Ladies and gentlemen, thank you for standing by, and welcome to the Alpha And Omega Semiconductor Reports Financial Results for the fiscal third quarter of 2020. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Young Zhang. Thank you.
Please go ahead, madam.
Good afternoon, everyone, and welcome to Alpine Omega Semiconductor's conference call to discuss fiscal 2020 third quarter financial results. I'm Soya Zeng, Investor Relations representative for the company. With me today are Doctor. Mike Chang, our CEO Tifang Liang, our CFO and Stephen Chang, our Executive Vice President. This call is being recorded and broadcasted live over the web and can be accessed for 7 days following the call via the link in the Investor Relations section of our website at www.aos md.com.
Mike will begin with a review of business overview for the quarter. And Stephen will provide a detailed segment report. After that, Yifan will continue with a review of financial results for the quarter and guidance for the next quarter. The earnings release was distributed by business wire today, May 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 our operating performance that should be considered by in conjunction with the GAAP measures that we provide. A reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release. We remind you that during the conference call we'll make certain forward looking statements including discussions of 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 more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC We assume no obligations to update information provided in today's call. Now, I'll turn the call over to our CEO, Mike, to provide an overview of our business and the impact of COVID 19 pandemic. Mike?
Thank you, Soya. Welcome, everyone, and thank you for joining us for our March quarter earnings call. As we navigated the unprecedented challenges of these COVID 19 pandemic, we think It is important to update you on our business operations and how we are staying resilient. Before we begin, the usual review of quarterly results, I will take a few minutes to talk about the challenges and risks we face and our actions to mitigate them. As I said, on our last earnings call, our top priority is health and well-being of our employees and their families.
In addition to the mandatory measures in access by federal States and regional agencies, we proactively implement the precautionary measures and establish operating guidance, guidelines to safeguard our employees and their family. As part of our business continuity plan, we instituted a work from home policy before it was mandatory. This helped us mitigate the impact of certain disruptions to our operations and ensured that our employee had a full access to the connectivity infrastructure required to work remotely. We are thankful that our 4000 of our employees are currently safe and and our global operations are running. In addition to safeguarding our employees, we are committed to fully supporting our customers during these time times.
When we discuss our outlook for March quarter back in early February, our guidance is factored in an estimate of our lost production in China. As it turned out, production in China was severely disrupted during February. However, we were fortunate that we maintained partial production throughout the Lunar New Year Harley game, you know, which we ran to 20 fourseven. When more people return to work after the holidays, our employees went above and beyond their typical role to ensure delivery of our products, while complying with various governmental order and managing those synergies. The Oregon effect also run nonstop during the quarter.
Our diversified manufacturing footprint helped us quickly respond to shifting market demand. Since March, our total production level has to recover the 6th dividend faster than we anticipated. Today, I am pleased to report that we are running at the level we expected. Obviously, COVID-nineteen negatively impact our customers. Some of them are recovering more slowly than others.
The phosphorus factory located in the COVID 19 EPU Centers, while others are exposed to greater supply chain disruption because they stores numerous components to complete an entire kit of parts. Public restrictions and logistical challenges also restrict our ability to support customers. With demo boards evaluation kits and design in support. With the utmost dedication, we are working closely and creatively to support our customers in every way we can. We are providing excellent service and the meeting demand by being flexible and nimble with production schedules.
Thus demonstrating solidarity with our customers. As of this stage, we are able to walk around temporary disruptions to achieve our operating objectives. While visibility beyond June quarter is very limited, given the uncertainty of the impact of COVID 19. We are managing risks by optimizing product mix, regionally seeking new business opportunities and accelerating product time to market. Against this backdrop, we reported an in line March quarter with revenue within our guidance range.
Yifan will provide details of our March quarter results later on the call. Let me now touch on some key business highlights. And what we are seeing in the current environment. Even with the overall downturn in the economy, near term and the demand for computing and gaming is very strong. This is due to the shelter increase and the social distancing mandate, which are driven the need for higher computing power for working from home activities, online learning, and scanning.
