Good day and thank you for standing by. Welcome to the Alpha and Omega Semiconductor Fiscal Quarter 4 2021 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Mr.
Gary Dvorchak, please go ahead.
Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call Discuss fiscal 2021 Q4 and year end financial results. I'm Gary Duborchak, Investor Relations representative for ALS. With me today are Doctor. Mike Chang, our CEO Stephen Chang, our President and Yifan Liang, our CFO. This call is being recorded and broadcast live over the web.
A replay will be available for 7 days following the call via the link in the Investor Relations section of our website. Our call will proceed as follows. Mike will begin with strategic highlights, then Steven will provide business updates and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the September quarter. Finally, we will have the question and answer session.
The earnings release was distributed over wire services today, August 11, 2021, after the close of the market. The release is also posted on the 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 the earnings release.
We remind you that during this conference call, we will make certain forward looking statements, including discussions of the business outlook and financial projections. These forward looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update the information provided in today's call. Now, I will turn the call over to our CEO, Mike, to provide strategic highlights.
Mike?
Thank you, Garrett. I would like to welcome everyone to today's call. I am excited to be speaking with All of you again today, we have been dealing with the COVID-nineteen pandemic for over one and a half And we continue to take strict precautions to ensure the safety and the well-being of all our Our 4th fiscal quarter continued The strength and the momentum we saw throughout the year. We once again delivered strong year over year performance In each of our market segments with record revenue and excellent profitability, We benefited from strong end market demand, enabling us to optimize our product mix. 4th quarter results demonstrate the strength of our market diversification strategy, broadening product portfolio, Deepening customer relationships and growing production scale.
Total revenue for the 4th quarter grew 45% year over year to $177,000,000 as we continue to see broad based strength across our business. Non GAAP gross margin was 34.9%, up 300 basis points from last quarter and 7.40 basis points Higher than the same quarter a year ago. Non GAAP EPS for the 4th quarter was 95%, which more than tripled year over year. Yifeng will Go into more details on our financial performance later. The strong 4th quarter Chapter 8, outstanding fiscal year 2021.
Revenue grew 41% year over year to $657,000,000 On the bottom line, we achieved non GAAP EPS of $2.93 up from $0.88 last year. Previously, we have set a Target of $600,000,000 in annual revenue for calendar year 2021. And I am pleased that we successfully
surpassed for
the 3rd patch that target ahead of While we are not immune to some of the supply chain constraints in the broader semiconductor industry, We are doing a good job managing them to mitigate any interruptions to our customers. 1st, We are making investments to expand the capacity and further enhance our technological At our Oregon track, we believe the investment will strengthen our competitive advantage in our target market, and it is part of our long term strategic plan for sustainable growth and the Continuous technology improvement. In the current business conditions and the shortage of capacity, It is increasingly important to have the ability to own and control our supply chain. 2nd, we continue to ramp up our capacity at our JV fab in Chongqing according to plan. I am pleased with the progress we are making and we are on track to approach the Phase 1 target run rate in the September quarter.
3rd, we continue to maintain close relationships with Multiple foundry partners and are working with them for additional wafer supply. Overall, although our supply is tight, I am thankful to be able to have both internal and External capacity to support our business and minimize the stress at our customers In this time of shortage. In summary, I am very proud and appreciative of our team's execution in fiscal year 2021. In addition to the traction we gained From the successful implementation of our strategy, we saw strong industrial tailwind during the unpleasant time. And as we enter fiscal year 2022, there are plenty of opportunities and much work to be done We continue to grow and scale our business.
I am confident that we have the right leadership and The right product in place to ensure we are successful to capitalize on these opportunities. Our mission to be a trusted technology partner and a global supplier of A broad portfolio of power semiconductors remains on track. Looking ahead, We plan to grow our annual revenue to $1,000,000,000 in the next few years. Now, I will turn the I'll turn the call over to Stephen for an update on our business and a key Care segment report.
