, manufacturing support | - All properties are leased except for the wafer fabrication facility in Hillsboro, Oregon, which was acquired in **January 2012**[234](index=234&type=chunk) [Item 3. Legal Proceedings](index=43&type=section&id=Item%203.%20Legal%20Proceedings) AOSL settled a Department of Commerce investigation for $4.25 million, with no impact on operations - AOSL reached a settlement agreement with the Department of Commerce on **July 2, 2025**, to close an administrative investigation, involving a one-time payment of **$4.25 million**[236](index=236&type=chunk) - The settlement does not impact the company's ongoing business operations[236](index=236&type=chunk) - The semiconductor industry is characterized by frequent claims and litigation, including intellectual property rights and hiring practices, which could result in significant defense costs[237](index=237&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to AOSL - Mine Safety Disclosures are not applicable to the registrant[238](index=238&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) AOSL common shares trade on NASDAQ; no cash dividends paid, earnings retained for operations, no Q4 FY25 share repurchases [Dividend Policy](index=44&type=section&id=Dividend%20Policy) - AOSL has never declared or paid cash dividends on its common shares and intends to retain all available funds and future earnings for business operations[241](index=241&type=chunk) [Securities Authorized for Issuance Under Equity Compensation Plans](index=44&type=section&id=Securities%20Authorized%20for%20Issuance%20Under%20Equity%20Compensation%20Plans) - Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from Part III, Item 12 of this report[242](index=242&type=chunk) [Share Performance Graph](index=44&type=section&id=Share%20Performance%20Graph) - A graph compares the total cumulative shareholder return of AOSL's common shares with the NASDAQ Composite Index and the Philadelphia Semiconductor Index for the last **five fiscal years** ended **June 30, 2025**[243](index=243&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=44&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) - The company did not repurchase any common shares during the **fourth quarter of FY25**[247](index=247&type=chunk) [Item 6. [Reserved]](index=45&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no content [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue increased **5.9%** to **$696.2 million**, but gross margin declined to **23.1%**; significant JV impairment recorded [Overview](index=46&type=section&id=Overview) - AOSL is a global supplier of power semiconductors, including MOSFET, SiC, IGBT, IPM, TVS, HV Gate Drivers, Power IC, and Digital Power products, with approximately **2,800** products and over **100** new introductions in **FY25**[250](index=250&type=chunk) - The company's ownership in the JV Company was reduced to approximately **39.2%** as of **June 30, 2025**, following a RMB **500 million** (**$68.5 million**) investment by a third party[254](index=254&type=chunk) - AOSL entered an agreement on **July 14, 2025**, to sell an additional **20.3%** equity interest in the JV Company for **$150 million**, expected to close by end of calendar year **2025**, providing significant capital for future investments[255](index=255&type=chunk)[256](index=256&type=chunk) [Other Factors Affecting Our Performance](index=47&type=section&id=Other%20Factors%20Affecting%20Our%20Performance) - AOSL's performance is significantly impacted by global/regional economic conditions and the PC market, which accounted for approximately **46.6%** of total revenue in **FY25**[103](index=103&type=chunk)[258](index=258&type=chunk) - Gross margin is affected by manufacturing costs, facility utilization, product mix, wafer pricing from third-party foundries, and raw material costs[260](index=260&type=chunk) - The company aims to offset average selling price (ASP) erosion by introducing new, higher-value products, expanding existing products, and reducing manufacturing costs[261](index=261&type=chunk) - Success depends on timely introduction of new products that meet customer specifications, especially for Tier 1 OEMs, and managing fluctuations from distributor ordering patterns and seasonality[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) [Principal Line Items of Statements of Operations](index=48&type=section&id=Principal%20line%20items%20of%20statements%20of%20operations) - Revenue is primarily generated from power semiconductor sales (power discretes and power ICs), with a small portion from packaging and testing services and license/development services[265](index=265&type=chunk) - Revenue is reported net of estimated stock rotation returns and price adjustments provided to distributors, which are variable considerations estimated based on inventory levels, forecasted selling prices, and demand[266](index=266&type=chunk) - A **$45.0 million** SiC technology license and development