The computer industry has been expanding and transforming to support and connect business and individuals worldwide. While we have rapidly diversified into other applications, as mobile and home appliance, we remain the lead in power management, especially in the computing area. Our unwavering commitments in the past years to our computing customers has rewarded us with a much welcomed business during this downturn. In difficult times like these, supporting customers through the uninterrupted supply of our products, is more important than ever. Also noteworthy is that Our Chongqing JV is starting to fulfill its purpose as highlighted in our strategic plan for sustainable growth.
Indeed, he has played a critical role in enabling us to meet the Given the environment, we are prudently managing expenses. We are reducing nonessential spending while also pursuing strategic and critical R and D projects in order to expand our market reach and expand. Stephen is diligently working with our R and D team on these special projects, and he will provide more details later on the call. Finally, I want to highlight that our core business is generating consistent and sustained cash flow. Our balance sheet is strong.
Ivan will provide you with more color on our cash position. As I look at our performance in the quarter, I am both onboarded by and proud of our amazing group of employees. They delivered an extraordinary performance with strong sense of ownership and commitment, while sustaining a safe and healthy working environment. We look forward to a gradual return to normality for our country, our industry and our economy. The power semiconductor market is large and growing, and we are determined and committed to accomplish our mission to rapidly expand and become a top tier supplier in this market.
Now, I will turn the call over to Steven for a detailed segment report. Steven,
Thank you, Mike, and good afternoon. Let me start with computing. It represented 44 point 2% of our and down 8.8% year over year. Starting in the second half of March, we saw a rise in demand for our computing products especially for notebook PCs. As a result of various stay at home orders by governments in response to the COVID-nineteen endemic, DCs have become indispensable worldwide as more people are working from home and transitioning to distance learning.
We don't know how to satisfy this surge in demand for driver Moss and MOSFET V core solutions. Graphics cards have been selling well as demand in both PC and gaming is up. We expect computing to be strong in the June quarter with mid single digit sequential growth. Now, turning to Revenue decreased 5.3% sequentially and was down 2.9% year over year. Our TV business was seasonally down in the March quarter but we now expect it to grow in the June quarter.
We are very excited to share with you that AOS has achieved a strong design into an upcoming gaming system platform that is expected to launch later this year. Our content in this gaming system has to power processors, as well as Type C smart load switches and TBS surge projection devices to protect the control reports. Came systems feature higher resolutions and faster graphics, along with plenty of software features while still needing to meet energy efficiency, temperature, and safety requirements. ALS won this design because our power solutions offer the high performance needed With a ramp up underway, we anticipate double digit growth for the June quarter in the Consumer segment. Next, let's discuss the power supply and industrial segment.
It accounted for 17.8% of total revenue, down 24.6% sequentially and down 10.3% year over year. COVID-nineteen market disruptions in China impacted our power supply industrial business during the March quarter. This was caused primarily by a drop in chargers and adapters used for smartphones and PCs. However, as China recovers, we expect to see a rebound in production and demand. The quick charger application has increasingly been migrating to higher power output from 18 watt to 24 watt and even up to 65 watt.
This performance driven market opportunity comes with higher value content and fewer competitors. And is well suited for our medium voltage products. We expect a return to growth in the June quarter in this segment as the Finally, let's move on to the communications segment, which was 18.1% of revenue in the quarter. Down 8.5% sequentially, but up 41.4% year over year. The Smart phone market was severely impacted by the COVID-nineteen pandemic and the disruption in production and demand is spreading globally.
But we don't have clear visibility on the smartphone market in the near term, we are seeing rebound in demand for our telecom business as 5G continues to roll out. We think we can maintain this segment's revenue in the June quarter. With that, I will now turn
Good afternoon, everyone, and thank you for joining us. Revenue for the March quarter was $106,900,000, down 9.3% from the prior quarter and down 2% from the same quarter last year. In terms of product mix, modified revenue was $89,900,000, down 11.4 percent sequentially and flat year over year. Power IC revenue was $15,700,000, up 7.1% from the prior quarter and down 11% from a year ago. Assembly service revenue was $1,300,000 as compared to $1,700,000 last quarter and $1,500,000 for the same quarter last year.