David? Thank you, Mike, and good afternoon, everyone. I will start with an update on our business and then provide detailed segment highlights for the June quarter. As we have stated all along, the core of our business strategy is technology and volume. Technology and innovation in our business Derived from repetitive volume manufacturing, which often inspires opportunity for improvement.
This is the origin of technology development. We invest in core competencies of silicon packaging and ICs As a foundation of our product technology, best in class technology leads to competitive advantage in our products and success Our product strategy is to create advanced total solution products in close partnership with our customers. These products demonstrate our expertise in power and move beyond commodity parts into multi socket optimized solutions, Make our customer end products more reliable and efficient. We continue to accelerate growth by winning new customer engagements With an expanding pipeline of new products and increasing BOM content with our application specific solutions. An example of this is our intelligent power modules designed specifically to address motor drives used in home appliance applications.
The modules combine the function of up to 17 discrete devices into a single solution to provide performance and ease of use to our customer. Another example is our series of driver MOS products, where we optimize the ICE to bring the best out of the co packaged MOSFETs to deliver high efficiency in V Core and Graphics applications. Even our advanced discrete MOSFETs are built on specialized of our products is more important than ever. As such, we are sharpening our focus on customer engagement. Our continued focus on strategic customers enables us to take advantage of the current environment to stay closer to Tier 1 customers, optimize product mix and capacity allocation and deliver strategic value to those customers.
While we are managing longer lead times and component availability, our competitive market position, strong customer relationships and supply chain responsiveness enable us to deliver on our commitments. Our backlog in the June quarter continued to Far exceed our capacity. We have been actively allocating capacity to avoid interruptions to our customers' production months, Optimize our factory utilization and support our strategic initiatives. At the same time, demand has been dynamic while not always following normal seasonality. Fortunately, the majority of our production is in house, which allows us to better serve our customers in such severe shortage Period.
As a result, we are able to focus on our core market growth that follows our strategic business direction. Now let me drill down into each of the business segments. Let's start with Computing. Revenue was up 57.3% year over year and up 10.2% sequentially outpacing the industry. This segment represented 43.7% of our total revenue End demand for our products remains strong with record revenue in the June quarter as our major customers were still facing Conan shortages.
While we were on allocation, we elected to allocate more capacity and resources to support the Computing segment, including the notebook, Tablets and motherboard applications. Conversely, the graphic card business was down double digits sequentially due to a customer's order pull in from the June quarter to the March quarter. Looking ahead, we expect computing revenue to be flat to modestly down sequentially in the September quarter due to allocation, but up double digits on a year over year basis. We expect solid demand at our ODM customers for motherboards and our graphics card business to rebound following a customer's production trending upward to a more normal level. This will be offset by a temporary decline in notebook as we allocate our production capacity to support growth in our motherboard and graphic cards.
Turning to the Consumer segment, which was 21.1% of total revenue in the June quarter, up 36 This segment played out better than expected. Gaming remains strong as we continue to gain share at a major customer with both our MOSFET and Power IC products in multiple sockets. Our overall home appliance business was slightly down due to a temporary allocation. That said, compared to the March quarter, we shipped Higher volumes of module solutions to key home appliance customers in Asia in the June quarter. And we intend to further increase shipments of module solutions in the next couple of quarters.
Looking to the September quarter, We expect the Consumer segment to increase by a high single digit percentage with strength in gaming and home appliances. Now let's discuss the Communications segment, which was 12.8% of total revenue in the quarter, up 14% year over year and down 17.4% sequentially. This segment plays out as expected As smartphone has performed in line with normal seasonality, having said that, demand for battery protection resumed at one of our global smartphone customers To support the upcoming launch of a new model, we expect our Communications segment to increase by double digits in the September quarter As all major smartphone players in China, Korea and the U. S. Are entering peak production.
With that, We believe we are in an excellent position to resume battery protection growth in the September quarter with designs secured at our key global customers. Finally, let's talk about the Power Supply and Industrial segment, which accounted for 20.4 percent of total revenue. This segment was up 50 3.1% year over year and up 11.5% sequentially. The solid growth was due to several factors. First, The demand for AC DC power supplies for laptop adapters was extremely robust with incremental design activity with major power In Taiwan.
