Ladies and gentlemen, thank you for standing by, and welcome to the Alpha And Omega Semiconductor Reports. Financial Results for the Fiscal Second Quarter 2020 Conference Call. At this time, all participants are in listen only mode. After the speakers presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Leon Jong. You may begin.
Thank you. Good afternoon, everyone, and welcome to alpineomedicsemiconductors conference call to discuss fiscal 20 22nd quarter financial results. I am Soyan Dong, Investor Relations Representative for the company. With me today are Doctor. Mike Chang, our CEO Yifan Liang, our CFO Steven Chang, our Executive Vice President.
This call is being recorded and broadcasted live over the web and can be accessed for 7 days following call via the link in the Investor Relations section of our website at www.aosmd.com. Efan will begin with a review of financial results for the quarter and Mike will review the business highlights followed by Stephen will provide a detailed segment's report. After that, Yifan will conclude the guidance for the next quarter. And answer session. The earnings release was disputed by Business Wire today, February 5th 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 measures because we believe they provide useful information 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 course of 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 risk and uncertainties that could cause our actual results to differ materially from such expectations.
For more detail, the description of these risks and uncertainties, please refer to our in today's call. Now I'll turn the call over to our CFO, Yifan, to provide an overview of the 2nd fiscal quarter financial results. Ipad?
Thank you, Sonia. Good afternoon, everyone, and thank you for joining us. Revenue for the December quarter was $117,900,000, flat when compared to the prior quarter and up 2.6% from the same quarter last year. In terms of product mix, modified revenue was $101,500,000, up 0.9% sequentially and up 8.8% year over year. PowerIC revenue was $14,700,000, down 6.8% from the prior quarter and down 24.4 percent from a year ago.
Assembly service revenue was $1,700,000 as compared to $1,600,000 for the prior quarter $2,200,000 for the same quarter last year. Regarding the segment mix, computing represented 41.3 percent of the total revenue, consumer 18%, power supply and industrial, 21.3%, communications, 17.9% and service 1.5%. Non GAAP gross margin for the December quarter was 28.3%, unchanged from the prior quarter and down from 29.2 percent for the same quarter last year. Non GAAP gross margin excluded $400,000 of share based compensation charge for the December as compared to $400,000 for the prior quarter $500,000 for the same quarter last year. Non GAAP gross margin also excluded $8,500,000 of production ramp up costs related to Chongqing Joint Venture for the December quarter as compared to $6,000,000 for the prior quarter and $3,500,000 for the second quarter last year.
Non GAAP operating expenses for the December quarter were 25.7 compared to $25,600,000 for the prior quarter Non GAAP operating expenses excluded $2,100,000 of share based compensation charge as compared to one $900,000 the prior quarter and $3,900,000 for the same quarter last year. Both GAAP and non GAAP operating expenses included $3,000,000 of digital power team expenses for the quarter as compared to $2,800,000 Our digital power controller team continues to engage with customers in product designs and is making steady progress toward our product roadmap. Non GAAP EPS attributable to AOS for the quarter was $2.3 per share as compared to $0.26 for the prior quarter and $0.30 for the same quarter last year. AOS generated $12,500,000 operating cash flow in the December quarter as compared to $4,200,000 net cash used in operating activities and $22,100,000 operating cash flow generated in the same quarter last year. Cash flow used in operations attributable to the JV company was $3,500,000 for the summer quarter compared to $3,000,000 provided operating by operating activities for the prior quarter and $9,100,000 used in operating activities for the same quarter last year.
Consolidated EBITDAS for the December quarter was $13,900,000 compared to $14,500,000 for the prior quarter, and $13,500,000 for the same quarter last year. EBITDA attributable to AOS for the quarter was $12,500,000 as compared to $13,800,000 for the prior quarter and 15 $700,000 for the same quarter last year. Now let's look at the balance sheet. We completed the December quarter with cash and cash equivalents of $107,200,000 including $86,100,000 at AAOS and $21,100,000 at the JV company. This compares to $103,100,000 at the end of last quarter, which included $88,000,000 at AAOS and $15,100,000 at the JV company.
