What changed in this filing

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Item 9A. Controls and Procedures

2023-08-29 compared with 2022-09-20 · 361 added, 324 removed, 1182 unchanged (37% of the section changed)

2 unchanged sentences

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)), as of the end of the period covered by this report.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of June 30, 2022 have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’ rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were not effective as of June 30, 2023, as a result of a material weakness in our internal control over financial reporting as described in more detail below .

The material weakness described herein did not result in any identified misstatements to the financial statements, and there were no changes to our historical financial statements.

Notwithstanding such material weakness, our financial statements and other financial information included in this Annual Report on Form 10-K fairly present in all material respects our financial condition, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Management’s Annual Report on Internal Control over Financial Reporting

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Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), as amended from time to time.

Based on the assessment, our management has concluded that our internal control over financial reporting was effective as of June 30, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.

The effectiveness of the Company’s internal control over financial reporting as of June 30, 2022 has been audited by BDO, USA LLP, an independent registered public accounting firm, as stated in their report, included on the following page.

Based on the assessment, our management concluded that the Company's internal control over financial reporting was not effective as of June 30, 2023 as a result of the material weakness as described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with management’s evaluation of the effectiveness of our internal control over financial reporting described above, management identified a material weakness in our internal control over financial reporting due to the fact that we did not:

(1) design and maintain effective information technology general controls in the areas of user access, and segregation of duties for one of the information technology systems that supports the Company’s financial reporting over inventory (work in process and finished goods) in costing;

and (ii) identify and test controls to ensure the reliability of the costing of inventory (work in process and finished goods).

The effectiveness of the Company’s internal control over financial reporting as of June 30, 2023 has been audited by Baker Tilly US, LLP, an independent registered public accounting firm, as stated in their report, included on page 68 .

REMEDIATION PLAN

Our management, with oversight from our Audit Committee, is in the process of developing and implementing remediation plans in response to the identified material weakness described above.

Specifically, we are designing and

implementing additional measures to further improve information technology general controls in the areas of user access in order to ensure segregation of duties for our system that supports financial reporting over inventory (work in process and finished goods) in costing, and to identify and test control to ensure reliability of costing of inventory (work in process and finished goods).

The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

We believe the measures described above will remediate the control deficiencies we have identified and strengthen our internal control over financial reporting.

We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures.

The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations.

As we continue to evaluate and take actions to improve our internal control over financial reporting, we may determine to take additional actions to address control deficiencies or determine to modify certain of the remediation measures described above.

Limitation on the Effectiveness of Controls

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2022 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Alpha and Omega Semiconductor Limited

Sunnyvale, California

Opinion on Internal Control over Financial Reporting

We have audited Alpha and Omega Semiconductor Limited (a Bermuda corporation) (the “Company’s”) internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of June 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended June 30, 2022, and the related notes and schedule and our report dated September 19, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, LLP

San Jose, California

September 19, 2022

As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal control over financial reporting to determine whether any changes occurred during the fourth fiscal quarter covered by this Form 10-K that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Based on that evaluation, there has been no such change during the fourth fiscal quarter of 2023 other than the material weakness and related remediation measures as described above.

Other Information

Trading Plans or Rule 10b5-1 Trading Plans

The table below summarizes the material terms of trading arrangements adopted by any of our executive officers or directors during the June 2023 quarter.

All of the trading arrangements listed below are intended to satisfy the affirmative defense of Rule 10b5-1(c).

Name Title Date of Adoption End Date 1

Aggregate number of shares common shares to be sold pursuant to 10b5-1 trading agreements

Mike Chang Executive Chairman and Director May 26, 2023 March 15, 2024 180,000

Yifan Liang Chief Financial Officer May 24, 2023 August 15, 2024 80,000

1 Each plan will expire on the earlier of the end date and the completion of all transactions under the trading arrangement.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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The information required by this item regarding related party transactions and director independence is incorporated by reference from the information set forth under the captions “Board of Directors and Committees of the Board” and “Related Party Transactions” in the 2023 Proxy Statement.

Principal Accounting Fees and Services

Principal Accountant Fees and Services

The information required by this item regarding principal accountant fees and services is incorporated by reference from the information set forth under the caption “Principal Accounting Fees and Services” in the 2023 Proxy Statement.

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The index to the consolidated financial statements is below.

Report of Independent Registered Public Accounting Firm Auditor Firm ID 243

Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP - PCAOB Firm ID No.

Report of Independent Registered Public Accounting Firm (BDO USA, LLP - PCAOB Firm ID No.

Consolidated Balance Sheets

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Alpha and Omega Semiconductor Limited

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Alpha and Omega Semiconductor Limited (the "Company") as of June 30, 2023, the related consolidated statements of operations, comprehensive income, equity, and cash flows, for the year then ended, and the related notes and schedule (collectively referred to as the "consolidated financial statements").

We also have audited the Company’s internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date as the Company did not:

(i) design and maintain effective information technology general controls in the areas of user access, and segregation of duties for one of the information technology systems that supports the Company’s financial reporting over inventory (work in process and finished goods) in costing;

and (ii) identify and test controls to ensure the reliability of the costing of inventory (work in process and finished goods).

The material weakness referred to above is described in Management’s Annual Report on Internal Control Over Financial Reporting included in Item 9A of this Annual Report on Form 10-K.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting included in Item 9A of this Annual Report on Form 10-K.

Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate .

Excess and Obsolete Inventory Reserve

The Company’s inventory, net totaled $183 million as of June 30, 2023, representing approximately 15% of total assets.

As described in Notes 1 and 6 to the consolidated financial statements, the Company assesses the valuation of its inventory on a periodic basis and provides an allowance based on several factors including inventory quantities on hand as compared with its sales forecasts, historical usage, aging of inventories, production yield levels and current product selling prices.

We identified the provision for excess and obsolete inventory as a critical audit matter because the determination of excess and obsolete inventory reserves is judgmental and considers several factors that are affected by market and economic conditions, such as company forecasts, dynamic pricing environments, and industry supply and demand.

How the critical audit matter was addressed in the audit

Our audit procedures related to management’s estimates used in the valuation of inventory included the following, among others:

• We evaluated and tested the design and operating effectiveness of the Company's internal controls over the costing of inventory, the calculation of lower of cost or net realizable value reserves including related estimated costs and selling prices, and the determination of demand forecasts and related application against on hand inventory.

• We reviewed the reasonableness of the Company’s methodology for estimating the valuation of inventories by evaluating factors including excess units on hand based on ending inventory quantities compared to forecasted shipment quantities.

• We tested the significant assumptions, including product demand forecasts, and the underlying data used in management's inventory valuation assessment.

• We evaluated management’s ability to accurately estimate forecasted demand by comparing estimates made in prior periods to the historical actual results for those same periods.

Allowance for Price Adjustments

The Company recorded allowance for price adjustments of $40 million as of June 30, 2023.

As described in Notes 1 and 6, the Company provides special pricing to certain distributors, primarily based on volume, to encourage resale of the Company's products and records a reduction of revenue and a corresponding allowance for price adjustments against accounts receivable on the consolidated balance sheet.

Estimating the allowance for price adjustments requires management to make certain assumptions including historical customer ship and debit credit rates and credit lag times on such revenues.

These assumptions could be affected by current and future economic and market conditions.

We identified the allowance for price adjustments as a critical audit matter because auditing management’s estimate of the allowance for price adjustments was complex and judgmental due to the significant estimation required by management.

How the critical audit matter was addressed in the audit

Our audit procedures included the following, among others:

• We evaluated and tested the design and operating effectiveness of the Company's internal controls over the measurement of the allowance for price adjustments, including testing controls over management’s review of the allowance calculation and the underlying assumptions used to develop the estimate.

• We confirmed the quantity of select distributor inventories.

• We vouched revenues and allowance for price adjustments to supporting documents.

• We evaluated the reasonableness of management’s assumptions by comparing the significant assumptions (ship and debit claims percentage history and the relevant cycle time period between when sales are made by distributors to their end customers and when ship and debit credit memos are issued by the Company to distributors) used to historical customer trends, including testing the completeness and accuracy of the underlying data.

/s/ Baker Tilly US, LLP

We have served as the Company's auditor since 2022.

Mountain View, California

August 29, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Alpha and Omega Semiconductor, Limited

Alpha & Omega Semiconductor Limited

Sunnyvale, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Alpha and Omega Semiconductor Limited (the “Company”) as of June 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended June 30, 2022, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2022 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated September 19, 2022 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheet of Alpha & Omega Semiconductor Limited (the “Company”) as of June 30, 2022, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the two years in the period ended June 30, 2022, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2022, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Inventories

As described in Note 1 to the consolidated financial statements, the Company’s consolidated inventories balance, which is stated at lower of cost (determined on a first-in, first-out basis) or net realizable value, was $158.0 million as of June 30, 2022.

The valuation of inventories is made based on the Company’s periodic review of inventory quantities on hand as compared with sales forecasts, historical usage, aging of inventories, production yield levels and current product selling prices.

We identified the valuation of inventories as a critical audit matter due to the significant judgment and estimates required by Management.

Determining whether a decline in value has occurred requires Management’s complex judgments related to sales forecasts based on historical sales, demand and expected future orders.

Auditing these judgments is especially challenging and involved subjective auditor judgment due to fluctuations in sales trends and evolving customer demands.

The primary procedures we performed to address this critical audit matter included:

• Testing the design and operating effectiveness of automated application controls relating to the inputs used in the analysis.

• Evaluating the completeness and accuracy of data used in the determination of the valuation of inventories by testing the completeness of the inventories analyzed, the inputs used in the analysis, and recalculating the estimated valuation of inventories.

• Analyzing the reasonableness of the methodology Management uses to estimate the valuation of inventories by evaluating quantitative and qualitative factors including excess units on hand based on ending inventory quantities compared to forecasted shipment quantities.

• Evaluating the reasonableness of Management's assumptions related to future demand by (i) performing retrospective review of the Company’s prior year estimates to actual results, and (ii) evaluating the reasonableness of sales forecasts by comparing to current backlog and historical sales data used in the analysis.