2nd, momentum of our quick charger business was solid, driven by demand for travel adapters used in tablets as well as quick charger solutions for smartphones. 3rd, demand for DC fans, major fan manufacturers in Japan was strong. We expect this segment to grow by high single digits in the September quarter, driven largely by our ACDC power supply and power tool businesses. Overall, business momentum accelerated in the June quarter and we are making solid progress towards our mission to position AOS as a leading global supplier of a broad portfolio of power semiconductors. With that, I will now turn the I'll turn the call over to Yifan for a discussion of our fiscal Q4 financial results and our outlook for the next quarter.
Thank you, Stephen. Good afternoon, everyone, and thank you for joining us. Revenue for the June quarter was $377,300,000 up 4.8% from the prior quarter and up 44.9% for the same quarter last year. In terms of product mix, DMOS revenue was $127,200,000 up 3.8% sequentially and up 31.2% year over year. Power IC revenue was $46,500,000 up 7.2% from the prior quarter and up 99.7% from a year ago.
Assembly service revenue was $3,600,000 as as compared to $3,200,000 last quarter $2,100,000 for the same quarter last year. For the fiscal year 2021, revenue was $656,900,000 up 41.3% from last year. Non GAAP gross margin for the June quarter was 34.9%, up from 31.9% in the prior quarter and up from 27 point 5% in the same quarter last year. The quarter over quarter increase in non GAAP gross margin was mainly driven by better product mix. Non GAAP gross margin excluded $800,000 of amortization of purchased IP for both the June quarter and the prior quarter, and $4,400,000 of production ramp up costs related to the JV company for the same quarter last year.
In addition, non GAAP gross margin Excluded $600,000 of share based compensation charges for the June quarter as compared to $400,000 for the prior quarter and $300,000 for the same quarter last year. For the fiscal year 2021, non GAAP gross margin was 31.9 percent as compared to 27.9% for the prior year. Non GAAP operating expenses for the June quarter were 30 $2,800,000 compared to $30,900,000 for the prior quarter 25 point $3,000,000 for the same quarter last year. The quarter over quarter increase was primarily due to Higher variable compensation accrues this quarter. Non GAAP operating expenses for the quarter excluded $4,800,000 of share based compensation charges and $600,000 of legal expenses related to the government investigation.
This compares to $3,400,000 of share based compensation charges and $600,000 of legal expenses related to the investigation for the prior quarter as well as $2,400,000 of share based compensation charges and $2,600,000 Non GAAP operating expenses for the fiscal year 2021 was $123,800,000 compared to $102,500,000 for the prior year. Non GAAP operating expenses excluded $13,600,000 of share based compensation charges and $3,100,000 of legal expenses related to the investigation in the current fiscal year as compared to $8,900,000 of share based compensation charges, $4,700,000 of legal expenses related to the investigation and $600,000 for an impairment charge in the prior fiscal year. Income tax expense for the quarter was $1,200,000 compared to $1,000,000 for the prior quarter and $400,000 for the same quarter last year. Income tax expense for the fiscal year was $3,900,000 compared to $400,000 for the prior fiscal year. Non GAAP EPS attributable to AOS for the quarter was $0.95 per share as compared to $0.77 for the prior quarter and $0.29 for the same quarter last year.
Non GAAP EPS attributable to AOS for the fiscal year was $2.93 as compared to $0.88 for the prior fiscal year. AOS continued To generate positive operating cash flow, AOS on a standalone basis generated $32,600,000 of operating cash flow in the June quarter as compared to $33,300,000 in the prior quarter and $20,200,000 in the same quarter last year. In the June quarter March quarters, We received $10,000,000 $20,000,000 customer deposits for securing supply, respectively. The JV company generated positive operating cash flow of $11,600,000 in the June quarter compared to $5,300,000 in the prior quarter $20,100,000 in the same quarter last year. Cash flow from operations attributable to AOS for the fiscal year was $114,300,000 as compared to $58,000,000 for the prior year.
