Q1 2026 Alpha & Omega Semiconductor Ltd Earnings Call
Speaker #1: Good afternoon . Thank you for attending today's Atlanta Semiconductor fiscal Q1 2020 Earnings Call . My name is Jason , and I'll be your moderator for today .
Speaker #1: All lines will be muted and presentation portion of the call with an opportunity for questions and answers at the end . At this time , I'd like to pass the conference over to the Investor Relations representative for AOS .
Speaker #1: Steven Pelayo . Please proceed .
Speaker #2: Good afternoon , everyone , and welcome to Alpha Omega Semiconductors conference call to discuss fiscal 2026 first quarter . I'm Steven Pelayo Investor Relations representative for AOS .
Speaker #2: With me today are Stephen Chang , our CEO , and Yifan Liang , our CFO . This call is being recorded and broadcast live over the web .
Speaker #2: A replay will be available for seven days following the call via the link in the Investor Relations section of our website . Our call will proceed as follows .
Speaker #2: Today , Stephen will begin business updates , including strategic highlights and a detailed segment report . After that , we review the financial results and provide guidance for the December quarter .
Speaker #2: Finally , we will have the Q&A session . The earnings release was distributed over the wire today , November 5th , 2025 . After the market close .
Speaker #2: The release is also posted on the company's website . Our earnings release in this presentation include non-GAAP Financial Measures . We use non-GAAP measures because we believe they provide useful information about our operating performance .
Speaker #2: That should be considered by investors in conjunction with GAAP measures . I reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release .
Speaker #2: We remind you that during this conference call , we will make certain forward looking statements , including discussions of the business outlook and financial projections .
Speaker #2: These forward looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially .
Speaker #2: For more detailed description of these risks and uncertainties , please refer to our recent and subsequent filings with the SEC . We assume no obligation to update the information provided in today's call .
Speaker #2: Now , I'll turn the call over to our CEO , Stephen Chang . Stephen .
Speaker #3: Thank you .
Speaker #2: Stephen .
Speaker #3: Welcome to Alpha and Omega Fiscal 2026 . Q1 Earnings Call . I will begin with a high level overview of our results . And then jump into segment details .
Speaker #3: We delivered fiscal Q1 revenue results at the midpoint of our guidance , primarily driven by growth in our computing and communication segments , offset partially by weaker trends in consumer and power supply and industrial .
Speaker #3: Overall total September quarter revenue was $182.5 million . non-GAAP gross margin was 24.1% . non-GAAP EPs was $0.13 . Total revenue increased slightly year over year , and 3.4% sequentially .
Speaker #3: As previously noted , licensing revenue wound down in the March quarter . Excluding licensing and other revenue , our product revenue was up 3.3% year over year .
Speaker #3: Power IC revenue increased 5.9% sequentially and 37.3% year over year to a record quarterly high. It now represents nearly 40% of total product revenue.
Speaker #3: The richer mix of power IC benefits gross margins , and combined with increased controller sales underscores our transformation from a component supplier to a total solutions provider .
Speaker #3: On October 13th , we announced support for 800 volt DC power Architecture , a major step forward for next generation AI data centers .
Speaker #3: This shift from traditional 54 volt systems to 800V represents a fundamental change in data center power distribution , improving efficiency , reducing copper usage , and enabling megawatt scale racks .
Speaker #3: AOS is part of an expanding ecosystem to provide silicon carbide , gallium nitride , stacked and multi-phase controllers to address every stage of power conversion .
Speaker #3: We are excited about this transition as the move to 800V opens the door for AOS to participate in entirely new system designs , rather than competing for existing sockets .
Speaker #3: In short , this architecture change creates a new design cycle and with it , new opportunities for AOS to expand our footprint in high performance computing and data center markets .
Speaker #3: During the MOSFETs quarter , we received the first installment payment of approximately $94 million from the sale of a portion of our equity interest in our China joint venture .
Speaker #3: We are using this capital to accelerate the pace of strategic investment across technology , equipment and engineering talent . Doubling down in the very areas where we've already proven success .
Speaker #3: These disciplined investments are designed to strengthen our technology , leadership and expand our served markets into higher performance and higher margin applications . Our momentum in graphics , smartphones and AI platforms is proof that past investments are paying off .
