What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2026-02-05 · 113 added, 102 removed, 289 unchanged (43% of the section changed)

1 unchanged sentence

Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

These forward looking statements include information set forth under the heading “Factors Affecting Our Performance.” Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company’s management.

These forward looking statements include information set forth under the heading “Other Factors affecting our Performance.” Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company’s management.

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements.

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Unless the context otherwise requires, the words “AOS,” the “Company,” “we,” “us” and “our” refer to Alpha and Omega Semiconductor Limited and its subsidiaries.

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.

Management’s discussion should be read in conjunction with management’s discussion included in the Company’s 2025 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on August 28, 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 six months ended December 31, 2025, we introduced 37 new products.

During the nine months ended March 31, 2026, we introduced 48 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 953 patents and 71 patent applications in the United States as of December 31, 2025.

We also have a total of 1,080 foreign patents, which primarily were based on our research and development efforts through December 31, 2025.

We have an extensive patent portfolio that consists of 956 patents and 74 patent applications in the United States as of March 31, 2026.

We also have a total of 1,087 foreign patents, which primarily were based on our research and development efforts through March 31, 2026.

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

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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 December 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 March 31, 2026, 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.

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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.

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).

In addition, we received $11.1 million during the three months ended December 31, 2025 for the second installment payment.

In January 2026, we also received $30.3 million for the third installment.

In addition, we received $11.1 million for the second installment payment during the three months ended December 31, 2025, and $30.3 million for the third installment payment during the three months ended March 31, 2026.

We expect to receive the remaining installment payment of approximately $15.6 million and close the transaction in the near future.

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Distributor ordering patterns, customer demand and seasonality :

Our distributors place purchase orders with us based on their forecasts of end customer demand, and this demand may vary significantly depending on the sales outlook and market and economic conditions of end customers.

Our distributors place purchase orders with us based on their forecasts of end customer demand, and this demand may vary significantly depending on the sales outlook and market and

economic conditions of end customers.

Because these forecasts may not be accurate, channel inventory held at our distributors may fluctuate significantly, which in turn may prompt distributors to make significant adjustments to their purchase orders placed with us.

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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 and six months ended December 31, 2025, we recorded nil of license and development revenue, respectively.

During the three and six months ended December 31, 2024 we recorded $5.4 million and $11.0 million of license and development revenue, respectively.

During the three and nine months ended March 31, 2026, we recorded nil of license and development revenue, respectively.

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.

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

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

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.

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.

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Results of Operations

The following tables set forth statements of loss, also expressed as a percentage of revenue, for the three and six months ended December 31, 2025 and 2024.

The following tables set forth statements of loss, also expressed as a percentage of revenue, for the three and nine months ended March 31, 2026 and 2025.

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

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 2026 2025 2026 2025 2026 2025

9 unchanged sentences

Operating loss (14,058) (10,658) (8.6) % (6.4) % (32,207) (16,818) (6.3) % (3.2) %

Other income, net

Other income (loss), net

587 (65) 0.4 % 0.0 % 3,949 (52) 0.8 % 0.0 %

1 unchanged sentence

Interest expenses (139) (596) (0.1) % (0.4) % (653) (2,109) (0.1) % (0.4) %

Net loss before income taxes and equity method investment income (loss) (11,701) (4,811) (7.2) % (2.8) % (13,285) (5,260) (3.8) % (1.5) %

Net loss before income taxes and equity method investment (loss) income

(12,620) (10,392) (7.7) % (6.3) % (25,905) (15,652) (5.0) % (3.0) %

Income tax expense 1,015 660 0.6 % 0.4 % 4,432 2,942 0.9 % 0.6 %

Net loss before equity method investment income (loss) (13,191) (6,053) (8.1) % (3.5) % (16,702) (7,542) (4.8) % (2.1) %

Equity method investment income (loss) (102) (561) (0.1) % (0.3) % 1,287 (1,568) 0.3 % (0.5) %

Net loss before equity method investment (loss) income

(13,635) (11,052) (8.3) % (6.7) % (30,337) (18,594) (5.9) % (3.6) %

Equity method investment (loss) income

(152) 245 (0.1) % 0.1 % 1,135 (1,323) 0.2 % (0.2) %

Net loss $ (13,787) $ (10,807) (8.4) % (6.6) % $ (29,202) $ (19,917) (5.7) % (3.8) %