Our cash balance a year ago was $146,600,000, including $93,600,000 at AOS and $53,000,000 at the JV company. Bank borrowing balance at the end of the December quarter was $148,500,000 including $36,900,000 at AOS and $111,600,000 at JV company. In the December quarter, AOS and the JV company repaid $4,100,000 and $16,400,000 of the existing loans respectively. The JV company also borrowed $30,900,000 working capital. Net trade receivables were $33,900,000 as compared to $39,300,000 at the end of the last quarter and $33,900,000 for the same quarter last year.
Day sales outstanding for the quarter was 28 days compared to 25 days in the prior quarter. Net inventory was $117,600,000 at the quarter end, down from $118,600,000 last quarter, and up from $103,000,000 in the prior year. Average days in inventory was 114 days for the quarter flat as compared to the prior quarter. Net property, plant and equipment was $416,100,000 as compared to $404,000,000 in last quarter $380,800,000 last year. Capital expenditures were $15,400,000 for the quarter, including $12,100,000 at AOS and $3,300,000 at the JV income.
We estimate that the capital expenditure for AOS core business to stay at 6 Before I turn the call over to Mike, I would like to update you on the progress of our JV company. During the December quarter, the 12 inches fab and assembly and test production continued to make progress as fab to approach the target run rate by the September quarter of this calendar year, subject to general and overall market conditions. With that, now I would like to turn the call over to our CEO, Doctor. Mach Chen, who will provide the business highlights for the quarter. Mike?
Thank you, Yifan.
Despite The challenging conditions, we remain focused and continue to execute well during the December quarter. Our revenue came in within the guidance range, achieving both year over year and a sequential revenue growth. Meanwhile, our gross margin benefited from improved operational efficiency. Most importantly, AOS reported healthy non GAAP earnings and our core business generated strong operating cash flow. Looking ahead to the March quarter we expect weaker than normal seasonality in our business.
I'll speak to one factor that is creating a headwind and Yifan will provide more details on the total outlook in his comments. There has been wide coverage of corona virus outbreak in China. Our employees will be in is our top priority. I'm grateful that all our employees are safe. In addition to the mandatory extended Chinese New Year Harley game, we have implemented additional travel bans, screening procedures as well as self quarantine measures.
While we maintained a partial production throughout the holiday, we anticipate that it will take longer for our factory to return to full production during the March We have factored the impact of this disruption into the guidance we are providing today. As you can imagine, this is a developing situation and so is its potential effect on the global supply chain. We will continue to evaluate the impact on our business as a further development warrant. We have been consistently pushed forward with our plan. To create demand with the differentiated product across key market segments.
And at the same time, we have been accelerating the penetration and the diversification into multiple global brand customers. For computing, our customers are increasing value, high performance products. As underlying trends such as artificial intelligence, big data and internal things are reshaping computing industry. With our highly efficient products, we were able to penetrate every single key PC OEM, maintaining a strong position at all of them. Coming to the IGBT business, we demonstrated solid traction by posting 40% year over year growth once again in calendar 2019.
We continue to expand our footprint at a broad base of home appliance customers, with both discrete and the module solutions. Our mobile business including smartphone battery pack and quick charger applications was the fastest growing business in percentage terms last year. As we read, the high volume production for multiple global OEMs. As we secure additional layers of business at a multiple OEMs and ODMs, we remain confident about the strength of our mobile business. In order to address its growing demand from global brand name customers, we carefully planned the supply chain expansion which centered on the top end fab and assembly and cast facility in Chongqing.
Our customers appreciate our commitment to enabling their growth and support our goals Looking beyond March quarter, we think that we are well positioned to capitalize on the demand we have created. Last year, although we garnered meaningful design wins, we were not able to fully satisfy peak season demand. Due to supply constraints at our Oregon fabs. As a result, we had to make difficult allocation decisions as to which customer and applications to support and this hindered our growth last year. This year with added capacity at Chongqing JV, we are in a much better position to supply our customers as they ramp up their production volumes, especially since both smartphone and PC applications are expected to hit their usual seasonal peak in the September quarter.
