Ladies and gentlemen, thank you for standing by, and welcome to Alpha and Omega Semiconductor Financial Results for the Fiscal First Quarter of 2021 Conference Call. At this time, all participants are in a listen only mode. After the speakers presentation, there will be a question and answer Please be advised that today's conference is being recorded. I will now turn the call over to Mr. Gary Dvorchak.
Sir, the floor is yours.
Good afternoon, everyone, and welcome to Alpha And Omega Semiconductor's conference call to discuss fiscal 2021 first quarter financial results. I'm Gary Dvorchak, Investor Relations representative for AOS. With me today are Doctor. Mike Chang, our CEO, Yifan Liang, our CFO and Steven Chang, our Executive Vice President. 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 After that, Yvonne will review the financial results and provide guidance. Finally, we will have the question and answer session. The earnings release was distributed over wire services today, November 5, 2020, 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 operating performance, which 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. 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 an overview of the business. Mike
Thank you, Gary. Welcome everyone to today's call. We are off to a great start to fiscal year 2021. Business momentum accelerated in the September quarter, despite the ongoing global uncertainty with COVID-nineteen. We delivered solid revenue growth and excellent profitability.
Shipments were strong across most of our categories, particularly computing and consumer applications. Revenue was up 29% year over year and at the high end of the updated guidance range we issued in earlier October. Better utilization and disciplined expense control drove non GAAP gross margin of 29%. On the bottom line, we posted non GAAP EPS of $0.55, which more than doubled year over year. 1st, fiscal quarter results continue to demonstrate the competitive strengths of our business strategy technical expertise, diversified the product portfolio and expanded customer base.
While we start our business in the computing market, we have successfully diversified our business by expanding into other market segments, including consumer, communications, power supply and industrial. Our mission is to become a leading designer, developer and a global supplier of a broad portfolio of power Silicon Our technical expertise enables us to develop a broader variety Power Discrete And Power IC Technology Platforms. This enables us to expand our product offerings and deliver complete power solutions for more target applications. Over the years, we have evolved from a component supplier to a solution provider. We have engaged more deeply with our customers, strengthening the relationships and have become their trusted strategic partner.
Our more accepted designs wins with the recently relaunched gaming system and new PC graphics card platforms as well as our continuing high growth in home appliance applications are some examples of how we have deepened strategic partnerships with Tier 1 OEM customers. We will continue to drive growth by winning new ODM and the OEM customer engagements with expanding Title IX of new products. Our renewed business growth was made possible by our multiyear effort to strengthen our supply chain. Specifically, our joint venture fab in Chongqing, which continued trend and helped in capturing the surging of demand in September quarter. Because of this, the Chongqing fab achieved positive EBITDAs for the 2nd consecutive quarters, and we expect to approach its phase 1 target run rate next year.
The joint venture fab provides us with flexible capacity management and the geographic diversification of our supply chain and will support our business growth for many years to come. I am pleased with our direction and our solid execution even though, of which it could be a little faster. I want to thank our confidence in the company. I also want to acknowledge our employees for an outstanding job and for staying focused and engaged with our customers, while we navigated this challenging macro environment. We are excited about our growth trajectory, and we believe we can achieve our calendar year 2021 target of 600,000,000 dollars of annual revenue with a healthy pipeline of new products, new design wins, and new customers we are focused on executing our growth strategy and building on the strong momentum we see now.
While our optimism is justified, we want to caution investors that the environment is still highly uncertain. We will be working diligently to drive growth but are prepared to respond quickly should condition change. Due to COVID-nineteen, economy, trade tensions or other issues. With that, now I will turn the call over to Steven for detailed segment report. Steven?
Thank you, Mike, and good afternoon. Let me start with Computing. It represented 44.1 percent of our total revenue in the September quarter. Revenue was up 35.9 percent sequentially and up 44.7% year over year. End demand was stronger than expected, which we fulfilled with ramping supply from our JV fab.
The work from home trend drove high demand for PC related products. Our graphics card business was exceptionally strong, driven by demand in the gaming application. We remain excited about and digital power solutions in the launch of key customers, graphic card platforms. We expect this to continue in the December quarter. Looking ahead, we expect overall computing revenue to be down mid single digits in the next quarter as the sequential growth in the graphics card business is expected to be offset by the usual seasonal decline in PC.
