What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-05-08 · 153 added, 180 removed, 213 unchanged (61% of the section changed)

7 unchanged sentences

Management’s discussion should be read in conjunction with management’s discussion included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the Securities and Exchange Commission on August 28, 2025.

We are a designer, developer and global supplier of a broad portfolio of power semiconductors.

Our portfolio of power semiconductors includes approximately 2,700 products, and has grown significantly with the introduction of over 100 new products in the fiscal year ended June 30, 2024, and over 60 and 130 new products in the fiscal years ended June 30, 2023 and 2022, respectively.

During the nine months ended March 31, 2025, we introduced 75 new products.

Our teams of scientists and engineers have developed extensive intellectual property and technical knowledge that encompass major aspects of power semiconductors, which we believe enables us to introduce and develop innovative products to address the increasingly complex power requirements of advanced electronics.

We have an extensive patent portfolio that consists of 946 patents and 63 patent applications in the United States as of March 31, 2025.

We also have a total of 1,054 foreign patents, which were based primarily on our research and development efforts through March 31, 2025.

We are a designer, developer, and global supplier of a broad range of discrete power devices, wide band gap power devices, power management ICs and modules, including a wide portfolio of Power MOSFET, SiC, IGBT, IPM, TVS, HV Gate Drivers, Power IC, and Digital Power products.

Our portfolio of power semiconductors includes approximately 2,800 products, and has grown with the introduction of over 100 new products in the fiscal year ended June 30, 2025, and over 100 and 60 new products in the fiscal years ended June 30, 2024 and 2023, respectively.

During the three months ended September 30, 2025, we introduced 16 new products.

Our teams of scientists and engineers have developed extensive intellectual properties and technical knowledge that encompass major aspects of power semiconductors, which we believe enables us to introduce and develop innovative products to address the increasingly complex power requirements of advanced electronics.

We have an extensive patent portfolio that consists of 951 patents and 71 patent applications in the United States as of September 30, 2025.

We also have a total of 1,067 foreign patents, which primarily were based on our research and development efforts through September 30, 2025.

We differentiate ourselves by integrating our expertise in technology, design and advanced manufacturing and packaging to optimize product performance and cost.

Our portfolio of products targets high-volume applications, including personal computers, graphic cards, game consoles, flat panel TVs, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.

Our portfolio of products targets high-volume applications, including personal computers, graphic cards, game consoles, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for computers, servers and telecommunications equipment.

Our business model leverages global resources, including research and development and manufacturing in the United States and Asia.

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We believe our in-house packaging and testing capability provides us with a competitive advantage in proprietary packaging technology, product quality, cost and sales cycle time.

During the fiscal quarter ended March 31, 2025, we continued our product diversification program by developing new silicon and packaging platforms to expand our serviceable available market, or SAM, and offer higher performance products.

During the fiscal quarter ended September 30, 2025, we continued our product diversification program by developing new silicon and packaging platforms to expand our serviceable available market, or SAM, and offer higher performance products.

Our metal-oxide-semiconductor field-effect transistors, or MOSFET, and power IC product portfolio also expanded.

As of March 31, 2025, we owned approximately 39.2% of outstanding equity interest in a joint venture company (the “JV Company”) that operates a power semiconductor packaging, testing and 12-inch wafer fabrication facility (“Fab”) in the LiangJiang New Area of Chongqing, China, and we relied on the Fab to manufacture wafers to develop our products.

On December 30, 2024, the JV Company signed an investment agreement with an investor, pursuant to which the investor agreed to invest RMB 500 million (or $68.5 million based on currency exchange rate between RMB and U.S.

Dollar on December 31, 2024) in the JV Company.

The funding of the investment will be made in three installments.

The JV Company received the first installment of RMB 40 million (or $5.5 million) on December 31, 2024.

The remaining installments are expected to be paid by July 31, 2025.

This transaction closed on January 15, 2025, at which time, the percentage of outstanding JV Company’s equity interest owned by the Company was reduced to approximately 39.2%.

In the past three years, we have been reducing our ownership of the JV Company to increase the flexibility of the JV Company to raise capital to fund its future expansion.

The JV Company is also contemplating an eventual listing on the

Science and Technology Innovation Board, or STAR Market, of the Shanghai Stock Exchange.

The reduction of our ownership assists the JV Company in meeting certain regulatory listing requirements.

A potential STAR Market listing may take several years to consummate and there is no guarantee that such listing by the JV Company will be successful or will be completed in a timely manner, or at all.

On March 29, 2016, we formed a joint venture (the “JV Company”) with two investment funds owned by the Municipality of Chongqing (the “Chongqing Funds”), for the purpose of constructing and operating a power semiconductor packaging, testing and 12-inch wafer fabrication facility (“Fab”) in the LiangJiang New Area of Chongqing, China.

As of December 1, 2021, we owned 50.9%, and the Chongqing Funds owned 49.1% of the equity interest in the JV Company.

joint venture was accounted under the provisions of the consolidation guidance since we had controlling financial interests until December 1, 2021.

In December 2021, we sold a portion of our equity interest in the JV Company to a third-party investor, pursuant to which we reduced our ownership from 50.9% to 48.8% of outstanding equity of the JV Company, and reduced our representation on the board of directors of the JV Company.

As a result, the JV Company was deconsolidated from our consolidated financial statements effective as of December 2, 2021.

