Q1 2025 Alpha and Omega Semiconductor Ltd Earnings Call

Good afternoon. Thank you for listening today's Alphan Omega's semiconductor. This school first quarter, 2020 signs are called, my name is Sherlan, I'm the moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. I'd like to turn the call for us over to our host, Stephen Pelayo, Steven. You may proceed.

Stephen Pelayo: Good afternoon everyone and welcome to Alpha in the Omega Simic Electors Conference call to discuss fiscal 2025 first quarter financial results.

I'm Steven Pelayo, a Mr. Relations representative for AOS. With me today, our Steven Chang, our CEO, and Yifan Liang, our CFR, this call is being recorded and broadcast live over the web. A replay will be available for seven days following the call via link in the Investor Relations section of our website.

Our call will proceed as follows today. Steven will begin business updates, including strategic highlights and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the December quarter. Finally, we will have the Q&A session.

Stephen Pelayo: The earnings release was distributed over the wire today, November 4, 2024 after the market closed.

and the release is also posted on the company's website.

Stephen Pelayo: Our earnings release and this presentation include non-gap financial measures, we use non-gap measures because we believe they provide useful information about our operating performance that should be considered buying vusters in conjunction with the gap measures. A reconciliation of these non-gap measures to comparable gap measures is included in the earnings release.

Stephen Pelayo: We remind you that during this conference call we will make certain forward-looking statements, including discussions of the business outlook and financial projections.

Stephen Pelayo: These four looking statements are based on Mayorsville's current expectations and involved risks and uncertainty that could cause our actual results to differ materially. For more detailed description of these risks and uncertainties, please refer to our recent and subsequent findings with the SEC.

Stephen Pelayo: We soon know obligations to update the information provided in today's call. Now I'll turn the call over to our CEO, Steven Chang, even.

Steven Chang: Thank you, Steven. Welcome to Alpha and Omega's Fiscal Q1 Earnings Call.

Steven Chang: I will begin with a high-level overview of our results and then jump into segment details.

Stephen Pelayo: We delivered fiscal Q1 revenue and EPS results in line with our guidance. Revenue was $181.9 million, non-GAAP gross margin was 25.5%, non-GAAP EPS was $0.21.

Stephen Pelayo: We saw broad-based demand due to seasonality in the September quarter with sequential growth in each of our major segments.

Stephen Pelayo: Relative strength came from PC desktops, notebooks, and servers in our computing segment.

Gaming and wearables within consumer, strong growth from a Tier 1 U.S. smartphone customer within communications, and ACVC power supplies and quick chargers in the power supply and industrial segment.

Stephen Pelayo: We have delivered on our commitments and continue to make unwavering strides to transform from a component supplier to a total solutions provider, leveraging strengths in high-performance silicon packaging and intelligent ICs.

Stephen Pelayo: We aim to capture market share and increase BOM content with a broader portfolio. For example, we are leveraging our strength in graphics cards and introducing new vCore products for opportunities in advanced computing and AI data centers.

Stephen Pelayo: In smartphones, trends like foldable screens, AI integration, and faster charging offer growth opportunities.

Stephen Pelayo: In addition to computing and communication, we see long-term potential in solar, e-mobility, gaming, and home appliances, all driven by the global push for efficient, sustainable energy solutions.

Stephen Pelayo: [inaudible]

Stephen Pelayo: With that, let me now cover our segment results and provide some guidance by segment for the next quarter.

Stephen Pelayo: Starting with computing.

Stephen Pelayo: September quarter revenue was up 8.6% year-over-year and 6.6% sequentially, and represented 42% of total revenue. These results were slightly better than our original expectation for mid-single-digit growth.

Stephen Pelayo: As mentioned before, we saw relative strength from PC desktops, notebooks, and servers, which was offset by software, graphics, and AI-celebrated cards due to a pause before the next platform transition.

Stephen Pelayo: We are increasingly competent in our position in advanced computing. Our backlog for both graphics cards and AI-accelerated cards is now growing due to the new platform transition.

Stephen Pelayo: At this stage, we are working closely with add-in card makers in Asia as they bring up their boards and prepare for mass production.

Stephen Pelayo: With the new platform, we expect BOM content to increase as more PowerStage ICs paired with our controller are being used to power the GPU.

Stephen Pelayo: These assignments highlight the strength of our customer relationships and our total solutions approach as we supply both the controller and power stages.