Accounting for Equity Method Investment

As described in Notes 1 and 2 to the consolidated financial statements, on December 2, 2021, the Company sold 2.1% of its ownership interest in the JV Company to a third party for approximately $16.9 million contemporaneously with a change in governance of the JV Company that reduced the Company’s Board of Directors representation from four to three seats.

Management evaluated the sale and determined that the JV Company was not a variable interest entity and that the Company no longer held voting control, resulting in the deconsolidation of the JV Company from the consolidated financial statements and recognition of a gain on the transaction in the amount of $399.1 million.

Subsequent to the deconsolidation, the Company had significant influence and ownership requiring the application of equity method accounting for its remaining ownership interest.

We identified the accounting for the sale of the ownership interest and the accounting for the remaining ownership interest and the related disclosures as a critical audit matter.

Identifying and applying complex generally accepted accounting principles, specifically the application of the variable interest model, to the fact pattern of the sale and the remaining ownership interest require significant management judgment.

Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

The primary procedures we performed to address the critical audit matter included:

• Analyzing applicable agreements and evaluating the applicable accounting standards relevant to the fact pattern of the sale, specifically focusing on management’s evaluation of whether its remaining ownership interest and board representation were determinative of control over the JV Company pursuant to the variable interest model.

• Utilizing personnel with specialized skill and knowledge to assist in evaluating management’s technical accounting analysis relating to application of the variable interest model to the fact pattern of the sale.

Fair Value Determination of Basis Difference in Equity Method Investment

As described in Notes 1 and 2 to the consolidated financial statements, the Company deconsolidated the JV Company subsequent to the sale of the 2.1% equity interest in the JV Company.

Management was required to determine the basis difference in the retained ownership interest in the JV Company as of December 2, 2021, as a significant component of accounting for the retained interest in the JV Company pursuant to the equity method.

We identified the determination of the difference between the carrying value of the investment in the JV Company and the Company’s underlying equity in the net assets of the JV Company as a critical audit matter.

As part of determining this basis difference, management applied significant judgment in determining the appropriate valuation methodology and the unobservable inputs used in calculating the fair value of intellectual property owned by the JV Company, including projected revenues, discount factor, terminal factor, present value factor and tax amortization benefit.

Auditing this element involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

The primary procedures we performed to address the critical audit matter included:

• Assessing the reasonableness of the forecasts of future revenue by evaluating historical inputs and challenging the revenue growth rate.

• Utilizing personnel with specialized knowledge and skills in valuation to perform procedures to assist in (i) evaluating the valuation methodology used and (ii) assessing the reasonableness of the discount factor, terminal factor, present value factor and tax amortization benefit incorporated in the valuation model.

/s/ BDO USA, LLP

We have served as the Company's auditor since 2018.

We have served as the Company's auditor from 2018 to 2022.

San Jose, California

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Deferred income tax assets 536 592

Restricted cash - long-term — 2,168

Other long-term assets 19,703 17,677

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Short-term debt 11,434 25,563

Deferred revenue 8,073 —

Finance lease liabilities 867 802

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Additional paid-in capital 329,034 288,951

Accumulated other comprehensive income 1,080 2,315

Accumulated other comprehensive income (loss) ( 8,111 ) 1,080

Retained earnings 642,291 629,994

Total Alpha and Omega Semiconductor Limited shareholders’ equity 883,919 854,093

Noncontrolling interest — 143,120

Total equity 854,093 516,325

Total liabilities and equity $ 1,199,737 $ 1,298,629

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ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Year ended June 30,

2023 2022 2021

Net income including noncontrolling interest $ 12,364 $ 453,183 $ 56,289

Other comprehensive income, net of tax

Foreign currency translation adjustment ( 9,191 ) 1,307 14,190

Cumulative translation adjustment removal due to deconsolidation of the JV Company — ( 3,642 ) —

Comprehensive income 3,173 450,848 70,479

Noncontrolling interest — ( 1,080 ) 4,921

Comprehensive income attributable to Alpha and Omega Semiconductor Limited $ 3,173 $ 451,928 $ 65,558

The accompanying notes are an integral part of these consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

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Selling, general and administrative 88,861 95,259 77,514

Impairment of privately-held investment — — 600

Total operating expenses 177,007 166,518 140,467

Operating income (loss) 102,038 64,076 ( 13,937 )

Operating income 22,529 102,038 64,076

Other income (loss), net ( 1,730 ) 999 2,456

Interest expenses, net ( 3,920 ) ( 6,308 ) ( 2,743 )

Interest expense, net ( 1,087 ) ( 3,920 ) ( 6,308 )

Gain on deconsolidation of the JV Company — 399,093 —

Loss on changes of equity interest in the JV Company, net — ( 3,140 ) —

Net income (loss) before income taxes 495,070 60,224 ( 17,909 )

Net income before income taxes 19,712 495,070 60,224

Income tax expense 5,937 39,258 3,935

Net income (loss) before loss from equity method investment 455,812 56,289 ( 18,257 )

Net income before loss from equity method investment 13,775 455,812 56,289

Equity method investment loss from equity investee ( 1,411 ) ( 2,629 ) —

Net income (loss) 453,183 56,289 ( 18,257 )

Net income 12,364 453,183 56,289

Net income (loss) attributable to noncontrolling interest — 20 ( 1,827 )

Net income (loss) attributable to Alpha and Omega Semiconductor Limited $ 453,163 $ 58,116 $ ( 6,596 )

Net income (loss) per common share attributable to Alpha and Omega Semiconductor Limited

Net income attributable to Alpha and Omega Semiconductor Limited $ 12,364 $ 453,163 $ 58,116

Net income per common share attributable to Alpha and Omega Semiconductor Limited

Basic $ 0.45 $ 16.93 $ 2.25

Diluted $ 0.42 $ 16.07 $ 2.13

Weighted average number of common share attributable to Alpha and Omega Semiconductor Limited used to compute net income (loss) per share:

Weighted average number of common share attributable to Alpha and Omega Semiconductor Limited used to compute net income per share:

Basic 27,552 26,764 25,786

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ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Year ended June 30,

2022 2021 2020

Net income (loss) including noncontrolling interest $ 453,183 $ 56,289 $ ( 18,257 )

Other comprehensive income (loss), net of tax

Foreign currency translation adjustment 1,307 14,190 ( 4,839 )

Cumulative translation adjustment removal due to deconsolidation of the JV Company ( 3,642 ) — —

Comprehensive income (loss) 450,848 70,479 ( 23,096 )

Noncontrolling interest ( 1,080 ) 4,921 ( 14,066 )

Comprehensive income (loss) attributable to Alpha and Omega Semiconductor Limited $ 451,928 $ 65,558 $ ( 9,030 )

The accompanying notes are an integral part of these consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF EQUITY

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Share-based compensation expense — — — — — — 12,190 — — 12,190 — 12,190

Net loss including noncontrolling interest

— — — — — — — — ( 6,596 ) ( 6,596 ) ( 11,661 ) ( 18,257 )

Restricted stock units settlement in connection with service — — — — — — 3,600 — — 3,600 — 3,600

Net income (loss) including noncontrolling interest — — — — — — — — 58,116 58,116 ( 1,827 ) 56,289

Foreign currency translation adjustment — — — — — — — 7,442 — 7,442 6,748 14,190

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Restricted stock units settlement in connection with service — — — — — — 400 — — 400 — 400

Net income (loss) including noncontrolling interest — — — — — — — — 58,116 58,116 ( 1,827 ) 56,289

Net income (loss) including noncontrolling interest through December 1, 2021 — — — — — — — — 453,163 453,163 20 453,183

Foreign currency translation adjustment — — — — — — — 558 — 558 749 1,307

Deconsolidation of noncontrolling interest — — — — — — — ( 1,793 ) — ( 1,793 ) ( 143,889 ) ( 145,682 )

Balance, June 30, 2022 — — 33,988 68 ( 6,617 ) ( 66,000 ) 288,951 1,080 629,994 854,093 — 854,093

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Issuance of shares under Employee Stock Purchase Plan — — 350 1 — — 8,426 — — 8,427 — 8,427

Repurchase of common shares under share repurchase program — — ( 548 ) ( 13,432 ) — — — ( 13,432 ) — ( 13,432 )

Share-based compensation expense — — — — — — 37,488 — — 37,488 — 37,488

Restricted stock units settlement in connection with service — — — — — — 400 — — 400 — 400

Net income (loss) including noncontrolling interest through December 1, 2021 — — — — — — — — 453,163 453,163 20 453,183

Net income — — — — — — — — 12,364 12,364 — 12,364

Foreign currency translation adjustment — — — — — — — ( 9,191 ) — ( 9,191 ) — ( 9,191 )

Deconsolidation of noncontrolling interest — — — — — — — ( 1,793 ) — ( 1,793 ) ( 143,889 ) ( 145,682 )

Balance, June 30, 2023 — $ — 34,811 $ 70 ( 7,157 ) $ ( 79,365 ) $ 329,034 $ ( 8,111 ) $ 642,291 $ 883,919 $ — $ 883,919

6 unchanged sentences

Cash flows from operating activities

Net income (loss) including noncontrolling interest $ 453,183 $ 56,289 $ ( 18,257 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income including noncontrolling interest $ 12,364 $ 453,183 $ 56,289

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on deconsolidation of the JV Company — ( 399,093 ) —

2 unchanged sentences

Depreciation and amortization 43,207 42,851 52,685

Loss on equity investment 2,629 — —

Equity method investment loss from equity investee 1,411 2,629 —

Share-based compensation expense 37,488 31,324 15,324

Deferred income taxes, net ( 1,418 ) 1,592 1,551

(Gain) loss on disposal of property and equipment 18 426 ( 102 )

Impairment of privately-held investment — — 600

Loss on disposal of property and equipment 182 18 426

Changes in assets and liabilities:

6 unchanged sentences

Income taxes payable on deconsolidation and changes of equity interest in the JV Company — 3,490 —

Increase in deferred revenue 8,073 — —

Accrued and other liabilities ( 45,545 ) 76,407 48,462

10 unchanged sentences

Proceeds from exercise of stock options and ESPP 8,978 6,143 5,092

Payments for repurchase of common shares ( 13,432 ) — —

Proceeds from borrowings 8,632 64,276 65,876

3 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 280 ) ( 59 ) 4,895

Net increase in cash, cash equivalents and restricted cash 109,838 42,109 38,409

Net increase (decrease) in cash, cash equivalents and restricted cash ( 119,048 ) 109,838 42,109

Cash, cash equivalents and restricted cash at beginning of year 314,651 204,813 162,704

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The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

Reclassification

Certain reclassifications of prior period presentation to conform to current period presentation have been made with no changes made to balance sheet, income statement or statement of cash flows subtotals.