Speaker #3: Now , emboldened by that success , we are going deeper by expanding our served available market , strengthening , differentiation and developing more complete system solutions that raise the performance bar for our customers .
Speaker #3: These investments position us to outpace the competition , increase our design capability , and drive higher Bom content and margin contribution across a broader set of high growth , high value applications .
Speaker #3: With that , let me now cover our segment results and provide some guidance by segment for the next quarter , starting with computing September quarter revenue was up 27.1% year over year and up 4.6% sequentially .
Speaker #3: And a represented the majority , or 53.2% of total revenue . These results were ahead of our original expectation for low single digit sequential growth and mid-teens year over year .
Speaker #3: The strong demand from PCs continued into the September quarter , driven by two key factors the ongoing orders from customers seeking to mitigate tariff related uncertainty and traditional seasonal strength tied to back to school and holiday demand .
Speaker #3: Combined . AI and graphics card revenue declined sequentially , but remained more than double from a year ago . The decline was anticipated , reflecting a digestion phase following strong June quarter shipments .
Speaker #3: One of our initial data center programs ramped at a smaller scale than originally planned , but we remain actively engaged across multiple new AI opportunities .
Speaker #3: In addition , some near-term moderation in graphics card demand reflects manufacturing prioritization toward AI platforms . We view these effects as temporary and expect activity to normalize as new programs ramp in the March quarter .
Speaker #3: Looking ahead to the December quarter , we expect computing segment revenue to decline nearly 20% sequentially . This reflects the anticipated slowdown following the typical post-holiday seasonal cooling in both PCs and tablets , and the digestion phase in both AI and graphics cards .
Speaker #3: As we just mentioned , we view these factors as short term in nature with demand expected to stabilize and return to a more typical pattern as we move into 2026 .
Speaker #3: At the same time , we are expanding our footprint beyond controller and power solutions to include new opportunities in the 48 volt to 12 volt power delivery board , broadening our reach into the AI market .
Speaker #3: Our medium voltage solutions are optimized for applications requiring fast switching performance in the power conversion stage , as well as high safe operating area capability for 48 volt hot swap applications .
Speaker #3: Turning to the consumer segment . September quarter revenue was down 25.8% year over year and 11.6% sequentially , and represented 12.9% of total revenue .
Speaker #3: The results reflect the normalization of demand following strong Q2 promotional activity in gaming and a contraction from home appliances . The standout in the consumer segment was wearables , which delivered a second consecutive quarter of strong sequential growth , reaching a record high .
Speaker #3: Growth was fueled by share gains , new customers , higher bond content , and an expanding product lineup that includes headphones , watches and smart eyeglasses .
Speaker #3: For the December quarter , we forecast a high teens sequential decline in the consumer segment , primarily driven by maturing product cycle demand in gaming and seasonality and wearables , partially offset by growth from new refrigerator and fan applications in home appliances .
Speaker #3: Specific to gaming , we continue to work closely with our key customer on their next generation platform . These programs leverage our established , designed in position and play directly to our strengths in high performance power management .
Speaker #3: We expect to benefit when these new products enter production and launch their next product cycle . Next , let's discuss the communication segment .
Speaker #3: September quarter revenue increased 21.4% sequentially , but declined 7.8% year over year . The sequential growth was primarily driven by demand related to product launches from our tier one smartphone customer in the USA , while smartphone sales in both China and Korea are also improved from the prior quarter .
Speaker #3: The year over year decline is mostly due to weaker demand from smartphone customers in China , and our strategic decision to prioritize US customers .
Speaker #3: Despite these dynamics , AOS has continued to capture share with leading global OEMs . We continue to strengthen our leadership position , particularly in high end smartphones where charging currents and bond content continue to rise .
Speaker #3: Looking ahead , the December quarter will likely decline low to mid digits sequentially . This is better than typical seasonality , as we expect demand from US customers to remain strong , supported by share gains .
Speaker #3: Ramping of new products and higher bond content related to increasing charging currents . Now let's talk about our last segment , power supply and industrial , which accounted for 15.3% of total revenue and was down 12.4% year over year and 5.6% sequentially .
Speaker #3: The sequential decline was primarily due to softer demand in AC , DC power supplies and quick chargers , partially offset by a rebound in e-mobility after a weaker June quarter .
Speaker #3: Overall , the results were below our expectations for mid single digit sequential growth , as quick charger demand came in weaker than expected .