Share-based compensation expense was recorded as follows:

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 2026 2025 2026 2025 2026 2025

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Total $ 5,101 $ 7,136 3.1 % 4.3 % $ 20,506 $ 21,988 4.0 % 4.3 %

Three and Six Months Ended December 31, 2025 and 2024

Three and Nine Months Ended March 31, 2026 and 2025

The following is a summary of revenue by product type:

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

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The following is a summary of revenue by end market:

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 2026 2025 2026 2025 2026 2025

8 unchanged sentences

$ 163,792 $ 164,635 100.0 % 100.0 % $ 508,556 $ 519,678 100.0 % 100.0 %

Total revenue was $162.3 million for the three months ended December 31, 2025, a decrease of $10.9 million, or 6.3% as compared to $173.2 million for the same quarter last year.

The decrease was primarily due to a decrease of $12.0 million in sales of power discrete products and a decrease of $5.4 million in license and development services, partially offset by an increase $5.1 million in sales of power IC products and an increase of $1.4 million in packaging and testing services and other.

The net decrease in power discrete products and power IC products sales was primarily due to a 5.7% decrease in unit shipment, partially offset by a 1.7% increase in average selling price as compared to same quarter last year due to a shift in product mix.

The net decrease in revenues was primarily driven by a decrease in power supply and industrial markets, particularly in power tools products and quick chargers products, as well as a decrease in consumer markets, particularly in gaming products, partially offset by an increase in the computing markets, particularly in notebook products.

The increase in revenue of packaging and testing services and other for the three months ended December 31, 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 December 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 $344.8 million for the six months ended December 31, 2025, a decrease of $10.3 million, or 2.9% as compared to $355.0 million for the same period last year.

Total revenue was $163.8 million for the three months ended March 31, 2026, a decrease of $0.8 million, or 0.5% as compared to $164.6 million for the same quarter last year.

The decrease was primarily due to a decrease of $7.7 million in sales of power IC products and a decrease of $2.8 million in license and development services, partially offset by an increase of $8.2 million in sales of power discrete products and an increase of $1.4 million in packaging and testing services and other.

The net increase in power discrete products and power IC products sales was primarily due to a 4.1% increase in average selling price, partially offset by a 3.6% decrease in unit shipment as compared to same quarter last year due to a shift in product mix.

Such net increase in revenues was primarily driven by an increase in communication markets, particularly in battery products, offset by a decrease in power supply and industrial markets, particularly in power tools products.

The increase in revenue of packaging and testing services and other for the three months ended March 31, 2026, 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 March 31, 2026 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 $508.6 million for the nine months ended March 31, 2026, a decrease of $11.1 million, or 2.1% as compared to $519.7 million for the same period last year.

The decrease was primarily due to a decrease of $17.7 million in sales of power discrete products, as well as a decrease of $13.8 million in license and development services, partially offset by an increase of $17.2 million in sales of power IC products and an increase of $3.2 million in packaging and testing services and other.

The net decrease in power discrete products and power IC products sales was primarily due to a 2.9% decrease in unit shipment, partially offset by a 2.9% increase in average selling price as compared to same period last year due to a shift in product mix.

The net decrease in revenues was primarily driven by a decrease in consumer markets, particularly in home appliances and gaming products, and a decrease in power supply and industrial markets, particularly in power tools products and quick chargers products, as well as a decrease in communication market, particularly in battery products, partially offset by an increase in the computing markets, particularly in notebook.

The increase in revenue from packaging and testing services and other for the six months ended December 31, 2025, as compared to same period last year, was primarily due to increased demand.

The decrease in license and development services for the six months ended December 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.

Such net decrease in revenues was primarily driven by a decrease in consumer markets, particularly in home appliances and gaming products, and a decrease in power supply and industrial markets, particularly in power tools products and quick chargers products, partially offset by an increase in the computing markets, particularly in notebook.

The increase in revenue from packaging and testing services and other for the nine months ended March 31, 2026, as compared to same period last year, was primarily due to increased demand.

The decrease in license and development services for the nine months ended March 31, 2026 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 December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

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Percentage of revenue 21.1 % 21.4 % 22.1 % 23.0 %

Cost of goods sold was $127.4 million for the three months ended December 31, 2025, a decrease of $5.7 million or 4.3%, as compared to $133.1 million for the same quarter last year.