Joint Venture

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The Joint Venture was accounted under the provisions of the consolidation guidance since the Company had controlling financial interest until December 1, 2021.

If both parties agree that the termination of the JV Company is the best interest of each party or the JV Company is bankrupt or insolvent where either party may terminate early, after paying the debts of the JV Company, the remaining assets of the JV Company shall be paid to the Chongqing Funds to cover the principal of its total paid-in contributions plus interest at 10 % simple annual rate prior to distributing the balance of the JV Company's assets to the Company.

The JV Company has reached its targeted production of assembly and testing.

Effective December 1, 2021, the Company entered into a share transfer agreement (the “STA”) with a third-party investor (the “Investor”), pursuant to which the Company sold to the Investor approximately 2.1 % of outstanding equity interest held by the Company in the JV Company for an aggregate purchase price of RMB 108 million or approximately $ 16.9 million (the “Transaction”).

The Transaction was closed on December 2, 2021 (the “Closing Date”).

As a result of the Transaction, as of the Closing Date, the Company’s equity interest in the JV Company decreased from 50.9 % to 48.8 %.

Also, the Company’s right to designate directors on the board of JV Company was reduced to three (3) out of seven (7) directors from four (4) directors prior to the Transaction.

As a result of the Transaction, AOS no longer had a controlling financial interest in the JV Company under generally accepted accounting principles.

Loss of control is deemed to have occurred when, among other things, a parent company owns less than a majority of the outstanding equity interest in the subsidiary, lacks a controlling financial interest in the subsidiary and, is unable to unilaterally control the subsidiary through other means such as having, or the ability to obtain or represent, a majority of the subsidiary’s board of directors.

Because of these factors, as of December 2, 2021, the Company ceased having control over the JV Company.

Therefore, the Company deconsolidated the financial statements of the JV Company as of that date.

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.

Subsequently, the Company has accounted for its investment in the JV Company using the equity method of accounting.

On December 24, 2021, the Company entered into a share transfer agreement with another third-party investor, pursuant to which the Company sold to this investor 1.1 % of outstanding equity interest held by the Company in the JV Company for an aggregate purchase price of RMB 60 million, or approximately $ 9.4 million.

In addition, on December 30, 2021, the JV

Company adopted an employee equity incentive plan and issued an equity interest equivalent to 3.99 % of the JV Company in exchange for cash.

As a result, the Company owned 45.8 % of the equity interest in the JV Company as of December 31, 2021.

On January 26, 2022, the JV Company completed a financing transaction pursuant to a corporate financing agreement (the “Financing Agreement”) between the JV Company and certain third-party investors (the “New Investors”).

Under the Financing Agreement, the New Investors purchased newly issued equity interest of the JV Company for a total purchase price of RMB 509 million (or approximately $ 80 million based on the currency exchange rate as of January 26, 2022) (the “Investment”).

Immediately following the closing of the Investment, the percentage of outstanding JV Company equity interest beneficially owned by the Company was further reduced to 42.2 %.

As of June 30, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was reduced to 42.2 %.

Such reduction reflects (i) the sale by the Company of approximately 2.1 % of the outstanding JV equity interest which resulted in the deconsolidation of the JV Company, (ii) additional sale by the Company of approximately 1.1 % of outstanding JV equity interest in December 2021, (iii) the adoption of an employee equity incentive plan and the issuance of additional equity interest equivalent to 3.99 % of the JV Company to investors in exchange for cash in December 2021, and (iv) issuance of additional equity interest of JV to investors in January 2022.

Certain Significant Risks and Uncertainties Related to Outbreak of Coronavirus Disease 2019 (“COVID-19”)

The COVID-19 pandemic has had and continues to have a negative impact on business and economic activities across the globe.

As a result of the COVID-19 pandemic and the global economic downturn and changing consumer behaviors due to various restrictions imposed by governments, the Company has experienced shifting market trends, including an increasing demand in the markets for notebooks, PCs and gaming devices and decreasing demand for mobile phone and industrial products, as more consumers are staying at and working from home.

While the Company has recently benefited from the increasing demand of consumer electronics and PC related products, there is no guarantee that this trend will continue, and such increasing demand may discontinue or decline as government authorities relax and terminate COVID-19 related restrictions and consumer behaviors change.

Furthermore, as the COVID-19 pandemic continues and global economic downturn and high unemployment persists, consumer spending may slow down substantially, in which case the Company may experience a significant decline of customer orders for its products, including those designed for PC-related applications, and such decline will adversely affect its financial conditions and results of operations.

The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic;

the availability, distribution and effectiveness of vaccines;

the spread of new variants of COVID-19;

the continued or renewed imposition of protective public safety measures and government mandates;

the continuing disruption of global supply chain affecting the semiconductor industry;

and the impact of the pandemic on the global economy and demand for consumer products.

In April 2022, the operations of our two packaging and testing facilities in Shanghai, China were suspended due to a strict lockdown of the city imposed by the local government in response to surging COVID cases.

Our facilities in Shanghai were required to be shut down and production was halted beginning in early April.

Transportation suspension in and out of Shanghai also interrupted the shipping of raw materials and finished parts to and from our facilities.

We received permission to reopen our facilities partially in early May.

We gradually ramped up production at these facilities in May and returned to normal operation in June 2022.

The suspension of our Shanghai facilities, and the subsequent partial resumption of production, reduced our ability to complete orders from our customers in a timely manner, which adversely affected our revenue and results of operation for the three months ended June 30, 2022.

During the first half of calendar year 2022, the Company's operations were negatively impacted by China’s zero-Covid policy that resulted in factory shutdowns and supply chain shortages, including the temporary suspension of our factory operations in Shanghai from April to June 2022.

In December 2022, the Chinese government issued new guidelines easing some of its strict zero-COVID policies, including the relaxation of testing requirements and travel restrictions.

During the three months ended March 31, 2023, China and other parts of the world in which we conduct our business have ended pandemic restriction and have largely returned to normal.

In general, our business operations are no longer affected by the COVID-19 pandemic.

Risks and Uncertainties

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The Company believes changes in any of the following areas could have a material adverse effect on the Company's future financial position or results of operations or cash flows:

the macroeconomic condition and cyclical nature of the semiconductor industry;

the timing and success of new product development, including market receptiveness, operation of in-house manufacturing facilities, litigation or claims against the Company based on intellectual property, patent, product regulatory or other factors, competition from other products, general economic conditions, the inability to attract and retain qualified employees, lack of control to the JV Company and ultimately to sustain profitable operations, risks associated with doing business in China, and ability to diversify products and develop digital business;

the general state of the U.S., China and world economies;

the highly cyclical nature of the industries the Company serves;

the loss of any of its larger customers;

restrictions on the Company’s ability to sell to foreign customers due to trade laws, regulations and requirements;

restrictions on the

Company’s ability to sell to foreign customers due to trade laws, regulations and requirements;

disruptions of the supply chain of components needed for our products;

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Additional risks and uncertainties that the Company is unaware of, or that the Company currently believes are not material, may also become important factors that adversely affect its business.

The Company's revenue limited by its ability to utilize wafer production and packaging and testing capacity from its in-house facilities and obtain adequate wafer supplies from third-party foundries.

The Company recently entered into a new agreement with the JV Company pursuant to which the JV Company agrees to provide us with a guaranteed supply of a fixed number of wafers until December 2023.

The Company's revenue is limited by its ability to utilize wafer production and packaging and testing capacity from its in-house facilities and obtain adequate wafer supplies from third-party foundries.

The Company entered into an agreement with the JV Company pursuant to which the JV Company agrees to provide the Company with a guaranteed supply of a fixed number of wafers until December 2023.

Currently the Company's main third-party foundry is Shanghai Hua Hong Grace Electronic Company Limited, or HHGrace, located in Shanghai, China.

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HHGrace manufactured approximately 9.6 %, 10.3 % and 11.5 % of the wafers used in the Company's products for the fiscal years ended June 30, 2023, 2022 and 2021, respectively.

Although the Company believes that its volume

of production allows the Company to secure favorable pricing and priority in allocation of capacity in its third-party foundries, if the foundries' capacities are constrained due to market demands, HHGrace, together with other foundries from which the Company purchases wafers, may not be willing or able to satisfy all of the Company's manufacturing requirements on a timely basis and/or at favorable prices.

The Company is also subject to the risks of service disruptions and raw material shortages by its foundries.

Such disruptions, shortages and price increases could harm the Company’s operating results.

In addition, manufacturing facilities' capacity affects the Company's gross margin because the Company has certain fixed costs associated with its Oregon Fab and the JV Company, as well as in-house packaging and testing facilities.

Although the Company believes that its volume of production allows the Company to secure favorable pricing and priority in allocation of capacity in its third-party foundries, if the foundries' capacities are constrained due to market demands, HHGrace, together with other foundries from which the Company purchases wafers, may not be willing or able to satisfy all of the Company's manufacturing requirements on a timely basis and/or at favorable prices.

In addition, manufacturing facilities' capacity affects the Company's gross margin because the Company has certain fixed costs associated with its Oregon Fab as well as in-house packaging and testing facilities.

If the Company fails to utilize its manufacturing facilities' capacity at a desirable level, its financial condition and results of operations will be adversely affected.

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GAAP requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses.

To the extent there are material differences between these estimates and actual results, the Company's condensed consolidated financial statements will be affected.

