Company: AOSL
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001387467-25-000044
Chunk: 91

Company: ALPHA & OMEGA SEMICONDUCTOR Ltd
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 8
Chunk 91
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  If these major customers experience significant decline in the demand of their products, encounter difficulties or defects in their products, or otherwise fail to execute their sales and marketing strategies successfully, it may adversely affect our revenue and results of operations.

31

Principal line items of Condensed Consolidated Statements of Income (Loss)

The following describes the principal line items set forth in our Condensed Consolidated Statements of Income (Loss).

Revenue

We generate revenue primarily from the sale of power semiconductors, consisting of power discretes and power ICs. Historically, a majority of our revenue has been derived from power discrete products. Because our products typically have three-year to five-year life cycles, the rate of new product introduction is an important driver of revenue growth over time. We believe that expanding the breadth of our product portfolio is important to our business prospects, because it provides us with an opportunity to increase our total bill-of-materials within an electronic system and to address the power requirements of additional electronic systems. In addition, a small percentage of our total revenue is generated by providing packaging and testing services to third parties through one of our in-house facilities.

Our product revenue is reported net of the effect of the estimated stock rotation returns and price adjustments that we expect to provide to our distributors. Stock rotation returns are governed by contract and are limited to a specified percentage of the monetary value of products purchased by the distributor during a specified period. At our discretion or upon our direct negotiations with the original design manufacturers (“ODMs”) or original equipment manufacturers (“OEMs”), we 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