Now turning to the Consumer segment, it represented 24.2 percent of total revenue in the September quarter. Revenue increased 33% sequentially and was up 70.8% year over year. Similar to PCs, the pandemic driven stay at home effect boosted sales of gaming TVs and home appliances, propelling the strong growth Gaming grew significantly as a major game console wins started to ramp. Pre production for the new gaming consoles started in the June quarter and ramp further in the September quarter. We are thrilled to have multiple sockets across several of our product lines, including power IC and MOSFET, design into this gaming console system.
Home appliances continue to expand in the September quarter, primarily driven by sales of intelligent power modules. Our co package IGBT and MOSFET based motor drive modules with built in safety features offer our customers a co packaged solution for ease of design and robust performance. Offering, and we are pleased to see business ramping with a new series of IPM modules designed for room air conditioners at a Japanese customer. Looking to the December quarter, we anticipate a mid single digit decline in the Consumer segment. Growth in home appliances is likely to be offset by a seasonal decline in TV, coupled with a production ramp push out of team and console systems caused by a shortage of other system components.
Now let's discuss the power supply and industrial segment. It accounted for 16.5 percent of total revenue, up 5.7% sequentially and down 8.5% year over year. Going into the September quarter, we expected this segment to be down somewhat due to softer demand for quick chargers and DC bands. The upside surprise was due to a couple of factors. 1st, quick charges were flat quarter over quarter better than expected.
This year's peak season for global smartphone OEMs was delayed due to co as our smartphone customers began shipping again in the September quarter, quick charges started to come back. 2nd, the demand for ACDC power supply was stronger than expected, closely tracking the surge and PC sales, which offset the decline in DC AM demand. Furthermore, the industrial drone application started to ramp as our high performance mOSets are designed to power that drones for use in applications such as agriculture, delivery and emergency response. Looking ahead, we expect that the overall segment to be flat in the December quarter as quick charger growth will be offset by a decline in ACDC power supply. Finally, let's move to the communication segment which was 13.4% of total revenue in the quarter, up 2.4% sequentially and down 4.5% year over year.
This segment played out largely as expected, given the delay in the smartphone peak season. Looking ahead, our battery protection business is expected to be strong in the December quarter, tracking the peak season of our global major smartphone customers. We expect communication segment revenue to be up double digits sequentially in the December quarter, With that, I will now turn the call over to Yifan for a discussion of our fiscal first quarter financial results and our outlook Yifan?
Thank you, Steven. Good afternoon, everyone, and thank you for joining us. Revenue for the December quarter was $151,600,000, up 23 0.8% from the prior quarter and up 28.6% from the same quarter last year. In terms of product mix,
MossET revenue was $119,400,000,
up 19.4% sequentially and up 18.7% year over year. Our IC revenue was $29,500,000, up 45.2% from the prior quarter, and up 87.3 percent from a year ago. Assembly service revenue was $2,700,000 as compared to $2,100,000 last quarter and $1,500,000 for the same quarter last year. Non GAAP gross margin for the September quarter was 29%, up from 27.5% in the prior quarter and up from 28.3% in the same quarter last year. The increase in non GAAP gross margin was mainly driven by favorable product mix and higher factory utilization.
Non GAAP gross margin excluded $800,000 of amortization of purchased IP related to digital power excluded $400,000 of share based compensation charges for the September quarter as compared to $300,000 $10,400,000 for the prior quarter and for the same quarter last year, respectively. Non GAAP gross margin also excluded $300,000 of production ramp up costs related to the JV company for the quarter. As compared to $4,400,000 for the prior quarter $6,000,000 for the same quarter last year. Non GAAP operating expenses for the September quarter were $28,600,000, compared to $25,300,000 for the prior quarter and $25,600,000 The quarter over quarter increase primarily related to higher R And D Engineering expenses and variable compensation accruals. Non GAAP operating expenses for the quarter excluded $2,500,000 of share based compensation charges, and $1,100,000 of legal expenses related to the government investigation.
This compares to $2,400,000 share based compensation charges and $2,600,000 of legal expenses related to the investigation for the prior quarter, as well as $1,900,000 Both GAAP and non GAAP operating expenses included $3,200,000 of digital power TV expenses for the quarter as compared to $3,000,000 for the prior quarter and $2,800,000 for the same quarter last year. In the September quarter, we started a shipment of digital power products. If so power is complementary to our power IC operation and make it more complete and compelling. As our internal integration is now behind us, we will no longer break out digital power teaming expenses going forward. Income tax expense for the quarter was $1,000,000 compared to $400,000 for the prior quarter and 0.4 attributable to AOS for the quarter was $0.55 per share as compared to $0.29 for the prior quarter, and $0.26 for the same quarter last year.