Cash flow provided by operations Attributable to the JV company was $14,400,000 for the year compared to $4,400,000 in the prior year. Consolidated EBITDAS for the June quarter was $40,900,000 compared to $36,200,000 for the prior quarter and $14,900,000 for Same quarter last year. EBITDAS attributable to AOS for the quarter was $33,600,000 as compared to $30,600,000 for the prior quarter $12,000,000 for the same quarter last year. EBITDAS for the JV company was $7,800,000 in the June quarter as compared to $4,500,000 for the prior quarter $1,100,000 for the same quarter last year. Consolidated EBITDAS for the fiscal year was $136,400,000 as compared to 52 $1,000,000 in the prior fiscal year.
EBITDA attributable to AOS for the year was $111,700,000 as compared to $44,800,000 a year ago. Now let's look at the balance sheet. We completed the June quarter with cash balance of $202,400,000 including $164,900,000 at AOS $37,500,000 at JV Company. This compares to $192,100,000 at the end of last quarter, which included $158,300,000 at AOS $33,800,000 at the JV Company. Our cash balance a year ago was $158,500,000 including $110,300,000 at AOS and $48,200,000 at the JV Company.
The bank borrowing balance at the end of June was and $141,100,000 at the JV Company. During the quarter, AOS And the JV Company repaid $2,100,000 $4,200,000 of existing term loans, respectively. Net trade receivables were $35,800,000 at the end of the June quarter as compared to $33,700,000 at the end of the prior quarter and $13,300,000 for the same quarter last year. Base sales outstanding for the June quarter were 26 days compared to 22 days in the prior quarter. Net inventory was $154,300,000 at quarter end, up from 145 point $1,000,000 last quarter and up from $135,500,000 in the prior year.
Average days in inventory were 115 days for the quarter compared to 112 days in the prior quarter. Net property, plant and equipment was $437,000,000 slightly up from 400 and $32,600,000 last quarter and up from $412,300,000 last year. Capital expenditures were $32,200,000 for the quarter, including $25,100,000 at AOS and $7,100,000 at the JV Company. In the June quarter, AOS has a plan to expand our Oregon fab With an investment of approximately $100,000,000 $20,000,000 to advance our capability and $80,000,000 to expand capacity. We believe this expansion, When fully completed, will enable us to generate an additional $70,000,000 in annual revenue.
We expect the capacity to come online in the December quarter of 2022. During the June quarter, The JV Company continued to ramp its 12 inches fab. It's on track to achieve the Phase 1 target run rate in the September quarter. As discussed, the JV Company is in the process of pursuing additional financing for its Phase 2 capacity expansion. We will provide more details when available.
With that, now I would like to discuss the guidance for the September quarter. We expect Revenue to be approximately $180,000,000 plus or minus $3,000,000 GAAP Gross margin to be 33.7 percent plus or minus 1%. We anticipate non GAAP gross margin to be 34.5 percent plus or minus 1%. Non GAAP gross margin excluded $800,000 amortization of acquired IP and $600,000 of estimated share based compensation charges. GAAP operating expenses to be in the range of $37,700,000 plus or minus $1,000,000 Non GAAP operating expenses are expected to be in the range of $33,500,000 plus or minus $1,000,000 Non GAAP operating expenses exclude $3,900,000 of estimated share based compensation charges $9,500,000 of estimated legal expenses relating to the government investigation Income tax expense to be approximately $1,000,000 to $1,400,000 loss attributable to non controlling interest to be approximately $500,000 As part of our normal practice, We are not obligated to update this information.
With that, we will open the call for questions. Operator, please Start the Q and A session.
Thank you. Your first question comes from the line of Craig Ellis from B. Riley Securities. Sir, your line is open.