Non GAAP gross margin for the March quarter was 27,500,000 27.5 percent, down from 28.3 percent for the prior quarter and up from 27% for the same quarter last year. Non GAAP gross margin excluded $400,000 of share based compensation charge for the March quarter as compared to $400,000 for the prior quarter and $500,000 for the prior year period. Non GAAP gross margin also excluded $6,600,000 of production ramp up costs relating to the Chongqing Joint Venture for the March quarter as compared to 8 point $5,000,000 for the prior quarter $3,400,000 for the same quarter last year. Non GAAP operating expenses for the March quarter were $25,900,000 compared to $25,700,000 for the prior quarter $23,200,000 for the same quarter last year. Non GAAP operating expenses for the quarter excluded $2,500,000 of share based compensation charge $2,100,000 of legal costs related to the government investigation and $600,000 impairment charge related to an investment in a privately held startup company.
As compared to $2,100,000 of share based compensation charge for the prior quarter and the $2,600,000 of share based compensation charge and $3,600,000 of preproduction expenses related to the joint venture company for the same quarter last year. Both GAAP and non GAAP operating expenses included $3,100,000 of digital power expenses for the quarter as compared to $3,000,000 for the prior quarter $2,300,000 for the same quarter last year. Our digital power development is also progressing well, and we are close to securing a design win at a graphics card maker. Income tax benefit for the quarter was $1,000,000 compared to tax expense of $600,000 for both prior quarter and the same quarter last year. The tax benefit was primarily driven by the tax relief from the Cares Act.
Non GAAP EPS attributable to AOS for the quarter was $0.11 per share as compared to $0.23 for the prior quarter and $0.22 for the same quarter last year. AOS on a stand alone basis generated $29,500,000 of operating cash flow in the March quarter as compared to $12,500,000 in the prior quarter $9,500,000 in the same quarter last year. Working capital management contributed $22,000,000 in the quarter. Cash flow used in operations attributable to the JV company was $15,200,000 for the March quarter compared to $3,500,000 and $17,500,000 for the same quarter last year. Consolidated EBITDAS for the March quarter was $8,800,000 compared to $13,900,000 for the prior quarter $11,800,000 for the same quarter last year.
EBITDA attributable to AOS for the quarter was $6,500,000 as compared to $12,500,000 for the prior quarter, and $13,500,000 for the same quarter last year. We completed the March quarter with cash and cash equivalents of 110 point $2,000,000, including $99,500,000 at AAOS and $10,700,000 at the JV company. This compares to $107,200,000 at the end of last quarter, which included 80 $6,100,000 at AOS and $21,100,000 at the JV company. Our cash balance a year ago was $139,100,000, including $90,900,000 at AAOS and $48,200,000 at the JV company. The bank borrowing balance at the end of March was $153,600,000, including $34,800,000 at AOS and $118,800,000 at the JV company.
During the March quarter, AOS and the joint venture company repaid $2,100,000 and $6,600,000 of existing loans respectively. The JV company obtained $15,400,000 of working capital loans. Subsequent to the quarter end, the JV company also entered into 2 loan agreements with the local banks for a total of $50,000,000. We believe that this was a largely sufficient to achieve the phase 1 plan at the JV company. Net trade receivables worth $17,500,000 as compared to $33,900,000 at the end of our quarter $28,400,000 for the same quarter last compared to 28 days in $27,400,000 at the quarter end, up from $117,600,000 in the last quarter and up from $107,900,000 in the prior year.
Average days in inventory was 131 days for the quarter compared to 114 days in the prior quarter. Net property, plant, and equipment was $412,300,000 as compared to $416,100,000 per quarter and $391,600,000 last year. Capital expenditures were $16,800,000 for the quarter, including $13,100,000 at AAOS, and $3,700,000 at the JV company. We estimate that a capital expenditure for AOS alone to be in the range of 8% to 9% of the total revenue for the fiscal year 2020. Before I move on to the guidance for the next quarter, I would like to update you on the progress at the JV company.