From December 2021 to June 2025, we completed several transactions to sell additional equity interests of the JV Company to third-party investors, while the JV Company also issued additional equity interests to new investors that diluted our ownership interest.

Accordingly, as of June 30, 2025, the percentage of outstanding JV equity interest beneficially owned by us was further reduced to 39.2%.

On July 14, 2025, we entered into an equity transfer agreement with a strategic investor to sell approximately 20.3% of outstanding equity interest in the JV Company held by us for an aggregate cash consideration of $150 million to be paid in four installments, subject to satisfaction of certain conditions.

On August 29, 2025, the amended Shareholders’ agreement for the JV Company was signed, which reduced our equity interest in the JV Company by 20.3% to an ownership percentage of 18.9%.

As of August 29, 2025, all of the conditions for the first installment were satisfied, and we received our first installment payment of RMB 676 million (or $94.5 million based on the currency exchange rate between RMB and U.S.

Dollar on August 29, 2025), and recorded a receivable of $56.4 million for the remaining installments, which is included in the receivable from sale of equity interest in the JV Company line on the Condensed Consolidated Balance Sheets.

We expect to receive the remaining installment payments and close the transaction prior to the end of calendar year 2025.

We believe this sale provides additional and significant capital for us to continue investment in technology, R&D projects and acquisition of assets complementary to our business operations, which will facilitate and accelerate our efforts to develop and distribute innovative and diverse power semiconductor products to customers worldwide.

In addition, the JV Company will continue to provide us with significant level of foundry capacity to enable us to develop and manufacture our products.

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A significant amount of our revenue is derived from sales of products in the PC markets, such as notebooks, motherboards and notebook battery packs.

Therefore, a substantial decline in the PC market could have a material adverse effect on our revenue and results of operations.

Therefore, a substantial decline in the PC market could have a material

adverse effect on our revenue and results of operations.

The PC markets have experienced a modest global decline in recent years due to continued growth of demand in tablets and smart phones, worldwide economic conditions and the industry inventory correction which had and may continue to have a material impact on the demand for our products.

In addition, the PC market may be affected by evolving laws and regulations governing international trade, such as export control regulations.

A decline of the PC market may have a negative impact on our revenue, factory utilization, gross margin, our ability to resell excess inventory, and other performance measures.

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We also rely on third parties to provide foundry capacity to manufacture our products, including the JV Company, therefore it is important that we maintain continuous access to such capacity, which may not be available at sufficient level or at pricing terms favorable.

If these third-party foundries, including the JV Company, take actions or make decisions that prevents us from accessing required capacity, our operations may be adversely affected.

If these third-party foundries, take actions or make decisions that prevent us from accessing required capacity, our operations may be adversely affected.

Erosion and fluctuation of average selling price :

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Product introductions and customers’ product requirements :

Our success depends on our ability to introduce products on a timely basis that meet or are compatible with our customers' specifications and performance requirements.

Our success depends on our ability to introduce products on a timely basis that meet or are compatible with our customers' specifications and performance requirements, including our Tier 1 customers who often have stringent requirements.

Both factors, timeliness of product introductions and conformance to customers' requirements, are equally important in securing design wins with our customers.

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In addition, because our products are used in consumer electronics products, our revenue is subject to seasonality.

Our sales seasonality is affected by numerous factors, including global and regional economic conditions as well as the PC market conditions, revenue

generated from new products, changes in distributor ordering patterns in response to channel inventory adjustments and end customer demand for our products and fluctuations in consumer purchase patterns prior to major holiday seasons.

Our sales seasonality is affected by numerous factors, including global and regional economic conditions as well as the PC market conditions, revenue generated from new products, changes in distributor ordering patterns in response to channel inventory adjustments and end customer demand for our products and fluctuations in consumer purchase patterns prior to major holiday seasons.

Typically, we generate lower revenue during the first quarter of the calendar year as compared to other quarters.

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Furthermore, our revenue may be impacted by the level of demand from our major customers due to factors outside of our control.

If these major customers experience significant decline in the demand of their products, encounter difficulties or defects in their products, or otherwise fail to execute their sales and marketing strategies successfully, it may adversely affect our revenue and results of operations.

If these major customers

experience significant decline in the demand of their products, encounter difficulties or defects in their products, or otherwise fail to execute their sales and marketing strategies successfully, it may adversely affect our revenue and results of operations.

Principal line items of Condensed Consolidated Statements of Income (Loss)

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Stock rotation returns are governed by contract and are limited to a specified percentage of the monetary value of products purchased by the distributor during a specified period.

At our discretion or upon our direct negotiations with the original design manufacturers (“ODMs”) or original equipment manufacturers (“OEMs”), we may elect to grant special pricing that is below the prices at which we sold our products to the distributors.

At our discretion or upon our direct negotiations with the original design manufacturers or original equipment manufacturers, we may elect to grant special pricing that is below the prices at which we sold our products to the distributors.

In certain situations, we will grant price adjustments to the distributors reflecting such special pricing.

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In February 2023, we entered into a license agreement with a customer to license our proprietary SiC technology and provided 24-months of engineering and development services for a total fee of $45.0 million.

The license and development fee was determined to be one performance obligation and was recognized over the 24 months during which we performed the engineering and development services.

We used the input method to measure progression of the transfer of services.

