Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alpha & Omega Semiconductor Ltd (AOSL, Financial) reported fiscal Q1 revenue of $181.9 million, which was in line with guidance.
- The company experienced broad-based demand across major segments, with notable strength in PC desktops, notebooks, servers, gaming, and wearables.
- AOSL is transitioning from a component supplier to a total solutions provider, leveraging strengths in high-performance silicon packaging and intelligent ICs.
- The company is seeing growth opportunities in advanced computing, AI data centers, and smartphones, driven by trends like foldable screens and faster charging.
- AOSL's computing segment revenue increased by 8.6% year-over-year and 6.6% sequentially, outperforming expectations for mid-single-digit growth.
Negative Points
- Non-GAAP gross margin decreased to 25.5% from 26.4% last quarter and 28.8% a year ago, impacted by ASP erosion and mix changes.
- The consumer segment is expected to see a close to 30% sequential decline in the December quarter due to seasonal declines in gaming and TVs.
- The power supply and industrial segment was down 23.7% year-over-year, despite a 15.6% sequential increase.
- The company anticipates a low double-digit sequential decline in the communications segment for the December quarter due to seasonality.
- Visibility into 2025 remains limited, with the first calendar quarter of 2025 expected to be seasonally soft.
Q & A Highlights
Q: How is the competitive landscape affecting your graphics card business?
A: Stephen Chang, CEO: The market is still in a correction period, affecting all competitors. We see increased competition as firms try to fill their fabs. However, with the upcoming platform transition, we expect less competition in graphics cards and more opportunities in data centers.
Q: Are we back to expecting seasonal trends, or is there still volatility?
A: Stephen Chang, CEO: Seasonal patterns have returned in computing and consumer markets, but full recovery in PCs hasn't occurred yet. We're focusing on gaining more BOM content in PCs and expect seasonal cycles to continue.
Q: Can you clarify the expected decline in the communications segment for the December quarter?
A: Stephen Chang, CEO: We anticipate a low double-digit sequential decline in communications, not 30%. This reflects normal seasonal drops after a strong phone launch by our major US customer.
Q: Can you provide details on AI opportunities and BOM content growth?
A: Stephen Chang, CEO: Our near-term AI opportunity is in next-gen graphics and AI accelerator cards. BOM content is increasing, with potential growth from $5-$6 to $7-$15, or even over $20, depending on the GPU power level.
Q: How is pricing pressure affecting your business, and what are your strategies to counter it?
A: Yifan Liang, CFO: We see increased pricing pressure due to market softness and competition. ASP erosion is trending high single digits annually. We're countering this by accelerating new product rollouts and targeting higher-performance sockets.
Q: What is the current utilization rate at your Oregon facility, and how do you see it evolving?
A: Yifan Liang, CFO: Our utilization rate is around 80%. We have capacity for further growth, and as we roll out new products, we expect our fab to support this expansion.
Q: Can you discuss the impact of ASP erosion on gross margins and future expectations?
A: Yifan Liang, CFO: The sequential decline in gross margin is mainly due to ASP erosion. We aim to improve margins through increased utilization and a better product mix with new products.
Q: How are you addressing competition from low to mid-range Chinese competitors?
A: Stephen Chang, CEO: We're focusing on higher-performance, differentiated products and attractive sockets, especially in the smartphone market, where higher charging currents create separation from competitors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