agreement, entered in **February 2023**, was fully recognized by **June 30, 2025**, with **$13.8 million** recognized in **FY25**[267](index=267&type=chunk) - Cost of goods sold includes wafer, packaging, testing, personnel, and overhead costs, with the goal of improving factory utilization through market diversification and product growth[268](index=268&type=chunk) - Operating expenses (R&D, SG&A) are expected to fluctuate as a percentage of revenue, with ongoing investment in R&D for new technologies and products[269](index=269&type=chunk)[270](index=270&type=chunk) - Income tax expense involves significant judgment due to complex tax laws across multiple jurisdictions, with a valuation allowance recorded against deferred tax assets if realization is unlikely[272](index=272&type=chunk)[273](index=273&type=chunk) - The Bermuda Corporate Income Tax Act **2023**, effective **January 1, 2025**, could impose a **15%** corporate income tax if the company meets the €**750 million** annual revenue threshold[274](index=274&type=chunk)[275](index=275&type=chunk) - A **$76.8 million** other-than-temporary impairment of the equity method investment in the JV Company was recognized in **FY25** due to its fair value being lower than carrying value[281](index=281&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Consolidated Statements of Operations Summary (FY2025 vs FY2024) | Metric | FY2025 (Millions USD) | FY2024 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------------- | :-------------------- | :-------------------- | :-------------------- | :--------- | | Revenue | $696.2 | $657.3 | $38.9 | 5.9% | | Cost of goods sold | $535.2 | $485.4 | $49.8 | 10.3% | | Gross profit | $161.0 | $171.9 | ($10.9) | (6.3)% | | Operating expenses | $189.4 | $175.7 | $13.8 | 7.8% | | Operating loss | ($28.4) | ($3.8) | ($24.7) | 657.1% | | Net loss before income taxes and equity method investment loss | ($27.8) | ($2.6) | ($25.2) | 951.7% | | Income tax expense (benefit) | ($8.6) | $3.6 | ($12.3) | (336.4)% | | Equity method investment loss | ($77.8) | ($4.8) | ($73.0) | 1524.7% | | Net loss | ($97.0) | ($11.1) | ($85.9) | 775.1% | Revenue by Product Type (FY2025 vs FY2024) | Product Type | FY2025 (Millions USD) | FY2024 (Millions USD) | Change (Millions USD) | Change (%) | | :----------------------------- | :-------------------- | :-------------------- | :-------------------- | :--------- | | Power discrete | $449.5 | $426.1 | $23.4 | 5.5% | | Power IC | $229.9 | $205.8 | $24.1 | 11.7% | | Packaging and testing services | $2.9 | $4.1 | ($1.2) | (29.9)% | | License and development services | $13.8 | $21.2 | ($7.4) | (34.8)% | | **Total Revenue** | **$696.2** | **$657.3** | **$38.9** | **5.9%** | Revenue by End Market (FY2025 vs FY2024) | End Market | FY2025 (Millions USD) | FY2024 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------ | :-------------------- | :-------------------- | :-------------------- | :--------- | | Computing | $324.1 | $282.4 | $41.7 | 14.8% | | Consumer | $102.3 | $106.4 | ($4.1) | (3.8)% | | Communication | $123.9 | $114.2 | $9.7 | 8.5% | | Power Supply and Industrial | $129.1 | $129.0 | $0.2 | 0.1% | | Packaging and testing services | $2.9 | $4.1 | ($1.2) | (29.9)% | | License and development services | $13.8 | $21.2 | ($7.4) | (34.8)% | | **Total Revenue** | **$696.2** | **$657.3** | **$38.9** | **5.9%** | - Research and development expenses increased by **$4.3 million** (**4.8%**) to **$94.3 million** in **FY25**, driven by higher share-based compensation and employee costs[288](index=288&type=chunk) - Selling, general and administrative expenses increased by **$9.4 million** (**11.0%**) to **$95.2 million** in **FY25**, primarily due to a **$4.3 million** DOC settlement fee and a **$4.2 million** increase in share-based compensation[289](index=289&type=chunk) - An impairment of **$1.0 million** related to purchased manufacturing equipment was recorded in SG&A expenses in **FY25**[289](index=289&type=chunk) - Income tax expense shifted from a **$3.6 million** expense in **FY24** to an **($8.6 million)** benefit in **FY25**, largely due to a **$12.5 million** tax benefit from the **$77.8 million** equity method investment loss[296](index=296&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) - AOSL finances operations and capital expenditures through cash generated from operations and borrowings, including a **$6.5 million** outstanding debt financing for machinery and a **$20.3 million** term loan for the Oregon Fab (paid in full in **August 2025**)[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk) - Chinese government currency exchange controls restrict the transfer of funds out of China, with approximately **$93.9 million** (**11.4%** of total consolidated net assets) of net assets in China subsidiaries restricted as of **June 30, 2025**[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - The company expects to receive **$150 million** from the sale of a **20.3%** equity interest in