Cost of goods sold was $129.3 million for the three months ended March 31, 2026, a decrease of $0.2 million or 0.2%, as compared to $129.5 million for the same quarter last year.

The decrease was primarily due to 0.5% decrease in sales.

Gross margin decreased by 1.6 percentage points to 21.5% for the three months ended December 31, 2025, as compared to 23.1% for the same quarter last year.

The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the three months ended December 31, 2025.

Cost of goods sold was $267.1 million for the six months ended December 31, 2025, a decrease of $3.4 million, or

Gross margin decreased by 0.3 percentage points to 21.1% for the three months ended March 31, 2026, as compared to 21.4% for the same quarter last year.

The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the three months ended March 31, 2026.

Cost of goods sold was $396.4 million for the nine months ended March 31, 2026, a decrease of $3.6 million, or

0.9%, as compared to $400.0 million for the same period last year.

The decrease was primarily due to 2.1% decrease in sales.

Gross margin decreased by 1.3 percentage points to 22.5% for the six months ended December 31, 2025, as compared to 23.8% for the same period last year.

The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the periods.

Gross margin decreased by 0.9 percentage points to 22.1% for the nine months ended March 31, 2026, as compared to 23.0% for the same period last year.

The decrease in gross margin was primarily due to higher material costs and lower unit shipments during the current periods.

Research and development expenses

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

1 unchanged sentence

Research and development expenses $ 26,052 $ 23,398 $ 2,654 11.3 % $ 75,402 $ 69,844 $ 5,558 8.0 %

Research and development expenses were $25.2 million for the three months ended December 31, 2025, an increase of $1.2 million, or 5.2%, as compared to $24.0 million for the same quarter last year.

The increase was primarily attributable to an increase of employee compensation and benefit expense mainly due to increased headcount and merit salary increases.

Research and development expenses were $49.4 million for the six months ended December 31, 2025, an increase of $2.9 million, or 6.3%, as compared to $46.4 million for the same period last year.

Th e increase was primarily attributable to an increase in employee compensation and benefits expense, mainly due to increased headcount and merit salary increases.

Research and development expenses were $26.1 million for the three months ended March 31, 2026, an increase of $2.7 million, or 11.3%, as compared to $23.4 million for the same quarter last year.

The increase was primarily attributable to a $1.7 million increase in employee compensation and benefit expense mainly due to higher bonus expense, increased headcount and merit salary increases, a $1.3 million increase in product prototyping engineering expense as a result of increased engineering activities, a $0.5 million increase in consulting and recruiting fees and $0.8 million increase in allocation, partially offset by a $1.1 million decrease in depreciation expenses and a $0.7 million decrease in share-based compensation expense as a result of the change in estimated achievement of the performance conditions associated with the MSUs granted in December 2021.

Research and development expenses were $75.4 million for the nine months ended March 31, 2026, an increase of $5.6 million, or 8.0%, as compared to $69.8 million for the same period last year.

The increase was primarily attributable to a

$4.6 million increase in employee compensation and benefit expense mainly due to higher bonus expense, increased headcount and merit salary increases, a $2.6 million increase in product prototyping engineering expense as a result of increased engineering activities, a $0.7 million increase in consulting and recruiting fees and $1.4 million increase in allocation, partially offset by a $3.3 million decrease in depreciation expenses and a $0.6 million decrease in share-based compensation expense as a result of the change in estimated achievement of the performance conditions associated with the MSUs granted in December 2021.

Selling, general and administrative expenses

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

1 unchanged sentence

Selling, general and administrative $ 22,536 $ 22,437 $ 99 0.4 % $ 69,004 $ 66,688 $ 2,316 3.5 %

Selling, general and administrative expenses were $23.2 million for the three months ended December 31, 2025, an increase of $1.2 million, or 5.6%, as compared to $22.0 million for the same quarter last year.

The increase was primarily due to a $0.3 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher medical insurance expense, a $0.5 million increase in legal expenses and a $0.3 million increase in audit and tax professional service fees.

Selling, general and administrative expenses were $46.5 million for the six months ended December 31, 2025, an increase of $2.2 million, or 5.0%, as compared to $44.3 million for the same period last year.

The increase was primarily due to a $1.2 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher medical insurance expense, a $0.6 million increase in legal expenses and a $0.5 million increase in audit and tax professional service fees.