To the extent there are material differences between these estimates and actual results, the Company's consolidated financial statements will be affected.

On an ongoing basis, the Company evaluates the estimates, judgments and assumptions including those related to stock rotation returns, price adjustments, allowance for doubtful accounts, inventory reserves, warranty accrual, income taxes, leases, share-based compensation, recoverability of and useful lives for property, plant and equipment and intangible assets, as well as the economic implications of the COVID-19 pandemic.

18 unchanged sentences

however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

The Company maintains restricted cash in connection with cash balances temporarily restricted for regular business operations, including the possibility of a dispute with a vendor.

The Company maintains restricted cash in connection with cash balances temporarily restricted for regular business operations.

These balances have been excluded from the Company’s cash and cash equivalents balance and are classified as restricted cash in the Company’s consolidated balance sheets.

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Adjustments to inventory once established are not reversed until the related inventory has been sold or scrapped.

If actual market conditions are more favorable than expected and the products that have previously been written down are sold, our gross margin would be favorably impacted.

Property, Plant and Equipment

2 unchanged sentences

Depreciation is provided for on a straight-line basis over the estimated useful lives of the related assets as follows:

Building 20 years

Building and building improvements 20 years

Manufacturing machinery and equipment 7 to 10 years

1 unchanged sentence

Computer hardware and software 3 to 5 years

Office furniture and equipment 5 years

Leasehold and building improvements 2 to 20 years

Office furniture and equipment 3 to 5 years

Leasehold improvements 2 to 15 years

Vehicle 5 years

14 unchanged sentences

The Company records such grants either as a reduction of the related expense, a reduction of the cost of the related asset, or as other income depending upon the nature of the grant.

As a result of such grants, during the fiscal year ended June 30, 2022, the Company reduced interest expense by $ 0.9 million, property, plant and equipment by $ 1.4 million, and operating expenses by $ 0.2 million.

As a result of such grants, during the fiscal year ended June 30, 2023, the Company reduced property, plant and equipment by $ 0.6 million and operating expenses by $ 0.1 million.

During the fiscal year ended June 30, 2022, the Company reduced interest expense by $ 0.9 million, property, plant and equipment by $ 1.4 million, and operating expenses by $ 0.2 million.

11 unchanged sentences

and (5) recognition of revenue when, or as, a performance obligation is satisfied.

The Company recognizes product revenue at a point in time when product is shipped to the customer, as determined by the agreed upon shipping terms, net of estimated stock rotation returns and price adjustments that it expects to provide to certain distributors.

expects to provide to certain distributors.

The Company presents revenue net of sales taxes and any similar assessments.

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Packaging and testing services revenue is recognized at a point in time upon shipment of serviced products to the customer.

License and Development Services Revenue Recognition

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 for a total fee of $ 45 million, consisting of an upfront fee of $ 18 million and $ 6.8 million paid to the Company in March 2023 and July 2023, respectively, with the remaining amount to be paid upon the achievement of specified engineering services and product milestones.

The license and development fee is determined to be one performance obligation and is recognized over the 24 months when the Company performs the engineering and development services.

The Company uses the input method to measure progression, representing a faithful depiction of the transfer of services.

During the fiscal year ended June 30, 2023, the Company recorded $ 9.9 million of license and development revenue.

The amount of contract liability is recorded as deferred revenue on the consolidated balance sheets.

In addition, the Company also entered an accompanying supply agreement to provide limited wafer supply to the customer.

The Company determines if an arrangement is a lease at inception.

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The Company considers evidence such as our past operating results, the existence of cumulative losses in recent years and our forecast of future taxable income.

The Company has concluded that it should report a full valuation allowance on its state research and development (R&D) tax credit carryforwards as the Company annually generates more state R&D tax credits than it could use based on its forecasts.

The Financial Accounting Standards Board (FASB), issued guidance which clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized.

18 unchanged sentences

Forfeitures are estimated based on historical experience at the time of grant.

Changes in estimated forfeitures are recognized in the period of change and impact the amount of stock compensation expenses to be recognized in future periods, which could be material if actual results differ significantly from estimates.

Changes in estimated forfeitures are

recognized in the period of change and impact the amount of stock compensation expenses to be recognized in future periods, which could be material if actual results differ significantly from estimates.

The Employee Share Purchase Plan (the “ESPP”) is accounted for at fair value on the date of grant using the Black-Scholes option valuation model.

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Recently Issued Accounting Standards not yet adopted

In September 2022, the FASB issued ASU No.

2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

This ASU was issued in response to requests from financial statement users for increased transparency surrounding the use of supplier finance programs.

The amendments in ASU 2022-04 require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

The amendments in this ASU do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this guidance.

Recently Adopted Accounting Standards

In November 2021, the FASB issued Accounting Standards Update (ASU) No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.” This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605.

The ASU is effective for all entities within their scope for financial statements issued for annual periods

beginning after December 15, 2021.

The adoption will not have any impacts on the Company's consolidated financial position, results of operations or cash flows.

Disclosures by Business Entities about Government Assistance.

This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605.

The adoption of ASU 2021-10 in the fiscal year ended June 30, 2023 on a prospective basis had no impact on the Company's Consolidated Financial Statements.

In August 2020, the FASB issued ASU No.

2 unchanged sentences

This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

Specifically, the ASU eliminated the need for the Company to assess (1) whether a contract on the entity’s own equity permits settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s rights, and (3) whether collateral is required.

Specifically, the ASU eliminated the need to assess whether a contract on the entity’s own equity (1) permits settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s rights, and (3) whether collateral is required.

In addition, the ASU requires incremental disclosure related to contracts on the entity’s own equity and clarifies the treatment of certain financial instruments accounted for under this ASU on earnings per share.

For public business entities, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

The Company does not expect the adoption of this guidance will have a material impact on its consolidated financial position, results of operations or cash flows.

Recently Adopted Accounting Standards

In January 2020, the FASB issued ASU No.

2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions.

ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting.

The adoption of ASU 2020-01 on July 1, 2021 had no material impact on the Company's Consolidated Financial Statements.

In December 2019, the FASB issued ASU No.

2019-12 “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”) by removing certain exceptions to the general principles.

The Company adopted ASU 2019-12 as of July 1, 2021.

ASU 2019-12 had no material impact on the Company's Consolidated Financial Statements.

The adoption of ASU 2020-06 had no impact on the Company's Consolidated Financial Statements.

Equity Method Investment in Equity Investee

2 unchanged sentences

The Transaction closed on December 2, 2021 (the “Closing Date”), which reduced the Company’s equity interest in the JV Company from 50.9 % to 48.8 %.

Also, the Company’s right to designate directors on the board of JV Company was reduced to three ( 3 ) out of seven ( 7 ) directors, from four ( 4 ) directors prior to the Transaction.

Also, the Company’s right to designate directors on the board of the JV Company was reduced to three ( 3 ) out of seven ( 7 ) directors, from four ( 4 ) directors prior to the Transaction.

As a result of the Transaction and other factors, the Company no longer has a controlling financial interest in the JV Company and has determined that the JV Company was deconsolidated from the Company’s Consolidated Financial Statements effective as of the Closing Date.

In connection with the deconsolidation and in accordance with ASC 810, the Company recorded a gain on deconsolidation of $ 399.1 million during the fiscal year ended June 30, 2022 in the Consolidated Statements of Income.

The gain on deconsolidation of the JV Company was calculated as follows:

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Gain on deconsolidation of the JV Company

The Company retained significant influence over the operating and financial policies of the JV Company and measured the fair value of the retained investment based on their share of the fair value of the JV Company, which was calculated using the market approach based on the Transaction.

In addition, on December 30, 2021, the JV Company adopted an employee equity incentive plan and issued an equity interest equivalent to 3.99 % of the JV Company in exchange to cash.

In addition, the JV Company adopted an employee equity incentive plan and issued an equity interest equivalent to 3.99 % of the JV Company in exchange to cash.

As a result of these two transactions, the Company owned 45.8 % of the equity interest in the JV Company as of December 31, 2021.

On January 26, 2022, the JV Company completed a financing transaction pursuant to a corporate investment agreement (the “Investment Agreement”) between the JV and certain third-party investors (the “New Investors”).

On January 26, 2022, the JV Company completed a financing transaction pursuant to a corporate investment agreement (the “Investment Agreement”) between the JV Company and certain third-party investors (the “New Investors”).

Under the Investment Agreement, the New Investors purchased newly issued equity interest of the JV Company, representing approximately 7.82 % of post-transaction outstanding equity interests of the JV Company, for a total purchase price of RMB 509 million (or approximately USD 80 million based on the currency exchange rate as of January 26, 2022) (the “Investment”).

Following the closing of the Investment and as of June 30, 2022, the percentage of outstanding JV Company equity interest beneficially owned by the Company was reduced to 42.2 %.

Following the closing of the Investment and as of June 30, 2022, the percentage of outstanding JV equity interest beneficially owned by the Company was reduced to 42.2 %.

The net loss associated with these sales of JV Company equity interest held by the Company were recorded in the fiscal year ended June 30, 2022 as follows:

2 unchanged sentences

Loss on diluted equity interest from issuance of shares under the employee equity incentive plan

Gain on 7.82% equity interest sold 4,501

Gain on 7.82% equity interest sol

Loss on changes on equity interest of the JV Company, net

The Company accounts for its investment in the JV Company as an equity method investment and reports its equity in earnings or loss of the JV Company on a three-month lag due to an inability to timely obtain financial information of the JV Company.

During the fiscal year ended June 30, 2022, the Company recorded $ 2.6 million of its equity in loss of the JV Company, using lag reporting.

During the fiscal year ended June 30, 2023 and 2022, the Company recorded $ 1.4 million and $ 2.6 million of its equity in loss of the JV Company, respectively, using lag reporting.

As of June 30, 2023, the percentage of outstanding JV equity interest beneficially owned by the Company was 42.2 %.