the JV Company by the end of calendar year **2025**, with the majority (**$94 million**) in **Q1 FY26**, to be invested in technology, R&D, and asset acquisitions[306](index=306&type=chunk) Cash, Cash Equivalents and Restricted Cash | Metric | June 30, 2025 (Millions USD) | June 30, 2024 (Millions USD) | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Cash, cash equivalents and restricted cash | $153.5 | $175.5 | | Net decrease | ($22.0) | ($20.1) | Cash Flows Summary | Activity | FY2025 (Millions USD) | FY2024 (Millions USD) | | :----------------------------------- | :-------------------- | :-------------------- | | Net cash provided by operating activities | $29.7 | $25.7 | | Net cash used in investing activities | ($36.4) | ($35.7) | | Net cash used in financing activities | ($15.5) | ($9.9) | [Commitments](index=58&type=section&id=Commitments) - Commitments are detailed in Note **15** of the consolidated financial statements[314](index=314&type=chunk) [Critical Accounting Estimates](index=59&type=section&id=Critical%20Accounting%20Estimates) - Key accounting estimates include reserves for stock rotation returns and price adjustments, valuation of inventories (excess and obsolete), income taxes, leases, and share-based compensation[315](index=315&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - Revenue recognition involves estimating variable consideration for price adjustments based on distributor inventory, forecasted selling prices, and demand[317](index=317&type=chunk) - Inventory valuation requires assessing salability, obsolescence, historical usage, and forecasted demand, with potential for future write-downs if estimates are inaccurate[318](index=318&type=chunk) [Recently Issued Accounting Pronouncements](index=59&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - ASU No. **2023-07**, 'Segment Reporting,' was adopted in **Q4 FY25** with no significant impact on consolidated financial statements[439](index=439&type=chunk) - ASU No. **2023-09**, 'Income Taxes,' effective for annual periods beginning after **December 15, 2024**, will enhance income tax disclosures[440](index=440&type=chunk) - ASU No. **2024-03**, 'Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures,' effective for annual periods beginning after **December 15, 2026**, will provide more detailed expense information[441](index=441&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) AOSL faces foreign currency, interest rate, and commodity price risks, with no formal hedging strategies [Foreign Currency Risk](index=60&type=section&id=Foreign%20currency%20risk) - AOSL's functional currency is the U.S. dollar, with most transactions settled in USD, but foreign currencies (primarily RMB) are needed for overseas operations[320](index=320&type=chunk) - Management believes exposure to foreign currency translation risk is not significant, based on a **10%** sensitivity analysis, due to the limited net assets denominated in foreign currencies[320](index=320&type=chunk) [Interest Rate Risk](index=60&type=section&id=Interest%20rate%20risk) - AOSL's interest-bearing assets are mainly short-term bank balances, managed with various short-term maturities[321](index=321&type=chunk) - As of **June 30, 2025**, the company had **$26.7 million** outstanding under loans and **$2.3 million** under financing leases, which are subject to interest rate fluctuations[321](index=321&type=chunk) - A hypothetical **10%** increase in the interest rate would result in an estimated **$0.1 million** in additional annual interest expense[321](index=321&type=chunk) [Commodity Price Risk](index=60&type=section&id=Commodity%20Price%20Risk) - AOSL is exposed to fluctuating market prices of commodity raw materials, particularly gold and silver, used in its manufacturing process[322](index=322&type=chunk) - A **10%** increase or decrease in the costs of these raw materials would decrease or increase current year's net earnings by **$1.0 million**, assuming no impact on selling prices[322](index=322&type=chunk) - The company does not enter into formal hedging arrangements to mitigate commodity risk[322](index=322&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Consolidated financial statements and supplementary data are referenced in Part IV, Item 15 - Consolidated financial statements and supplementary data are filed as part of Part IV, Item **15** of this Annual Report on Form **10-K**[323](index=323&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=61&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes or disagreements with accountants on financial disclosure were reported - No changes in or disagreements with accountants on accounting and financial disclosure were reported[324](index=324&type=chunk) [Item 9A. Controls and Procedures](index=61&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors affirmed effective disclosure and internal controls over financial reporting as of **June 30, 2025** [Evaluation of Disclosure Controls and