AOS continued to generate positive operating cash flow. AOS on a stand alone basis generated $12,700,000 of operating cash flow in the September quarter as compared to $20,200,000 of operating cash flow generated in the prior operating cash flow in September quarter was $2,900,000 compared to $20,100,000 of cash flow provided by the JV company in the prior quarter. And $3,000,000 of cash EBITDAS for the September quarter was $27,600,000 compared to $14,900,000 for the prior quarter. And $14,300,000 for the same quarter last year. EBITDA attributable to AOS for the quarter was $22,200,000 as compared $13,800,000 for the same quarter last year.
EBITDAS for the JV company was $4,600,000 in the September quarter as compared to $1,100,000 for the prior quarter and negative $2,400,000 for the same quarter last year. Now let's look at the balance sheet. We completed the September quarter with cash balance of $154,700,000, including $112,700,000 at AAOS and $42,000,000 at the JV company. This compares to $158,500,000 the end of last quarter, which included $110,300,000 at AAOS and $48,200,000 as a JV company. Our cash balance a year ago was $103,100,000, including $88,000,000 at AOS and $15,100,000 at the JV company.
The bank borrowing balance at the end of September was $173,800,000, including $30,600,000 at AAOS, and $143,100,000 at the JV company. During the quarter, AOS and the JV company repaid $2,100,000 $4,000,000 of existing loans, respectively. Net trade receivables were $26,300,000 at the end of the September quarter, as compared to $13,300,000 at the end of the prior quarter $39,300,000 for the same quarter last year. Base sales outstanding for the September quarter and for the prior quarter were both 18 days. Net inventory was $137,700,000 at the quarter end, up from $135,500,000 last quarter and up from $118,600,000 in the prior year.
Average days in inventory were 113 days for the quarter compared to 127 days in the prior quarter. Net property, plant and equipment was $421,600,000, up from $412,300,000 of last quarter and up from $404,000,000 of last year. Capital expenditures were $11,300,000 for the quarter, including dollars at AOS and $3,400,000 at the day we company. With that, Now I would like to discuss the guidance for the next quarter. We expect the revenue to be approximately 150 $3,000,000 plus or minus $3,000,000.
That gross margin to be 28% plus or minus 1%. We anticipate non GAAP gross margin to be 29% plus or-1 percent. Note that non GAAP gross margin excludes $800,000 amortization of acquired IP $400,000 of estimated share based compensation charges and $400,000 of estimated production ramp up costs relating to the JV company. GAAP operating expenses to be in the range of $32,600,000 plus or minus $1,000,000. Non GAAP operating expenses are expected to be in the range of $28,600,000 plus or minus $1,000,000.
Non GAAP operating expenses exclude compensation charges and $1,500,000 of estimated legal expenses relating to the government investigation. Income tax expense to be approximately $800,000 to $1,200,000. Loss attributable to noncontrolling interest to be approximately $1,400,000 On a non GAAP basis, excluding estimated production ramp up costs relating to the JV company, This item is expected to be approximately $1,000,000. As part of our normal practice, we are not obligated to update this information.
Your first question comes from the line of David Williams.
For taking my questions and congrats on the solid quarter and the guide. Just kind of look out and think about the revenue stream. Obviously, it sounds like you're targeting $600,000,000 this year, so very nice run rate. So it feels like most of this is fairly sticky. But can you talk maybe a little bit about where you're seeing the demand coming from in terms of design wins and new products versus just backfilling demand that you previous couldn't just with lack of capacity?
Sure. Let me take that. And we're definitely excited to see the growth this year. This year definitely started off a bit unpredictable and uncertain, but we are pleased to see the results in the past couple of quarters. In terms of the traction that we're getting in the market, the current growth that we've seen in the past has further grown, especially in PC area.
We continue to expand our bond content. And as we talked about, we've also broken into the graphics card business would be the major launch that happened on this quarter. And additionally, our home appliance business also continues to continue to expand We've started with our RGBT business, our Discrete business, and we've expanded with our module business. And then we're starting to see the results especially the module business, this September quarter going into the December quarter. Smartphones overall have been a bit of a rocky start, just like in many of the markets.
And we saw a push out of the peak season and spreading into the next couple of quarters. But our position there is still strong. And we have a good placement at the key global smartphone makers. And layering on top of that, we've also opened the market for gaming for ALS and going on to one of the in consoles that launching on this quarter. So we're pretty happy to see the growth of our existing applications as well as some of the new growth areas.
