AOS(AOSL) - 2025 Q4 - Annual Report

PART I Item 1. Business AOSL is a global power semiconductor designer and supplier, integrating R&D and manufacturing for diverse markets Forward Looking Statements 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] Overview - AOSL is a designer, developer, and global supplier of approximately 2,800 power semiconductors, introducing over 100 new products in FY25[14] - 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] - 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][18] - 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] Our Industry - 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][22] - Power semiconductors, a subset of analog, manage and switch electricity, comprising discrete devices (MOSFETs) and integrated circuits (Power ICs)[23][24] - 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][26] Our Strategies - 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] - 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] - 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][32][34] - AOSL maintains a strong relationship with the JV Company for foundry capacity, with a guaranteed monthly wafer production capacity[35] Our Products - 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][37][38] - Power ICs leverage proprietary MOSFET and advanced packaging technologies for integrated solutions, offering higher power density and faster product updates[43] 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 - 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][47] - 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] - 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] - 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] Distributors and Customers - 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][51][52] 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 - 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] - The sales team is strategically positioned globally, with offices in Asia, Europe, and the US, complemented by application centers[54] - 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] 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] - 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] 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] Research and Development 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][62][64] 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][66] - 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][68] - 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] Quality Assurance - Manufacturing operations in China and Oregon are certified to ISO9001 and IATF16949:2016 quality management standards, and products comply with RoHS 3.0[70] - A supplier management and process engineering team monitors third-party foundries and subcontractors to ensure compliance with process controls and product requirements[71] - Raw materials, including silicon wafers, gold, copper, and various chemicals, are sourced from numerous suppliers, with strict qualification processes[72] Intellectual Property Rights - 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][74] - 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] - 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][75][77] Human Capital Resources - As of June 30, 2025, AOSL had 2,428 employees globally, with 770 in the US, 1,475 in China, and 183 elsewhere[78] - 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][80][81] - 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] Environmental Matters - 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] - 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][86] - 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][87] Export Control - AOSL is subject to export and import control laws and trade regulations, and has implemented revised processes and training programs to ensure compliance[88] Executive Officers 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 - 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] Available Information - 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 AOSL faces risks from industry downturns, PC market volatility, geopolitical tensions, operational challenges, and IP disputes Risk Factor Summary - The summary highlights risks related to business operations, including industry downturns, PC market decline, diversification challenges, geopolitical conflicts, and operational issues[98] - Specific risks related to doing business in China, such as tax changes, trade tensions, and regulatory policies, are also summarized[99][102] - Risks concerning the corporate structure and common shares, including stock price volatility and anti-takeover provisions, are noted[100][102] Risks Related to Our Business - 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][103] - Diversification into new market segments (consumer, communications, industrial) may not succeed as expected and could strain resources[104][105] - 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][112][113][114] - 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][118][120][121] - 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][131][134][135] - 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] - 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][142] - Cybersecurity threats and disruptions to IT systems, loss of key personnel, and failure to protect intellectual property are ongoing risks[152][155][156] Risks Related to Doing Business in China - 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][176][180][181] - 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][191][193][201][204] - Continuing trade tensions between the U.S. and China, including increased tariffs, could adversely affect supply chain, costs, product margins, and business relationships[196][197][199][200] - 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][208][209][210] - PRC labor laws, including the Labor Contract Law and regulations on paid annual leave, may increase employee-related costs and affect workforce management[214][215][216] - Relations between Taiwan and China could negatively affect AOSL's business due to significant customer and personnel presence in both regions[217] Risks Related to Our Corporate Structure and Our Common Shares - 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][219] - Anti-takeover provisions in the company's bye-laws could make an acquisition more difficult and prevent shareholder attempts to replace management[222][223] - As a Bermuda company, shareholder rights under Bermuda law may differ from U.S. laws, potentially complicating enforcement of judgments[224] Item 1B. Unresolved Staff Comments No unresolved staff comments were reported - No unresolved staff comments were reported[226] Item 1C. Cybersecurity AOSL manages cybersecurity risks with technical solutions, policies, training, and board oversight, following NIST framework Risk Management and Strategy - 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] - 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][228] - Stringent processes are in place to oversee cybersecurity risks with third-party service providers, including risk assessments and compliance monitoring[229] Governance - The senior management team, including the cybersecurity team, is responsible for day-to-day implementation and management of cybersecurity risk processes[231] - The Board of Directors, through its Audit Committee and a Cybersecurity Subcommittee, provides active oversight of the company's cybersecurity risks[232] - The Cybersecurity Subcommittee's responsibilities include oversight of security