During the March quarter, the 12 inches fab and assembly facility performed better than we expected, considering the conditions of the COVID 19 outbreak in China. Given this situation of the global pandemic and resulting economic recession, our visibility into overall market demand beyond the June quarter is very limited. At this point, we are unable to determine when we can ramp up the 12 inch fab to its phase 1 target run rate. We will continue to monitor and evaluate market conditions closely and provide further guidance when we gain more visibility. For the June quarter, we expect the JV company to increase production volumes sequentially to support our business growth opportunities as our Oregon fab is running at full capacity.
With that, now I would like to discuss the guidance for the next quarter. We expect revenue to be between $117,000,000 $121,000,000. That gross margin to be 22%, plusor-1 percent. We anticipate the non GAAP gross margin to be 26.5 percent, plus or minus 1%. Note that non GAAP gross margin excludes $400,000 of estimated share based compensation and $5,000,000 of estimated production ramp up costs relating to the JV company.
Have operating expenses to be in the range of $29,000,000 plus or minus $1,000,000. Non GAAP operating expenses are expected to be in the range of $25,700,000 plus or minus $1,000,000. Both GAAP and non GAAP operating expenses include 3 point $2,000,000 to $3,500,000 of estimated expenses relating to the development of our digital power business. Non GAAP operating expenses exclude $1,000,000 to $2,000,000 of estimated professional fees related to the government investigation and $2,300,000 of estimated share based compensation. Income tax expense to be approximately $300,000 to $500,000.
Loss attributable to non controlling interest to be around $2,700,000 On a non GAAP basis, excluding estimated production ramp up costs relating to the JV company. This item is expected to be approximately $100,000. As part of our normal practice, we're not assuming any obligations to update this information. With that, we will open
Your first question comes from David Williams from Loop Capital. Please go ahead.
Hey, good evening. Thanks for taking my question and congratulations on the guidance. It's a very strong revenue And if I kind of look back over the last couple of quarters or couple of years, that looks to be a fairly high level of revenue. Can you talk a little bit about where the greatest level of demand is and maybe what your confidence level is in the guidance range?
Sure, David. This guidance for the June quarter primarily reflected in demand surge in computing and gaming area that we're seeing right now It's some other areas that are not performing to to the level that the last year we saw. For example, in the smartphone areas, some industrial areas, and then those areas are definitely down. For us and with our long term commitment in computing area, this time, we saw a pretty strong surge in the month of March, I would say, started we saw demand for our products. So that's why where we adjusted our productions, And, this time, our joint venture, the 2 joint venture actually provided us with a flexibility of production and a much needed capacity.
To support this sudden surge in computing demand. So I mean, we are managing this surge and what going after those business opportunities. On the other hand, I want to be cautious about the outlook for the second half of the year. I mean, we don't know whether or not this surge of demand or will be a short term or can extended for a while. So at this point, we're very happy in the Chongqing joint venture and support us for much needed supply.
I mean, this might you have anything you want to add?
Well, thank you, Yifan. And thank you, Dave, question. Actually, we're very thankful. Thank god that you're such a typical time. We have to he sees business surgeon And maybe let me speak a little bit about the Joggin JV, if I mentioned about it.
And also this time, and that we really got to benefit from this joint venture. As you know, our core piece in the model is technology and volume all along. The technology will enable us to create a new demand and also, of course, expand benefit more, to newer customers. However, this new business will need a capacity capacity to support. And our Oregon fab from very beginning, we knew, we know that it's a, the capacity is very limited.
And indeed, since last year, it started to be full capacity and this JV, of course, coming in right time. Of course, it takes some time to bring up there. And right now, we are very thankful that a you come in to serve this surge and you start to produce a good result to us and we are very, very thankful.
Fantastic. Thanks for the commentary. It's very helpful. If we kind of think about how much flexibility, how much capacity came out of the JV this quarter. Can you give us anything that maybe quantify that or maybe to what level of revenue was provided by the JV?
Sure. I mean, at this point, and I mean, the because of the uncertainties about the overall market demand. And then right now, there's an R2 say about the second half of the year. Right now, we are unable to determine when we can ramp up this phase 1 to the targeted rate Given that, but that, you can tell from our June quarter's guidance in the I mean, there's incremental, on revenues, on all supported by our Chongqing joint venture. Over there, we still haven't capacity to support even higher demand if this market play out in the well, in the second half of the year.
