Good day, ladies and gentlemen, and welcome to the Alpha And Omega Semiconductor Full Fourth Quarter And Fiscal Year 2018 Financial Results Conference Call. At this time, all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Soe Young Jong.
You may begin.
Thank you. Good afternoon, everyone, and welcome to the Alpha And Omega Semiconductor's conference call for fiscal fourth quarter year end financial results. Our fiscal year ended June 30, 2018. This is Soyan Zheng, Investor Relations representative for the company. With me today are Doctor.
Mike Chang, our CEO and Yifan Yang, our CFO. This call is being recorded and broadcast 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.aosmd.com. The earnings release was distributed by Business Wire today, August 8, 2018 after the market closed. 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 use full information about our operating performance, that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non GAAP measures to comparable GAAP measures is included in our We would like to remind you that during the course of the conference call, we'll make forward looking statements, including discussions of business outlook and financial production. These forward looking statements are based on management's current expectations and involve risks and uncertainties that could cause the 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 discussion over to Yifan, our CFO, to provide an overview of the 4th fiscal quarter fiscal year 2018 financial results.
Yifan?
Thank you, Sonia. Good afternoon and thank you for joining us. To begin, I will discuss financial results for the quarter and for the fiscal year ended June 30, 2018. Then I'll turn the call over to Mike, our CEO, who will review the company's business highlights. After that, I will follow-up with our guidance for the next quarter.
Finally, we will reserve time for questions and answers. Revenue for the June quarter was 100 and $9,900,000, an increase of 6.8 percent from the prior quarter and an increase of 12 point 1% from the same quarter last year, driven by the continued momentum of our diversified new products and supported by the increased internal capacity. In terms of product mix, MOSFET revenue was 89 $400,000, up 6.4 percent sequentially and up 16.5% year over year. PowerIC revenue was $17,500,000, up 11.8% from the prior quarter and down 2 3.7 percent from a year ago. Service revenue was approximately $3,000,000 as compared to $3,200,000 for the prior quarter and The June quarter's computing segment represented 43.7 percent of the total revenue, Consumer 19.1%, our supply and industrial 20.1%, communications, 14.1%, service, 2.7% and others, 0.3%.
For the fiscal year 2018, revenue was $421,600,000, up 10% from the prior fiscal year. Non GAAP gross margin for the June quarter was 27 percent as compared to 26.8% in the prior quarter and 26% for the same quarter last year. The increase in non GAAP gross margin quarter over quarter was mainly driven by the improved product mix, partially offset by the inefficiency of factory operations due to the capacity expansion as well as higher raw material costs. Non GAAP gross margin excluded our quarter and for the same quarter last year. For the fiscal year 2018, non GAAP gross margin was 26.9 percent as compared to last fiscal year's non GAAP gross margin of 24 0.2%, representing an increase of 270 basis points.
Non GAAP operating expenses for the quarter were 21.8 compared to $21,700,000 for the prior quarter and Non GAAP operating expenses excluded $2,500,000 of share based compensation charge, as compared to $2,000,000 in the prior Non GAAP operating expenses also excluded $5,000,000 of preproduction expenses related to the Chongqing Joint Venture for the Drum quarter as compared to $2,800,000 in the prior quarter Non GAAP operating expenses included $1,400,000 of digital power team expenses for the quarter, as compared to $1,000,000 in the prior We had hired over twothree of the digital power team that we plan to build. The team has been engaging with customers in product designs. Non GAAP operating expenses fiscal year 2018 were $86,000,000 compared to $73,100,000 for the prior fiscal year. Non GAAP operating expenses excluded $9,800,000 of share based compensation charges and $7,800,000 of pre production expenses related to our Chongqing joint venture in the current fiscal year. As compared to $5,600,000 of share based compensation Income tax expense was $700,000 for the quarter as compared to $800,000 for the prior quarter Income tax expense for the fiscal year was $700,000, which included 2,700,000 dollars one time tax benefit from the impact of the tax reform.