During the three and nine months ended March 31, 2025, we recorded $2.8 million and $13.8 million of license and development revenue, respectively, and during the three and the nine months ended March 31, 2024, we recorded $5.1 million and $16.2 million of license and development revenue, respectively.

As of March 31, 2025, we had recorded a total of $45.0 million of license and development revenue.

When our performance under the contract preceded our receipt of consideration from the customer, and the receipt of consideration was conditional upon factors other than the passage of time, a contract asset was recorded.

The license and development fee required significant integration to create a combined output to the customer and was determined to be one performance obligation and was recognized over the 24 months during which we performed the engineering and development services.

We use the input method to measure progress and recognize revenue, based on the effort expended relative to the estimated total effort to satisfy the performance obligation.

As of June 30, 2025, all revenue has been recognized and all consideration has been received associated with the license agreement, therefore we no longer have any obligations under the license agreement.

During the three months ended September 30, 2025 and 2024, we recorded $0 and $5.6 million of license and development revenue, respectively.

We also entered into an accompanying supply agreement to provide limited wafer supply to the customer.

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Our selling, general and administrative expenses consist primarily of salaries, bonuses, benefits, share-based compensation expense, product promotion costs, occupancy costs, travel expenses,

expenses related to sales and marketing activities, amortization of software, depreciation of equipment, maintenance costs and other expenses for general and administrative functions as well as costs for outside professional services, including legal, audit and accounting services.

expenses related to sales and marketing activities, amortization of software, depreciation of equipment, maintenance costs, other expenses for general and administrative functions, and costs for outside professional services, including legal, audit and accounting services, as well as impairment of long-lived assets.

We review all long-lived assets whenever events or changes in circumstance indicate that these assets may not be recoverable.

When evaluating long-lived assets, if we conclude that the estimated undiscounted cash flows attributable to the assets are less than their carrying value, we recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values.

We expect our selling, general and administrative expenses to fluctuate in the near future as we continue to exercise cost control measures.

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We are subject to income taxes in various jurisdictions.

The Company’s interim period tax provision for (or benefit from) income taxes is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period.

Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.

The Company’s quarterly tax provision and estimate of its annual effective tax rate are subject to variation due to several factors, including variability in forecasting its pre-tax income or loss and the mix of jurisdictions to which they relate, and changes in how the Company does business.

Our interim period tax provision for (or benefit from) income taxes is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period.

Each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Our quarterly tax provision and estimate of its annual effective tax rate are subject to variation due to several factors, including variability in forecasting its pre-tax income or loss and the mix of jurisdictions to which they relate, and changes in how we do business.

Significant judgment and estimates are required in determining our worldwide income tax expense.

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Our effective tax rate is highly dependent upon the geographic distribution of our worldwide profits or losses, the tax laws and regulations in each geographical region where we have operations, the availability of tax credits and carry-forwards and the effectiveness of our tax planning strategies.

“The Chip and Science Act of 2022”, Enacted August 2, 2022

In August 2022 the U.S.

enacted the Chip and Science Act of 2022 (the Chips Act).

The Chips Act provides incentives to semiconductor chip manufacturers in the United States, including providing a 25% manufacturing investment credits for investments in semiconductor manufacturing property placed in service after December 31, 2022, for which construction begins before January 1, 2027.

Property investments qualify for the 25% credit if, among other requirements, the property is integral to the operation of an advanced manufacturing facility, defined as having a primary purpose of manufacturing semiconductors or semiconductor manufacturing equipment.

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

Bermuda Corporate Income Tax for Tax Years Beginning in 2025

The Company is subject to income tax expense or benefit based upon pre-tax income or loss reported in the Condensed Consolidated Statements of Income (Loss) and the provisions of currently enacted tax laws.

We are subject to income tax expense or benefit based upon pre-tax income or loss reported in the consolidated statements of income (loss) and the provisions of currently enacted tax laws.

The parent company is incorporated under the laws of Bermuda and is subject to Bermuda law with respect to taxation.

Under current Bermuda law, the Company is not subject to any income or capital gains taxes in Bermuda.

Under current Bermuda law, we are not subject to any income or capital gains taxes in Bermuda.

As we have previously disclosed, the Government of Bermuda announced in December 2023 that it enacted the Corporate Income Tax Act 2023, potentially imposing a 15% corporate income tax (CIT) on Bermuda companies that are within the scope of the CIT, that will be effective for tax years beginning on or after January 1, 2025.

In particular, the CIT applies to multinational companies with annual revenue of 750 million euros or more in the consolidated financial statements of the ultimate parent entity for at least two of the four fiscal years immediately preceding the fiscal year when the CIT may apply.

The Company is not in a position to determine whether the annual revenues may meet and/or cross the 750 million Euro threshold for at least two of the four fiscal years immediately preceding the fiscal year when CIT may apply.

The Company continues to monitor and assess if and when it may be within the scope of the CIT.

We did not generate more than 750 million euro revenue in any of the four fiscal years before the tax year starting July 1, 2025.

We continue to monitor and assess if and when it may be within the scope of the CIT.

If we become subject to the Bermuda CIT, we may be subject to additional income taxes, which may adversely affect our financial position, results of operations and our overall business.

Equity method investment income/loss from equity investee

One Big Beautiful Bill Act, Enacted July 4, 2025

On July 4, 2025, H.R.

1, commonly known as the One Big Beautiful Bill Act (the “OBBB”), was signed into law.