Yes. Thanks for taking the question and congratulations on the very robust results and outlook. I wanted to ask a 2 part question, in part based on a comment that you made, Mahesh. And so as I look at the first Quarter's guidance, it annualizes to $720,000,000 in revenues and Down the line items would imply EPS that would annualize near $3.88 So you had indicated, Mike, That you were shooting for $1,000,000,000 in sales in the next few years. I know that's historically been the calendar '24 target, but does my decoder ring mean that a few years is really 2 years or 3 years because It seems like you've been on a very aggressive growth trajectory and maybe we are pulling in that $1,000,000,000 target.
And then, the second half of the question, Given the profitability levels that we're achieving this far below the $1,000,000,000 target, If we've got, call it, 40% upside to target revenues, is it fair to think there is another 40% upside in earnings Coming if we can grow revenues from $720,000,000 to $1,000,000,000 over the next few years.
Well, thank you for the question. Thank you for your kind words. BINDA is for sure We are pursuing, okay, whether 3 years or somebody will be there. I think the earning was there, I would rather have Yifan Give me a good answer. Yifan, can you do it?
Sure, sure. Yes, Our target, Craig, right now for $1,000,000,000 remains at around 2024, 2025 timeframe at this point. In terms of profitability, We have been pleased with our gross margin improvement and bottom line even More significant improvement. Yes, that's an our overall business model is to grow Our business grow top line with reasonable margins. We leverage our scales To grow bottom line EPS even faster.
So I mean, yes, I would expect As we grow our top line toward $1,000,000,000 and then our bottom line Would continue to improve. This is our business model for the near term, mid term and Long term, I think we can continue to grow our Profitability. I mean, our June quarter's results already demonstrated This business model.
Yes. That's very helpful. My next question is regarding gross margin. So Great to see the surge in gross margins in the quarter. And in the outlook, they're guided down, I believe, by 50 basis points sequentially.
So the question is this, Given that there's been a very strong new product contribution to gross margins over the last few quarters, is that Still expected or is there something about mix that's changing sequentially that would leave gross margins a little bit lower or is it more just the mix Of the end markets and some of the things that are happening there that's causing the change in gross margin. If we look at gross margin Beyond the current quarter, can you talk about some of the things that are happening with gross margins and the degree to which current levels are sustainable or could even The expanded upon, can we now think about 35% gross margins or even higher given that we're so close to that level?
Sure. We are pleased with our gross margin improvement, which was mainly driven by the better mix. A couple factors contributed to the mix Improvement. One is, since we are on allocation right now, so we are optimizing on the mix, Product mix as well as customer mix. Another contributing factor was the Growth from our new products.
For example, you saw our power IC products grew Quite a bit, almost 100% year over year in the June quarter. Those new products generally Carry at higher margin for us. So fundamentally, we are selling more and more higher margin products. So, I would expect our margin stay around this level For the near term, of course, it may fluctuate. And I would expect that at this point, we will The even is fluctuating, we're probably around this level.
That's helpful, Yifan. And then I'll ask one to Steven, so I don't ignore him before I jump back into the queue. So I just wanted to follow-up on the company's decision to add capacity at the So the $70,000,000 seems like it might give you an incremental 10% to 15 Percent of incremental output there. But the question is really about why you're adding capacity in Oregon versus Doing something more at a quicker pace in CQ and are the drivers related to some of the Deposits that you've taken in, which I think now total $30,000,000 over the last two quarters, is it a mix issue? I think Oregon does More of the power ICs versus MOSFETs or what are the reasons you're moving ahead with an expansion of that versus being more reliant on CQ?
Sure. For us, we've been growing fairly quickly in the last year and a half, and it's pretty obvious that we are Out of capacity in the shortage time. And we want to make sure that our supply can keep up with our demand. So that includes expanding in house at our Oregon fab. It also includes working with Our joint venture as well as other foundries to expand capacity.
So our decision to expand in Oregon is not No, it's not just a decision only for Oregon. We are extending on all those fronts to make sure that we can keep up with demand. So it's not necessarily due to mix and we have demand that's growing in several of our segments. So it doesn't make sense for us to continue to expand where we can.