Income tax expense for the fiscal year 20 17 was $3,700,000. Non GAAP EPS attributable to AOS for the June quarter was $3.1 earnings per share as compared to $0.23 earnings per share for the prior quarter and $0.25 earnings per share for the same quarter last year. Non GAAP EPS attributable to AOS for the quarter excluded $2,900,000 of share based compensation charge and $3,600,000 pre production expenses. As compared to $2,500,000 of share based compensation quarter. Non GAAP EPS attributable to AOS for the fiscal year was 1.14 as compared to $0.83 earnings per share for the prior fiscal year.
In the June quarter, we generated $8,700,000 operating cash flows attributable to AOS as compared to $700,000 for the prior quarter and $14,500,000 for the same quarter last year. Cash flows used in operations attributable to our Chongqing joint venture was $19,500,000 for the June quarter as compared to $8,300,000 for the last quarter $900,000 for the same quarter last year. Cash flows from operations are attributable to AOS for the fiscal year were $36,900,000 as compared to $44,800,000 for the prior year. Operations attributable to the joint venture were $33,400,000 compared to $2,100,000 $1,000,000 compared to $12,300,000 for the prior quarter and $14,000,000 for the same quarter last year. EBITDAS for the year was $56,100,000 as compared to $51,200,000 in fiscal year, 2017.
Moving on to the balance sheet. We completed the June quarter with cash and cash equivalent balance of $131,500,000, including $43,300,000 cash balance at our Chongqing Joint Venture as compared to $125,200,000 at the end of last quarter including $46,000,000 cash balance at the joint venture.
$115,700,000,
including $6,100,000 As we previously filed with the SEC on May 11, 2018, our Chongqing Joint Venture entered the lease financing agreement and received approximately $60,400,000 for its equipment purchases and payments of constructions. In addition, AOS borrowed $17,800,000 mortgage against the Oregon fab's land and building to fund its capacity expansion. With that, bank borrowing balance at the end of the June quarter was $91,300,000, including $30,900,000 from AOS and $60,400,000 from the joint venture as compared to $13,200,000 from AOS and $0 from the joint venture at the end of the March quarter. Net trade receivables were $33,800,000 as compared to $28,900,000 at the end of the same quarter last year. Day sales outstanding for the quarter was 29 days compared to 30 days in the prior quarter.
Net inventory was $90,200,000 at the quarter end compared to 90,500,000 for last quarter and $76,300,000 for the prior year. Average days in inventory were 101 days for the quarter compared to 105 days for the prior quarter. Net property, plant and equipment balance was $331,700,000, as compared to $258,800,000 last quarter and $148,200,000 for the prior year. Capital expenditures were $55,100,000 for the quarter, including $13,800,000 from AOS and $41,300,000 from our Chongqing joint venture. Capital expenditures for the fiscal year were $177,700,000, including $49,400,000 from AOS and $128,300,000 from the joint venture.
As we have largely finished our internal capacity expansion, We expect that capital expenditures from AOS for fiscal year 2019 to be down to the range of 6% to 8% of the total revenue. During the June quarter we repurchased 201,011,000 shares of our stock from the open market for approximately $3,100,000 under our existing share repurchase program. Before I conclude the financial review let me update Let me add a brief facilities for assembly and tests and the 12 inches fab by the end of the June quarter as per our plan. We expect to commence small mass production for assembly and test during the September quarter. And start the 12 inches wafer trial production toward the end of calendar year 2018.
With that, now I would like to turn the call over to our CEO, Doctor. Mike Chang, who will provide the business highlights for the quarter. Mike?
Yifan, thank you, and thank you, everyone, for listening us. AOS once again delivered outstanding execution. For the June quarter.