Stephen Pelayo: Additionally, we are collaborating with customers on larger data center opportunities slated for 2025.

Stephen Pelayo: We anticipate having more to talk about with these developments during our next earnings report.

Stephen Pelayo: Looking forward into the December quarter, the PC market is expected to decline with seasonality, but we expect the computing segment to slightly grow sequentially with share gains in desktops as well as strength in graphics cards and servers offset by notebook and tablet market seasonality.

Stephen Pelayo: Turning to the consumer segment, September quarter revenue was up 2% year-over-year and 12.4% sequentially and represented 17.4% of total revenue.

Stephen Pelayo: The results were in line with our forecast for low double-digit sequential growth and were primarily driven by gaming wearables and TVs offset by a decline in home appliances

Stephen Pelayo: This was the second quarter of sequential growth in gaming, so we are confident the inventory correction is now behind us. However, we don't expect meaningful growth until the customer transitions to the next platform.

Stephen Pelayo: We're a notable standout in the quarter, reaching record levels on market share gains and new versions of smart watches and headphones.

Stephen Pelayo: For the December quarter, we forecast close to a 30% sequential decline in the consumer segment driven by seasonal decline in gaming and TVs, post-new product launch impacts in wearables, and continued softness in home appliances.

Stephen Pelayo: Next, let's discuss the communication segment.

Stephen Pelayo: Revenue in the September quarter was up 14.2% year-over-year and 29.4% sequentially and represented 19.5% of total revenue.

Stephen Pelayo: These results were above our double-digit sequential growth expectations as our Tier 1 U.S. smartphone customer prepared for its product launch.

Stephen Pelayo: In some of their high-end models, we are seeing an increase in bomb content as they are moving toward a higher charging current.

Stephen Pelayo: We also saw strong sequential growth from China OEMs, offset by sequential declines from Korea.

Stephen Pelayo: As mentioned last quarter, we are benefiting from a mixed shift to more premium phones.

Stephen Pelayo: Looking ahead, we anticipate a low double-digit sequential decline in the December quarter due to seasonality and overall limited visibility on smartphone sell-through heading into next year.

Stephen Pelayo: Now, let's talk about our last segment, power supply and industrial, which accounted for 17.5% of total revenue and was down 23.7% year over year, but up 15.6% sequentially.

Stephen Pelayo: The results were at the low end of our forecast for 15 to 20% sequential growth, but we're still driven by seasonal strength in AC, DC, power supplies, and quick chargers.

Stephen Pelayo: Within an industrial, solar remains soft while the recovery in quick chargers has now started. We see additional opportunities in 2025 for quick chargers due to increased bond content driven by higher charging currents.

Stephen Pelayo: We're also leveraging relationships in Taiwan to partner on DC fans for server racks.

Stephen Pelayo: For the December quarter, we expect the power supply and industrial segment to grow low single digits sequentially, primarily driven by e-mobility and continued growth from quick chargers. This growth will be partially offset by a seasonal decline in AC-DC power supplies.

Stephen Pelayo: In closing, the September quarter was in line with our expectations. The broad-based growth confirms the inventory corrections we experienced over the past year are complete.

Stephen Pelayo: Seasonality has returned and new markets like AI and advanced computing are emerging. We expect a typical seasonal decline in the December quarter primarily driven by notebooks,

Stephen Pelayo: tablets, gaming, wearables, and TV, but partially offset by desktops, graphics cards, servers, e-mobility, and quick chargers.

Stephen Pelayo: At this point, our visibility into 2025 is limited, and the calendar first quarter of 2025 is typically seasonally soft as well. However, we are optimistic and poised for growth. Bolstered by advanced technology, a diversified product portfolio addressing a broadening array of end markets,

Stephen Pelayo: and a premier customer base across all business lines.

Stephen Pelayo: We are steadfast in executing our technology roadmap.

Stephen Pelayo: We are excited about our transition from a component supplier to a total solutions provider.

Stephen Pelayo: These strategic efforts over the past few years are starting to bear fruit as evidenced by our success in designing in both controllers, as well as power stages into PCs, graphics cards, and now expanding into AI applications.

Stephen Pelayo: This transition will only accelerate going forward as we tap into new opportunities and increase our share of BOM content.

Yifan Liang: Yifan Liang, Unknown Executive

Yifan Liang: In summary, power management underpins key trends such as AI, digitalization, connectivity, and electrification, especially as we move towards a sustainable, low-carbon society.