Therefore, we still expect to approaching the phase 1 target run rate by the September quarter this year. This expanded capacity will allow us to better capture potential growth opportunities. And fuel our diversification effort as we benefit from the momentum seen across a broad array of growing applications. We have the right strategy in place and the outstanding teams to execute it. We have demonstrated remarkable progress, especially in 3 key areas.
Creating demand, penetrating top tier global OEMs with value added solutions and expanding production capacity to fulfill demand. This in return is building great momentum with ever increasing design wins in the pipeline and share gains at a multiple customers across key market segments, which validates our confidence in driving sustainable growth. We remain encouraged by the opportunities ahead of us and are fully committed to moving forward with our growth plans. And then navigating the headwinds and the volatilities we are facing in the short term. Now, I'll turn the call over to Stephen for a detailed segment report.
Stephen?
Thank you, Mike, and good afternoon. Let me start with computing. It represented 41.3 of our and down 12 point still not enough to fully satisfy the market demand. However, the ramp high value products such as Vcore and graphics cards enabled modest growth in this segment business. The CPU shortage is anticipated to persist at least through the first half of calendar twenty twenty, especially with small core.
This has been compounded by and its mid single digit sequential decrease in the computing segment. Now turning to the Consumer segment, which represented 18% of total revenue and was up 13.8% year over year. We had originally expected to see a double digit sequentials decrease due to TV seasonality. However, we saw healthy demand for various consumer applications during the quarter. As Mike mentioned earlier, strong customer momentum with our leading portfolio of IGBT solutions continued especially with home appliance applications bolstered by high performance and reliability required by these applications, our IGBT product line posted a 40% annual increase in calendar year 2019 after growing 43% in calendar 2018 year over year.
As we expand our customer base in home appliances, and the celebrate production ramp at global OEMs, we expect the IGBT business to increase another 40% in calendar year 2020. Looking into the March quarter, we expect a moderate seasonal decline in the Consumer segment Next, let's discuss the power supply and industrial segment. This segment accounted for 21.3 percent of total revenue. Down 7.6% sequentially and up 13.5% year over year. While we grew in applications such as solar power and industrial fans, the seasonal decrease in other ACDC power supply applications was sharper than anticipated.
As one of the key suppliers of quick charging solutions, We believe that we are well positioned to benefit from the
higher wattage power supplies. However,
entering into what is typically the seasonal low point for our quick charger business we expect to Finally, let's move on to the Communications segment, which was 17.9% of revenue in the quarter. Down 1.1% and up 32.5% year over year. Our highly efficient battery protection business continues to be strong during the December quarter and we maintained the segment's revenue similar to the peak level. Since each global smartphone OEM launches new models at different times throughout the year, serving multiple global OEMs helps us offset some seasonality. To drive growth on a modest increase in the communication segment in the March quarter.
With that, I will now turn the call over to Yifan for additional comments and guidance.
Thank you, Steven. As disclosed in our press release We are cooperating with federal authorities in their recent investigations of our export control practices with Huawei and its affiliates. We have maintained an export control compliance program and have been committed to fully complying with all applicable laws and regulations in connection with this investigation, we have suspended shipment of our products to Huawei based on the order issued by Department of Commerce. This suspension is expected to reduce our revenue for the March quarter by approximately $4,000,000 to $5,000,000. We are working with DOC to resolve this issue Although currently, we do not know when we will be able to resume shipment to Huawei if at all.
In addition, we expect to incur $1,000,000 to $2,000,000 of professional fees during the March quarter in connection with the ongoing government investigation. The DOC order applies to only our shipments to Huawei. Our sales to other customers are expected to continue. And grow beyond the March quarter unaffected by the order. Since this is a pending and confidential matter, We will not be making additional comments beyond the facts that we have shared with you on this call in our press release and the related financial impact that we can assess at this time, except as required by law.
Future inquiries will be directed to these statements. Based on this development and estimated production loss in China due to the corona virus outbreak and extended Chinese New Year holiday, our expectations for the third quarter of fiscal year 2020 are as follows. We expect the revenue to be between $106,000,000 $110,000,000. In addition to the impact of suspended shipment to Huawei. This guidance also reflects an estimate of $6,000,000 to $7,000,000 reduction in revenue due to the production loss resulted from the coronavirus outbreak an extended Chinese New Year holiday based on the information we have as of today.