This includes significant changes to the federal corporate tax provisions and extends certain otherwise expiring provisions of the 2017 Tax Cuts and Jobs Act.

The key provisions include allowing immediate expensing of domestic research and experimental expenditures, new limitations on interest expense deductibility, reinstatement of 100% bonus depreciation for qualified assets placed in service in the United States after January 19, 2025 as well as changes to the calculation of taxable income resulting from the foreign derived intangible income deduction.

ASC 740 Income Taxes requires the effects of changes in tax rates and

laws to be recognized in the period in which the relevant legislation is enacted.

We have concluded that the impact of OBBB for the current quarter is immaterial.

Equity method investment gain (loss)

We use the equity method of accounting when we have the ability to exercise significant influence, but we do not have control, as determined in accordance with generally accepted accounting principles, over the operating and financial policies of the company.

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Since we are unable to obtain accurate financial information from the JV Company in a timely manner, we record our share of earnings or losses of such affiliate on a one quarter lag.

We record our interest in the net earnings of the equity method investee, along with adjustments for unrealized profits or losses on intra-entity transactions and amortization of basis differences, within earnings or loss from equity interests in the Condensed Consolidated Statements of Income (Loss).

Profits or losses related to intra-entity sales with the equity method investee are eliminated until realized by the investor or investee.

Basis differences represent differences between the cost of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to them.

Equity method goodwill is not amortized or tested for impairment.

Equity method goodwill is not amortized.

Instead the total equity method investment balance, including equity method goodwill, is tested for impairment.

We review for impairment whenever factors indicate that the carrying amount of the investment is determined to be other than temporary.

In such a case, the decrease in value is recognized in the period the impairment occurs in the Condensed Consolidated Statements of Income (Loss).

In the fourth quarter of fiscal year 2025, the impairment loss of $76.8 million was recorded within equity method investment loss in the consolidated statement of operations.

Results of Operations

The following tables set forth statements of income (loss), also expressed as a percentage of revenue, for the three and nine months ended March 31, 2025 and 2024.

The following tables set forth statements of income (loss), also expressed as a percentage of revenue, for the three months ended September 30, 2025 and 2024.

Our historical results of operations are not necessarily indicative of the results for any future period.

Three Months Ended March 31, Nine Months Ended March 31,

Three Months Ended September 30,

2025 2024 2025 2024

(in thousands) (% of revenue) (in thousands) (% of revenue)

(in thousands) (% of revenue)

Revenue $ 182,501 $ 181,887 100.0 % 100.0 %

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Other income (loss), net

2,468 (650) 1.3 % (0.4) %

Interest income 892 1,265 0.5 % 0.6 %

Interest expenses (360) (812) (0.2) % (0.4) %

Gain on change of equity interest in equity method investment 505 — 0.3 % — % 505 — 0.1 % — %

Net loss before income taxes and loss from equity method investment (9,887) (9,925) (6.0) % (6.6) % (15,147) (1,621) (2.9) % (0.2) %

Net loss before income taxes and equity method investment income (loss) (1,584) (449) (0.9) % -0.009 (0.4) %

Income tax expense 1,927 1,040 1.1 % 0.6 %

Net loss before loss from equity method investment (10,547) (10,536) (6.4) % (7.0) % (18,089) (4,264) (3.5) % (0.7) %

Equity method investment loss from equity investee (260) (676) (0.2) % (0.5) % (1,828) (4,085) (0.3) % (0.8) %

Net loss before equity method investment income (loss) (3,511) (1,489) (2.0) % (1.0) %

Equity method investment income (loss) 1,389 (1,007) 0.8 % (0.6) %

Net loss $ (2,122) $ (2,496) (1.2) % (1.6) %

Share-based compensation expense was recorded as follows:

Three Months Ended March 31, Nine Months Ended March 31,

Three Months Ended September 30,

2025 2024 2025 2024

(in thousands) (% of revenue) (in thousands) (% of revenue)

(in thousands) (% of revenue)

Cost of goods sold $ 1,065 $ 1,015 0.6 % 0.6 %

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Total $ 7,132 $ 6,902 3.9 % 3.9 %

Three and Nine Months Ended March 31, 2025 and 2024

Three Months Ended September 30, 2025 and 2024

The following is a summary of revenue by product type:

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Power discrete $ 108,506 $ 122,454 $ (13,948) (11.4) %

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The following is a summary of revenue by end market:

Three Months Ended March 31, Nine Months Ended March 31,

Three Months Ended September 30,

2025 2024 2025 2024

(in thousands) (% of revenue) (in thousands) (% of revenue)

(in thousands) (% of revenue)

Computing $ 97,131 $ 76,411 53.2 % 42.0 %

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$ 182,501 $ 181,887 100.0 % 100.0 %

Total revenue was $164.6 million for the three months ended March 31, 2025, an increase of $14.6 million, or 9.7% as compared to $150.1 million for the same quarter last year.

The increase was primarily due to an increase of $13.0 million and $4.6 million in sales of power discrete products and sales of power IC products, respectively, offset by a decrease of $0.8 million in packaging and testing services and other, as well as a decrease of $2.3 million in license and development services.

The net increase in power discrete and power IC product sales was primarily due to a 17.3% increase in unit shipment, partially offset by a 4.3% decrease in average selling price as compared to same quarter last year due to a shift in product mix.

