Company: AOSL
Filing Date: 2025-08-28
Form Type: 10-K
Source: 0001628280-25-041297
Chunk: 14

Company: ALPHA & OMEGA SEMICONDUCTOR Ltd
Filing Date: 2025-08-28
Form: 10-K
Item: Item 15
Chunk 14
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 active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. •Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.Fair Value of Financial InstrumentsThe fair value of cash equivalents is based on observable market prices and have been categorized in Level 1 in the fair value hierarchy.  Cash equivalents consist primarily of short-term bank deposits.  The carrying values of financial instruments such as cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to their short-term maturities.  Level 2 inputs were used to estimate the fair value of the equity method investment for the purpose of recognizing the other than temporary impairment recorded in 2025.  The carrying value of the Company’s debt is considered a reasonable estimate of fair value which is estimated by considering the current rates available to the Company for debt of the same remaining maturities, structure and terms of the debts.Inventories The Company carries inventories at the lower of cost (determined on a first-in, first-out basis) or net realizable value.  Cost includes semiconductor wafer and raw materials, labor, depreciation expenses and other manufacturing expenses and overhead, and packaging and testing fees paid to third parties if subcontractors are used.  The Company evaluated its inventory for salability, obsolescence and other available applicable information.  When evaluating the adequacy of its provision for excess and obsolete inventory, the Company identifies excess and obsolete products and also analyzes historical usage, forecasted demand, and current economic trends.  If actual economic trends are less favorable than those forecasted, additional future inventory write-downs may be required, which could adversely affect our operating results.   Inventory adjustments, once established, are not reversed until the related inventory has been sold or scrapped.Property, Plant and Equipment  Property, plant and equipment are stated at historical cost less accumulated depreciation.  Historical cost includes expenditures that are directly attributable to the acquisition of the items and the costs incurred to make the assets ready for their intended use.  Depreciation is provided for on a straight-line basis over the estimated useful lives of the related assets as follows:    Building and building improvements20 yearsManufacturing machinery and equipment7 to 10 yearsEquipment and tooling3 to 5 yearsComputer hardware and software3 to 5 yearsOffice furniture and equipment3 to 5 yearsLeasehold improvements2 to 15 years