Selling, general and administrative expenses were $22.5 million for the three months ended March 31, 2026, an increase of $0.1 million, or 0.4%, as compared to $22.4 million for the same quarter last year.

The increase was primarily due to a $0.5 million increase in employee compensation and benefit expenses primarily due to merit salary increases and higher bonus expense, a $0.4 million increase in legal expenses, $0.3 million increase in design-win commission and a $0.1 million increase in audit and tax professional service fees, offset by $1.4 million decrease in share-based compensation expense as a result of the change in estimated achievement of the performance conditions associated with the MSUs granted in December 2021.

In addition, during the three months ended March 31, 2026, we identified one purchased manufacturing equipment, for which we were unable to meet our production process requirements.

Because the equipment had no alternative uses, we recorded an impairment of $0.3 million related to such equipment.

Selling, general and administrative expenses were $69.0 million for the nine months ended March 31, 2026, an increase of $2.3 million, or 3.5%, as compared to $66.7 million for the same period last year.

The increase was primarily due to a $1.7 million increase in employee compensation and benefits expenses primarily due to merit salary increases and higher bonus expense, a $0.9 million increase in legal expenses, and a $0.6 million increase in audit and tax professional service fees, offset by a $1.0 million decrease in share-based compensation expense as a result of the change in estimated achievement of the performance conditions associated with the MSUs granted in December 2021.

and $0.1 million decrease in design-win commission expense.

In addition, during the nine months ended March 31, 2026, we recorded an impairment of $0.3 million related to an equipment.

Other income (loss), net

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

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

Other income, net

Other income (loss), net

$ 587 $ (65) $ 652 (1,003.1) % $ 3,949 $ (52) $ 4,001 (7,694.2) %

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

Other income (loss), net increased in the six months ended December 31, 2025, as compared to the same periods last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation of RMB against USD, as well as $1.9 million of certain services were provided by the Company to the JV Company.

Other income (loss), net increased in the three months ended March 31, 2026, as compared to the same quarter last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation of RMB against USD.

Other income (loss), net increased in the nine months ended March 31, 2026, as compared to the same periods last year primarily due to an increase in foreign currency exchange gain as a result of the appreciation 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 December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

1 unchanged sentence

Interest income $ 990 $ 927 $ 63 6.8 % $ 3,006 $ 3,327 $ (321) (9.6) %

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

Interest income increased in the three months ended March 31, 2026, as compared to the same quarter last year primarily due to higher cash balances in the current quarter.

Interest income decreased in the nine months ended March 31, 2026, as compared to the same period last year primarily due to lower interest rates in the current periods.

Interest expense

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

1 unchanged sentence

Interest expenses $ (139) $ (596) $ 457 (76.7) % $ (653) (2,109) $ 1,456 (69.0) %

Interest expense decreased in the three and six months ended December 31, 2025 as compared to the same periods last year primarily due to lower outstanding loan balance in the current periods.

Interest expense decreased in the three and nine months ended March 31, 2026 as compared to the same period last year primarily due to lower outstanding loan balance in the current periods.

Equity method investment income (loss)

Three Months Ended December 31,

Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

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

Equity method investment income (loss) $ (102) $ (561) $ 459 (81.8) % $ 1,287 $ (1,568) $ 2,855 (182.1) %

Equity method investment loss decreased in the three months ended December 31, 2025, as compared to the same quarter last year as a result of a decrease in the loss recorded from the equity method investment.

Equity method investment income increased in the six months ended December 31, 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 six months ended December 31, 2025, compared to the equity method investment loss in the same periods last year.

Equity method investment (loss) income

$ (152) $ 245 $ (397) (162.0) % $ 1,135 $ (1,323) $ 2,458 (185.8) %

Equity method investment loss increased in the three months ended March 31, 2026, as compared to the same quarter last year as a result of a $0.5 million gain on the change of equity interest in the JV Company recorded in the three months ended March 31, 2025.

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.

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

Equity method investment income increased in the nine months ended March 31, 2026, 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 nine months ended March 31, 2026, compared to the equity method investment loss in the same period last year.

Income tax expense

Three Months Ended December 31, Six Months Ended December 31,

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

2026 2025 Change 2026 2025 Change

1 unchanged sentence

Income tax expense $ 1,015 $ 660 $ 355 53.8 % $ 4,432 $ 2,942 $ 1,490 50.6 %

We recognized income tax expense of approximately $1.5 million and $1.2 million for the three months ended December 31, 2025 and 2024, respectively.

The income tax expense of $1.5 million for the three months ended December 31, 2025 included a $0.1 million discrete tax expense.

The income tax expense of $1.2 million for the three months ended December 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 December 31, 2025 and 2024 was $1.4 million and $1.2 million, respectively, and the effective tax rate for the three months ended December 31, 2025 and 2024 was (12.0)% and (22.1%), respectively.

We recognized income tax expense of approximately $1.0 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively.

The income tax expense of $1.0 million for the three months ended March 31, 2026 included a $0.1 million discrete tax expense.

The income tax expense of $0.7 million for the three months ended March 31, 2025 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, 2026 and 2025 was $0.9 million and $0.6 million, respectively, and the effective tax rate for the three months ended March 31, 2026 and 2025 was (7.4)% and (5.8%), respectively.

We recognized income tax expense of approximately $3.4 million and $2.3 million for the six months ended December 31, 2025 and 2024, respectively.

The income tax expense of $3.4 million for the six months ended December 31, 2025 included a $0.1 million discrete tax expense.

The income tax expense of $2.3 million for the six months ended December 31, 2024 included a $0.1 million discrete tax expense.

Excluding the discrete income tax items, the income tax expense for the six months ended December 31, 2025 and 2024 was $3.3 million and $2.1 million, respectively, and the effective tax rate for the six months ended December 31, 2025 and 2024 was (27.3)% and (31.4%), 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, including reporting $0.7 million of income tax expense related to the Company’s income from its investment in CQJV for the six months ended December 31, 2025 versus an $0.2 million tax benefit for the six months ended December 31, 2024.

During the three months ended September 30, 2025, income tax payable increased by $10.4 million and deferred tax liability decreased by $10.5 million as a result of the sale of approximately 20.3% of the Company’s equity interest in the JV company for $150 million.

The Company made income tax payments of approximately $8.7 million as a result of the sale transaction during the three months ended December 31, 2025.

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

We recognized income tax expense of approximately $4.4 million and $2.9 million for the nine months ended March 31, 2026 and 2025, respectively.

The income tax expense of $4.4 million for the nine months ended March 31, 2026 included a

$0.2 million discrete tax expense.

The income tax expense of $2.9 million for the nine months ended March 31, 2025 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, 2026 and 2025 was $4.2 million and $2.7 million, respectively, and the effective tax rate for the nine months ended March 31, 2026 and 2025 was (17.0)% and (16.1%), 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, including reporting $0.7 million of income tax expense related to the Company’s income from its investment in CQJV for the nine months ended March 31, 2026 versus a $0.2 million tax benefit for the nine months ended March 31, 2025.

In addition, income tax payable increased by $10.4 million and deferred tax liability decreased by $10.5 million as a result of the sale of approximately 20.3% of the Company’s equity interest in the JV company for $150 million during the nine months ended March 31, 2026 .

We made income tax payments of approximately $0.7 million and $9.3 million during the three and nine months ended March 31, 2026, respectively, as a result of the sale transaction.

The Company files its 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.

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

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, the Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

These assessments can require considerable estimates and judgments.

As of December 31, 2025, the gross amount of unrecognized tax benefits was approximately $10.8 million, of which $7.5 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.

As of March 31, 2026, the gross amount of unrecognized tax benefits was approximately $10.9 million, of which $7.5 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 determine the liabilities are no longer necessary.

Liquidity and Capital Resources

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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 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.

This agreement includes a payment term of five (5) years, pursuant to which Jireh commenced payments of interest 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.

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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 $11.3 million as of December 31, 2025.

As of December 31, 2025, the outstanding balance of this debt financing was $5.1 million.

The financing arrangement is secured by this equipment and other equipment at Jireh, which had a net book value of $10.9 million as of March 31, 2026.

As of March 31, 2026, the outstanding balance of this debt financing was $4.4 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.

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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, the Company paid the outstanding balance in full and this agreement was terminated.

As of December 31, 2025, there was no outstanding balance.

In August 2025, we paid the outstanding balance in full and this agreement was terminated.

As of March 31, 2026, there was 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.

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In August 2025, this factoring agreement was terminated.

As of December 31, 2025, there was no outstanding balance.

