Company: AOSL
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001387467-25-000044
Chunk: 40

Company: ALPHA & OMEGA SEMICONDUCTOR Ltd
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 1
Chunk 40
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 may elect to grant special pricing that is below the prices at which we sold our products to the distributors. In certain situations, we will grant price adjustments to the distributors reflecting such special pricing. We estimate the price adjustments for inventory at the distributors based on factors such as distributor inventory levels, forecasted distributor selling prices, distributor margins and demand for our products.

In February 2023, we entered into a license agreement with a customer to license our proprietary SiC technology and provided 24-months of engineering and development services for a total fee of $45.0 million. The license and development fee was determined to be one performance obligation and was recognized over the 24 months during which we performed the engineering and development services.  We used the input method to measure progression of the transfer of services.  During the three and nine months ended March 31, 2025, we recorded $2.8 million and $13.8 million of license and development revenue, respectively, and during the three and the nine months ended March 31, 2024, we recorded $5.1 million and $16.2 million of license and development revenue, respectively.  As of March 31, 2025, we had recorded a total of $45.0 million of license and development revenue.  When our performance under the contract preceded our receipt of consideration from the customer, and the receipt of consideration was conditional upon factors other than the passage of time, a contract asset was recorded.  We also entered into an accompanying supply agreement to provide limited wafer supply to the customer.

Cost of goods sold

Our cost of goods sold primarily consists of costs associated with semiconductor wafers, packaging and testing, personnel, including share-based compensation expense, overhead attributable to manufacturing, operations and procurement, and costs associated with yield improvements, capacity utilization, warranty and valuation of inventories. As the volume of sales increases, we expect cost of goods sold to increase. While our utilization rates cannot be immune to the market conditions, our goal is to make them less vulnerable to market fluctuations. We believe our market diversification strategy and product growth will drive higher volume of manufacturing which will improve our factory utilization rates and gross margin in the long run.

Operating expenses

Our operating expenses consist of research and development, and selling, general and administrative expenses. We expect our operating expenses as a percentage of revenue to fluctuate from period to period as we continue to exercise cost control measures in response to the declining PC market as well as align our operating expenses to the