Good afternoon. My name is Ra and I will be your conference operator today. At this time I would like to welcome everyone to the Alpha and Omega Semiconductor Fiscal Q1 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. So-Yeon Jeong of Investor Relations you may begin your conference.

Thank you. Good afternoon, everyone, and welcome to the Alpha and Omega Semiconductor’s conference call for fiscal 2019 first quarterly results. This is So-Yeon Jeong, Investor Relations representative for the company. With me today are Dr. Mike Chang, our CEO; and Yifan Liang, our CFO. This call is being recorded and broadcasted live over the web and can be accessed for seven days following the call via the link in the Investor Relations section of our website at www.aosmd.com. The earnings release was distributed by business wire today, November 1, 2018, after the market closed. The release is also posted on our company's website. Our earnings release and this presentation include certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. We would like to remind you that during the course of this conference call, we will make forward-looking statements, including discussions of business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause the actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our current and subsequent filings with the SEC. We assume no obligations to update the information provided in today's call. Now, I’ll turn the discussion over to Yifan, our CFO, to provide an overview of the first fiscal quarter financial results. Yifan?

Thank you, So-Yeon. Good afternoon and thank you for joining us. To begin, I will discuss financial results for the quarter. Then I’ll turn the call over to Mike, our CEO, who will review the company’s business highlights. After that I will follow-up with our guidance for the next quarter. Finally, we’ll reserve time for questions-and-answers. Revenue for the September quarter was a record $115.1 million, an increase of 4.7% from the prior quarter and an increase of 9.7% from the same quarter last year. The revenue growth was driven by solid demand for the new, higher value products we introduce regularly. Mike will elaborate on that shortly. In terms of product mix, MOSFET revenue was $92.3 million, up 3.2% sequentially and up 10.3% year-over-year. Power IC revenue was $19.4 million, up 10.7% from the prior quarter and up 7.3% from a year ago. Service revenue was $3.4 million as compared to $3.0 million for the prior quarter and $3.1 million for the same quarter last year. Regarding the segment mix, this quarter’s Computing segment represented 43.8% of the total revenue, Consumer 18.5%, Power Supply and Industrial 18.9%, Communications 15.5%, Service 3.0% and others 0.3%. Non-GAAP gross margin for the September quarter was 29.7%, as compared to 27.0% in the prior quarter and 26.6% for the same quarter last year. The increase of 270 basis points in gross margin quarter-over-quarter was primarily driven by the improved product mix. Non-GAAP gross margin excluded $0.5 million of share-based compensation charge for the September quarter, as compared to $0.5 million for the prior quarter and $0.3 million for the same quarter last year. Non-GAAP gross margin also excluded $1.1 million of production ramp-up costs related to the Chongqing Joint Venture for the September quarter. Non-GAAP operating expenses for the quarter were $24.5 million,…

Yifan, thank you and good afternoon. We are off to a great start in fiscal year 2019 with excellent financial results as we delivered another record-breaking quarter. AOS reached an all-time high quarterly revenue in the September quarter, driven by strong demand for our new products across the board, especially in smartphone battery management and Vcore applications. This is the third time of breaking record revenue since September quarter of last year. Most notably, our non-GAAP gross margin reached 29.7%, above the high-end of our guidance range, which was the highest since 2011. The significant improvement in gross margin reflects continued progress in migrating to higher value products and improving product mix. There have been some macro headwinds and industry cycle concerns that have increased the overall market uncertainty. In fact, we did see some softness in home appliance and smartphone applications in China. However, we do not expect this trend to have a material impact in the near-term primarily due to two reasons. One, our product portfolio has been well diversified in terms of customer base and geographic regions. And two, we are still on allocation with higher demand across most applications. While no one can be completely immune to the market impact, we nonetheless remain confident about our own business execution and long-term growth sustainability. We believe that there are fundamental factors behind our performance and sustainability that are AOS-specific, which we didn’t have in the past. So, what has changed? The first factor is the unmatched breadth and depth of our current product portfolio. Undoubtedly, we are in a healthier position than any other point in the company’s history. Today, as exemplified by our recent revenue growth, we have established solid footings in the applications we target. We have been adding and upgrading our innovative technology platforms…

As we look forward to the second quarter of fiscal year 2019, we expect revenue to be between $112 million and $116 million, gross margin to be approximately 26.0% plus or minus 1%. Non-GAAP gross margin is expected to be approximately 29% plus or minus 1%. Non-GAAP gross margin excludes $0.5 million of estimated share-based compensation charge and $3 million of estimated production ramp-up costs relating to the Chongqing Joint Venture. Operating expenses to be in the range of $32 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $25 million plus or minus $1 million. Both GAAP and non-GAAP operating expenses include $3.1 million to $3.3 million of estimated expenses relating to our digital power controller team. Non-GAAP operating expenses exclude an estimated share-based compensation charge of approximately $3.1 million and estimated pre-production expenses relating to the joint venture of $3.9 million. Tax expense to be approximately $0.5 million to $0.7 million. Loss attributable to non-controlling interest to be around $4 million. On a non-GAAP basis, excluding estimated pre-production expenses and production ramp-up costs relating to the joint venture, this item is expected to be approximately $0.4 million. As part of our normal practice, we are not assuming any obligations to update this information. With that, we will open up the floor for questioning. Operator?