Stephen Pelayo: We see many opportunities in advanced computing and data centers, increasing integration of AI and PCs and smartphones, and higher smartphone charging currents with multiple batteries and streams.

Stephen Pelayo: Beyond computing and communications segments, we remain optimistic on the underlying power trends in adjacent markets such as solar, motors, and e-mobility, gaming, home appliances, and power tools.

Speaker Change: Thank you, Steven. Good afternoon, everyone, and thank you for joining us.

Speaker Change: In terms of product mix, DMOPS revenue was $122.5 million, up 20% sequentially, and 0.8% over last year.

Stephen Pelayo: PowerIC revenue was $52.9 million, up 0.4% from the prior quarter and from a year ago.

Speaker Change: Assembly Service and other revenue was $0.9 million as compared to $1.4 million last quarter and $0.7 million for the same quarter last year.

Speaker Change: Licensed and Engineering Service revenue was $5.6 million for the quarter versus $5.1 million in the prior quarter and $5.6 million for the same quarter a year ago.

Stephen Pelayo: Non-GAAP growth margin was 25.5% compared to 26.4% last quarter and 28.8% a year ago.

Stephen Pelayo: The quarter-over-quarter decrease was mainly impacted by ASP erosion and mixed changes.

Stephen Pelayo: Non-GAAP operating expenses were $38.5 million compared to $39.3 million for the prior quarter and $40.8 million last year.

Stephen Pelayo: The slight quarter-over-quarter decrease was primarily due to lower professional fees and fluctuation of engineering expenses.

Speaker Change: Non-gap quarterly EPS was 21 cents compared to 9 cents per share last quarter and 33 cents per share a year ago.

Speaker Change: Moving on to cash flow.

Speaker Change: Operating cash flow was $11 million, including $8.4 million of repayment of customer deposits.

Speaker Change: By comparison, operating cash flow was $7.1 million in the prior quarter and $13.8 million last year.

Stephen Pelayo: We expect to refund $5.8 million customer deposits in the December quarter.

Stephen Pelayo: If it asked for the quarter was $20.6 million compared to $16 million last quarter and $23.3 million for the same quarter a year ago.

Speaker Change: Now let me turn to our balance sheet.

Speaker Change: We completed the September quarter with a cash balance of $176 million compared to $175.1 million at the end of last quarter.

Stephen Pelayo: Nitrate receivables increased by 12 million dollars sequentially.

Stephen Pelayo: Day sales outstanding were 15 days for the quarter compared to 12 days for the prior quarter.

Stephen Pelayo: Net inventory decreased by $10.8 million for the recorder.

Stephen Pelayo: 25 days compared to 148 days in the last quarter.

Stephen Pelayo: CapEx for the quarter was $6.7 million compared to the $7.2 million for the prior quarter.

Stephen Pelayo: Now I would like to discuss December quarter guidance.

Stephen Pelayo: We expect the revenue to be approximately $170 million plus or minus $10 million.

Stephen Pelayo: Debt Gross Margin to be 24% plus or minus 1%. We anticipate Non-Debt Gross Margin to be 25% plus or minus 1%.

Stephen Pelayo: That's operating expenses to be in the range of $45 million plus or minus $1 million.

Stephen Pelayo: Non-GAAP operating expenses are expected to be in the range of $38.8 million plus or minus $1 million.

Stephen Pelayo: Interest expense to be approximately equal to interest income and income tax expense to be in the range of 1 million dollars to 1.2 million dollars.

Stephen Pelayo: With that, we will open the call for questions.

Stephen Pelayo: Operator, please start the Q&A session.

Speaker Change: We're going to begin our question and answer session at this time. If you'd like to ask a question please press star followed by one on your telephone keypad. If for any reason you would like to remove that question please press star followed by two.

Stephen Pelayo: Again, if you have a question, please star 1.

Stephen Pelayo: As a reminder, if you're using a speakerphone.

Stephen Pelayo: Please remember to pick up your handset before asking a question. We'll pause briefly here if questions are registered.

Speaker Change: Our first question comes from David Williams with the company Benchmark. David, your line is now open.

David Williams: Hey, good afternoon, gentlemen. Thanks for taking my question.

David Williams: And excuse me, I jumped on a little bit late here, so forgive me if you cover some of this in the call, but just kind of curious how you're seeing, I guess, from the competitive standpoint. Are you seeing anything that's changed there? And in particular, maybe your practice card business. Is there any new courses that have come in there that you're seeing?