Speaker #3: Within these segments , power tools revenue decreased sequentially and year over year , reflecting softer consumer spending and inventory adjustments at key customers .
Speaker #3: Looking ahead to the December quarter , we expect power supply revenue to grow mid to high single digits sequentially . Growth will be driven primarily by the power tools segment , which has been in a correction phase but is now showing signs of recovery as customers ramp new products into mass production .
Speaker #3: We're already seeing progress , including a recent design win that integrates our driver ICS with medium voltage MOSFETs in the next generation brushless motor platform .
Speaker #3: This win highlights our growing system level capability and position in advanced motor control applications . Elsewhere , DC fan demand is expected to soften in the December quarter , while e-mobility continues to show moderate growth , particularly in emerging markets where new projects are beginning to ramp .
Speaker #3: Looking ahead to the December quarter , we expect product revenue of around $150 million , reflecting typical seasonality following a strong September period , demand across PCs is normalizing after a recent tariff related demand .
Speaker #3: While gaming and wearables are also trending lower following promotional activity earlier in the year . AI and graphics cards are also digesting the strong shipment from the June quarter in contrast , we expect strength in power tools and immobility to help offset some of this softness .
Speaker #3: Before turning the call over to Ifan , I would like to take a moment to highlight several critical investments currently underway . We remain more confident than ever in our long term trajectory as we deepen our role in the global transformation taking place across electrification , digitalization and AI driven computing .
Speaker #3: Power management has never been more essential , and AOS is well positioned across these megatrends . With a broad portfolio spanning computing and AI , battery management and motor control .
Speaker #3: This diversification , combined with our evolution from discrete components to total power solutions , continues to expand . Our served markets , enhance our resilience across cycles and drive sustainable growth in the near term .
Speaker #3: While the market continues to recalibrate , we are driving innovation through disciplined investments and a focus strategy with the cash proceeds from our JV equity sale , we are deploying capital with discipline , directing resources towards areas where we already demonstrate strengths such as smartphones and PCs , while further expanding our opportunities in graphics and AI .
Speaker #3: At the same time , we are investing in high impact initiatives that will shape the next wave of growth . For example , we are seeing continued expansion of bond content in AI platforms not only through our total power solutions , combining controllers and power stages , but also through our high performance mOSFET portfolio .
Speaker #3: Another key priority is accelerating development of the 800 volt AI power architecture , which marks a major inflection point in power efficiency and density for next generation data centers .
Speaker #3: To support these opportunities , we are increasing targeted R&D and system level engineering investments to advance design capability , qualification and early production readiness .
Speaker #3: Applying the same proven playbook that has driven our success in high performance computing and mobile markets , these investments are designed to strengthen our technology , leadership and expand our served market into higher performance and higher margin applications .
Speaker #3: We expect steady growth through 2026 , followed by a stronger uptrend in 2027 as programs transition from design into volume production . Capital deployment will remain milestone driven and tied to clear technical and commercial objectives to ensure attractive returns on invested capital .
Speaker #3: With that , I will now turn the call over to Irfan for a discussion of our fiscal first quarter financial results and our outlook for the next quarter .
Speaker #3: Yvonne .
Speaker #4: Thank you . Stephen . Good afternoon , everyone , and thank you for joining us . Revenue for the September quarter was $182.5 million , up 3.4% sequentially and up 0.3% year over year .
Speaker #4: In terms of product mix demos , revenue was $108.5 million , up 1.1% sequentially , and down 11.4% over last year . Park revenue was $72.7 million , up 5.9% from the prior quarter and 37.3% from a year ago .
Speaker #4: Assembly , service and other revenue was $1.3 million , as compared to $0.5 million last quarter and $0.9 million for the same quarter last year .
Speaker #4: non-GAAP gross margin was 24.1% , compared to 24.4% last quarter and 25.5% a year ago . A quarter over quarter decrease was mainly impacted by higher operating costs .
Speaker #4: non-GAAP operating expenses were $41.4 million , compared to $40.9 million for the prior quarter and $38.5 million last year . Quarter over quarter increase was primarily due to higher professional service fees .
Speaker #4: non-GAAP quarterly EPs was $0.13 , compared to $0.02 per share last quarter , and $0.21 per share a year ago . Moving on to cash flow .