We expect GAAP gross margin to be 17.3 percent plusor-1 percent. We anticipate non GAAP gross margin to be 26% plusor-1 percent. Gross margin guidance reflects the inefficiency caused by production disruptions due to the coronavirus as well as suspended shipments to Huawei. Note excludes $400,000 of estimated share based compensation and $8,500,000 of estimated production ramp up costs relating to the JV company. We expect GAAP 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 $25,500,000 plus or minus $1,000,000. Both GAAP and non GAAP operating expenses include $3,000,000 to $3,300,000 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 investigation $2,000,000 of estimated share based compensation tax expense should be approximately $400,000 to $600,000. We anticipate a loss attributable to non controlling interests to be around $4,700,000. On a non GAAP basis, excluding estimated production ramp up costs relating to the JV company, This item is expected to be approximately $300,000.
As part of our normal practice, we are not assuming any obligations to update this information. With that, we'll open up the floor for questions. Operator.
And we do have a
Good afternoon and thanks for taking my questions. I certainly appreciate it. Quickly, I guess if we're kind of thinking about, the the different moving pieces here, obviously, Huawei is a is a drag. And if I can call correctly, previously that was a fairly, negligible part of the business. Can you kind of talk about how that has trended, I guess, since we've, started the the the process of of, the ban until now and kinda has that the revenue changed much in that time?
Has it come down or are you shipping about the same as you were previously? Just kind of how those revenues have trended, I guess, for the last several quarters?
Sure, David. As we mentioned, we have maintained an export control compliance program. We have been committed to fully complying with all applicable laws and the regulations. So right now, we are cooperating with the government agencies in their investigations right now. So this, because this is a pending and then confidential matter.
We said we do not intend to make additional comments beyond the facts and let them know we have shared on this call and our earnings release, except as required by law. So that's will stop there. Our March quarter guidance, we factor in those impacts and we have already said about $4,000,000 to $5,000,000 revenue impact for our March quarter. And then some expense impact that we also disclosed there. So what this to me, I mean, this is near term, short term headwinds.
And so we'll get through it and then we'll press on with our growth plan longer term and so that we'll continue to grow and diversify our customer base and and applications we serve. So you know our models and those models and still there in the shooting range even now with some additional challenges. So now we'll face and the March ago.
Yeah. And this is Steven. And just wanna speak on it. We have our the overall, you know, our our push towards diversification. Our biggest markets right now are PC and smartphones.
And few years, and there's been a big push by the company to actually diversify our customer base within those core segments And we've been pretty successful at, you know, expanding that customer base and geographically, also in in order to reach all the major customers in each of those spaces. So we are encouraged by that progress and that helps us also as we move forward and because of that base is wide.
Okay, fantastic. Thank you. And then if I'm thinking about the segment that is the largest contributor or Rajat should be thinking about that $4,000,000 coming from. Is it dispersed amongst the different units or is it more heavily related to one or the other?
We can't comment specifically again about, you know, fall weight specifically. But we did, you know, our guidance in overall as well as in each of the segments is reflecting the impact of that.
Okay. Thank you. And then just kind of about from an OpEx perspective, understanding some of the lumpiness at the moment. And, it looks like the $25,000,000, guide for the next quarter is coming down from the prior quarter. Can you talk a little bit about what you're doing in terms of the OpEx, what those trends are containment strategies.
Anything of that sort that might help us get a better handle on the OpEx longer term?
Sure. This March quarter's OpEx guidance, non GAAP guidance, $25,500,000 is pretty much flattish compared to the December quarter's actual numbers. So that's our current view that would maintain our OpEx at this level and then we'll continue to invest in certain strategic initiatives such as Digital Power product line. We'll continue to do that. And so right now, we are at full speed to pursue our growth plan.
Okay. And
guess if I kind of do the math here and I'll I'll look at the number that are being taken out for Huawei and then, of course, for the, the coronavirus impact, That would add about $10,000,000 to $10,500,000 to the total, from your guidance. So if I'm looking at, that 110, that puts about 120 to 121. Is it fair to say you're seeing that demand, that same level of demand, through the business, or is there anything that I'm missing? Is, you know, just think about that growth trajectory, is a fairly nice step.