Summarized Financial Information

The following table presents summarized financial information for the JV Company as of and for the period from December 2, 2021 through March 31, 2022, using lag reporting (in thousands):

As of March 31, 2022

The following table presents summarized financial information for the JV Company as of and for the period from April 1, 2022 through March 31, 2023 and December 2, 2021 through March 31, 2022, using lag reporting (in thousands):

As of March 31, 2023 As of March 31, 2022

Current assets $ 122,324 $ 198,323

2 unchanged sentences

Non-current liabilities $ 36,525 $ 76,207

For the periods of December 2, 2021 to March 31, 2022

For the period of April 1, 2022 to March 31, 2023 For the period of December 2, 2021 to March 31, 2022

Revenue $ 178,974 $ 68,972

Gross loss $ 870

Gross loss (income) $ ( 4,502 ) $ 870

Operating expenses $ 5,939 $ 2,280

2 unchanged sentences

As of June 30, 2023, the Company owned 42.2 % equity interest in the JV Company, which, by definition, is a related party to the Company.

The JV Company supplies 12-inch wafers and provides assembly and testing services for 8-inch wafer products to AOS.

Due to the right of offset of receivables and payables with the JV Company, as of June 30, 2022, AOS recorded the net amount of $ 29.0 million as a payable related to equity investee, net, in the Consolidated Balance Sheet.

The JV Company supplies 12-inch wafers and provides assembly and testing services to AOS.

AOS previously sold 8-inch wafers to the JV Company for further assembly and testing services until January 1, 2023, when it changed to consign the 8-inch wafers to the JV Company.

Due to the right of offset of receivables and payables with the JV Company, as of June 30, 2023 and 2022, AOS recorded the net amount of $ 12.0 million and $ 29.0 million, respectively, as a payable related to equity investee, net, on the Consolidated Balance Sheet.

Since the December 2, 2021 deconsolidation of the JV Company and through the fiscal year ended June 30, 2022, the Company purchased finished goods and services of $ 117.6 million from the JV Company and AOS provided the JV Company with $ 36.4 million of 8-inch wafers.

Net Income (Loss) Per Common Share Attributable to Alpha and Omega Semiconductor Limited

The purchases by AOS for the fiscal year ended June 30, 2023 were $ 127.8 million and the sales by AOS for the fiscal year ended June 30, 2023 were $ 35.6 million.

Net Income Per Common Share Attributable to Alpha and Omega Semiconductor Limited

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period.

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Under the treasury stock method, potential common shares outstanding are not included in the computation of diluted net income per share if their effect is anti-dilutive.

The following table presents the calculation of basic and diluted net income (loss) per share attributable to common shareholders:

The following table presents the calculation of basic and diluted net income per share attributable to common shareholders:

Year Ended June 30,

1 unchanged sentence

(in thousands, except per share data)

Net income (loss) attributable to Alpha and Omega Semiconductor Limited $ 453,163 $ 58,116 $ ( 6,596 )

Net income attributable to Alpha and Omega Semiconductor Limited $ 12,364 $ 453,163 $ 58,116

Weighted average number of common shares used to compute basic net income per share 27,552 26,764 25,786

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Weighted average number of common shares used to compute diluted net income per share 29,528 28,203 27,272

Net income (loss) per share attributable to Alpha and Omega Semiconductor Limited:

Net income per share attributable to Alpha and Omega Semiconductor Limited:

Basic $ 0.45 $ 16.93 $ 2.25

Diluted $ 0.42 $ 16.07 $ 2.13

The following potential dilutive securities were excluded from the computation of diluted net income (loss) per share as their effect would have been anti-dilutive:

The following potential dilutive securities were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive:

Year Ended June 30,

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Credit sales, which are mainly on credit terms of 30 to 60 days, are only made to customers who meet the Company's credit standards, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis.

The Company considers its financial assets to be of good credit quality because its key distributors and direct customers have long-standing business relationships with the Company and the Company has not experienced any significant bad debt write-offs of accounts receivable in the past.

The Company considers its trade accounts receivable to be of good credit quality because its key distributors and direct customers have long-standing business relationships with the Company and the Company has not experienced any significant bad debt write-offs of accounts receivable in the past.

The Company closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, where available.

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Customer B 35.6 % 39.7 % 35.4 %

Customer D 14.0 % * *

Percentage of accounts receivable 2023 2022

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Interest receivable 135 25

Customs deposit — 270

Other receivables 1,138 745

3 unchanged sentences

Land $ 4,877 $ 4,877

Building 16,691 71,454

Building and building improvements 26,478 16,691

Manufacturing machinery and equipment 398,757 287,574

3 unchanged sentences

Leasehold improvements 38,787 35,254

Land use rights — 9,319

554,613 422,026

10 unchanged sentences

Prepayments for property and equipment $ 1,717 $ 6,890

Investments in privately held companies 100 100

Investment in privately held companies 100 100

Customs deposit 931 1,708

32 unchanged sentences

$ 79,533 $ 116,893

Short-term customer deposits are payments received from customers for securing future product shipments.

As of June 30, 2023, $ 13.5 million were from Customer A and $ 9.2 million were from Customer B, and $ 15.4 million were from other customers.

As of June 30, 2022, $ 12.5 million were from Customer A and $ 16.2 million were from Customer B, and $ 11.9 million were from other customers.

The activity in the warranty accrual, included in accrued liabilities is as follows:

16 unchanged sentences

(in thousands)

Deferred payroll taxes $ — $ 1,219

Customer deposits $ 46,393 $ 70,301

3 unchanged sentences

As of June 30, 2023, $ 21.0 million were from Customer A and $ 11.7 million were from Customer B, and $ 13.7 million were from other customers.

As of June 30, 2021, $ 21.0 million were from Customer A and $ 21.0 million were from Customer B.

As of June 30, 2022, $ 34.5 million were from Customer A and $ 21.9 million were from Customer B and $ 13.9 million were from other customers.

Bank Borrowing

Short-term bank borrowing

In October 2019, the Company's subsidiary in China entered into a line of credit facility with Bank of Communications Limited in China.

In January 2023, one of the Company's subsidiaries in China entered into a line of credit facility with Bank of Communications Limited in China.

The purpose of the credit facility is to provide working capital borrowings.

The Company could borrow up to approximately RMB 140 million or $ 20.6 million based on currency exchange rate between RMB and U.S.

Dollar on January 31, 2023 with a maturity date of December 1, 2023.

As of June 30, 2023, there was no outstanding balance for this loan.

In September 2022, one of the Company's subsidiaries in China entered into a line of credit facility with Industrial and Commercial Bank of China.

The purpose of the credit facility was to provide working capital borrowings.

The Company could borrow up to approximately RMB 72.0 million or $ 10.3 million based on currency exchange rate between RMB and U.S.

Dollar on September 20, 2022 with a maturity date of September 30, 2023.

As of June 30, 2023, there was no outstanding balance.

In October 2019, one of the Company's subsidiaries in China entered into a line of credit facility with Bank of Communications Limited in China.

This line of credit matured on February 14, 2021 and was based on the China Base Rate multiplied by 1.05 , or 4.99 % on October 31, 2019.

4 unchanged sentences

During the three months ended December 31, 2021, the Company borrowed RMB 11.0 million, or $ 1.6 million, at an interest rate of 3.85 % per annum, with principal due on November 18, 2022.

As of June 30, 2022, there was $ 1.6 million outstanding balance under the loan.

On November 16, 2018, the Company's subsidiary in China entered into a line of credit facility with Industrial and Commercial Bank of China.

As of June 30, 2023, there was no outstanding balance and this loan was expired.

On November 16, 2018, one of the Company's subsidiaries in China entered into a line of credit facility with Industrial and Commercial Bank of China.

The purpose of the credit facility was to provide short-term borrowings.

3 unchanged sentences

During the three months ended December 31, 2021, the Company borrowed RMB 5.0 million, or $ 0.8 million, at an interest rate of 3.7 % per annum, with principal due on September 12, 2022.

As of June 30, 2022, the total outstanding balance of this loan was $ 0.5 million.

As of June 30, 2023, there was no outstanding balance and this loan was expired.

Accounts Receivable Factoring Agreement

1 unchanged sentence

This factoring agreement allows the Borrower to borrow up to 70 % of the net amount of its eligible accounts receivable of the Borrower with a maximum amount of $ 30.0 million.

The interest rate is based on one month London Interbank Offered Rate ("LIBOR") plus 1.75 % per annum.

The interest rate is based on one month

London Interbank Offered Rate ("LIBOR") plus 1.75 % per annum.

The Company is the guarantor for this agreement.

7 unchanged sentences

Debt financing

In September 2021, Jireh Semiconductor Incorporated (“Jireh”) entered into a financing arrangement agreement with a company (“Lender”) for the lease and purchase of a machinery equipment manufactured by a supplier.

The total purchase price of this machinery equipment was euro 12.0 million, or $ 12.8 million based on the currency exchange rate between the euro and U.S.

Dollar on June 30, 2022.

In September 2021, Jireh Semiconductor Incorporated (“Jireh”), one of the wholly-owned subsidiaries, entered into a financing arrangement agreement with a company (“Lender”) for the lease and purchase of a machinery equipment manufactured by a supplier.

This agreement has a 5 years term, after which Jireh has the option to purchase the equipment for $ 1 .

The implied interest rate was 4.75 % per annum which was adjustable based on every five basis point increase in 60-month U.S.

Treasury Notes, until the final installation and acceptance of the equipment.

The total purchase price of this equipment was euro 12.0 million.

In April 2021, Jireh made a down payment of euro 6.0 million, representing 50 % of the total purchase price of the equipment, to the supplier.

In June 2022, the equipment was delivered to Jireh after Lender paid 40 % of the total purchase price, for euro 4.8 million, to the supplier on behalf of Jireh.

Based on the terms of the agreement between Jireh and Lender, after the installation and configuration of the equipment for its intended use, Lender will make the remaining 10 % payment for the total purchase price and reimburse Jireh for the down payment made to the supplier.

By that time, the title of the equipment will be transferred to Lendor.

This agreement has a 5 years term, after which Jireh has the option to purchase the equipment for $ 1 .