And right now, just so much uncertainties. And our visibility beyond the June quarter is very limited. So that's we'll closely monitor the market and then react and accordingly. So we'll see.
Great.
You might add a little bit more Okay. Yes, indeed, we still had some capacity in the Chongqing JV to, for more business. However, our first phase, plan is really is to reach the breakeven in the cash flow. So we do have capacity, but not overly, not too much in other words. Okay.
So enough to support it near term, okay. That's the fact. Thank you.
Okay. So you feel comfortable that you can satisfy your demand coming in the June quarter through the additional capacity and in the JV?
Yes, yes.
And then maybe if you have a sense of the channel inventory health, are you seeing maybe pull in orders or anything that would give you any concern in terms of inventory, overstocking or just generally the health of the channel?
Okay, sure. On, well, channel inventory right now, we are at in the mid range of our target, like in 2 to 3 months. And last couple of quarters were at the low end of the channel inventory. This quarter, because of the better than you expected that production recovery, we actually benefited from, this production recovery. So that we can serve better on the on this demand cert.
So right now, the channel inventory, the incremental channel inventory is, was pretty much in the computing area. So that, which is much needed an inventory for the provided to our customers and for the strong quarter.
Okay. Fantastic. And just one more if I can't hear it, and I'll jump back in the queue. But But you talked a little bit about the the controller, and the progress there. How how close are you?
I know you said in the past about the year's end, think there's an opportunity to accelerate that and maybe drive that controller revenue up before the year end.
Hi, David. This is Steven. Yeah. Let me comment on that. So actually our digital power has been addressing 2 markets.
1 has been advanced computing and the second one is telecom. And we're actually pretty close to getting a design win actually on the advanced computing side at a graphics card on maker. And that's it's kind of going into more of a consumer side of that, but we're pretty excited this one. We're hoping and expecting this to generate revenue closer to the end of the year. Once the project ramps up, So we expect that to come as a near term revenue.
The other portions, I think we're still in the development phase in terms of development, working with the customers. So we're anticipating it'll still take some time to develop the revenue for the other portion of the business. So we expect, in a nutshell, we do expect some business in the short term, but it'll be kind of small just to start out with and with some more mild growth going into 2021.
Great. Well, thanks again and best of luck on the quarter. Stay healthy, please.
Thank you. Thank you.
Your next question comes from Tore Svanberg from Stifel.
Yes, thank you. Question on gross margin. So I do recognize the Oregon fab is full. I was expecting a little bit more, fall through from the $10,000,000 to $15,000,000 higher revenue in the June quarter. So is the Is the lower gross margin just a pure function of the revenue mix?
The higher revenue and guidance for the June quarter, the margin, we did not increase much over there. A couple of things. One is that we backed in some ASP erosion and we would expect that the economic recession time, there's some other areas that we would expect some price erosion. Another thing is, and this incremental revenue is pretty much supported by our joint venture. So joint venture by providing pro form a, the production ramp up costs and actually, you can tell the margin benefit will be reflected in the production ramp up cost reduction.
So then in the March quarter, we pro form a out the $6,500,000, $6,500,000 or so. For the June quarter, expecting about a $5,000,000 production ramp up costs and from the joint venture. So that will be the
That's very helpful. And you mentioned a $50,000,000 loan. Could you elaborate a little bit on the terms of that loan? And as far as the usage of that money, is that going to go down to pay down some of the JV debt or is it going to be spent more on CapEx as you continue to ramp up phase 1 and eventually phase 2?
This $50,000,000 of loans that for CapEx and for working capital. So the terms are pretty much similar to our to their previous loans is in the 5 years range and similar interest rate and then a little bit down actually better rates than before. This will be used for remaining on payment for the CapEx and for the phase 1 and for the some working capital. For the company.
And do you have a CapEx number for the JV for this year?