Procedures](index=61&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - AOSL's management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of **June 30, 2025**, concluding they were effective[325](index=325&type=chunk)[326](index=326&type=chunk) [Management's Annual Report on Internal Control over Financial Reporting](index=61&type=section&id=Management%27s%20Annual%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) - Management is responsible for establishing and maintaining adequate internal control over financial reporting, which was assessed as effective as of **June 30, 2025**, based on the COSO **2013** framework[327](index=327&type=chunk)[328](index=328&type=chunk) - Deloitte & Touche LLP audited and expressed an unqualified opinion on the effectiveness of the company's internal control over financial reporting[329](index=329&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) [Changes in Internal Control Over Financial Reporting](index=61&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No changes materially affecting internal control over financial reporting occurred during the **fourth fiscal quarter** ended **June 30, 2025**[330](index=330&type=chunk) [Inherent Limitations on the Effectiveness of Controls](index=61&type=section&id=Inherent%20Limitations%20on%20the%20Effectiveness%20of%20Controls) - Control systems provide reasonable, not absolute, assurance and may not prevent or detect all errors and fraud due to inherent limitations[331](index=331&type=chunk)[332](index=332&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) [Item 9B. Other Information](index=60&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item - No other information is reported under this item[341](index=341&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](index=60&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to AOSL - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the registrant[341](index=341&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=61&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is referenced from the **2025** Proxy Statement - Information on directors, executive officers, Section **16** compliance, and corporate governance is incorporated by reference from Part I and the **2025** Proxy Statement[344](index=344&type=chunk) [Item 11. Executive Compensation](index=61&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the **2025** Proxy Statement - Information on executive compensation is incorporated by reference from the **2025** Proxy Statement[345](index=345&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=61&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan information is incorporated by reference from the **2025** Proxy Statement - Information on security ownership of beneficial owners and management, and equity compensation plan information, is incorporated by reference from the **2025** Proxy Statement[346](index=346&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=61&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transactions and director independence information is incorporated by reference from the **2025** Proxy Statement - Information on related party transactions and director independence is incorporated by reference from the **2025** Proxy Statement[347](index=347&type=chunk) [Item 14. Principal Accountant Fees and Services](index=61&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the **2025** Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the **2025** Proxy Statement[348](index=348&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedule](index=62&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedule) This section details consolidated financial statements, supplementary data, and exhibits, including auditor reports - The section includes the Report of Independent Registered Public Accounting Firm from Deloitte & Touche LLP for **FY25** and Baker Tilly US, LLP for **FY24**[351](index=351&type=chunk)[354](index=354&type=chunk)[365](index=365&type=chunk) - Consolidated financial statements include Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Equity, and Cash Flows, along with accompanying notes[351](index=351&type=chunk) - Schedule II – Valuation and Qualifying accounts is also filed as part of this annual report[351](index=351&type=chunk) - A comprehensive list of exhibits, including organizational documents, agreements, and certifications, is provided[352](index=352&type=chunk)[527](index=527&type=chunk)[528](index=528&type=chunk)[529](index=529&type=chunk) [Signatures](index=111&type=section&id=Signatures) This section contains required signatures of the CEO, CFO, and directors, affirming the report filing - The report is duly signed on behalf of Alpha and Omega Semiconductor Limited by its Chief Executive Officer, Stephen C. Chang, and Chief Financial Officer, Yifan Liang, along with other directors[533](index=533&type=chunk)[534](index=534&type=chunk)[537](index=537&type=chunk)[538](index=538&type=chunk)