The net increase in revenues was primarily driven by a significant increase in the computing markets, particularly in graphics cards products and tablet products, as well as an increase in the power supply and industrial markets, particular in E-mobility products and quick chargers products, partially offset by a decrease in consumer markets, particularly in home appliances products.

The decrease in revenue of packaging and testing services for the three months ended March 31, 2025, as compared to same quarter last year, was primarily due to decreased demand.

The decrease in license and development services for the three months ended March 31, 2025 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Total revenue was $519.7 million for the nine months ended March 31, 2025, an increase of $23.7 million, or 4.8%, as compared to $496.0 million for the same period last year.

The increase was primarily due to an increase of $18.1 million and $8.2 million in sales of power discrete products and sales of power IC products, respectively, partially offset by a decrease of $0.3 million in packaging and testing services and other, as well as a decrease of $2.3 million in license and development services.

The net increase in power discrete and power IC product sales was primarily due to a 17.2% increase in unit shipment, partially offset by a 9.8% decrease in average selling price as compared to same period last year due to a shift in product mix.

The net increase in revenues was primarily driven by a significant increase in the computing markets, particularly in graphics cards products and tablet products, as well as an increase in the communication markets, particular in battery and networking products, partially offset by a decrease in consumer markets, particularly in home appliances products.

The decrease in revenue of packaging and testing services for the nine months ended March 31, 2025, as compared to same period last year, was primarily due to decreased demand.

The decrease in license and development services for the nine months ended March 31, 2025 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Total revenue was $182.5 million for the three months ended September 30, 2025, an increase of $0.6 million, or 0.3% as compared to $181.9 million for the same quarter last year.

The increase was primarily due to an increase of $19.8 million in sales of power IC products and an increase of $0.4 million in packaging and testing services and other, partially offset by a decrease of $13.9 million in sales of power discrete products, as well as a decrease of $5.6 million in license and development services.

The net increase in power discrete products and power IC products sales was primarily due to a 0.4% increase in unit shipment and a 2.9% increase in average selling price as compared to same quarter last year due to a shift in product mix.

The net increase in revenues was primarily driven by a significant increase in the computing markets, particularly in graphics cards , note books and mother board products, partially offset by a decrease in consumer markets, particularly in home appliances and gaming products, and a decrease in power supply and industrial markets, particular in power tools products and quick chargers products, as well as a decrease in communication market, particularly in battery products.

The increase in revenue of packaging and testing services for the three months ended September 30, 2025, as compared to same quarter last year, was primarily due to increased demand.

The decrease in license and development services for the three months ended September 30, 2025 was related to the license agreement with a customer to license our proprietary SiC technology and provided 24-month engineering and development services, which was completed during the three months ended March 31, 2025.

Cost of goods sold and gross profit

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Cost of goods sold $ 139,656 $ 137,361 $ 2,295 1.7 %

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Percentage of revenue 23.5 % 24.5 %

Cost of goods sold was $129.5 million for the three months ended March 31, 2025, an increase of $15.0 million or 13.1%, as compared to $114.5 million for the same quarter last year.

The increase was primarily due to 9.7% increase in sales.

Gross margin decreased by 2.3 percentage points to 21.4% for the three months ended March 31, 2025, as compared to 23.7% for the same quarter last year.

The decrease in gross margin was primarily due to average selling pricing erosion, higher material costs and less favorable product mix during the three months ended March 31, 2025.

Cost of goods sold was $400.0 million for the nine months ended March 31, 2025, an increase of $34.5 million, or 9.4%, as compared to $365.5 million for the same period last year.

Cost of goods sold was $139.7 million for the three months ended September 30, 2025, an increase of $2.3 million or 1.7%, as compared to $137.4 million for the same quarter last year.

The increase was primarily due to 0.3% increase in sales.

Gross margin decreased by 3.3 percentage points to 23.0% for the nine months ended March 31, 2025, as compared to 26.3% for the same period last year.

The decrease in gross margin was primarily due to average selling price erosion, higher material costs and less favorable product mix during the periods.

Gross margin decreased by 1.0 percentage points to 23.5% for the three months ended September 30, 2025, as compared to 24.5% for the same quarter last year.

The decrease in gross margin was primarily due to higher material costs during the three months ended September 30, 2025.

Research and development expenses

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Research and development expenses $ 24,145 $ 22,478 $ 1,667 7.4 %

Research and development expenses were $23.4 million for the three months ended March 31, 2025, an increase of $0.3 million, or 1.3%, as compared to $23.1 million for the same quarter last year.

The increase was primarily attributable to a $0.5 million increase in employee compensation and benefit expense mainly due to higher bonus expense and higher severance expenses, as well as a $0.2 million increase in product prototyping engineering expense as a result of increased engineering activities, partially offset by a $0.3 million decrease in share-based compensation expense primarily due to more cancellation of awards in current quarter.

Research and development expenses were $69.8 million for the nine months ended March 31, 2025, an increase of $1.7 million, or 2.5%, as compared to $68.1 million for the same period last year.

The increase was primarily attributable to a $1.4 million increase in share-based compensation as a result of a modification of market-based restricted stock units in August 2024, as well as a $0.4 million increase in employee compensation and benefit expense mainly due to higher bonus expense and higher severance expenses.