Perfect. And you mean for this fiscal year, that'll be quarter, I would think that a little bit higher than this March quarter's $3,000,000 or $4,000,000 CapEx payment. That just depends on the timing of the payment. So there are some remaining payments they need to make. That's right.
Yes, after the equipment installed and then try run and then for a period of time. And then everything checked out and then they wouldn't make the last payment for those equipment.
Your next question comes from
and team and congratulations on doing such a good job in the March quarter navigating a real volatile environment. I wanted to start just with a couple of clarifications. The first one, with respect to the the prior target for the JV ramp, we had been looking for a revenue ramp to $37,500,000 in the September quarter. And I understand we've got a much different environment, but what I wanted to dig into is is the, the reason that the company is uncomfortable sticking with that guidance because the design wins aren't there to get to the 37 $500,000 or the design wins are there, but maybe the unit volumes on those wins is now different than you thought. Or is it that those 2 things are fine and maybe you're just concerned about, parts from other suppliers that would go in kits that are related to the design wins that you have.
Maybe it's other things, but I'm just trying to understand what the specific factors are and where you are overall. Relative to the design wins that are needed to get to a $37,500,000 run rate for that facility.
Okay, sure. Craig, this is primarily because of the overall market demand. I mean, at this point, and it's so volatile. I mean, so it's kind of in the March quarter, we saw in this market, the shift, I mean, like a roller coaster and then, and then, with the mobile market demand in the town so dramatically. And then later on of the quarter, we saw the surge in the demand for computing.
And then I mean, all those things in the end and also It's a lot of uncertainties related to this pandemic and we don't know how long it will last. And then I mean, those recessions and for sure, recession right now, but then how long and how severe we don't know. And then even after this reopening of, cities and economy. And I mean, on how people are going to behave and react. And then that also another things to be seen, whether or not there's a second wave of COVID-nineteen down the road and in the wintertime, all the one that's a vaccine way out.
And then I mean, a lot of unknowns that's going to impact on the overall global demand for our products. So at this point and then I mean, I'm just unable to give you that guidance. 1, we can ramp up to the target run rate of phase 1. We'll closely monitor it and then it will we will provide further guidance and then when we gain more visibility.
Okay. Going back to a clarification on gross margin, Terry, Victoria pushed out the fiscal 4th quarter, but on the 3rd quarter about 150 basis points better than I expected. So, what what allowed the company to perform so well. And, and obviously, we did reduce estimates into quarter just given the choppy environment, but Were there any incremental positives in the quarter that allowed you to offset some of what was likely incremental COGS costs in a COVID environment?
Sure. In the March quarter, yes, in our gross margin came in and I don't higher than our guidance. It was primarily because of our production recovery was better than we expected. And I mean, we expected the more declined in the production level. So I got to give credit to our employees and then I mean, especially in China, they they thought that through this lockdowns and then shortage of labor for pretty much most of the time, February March.
So then with the limited workforce on over there. And then they, they'd produced much higher output for us through over time through commitment. And really demonstrated in ownership and over there. You know, given the situations, not only the shortage of labor, but also the disruption of logistic some a lot of shortage on some materials in there or even cleanroom masks. I mean, that's for a while and then, they were down to a pretty low level.
And then, I mean, they, they, fall through it. So that contributed to our over all gross margin and then I mean, performed better than we expected.
Got it. And then moving on
to consumer.
Let me get back to the
Sure, Ryan.
This is Mike. Let me add a few words about this Tianjin JV of the focus. Yes, facing this recession and the unknown in the COVID 19th impact, we, I think we should be more conservative. But however, I'd like to point out the progress in the loading in the 20 chip is progressively accordingly and improving. So beyond June, really, look, I, we cannot do come in anything.
We cannot focus on anything, but at this moment, I'm very, very much a priest. By the performance.
Thank you. Okay, got it. Thanks for that, Mike. Moving on to consumer's gaming ramp, so it looks like gaming is accounting for about half of this sequential growth if I've got the bottoms up modeling right in the June quarter. So twofold question.