Yes. I mean, that's in the ballpark number. I mean, seasonally, quarter is our lowest quarter normally. We are seeing some, the good design wins and engines and adding variable. Various customers.
And so on our March quarter's guidance reflected despite the near term headwinds and so that you subtract it out. Yes, right now, that's where we are. Okay.
And then one more if I can, Stephen, maybe you can answer this, but if we're kind of thinking about, the the allocation and where you're still on allocation amongst your customers. Can you can you kind of parse that out for us where, I guess, is the greatest demand? I know at one point that the PC has been kind of, taken out of the, the, the drive and slipping in other higher, margin products in, are you still doing the same type of, strategies or is there anything in terms of the different allocation mix that you could point to?
Sure. I can talk about that. So last year, it was a calendar year. It was a bit of a struggle for us cause, we were on allocation. And as I mentioned before, we're, you know, we're ramping in all these, meter customers, in PC and smartphone specialty.
Both of these all usually peak at the same time during the September quarter. So last year, we had to be very optimal or, in, optimize in our loading, in our preparation for that. To make sure that we could keep, all the key customers happy and, you know, and matching our our our priority. And, and this year, We've we're actually encouraged because we have been working on expanding our supply chain. We've been talking about our Chongqing 12 inches mansion with that joint venture.
This is already beginning to ramp, and we believe that this is going to help us to provide a lot more flexibility in the way that we support our customers. So, yes, you know, I believe that we'll still have some allocation issues to deal with, but are we have a lot more options now with Chongqing and in order to address not only the peak demand that's coming during the peak season, but also to support all the new business that we've been working to expand and get into.
And our next question comes from the line of Craig Ellis
Harlan Lynch on for Craig. Thanks for taking my question. Just wanted to start with the joint venture and kind of the ramp there. Obviously, the coronavirus is an unwelcome headwind, but I think there was last quarter, you had said, that there was going to be roughly $7,000,000 in revenues, in this past quarter. And then looking out to the September quarter, you know, obviously that $150,000,000 run rate, we get to, you know, 37a half 1000000 in revenue per quarter.
As we think about the dynamics past this March quarter, where, what end markets are going to be driving that big leg up at the joint venture, is it going to be coming from smartphones? Just curious as how we think about post March quarter getting to that $150,000,000 run rate off of what obviously is a little bit of a lower rate than maybe hoped in the March quarter.
Okay. I'll address your questions. First part of your question and Steven can talk about the product mix. What we have been saying is, we're targeting to ramp up the 12 inches fab you know, joint venture, to approach the target run rate quarterly run rate in the September quarter. Well, it doesn't mean it's a linear progression.
So from last year's September quarter to this year's September quarter. We anticipated around a year, 12 months or so ramp up time for the new fab, but it's not linear. So right now, we even given that, near term headwinds, you know, will still remain to target the September run rate to get to that run rate. So I mean, that's our overall goal at this point. I'll let Steven talk about what type of products we will run over there?
Sure.
So, regarding the applications that we're serving for Chongqing, we're actually servers. Moving several of our technology platforms over there in order to help support the growth, especially in PC and smartphones. Those will probably come first. We have a lot of high runners that are and that we will that we're planning to move over there in order to help balance out the loading, within our whole supply chain. So we'll be targeting those first, but we also are going after other applications as well too.
So this, the that has several platforms again being that will be supported from the 12 inches and the Tungsten joint venture. So again, we have a lot more flexibility to support that. So not only for existing business to help balance the load, but also to support new business.
Got it. And just to kind of put a fine point on it, that means that we could expect maybe in the June September quarter, we could see above seasonal growth or above what we've seen historically just given how much more capacity you guys have fill demand versus, say, last year or 2 years ago where you were still, you know, incredibly supply constraints. Is that fair?
That's correct. And to be fair, we will still be on allocation for certain areas, but with home chain, we have a lot more ability to support that peak season.
Got it. And then, so turning to the digital power side, obviously, OpEx has kind of bounced around, between, looks like, 2.8 and $3,100,000 per quarter. Two questions there. 1, is that kind of are we now at a steady $3,000,000 per quarter in operating expense, so $12,000,000 a year. And then on the second, can you touch on just what the demand has looked like?
