Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $162.3 million, down 6.3% year-over-year and down 11.1% sequentially [4][18] - Non-GAAP gross margin was 22.2%, compared to 24.1% in the previous quarter and 24.2% a year ago [18] - Non-GAAP EPS was a loss of $0.16 per share, compared to a profit of $0.13 in the prior quarter and $0.09 a year ago [20] - Operating cash flow was negative $8.1 million, down from positive $10.2 million in the prior quarter [20][21] Business Line Data and Key Metrics Changes - Computing segment revenue was $80.5 million, representing 49.6% of total revenue, down 17.1% sequentially but up 5.9% year-over-year [10][12] - Consumer segment revenue was $19.2 million, down 14.9% year-over-year and down 18.3% sequentially, accounting for 11.8% of total revenue [13][14] - Communication segment revenue was $33.1 million, flat year-over-year and up 1.1% sequentially, representing 20.4% of total revenue [15] - Power supply and industrial segment revenue was $27.1 million, down 22.5% year-over-year and down 3% sequentially, accounting for 16.7% of total revenue [16] Market Data and Key Metrics Changes - Demand for PCs is expected to be constrained due to memory shortages, but data center investments are providing an offset [11][57] - The company is seeing increased BOM content in new platforms, particularly in AI and high-performance applications [9][57] - The smartphone market remains uneven, with strong performance from Tier 1 US customers but mixed results from China [15] Company Strategy and Development Direction - The company is transitioning from a component supplier to a provider of application-specific total solutions, focusing on higher performance markets [6][7] - Increased R&D investments are being made in areas with clear differentiation and strong customer engagement [7][40] - The company is monetizing a portion of its equity interests in a joint venture to support strategic investments [8] Management's Comments on Operating Environment and Future Outlook - Management expects the March quarter to be a near-term low point for revenue and margin, with growth anticipated beginning in the June quarter [17] - The company is optimistic about the impact of its total solution strategy and expects to see tangible results in 2026 [9][17] - There is confidence in the ability to penetrate further into the PC and smartphone markets despite memory supply challenges [57] Other Important Information - The company repurchased approximately $13.9 million of shares during the December quarter, with $16 million remaining in the repurchase program [5] - CapEx for the quarter was $15 million, with expectations for the March quarter to range from $15 million to $18 million [21] Q&A Session Summary Question: AI opportunities and GPU track - Management noted that while AI opportunities are less than originally expected, they are expanding into medium-voltage MOSFETs for power conversions [25] Question: Operating expenses normalization - Operating expenses are expected to increase by about $4 million in the March quarter, primarily due to R&D investments [27] Question: Capacity and balance sheet - The company is investing in CapEx to prepare for growth in 2026 and is building up capacity [30] Question: Gross margin expectations - March quarter guidance reflects lower utilization due to seasonal factors, with expectations for margins to rebound in the June quarter [36] Question: R&D investment specifics - Increased R&D will focus on areas with competitive leverage, including AI applications and smartphone battery protection [40] Question: Advanced compute product investment - The company is targeting AI applications and medium voltage power conversion, with expectations for significant growth in these areas [48][52]