Okay. That's helpful, Stephen. Just related to capacity and capacity planning. I know you set the expectation that auto should be an end market That doesn't have a material ramp for a couple of years. It's just the nature of that application area.
But can you talk a little bit about, of the 3 Sources that you mentioned, where you'd expect to be sourcing supply for that initiative?
Right now, we're not restricting automotive to any particular facility yet. And Dustin, I think we will be using whichever whatever Outlet we have that we can count on for the long term. Of course, automotive, they are looking for suppliers That will not change in the next 10 years, right? And that will not change the materials that they can count on that they don't have to go through requalification. So for us, we're not fixed that.
Automotive can only come from certain areas. Yes, for each of those things, we'll plan Typically some may be in house, some may be outside, but it's not fixed value. It's only JFAP for automotive, for example.
Got it. Great results, guys. I'll get back in the queue.
Thank you, Craig.
Thank you.
Thank you. Your next question comes from the line of David Williams from Benchmark. Sir, your line is open.
Hey, good afternoon. Thanks for taking my questions And congrats on the solid quarter.
Thank
you. Thank you.
I guess first I wanted to ask around the gross margin and some of this has already been asked, but I wanted to ask it maybe a little Different way and just kind of thinking about the higher IC business that's clearly been a part of the business that's been expanding and it's been a nice contributor. But how do you think about that mix over time? And what do you think is the right percentage of IC Business versus your other business? And how do you think of maybe about The margin differential between those two different segments there?
Sure. For us, we're happy to see, As Yifan was mentioning just now that our Power IC business is definitely growing along with our module solutions. Our module solutions are the ones that we're selling So this is a great way for us to sell more, to sell a better product That addresses the customer needs and locks it in a little bit more tightly. We will continue to expand in those areas, but at the same time, our discrete business isn't going to stand still either at you. Just a reminder that many of our power ICU products and our module solutions, Based on our discrete inside, we use co packaging and it's built on top of our silicon technology platforms.
So we will still continue to see growth in our discrete business Simply because we need good and discrete that's in order or IGBTs in order to make Good power IC and module solutions. So in terms of mix, I would say the percentage of ICs and modules will certainly grow over time. First, I think a rough target that we're looking at is about 1 third from ICs and modules And 2 thirds still from discrete business.
Okay. Great color there. Thanks so much. And then, Steve, maybe another one for you. But on the $20,000,000 of OpEx that you talked about and expanding the technology in Oregon, how much of that, I guess, is there any process node there expansion or maybe if
you could Give us any
color about what that is. But I also just want to say it speaks to the confidence that you have in the demand sustainability. And so I guess if you look out in the next year when this capacity comes online, how I guess to what level is your confidence that your demand that you're seeing today is not Fairly being pulled in by the macro, but more sustainable and can continue long term and that we're not overbuilding here capacity that could fall off as we get into next year.
Sure, of course. Certainly, we do need capacity now and it's not just it definitely we benefited from some of the work from home And the shortest situation, but our fundamental growth areas are certainly continuing to move forward, while PC is kind of a given But also smartphones and home appliances, our business is pretty solid and making business company specific growth That continues to move forward. And addressing the expanding capacity, we are doing this definitely for capacity, but also for But also for capability as well. It is going to give us more advanced equipment that allows us to improve our So much of the technology, for example, our low voltage is probably on the 5th or 6th generation of technology platform. And we do need newer equipment in order to keep that engine going and to continue to come out with leading platforms That we can base both our discrete and as well as our IC products on top of.
Okay. Okay. And then maybe one just last one for me here. Anything unusual in the inventory build you saw this quarter, Yep, a bit. How much of that was just inventory build that you could?
And how much of that are you seeing anything in any particular mark Were you seeing slowdowns or maybe anything unusual there?