Speaker #4: Operating cash flow was $10.2 million , including $5 million of repayment of customer deposits by comparison , operating cash flow was negative $2.8 million in the prior quarter and positive $11 million last year .
Speaker #4: We expect to refund $8.2 million of customer deposits in the December quarter . EBITDA , excluding equity method , investment income , was $19.4 million for the quarter , compared to $10.5 million last quarter and $20.6 million for the same quarter a year ago .
Speaker #4: Now , let me turn to our balance sheet . We completed the September quarter with a cash balance of $223.5 million , compared to $153.1 million at the end of last quarter .
Speaker #4: In the September quarter , we divested 20.3% of our equity interest in the JV company for $150 million , and we received the first installment payment of $94 million .
Speaker #4: We expect to receive the remaining payments in the next few months . Also in the September quarter , we paid off $20.8 million for the remaining balance of our equipment loan nitrate receivables increased by $2.3 million sequentially .
Speaker #4: Day sales outstanding were 21 days for the quarter , compared to 15 days for the prior quarter . Net inventory increased by $6.5 million quarter over quarter .
Speaker #4: Average days in inventory were 124 days for the quarter , compared to 126 days for the prior quarter . CapEx for the quarter was $9.8 million , compared to $14.3 million for the prior quarter .
Speaker #4: We expect for the December quarter to range from $14 million to $16 million . With that now , I would like to discuss December quarter guidance .
Speaker #4: We expect revenue to be approximately $160 million , plus or -$10 million . Gross margin to be 22.3% plus or -1% . We anticipate non-GAAP gross margin to be 23% plus or minus 1% .
Speaker #4: GAAP operating expenses are expected to be $47.1 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be $40.5 million, plus or minus $1 million.
Speaker #4: Interest income to be $1 million higher than interest expense and income tax expense to be in the range of $1.1 million to $1.3 million .
Speaker #4: With that , we will now open the call for questions . Operator please start the Q&A session .
Speaker #1: At this time . If you'd like to ask a question , it is star , followed by one on your telephone keypad . If for any reason you would like to remove that question , it is star followed by two again , to ask a question , it is star one .
Speaker #1: As a reminder , if you are using a speakerphone , please remember to pick up your handset before asking a question . I'll pause briefly his questions and registered .
Speaker #1: Our first question comes from David Williams with a company benchmark . David , your line is now open .
Speaker #5: Solution . In our and a .
Speaker #1: David , please ensure you're not on mute .
Speaker #6: Hey good afternoon . Can you guys hear me ? Okay .
Speaker #7: Yes , now we can . Thanks .
Speaker #6: All right . Apologies for the technical difficulties here . So excuse me for I kind of missed the first of the call here , but just kind of curious if you could give us maybe a little more color on the the sequential decline .
Speaker #6: If there's anything in particular there that you think is maybe a demand side related as you kind of look out in the next year , just kind of how how things are trending as we get into 2026 .
Speaker #7: Sure . I'm looking at the into the fourth quarter , the fourth calendar , quarter , December , quarter , some of this is seasonality , but some of this does go a little bit beyond seasonality .
Speaker #7: We noted , particularly in the PC area , we saw , you know , activity tied to , you know , mitigating tariffs in seeing more activity in the beginning part of the year .
Speaker #7: We , are you know , we're already at that time expected that to be temporary . It ended up being kind of a longer temporary going throughout most of even the September quarter .
Speaker #7: But that is , you know , is coming to an end . And we you know , we expect that there is is right now going through a correction period .
Speaker #7: But we see this as a as a more of a temporary thing as well to and , you know , fundamentally , you know , the markets that we're in , you know , still have the underlying growth growth trends behind that .
Speaker #7: Whether it's a bomb expansion in PCs or whether it's it's the smartphones moving to higher charging currents , those trends are still ongoing .
Speaker #7: So we see this more as a temporary correction . Whereas the underlying trends are still there .
Speaker #6: Great . Thanks for the color . There . And then just maybe on the gross margin side , Yvonne , if you can and forgive me if this has already been asked and answered , but can you just kind of speak to the gross margin and the degradation there and how you kind of think about or how we should think about that trending through through next year ?
Speaker #6: Thank you .
Speaker #4: Sure . Well , for the September quarter , you know , our gross margin was in line with our guidance . And then , you know , slightly below the midpoint , primarily reflected , reflecting some higher operation expenses going forward .