Research and development expenses were $24.1 million for the three months ended September 30, 2025, an increase of $1.7 million, or 7.4%, as compared to $22.5 million for the same quarter last year.

The increase was primarily attributable to a $1.6 million increase in employee compensation and benefit expense mainly due to increased headcount, merit salary increases, and higher bonus expense.

Selling, general and administrative expenses

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Selling, general and administrative $ 23,284 $ 22,300 $ 984 4.4 %

Selling, general and administrative expenses were $22.4 million for the three months ended March 31, 2025, a decrease of $0.5 million, or 2.3%, as compared to $23.0 million for the same quarter last year.

The decrease was primarily due to a $0.7 million decrease in share-based compensation expense as a result of more cancellation of awards, a $0.5 million decrease in design-win commission and marketing demo fees, and $0.4 million decrease in allocation, partially offset by $0.2 million increase in legal expenses, as well as $0.9 million increase in employee compensation and benefits expenses primarily due to increased headcount, higher bonus expense, as well as higher severance expenses.

Selling, general and administrative expenses were $66.7 million for the nine months ended March 31, 2025, an increase of $2.1 million, or 3.2%, as compared to $64.6 million for the same period last year.

The increase was primarily attributable to a $2.4 million increase in share-based compensation as a result of a modification of market-based restricted stock units in August 2024, and $1.7 million increase in employee compensation and benefits expenses primarily due to increased headcount, higher bonus expense, as well as higher severance expenses, partially offset by $0.7 million decrease in audit fees, a $0.6 million decrease in design-win commission and marketing demo fees, $0.4 million decrease in consulting fees, and $0.4 million decrease in allocation.

Selling, general and administrative expenses were $23.3 million for the three months ended September 30, 2025, an increase of $1.0 million, or 4.4%, as compared to $22.3 million for the same quarter last year.

The increase was primarily due to a $0.9 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher bonus expense, a $0.2 million increase in share-based compensation expense as a result of more grants of awards, and a $0.2 million increase in audit fees, partially offset by $0.2 million decrease in design-win commission.

Other income (loss), net

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Other income (loss), net $ 2,468 $ (650) $ 3,118 (479.7) %

Other income (loss), net decreased in the three and nine months ended March 31, 2025, as compared to the same periods last year primarily due to an increase in foreign currency exchange loss as a result of the appreciation of RMB against USD.

Other income (loss), net increased in the three months ended September 30, 2025, as compared to the same periods last year primarily due to an increase in foreign currency exchange gain as a result of the depreciation of RMB against USD, as well as $1.9 million of certain services were provided by the Company to the JV Company.

Interest income

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Interest income $ 892 $ 1,265 $ (373) (29.5) %

Interest income decreased in the three and nine months ended March 31, 2025, as compared to the same periods last year primarily due to lower interest rates in the current periods.

Interest income decreased in the three months ended September 30, 2025, as compared to the same periods last year primarily due to lower interest rates in the current periods.

Interest expense

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Interest expenses $ (360) $ (812) $ 452 (55.7) %

Interest expense was decreased in the three and nine months ended March 31, 2025 as compared to the same periods last year primarily due to less outstanding loan balance in the current periods.

Gain on change of equity interest in equity method investment

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Gain on change of equity interest in equity method investment $ 505 $ — $ 505 100.0 % $ 505 $ — $ 505 100.0 %

Dollar on December 31, 2024) in the JV Company.

This transaction closed on January 15, 2025, at which time, the percentage of outstanding JV Company’s equity interest owned by the Company was reduced to approximately 39.2%.

During the three and nine months ended March 31, 2025, we recorded a $0.5 million of gain on the change of equity interest in the JV Company.

Interest expense decreased in the three months ended September 30, 2025 as compared to the same periods last year primarily due to less outstanding loan balance in the current periods.

Equity method investment loss

Three Months Ended March 31,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Equity method investment income (loss) $ 1,389 $ (1,007) $ 2,396 (237.9) %

Equity method investment income increased in the three months ended September 30, 2025, as compared to the same period last year as a result of the gain from the sales of 20.3% outstanding equity interest in the JV Company in August 2025, as well as an income recorded from the equity method investment during the three months ended September 30, 2025, compared to the equity method investment loss in the same periods last year.

Income tax expense

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 Change 2025 2024 Change

(in thousands) (in thousands) (in percentage) (in thousands) (in thousands) (in percentage)

Three Months Ended September 30,

2025 2024 Change

(in thousands) (in thousands) (in percentage)

Income tax expense $ 1,927 $ 1,040 $ 887 85.3 %

The Company recognized income tax expense of approximately $0.7 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively.

The income tax expense of $0.7 million for the three months ended March 31, 2025 included a $0.1 million discrete tax expense.

The income tax expense of $0.6 million for the three months ended March 31, 2024 included a $0.1 million discrete tax expense.

Excluding the discrete income tax items, the income tax expense for the three months ended March 31, 2025 and 2024 was $0.6 million and $0.6 million, respectively, and the effective tax rate for the three months ended March 31, 2025 and 2024 was (5.8)% and (5.3%), respectively.

The Company recognized income tax expense of approximately $2.9 million and $2.6 million for the nine months ended March 31, 2025 and 2024, respectively.

The income tax expense of $2.9 million for the nine months ended March 31, 2025

included a $0.2 million discrete tax expense.