policies, IT systems quality, incident response preparation, and public disclosures related to cybersecurity[233] Item 2. Properties 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] Item 3. Legal Proceedings 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] - The settlement does not impact the company's ongoing business operations[236] - 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] Item 4. Mine Safety Disclosures This item is not applicable to AOSL - Mine Safety Disclosures are not applicable to the registrant[238] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities AOSL common shares trade on NASDAQ; no cash dividends paid, earnings retained for operations, no Q4 FY25 share repurchases Dividend Policy - 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] Securities Authorized for Issuance Under Equity Compensation Plans - Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from Part III, Item 12 of this report[242] Share Performance Graph - 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] Purchases of Equity Securities by the Issuer and Affiliated Purchasers - The company did not repurchase any common shares during the fourth quarter of FY25[247] Item 6. [Reserved] This item is reserved and contains no content Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue increased 5.9% to $696.2 million, but gross margin declined to 23.1%; significant JV impairment recorded 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] - 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] - 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][256] Other Factors Affecting Our Performance - 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][258] - Gross margin is affected by manufacturing costs, facility utilization, product mix, wafer pricing from third-party foundries, and raw material costs[260] - The company aims to offset average selling price (ASP) erosion by introducing new, higher-value products, expanding existing products, and reducing manufacturing costs[261] - 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][263][264] Principal Line Items of Statements of Operations - 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] - 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] - 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] - 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] - 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][270] - 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][273] - 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][275] - 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] Results of Operations 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] - 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] - An impairment of $1.0 million related to purchased manufacturing equipment was recorded in SG&A expenses in FY25[289] - 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] Liquidity and Capital Resources - 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][300][301] - 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][304][305] - 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] 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 - Commitments are detailed in Note 15 of the consolidated financial statements[314] Critical Accounting Estimates - 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][317][318] - Revenue recognition involves estimating variable consideration for price adjustments based on distributor inventory, forecasted selling prices, and demand[317] - Inventory valuation requires assessing salability, obsolescence, historical usage, and forecasted demand, with potential for future write-downs if estimates are inaccurate[318] Recently Issued Accounting Pronouncements - ASU No. 2023-07, 'Segment Reporting,' was adopted in Q4 FY25 with no significant impact on consolidated financial statements[439] - ASU No. 2023-09, 'Income Taxes,' effective for annual periods beginning after December 15, 2024, will enhance income tax disclosures[440] - 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] Item 7A. Quantitative and Qualitative Disclosures About Market Risk AOSL faces foreign currency, interest rate, and commodity price risks, with no formal hedging strategies Foreign Currency Risk - 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] - 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] Interest Rate Risk - AOSL's interest-bearing assets are mainly short-term bank balances, managed with various short-term maturities[321] - 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] - A hypothetical 10% increase in the interest rate would result in an estimated $0.1 million in additional annual interest expense[321] Commodity Price Risk - AOSL is exposed to fluctuating market prices of commodity raw materials, particularly gold and silver, used in its manufacturing process[322] - 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] - The company does not enter into formal hedging arrangements to mitigate commodity risk[322] Item 8. Financial Statements and Supplementary Data 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] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 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] Item 9A. Controls and Procedures Management and auditors affirmed effective disclosure and internal controls over financial reporting as of June 30, 2025 Evaluation of Disclosure Controls and Procedures - 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][326] Management's Annual Report on Internal Control over Financial Reporting - 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][328] - Deloitte & Touche LLP audited and expressed an unqualified opinion on the effectiveness of the company's internal control over financial reporting[329][334][335] Changes in Internal Control Over Financial Reporting - No changes materially affecting internal control over financial reporting occurred during the fourth fiscal quarter ended June 30, 2025[330] Inherent Limitations on the Effectiveness of Controls - Control systems provide reasonable, not absolute, assurance and may not prevent or detect all errors and fraud due to inherent limitations[331][332][338][339] Item 9B. Other Information No other information is reported under this item - No other information is reported under this item[341] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. This item is not applicable to AOSL - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the registrant[341] PART III Item 10. Directors, Executive Officers and Corporate Governance 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] Item 11. Executive Compensation 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] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 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] Item 13. Certain Relationships and Related Transactions, and Director Independence 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] Item 14. Principal Accountant Fees and Services 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] PART IV Item 15. Exhibits and Financial Statement Schedule 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][354][365] - Consolidated financial statements include Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Equity, and Cash Flows, along with accompanying notes[351] - Schedule II – Valuation and Qualifying accounts is also filed as part of this annual report[351] - A comprehensive list of exhibits, including organizational documents, agreements, and certifications, is provided[352][527][528][529] 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][534][537][538]