Speaker Change: Unknown Speaker 0

Speaker Change: Okay, your question got a little chopped up. Can you repeat the last part of the question? I heard the question about competition in general, but can you do the phrase again?

Speaker Change: Sure, no problem. Yeah, just the competitive landscape and if you've noticed or seen anything I guess in the graphics card side, you've talked before about that being a competitive spot. I'm just curious how you're seeing that today.

Stephen Pelayo: www.yifan.co.uk

Speaker Change: Sure. So overall competition, it is, you know, by now we are still overall in market correction period.

Stephen Pelayo: And most of the end segments, you know, in our markets, we saw the correction happening earlier last year in the computing consumer space. And then this year, we're seeing it in general in the markets more in the automotive and industrial side.

Stephen Pelayo: So, you know, what we see is overall, you know, every each one of our competitors is affected by the market cycles and where we are in the market cycle and therefore we are seeing more increased competition as, you know, more firms are seeking to fill their fabs and in some cases it's been going back to some of their previous markets.

Stephen Pelayo: That said, on the graphics side, the key thing here is about their upcoming transition, at least for our leading customer here. They're undergoing a big transformation with their big chipset that's expected to launch at the beginning of the new year. We do expect to participate as part of that, at least on the graphics and the add-in card side, where we expect to see the business come earlier. We expect to see a little bit less competition there. Actually, in the previous platform, there were more competitors in those sockets. There's less now going into this next platform on the card side.

Stephen Pelayo: On the data center side, you know, we do expect to see, you know, a few more of the major players there. There's going to be more competition there, but there's also a bigger opportunity there as well.

Stephen Pelayo: Great.

Speaker Change: I just wanted to ask too, on the seasonality, it looks like you're guiding down just a bit more than seasonality. Is it fair to assume that maybe we're back to a place that we can expect kind of seasonal trends here? Or is there still enough volatility out there that you think it's too early to call? Thank you.

Speaker Change: I think for the standard markets that we've been in, in computing and consumer, that seasonal pattern has returned. But at the same time, the full recovery, especially for PCs, hasn't come yet. We're still waiting for PC shipments to grow, I guess, for the replacement cycles to come back again. Therefore, at least for the last few years, after the inventory correction of the previous year, right now we're just waiting for the PC shipments to be able to grow more. That said, we are not standing still. Even in the PC markets, we're seeking to gain more BOM content as we sell more of a total solution going into that application.

Stephen Pelayo: We do think that, you know, seasonally, yes, it's going to go through that cycle, where, you know, the September quarter is typically the peak because of back to school and the holiday seasons. And then going into the March quarter is probably more of a trough when it comes to the PC shipments. But that should come back up again and going into the following year. We're hoping that to be able to layer that in, especially with our advances in the the Gratis card and AI celebrated card side, that can help to to fill in the gap and layer in on top of what we see as our base business.

Speaker Change: Thanks very much. I'll jump back in the queue.

Speaker Change: Our next question comes from Craig Ellis with the company Be Riley. Craig, your line is now open.

Craig Ellis: Yeah, thanks for taking the questions, team, and for all the color. I wanted to start off with a clarification. Steven, in your remarks, I think you noted that the expectation in the December quarter for communications would be down around 30%, which seems well above seasonal for that quarter. I wouldn't be surprised if we saw that on a multi-quarter basis, but single quarter seems high. So is that a particular OEM program that's weak, or is that something that's...

Speaker Change: Spanning, different Android programs, as well as other customers that you have.

Speaker Change: To clarify, I think we didn't say a 30% decline in the December quarter. We said a low double-digit sequential decline in the December quarter. So, basically, in this segment, our number one customer in the U.S. market did launch their phone. We have a pretty good share on that phone. The launch is fairly strong. You know, we do expect, normally, for it to drop down some going into the December quarter. So that simply reflects that right now. Right now, I honestly think it's a little bit early to say how strong that reception will be going into the December quarter. Just as a note, were you asking about communications? Were you asking about consumers?

Speaker Change: Unknown Speaker 05. Unknown Speaker 05.

Craig Ellis: Unknown Speaker 0

Speaker Change: Well, I was asking, I was asking about communications because I thought that's where you referenced the 30% number. But oh, if I misassociated those, I apologize.