Jireh is required to make a monthly payment of interest at an implied interest rate of 4.75 % per annum to Lessor.

Principal payment is required to be paid monthly after the completion of the title transfer.

The financing arrangement is secured by this machneray equipment which had the carrying amount of $ 12.8 million as of June 30, 2022.

In September 2022, Lender paid the remaining 10 % payment for the total purchase price and reimbursed Jireh for the 50 % down payment, after the installation and configuration of the equipment.

The title of the equipment was transferred to Lender following such payment.

The agreement was amended with fixed implied interest rate of 7.51 % and monthly payment of principal and interest effective in October 2022.

Other terms remain the same.

In addition, Jireh purchased hardware for the machine under this financing arrangement.

The purchase price of this hardware was $ 0.2 million.

The financing arrangement is secured by this equipment and other equipment which had the carrying amount of $ 15.2 million as of June 30, 2023.

As of June 30, 2023, the outstanding balance of this debt financing was $ 11.9 million.

6 unchanged sentences

This agreement contains customary restrictive covenants and includes certain financial covenants that the Company is required to maintain.

Jireh drew down $ 45.0 million on February 16, 2022.

Jireh drew down $ 45.0 million on February 16, 2022 with the first payment of principal beginning in October 2022.

As of June 30, 2023, Jireh was in compliance with these covenants and the outstanding balance of this loan was $ 38.3 million.

2 unchanged sentences

The loan has a five-year term and matures on June 1, 2023.

Beginning June 1, 2018, Jireh made consecutive monthly payments of principal and interest to the Bank.

Jireh made consecutive monthly payments of principal and interest to the Bank.

The outstanding principal shall accrue interest at a fixed rate of 5.04 % per annum on the basis of a 360-day year.

2 unchanged sentences

The amendment was accounted for as a debt modification and no gain or loss was recognized.

The Company was in compliance with these covenants as of June 30, 2022.

As of June 30, 2022, the outstanding balance of the term loan was $ 14.2 million.

The Company paid this loan in full on May 1, 2023.

As of June 30, 2023, there was no outstanding balance and this loan was expired.

On August 15, 2017, Jireh entered into a credit agreement with the Bank that provided a term loan in an amount up to $ 30.0 million for the purpose of purchasing certain equipment for the fabrication facility located in Oregon.

The obligation under the credit agreement is secured by substantially all assets of Jireh and guaranteed by the Company.

The credit agreement has a five-year term and matures on August 15, 2022.

The obligation under the credit agreement was secured by substantially all assets of Jireh and guaranteed by the Company.

The credit agreement had a five-year term and matured on August 15, 2022.

In January 2018 and July 2018, Jireh drew down on the loan in the amount of $ 13.2 million and $ 16.7 million, respectively.

Beginning in October 2018, Jireh is required to pay to the Bank on each payment date, the outstanding principal amount of the loan in monthly installments.

The loan accrues interest based on an adjusted London Interbank Offered Rate ("LIBOR") as defined in the credit agreement, plus specified applicable margin in the range of 1.75 % to 2.25 %, based on the outstanding balance of the loan.

The credit agreement contains customary restrictive covenants and includes certain financial covenants that require the Company to maintain, on a consolidated basis, specified financial ratios and fixed charge coverage ratio.

Beginning in October 2018, Jireh was required to pay to the Bank on each payment date, the outstanding principal amount of the loan in monthly installments.

The loan accrued interest based on an adjusted LIBOR as defined in the credit agreement, plus specified applicable margin in the range of 1.75 % to 2.25 %, based on the outstanding balance of the loan.

The credit agreement contained customary restrictive covenants and included certain financial covenants that required the Company to maintain, on a consolidated basis, specified financial ratios and fixed charge coverage ratio.

In August 2021, Jireh signed an amendment of this loan with the Bank to modify the financial covenants requirement to align with the new term loan agreement entered into on August 18, 2021, discussed above.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

The Company was in compliance with these covenants as of June 30, 2022.

As of June 30, 2022, the outstanding balance of the term loan was $ 1.9 million.

The loan was fully paid off in September, 2022.

As of June 30, 2023, there was no outstanding balance and this loan was expired.

At June 30, 2023, maturities of short-term debt and long-term debt were as follows (in thousands):

1 unchanged sentence

2024 $ 11,472

Thereafter 234

Total principal of debt 49,887

15 unchanged sentences

For operating leases, the amortization of the ROU asset and the accretion of its lease obligation liability result in a single straight-line expense recognized over the lease term.

The finance lease is related to the machinery lease financing with a vendor.

In addition, the finance lease related to the RMB 400.0 million of lease financing of the JV Company with YinHai Leasing Company and The Export-Import Bank of China was not included in the Company’s Consolidated Balance Sheet at June 30, 2022 due to the deconsolidation of the JV Company on December 2, 2021.

The finance lease is related to the $ 5.1 million of a machinery lease financing with a vendor.

In September 2022, the lease was amended to make a monthly payment of principal and interest as a fixed amount effective in October 2022.

Other terms remain the same.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

The Company does not record leases on the consolidated balance sheet with a term of one year or less.

56 unchanged sentences

Any remaining balance of the losses is charged to retained earnings.

During fiscal year 2023, the Company repurchased an aggregate of 548,132 shares, from the open market for a total cost of approximately $ 13.4 million, excluding fees and related expenses, at an average price of $ 24.51 per share.

During fiscal year 2022 and 2021, the Company did no t repurchase any shares pursuant to the repurchase program.

2 unchanged sentences

Of the 7,332,780 repurchased shares, 175,599 shares with a weighted average repurchase price of $ 9.97 per share, were reissued at an average price of $ 4.76 per share for option exercises and vested restricted stock units (“RSU”).

As of June 30, 2022, $ 13.4 million remain available under the share repurchase program.

As of June 30, 2023, there was none remaining available under the share repurchase program.

Share-based Compensation

6 unchanged sentences

Outstanding shares under the 2018 Plan and awards granted under the 2009 Plan that expire, are forfeited or cancelled or terminate prior to the issuance of the shares subject to those awards or are settled in cash will be available for subsequent issuance under the 2018 Plan.

At the annual general meeting of shareholders in November 2021, the 2018 Plan was approved to increase by 1,000,000 shares to a total of 3,065,000 shares.

At the annual general meeting of shareholders in November 2021 and 2022, the 2018 Plan was approved to increase by 1,000,000 and 740,000 shares, respectively, to a total of 3,805,000 shares.

As of June 30, 2023, 611,994 shares were available for grant under the 2018 Plan.

Beginning with the 2014 Annual Shareholders Meeting, on the date of each annual shareholders meeting, each individual who commences service as a non-employee Board member by reason of his or her election to the Board at such annual meeting and each individual who is to continue to serve as a non-employee Board member, whether or not that individual is standing for re-election to the Board at that particular annual meeting, will automatically be granted an award in the form of restricted share units covering that number of common shares determined by dividing one hundred twenty-five thousand dollars ($ 125,000 ) by the average fair market value per share for the ninety ( 90 )-day period preceding the grant date, up to a maximum of 10,000 shares.

Beginning with the 2014 Annual Shareholders Meeting, on the date of each annual shareholders meeting, each individual who commences service as a non-employee Board member by reason of his or her election to the Board at such annual meeting and each individual who is to continue to serve as a non-employee Board member, whether or not that individual is standing for re-election to the Board at that particular annual meeting, will automatically be granted an award in the form of restricted share units covering that number of common shares determined by dividing one hundred thirty-five thousand dollars ($ 135,000 ) by the average fair market value per share for the ninety ( 90 )-day period preceding the grant date, up to a maximum of 10,000 shares.

Under the 2018 Plan, incentive share options and RSU are to be granted at a price that is not less than 100 % and nonstatutory share options are to be granted at not less than 85 % of the fair value of the common shares, at the date of grant for employees and consultants.

31 unchanged sentences

Such non-cash compensation expense was recorded as part of share-based compensation expense in the condensed consolidated statements of operations.

As of June 30, 2022 and 2021, the Company recorded nil and $ 0.1 million such expens es in the other current liabilities, respectively.

As of June 30, 2022 and 2021, the Company recorded nil and $ 0.1 million such expenses in the other current liabilities, respectively.

During the fiscal years ended June 30, 2022, 2021 and 2020, the Company recorded $ 0.3 million, $ 3.1 million and $ 0.6 million of non-cash compensation expense, respectively.

25 unchanged sentences

Risk-free interest rate of 1.0 %, expected term of 3.1 years, expected volatility of 62.8 % and dividend yield of 0 %.

The Company recorded approximately $ 4.5 million expenses for these MSUs during the fiscal year ended June 30, 2022.

During the quarter ended September 30, 2018, the Company granted 1.3 million market-based restricted stock units (“MSUs”) to certain personnel.

The number of shares to be earned at the end of the performance period is determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2019 to December 31, 2021 as well as the recipients remaining in continuous service with the Company through such period.

The Company recorded approximately $ 1.9 million and $ 4.5 million of expenses for these MSUs during the fiscal year ended June 30, 2023 and 2022, respectively.

During the quarter ended September 30, 2018, the Company granted 1.3 million MSUs to certain personnel.

recipients remaining in continuous service with the Company through such period.

The MSUs vest in four equal annual installments after the end of performance period.

On August 31, 2020, the Compensation Committee of the Board approved a modification of the terms of MSU to (i) extend the performance period through December 31, 2022 and (ii) change the commencement date for the four-year time-based service period to January 1, 2023.

The modified MSUs were valued immediately before and after the modification, using Morte Carlo simulation pricing model.

The Morte Carlo simulation pricing model applied the following assumptions for pre-modification conditions:

The modified MSUs were valued immediately before and after the modification, using Monte-Carlo simulation pricing model.

The Monte-Carlo simulation pricing model applied the following assumptions for pre-modification conditions:

risk-free interest rate of 0.13 %, expected term of 1.3 years, expected volatility of 66.7 % and dividend yield of 0 %;

3 unchanged sentences

The Company recorded approximately $ 3.9 million, $ 1.6 million and $ 1.2 million of expense for these MSUs during the years ended June 30, 2023, 2022 and 2021, respectively.