As the new
capacity came online, we achieved another record quarterly revenue and all of the core financial metrics came in above the midpoint of our guidance range. We closed a solid fiscal year 2018, setting a new record with annual revenue and the highest non GAAP earnings per share in 7 years. I am pleased with the annual revenue growth by 10% year over year and a non GAAP gross margin expansion by 270 basis points. I am more pleased that we improved the annual non GAAP earnings per share by percent as compared to a year ago. The earning the setup, okay, the setup in the remedy run rate and the earning leverage was driven by strong demand for our diversified new products and were enabled by the increased internal capacity.
Looking back at the fiscal year 2018, Every effort we dedicate has been about making fundamental improvements toward our goal. To accelerate growth. In terms of demand side improvement, we continued to bring the market driven R and Ds and the technology roadmap that coincide with our customers emerging interest and needs. The demand for our products remained very strong across all the most technology platforms, including low, medium, high voltage and IGBT, IGBT and some of the design activities are now transitioning to a stable revenue stream. Our power IC product line that was severely impacted by the supply constraint is expected to resume the growth starting from the September quarter.
Our new Dropbox products are gaining traction in vehicle applications and we are allocating more capacity to support our customers' customers. Additionally, we are just starting the ramp of our products for smartphone battery pack and high value, high performance graphics card. I am very excited about the opportunity opportunities for scalable expansion, lead by AOS customer friendly products. With regard to the supply side, the Chongqing Joint Venture Plan reached several major milestones throughout the year. The construction of building, infrastructure and the phase 1 clean room were completed ahead of schedule.
We started to gradually equip the clean room a couple of quarters ago, and successfully finished the trial production at the assembly and the CAST facility. In addition we have been gradually expanding our internal capacity over the past multiple quarters to support increasing demand. I am pleased to announce that the critical investments in internal capacity are already in place and the heavy lifting is behind us. Our proactive and deliberate planning and execution have presented us with the opportunity to cultivate enhanced customer engagement. At AAOS, our investments are always fundamentally aligned with customers' success.
My old among all the business considerations, the top priority during allocation planning was to help customers keep their production lines running. If It sometimes doesn't maximize our product mix. The AOS strong culture and the commitment to customer support were even further recognized and rewarded during last year, which in turn advanced us to play a greater role in business partnership. As a point in case, our hard work and dedication to the success of Chinese smartphone OEMs in the past few years solidified customer's confidence in AOS. And our new customers, including global brand names, opened the door to us.
The improved partnership position is reflected in the future business pipeline. And it is a critical asset that provides us with the ability to scale. Our focused execution of business plan is accelerating the financial roadmap which we believe will enhance our shareholders value. Both near to mid term and long term target models. The near to mid term goal is to achieve a high single digit revenue growth and the mid-twenty percent gross margin.
The long term target is to reach 600,000,000 in revenue with greater than 30% gross margin. I am pleased to announce that we have achieved the near to mid term financial goals. With the current capacity run rate, we expect we now expect to grow the top line by 10% in fiscal year 2019 with notable improvement in the bottom line. Whilst Chongqing joint venture ramps up in fiscal year 2020, which we strategically planned since 2015, we are confident that it will significantly enhance our growth opportunity. As we march forward to our next set of goals, we will certainly encounter challenges that we that will test our patience and determination.
But I am optimistic that the critical investments we have made in demand creation and the supply capability will better position us to capitalize on I will now move on to segment review starting with Computing. It represents 43.7 percent of total revenue in the June quarter. We posted a 13% sequential increase and 19.8% growth year over year. Both certified strong share gain across all notebook applications This segment grew 17.1% in fiscal year 2018. The computer industry is increasingly expanding beyond personal computing to include artificial intelligence big data and internet of things as a leader of power management, especially in the computing area, We have been relentlessly sharpening our capability to support the customer's needs.
