Company: AOSL
Filing Date: 2025-08-28
Form Type: 10-K
Source: 0001628280-25-041297
Chunk: 90

Company: ALPHA & OMEGA SEMICONDUCTOR Ltd
Filing Date: 2025-08-28
Form: 10-K
Item: Item 1A
Chunk 90
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 will have to similarly reduce prices in the future for older generations of products.  Reductions in our average selling prices to one customer could also impact our average selling prices to all customers.  A decline in average selling prices would harm our gross margins for a particular product.  If not offset by sales of other products with higher gross margins, our overall gross margins may be adversely affected.  Our business, results of operations, financial condition and prospects will suffer if we are unable to offset any reductions in our average selling prices by increasing our sales volumes, reducing our costs and developing new or enhanced products on a timely basis, with higher selling prices or gross margins.

If we do not forecast demand for our products accurately, we may experience product shortages, delays in product shipment, excess product inventory, or difficulties in planning expenses, which will adversely affect our business and financial condition.

We manufacture our products according to our estimates of customer demand.  This process requires us to make numerous forecasts and assumptions relating to the demand of our end customers, channel inventory, and general market 

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conditions.  Because we sell most of our products to distributors, who in turn sell to our end customers, we have limited visibility as to end customer demand.  Furthermore, we do not have long-term purchase commitments from our distributors or end customers, and our sales are generally made by purchase orders that may be cancelled, changed or deferred without notice to us or penalty.  As a result, it is difficult to forecast future customer demand to plan our operations.

The utilization of our manufacturing facilities and the provisions for inventory write-downs are important factors in our profitability.  If we overestimate demand for our products, or if purchase orders are canceled or shipments delayed, we may have excess inventory, which may result in adjustments to our production plans.  These adjustments to our productions may affect the utilization of our own wafer fabrication and packaging facilities.  If we cannot sell certain portions of the excess inventory, it will affect our provisions for inventory write-downs.  Our inventory write-down provisions are subject to adjustment based on events that may not be known at the time the provisions are made, and such adjustments could be material and impact our financial results negatively.   

If we underestimate demand, we may not have sufficient inventory to meet end-customer demand, and we may lose market share and damage relationships with our distributors and end customers and we may have to forego potential revenue opportunities.  Obtaining additional supply in the face of product shortages may be costly or impossible, particularly in the short