The income tax expense of $2.6 million for the nine months ended March 31, 2024 included a $0.2 million discrete tax expense.

Excluding the discrete income tax items, the income tax expense for the nine months ended March 31, 2025 and 2024 was $2.7 million and $2.5 million, respectively, and the effective tax rate for the nine months ended March 31, 2025 and 2024 was (16.1%) and (43.4%), respectively.

The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current year and the same period of last year as well as from reporting pretax book loss of $17.0 million for the nine months ended March 31, 2025 as compared to $5.7 million of pretax book loss for the nine months ended March 31, 2024.

The Company files its income tax returns in the United States and in various foreign jurisdictions.

We recognized income tax expense of approximately $1.9 million and $1.0 million for the three months ended September 30, 2025 and 2024, respectively.

The income tax expense of $1.9 million for the three months ended September 30, 2025 included a $0.1 million discrete tax expense.

The income tax expense of $1.0 million for the three months ended September 30, 2024 included a $0.1 million discrete tax expense.

Excluding the discrete income tax items, the income tax expense for the three months ended September 30, 2025 and 2024 was $1.9 million and $1.0 million, respectively, and the effective tax rate for the three months ended September 30, 2025 and 2024 was (952.4)% and (65.8%), respectively.

related to the Company’s income from its investment in CQJV for the three months ended September 30, 2025 versus an $0.2 million tax benefit for the three months ended September 30, 2024.

We file our income tax returns in the United States and in various foreign jurisdictions.

The tax years 2004 to 2025 remain open to examination by U.S.

1 unchanged sentence

The tax years 2019 to 2025 remain open to examination by foreign tax authorities.

The Company’s income tax returns are subject to examinations by the Internal Revenue Service and other tax authorities in various jurisdictions.

In accordance with the guidance on the accounting for uncertainty in income taxes, the Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

Our income tax returns are subject to examinations by the Internal Revenue Service and other tax authorities in various jurisdictions.

In accordance with the guidance on the accounting for uncertainty in income taxes, we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

These assessments can require considerable estimates and judgments.

As of March 31, 2025, the gross amount of unrecognized tax benefits was approximately $10.3 million, of which $7.0 million, if recognized, would reduce the effective income tax rate in future periods.

If the Company’s estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required.

If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary.

The Company does not anticipate any material changes to its uncertain tax positions during the next twelve months.

As of September 30, 2025, the gross amount of unrecognized tax benefits was approximately $10.8 million, of which $7.4 million, if recognized, would reduce the effective income tax rate in future periods.

If our estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required.

If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary.

We do not anticipate any material changes to its uncertain tax positions during the next twelve months.

Liquidity and Capital Resources

1 unchanged sentence

To date, we finance our operations and capital expenditures primarily through funds generated from operations and borrowings under our term loans, financing lease and other debt agreements.

In March 2024, Bank of Communications Limited in China provided a line of credit facility to one of the Company’s

subsidiaries 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 $19.3 million based on currency exchange rate between RMB and U.S.

Dollar on March 31, 2025.

This line of credit expired on March 15, 2025.

As of March 31, 2025, there was no outstanding balance for this loan.

In September 2023, China Construction Bank provided a line of credit facility to one of the Company’s subsidiaries in

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

The Company could borrow up to approximately RMB 50 million or $6.9 million based on currency exchange rate between RMB and U.S.

Dollar on March 31, 2025 with a maturity date of September 8, 2025.

As of March 31, 2025, there was no outstanding balance for this loan.

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.

This agreement includes a payment term of five (5) years, pursuant to which Jireh commenced payments of interests and principal to the Lender in September 2022 when the final installation and acceptance of the equipment were completed.

After the end of such payment term, 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 .

Treasury Notes.

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

7 unchanged sentences

The purchase price of this hardware was $0.2 million.

The financing arrangement is secured by this equipment and other equipment at Jireh, which had the net book value of $12.5 million as of March 31, 2025.

As of March 31, 2025, the outstanding balance of this debt financing was $7.2 million.

On August 18, 2021, Jireh entered into a term loan agreement with a financial institution (the “Bank”) in an amount up to $45.0 million for the purpose of expanding and upgrading the Company’s fabrication facility located in Oregon.

The obligation

under the loan agreement is secured by substantially all assets of Jireh and guaranteed by the Company.

The financing arrangement is secured by this equipment and other equipment at Jireh, which had the net book value of $11.7 million as of September 30, 2025.

As of September 30, 2025, the outstanding balance of this debt financing was $5.8 million.

On August 18, 2021, Jireh entered into a term loan agreement with a financial institution (the “Bank”) in an amount up to $45.0 million for the purpose of expanding and upgrading our fabrication facility located in Oregon.

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

The agreement has a 5.5 year term and matures on February 16, 2027.

1 unchanged sentence

The loan accrues interest based on adjusted SOFR plus the applicable margin based on the outstanding balance of the loan.

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

This agreement contains customary restrictive covenants and includes certain financial covenants that we are required to maintain.

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

As of March 31, 2025, Jireh was in compliance with these covenants and the outstanding balance of this loan was $22.5 million.

On August 9, 2019, one of the Company’s wholly-owned subsidiaries (the “Borrower”) entered into a factoring agreement with Hongkong and Shanghai Banking Corporation Limited (“HSBC”), whereby the Borrower assigns certain of its accounts receivable with recourse.