David, inventory increased A little bit, yes, compared to last quarter. But partially, it was because the joint venture And they continue to ramp up and so then they have some inventory materials and some WIP There another thing is for AOS side, we also increased the sum on the Materials, raw materials like those substrate and leaf frame, I mean, those in those areas. So given the uncertainty of COVID, as you know, there are Some countries started lockdown again, so we kind of intentionally increased some Purchases. Actually, our finished goods inventory actually went down.
Okay. Very good. And even now that I have you on the line, let me ask one more there. Just in terms of the OpEx, it kind of bumped up a little more than we would have expected in the June quarter. Anything unusual there that we should be thinking about?
And does that kind of carry forward? Is this a good base to kind of grow from?
If you don't mind, I'll just add some color, okay? Now this year, everybody knows it's a shortage year. Anything you produce, It will be hard to sell. That's why if I mentioned to you very clearly that we can take advantage of that to have a product mix. However, everybody knows such kind of thing will last forever.
So eventually, it still depends on your competitive leverage. So while this year, we invest in the capital equipment area to further enhance our Evolving capability, so that we'll keep the or enhance our competitive leverage just in case the time go back to normal.
Okay. All right. David, regarding the OpEx, yes, in the June quarter, The increase was primarily due to the increased variable compensation accruals Because of the better than expected financial results. So I would expect that, yes, going Forward, probably, it will stay around that level.
Great. Thanks so much guys. Certainly appreciate the time and best of luck on the quarter.
Thank you.
Thank you. Your next question comes from the line of Jeremy Kwan from Stifel. Your line is open.
Yes, good afternoon and let me add my congratulations on the higher gross margin and seeing the JV churn free cash flow positive. I guess, a first question on the backlog you mentioned was very strong. Can you give us an idea of where your lead times have gone and Where they were maybe 12 months ago and where they are today?
Lead time, I mean, right now, it is A little bit longer than 12 months ago, yes. And then, I mean, our backlog, I would Say stronger than 12 months ago as well. And I mean, for us, I mean, this We saw some customers placing more POs for the longer range. So we are closely monitored activities and work, communicate closely with our customers. So we know their true demand.
So and then For us, we also triangulate with our own design wins at customers And then we monitor our shipment. So overall, I mean, If we cannot ship the if we cannot fulfill customer orders, then we'll tell them Upfront, so we don't want to drag them out.
Got it. So you're not doing anything like Your other semiconductor peers where you're trying to get customers Place longer lead time orders or things like that, any like non cancelable or non refundable type arrangements?
No. That's pretty much been the same throughout the years.
Okay, Great. And then I guess, can you give us any indication of where you see pricing both in terms of your own products? Given the tightness in the whole supply chain, it seems like I know you've been pretty judicious about raising prices on your customers, but Just wondering what maybe competitors are doing and what you're also seeing in terms of the input prices, if those are going up and if you're planning to pass These are long to your customers.
Sure. I mean, yes, and then we do see some Input cost increases, yes. In terms of our own Pricing, yes. There is no formula in this area. There are Several factors we consider, the relationship with customers and the strategic Initiatives, we want to push and then a product mix, I mean, Capacity and I mean optimize revenue on margin for us.
I mean overall, Well, we selectively increased some ASPs. So we don't want to Gauteng customers. So we overall, we want to use this opportunity to deepening Our relationship with key customers and then promote our new products.
Got it. Okay. And if I could just turn to some comments that, Stephen, you made on the graphics market that it seemed like there were A large customer pulled in some orders from the June quarter into the March quarter. And so it seems like that can you help us square that with it seems like everything is in shortage and particularly graphics cards, Everything is flying off the shelves. Can you help us understand a little bit what's going on?
Thanks.
Sure. It all has to do with allocation also too and Finding ways to support our customers in their time of need. For graphics, we're talking about selling in Power IC driver MOS products and yes, they had a need in the marked quarter for more support. So we helped The customer out, but that was pulling in from the June quarter. We are expecting that to rebound as we go into the September quarter.