Computer market continues to be an important segment for AOS based on our core competence and the customer's partnership, and we are committed to stay on the forefront of the evolving As the demand of for our product increases, we expect this segment to grow modestly quarter over quarter in the September quarter. 2nd, Consumer, it was 19.1% of the total revenue, It decreased by 1.7% 13.2% sequentially and year over year, respectively. The decline in TV revenue caused by the soft demand from 1 of the major TV OEM customers, continued in the June quarter, leading the fiscal year to be down by 7.2%. However, Our IGBT product line continues to demonstrate solid improvements. As we capture additional market share through design wins with home appliance customers in China.
To mitigate the constraint from the third party suppliers, we have been strategically migrating new product deployments such as a higher power application for TV and home appliance into our own production facilities. This strategy will enable us to gradually resume our consumer business strengths. With that, we expect a slight increase in this segment next quarter. Turn to the power supply and industrial segment. It was 20.1% of the total revenue, which grew 1.5% sequentially and it was up 26.3% from the same quarter last year.
This segment grew by 11.5% in fiscal year 2018, driven by industrial IGBT, half of most of 5 high voltage and the meeting voltage platforms. We were able to firmly secure our market position, driven by the superior performance of our medium voltage products. We are encouraged by the share gain with quick charges and the adoption of USB PD applications. We expect to maintain primarily due to mix management. Lastly, we also saw strong progress with the communication segment.
It represented 14.1 percent of the June quarter's revenue. It demonstrated a healthy growth of 12.1% and the 19.2% sequentially and the year over year respectively. We are showing strong footing and the continued share gain in the alpha TFN product line. For smartphone battery management application, coupled with growing demand in telecom network networking products. This segment posted a 22% growth in fiscal year 2018.
Fueled by the further production ramp of our alpha DFN, we expect this growth to continue in September quarter. In closing, we entered fiscal year 2019 with expanded capacity stronger portfolio in growing markets and the enhanced customer partnerships. We see great opportunities ahead of us we are keenly focused on executing our plan to deliver accelerated growth and improved profitability for our feasibility for many years to come. With that, I will now turn the call over to Yifan for the guidance. Yifan?
Thank you, Mike. As we look forward to the first quarter of fiscal year 2019, we expect revenue to be between $113,000,000 to $117,000,000. Gross margin to be approximately 26.5%, plus or minus 1%. Non GAAP gross margin is expected to be approximately 28.5 percent, plus or -1 percent. Non GAAP gross margin excludes $600,000 of estimated share based compensation charge and $1,700,000 of estimated production ramp up costs relating to the Chongqing joint venture.
Operating expenses to be in the range Non GAAP operating expenses are expected to be in the range of $24,200,000, plus or minus $1,000,000. Both GAAP and non GAAP operating expenses include $2,100,000 to $2,300,000 of of estimated expenses relating to the development of our digital power team. Non GAAP operating expenses exclude an estimated share based compensation charge of approximately $2,800,000 and estimated pre production expenses relating to the joint venture of $5,000,000. Tax expense to be approximately $600,000 to $800,000. Loss attributable to non controlling interest to be around $4,200,000, On a non GAAP basis, excluding approximately $3,500,000 estimated pre production expenses, and production ramp up costs relating to the joint venture.
This item is expected to be approximately $700,000 as part of our normal practice, we're not assuming any of the to update this information. With that, we'll open up the floor for questioning. Operator, Thank
And our first question comes from Jeremy Kwan from Stifel Nicholas. Your line is now open.
Yes, thank you. Congratulations on the nice growth and outlook. Question about the outlook for the fiscal year. On the 10% growth Is that any of that dependent on the JV ramping up, or is your current installed capacity at AOS enough to support that growth?
Thank you, Jeremy. The 10% growth for the fiscal year 19 is largely, depends on our internal capacity at this point plus, of course, plus third party foundries. We're not placing that much on the joint ventures ramp up.
Great. And then the shifting gears to the consumer segment. You mentioned the China home appliance market being an air strength. Have you seen, any impacts maybe whether specifically regard to that segment or in general, relating to the ongoing tariff challenges.
At this moment, we we have not seen, of course, this trader dispute, just the beginning, And second, we are new. We are still small, so probably we would not be would be not impacted too much by that. Key for the SME.
Got it. Great. And just a question in terms of the J. D. Operating cash burn, you know, $19,500,000 this quarter was quite an increase from last quarter.
Can you give us an idea of where you see that going forward and maybe if you can kind of see when it might be kind of achieve breakeven status, whether on operating or free cash flow basis?
You mean the all packs?
Sorry. For the the JV Cashburn, the operating cash flow. Yes.
Okay. Well, from the cash flow perspective, I would like to separate AOS and and joint venture. So that's why in this quarter, we'd increased some supplemental disclosure in our earnings release, toward the end of the press release, because for AOS and this cash contribution, capital contribution, if we completed that and that's pretty much we completed our obligation. So for this joint venture, Yes, it's in the construction building pretty much finished at this point. And then we are importing the, installing the machines for the 12 inches fab.
So at this point, and I mean, they have their capacity to borrow. As you saw in last quarter, in the in May, we the joint venture entered into a lease financing for, 60 some $1,000,000 in, financing. So, I mean, the yourself and it can is cash can support and, it's known, construction and equipment purchases. So, if they need and they can, they still have other, some additional capacity to borrow So I mean, that's then I would like to see it separately from the cash flow perspective.
Understood. I was, I guess, I was referring to the, you know, there's a line that says nat cash used in operating activities for the China, the Chongqing Joint Venture. That was listed at $19,500,000. Can you give us an idea where that might go next quarter and maybe even the next couple of quarters as you ramp up production?
Well, the increase from $19,000,000 because the $19,000,000 in money pay for the current expenses and salaries and then some inventory purchases. So next quarter, in the September quarter, as an somebody and test and start some small mass productions. We would expect we need more, working capital, to, support the ramp.
Jeremy, you might not give you some, some perspective from the business point of view about our Chongqing joint venture.
I'm sorry. Can you say that again?
So, would you mind if I give you some of what our point about this Chongqing joint venture from business point of view?
Yes. I understand. Yeah. It's it's, you know, it's going
to help.
Perspective about the whole thing. So maybe so everybody can have an understanding, okay. For a couple of years, okay, there's a tremendous demand for the semiconductor the product there and which is from a publicly will probably last at least to next year. So everybody is swampling or struggling for capacity for foundry. Okay.
So with $35,000,000 cash, We got a huge facility, 12 inch, it was good equipment there. But we only because joint venture, right? If any of the exposure we only have half the the the exposure, right? But we're going to harvest the full benefit of the capacity So that's why we're so excited about that. Of course, going up there now they solve always a kind of challenge there, but that's a good challenge.
We're really happy to phase 2. To work on. So this gives you a $0.02 of a point. So if I have the right perspective, why we're so excited about this Chongqing joint venture?
Understood. We see
if we can manage you with somebody else to share the risk.
Right. Now that makes sense to share the risk and to increase that capacity. But that's that $35,000,000, that includes the $25,000,000 additional contribution in cash. And that, that payment has that hit yet?
That will be in the September quarter.
In September quarter. Got it. Okay. Great. I'll turn it over at this point, but thanks again.
All right. Thank you.
Thank you. And our next question comes from Edgar Rush from Sidoti. Your line is now open.
Good afternoon and congratulations on a great quarter. Mike, I appreciate all the color you provided on the various end markets and the products. I did wanna follow-up on 1 point, would you say overall that the mix management that was imposed by your supply constraints in 2018 was overall yeah, fairly neutral to the gross margin or a drag. What would be your perspective on the overall impact of that mix management?
Sure. And add, I mean, mix management definitely contributed positively to the gross margin improvement of 270 basis points in fiscal year 2018. That 270 basis points improvements in that, yes, some contributed from the utilization perspective, but by and large and some bigger portion of it contributed from the mix management.
Okay. Thank you. And then, on the operating expenses operating expense side, is it fair to think the next step up in non GAAP expenses. So excluding the preproduction items, would that be hiring the next 3rd or 2 thirds of the digital power team. And that and that would really be the next, you know, step or 2 steps.
And and then it might start to flatten out a little bit sequentially?
Yes. For the Digital Power team, as of the end of the June quarter, we hired a button 2 third of the team already. So we'll continue to fill in field openings. Yes, we do expect on the digital powers team expenses to increase in the September quarter. I provided guidance and we estimated at this point $2,100,000 to $2,300,000 for the Digital Power team, versus in the June quarter, it was $1,400,000.
So we should be expecting it steps up. Eventually, yes, I mean, what the team is fairly close to be complete. And, right now, the team is working with customers on multiple customers in design, in product designs. So it progressed pretty well at this point.
Okay. Terrific. And that's the main driver of the increase in expenses at this point. Yeah. The, you know, are there some other things on the horizon you'd highlight?
Oh, yeah. That I mean, that's, you know, in the other area of businesses, we see a lot of growth opportunities. So continue to invest in the R and D and sales marketing to further secure our growth. At the meantime, I mean, for the June quarter, if you look at it, our R and D expenses, actually fluctuated toward the lower number. So that's just the
nature of the R and
D. Expenses fluctuating from time to time. So we would expect and get back to the normal level. So you may see in the June quarter on R And D expenses kind of temporarily and a little bit lower than even the March quarter.
Okay. All right. Thank you. And then, is it too early for there to be any meaningful inventory held at the JV, because I was just interested that you were flat sequentially. On inventory.
Was there anything in the JV that built up in the quarter?
Not much because in the June quarter, JVs and the assembly and test and did not start in the production. So it's not only a trial. It was a trial production there. In the September quarter, we'll see a little bit, material buildup in the joint venture for assembly and test, but then I would not expect an too much, because it's only starting at a small mass production. Not at full scale production yet.
Okay. Great. And then, Mike, I think you mentioned the power IC business is set for growth again? And is that just the internal Oregon capacity coming online that is supplying the components?
Good portion from our Oregon, yes, internally. We still have some portion from outside, but the outside is pretty secured. So that should be helpful. Yeah. And our
Traverse and as Mike mentioned in his prepared remarks and our driver maws and products and the gaining pretty good tractions in the Vicor business. And so we do expect that product line started growing again.
Sounds great. Well, congrats on a great, fiscal 18.
Thank you.
Thank And our next question comes from Craig Ellis from B. Riley FBR. Your line is now open.
Hi, this is actually Peter Peng calling in for Craig Ellison. Thanks for letting us ask a few questions and congratulations on the execution and the outlook. First wanted to concentrate on just some of the near term variance. The operating expenses for the quarter came in a little bit lighter despite the higher revenue. I'm wondering if that's just some of the shift in the R and D that you mentioned into the September quarter?
Yes. Mean, that's partially, is the reason. Yes. I mean, the R and D expenses tend to fluctuate from quarter to quarter.
Great. And then on the September OpEx, does that kind of, embed all the full hire of the, power management team, or is that still partial I want to understand that captures the whole digital power team.
Yes. That's pretty much in the wind. You expect that with the further the higher fuel headcounts for the Digital Power team in the September quarter. So then yes, That's why the expenses for that team sets up from $1,400,000 to 1 to $2,100,000 to $2,300,000 range.
Got it. And then on the gross margins, for the guidance, it seems like it's above what we expected. So wondering if you can talk about the gives and takes. Is there some kind of, I guess, less rising wafer costs and raw material costs? Or is that a lot of that utilization picking up?
So if you can just provide some color on that.
Sure. I mean gross margin for the September quarter, that increase came from the 2 or 3 factors. 1 is the product mix. We continue to expecting our newer products and gaining more revenues. Proportionally.
And then at the same time, we also manage the product mix. Given the current favorable in the MOSFET environment and we would expect that we continue to improve our gross margin. The offsetting factor is mainly from the increase of other raw materials such as substrates and ARPs and foundry wafers. And even some back end, leaf frames, some materials, we see some cost increases.
Got it. And then kind of looking at the fiscal 2019, 10% year on year growth. Can you just talk about the end segment expectations, whether you're still expecting those double digits in the compute and the comps and then more of the mid single digits Industrial. Maybe you can provide some color on the segment expectations.
Oh, sure. In terms of segment, in the fiscal year 2019, yes, I would expect the good growth still comes from this communication areas and you know, we'll continue to the gain shares in the smartphones and then battery pack in the area and then some telecom areas, in the Computing area, we would expect some fairly good growth there as well. And then power supply and industrial area, yes, we're expecting some gains because we rolled out our Office 5 high voltage platform not very long ago. So we do expect that new platform can generate additional revenue for us. So in the areas such as quick charger and some power USB, PD, Aaron, And then in the consumer area, yes, our IGBT product lines is performing very well.
Last calendar year, that new product line across the $10,000,000 annual revenue So for this year calendar year on 2018, we expect it to continue to grow significantly for that product line. That's primarily in the home appliance area. And the other, like, our high voltage, AlphaMOS 5 platform can also been used in the in the some other like consumer devices area such as TV power, so do expect them, the growth is from almost all the segments, some faster, some, maybe less than 10%. But then by and large, we should see a higher growth rate last year, we guided a single high single digit growth rate. And then this year, we guided 10%.
Okay, great. And just going back to that gross margin, is that a gross margin that you're comfortable in sustaining throughout the year or is this more of a mix, for a 1 quarter kind of thing?
We would expect that September guidance can be viewed as in whole years. And even for the whole year, we'll probably, we'll see even higher gross margin a little bit, I mean, we do expect in the next few quarters and we can continue to improve our gross margin.
One more question before I hop back into queue. On the cash, can you talk about the cash availability for buybacks and your expectations for, buyback pacing?
Yeah. We last year, I believe it, it was September quarter. Also, and then, you know, last year, we set up a $30,000,000 buyback program. So far, we have already, repurchased half of it, $15,000,000 in the June quarter we repurchased $3,000,000. We'll see then, I mean, the depends on our situation and then cash flow, all those things and so on.
That program is still in place.
Great. Thank you. Congratulations on the strong execution.
Thank you.
Thank you. And we have a follow-up question from Jeremy Kwan from Stifel. Your line is now open.
Yes. Thank you. I just wanted to follow-up on the assembly and test ramp up has, I guess, first question is, you know, it has equipment been fully transferred there. And also can you help us to understand the dynamics of how that that's going to affect, you know, flow through the income statement, you know, from what I understand, you transferred, you know, majority of your back end equipment, about $60,000,000 worth So, you know, presumably, some of it's going to be split with the JV and some of it, you know, you get to capture back, for yourselves. Can you just help us understand the dynamics there?
Thanks.
Okay. Sure. Yes. And for the total contribution, we plan to move about half or slightly half the higher than half of the our Shanghai facilities equipment to contribute to the joint venture. In the September quarter, we'll continue to move.
At the end of the June quarter, we only moved in a small portion of it. So so that get the line set up and qualified and then qualify with customers. And so we'll continue to gradually move more equipment from our Shanghai facility to the joint venture. Because we want to manage this transition carefully so that it won't jeopardize our production schedule. So in the September quarter, they only produced a small amount of mass production.
To us. So basically, their function is like our subcon. So they produce they produce for us. So that we sell the products to our customers.
Great. Thank you.
All right. Thank you.
And that concludes today's Q and A session. I would now like to turn the call back over to the speakers any closing remarks.
Okay. This concludes our earnings call today. Thank you for your interest in OS and We look forward to talking with you next quarter. Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.