When you once we exit the June quarter, where will we be with respect to that ramp? Is there further growth coming in September or will you really realize all the benefits of the gaming design win in the June quarter? And then maybe going back and connecting in with, Tori's question, since this is half the sequential growth and given the decline in gross margins, would it be fair to assume that this design win as a high volume design win is coming in below corporate average?
Yes, this is Steven. Let me comment on the gaming things. We're pretty excited to be able to share this because we are winning multiple sockets in this gaming system. And as gaming systems go, definitely they're preparing for a preproduction. At this point, the system is not released yet.
It's going to release in the second half of this year. Hopefully, there's no delays or anything, but we don't see anything as of yet. We do expect our business with this to continue to grow, but it all definitely depends on the customer's own ramp up rate. I think whenever these things launch, there's usually a big push, especially they're trying to do for Christmas. And then after that, they see how how on the septances and then they push further.
But we believe that this will be a pretty good growth area for us. So we're excited by we're also cautious, especially given this coronavirus time.
Do you have any sense for what your share
is with that topic, Steve?
The share, I mean, our share in there or that what you're asking?
Yes, are you still sourcing to the sockets that you're in?
Or do you think you have
a majority, a majority share?
I think it depends on which sockets, it is. Some things we have a better share. Others, we don't. We, the good thing is we actually have a quite a few, number of sockets inside So it depends which 1 year you're talking about, but none of them are sole sourced. They always want multiple sources for these systems.
Okay, great. Good for you guys. And then just connecting 2 of the end markets. So, some fancy footwork to realize the strength in PCs? The question is we look ahead, can PCs get back to some of the highs that we had seen last year with the strength that you're seeing near term team.
And then secondly, we went into this year thinking that that comms was gonna be the sequential or the year on year growth driver and we were allocating capacity towards comms. Sure we've got some unit headwinds, but as you look to the back half of the calendar year and the design win funnel that you have, do you feel like from stable revenues in June, you have the opportunity to really grow that business in the back half or would we really look to calendar 'twenty one? Before we, were able to see significant growth up, correct revenue levels.
Yeah. And let me answer that one too. So, regarding PC, definitely, we're very excited about the growth in PCs. Normally in a regular year, Q1 typically is a down season. So, actually to where we're at and only dropping just a few percentage points in the first quarter is a pretty big unusual type of thing for us.
So we do expect computing to continue to be strong. We all along, we've always talk to PC as one of our core areas of business, and we'll continue to do that. And we continue to also grow there into higher content with power ICs and driver Moss. So we do expect to continue to maintain and grow our foothold in PC. Of course, this is all pending to overall market.
We don't know how long the this current surge is going to last for. But we believe our position at least in what's there is good. Regarding communications, what remains to be seen is how the peak smartphone season is going to be in the in this coming September quarter December quarter. And we know that in at least in the March quarter. Overall, phone shipments were actually down quite sharply.
But actually, our battery business was also down, but actually it wasn't as down as compared to the overall market. We we're still in some pretty good positions at the global filmmakers. But of course, we're dependent upon their own shipments to see how they'll be doing in this upcoming peak season. So yes, there's, I think there is possibility for growth, but there's also a lot of dynamics that we have to account for as well. So we're we hesitate to put a firm number into the 2nd half.
But yes, potentially, we could be growing and going into the 2nd even further.
And just to further clarify that last point, Steven, can you see the the air interface of the design wins that you have, for example, is it visible to you whether you're designed into a 5G or 4G phone in the back half of the year obviously, the unit dynamics are going to be dramatically different, up on how 5g phones are likely to be up 2 to 2.5x in the first half, but 4g phones will be nowhere near. That is good. So, any visibility on whether you're in 4 g or 5 g?
We don't necessarily always know which model we're designing until the things get finally released, but we feel pretty confident about where we're at positioned wise, at least at each of the phone makers that we've been in. So designing wise, I think we're in a good position in terms of what the actual volumes would be we don't know what that's what's going to happen there until it happens. But right now, we are preparing for a ramp we don't know how strong of a ramp would be.
There are no further questions at this time. I will turn the call back over to the presenters.
This concludes our earnings call today. Thank you for your interest in AOS and we look forward to talking to you again next
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.