In terms of breadth of customers, you know, or where are we in terms of, is it one big customer a few big customers, just where are we with that rollout? Any color there would be great.
Okay. I'll comment on the OpEx portion first. And then, I'd like Steven to comment on the progress. In terms of an OpEx and related to our Digital Power team, yes, And right now, it's running around $3,000,000 also per quarter. Expenses could fluctuate, I mean, from quarter to quarter depending on the engineering activities and I mean, I would think it probably in the range of, 3,000,000 to 3,500,000 per quarter, that type of range.
I'll let Steven comment on the progress.
Sure. So, we're pretty pleased with the progress so far in digital power. Last year was definitely mainly product and development and early engagement with customers. As we kind of reach into the end of last year, this is set up Glen a bit. And we are getting deeper into customer engagement as several customers.
And we would have happy with what we see. But and we expect to start to turn some of these opportunities into design wins, convert them into revenue soon. And we will be providing some more guidance on this in the coming quarters, but we are happy with what we see so far.
Got it. And then, just two more for me, quick ones. And then I'll jump back in the queue. On inventory dynamics, it was good to kind of see inventory date a days of inventory rise a little bit quarter over quarter, because I know you guys had said before that it was you guys were running a bit seen. Can you touch on some of the channel inventory dynamics both for you guys and kind of any color about industry broadly?
I know you had said that Intel CPU supply remains tight. But any kind of color what you're seeing in terms of inventory destocking? Obviously, we just had this long period for where things kind of destock pretty rapidly?
Okay, sure. For our own channel inventory, yes, right now is at the low end of our target range, which is 2 to 3 months. So for us and now it's on average and so we're still at pretty tight inventory level. In terms of channels. And right now, the overall channel inventory and overall market conditions I think right now, we need to reassess after Chinese New Year because of this corona on virus outbreak.
I mean, this one could potentially the hit the global supply chain. Right now, this virus situation is very fluid and it's still evolving. So we need to closely monitor that its impact on the global supply chain and overall market conditions.
And have just to clarify that, how has some of the China coronavirus has that impacted supply and demand dynamics within the last 2 weeks or so? How has that kind of changed the situation?
Well, last couple of weeks, has been Chinese New Year. So, I mean, a lot of the China Taiwan, a lot of Asian countries, they're they're on holidays. So right now, it's hard to say, you know, this is still pretty dynamic. Need time to to closely monitor and evaluate because there are some productions from our customer side and whether or not they can resume their productions to the food capacity how soon they can get to that point. And also on our supplier side, we also need to evaluate how soon they can start in their productions for our own factories in China.
Pretty much our entire assembly test and back end productions are all in China. So then, you know, we also to evaluate. And once those workers come back on February 10th. That's now where the one isn't supposed to come back. But, you know, given the current coronavirus situation, we also implemented self quarantine policy, you know, even though they come back and, you know, they may have another 14 days.
Quarantine time. So all those things are kind of still evolving and developing. So we we need to keep close eye on those situations.
Got it. All right. Thanks guys. I'll hop back in the queue.
And we have a question
Yeah. Thanks for taking the question. And, appreciate all the transparency on the things that are going on in the business. I wanted to really follow-up on some of the things related to guidance. And some of this may have been covered earlier.
I was on a different call. And Carlin was doing a great up following up on some of the specifics. But, as I look at guidance, it looks like there's an $11,000,000 revenue impact for two reasons, and I want to understand them much better. First, with respect to the China coronavirus allowance that you're making of 6000000 to 7000000 how much of that is simply on the supply side and some of the things you just mentioned in Chong King, Yifan, versus any of the demand side disruption that, that you may be seeing and maybe to put that First question in context, you can tell us how much Sean King related revenue you had in the December quarter and with the 6 to 7 $1,000,000 adjustment, how much is embedded now in guidance or if all of the Chaun King's fabs, revenues are excluded from guidance?
Okay, sure. Right now, the $6,000,000, $7,000,000, our estimated is primarily we estimate based on the, our production situation. You know, the with this extended Chinese New Year holiday another 7 days. We lost and with the 14 days quarantine and policies. We implemented it.