But overall, we are on allocation also too. The same similar type of products, driver MOS products Also being sold into gaming and as well as computing applications. So it's been a challenge for us to Choose and to figure out who to support, what's the best interest for us, what's the best interest for the customer. So overall, you The overall power IC business has grown pretty tremendously year over year, but we do have to move things around from quarter to quarter to support the customers as well Our own strategic initiatives.
Great. Thanks, Stephen. And just one last question before I jump back in. Yifan, in terms of the $100,000,000 spend, is the $25,000,000 that you spent this quarter, is that part of that $100,000,000 or is that In addition to the $25,000,000 And also if you can give us a rough time frame of when you expect this $100,000,000 to be phased in?
Okay. Sure. The $25,000,000 CapEx spend in the June quarter, that was Including some down payment for this $100,000,000 project. We already placed the order and then some of them required a down payment. But the Majority of it, it was not related to this $100,000,000 project.
So this $100,000,000 project, it probably will spread out Throughout this fiscal year 2022, so from now on pretty much to the first half of On the calendar year 2022, so in order to get machines and get
Our next question comes from the line of Peter Vogel from J&K Securities. Your line is
Faum and Stephen, thanks for taking my question. I wanted to kind of Ask about the environment and understand obviously things are tight. You're taking deposits, but then you're also Trying to get more capacity. So how are you thinking about the potential for over ordering because everybody seems to be jockeying For position right now. And so I would think that you guys are trying to scrub your books a little bit, make sure orders are real.
Would love Just understand how you're thinking about that conceptually, please?
Sure. I understand.
Go ahead. I'll just
add something and Yifan can Certainly, when we look at the orders and the backlog, it is definitely much stronger And more than we can handle. And we don't doubt that there are double orders in there. But There are real orders. So if we can supply, they will take them. And so the best thing for us too is So we work very closely with our customers.
Keep in mind that most of our designs and revenue comes from design ins that our Team actually personally designed in. So we have close contact with their procurement and we know what their actual needs are. We know what's going when it goes above and beyond and when things are abnormal. So we will question also too because we want to make sure that it goes to The supply goes into products that are really actually being produced and not just being hoarded somewhere. So we are working in close partnership with our customers.
This is a great opportunity for us to talk closer to them, Understand their demand, understand what's going on as well as position us for future growth with these customers. So it comes down to just talking to
Right. And to that, on the design, how much of your business is going through the distribution channel versus Direct to customers. And forgive me for not knowing this, but is the use of the channel, is that really just for fulfillment? Or is there some part of that that's actually used for sales as opposed to fulfillment?
Yes. I mean that our this business right now is about 2 third of our business or 70% range, but Peter, you're right. I mean, This is for us pretty much serve as like a logistic and Fulfillment purposes. Our people, our engineers and Salespeople, they work directly with our key customers for design wins. So Basically, we no matter is it channel or direct business, we pretty much Serving all the key customers directly.
That's helpful. And then maybe the last question, I know this has been asked Few times and you guys have done a good job of not answering it directly. But it's a tight environment. You don't have capacity, you're on allocation, mix is helping your margins and you've given out a $1,000,000,000 sales target. What would Help us understand what would be the new operating model, gross margins, operating margins at $1,000,000,000 in sales?
And then how much of that It's going to be due to a different mix that you can envision versus just normal revenue And utilization rates?
For our longer term business model, Peter, We put out in there, we shoot for $1,000,000,000 revenue in the 2024, 2025 timeframe for the gross margin, non GAAP gross margin, we're targeting over 30%, yes, that was what we put in out there. Right now, I would expect that we can Maintain the gross margins in this current Range. So our goal is to grow top line and drop down to bottom line EPS. So EPS would imply that model would imply $4,000,000 $5 EPS.
Thank you.
Thank you.
Thank you. There are no further questions on queue. I will now turn the call back to Yifan. Please go ahead.
This concludes our earnings call for today. Thank you for your interest in AOS, and we look forward to
This concludes today's conference call. Thank you for participating. You may now disconnect.