[Operator Instructions] And your first question comes from the line of Jeremy Kwan from Stifel, Nicolaus. Your line is open.

Yes, good afternoon and congratulations on the record quarter.

Thank you.

Thank you.

My first question is in terms of your lead time, can you talk about where they stand now and where they've been before? I just want seek it a little bit better picture of the visibility that you guys have.

I cannot give you that lead time, okay, but I can tell you one thing that our lead time just as long as before.

And at this point in Jeremy, our overall demand is still strong across most of the applications. This demand right now is still exceeding our capacity today. And so right now we’re still on allocation. So, I mean, the situations for us isn't same as prior quarter at this point.

And I want to apologize to you – sometimes rule, okay, actually, really because we have so many different products there. The lead times are all different, so I cannot give you one.

That's totally fair and I appreciate that. I guess in terms of the capacity then, can you talk about maybe the capacity expansion at the Oregon fab? It sounds like it's mostly done at this point. CapEx is going to come down quite a bit over the next couple of quarters. Can you – I think in the past you have talked about the revenue level that it can support. Can you give us a quick update there where that stands today?

Okay, sure. Our current capacity situation and the backlog situation reflected in our guidance. We guided the mid-point of $114 million for the December quarter has pretty much reflected in our current capacity, a slightly decline compared to last quarter's revenue as – primarily reflected holiday impact. Next quarter will be the holiday season. So, at this point, pretty much we’re still constrained by the supply. So, when we get into the March quarter, next year, we would expect a similar situation.

Great. And last question before I give up the queue, I guess. In terms of the cash burn at the JV, it looks like things have – it has fluctuated quite a bit. It's nice to see that come down to just less than $0.5 million this quarter. Can you help us to understand what's going on there and where you see that operating cash flow going forward?

Okay, sure.

For the JV?

I mean, just – yeah, I mean, right now our joint venture for the assembly and test piece and we started a small mass production in September quarter. So we expect we’ll ramp it up in the next couple of quarters. For the 12-inch of fab, we expect to start prior production in the December quarter and then ramp up throughout next calendar year and that's our current view. In terms of its operating cash flows, last quarter, that cash out flow, the $19 million. It was [indiscernible] was because of the value-added tax we have to pay to import those 12-inch fab equipments. So most of the machines were imported in the June quarter, so that's pretty much the one-time cash flow impact and it was down in the June quarter. So the September quarter was reduced quite a bit.

So can we expect going forward that it's pretty close to breakeven at this point and maybe even eventually generate cash in the coming quarters?

Well, I wouldn’t expect that it can generate cash, but then it can fluctuate because of working capital. Generally when we’re started ramping our productions, I would expect that we need some working capital support.

Great, thank you.

Thank you.

[Operator Instructions] Your next question comes from the line of Edgar Roesch from Sidoti. Your line is open.

Yeah, hi, and nice quarter. I wanted to check in with you about your distributors and what you're hearing from them and are they leading the charge on slowing things down a little bit in the home appliance or industrial side of the business?

Sure. I mean, right now, overall our channel inventory has had a very low level even below our targeted range. And then we target two to three months in channel inventory. Right now, it’s below the low end of our target range even. So at this point, right now just our business is still constrained by all supplies. So, overall situations – I mean in the home appliances in China, no one is mainly, we feel just mainly because of the housing market – new house buildings in China kind of started slowing down, so because a lot of the home appliances will be consumed when they have new apartments or housing over there.

Okay, I appreciate that. And then one other question for you. Just on MOSFETs generally, I'm trying to just understand if the industry is still generally tight or not at this point. And if you have any insights as to when things might get in the balance a little bit more? Is it within reach in a quarter or two? Or is it just outlook is to remain tight as long as you can see?

We can – you'll never be able to see. It’s too far, okay. But one or two quarters, it’s still tight, yeah.

And I mean…

And I think are changing of course [indiscernible] but what we can see is order wise.

I mean overall I think we didn’t own other people but the overall demand for our products across most of the applications are still very strong. So we have a very strong backlog right now.

Great, glad to hear it. Thanks guys.

Thank you.

Thank you.

And there were no further questions at this time. I will turn the call back over to Alpha and Omega Semiconductor for some closing remarks.

This concludes our earnings call today. Thank you for your interest in AOS, and we look forward to talking to you again next quarter. Thank you.

Thank you.

This concludes today's conference call. You may now disconnect.