So that potentially will have some other, additional disruptions on our production. So $6,000,000 $7,000,000. And that's, reflecting there. Overall, backlog and bookings are healthy at this point. And so depending on the the customer's check after Chinese New Year after they come back probably, you expect gradually, we'll learn more from our customers, at this point.
So that's a $6,000,000,000, a more in fact, an estimated based on our own production situation.
Yes, so this is Steven. So on the demand side, demand side, we haven't seen any major impact yet. We do see however, we do see that our direct customers, they also have operations running in China as well too. So they're seeing the same they're dealing with the same issues and that we are as well. So we do see some impact there, but right now, it's also overlapping with our own production delays because of the labor force taking a little longer to come back.
So where we are reflecting that in our guidance, where we are, have confidence that the current demand actually is still looking very healthy. And, but we will have to work temporarily through this challenging time for China. As we, as we deal with the situation.
Okay. The 2 follow ups are Glenn, Steven, it sounds like then you're saying that, that share loss risk is mitigated given that this is a headwind that your customers are accounting, but can you, can you speak to any share loss risk that might be out there if you're unable to fill existing demand with products your customers accounted on. And then Yvonne, what gives you confidence that the fab will be up and running and delivering output so that it could in the calendar second quarter or fiscal 4th quarter be able to get back to a revenue level that would meet the phase 1 ramp target you have for the September quarter. So that's more of an operational question.
So regarding the demand question, right now, we're not anticipating any share loss as a result of that right now. We believe that the it's mostly affecting right now this return to work. Certainly, if things change, it could be a different story, but it probably won't be us that's affected as well. So on the demand side, that's what we see right now.
Okay. From the estimate. And I mean, this overall, I mean, right now, that's what we can see and what we estimate. Based on the information we have as of today, this coronavirus and could potentially it could last, I mean, into a, 2 quarter and mean, nobody knows, we'll give an update in the future if needed. Generally, I mean, there's a virus is what based on current information is more like will fade away when you have a hotter temperature weather.
So that's when using some comparison with the SARs like 15 years ago. It was an outbreak in the spring time and then went away in the late spring and early summer timeframe So that's our current information we have. In terms of September run rate and that's, of course, subject to the overall market. Conditions. Right now, based on our design wins and wins pipelines and then our customers ramp up schedule.
We are expecting PC customers and from customers granting to the peak season in the September quarter at the same time. So that's where we're we need the capacity the most. So that's margin forward, we have our longer term growth plan and then we'll press on it.
This is Mike Chang. Talk about a long term, which is just few years, it might be too long. Okay. This company, you have a clear roadmap to go beyond $1,000,000,000 company as we've been talking about in the last year or so. And the matter because this company has a determination to build out the company, build infrastructure to expand our product technology and application all across wider and deeper.
And also we migrate in the upper application area and become more more, application specific. So the moment is there, the strength is there, the capability is there. Yes. So we're facing a short term headwind, but, however, this headwind will be over. And then our course was when I changed.
So with this company, we have 4 companies to purchase that to pursue that our original goal.
That's helpful, Mike. Appreciate the color. And then I wanted to switch gears and just make sure I understood the Huawei situation. Can you please identify when you were notified by the DOJ about the inquiry. Is there any revenue that's included in the fiscal third quarter guidance associated with Huawei?
And can you just put the $4,000,000 to $5,000,000 allowance that you called out in your press release as a headwind, to the quarter in the context of what you would have shipped to Huawei, say, in the December quarter and the September quarter for us. Thank you, guys.
Sure, Craig. This DOC order, 1st of all, this DOC order applies only to our shipments to Huawei, so our sales to other non Huawei customers are expected to continue and grow beyond March. Quarter. So given that, I mean, since this is pending and confidential matter. We do not plan to make any additional comments beyond what we shared with you on this call and in our press release.
So unless it's required by law, so any future inquiries about this case and this instance and will be directed to those statements.
All right. Well, I wanted to give it a try. Thanks, Yifan.
And we have no further questions. And I'll turn the call back over to your speakers.
Sure. This concludes our earnings call today. Thank you for your interest in the OS and we look forward to talking with you again next quarter. Thank you.