That we've just recently expanded into.
Great. And then just kind of thinking about the new digital controller and then digital power. So solution, how much did that contribute to the quarter? And then as you kind of think about next year, what do you think that contribution or excuse me this you think that contribution could be? What are the expected kind of ramps or targets for the year?
Sure. So our digital power, as part of our multi phase initiative, we started the early revenue came in graphic card and going into a high end card. Where our SPS is being, is already starting to ramp in the September quarter. This is more at a smaller ramp compared to the other graphics card ramp that we're doing right now. This is going into a very high end card for that vendor.
So we see some small business this quarter. It'll wrap a little more going into the December quarter. And but our heart is still set out to go after the core server and telecom market. And with that, that to be a little further out more like in 2021, 2022, to take a type of timeframe for that business. In the meanwhile, we will continue to we expect this graphics card business to gradually increase over time.
As they roll out their production and hopefully seeing our part also proliferate into more models within that and that criteria. Card maker.
Okay. And one more if you don't mind, but, you talked even a little bit about the factory loadings and that helping the gross margin a bit. But can you maybe give us a little bit of color around what your utilization rates are looking like, particularly in the JV? And then maybe where your capacity stands there talk about getting to that run rate in the next year. Can you maybe qualify that in terms of when you expect that?
And just kind of in terms of gross margin, maybe that contribution that you expect to see just from all of these moving pieces that are really moving in the right direction here, if you kind of combine together. So just any color you could provide would be helpful.
Okay, sure, David. In terms of gross margin, yes, September quarters, both margin increased by 150 basis points compared to the June quarter. That was primarily due to the combination of, product mix, better product mix and, higher factory utilization. So product mix and factory utilization, I would say half and half maybe slightly higher on the factory utilization side product mix definitely improved, example, You can see it's a power IC product line. We grew like 1,000,000 5% some quarter over quarter, 87% year over year.
I mean, PowerIC product line carries an even higher product margin for us. In terms of factory utilization, our own factories like an organ fab and Shanghai vacant facilities and pretty much an operator at a full scale right now. We can squeeze out in here and there, some, the JV company and continue to disrupt during the September quarter, contributed to our revenue growth. So this, I mean, right now, it's not run fully ramped up to its phase 1 run rate yet. So as Mike mentioned in are what's targeting next year, the September quarter can, we can fully ramp up in that place.
But I've said, and actually, to me, it's actually a better outcome. For us, the, at $130,000,000 quarterly revenue, level, our JV company, they still have some room to support us for further growth. So I feel that it's actually, it's a positive factor. And the JV company also, I mean, during the September quarter, has improved its performance. You can see from the production ramp up to cost, In the June quarter, I remember it was $6,600,000 also, and now this, this in the September quarter, it's, it's like a $300,000 also.
So that further ramping up on this joint venture 12 inches Fant.
Your next question comes from the line of Craig Ellis from B. Riley FBR.
Yes. Thanks for taking the question and congratulations on the real strong execution team. Great to see the strong revenues and margins and earnings in the quarter. So I'll start with that as a follow-up to David's question. Yifan, thanks for the color on utilization and mix in the significant increase in gross margin in fiscal 1Q, but in go through to your guiding revenue is a little bit higher, but it looks like the gross margin midpoint is lower.
So what accounts for the lower gross margin on higher volume?
We guided actually about the flattish, gross margin for the December quarter. Slightly increased in revenue. I mean, that would not change a whole lot of things. Right now, there is the factories, utilizations, our own factories are running at a pretty full level. So than product mix.
And it's about the same. So, similar product margin profile. So I would think this December quarter, we are expecting similar on gross margin at this point.
Okay, got it. And then moving on to some of the product trends and and some of the seasonal dynamics in the business. So great to see the execution on the gaming system program and all the design wins there. And and the gaming card, digital power strength. But how should investors think about the seasonal dynamics of those types of applications?
Are they seasonally stronger in your fiscal 1Q and 2Q and then weaker in 3Q and 4Q? Or what's the seasonal profile of those 2 businesses? Sure.
Both of these businesses are a great new business for us. We're pretty excited about that. And they also have different types of, I guess, lifetimes or product life cycles. On the graphics card, typically, a new platform is released every 2 years. And this is another new refresh year for the main 2 guys.