Stephen Pelayo: Right, the 30% decline was specifically for the consumer segment, that's where we mentioned that. And that's a more reflection of the gaming market, the product lifecycle, as well as the TV market has something to do with that as well. Several things that were strong in the September quarter in the consumer segments, such as the wearables, the headsets, those naturally will tend to drop off once you go into the December quarter, once you're passing

Stephen Pelayo: www.yifan.co.uk

Speaker Change: Got it. Makes sense. Okay, moving on to the questions. First, on compute and AI, so like the tone signaling, higher AI confidence than prior. Can you provide some details on

Stephen Pelayo: the specific socket opportunities that the company has won. And it sounds like there's some things that are out there that may be in progress that could be quite material for 2025.

Stephen Pelayo: Any color on that would be helpful and to the extent that you can provide color on dollar content with this, Steve, and it would be quite useful. Thank you.

Stephen Pelayo: Sure, so for AI, our more near-term opportunity is actually coming from the next generation graphics cards in combination with the AI accelerator cards.

Stephen Pelayo: And with the next platform that's being launched, that customer is using similar solutions for both.

Stephen Pelayo: And the BOM content indeed is growing. Over there, we're talking about our driver MOS products being sold. Actually, multiple driver MOS is being sold and being used to power the GPU. And the new thing about us going into this new platform is that not only are we selling the driver MOS,

Stephen Pelayo: But we're also pairing that together with the controller as a total solution. In general, I think you've heard us talking more about selling total solutions. And this is one evidence of that happening in the market now. And we can sell both the controller as well as the power stages. And in this case, in terms of BOM content, it's going to grow from what used to be maybe around five to six dollars.

Stephen Pelayo: And then going to the next platform, it can range anywhere from 7 to 15 to maybe even over $20 of content, depending upon the power or the level of the GPU being paired with.

Yifan Liang: Yifan Liang, Unknown Executive

Speaker Change: Got it. And Steven, for the AI application, that would be instances where in a server there would be a control.

Stephen Pelayo: CPU in front and then anywhere from four to eight GPU cards in back and you'd have content in those GPU cards is that where you would have content that type of configuration.

Stephen Pelayo: So for us, now we're specifically addressing initially on the cards themselves, the daughter cards.

Stephen Pelayo: So these are both graphics cards, the traditional ones that would go into a PC, but the same ones that can go into also a server as an AI accelerated card.

Stephen Pelayo: So that's where the initial content and RAMP will be coming from at launch with this customer. We are indeed also working on data center opportunities where we're going for onboard solutions where the content can actually be bigger. And that's something that's still earlier in development, but it's something that we'll continue to update on going forward.

Speaker Change: Okay, got it. And then moving on to a few other items. You mentioned desktop share game. Can you quantify the degree to which that benefited the business in the back half of this year or could benefit the business in the back half of this year? And then how does that play out next year for the company?

Speaker Change: So this is something that is helpful and I think it's nice to be able to, I guess, go against the curve in that market.

Stephen Pelayo: And then lastly, for me, I think we've all had our eye on competitive pricing.

Stephen Pelayo: this year. How did it play out in the third calendar quarter, your fiscal first quarter and

Speaker Change: If you look ahead, what's your expectation for the way pricing can play out, what are maybe positives and what are risks as you look out over the next four quarters?

Speaker Change: www.yifan.co.uk

Speaker Change: Sure. Um, you know, during the quarter

Speaker Change: and Unknown Speaker we're going to be doing a presentation on the by the by by by by by by by by by by by by by by by by by by by by by by

Speaker Change: We did see increased pricing pressure. I mean, I guess this is a reflection of softer overall market recovery, you know, competitors.

Speaker Change: Impacted by inventory correction and demand slowdown, especially in automotive and industrial, so they shifted more.

Speaker Change: Consumer-related markets to fill their fabs. So we see increased competition from all players, you know, large or small. So right now, I mean, the ASP

Speaker Change: Joe Shindlin

Stephen Pelayo: erosion versus typical you know the mid to high single digit so you know

Stephen Pelayo: And here, you know, what we want to do is to accelerate our new product rollout to counter the ASP erosion. So that has been.

Stephen Pelayo: That's been what we have been doing all along the years.

Speaker Change: Got it. Thanks, team. Good luck.

Stephen Pelayo: www.yifan.co.uk

Stephen Pelayo: Thank you.

Speaker Change: A next question comes from Jeremy Kwan with the company's default. Jeremy, your line is now open.

Jeremy Kwan: Yes, thank you. Maybe a little bit follow-up on the...

Jeremy Kwan: the pricing question.