Speaker #4: Yeah , I would expect the , you know , the this gross margin line will fluctuate along with revenue , top line . And then depending on the product mix and then production level .
Speaker #4: So , you know . As Stephen , just mentioned , I mean for the December quarter , yes we are expecting a lower top line .
Speaker #4: And then so we also expect gross margin line . And just a little bit lower than the September quarter . So yeah , so next year yeah we'll we we will still confident in you know our product mix and well improve .
Speaker #4: And then after this near-term slowdown inventory correction .
Speaker #1: At this time there are no more questions . But again if you'd like to ask a question it is star followed by one on your telephone keypad .
Speaker #1: And next question comes from Kyle Smith with a company Stifel . Kyle , your line is now open .
Speaker #8: Hey guys . Thank you for taking my question . Maybe shifting longer term , I'm curious what sort of dynamics you're seeing around ASPs and any potential erosion .
Speaker #8: I think I know , like in the past it's been like kind of like mid to high single digit declines annually . What sort of dynamics are you seeing for fiscal 26 and then heading into fiscal 27 ?
Speaker #8: Just any commentary there would be appreciated .
Speaker #4: All right . Sure . I mean , right now . So far this year , this calendar year , we've we've been seeing pretty much the ASP .
Speaker #4: Erosion has been trending toward historical number . And , you know , as what you said , you know , single digit year over year , that type of range .
Speaker #4: So that's on the same parts , you know , year over year basis . So , you know , what we do is , you know , we roll out new products and you know , to provide our customers with more , you know , the higher performance the more functionality .
Speaker #4: And you know , so , so that we we can reset the ASP . So going forward we'll , we'll be doing the same thing .
Speaker #4: And then in terms of overall market pricing situation , that's that's hard to say . I mean , depending on the overall economy and the competition .
Speaker #4: And you know , so far this year , it's in the along the traditional and historical line .
Speaker #7: And let me comment a little more on this one too . Is and yes , you know , the we're glad to see more normalization of ASP decline .
Speaker #7: But the key thing that we're driving to actually to raise and raise margin going forward is actually through the mix , as Ethan has alluded to , we are going after sockets in applications that are more performance driven .
Speaker #7: And in this sense , this is where when we're talking about investing in growth , we're investing in these types of areas that can drive higher bomb content , both for our ICS as well as our MOSFETs and solutions .
Speaker #7: We've been talking about and demonstrating the percentage of our power IC business as a percentage of revenue increasing , and also and we're happy to see that even our MOSFETs are also going after higher performance sockets , whether it's in smartphones for higher charging currents or even for even for AI servers going after going after the hot swap applications or intermediary bus conversions where they need a high performance MOSFETs .
Speaker #7: All these kinds of sockets help to increase the Bom content as well as the margin profile .
Speaker #8: Great , that's really helpful . Color . Thank you . And then yeah , I guess maybe if I could just turn to the JV sale , which I know is obviously bringing in a lot of cash .
Speaker #8: And you've talked about some of the uses that you kind of see for that influx of capital that's coming in. But I guess it would be helpful if maybe you could qualitatively just kind of rank sort of the different uses of those proceeds that you kind of see.
Speaker #8: I think you alluded to it a little bit in your previous answer , but any additional color there would be appreciated .
Speaker #4: Okay . Sure . Yeah . You know , through this sale of , you know , equity deal , you know , we , we , we already realized about $176 million .
Speaker #4: So this deal , you know , the we got 150 million , you know , back to December 2021 . We we got about a $26 million .
Speaker #4: So 176 million in total . And then after this deal , we still own 18.9% of the JV . So definitely , I mean , this transaction significantly strengthened our balance sheet .
Speaker #4: And then going forward , yes , you know , in terms of how we want to use those proceeds and a couple of things , and I mean , one is , you know , as Steven already talked about it , you know , we'll continue to invest in our in the areas , and we have been doing very well , you know , for example , in , in the smartphone PC , you know , AI and then at the same time , you know , we'll invest in those , you know , the expanding and growing , you know , bomb content in terms of , you know , AI .
Speaker #4: And then that would support our next wave of of of growth . So , you know , in those AI and 800 vote AI power architecture , you know , in those areas , we we saw a lot of potential opportunities for us .