And the game systems and the life cycle close typically around 7 years. And for the game system, they all sold throughout that 7 years. They also come up with new refreshed models, whether it's cost down or some other combination of what they want to offer. So this usually kind of new builds going on each year. But it's continuously sold throughout that 7 year period.
Seasonality is probably a little difficult to read into, especially at the beginning of the quarter. Even for us, it's a little bit unpredictable because we're still right at launch and, as far as we see, reception has been good, but the production side also, is a little bit unpredictable as well too. So we right now, what we see is that in the December quarter, it is still pretty strong Q and going into the calendar Q and, I guess, Q1 calendar for next year. Is this a little to tell still. And we're still just tracking our production to match our customers' production.
Generally, overall in the 1st few quarters and then pretend to be some kind of inventory correction once they once our customer sees the reception and then adjust their production. But right at this moment, it's a little too early to tell.
Okay. That's really helpful.
I appreciate it, Steven. Moving on and just looking at the broader supply landscape. So it seems like there was just very good manufacturing execution between the Oregon fab and the JV fab in the quarter seems like you're getting that again in the outlook, but Can you confirm if you're able to meet all orders and given some of the things that we've seen, with regards to supply constraint Econ, can you talk about your comfort that there aren't double ordering, issues out there that would be over inflating activity versus end demand?
Sure.
Backlog has been healthy and steady throughout the quarter, which reflected in our guidance for the December quarter. Right now, the overall market supply this side. So at least in our field, I would not rule out some double orders. Internally, we looked at our backlogs and, you know, orders and also waste triangulated with our design wins and then, you know, at each customer. So we are monitoring, you know, how much we ship to each cost number.
The overall, we think in our December quarter's guidance and is achievable. And I mean, it's, it's off a pretty high base from the September. Quarter. So we're happy to see December quarter continue to, to, increase, not dropping.
Yes, indeed, nice to see the strength there. The next question, maybe for Mike, perhaps, or maybe for you Ethon, but if I look ahead a couple of quarters and think about the seasonally stronger period of the year, which typically occurs in the June September quarter, given the exit velocity of the business out of calendar 'twenty one here at $153,000,000,
which is very strong.
It would seem if you saw something like seasonal growth in the June September quarter, potentially the revenue profile of the business could move well up into the 100 and $65,000,000 to $175,000,000 range, which I believe would really be a level where either au'd have to increase external supply or accelerate the ramp of phase 2 of the JV fact Can you just talk about how you're thinking about, moving into fab phase 2 versus external supply given that the demand is so strong and here design wins or performing so well?
Okay. Yes. I'll take it first and then, Mike, maybe you can add in. Overall, I mean, next year, I mean, as Mike mentioned, we're targeting $600,000,000 of the calendar year 2021 annual run. That's our goal.
In terms of each quarter, I mean, right now, the COVID is kind of altered and typical seasonality, this year. And when we'll see, and I mean, maybe some fluctuations between the quarters and, it's hard to tell at this point. But overall, I mean, as Stephen mentioned, we do have some company specific growth areas and those growth points. So we are pretty excited about next year's opportunities. In terms of supply side, yes, and then I mean, we're continuing to ramp.
JV fab. And then on the other hand, yes, we are planning for the next phase. Looking at our business growth opportunities. And so it is on our agenda right now to consider another year out. So, we we will see, I mean, the overall market and the business development right now, the momentum is relatively strong.
Mike, you want to add in some
Thank you, Yifan. I think you talked about pretty much about the business side there, okay, of course, you know, the Orlando looks good there, okay. The macro economy, nobody can predict that. So we have to prepare for that. Top of the price side on the CQ, I had to be honest with you, okay, you know, whatever capacity is in there was prepared or planned a few years ago, At that time, of course, you don't have a clear crystal form.
So you just, whatever you can. And then, Baragao, maybe ask question, what's your what's your loading rate? Okay. I'll say right now is pretty tight, not because of all equipment we use out merit because of some some efficiency there. So we call it just as a minor adjustment there because of the mix of the cutter to respond to the current demand.
So there'll be some room to go to to fulfill our 1st phase, in next year. Of course, from there, we've been looking for the phase 2, which definitely will follow-up I wonder, what does this answer your question now?
Yes, I think it does, Mike. I think one of your points is there's some debottlenecking and efficiency gains you can get to squeeze some strict capacity out of phase 1. And so
you've got some time to do that. Yes. Move around a little bit, Katrina, so just opened up with the high area. Thank you. Got it.
Guys, thanks so much. I'll hop back in the queue.
Your next question comes from the line of Jeremy Kwan from Stifel Nicolaus.