As of March 31, 2026, there was 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.

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Cash, cash equivalents and restricted cash

As of December 31, 2025 and June 30, 2025, we h a d $196.8 million and $153.5 million of cash, cash equivalents and restricted cash, respectively.

As of March 31, 2026 and June 30, 2025, we h a d $190.7 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.

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

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands)

Net cash provided by operating activities $ 2,062 $ 25,126

Net cash (used in) provided by operating activities

$ (6,280) $ 32,494

Net cash provided by (used in) investing activities 88,187 (22,167)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash (132) (35)

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

$ 37,184 $ (5,974)

Cash flows from operating activities

For the six months ended December 31, 2025, the $23.1 million decrease in cash provided by operating activities compared to the same period last year was primarily due to an increase of net loss of $6.3 million, a decrease of non-cash expenses of $11.3 million, which includes an increase of $8.7 million in deferred income tax, net and an increase of $2.9 million in equity method investment gain due to the 20.3% equity method investment sale 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 $22.4 million in inventory purchase, a decrease of accounts payable of $8.5 million primarily due to timing of payment, a decrease of $3.3 million in net payable, equity investee, and increase of $0.4 million in other current and long-term assets.

These sources of cash were offset by an increase of $2.5 million in income tax payable primarily due to the sale of the 20.3% interest in the equity method investment, a decrease of $13.1 million in accounts receivable, a decrease of $8.5 million in contract assets, and an increase of $4.6 million in deferred revenue.

For the nine months ended March 31, 2026, the $38.8 million decrease in cash provided by operating activities compared to the same period last year was primarily due to an increase of net loss of $9.3 million, a decrease of non-cash expenses of $15.9 million, which includes an increase of $8.1 million in deferred income tax, net, a decrease of $4.2 million in depreciation and amortization, and an increase of $2.5 million in equity method investment gain due to the 20.3% equity method investment sale 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 $17.0 million in inventory purchase, a decrease of accounts payable of $20.9 million primarily due to timing of payment, and a decrease of $5.1 million in net payable, equity investee.

These sources of cash were offset by a decrease of $12.3 million in accounts receivable, $4.0 million increase in deferred revenue, an increase of $11.5 million in accrued and other liabilities, and an increase of $2.6 million in income tax payable primarily due to the sale of the 20.3% interest in the equity method investment.

Cash flows from investing activities

For the six months ended December 31, 2025, the $88.6 million increase in cash provided by investing activities compared to the same period last year was primarily due to $103.2 million of proceeds from sale of equity interest in the JV Company, net with transaction costs, partially offset by $10.3 million of more purchases of property and equipment, $3.5 million of a loan issued to a supplier, and $0.5 million of more purchase of intangible assets, as well a $0.3 million less government grant related to equipment in the six months ended December 31, 2025 compared to the same period last year

For the nine months ended March 31, 2026, the $110.4 million increase in cash provided by investing activities compared to the same period last year was primarily due to $133.5 million of proceeds from sale of equity interest in the JV Company, net with transaction costs, partially offset by $14.0 million of more purchases of property and equipment, $8.0 million of a loan

issued to a supplier, and $0.6 million of more purchase of intangible assets, as well a $0.5 million less government grant related to equipment in the nine months ended March 31, 2026 compared to the same period last year.

Cash flows from financing activities

For the six months ended December 31, 2025, the $29.5 million increase in cash used in financing activities compared to the same period last year was primarily due to $15.9 million of repayment of loan borrowings and $14.0 million of payment for repurchases of common shares, partially offset by $0.3 million of withholding tax on restricted stock units.

For the nine months ended March 31, 2026, the $28.3 million increase in cash used in financing activities compared to the same period last year was primarily due to $13.7 million of repayment of loan borrowings and $18.2 million of payment for repurchases of common shares, partially offset by $3.5 million of withholding tax on restricted stock units.

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.

Contractual Obligations

There were no material changes outside of our ordinary course of business in our contractual obligations from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

There were no material changes outside of our ordinary course of business in our contractual obligations from those disclosed in our 2025 Form 10-K.

Recent Accounting Pronouncements

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the market risks previously disclosed in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended June 30, 2025, filed with the SEC on August 28, 2025.

There have been no material changes in the market risks previously disclosed in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our 2025 Form 10-K, filed with the SEC on August 28, 2025.

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