Jeremy Kwan: Can you talk about, you know, I think in the years past you've talked about competition.

Jeremy Kwan: to maybe low to mid-range coming out of China. Have you seen that continue to intensify? Can you talk about,

Jeremy Kwan: maybe, you know, things you're doing there to try to counter that. And also, if you can give us a quick update on the JV and how, you know, where your position is in terms of capacity and what they've

Jeremy Kwan: maybe communicated to you in terms of, you know, their capacity expansion plans and maybe their search for new customers. That's a bit of an update that would be helpful. Thank you.

Speaker Change: Hey Jeremy, let me address the first part on the on the pricing and also on the how to compete against competitors in today's market, and then Yifan can address the JV question. So what Yifan emphasized is that really the key strategy to to improving ASP, the margin, is that, you know, all in all, we are trying to go after more attractive sockets, higher performance sockets.

Jeremy Kwan: with products that are more differentiated. So this is why you've heard us talk about not only the total solutions but driving application-specific solutions that have more differentiation.

Jeremy Kwan: And, you know, in China, you know, one of our core markets that we're going after is, you know, is the smartphone market. And over there, the underlying trend that's powering that is towards, as phone makers are moving towards higher charging current, especially in the premium phones.

Jeremy Kwan: So over there, we are selling, again, newer products that have offered better performance, especially to power these higher charging currents. So when there's an application trend that pushes performance more, actually, you know, it creates more separation between us and the competition.

Jeremy Kwan: So we'll continue to to drive and go after these attractive sockets with our solutions and that will help us to combat the competition

Jeremy Kwan: Good.

Jeremy Kwan: In terms of JV side and that, I mean, right now.

Jeremy Kwan: Unknown Speaker 0

Speaker Change: JV is in the process of raising the additional funds, so in terms of their business, yeah.

Jeremy Kwan: Yifan Liang, Steve Pelayo, Yifan Liang, Unknown Executive

Jeremy Kwan: suppliers, and then, you know, we, we, we.

Jeremy Kwan: you know, work and with them very well. So in the end of that.

Jeremy Kwan: Supporting our business at this point.

Speaker Change: Thank you. Maybe if you can give us the utilization rates at Oregon and, you know, your capacity.

Speaker Change: especially, I don't know, you know, with price erosion coming, has that, is that kind of putting a, or does it lower the capacity at all in terms of the revenue you can get out of the fab?

Jeremy Kwan: and your continual upgrades to the FAB, you know, looking at that all in combination can you just give us, you know, kind of where the utilization rate is now and where you see that going in the next couple quarters. Thank you.

Yifan Liang: Yifan Liang, Unknown Executive

Speaker Change: Okay, sure.

Yifan Liang: quarter, our FAB's utilization was around 80% also. So overall, I mean, we still have some capacity to go to support our further growth. Overall, I mean, yeah, as we roll out more new products, and so we expect, you know, our FAB can provide support there.

Speaker Change: Unknown Speaker 00.00.00.00

Speaker Change: Got it.

Speaker Change: Going to the gross margin line.

Yifan Liang: Can you give us, you know, more color in terms of the puts and takes?

Jeremy Kwan: Thank you. Thank you. Thank you.

Jeremy Kwan: Sequential decline that's expected in December quarter. How much is volume? How much is pricing? And then, you know, kind of, where do you expect the trend to go? Is 25% the bottom here? Or, you know, how are you looking at it on a kind of long term basis?

Speaker Change: Okay, sure. September quarter's margin was over quarter drop was mainly because of AST erosion and I mean that's pretty much

Jeremy Kwan: So, you know, from there, I mean, we expect, and I mean,

Jeremy Kwan: that, you know, once we grow our business and, I mean, our

Jeremy Kwan: Utilization can go up and then which can provide support to our gross margin line and then also our newer products and you know can improve our product mix so that's where we want to grow our

Marcia: Co-host Marcia.

Jeremy Kwan: Great. Thank you very much.

Jeremy Kwan: All right, thank you.

Jeremy Kwan: Thank you.

Jeremy Kwan: www.yifan.co.uk

Speaker Change: There are no more questions registered in the queue at this time. I'd like to pass the conference back over to our host for closing remarks.

Jeremy Kwan: Okay, great. It's Steven Pelayo. This concludes our earnings call today. Thank you for your interest in AOS, and we look forward to talking to you again next quarter.

Jeremy Kwan: Take care.

Speaker Change: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.