Yes, good afternoon. And let me add my congratulations on the strong results and outlook. And hitting that $150,000,000 quarterly revenue ahead of plan. I had a question on the, maybe Stephen, in terms of the end markets, I don't think I caught the consumer guidance. Is there, do you guys have the formal expectations for that side of the business?
Yes, so consumer was very strong for in the in the Q3 and sorry, in the September quarter and due to a lot of things tied to the stay at home TV was up a seasonally, and the new gaming console, the preproduction was going on as well as the continue to grow in home appliances. Looking to Q4, and we're expecting a slight drop in the outlook. Mainly because of some seasonality is coming back into play, TD market typically starts to drop in the December quarter, because most of all the shipments have been already done in the September quarter. We do expect to see continued growth in home appliances this has been, again, we're a pretty small part of the overall market. And this is an area that we've been growing, especially with our IPM modules going into home appliances like refrigerators and washing machines.
And we also mentioned in the script, gaming is expected to see a little bit of a push out because of our customer, they're having some production, supply issues. But we expect that to resume in the fall in quarter. So overall, we're projecting a slight drop going into the December quarter. Great.
Thank you. It does sound like the communication segment is what's kind of driving the, the better than seasonal outlook for December, especially off the strong September. Can you walk us through again what's, give me the confidence behind that? Is it just a delay in the smartphone app that continuing into December or is there something else going on there that is leasing this business?
Yes, you got it by far. And the biggest news there is the smartphone side. Normally, we'll see a big jump up in the September quarter because there's a few filmmakers doing the launches at that time. This year, we've seen some push outs, some small push outs of launches, even though they still happened. And therefore, our our December quarter is expected to be the peak for us in with regards to the sell in for battery protection So we've so the main, the guidance for Q for December quarter is a strong Q4 for calendar Q4 for communications led because of the battery PCM that's going to be peaked in that quarter.
And I guess turning to the JZ, so maybe if I can try to get it this another way, originally the plan was to, the JV Phase I that's going to help you hit 150 and you guys are already there now. Can you give us what the new revenue level would suggest to us like at the JV at full phase 1 for the combined company?
Sure. Yes. And right now, our quarterly revenue is at $150,000,000 level. So, at this point, the KB12 fab is not fully ramped, but then ramped quite a bit already. So in the The thing is, and there are a couple of factors here, elements here.
One is yes, in the second quarter, JV continued to ramp supportive in a portion of our revenue growth. On the other hand, our product mix improved, in the last the couple of quarters. So now this revenue per wafer actually increased, some. So in that way, our own organ fab and then also foundry foundries actually supporting more revenue, for us. So that's the dynamic in there.
So actually, as I said, and actually, I view this as a better come for us. So that means the JV company can still support our further growth. So in terms of how high you can support, I wouldn't expect another another Canon in and also, and then that's a doable, from there. So that's the current estimate.
Is there, can you give us any indication of the timing that you might start the phase 2 and maybe the different options you have in terms of like the magnitude of that? I understand the shell has been built out already So a lot of the CapEx is already spent. So yes, can you just what type of plants you might have in terms of adding incremental capacity for phase 2?
Sure. Right now, actually, we are planning for the next phase. Whether or not there's another full phase or some incremental, and expansion, you know, or C, as Mike just mentioned, and you know, that phase 1, the clean room and the equipment, and there are still some rooms to and adjust and, you know, to resolve some bottleneck areas and so that can give us more output And also, the phase 1 clean room is still not as crowded as our organ fab, in room. So by incrementally install some, equipment that can also helped lift up some, capacity. So overall, yeah, we'll do more planning we'll see that, adjusted interim sulfur next phase of the, JV
expansion. Great.
Thank you.
Yes. This plan in 1, okay, we are not in a hurry. Cost, you know, as we report, actually, in next year, we should still be, still be comfortable. So we will take time to time it, because the planning phase is very crucial. If you plan aggressively, you're going to wind up lose money if you plan not enough there, you're going to miss the opportunity.
So we do want to spend time effort to carefully come out in our best calculation, whatever, to do that. So at this moment, we're still in the planning stage and it's not from yet. That means that the detail yet. Thank you.
Great. Thank you, Mike. I really appreciate that color.
This time. And I show no further questions at this time. I would now turn the call back to management for any closing remarks.
This concludes our earnings call today. Thank you for your interest in AOS, and we look forward to talking to you again. Thank you.
Thank you.
Ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now all disconnect.