Speaker #4: So those are the areas, and we are going to continue to invest.
Speaker #7: Yeah . Let me add on to that too . So basically , in terms of the investment area , you know , we are taking a very focused look at that very disciplined approach .
Speaker #7: And we want to invest more in areas where we have demonstrated already that we can we can execute and we can expand our business .
Speaker #7: So whether it's going in deeper into existing applications such as PCs such as phones or expanding into AI applications , they if it's into areas where we see that we have competitive strength , we have products that are competitive going after performance driven sockets .
Speaker #7: So those are the areas that we will focus on .
Speaker #8: Great . Thank you . And then just one quick housekeeping question . I missed it at the end . You guided for the industrial segment to exhibit a mid to high single digit sequential increase or decrease in the December quarter .
Speaker #7: December quarter should be to grow mid to high single digits sequentially . That's our guidance .
Speaker #6: Right ?
Speaker #8: Okay . Perfect . Thank you very much .
Speaker #6: Yes .
Speaker #4: Thank you .
Speaker #7: Thanks .
Speaker #1: Next question comes from Craig Ellis with company B Riley Securities. Craig, your line is now open.
Speaker #9: Yeah . Thanks for taking the question . I was like , getting in . So apologies if these questions have already been asked .
Speaker #9: I think what I saw in the prepared remarks is that we had expected AI related revenues to be coming back in the fourth quarter after some digestion in the in the fiscal first quarter .
Speaker #9: But now we expect more of that ramp to come in the fiscal third quarter. Is that correct? And what is happening that is causing that ramp to be a quarter later than we previously expected?
Speaker #7: Sure . Yeah . We were originally counting on some ramp up happening in the second half of the calendar year . And you know , although we have done some ramp in the previous quarter , right now it looks like the demand for that is not as strong as what it was originally forecasted to be .
Speaker #7: And so we're continuing to watch , at least for this particular program . But that said , you know , we continue to be engaged on other opportunities that have different timelines that we are actively pursuing .
Speaker #9: And as you as you convey that , Steven , are you referring to engage with other opportunities with the same customer or are you referring to other opportunities with different customers just trying to understand what's happening in the business ?
Speaker #7: It's a little bit of both . So as we mentioned in the call , there's the total solutions with our controller and with our drive loss and power stage products .
Speaker #7: Those , you know , are mostly with the with the same customer that we're engaged with now . But as we mentioned on the call , we are also expanding to go after other sockets in AI , which includes some of the power delivery to get the power .
Speaker #7: Even before getting to that , that last stage and that , you know that expands our available customers to other ones besides the ones that we're currently serving for AI .
Speaker #9: Okay . And then . There was remarks , I believe , in the call about investing for growth . And maybe you're referring to that right there .
Speaker #9: Or maybe it's a different point . My question regarding the investments for growth , does that mean we're we're sustaining current levels of R&D , or are you expecting that you're going to need to take R&D higher because you would need either additional design engineers , additional field engineers , etc.
Speaker #9: ? Help me understand what investing for or in growth looks like .
Speaker #7: Sure . Yeah . We are planning to invest some more into R&D , especially to fuel some of these areas . And the idea is that , you know , we you know , we are happy to see the success so far , but we want to accelerate that success .
Speaker #7: Go after more programs , go after more sockets , expand our offering even more in those specific areas . So that will come with some R&D expense as well to to cover those additional products to serve the bigger , bigger opportunities there .
Speaker #9: And can you , Steven , or can you quantify how significant that would be ? And , and when we would expect to see it , for example , is it baked into the guide you've given for the fiscal second quarter , or is it something that comes in the fiscal second half of the year ?
Speaker #7: Well , in terms of the return portion , timing wise , you know , this is we've been we've already been investing so far .
Speaker #7: So some of this is going to be we'll start to see next year already . This is why we are signaling that we will expect to see some growth , steady growth in in calendar 26 , followed by a more uptick upturn in 2027 .
Speaker #7: So that is the result of further investment in these growth areas .
Speaker #9: Okay . Got it . And then just moving on to to Non-ai businesses . You commented that compute was up in the fiscal first quarter , despite some of the ship ahead activity .
Speaker #9: I thought it might be up a little bit more , given that we had , I think , 9% quarter on quarter sequential growth .