As of June 30, 2025, Jireh was in compliance with these covenants and the outstanding balance of this loan was $20.3 million.

In August 2025, we paid the outstanding balance in full.

As of August 2025, this agreement was terminated with no outstanding balance.

On August 9, 2019, one of our wholly-owned subsidiaries (the "Borrower") entered into a factoring agreement with the Hongkong and Shanghai Banking Corporation Limited (“HSBC”), whereby the Borrower assigns certain of its accounts receivable with recourse.

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 the Secured Overnight Financing Rate ("SOFR)", plus 2.01% per annum.

The Company is the guarantor for this agreement.

The Company is accounting for this transaction as a secured borrowing.

We are the guarantor for this agreement.

We are accounting for this transaction as a secured borrowing under the Transfers and Servicing of Financial Assets guidance.

In addition, any cash held in the restricted bank account controlled by HSBC has a legal right of offset against the borrowing.

This agreement, with certain financial covenants required, has no expiration date.

On August 11, 2021, the Borrower signed an agreement with HSBC to reduce the borrowing maximum amount to $8.0 million with certain financial covenants required.

On August 11, 2021, the Borrower signed an agreement with

HSBC to decrease the borrowing maximum amount to $8.0 million with certain financial covenants required.

Other terms remain the same.

As of March 31, 2025, the Borrower was in compliance with these covenants.

As of March 31, 2025, there was no outstanding balance and the Company had unused credit of approximately $8.0 million.

In August 2025, this factoring agreement was terminated with no outstanding balance.

We believe that our current cash and cash equivalents and cash flows from operations will be sufficient to meet our anticipated cash needs, including working capital and capital expenditures, for at least the next twelve months.

5 unchanged sentences

Cash, cash equivalents and restricted cash

As of March 31, 2025 and June 30, 2024, we h a d $169.6 million and $175.5 million of cash, cash equivalents and restricted cash, respectively.

As of September 30, 2025 and June 30, 2025, we h a d $223.9 million and $153.5 million of cash, cash equivalents and restricted cash, respectively.

Our cash, cash equivalents and restricted cash primarily consist of cash on hand, restricted cash, and short-term bank deposits with original maturities of three months or less.

1 unchanged sentence

The following table shows our cash flows from operating, investing and financing activities for the periods indicated:

Nine Months Ended March 31,

Three Months Ended September 30,

(in thousands)

Net cash provided by operating activities $ 10,187 $ 11,021

Net cash used in investing activities (22,167) (28,593)

Net cash provided by (used in) investing activities 81,945 (6,738)

Net cash used in financing activities (21,634) (3,706)

Effect of exchange rate changes on cash, cash equivalents and restricted cash (66) 105

Net decrease in cash, cash equivalents and restricted cash $ (5,974) $ (21,008)

Net increase in cash, cash equivalents and restricted cash

$ 70,432 $ 682

Cash flows from operating activities

For the nine months ended March 31, 2025, the $13.9 million increase in cash provided by operating activities compared to the same period last year was primarily due to an increase of net loss of $11.6 million and an increase of non-cash expenses of $8.6 million, a decrease of $22.5 million in inventory purchases, an increase of accounts payable of $9.9 million, and an increase of $6.1 million in accrued and other liabilities.

These sources of cash were offset by an increase of $25.1 million in accounts receivable.

This net increase was also affected by changes in other working capital.

For the three months ended September 30, 2025, the $0.8 million decrease in cash provided by operating activities compared to the same period last year was primarily due to a decrease of net loss of $0.4 million, a decrease of non-cash expenses of $10.5 million, which includes an increase of $8.0 million in deferred income tax, net and an increase of $2.4 million in equity method investment gain due to the 20.3% equity method investment sales and income recorded from the equity method investment in current period, compared to a loss recorded from the equity method investment in the same period last year, an increase of $17.3 million in inventory purchase, and a decrease of accounts payable of $7.7 million primarily due to timing of payment.

These sources of cash were offset by an increase of $10.8 million in income tax payable primarily due to the sale of the 20.3% interest in the equity method investment, a decrease of $9.7 million in accounts receivable, an increase of $5.6 million in accrued and other liabilities, a decrease of $3.1 million in contract assets, an increase of $2.6 million in deferred revenue and an increase of $1.8 million in net payable, equity investee.

Cash flows from investing activities

For the nine months ended March 31, 2025, the $6.4 million decrease in cash used in investing activities compared to the same period last year was primarily due to less purchases of property and equipment in the nine months ended March 31, 2025 compared to the same period last year.

For the three months ended September 30, 2025, the $88.7 million increase in cash provided by investing activities compared to the same period last year was primarily due to $92.1 million of proceeds from sale of equity interest in the JV Company, net with transaction costs, partially offset by $2.8 million of more purchases of property and equipment in the three months ended September 30, 2025 compared to the same period last year.

Cash flows from financing activities

For the nine months ended March 31, 2025, the $5.3 million increase in cash used in financing activities compared to the same period last year was primarily due to $2.1 million decrease in proceeds from exercise of stock options and ESPP, and $3.0 million increase in common shares acquired to settle withholding tax related to the release of restricted stock.

For the three months ended September 30, 2025, the $18.0 million increase in cash used in financing activities compared to the same period last year was primarily due to repayment of loan borrowings.

See Note 12 of the Notes to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for a description of commitments.

6 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis