Alpha and Omega Semiconductor Stock

Alpha and Omega Semiconductor Limited operates as a designer, developer and global supplier of a broad portfolio of power semiconductors.

The company’s portfolio of power semiconductors includes approximately 2,600 products. The company had an extensive patent portfolio that consisted of 918 patents and 45 patent applications in the United States as of June 30, 2023. The company also had a total of 980 foreign patents, which were based primarily on the company’s research and development efforts through June 30, 2023. The company’s portfolio of products targets high-volume applications, including portable computers, graphics cards, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.

During the year ended June 30, 2023, the company continued its diversification strategy by developing new silicon and packaging platforms to expand the company’s serviceable available market, or SAM, and offer higher performance products. The company’s metal-oxide-semiconductor field-effect transistors, or MOSFET, portfolio expanded significantly across a full range of voltage applications. The company also developed new technologies and products designed to penetrate into markets beyond the company’s MOSFET computing base, including the consumer, communications and industrial markets, Insulated Gate Bipolar Transistors, or IGBTs for the home appliance market, as well as power ICs for next generation computing and gaming applications.

The company’s business model leverages global resources, including research and development and manufacturing in the United States and Asia. The company’s sales and technical support teams are localized in several growing markets around the world. The company operates an 8-inch wafer fabrication facility located in Hillsboro, Oregon (the ‘Oregon fab’), which is critical for the company to accelerate proprietary technology development, new product introduction and improve the company’s financial performance. The company also expanded and upgraded its manufacturing capabilities at the Oregon Fab in 2023. To meet the market demand for the more mature high volume products, the company also utilize the wafer manufacturing capacity of selected third party foundries. The company utilizes both in house assembly and test facilities in China, as well as subcontractors for industry standard packages. The company’s in-house packaging and testing capability provides the company with a competitive advantage in proprietary packaging technology, product quality, cost and sales cycle time.

On March 29, 2016, the company entered into a joint venture contract (the ‘JV Agreement’) with two investment funds owned by the Municipality of Chongqing (the ‘Chongqing Funds’), pursuant to which the company and the Chongqing Funds formed a joint venture, (the ‘JV Company’), for the purpose of constructing and operating a power semiconductor packaging, testing and 12-inch wafer fabrication facility in the Liangjiang New Area of Chongqing, China (the ‘JV Transaction’). As of December 1, 2021, the company owned 50.9%, and the Chongqing Funds owned 49.1%, of the equity interest in the JV Company. The Joint Venture was accounted under the provisions of the consolidation guidance since the company had controlling financial interest until December 1, 2021. As of December 2, 2021, the company ceased having control over the JV Company. Therefore, the company deconsolidated the JV Company as of that date.

Strategies

The company seeks to advance its position as a designer, developer and global supplier of a broad portfolio of power semiconductors. The company has adopted strategies that allow the company to balance the development of proprietary technology at in-house fabrication and packaging facilities and also utilize the capacity and manufacturing capability of third-party foundries and subcontractors.

Although the company’s largest end-market is the personal computing (‘PC’) market, the company has successfully diversified its business by expanding into other markets, including consumer, communications, and industrial markets. While the company has made progress in its diversification and expansion into additional applications, the company continues to support and grow its PC business by expanding bill-of-material content, gaining market share, and acquiring new customers.

The company plans to further expand the breadth of its product portfolio to increase the company’s total bill-of-materials within an electronic system and to address the power requirements of additional electronic systems. The company’s product portfolio consists of approximately 2,600 products and the company has introduced over 60 new products in this past fiscal year. The company will continue to leverage its expertise to further increase the company’s product lines, including higher performance power ICs, IGBTs and high, medium and low voltage MOSFETs, in order to broaden the company’s addressable market. This includes expanding the company’s power IC portfolio with multiphase controllers and smart power stages to address advanced System on Chip (SoC) products used in personal computing, graphics cards, and gaming.

The key elements of the company’s strategy are to leverage the company’s power semiconductor expertise to drive new technology platforms; increase direct relationships and product penetration with OEM and ODM customers; and leverage global business model for cost-effective growth.

Products

The company has created a broad product portfolio consisting of two major categories: power discretes and power ICs that serve the large and diverse analog market for power semiconductors.

The company’s power discrete products consist of low, medium and high voltage power MOSFETs. The company’s low voltage MOSFET series is based on the company’s proprietary silicon and package technologies, with deep application know-how in various markets. The company has precisely defined technology platforms to address different requirements from various applications. The company’s medium voltage MOSFETs provide optimized performance with high efficiency, high robustness and high reliability, and are widely used in applications such as TV backlighting, telecom power supplies, and industrial applications. The company expanded its high voltage 600V and 700V MOSFET portfolio based on the company’s aMOS5 technology platform in order to address demanding consumer and industrial applications. The company’s high-voltage portfolio includes its proprietary insulated-gate bipolar transistor (‘IGBT’) technology, which the company provides highly robust and easy-to-use solutions for industrial motor control and white goods applications. The company has also deployed its 1200V SiC (Silicon carbide) products based on the company’s AlphaSiC platform, designed to address high efficiency, high density industrial applications such as solar inverters, UPS, and battery management systems.

The company’s power ICs deliver power and control and regulate the power management variables, such as the flow of current and level of voltage. The company’s DrMOS family of products continue to grow as the company paired its latest high performance MOSFET silicon with the company’s latest Driver IC technologies. The company continues to expand its EZBuck power IC family with products that feature lower on-resistance, less power consumption, smaller footprint and thermally enhanced packages. While the company derives the majority of its revenue from the sale of power discrete products, sale of power ICs continued to gain traction during the past years. The company’s Type C smart load switch product line has also expanded as it offers reverse blocking capability, designed to protect applications against high voltage exposure.

Power Discrete Products

Power discretes are used across a wide voltage and current spectrum, requiring high efficiency and reliability under harsh conditions. Due to the diverse nature of end-market applications, the company markets both general purpose MOSFETs that are used in multiple applications, as well as application specific MOSFETs.

The company’s power discrete product line includes industry standard trench MOSFETs, SRFETs, XSFET, electrostatic discharge, protected MOSFETs, high and mid-voltage MOSFETs and IGBTs.

Power IC Products

In addition to the traditional monolithic or single chip design, the company employs a multi-chip approach for the majority of its power ICs. This multi-chip technique leverages the company’s proprietary MOSFET and advanced packaging technologies to offer integrated solutions to the company’s customers. This allows the company to update product portfolios by interchanging only the MOSFETs without changing the power management IC, thereby reducing the time required for new product introduction and providing optimal solutions to the company’s customers. The company’s power IC products improve its competitive position by enabling the company to provide higher power density solutions to its end customers than some of the company’s competitors.

The incorporation of both power delivery and power management functions tends to make power ICs more application specific because these two functions have to be properly matched to a particular end product. The company has local technical marketing and applications engineers who closely collaborate with the company’s end customers to help ensure that power IC specifications are properly defined at the beginning of the design stage.

New Product Introduction

The company introduced several new products based on the company’s proprietary technology platform and continue to expand the company’s product families.

During the fourth quarter of fiscal year of 2023, the company released the 600V aMOS7 Super Junction MOSFETs Family. These devices are designed to meet the high efficiency and high-density needs of servers, workstations, telecom rectifiers, solar Inverters, EV charging, motor drives and industrial power applications.

During the third quarter of fiscal year of 2023, the company introduced a powerful duo of sink and source switches that can increase the power delivery capability of USB Type-C ports to 140W, paving the way for Type C extended power range (EPR) implementations. The AOZ13937DI is suited for 28V Type C sinking applications while the AOZ15333DI is capable of Type C sourcing applications. These new switches are suited for 28V Type C EPR implementations in high-performance laptops, personal computers, monitors, docking, and other applications. Also, the company introduced an extension to the company’s active bridge driver, AlphaZBL family. The new device in this family is suitable for use in adapters for high-end laptops and televisions, as well as power supplies for Desktops, Game consoles, and Servers.

During the second quarter of fiscal year of 2023, the company introduced its new industry-leading 650V and 750V SiC MOSFET platform for both industrial and automotive applications. The 650V SiC MOSFETs are ideal switching solutions for industrial applications, such as solar inverters, motor drives, industrial power supplies, and new energy storage systems, while the AEC-Q101 qualified 750V SiC MOSFET line is targeted for the high-reliability needs in electric vehicle (EV) systems, such as the on-board charger (OBC) and the main traction inverter. Also, the company introduced an extension to the company’s compact Smart Motor Module (SMM) family. Available in an ultra-compact, thermally enhanced 3mm x 3mm QFN-18L package, the highly integrated AOZ9530QV SMM is a half-bridge power stage with a slew of features and protections that simplify motor drive designs. The AOZ9530QV SMM is suitable for use in a large number of BLDC fan applications ranging from PC and server fans, seat cooling and home appliances. In addition, the company released AONS30300, a 30V MOSFET with low on-resistance. The AONS30300 features a high Safe Operating Area (SOA) capability making it ideally suited for demanding applications, such as hot swap and eFuse.

Distributors and Customers

The company has established direct relationships with key OEMs, including Dell Inc., Hewlett-Packard Company, Samsung Group, and Stanley Black & Decker, Inc., most of whom the company serves through its distributors and ODMs. In addition, based on the company’s historical design win activities, the company’s power semiconductors are incorporated into products sold to many other leading OEMs.

Through the company’s distributors, the company provides products to ODMs who traditionally are contract manufacturers for OEMs. As the industry has evolved, ODMs are increasingly responsible for designing portions, or entire systems, of the products they manufacture for the OEMs. In addition, several ODMs are beginning to design, manufacture and brand their own proprietary products, which they sell directly to consumers. The company’s ODM customers include Compal Electronics, Inc., Foxconn, Quanta Computer Incorporated, Wistron Corporation and Delta Electronics.

In order to take advantage of the expertise of end-customer fulfillment logistics and shorter payment cycles, the company sells most of its products through distributors. As of June 30, 2023, the company’s two largest distributors were WPG Holdings Limited, or WPG, and Promate Electronic Co. Ltd., or Promate. Sales to WPG and Promate accounted for 35.6% and 21.6% of the company’s revenue, respectively, for the fiscal year ended June 30, 2023.

Sales and Marketing

The company’s marketing division is responsible for identifying high growth markets and applications where the company’s technology can be effectively deployed.

The company’s sales team consists of sales personnel, field application engineers, customer service representatives and customer quality engineers who are responsible for key accounts. The company strategically positions its team near the company’s end customers through the company’s offices in Taipei, Hong Kong, Shenzhen, Shanghai, Qingdao, SuZhou, Tokyo, Seoul, Heilbronn, and Sunnyvale, California, complemented by the company’s applications centers in Sunnyvale and Shanghai. In addition, the company’s distributors and sales representatives assist the company in its sales and marketing efforts by identifying potential customers, creating additional demand and promoting the company’s products, in which case the company may pay a sales commission.

The company’s sales cycle varies depending on the types of products and can range from six to eighteen months. In general, the company’s traditional power discrete products in PC and TV applications progress more rapidly through the customer's design and marketing processes, and therefore they generally have a shorter sales cycle. In contrast, the company’s newer Power IC and IGBT products, used mostly in the power supply, home appliance and industrial applications, require a more extended design and marketing timeline and thus have a longer sales cycle.

Competition

The company’s major competitors in power discretes include Infineon Technologies AG, ON Semiconductor Corp., STMicroelectronics N.V., Toshiba Corporation, Diodes Incorporated and Vishay Intertechnology, Inc. The company’s major competitors for its power ICs include Monolithic Power Systems, Inc., ON Semiconductor Corp., Richtek Technology Corp., Semtech Corporation, Texas Instruments Inc., and Vishay Intertechnology, Inc.

Seasonality

As the company provides power semiconductors used in consumer electronic products, the company’s business is subject to seasonality. The company’s sales seasonality is affected by a number of factors, including global and regional economic conditions, as well as the PC market condition, revenue generated from new products, changes in distributor ordering patterns in response to channel inventory adjustments and end customer demand for the company’s products and fluctuations in consumer purchase patterns prior to major holiday seasons.

Intellectual Property Rights

The company has also entered into intellectual property licensing agreements with other companies, including On Semiconductor Corp. and Giant Semiconductor Corporation, to use selected third-party technology for the development of the company’s products. In February 2023, the company entered into a license agreement with a customer to license the company’s proprietary SiC technology and to provide 24-months of engineering and development services.

As of June 30, 2023, the company had 918 patents issued in the United States, of which 911 were based on the company’s research and development efforts and 7 were acquired, and these patents are set to expire between 2023 and 2041. The company also had a total of 980 foreign patents, including 446 Chinese patents, 489 Taiwanese patents, 24 Korean patents, 4 Hong Kong patents, 5 Philippine patents, 8 Japanese patents, 2 Europe patent and 2 India patent as of June 30, 2023. Substantially all of the company’s foreign patents were based on the company’s research and development efforts. These foreign patents will expire in the years between 2023 and 2041. In addition, as of June 30, 2023, the company had a total of 159 patent applications, of which 45 patents were pending in the United States, 81 patents were pending in China, 22 patents were pending in Taiwan and 11 patents were pending in other countries.

Environmental Matters

The company’s operations in China are subject to regulation and periodic monitoring by China’s State Environmental Protection Bureau, as well as local environmental protection authorities, including those under the Shanghai Municipal Government, which may in some cases establish stricter standards than those imposed by the State Environmental Protection Bureau. The company’s operation in Oregon is subject to Oregon Department of Environmental Regulations, Federal Environmental Protection Agency laws and regulations, and local jurisdictional regulations.

The company has implemented an ISO 14001 environmental management system in its manufacturing facilities in China and Oregon. The company also requires its subcontractors, including foundries and assembly houses, to meet ISO 14001 standards.

The company’s products sold in worldwide are subject to RoHS (Restrictions on the use of Hazardous Substances) in Electrical and Electronic Equipment, which requires that the products do not contain more than agreed levels of lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl and polybrominated diphenyl ether flame retardants. The company’s manufacturing facilities in China also obtained QC080000 certification, which is an IECQ Certificate of Conformity Hazardous Substance Process Management for European Directive 2002/95/EC requirements and a Certificate of Green Partner for Sony Green Partner Program. The company avoids using these restricted materials to the extent possible when the company designs its products.

The company is also subject to SEC (Securities and Exchange Commission) rules that require diligence, disclosure and reporting on whether certain minerals and metals, known as conflict minerals, used in the company’s products originate from the Democratic Republic of Congo and adjoining countries.

Research and Development

The company’s research and development expenses were $88.1 million for the year ended June 30, 2023.

History

Alpha and Omega Semiconductor Limited was incorporated in 2000 in Bermuda.