Speaker #9: Can you just comment on how you feel about share activity in the compute market ? And and then I'd just ask the same thing about the the gaming card market , because I think that's in the same segment .
Speaker #9: Thank you .
Speaker #7: Okay . Yeah . For the the PC side , seasonally , the September quarter is always a peak . And we saw that that strength going going into the September quarter .
Speaker #7: But by the end of the September quarter , that's when we started to see some of the adjustments happening . Based on the , you know , the more pulling in in in terms of the first half and the first portion of the year , so that that started to change towards the end of the September quarter .
Speaker #7: But overall , it's still a strong quarter for us . It always is a strong quarter in the September quarter . And just now we we're expecting some kind of temporary adjustment as we enter into the lower season for PCs .
Speaker #9: Got it . Thanks , guys . I'll hop .
Speaker #7: Question was was about sure . The second part question on the graphics cards right . So for the gaming cards portion that also I think was was strong more towards the first part of the year .
Speaker #7: We're expecting that to moderate some going into the December quarter , mainly because our end customer is focusing more on on the data center .
Speaker #7: So the allocation for them is more shifted that way . But we see this as also temporary , too . We expect this to come back pretty shortly .
Speaker #9: Got it . Thank you Steven .
Speaker #1: I next question comes from Terry Vanberg with Stiefel. Terry, your line is now open.
Speaker #10: Yes . Hi . Thank you . Hi , Steven . So I know it's very early , but I'm just looking at next year and just want to understand some of the puts and puts and takes .
Speaker #10: Obviously I'm not looking for particular guidance here , but you know , given your R&D pipeline , some of your design wins . What would be some of the relatively better performance segments you think you know next year ?
Speaker #7: Yeah , I would say that those three areas that we're talking about investing in , those are the ones to focus on for us as a company , PCs in general , besides , the more temporary adjustments , you know , we are focused in general on expanding our total solutions , including both controller as well as power stages .
Speaker #7: So we expect to see kind of further bomb content expansion just for standard PCs in general . We also expect to see growth both for graphics and AI combined .
Speaker #7: I think we continue to to make progress there . We hope to be to see more platforms hitting , hitting the market with our products on there .
Speaker #7: Smartphones also , and we've been talking about expanding bomb content there . And over there . It's because of the higher charging currents and and we see more of that happening rolling out to more more phone platforms in our key customer .
Speaker #7: And that's that should hit again in the in the peak season in the September quarter . There . So overall , I think those are the areas that we're focusing on .
Speaker #7: You know , PCs in AI applications as well as smartphone . Those are the bigger ones that we'll see . Of course , you know , we're still we still have our investments in other motor applications over there .
Speaker #7: You know , we we're starting to see some signs of life in the power tools . And as well as e-mobility . So those can help as well to .
Speaker #10: Very good . And the last question is on is on gross margin . And I guess more precisely on utilization obviously down quarter March quarter tends to be seasonally down .
Speaker #10: So when would you start to ramp utilization again ? Or I guess the better question is , you know , what are some of the signs that you need to see above and beyond seasonality ?
Speaker #10: Obviously , to to start to get utilization up again ?
Speaker #4: Sure . We we generally we adjust our factory productions and , you know , along with the expectation of revenue . So the shipments so yes , once we once we see that order patterns and then improving the the higher revenue , we we have to start turning on the utilization .
Speaker #4: Also , you know , looking ahead for , for the entire year , of calendar year 2026 . And you know , for certain bottleneck areas and we may need to start some productions in the early on .
Speaker #4: So in order to smooth out the whole years , production , in order to support our customers .
Speaker #10: Sounds good . Thank you . .
Speaker #4: All right .
Speaker #1: At this time , there are no more questions for I'd like to pass the conference back over to the management team for closing remarks .
Speaker #2: Okay . This is Steven Pelayo . Before we conclude , I just want to highlight a few upcoming investor events . The management team will be participating in the 14th annual Roth Technology Conference .
Speaker #2: November 19th in New York City . The UBS Global Technology and AI conference on December 3rd in Scottsdale , Arizona , and the 14th annual NYC CEO Summit on December 16th in New York City .
Speaker #2: If you wish to request a meeting, please contact the Institutional Sales Representative at the sponsoring bank. This concludes our earnings call today.
Speaker #2: Thank you for your interest in AOS , and we look forward to speaking with you again next quarter .