The following table summarizes the Company’s MSUs activities:

Number of Performance-based Restricted Stock

Units Weighted Average

Grant Date Fair

Value Per Share Weighted Average

Period (Years) Aggregate Intrinsic Value

Nonvested at June 30, 2020 1,290,000 $ 5.17 3.88 $ 14,035,200

Forfeited ( 50,000 ) $ 5.17

Nonvested at June 30, 2021 1,240,000 $ 5.17 3.84 $ 37,683,600

Granted 1,022,000 $ 48.44

Forfeited ( 56,000 ) $ 9.81

Nonvested at June 30, 2022 2,206,000 $ 25.10 3.83 $ 73,548,040

Vested ( 90,000 ) $ 5.17

Forfeited ( 8,000 ) $ 48.44

Nonvested at June 30, 2023 2,108,000 $ 25.86 2.96 $ 69,142,400

The following table summarizes the Company's stock option activities:

27 unchanged sentences

After such accumulation period, common shares will be purchased at a price equal to 85 % of the fair market value per share on either the first day of the offering period or the last date of the accumulation period, whichever is less.

The maximum number of shares that may be purchased by a participant on any purchase date may not exceed 875 shares for a total of 3,500 shares per a 24-

month offering period.

The maximum number of shares that may be purchased by a participant on any purchase date may not exceed 875 shares for a total of 3,500 shares per a 24-month offering period.

In addition, no participant may purchase more than $ 25,000 worth of common stock in any one calendar year period.

27 unchanged sentences

The employer's contribution is discretionary.

Effective from April 1, 2022, the Company begins to match 50 % of employee contribution up to 4 % of eligible compensation for a 2 % maximum match.

During the fiscal year ended June 30, 2022, the Company made employer match contributions of $ 0.3 million.

Effective from April 1,

2022, the Company begins to match 50 % of employee contribution up to 4 % of eligible compensation for a 2 % maximum match.

During the fiscal year ended June 30, 2023 and 2022, the Company made employer match contributions of $ 1.0 million and $ 0.3 million, respectively.

The Company makes mandatory contributions for its employees to the respective local governments in terms of retirement, medical insurance and unemployment insurance, where applicable, according to labor and social security laws and regulations of the countries and areas in which the Company operates.

The retirement contribution rate is 7.7 % in the U.S., 14.0 % to 16.0 % in China, and 6.0 % in Taiwan.

The retirement contribution rate is 7.7 % in the U.S., 15.0 % to 16.0 % in China, 6.0 % in Taiwan, and 12.0 % in India.

The Company has no obligations for the payment of such social benefits beyond the required contributions as set out above.

18 unchanged sentences

Outside basis difference on equity method investment ( 1.0 ) 1.2 —

Research and development credit ( 0.3 ) ( 2.4 ) 8.0

Tax credits ( 13.3 ) ( 0.3 ) ( 2.4 )

Non-deductible expenses 1.5 — 2.4

Tax Act deferred tax re-measurement — — 6.2

Tax exempt income ( 1.5 ) — —

Withholding taxes 9.0 — —

Non-deductible executive compensation 7.3 0.5 —

Foreign derived intangible income deduction ( 7.2 ) ( 0.3 ) —

7 unchanged sentences

operations 711 478,386 50,602

Loss before income taxes $ 495,070 $ 60,224 $ ( 17,909 )

Net income before income taxes $ 19,712 $ 495,070 $ 60,224

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

7 unchanged sentences

Operating lease liabilities 4,567 5,807

Capitalized intangible assets — 9,982

Capitalized R&D costs 1,116 —

Accruals and reserves 558 643

7 unchanged sentences

Total deferred tax liabilities ( 49,078 ) ( 54,107 )

Net deferred tax assets/(liabilities)

Net deferred tax liabilities

$ ( 26,747 ) $ ( 28,165 )

3 unchanged sentences

Long-term deferred tax liabilities ( 27,283 ) ( 28,757 )

Net deferred tax assets/(liabilities) $ ( 28,165 ) $ 2,719

Net deferred tax liabilities $ ( 26,747 ) $ ( 28,165 )

The Company’s valuation allowance related to deferred income taxes as reflected in the consolidated balance sheets was $ 6.7 million and $ 5.8 million as of June 30, 2023 and 2022, respectively.

The change in valuation allowance for June 30, 2022 and 2021 was a decrease of $ 35.7 million and an increase of $ 3.6 million, respectively.

At June 30, 2022 and 2021, the Company provided a valuation allowance for its state research and development credit carryforward deferred tax assets of $ 5.8 million for both years, as it generated more state tax credits each year than it can utilize.

The change in valuation allowance for June 30, 2023 and 2022 was an increase of $ 0.9 million and a decrease of $ 35.7 million, respectively.

At June 30, 2023 and 2022, the Company provided a valuation allowance for its state research and development credit carryforward deferred tax assets of $ 6.7 million and $ 5.8 million, respectively, as it generated more state tax credits each year than it can utilize.

The Company intends to maintain a valuation allowance equal to the state research and development credit carryforwards in excess of the state net deferred tax liabilities on all other state book/tax differences and net operating loss carryforward.

3 unchanged sentences

The federal tax credits begin to expire in 2039, if not utilized.

At June 30, 2022, the Company had $ 0.9 million of state net operating loss carryforwards and had tax credit carryforwards of approximately $ 7.8 million.

Approximately $ 0.2

million of the state tax credits begin to expire in 2023, if not utilized.

The remaining $ 7.6 million of the state tax credits carryforward indefinitely.

At June 30, 2023, the Company had state tax credit carryforwards of approximately $ 9.0 million, which carryforward indefinitely.

The Company has not provided for withholding taxes on the undistributed earnings of its foreign subsidiaries because it intends to reinvest such earnings indefinitely.

16 unchanged sentences

The total unrecognized tax benefits of $ 9.3 million at June 30, 2023 included $ 6.3 million that, if recognized, would reduce the effective income tax rate in future periods.

It is reasonably possible that the Company will recognize approximately $ 0.01 million reduction to its uncertain tax positions during the next twelve months, related to potential expiration of the relevant statute of limitations.

It is reasonably possible that the Company will recognize approximately no reduction to its uncertain tax positions during the next twelve months.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made.

The amount of interest and penalties accrued at June 30, 2022 was $ 0.2 million, of which $ 32 thousand was recognized in the year ended June 30, 2022.

The amount of interest and penalties accrued at June 30, 2023 was $ 0.3 million, of which $ 0.1 million was recognized in the year ended June 30, 2023.

The amount of interest and penalties accrued at June 30, 2022 was $ 0.2 million, of which $ 32 thousand was recognized in the year ended June 30, 2022.

1 unchanged sentence

The tax years 2004 to 2023 remain open to examination by U.S.

federal and state tax authorities.

federal and state tax authorities due to tax attribute carryovers.

The tax years 2017 to 2023 remain open to examination by foreign tax authorities.

6 unchanged sentences

On December 22, 2017, the United States enacted tax legislation commonly known as the Tax Cuts and Jobs Act (“the Tax Act”), which significantly changed the existing U.S.

(5) creating a new limitation on deductible interest expense and (6) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

tax laws, including, but not limited to, (1) a reduction in the corporate tax rate from 35% to 21%, (2) a move from a worldwide tax system toward a territorial system through a “participation exemption” deduction for certain foreign-source dividends, (3) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized, (4) bonus depreciation that allows for full expensing of qualified property, (5) creating a new limitation on deductible interest expense and (6) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

The Company is not currently subject to the Base Erosion and Anti-Abuse (BEAT) tax, which is a tax imposed on certain entities who make payments to their non U.S.

3 unchanged sentences

It is possible that this tax could be applicable in future periods, which would cause an increase to the effective tax rate and cash taxes.

The Company is subject to U.S.

research expense capitalization under IRC Section 174 and is eligible for the foreign derived intangible income (FDII) deductions under the 2017 U.S.

Tax Cuts and Jobs Act.

The IRC Section 174 research expense capitalization results in a timing difference which is amortizable over five years for domestic R&D expenditures and 15 years for foreign R&D expenditures.

The FDII deduction results in a favorable permanent book-tax difference which is based on multiple factors including the amount of foreign sourced taxable income of U.S.

corporations.

Coronavirus Aid, Relief and Economic Security Act” (“CARES Act”), Enacted March 27, 2020

18 unchanged sentences

Currently, we are evaluating the impact of the Chips Act to us.

“The Inflation Reduction Act”, Enacted August 16, 2022

In August 2022 the United States enacted tax legislation through the Inflation Reduction Act (IRA).

The IRA introduces a 15% corporate alternative minimum tax (CAMT) for corporations whose average annual adjusted financial statement income (AFSI) for any consecutive three-tax-year period preceding the applicable tax year exceeds $1 billion.

The CAMT is effective for tax years beginning after 31 December 2022.

The CAMT is currently not applicable to the Company.

Altera Litigation

18 unchanged sentences

the design, development and supply of power semiconductor products for computing, consumer electronics, communication and industrial applications.

The chief operating decision-maker is the Chief Executive Officer.

The financial information presented to the Company's Chief Executive Officer is on a consolidated basis, accompanied by information about revenue by customer and geographic region, for purposes of evaluating financial performance and allocating resources.

The chief operating decision-makers are the Executive Chairman and the Chief Executive Officer.

The financial information presented to the Company’s Executive Chairman and Chief Executive Officer is on a consolidated basis, accompanied by information about revenue by customer and geographic region, for purposes of evaluating financial performance and allocating resources.

The Company has one business segment, and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level.

2 unchanged sentences

Because the Company’s distributors sell their products to end customers which may have a global presence, revenue by geographical location is not necessarily representative of the geographical distribution of sales to end user markets.

The revenue by geographical location in the following tables is based on the country or region in which the products were shipped to:

8 unchanged sentences

$ 691,321 $ 777,552 $ 656,902

During the fiscal year ended June 30, 2022, the Company corrected an immaterial error to reduce revenues in Hong Kong by $0.5 million, and to increase the revenues in China by $0.5 million for the fiscal year ended June 30, 2021.

