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% last 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 last quarter and $0.09 a year ago [18] - Operating cash flow was negative $8.1 million, down from positive $10.2 million in the prior quarter [19] 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 down 14.9% year-over-year and down 18.3% sequentially, accounting for 11.8% of total revenue [12][14] - Communication segment revenue was flat year-over-year and increased 1.1% sequentially, representing 20.4% of total revenue [15] - Power supply and industrial segment revenue was 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][55] - The smartphone market is seeing uneven demand from China, while the U.S. market is experiencing growth due to higher charging currents [15][56] - Advanced computing, particularly in AI data centers, is becoming a core growth area, with increased demand for medium-voltage solutions [10][12] 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 [5][6] - 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 the Chongqing 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 application-specific total solution strategy is yielding results, with expectations for stronger growth in 2027 and beyond [17][40] - Visibility into the PC market remains limited, but the company is confident in its ability to penetrate further with its total solution strategy [55] Other Important Information - The company repurchased approximately $13.9 million of shares during the December quarter, with $16 million remaining in the share repurchase program [5] - CapEx for the quarter was $15 million, with expectations for the March quarter to range from $15 million to $18 million [20] Q&A Session Summary Question: AI opportunities and GPU track - Management noted that while AI opportunities are less than original expectations, they are expanding into medium-voltage MOSFETs for power conversions [24] Question: Operating expenses normalization - Management indicated that operating expenses are expected to increase by about $4 million in the March quarter, primarily due to R&D investments [25] Question: Capacity and gross margin - Management confirmed that CapEx is being invested to prepare for growth in 2026, with ongoing capacity building [28] Question: Gross margin expectations - Management explained that the March quarter's gross margin guidance is lower due to reduced utilization during the lunar new year, with expectations for a rebound in June [34] Question: R&D investment specifics - Management clarified that increased R&D is focused on areas with competitive leverage, including AI applications and smartphone battery solutions [39] Question: Revenue return on investment - Management anticipates that AI-related revenue could grow to 50% of the computing segment, depending on successful penetration of opportunities [50]