AOS(US:AOSL)2023-05-05 02:46Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $132.6 million, down 29.8% sequentially and 34.8% year-over-year, reflecting the industry-wide inventory correction [5][16] - Non-GAAP gross margin was 25.1%, compared to 29.5% in the prior quarter and 36.7% a year ago [17] - Non-GAAP EPS was negative $0.21, compared to $0.67 last quarter and $1.34 a year ago [18] Business Line Data and Key Metrics Changes - Computing segment revenue decreased 57.7% year-over-year and 40.4% sequentially, representing 28.7% of total revenue [11] - Consumer segment revenue was slightly up year-over-year but down 5.5% sequentially, driven by strong gaming volumes [12] - Communications segment revenue declined 33.7% year-over-year and 45.4% sequentially, making up 14.5% of total revenue [13] - Power Supply and Industrial segment revenue decreased 29.6% year-over-year and 35.7% sequentially, accounting for 20% of total revenue [14] Market Data and Key Metrics Changes - End consumer demand remains weak, but there are signs of recovery in certain applications as inventory levels deplete [5][15] - The company anticipates a rebound in the second half of the year, particularly during the fall launches and holiday sales [13][15] Company Strategy and Development Direction - The company aims to grow beyond a near-term $1 billion revenue target, focusing on electrification trends and expanding into new markets such as automotive and energy generation [6][8] - Plans include deeper penetration into existing core markets and leveraging technology IP for integrated solutions [8][9] - Supply chain optimization is a priority, with exploration of additional foundry partnerships to enhance production capabilities [9] Management's Comments on Operating Environment and Future Outlook - Management believes the worst of the inventory correction is behind them, with expectations for revenue recovery in the upcoming quarters [5][15] - The company is optimistic about future demand driven by trends in electric vehicles, clean energy, and advancements in AI [7][15] Other Important Information - The company entered into a licensing and engineering service agreement worth $45 million related to Silicon Carbide technology, which will be recognized over 24 months [16][17] - Operating cash flow was $11.6 million, significantly improved from the prior quarter [18] Q&A Session Summary Question: Thoughts on gross margin recovery - Management targets a return to mid-30% gross margin but acknowledges current competitive pressures [24][25] Question: Strategy for the IC business - The company is broadening its product portfolio in ICs to address higher margin content and increase BOM [28][29] Question: Details on the Silicon Carbide licensing agreement - The agreement is expected to help enter new markets like automotive and industrial power supplies [30][31] Question: Revenue impact from the Silicon Carbide deal - $3.6 million was recognized in Q3, with expectations for $5 million to $6 million in Q4 [34][35] Question: Inventory levels and demand recovery - Most current improvements are due to inventory correction rather than underlying demand [48][49] Question: Update on manufacturing and CapEx outlook - CapEx is expected to range from $15 million to $20 million for the June quarter, with ongoing discussions regarding the CHIPS Act [62]