The following is a summary of revenue by product type:

Year Ended June 30,

4 unchanged sentences

Packaging and testing services 3,979 11,535 12,458

License and development services 9,927 — —

$ 691,321 $ 777,552 $ 656,902

16 unchanged sentences

Other commitments

See Notes 1, 7 and 8 to the Consolidated Financial Statements contained in this annual Report on Form 10-K for descriptions of commitments including Joint Venture, debt and leases.

See Notes 1, 7 and 8 to the Consolidated Financial Statements contained in this annual Report on Form 10-K for descriptions of commitments including Joint Venture, bank borrowings and leases.

Contingencies and indemnities

3 unchanged sentences

As previously disclosed, U.S.

Department of Justice (“DOJ”) commenced an investigation into the Company’s compliance with export control regulations relating to its business transactions with Huawei and its affiliates (“Huawei”), which were added to the “Entity List” by the Department of Commerce (“DOC”) in May 2019.

The Company is cooperating fully with federal authorities in the investigation.

2 unchanged sentences

The Company complied with such request, and the Company has not shipped any product to Huawei after December 31, 2019.

The Company continues to work with DOC to resolve this issue and requested DOC to grant permission to reinstate the Company’s shipments to Huawei.

As part of this process and in response to DOC’s request, the Company provided certain documents and materials relating to the Company’s supply chain and shipment process to DOC, and DOC is currently reviewing this matter.

DOC has not informed the Company of any specific timeline or schedule under which DOC will provide a response to the Company’s request.

DOC has not informed the Company of any specific timeline or schedule under which DOC will complete its review.

Given the case is in still ongoing and neither DOJ nor DOC have provided the Company with any clear indication of the timing and schedule for the investigation, the Company cannot estimate the reasonably possible loss or range of loss that may occur.

4 unchanged sentences

Typically, these obligations arise in the context of contracts entered into by the Company, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants related to such matters as title to assets sold, certain intellectual property rights, specified environmental matters and certain income taxes.

In these circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant

to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party's claim.

Further, the Company's obligations under these agreements may be limited in time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by it under these agreements.

In these circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party's claim.

Further, the Company's obligations under these agreements may be limited in time and/or amount, and in some

instances, the Company may have recourse against third parties for certain payments made by it under these agreements.

The Company has not historically paid or recorded any material indemnifications, and no accrual was made at June 30, 2023 and 2022.

10 unchanged sentences

However, it is possible that additional environmental issues may arise in the future, which the Company cannot currently predict.

Cybersecurity Incident

In April 2022, the Company became aware of a cybersecurity incident involving unauthorized access to one email account at the Company, which caused the Company to make payments to unauthorized bank accounts.

As a result, the Company recorded a loss of $ 1.5 million due to the incident for the three months ended March 31, 2022.

The financial impact of this incident was not material, and there were no changes to previously released financial results or financial statements.

Immediately following the discovery, the Company commenced an investigation, contained the incident and implemented additional protective measures and internal control policies and procedures.

The Company has also retained a professional cybersecurity investigation firm to conduct a full forensic analysis of the incident, and concluded that there were no evidence of malware, persistence mechanisms or other compromised exchange on-premises accounts within the Company's environment.

In addition, there was no evidence to suggest that these accounts were accessed via the user agent that has the capability to synchronize or download email messages to the user’s local host.

This incident appears to be isolated and its financial impact identified to date was not material.

The Company believes that it had not incurred other damages and losses based on the conclusion of the full investigation.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

1 unchanged sentence

(in thousands)

Allowance Allowance Allowance

Allowance Allowance Valuation Allowance

for Doubtful for Price for Deferred

19 unchanged sentences

333-165823) filed with the Commission on March 31, 2010)

4.2* Description of Securities of the Registrant

10.7†† Foundry Agreement dated as of January 10, 2002 between the Registrant and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.16 from Registration Statement on Form F-1 (File No.

30 unchanged sentences

333-165823) filed with the Commission on March 31, 2010)

10.21(+) Form of Employment Agreement between the Registrant and Mike F.

Chang (incorporated by reference to Exhibit 10.13 from Registration Statement on Form F-1 (File No.

333-165823) filed with the Commission on March 31, 2010)

10.22(+) Form of Retention Agreement (incorporated by reference to Exhibit 10.14 from Registration Statement on Form F-1 (File No.

26 unchanged sentences

001-34717) filed with the Commission on May 11, 2020)

10.37 Amended and Restated 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-34717) filed with the Commission on November 12, 2019)

10.37 Alpha & Omega Semiconductor Limited 2018 Omnibus Incentive Plan (incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A filed with the Commission on October 13, 2022)

10.38 Supplemental Agreement to Financing Lease Contract, dated as of June 28, 2020 between YinHai Leasing Company and China Import/Export Bank and Chongqing Alpha and Omega Semiconductor Technology Co., Ltd.

5 unchanged sentences

001-34717) filed with the Commission on November 6, 2020)

10.41 Letter Agreement of Severance Benefit Program for Yifan Liang, dated April 28, 2010 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on February 8, 2021)

10.43(+) Alpha and Omega Semiconductor Limited Calendar Year 2021 Executive Incentive Cash Bonus Plan (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on May 7, 2021)

10.44(+) First Amendment to CEO Employment Agreement between Dr.

Mike Chang and Alpha and Omega Semiconductor Limited (incorporated by reference to Exhibit 10.

44 from Annual Report on Form 10-K (File No.

001-34717) filed with the Commission on August 30 , 20 21 )

10.41 Alpha & Omega Semiconductor Limited 2018 Omnibus Incentive Plan-Plan Amendment (incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A filed with the Commission on October 13, 2022)

10.45(+) 2021 Officer Form Retention Agreement for Executive Officers of Alpha and Omega Semiconductor Limited (incorporated by reference to Exhibit 10.45 from Annual Report on Form 10-K (File No.

5 unchanged sentences

10.49 Amended and Restated Director Compensation Policy (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on Nov ember 5 , 2021)

10.50 Equity Transfer Agreement of Chongqing Alpha and Omega Semiconductor Limited dated as of December 1, 2021 (English Translation) (incorporated by reference to Exhibit 10.

1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on November 5, 2021)

10.50 Equity Transfer Agreement of Chongqing Alpha and Omega Semiconductor Limited dated as of December 1, 2021 (English Translation) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on February 9, 2022)

10.51 The fourth Supplementary Agreement to the Joint Venture Contract on Incorporation of Chongqing Alpha and Omega Semiconductor Limited dated as of December 1, 2021 (English Translation) (incorporated by reference to Exhibit 10.

2 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on Feb ruary 9 , 202 2 )

10.52 Fourth Addendum to Foundry Agreement dated as of July 28, 2005 between the Registrant and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.

1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on February 9, 2022)

10.52 Fourth Addendum to Foundry Agreement dated as of July 28, 2005 between the Registrant and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on May 10, 2022)

1 unchanged sentence

001-34717) filed with the Commission on May 10, 2022)

10.54*† Shareholders Contract of Chongqing Alpha and Omega Semiconductor Limited dated as of July 12, 2022

10.54† Shareholders Contract of Chongqing Alpha and Omega Semiconductor Limited dated as of July 12, 2022 (incorporated by reference to Exhibit 10 .

54 from Annual Report on Form 10-K (File No.

001-34717) filed with the Commission on September 20, 2022)

10.56 Executive Chairman Employment Agreement (Mike Chang) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on May 8 , 202 3 )

10.57 Chief Executive Officer Employment Agreement (Stephen Chang) (incorporated by reference to Exhibit 10.

2 to the Quarterly Report on Form 10-Q (File No.

001-34717) filed with the Commission on May 8, 2023)

16.1 Letter from BDO USA LLP to the Securities and Exchange Commission (incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K filed with the Commission on October 11, 2022)

21.1* List of Subsidiaries of the Registrant

23.1* Consent of BDO USA, LLP, independent registered public accounting firm

23.1* Consent of B aker Tilly US , LLP, independent registered public accounting firm

23.2* Consent of BDO USA, P.A., independent registered public accounting firm

31.1* Certification of Chief Executive Officer required by Rule 13(a)-14(a) under the Exchange Act

15 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

September 19, 2022

August 29, 2023

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

/s/ STEPHEN C.

Chief Executive Officer

1 unchanged sentence

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints Mike F.

KNOW ALL PERSONS BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints Stephen C.

Chang and Yifan Liang, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

1 unchanged sentence

Signature Title Date

CHANG Chairman of the Board and Chief Executive Officer September 19, 2022

/s/ STEPHEN C.

CHANG Chief Executive Officer and Director August 29, 2023

Chang (Principal Executive Officer)

CHANG Executive Chairman and Chairman of the Board August 29, 2023

(Principal Executive Officer)

/s/ YIFAN LIANG Chief Financial Officer and Corporate Secretary September 19, 2022

/s/ YIFAN LIANG Chief Financial Officer and Corporate Secretary August 29, 2023

(Principal Financial Officer and Principal Accounting Officer)

CHANG Director September 19, 2022

/s/ CLAUDIA CHEN Director September 19, 2022

/s/ YUEH-SE HO Director September 19, 2022

Yueh-Se Ho, Ph.D.

/s/ SO-YEON JEONG Director September 19, 2022

CHANG Director August 29, 2023

/s/ CLAUDIA CHEN Director August 29, 2023

/s/ SO-YEON JEONG Director August 29, 2023

So-Yeon Jeong

/s/ HANQING (HELEN) LI Director September 19, 2022

/s/ HANQING (HELEN) LI Director August 29, 2023

Hanqing (Helen) Li

/s/ KING OWYANG Director September 19, 2022

/s/ KING OWYANG Director August 29, 2023

/s/ MICHAEL L.

PFEIFFER Director September 19, 2022

PFEIFFER Director August 29, 2023

/s/ MICHAEL J.

SALAMEH Director September 19, 2022

SALAMEH Director August 29, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures