Alpha and Omega Semiconductor (NASDAQ:AOSL) Q3 2020 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by and welcome to the Alpha and Omega Semiconductor Report's financial results for the fiscal third quarter of 2020. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, So Young Jung. Thank you. Please go ahead, madam. Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call to discuss fiscal 2020 third quarter financial results. I'm So Young Jung, investor relations representative for the company.

0:48 With me today are Dr. Mike Chang, our CEO, Yifan Liang, our CFO, and Stephen Cheng, our executive vice president. This call is being recorded and broadcasted live over the web and can be accessed for seven days following the call via the link in the investor relations section of our website at www.aosmd.com. Mike will begin with a review of business overview for the quarter. Then Stephen will provide a detailed segment report. After that, Yifan will continue with a review of financial results for the quarter and guidance for the next quarter. Then we'll have the question and answer session.

1:35 The earnings release was distributed by BusinessWire today, May 5th, 2020, after the close of the market. The release is also posted on the company's website. Our earnings release and this presentation include certain non-GAAP financial measures We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. We remind you that during the conference call, we'll make certain forward-looking statements, including discussions of business outlook and financial projections.

2:25 These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update information provided in today's call. I'll turn the call over to our CEO, Mike, to provide an overview of our business and the impact of COVID-19 pandemic. Mike. Thank you, Soyoung. Welcome, everyone. And thank you for joining us for our March quarter earnings call. I hope that all of you and your families are safe and healthy.

3:23 As we navigate the unprecedented challenges of this COVID-19 pandemic, we think it is important to update you on our business operations and how we are staying resilient. Before we begin the usual review of quality results, I will take a few minutes to talk about the challenges and risks we face and our actions to mitigate them. As I said on our last earnings call, our top priority is health and well-being of our employees and their families. In addition to the mandatory measures enacted by federal, state, and regional agencies, we proactively implemented precautionary measures and established operating guidelines to safeguard our employees and their families.

4:26 As part of our business continuity plan, we instituted a work-from-home policy before it was mandatory. This helped us mitigate the impact of sudden disruptions to our operations and ensured that our employees had full access to the connectivity infrastructure required to work remotely. We are thankful that our 4,000 of our employees are currently safe and well and our global operations are running. In addition to safeguarding our employees, we are committed to fully supporting our customers during these trying times.

5:18 When we discussed our outlook for March quarter, back in early February, our guidance factored in an estimate of our lost production in China. As it turned out, production in China was severely disrupted during February. However, we were fortunate that we maintained partial production throughout the Lunar New Year holiday, during which we ran to 24x7. When more people returned to work after the holiday, our employees went above and beyond their typical role to ensure delivery of our products while complying with various governmental orders and managing logistical challenges.

6:16 The Oregon Fab also ran nonstop during the quarter. Our diversified manufacturing footprint helped us quickly respond to shifting market demand. Since March, our total production level has recovered significantly, faster than we anticipated. Today, I am pleased to report that we are running at the level we expected. Obviously, COVID-19 actively impact our customers. Some of them are recovering more slowly than others. The factories located in the COVID-19 epicenters while others are exposed to greater supply chain disruption because they store numerous components to complete an entire kit of parts.

7:17 Public restrictions and logistical challenges also restrict our ability to support customers with demo boards, evaluation kits, and design-in support. With utmost dedication, we are working closely and creatively to support our customers in every way we can. We are providing excellent service and meeting demand by being flexible and Limbo with production schedules, thus demonstrating solidarity with our customers. At this stage, we are able to work around temporary disruptions to achieve our operating objectives.

8:04 While visibility beyond June quarter is very limited, given the uncertainty of the impact of COVID-19, we are managing risk. by optimizing product mix, vigilantly seeking new business opportunities, and accelerating product time to market. Against this backdrop, we reported an in-line March quarter with revenue within our guidance range. Yifan will provide details of our March quarter results later on the call. Let me now touch on some key business highlights and what we are seeing in the current environment.

8:54 Even with the overall downturn in the economy, near-term demand for computing and gaming is very strong. This is due to the shelter in place and the social distancing mandate, which are giving the need for higher computing power for working from home activities, online learning, and gaming. The computing industry has been expanding and transforming to support and connect business and individuals worldwide. While we have rapidly diversified into other applications, such as mobile and home applying, we remain the leader in power management, especially in the computing area.

9:45 Our unwavering commitment in the past years to our computing customers has rewarded us with much welcomed business during this downturn. In difficult times like these, supporting customers through the uninterrupted supply of our products is more important than ever. Also noteworthy is that Our Chongqing JV is starting to fulfill its purpose as highlighted in our strategic plan for sustainable growth growth. Indeed, it has played a critical role in enabling us to meet the surging demand in the computing market.

10:38 As you would expect, given the environment, we are prudently managing expenses. We are reducing non-essential spending while also pursuing strategic and critical R&D projects in order to expand our market reach and stand. Stephen is diligently working with our R&D team on this special project and he will provide more details later on the call. Finally, I want to highlight that our core business is generating consistent and sustained cash flow. Our balance sheet is strong. Yifan will provide you with more color on our cash position.

11:26 As I look at our performance in the quarter, I am both humbled by and proud of our amazing group of employees. They delivered an extraordinary performance with strong sense of ownership and commitment. while sustaining a safe and healthy working environment. We look forward to a gradual return to normality for our country, our industry, and our economy. The power semiconductor market is large and growing, and we are determined and committed to accomplish our mission to rapidly expand and become a top tier supplier in this market.

12:15 Now, I will turn the call over to Stephen for a detailed segment report. Stephen. Thank you, Mike, and good afternoon. Let me start with computing. It represented 44.2% of our total revenue in the March quarter. Revenue was down 2.9% sequentially and down 8.8% year over year. Starting in the second half of March, we saw a rise in demand for our computing products, especially for notebook PCs. As a result of various stay at home orders by governments in response to the COVID-19 pandemic, PCs have become indispensable worldwide as more people are working from home and transitioning to distance learning.

13:07 We don't know how this demand picture will play out in the second half of this year, but at the moment we are optimizing our production mix to satisfy this surge in demand for the next quarter. Our graphics card business has also been strong with both our high performance driver MOS and MOSFET vCore solutions. Graphics cards have been selling well as demand in both PC and gaming is up. We expect computing to be strong in the June quarter with mid single digit sequential growth. Now turning to the consumer segment, it represented 18.7% of total revenue in the March quarter. Revenue decreased 5.3% sequentially and was down 2.9% year over year. Our TV business was seasonally down in the March quarter, but we now expect it to grow in the June quarter.

14:05 We are very excited to share with you that AOS has achieved a strong design into an upcoming gaming system platform that is expected to launch later this year. Our content in this gaming system has multiple sockets, including driver MOS and MOSFETs to power processors, as well as Type-C smart load switches and TVS surge protection devices to protect the controller ports. Gaming systems feature higher resolutions and faster graphics, along with plenty of software features while still needing to meet energy efficiency, temperature, and safety requirements. AOS won this design because our power solutions offer the high performance needed to keep the system operating coolly and efficiently.

14:56 With the ramp up underway, we anticipate double-digit growth for the June quarter in the consumer segment. Next, let's discuss the power supply and industrial segment. It accounted for 17.8% of total revenue, down 24.6% sequentially, and down 10.3% year over year. COVID-19 market disruptions in China impacted our power supply industrial business during the March quarter. This was caused primarily by a drop in chargers and adapters used for smartphones and PCs. However, as China recovers, we expect to see a rebound in production and demand.

15:42 The quick charger application has increasingly been migrating to higher power output, from 18-watt to 24-watt and even up to 65-watt. This performance-driven market opportunity comes with higher value content and fewer competitors and is well-suited for our medium-voltage products. We expect a return to growth in the June quarter in this segment as the demand for notebook chargers and smartphone quick chargers recovers. Finally, let's move on to the communications segment, which was 18.1% of revenue in the quarter, down 8.5% sequentially, but up 41.4% year over year. The smartphone market was severely impacted by the COVID-19 pandemic, and the disruption in production and demand is spreading globally. While we don't have clear visibility on the smartphone market in the near term, we are seeing rebound in demand for our telecom business as 5G continues to roll out. We think we can maintain this segment's revenue in the June quarter. With that, I will now turn the call over to Yifan for additional comments and guidance.

17:01 Thank you, Stephen. Good afternoon everyone and thank you for joining us. Revenue for the March quarter was $106.9 million, down 9.3% from the prior quarter and down 2% from the same quarter last year. In terms of product mix, MOSFET revenue was $89.9 million, down 11.4% sequentially and flat year over year. Our IC revenue was $15.7 million, up 7.1% from the prior quarter and down 11% from a year ago. Assembly service revenue was $1.3 million as compared to $1.7 million last quarter and $1.5 million for the same quarter last year.

17:58 Non-GAAP gross margin for the March quarter was 27.5% down from 28.3% for the prior quarter and up from 27% for the same quarter last year. Non-GAAP gross margin excluded $0.4 million of share-based compensation charge for the March quarter as compared to for the prior quarter and $0.5 million for the prior year period. Non-GAAP gross margin also excluded $6.6 million of production ramp-up costs relating to the Chongqing joint venture for the March quarter as compared to $8.5 million for the prior quarter and $3.4 million for the same quarter last year.

18:57 Non-GAAP operating expenses for the March quarter were $25.9 million compared to $25.7 million for the prior quarter and $23.2 million for the same quarter last year. Non-GAAP operating expenses for the quarter excluded $2.5 million of share-based compensation charge, $2.1 million of legal costs related to the government investigation, and $0.6 million impairment charge related to an investment in a privately held startup company as compared to $2.1 million of share-based compensation charge for the power quarter and $2.6 million of share-based compensation charge and $3.6 million of free production expenses related to the joint venture.

19:54 Company for the same quarter last year. Both GAAP and non-GAAP operating expenses included $3.1 million of digital power expenses for the quarter as compared to $3 million for the prior quarter and $2.3 million for the same quarter last year. Our digital power development is also progressing well and we are close to securing a design win as a graphics card maker. Income tax benefit for the quarter was $1 million compared to tax expense of $0.6 million for both prior quarter and the same quarter last year. The tax benefit was primarily driven by the tax relief from the CARES Act.

20:50 Non-GAAP EPS attributable to AOS for the quarter was 11 cents per share as compared to 23 cents for the prior quarter and 22 cents for the same quarter last year. AOS on the standalone basis generated $29.5 million of operating cash flow in the March quarter as compared to $12.5 million in the prior quarter $9.5 million in the same quarter last year. Working capital management contributed $22 million in the quarter. Cash flow used in operations attributable to the JV company was $15.2 million for the March quarter compared to $3.5 million for the prior quarter and $17.5 million for the same quarter last year.

21:48 Consolidated EBITDAs for the March quarter was $8.8 million compared to $13.9 million for the prior quarter and $11.8 million for the same quarter last year. EBITDAs attributable to AOS for the quarter was $6.5 million as compared to $12.5 million for the prior quarter and $13.5 million for the same quarter last year. Now let's look at the balance sheet. We completed the March quarter with cash and cash equivalents of $110.2 million, including $99.5 million at AOS and $10.7 million at the JV Company. This compares to $107.2 million at the end of last quarter, which included and Yifan Liang.

23:18 including $34.8 million at AOS and $118.8 million at the JV company. During the March quarter, AOS and the joint venture company repaid $2.1 million and $6.6 million of existing loans respectively. The JV company obtained received $15.4 million working capital loans. Subsequent to the quarter end, the JV Company also entered into two loan agreements with local banks for a total of $50 million. We believe that this was largely sufficient to achieve the phase one plan at the JV Company.

24:11 Net trade receivables were $17.5 million as compared to $33.9 million at the end of prior quarter and $28.4 million for the same quarter last year. Day sales outstanding for the quarter were 22 days compared to 28 days in the prior quarter. Net inventory was $127.4 million at the quarter end up from $117.6 million last quarter and up from $107.9 million in the prior year. Average days in inventory was 131 days for the quarter compared to 114 days in the prior quarter. Net property plant and equipment was $412.3 million as compared to $416.1 million per quarter and $391.6 million last year. Capital expenditures were $16.8 million for the quarter, including $13.1 million at AOS and $3.7 million at the JV Company.

25:34 We estimate that the capital expenditure for AOS alone to be in the range of 8% to 9% of the total revenue for the fiscal year 2020. Before I move on to the guidance for the next quarter, I would like to update you on the progress at the JV Company. During the March quarter, the 12-inch fab and assembly and test facility performed better than we expected, considering the conditions of the COVID-19 outbreak in China. Given this situation of the global pandemic and resulting economic recession, our visibility into overall market demand beyond the June quarter is very limited.

26:24 At this point, we are unable to determine when we can ramp up the 12-inch fab to its phase one target run rate. We will continue to monitor and evaluate market conditions closely and provide further guidance when we gain more visibility. For the June quarter, we expect the JV Company to increase production volumes sequentially to support our business growth opportunities as our Oregon Fab is running at full capacity. With that, now I would like to discuss the guidance for the next quarter. We expect revenue to be between $117 million and $121 million.

27:10 Gap growth margin to be 22% plus or minus 1%. We anticipate the non-gap growth margin to be 26.5% plus or minus 1%. Note that Non-GAAP gross margin excludes $0.4 million of estimated share-based compensation and $5 million of estimated production ramp-up costs relating to the JV company. GAAP operating expenses to be in the range of $29 million plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $25.7 million plus or minus $1 million.

28:05 Both GAAP and non-GAAP operating expenses include $3.2 million to $3.5 million of estimated expenses relating to the development of our digital power business. Non-GAAP operating expenses exclude $1 million to $2 million of estimated professional fees related to the government investigation and $2.3 million of estimated share-based compensation. Income tax expense to be approximately $0.3 million to $0.5 million. Loss attributable to non-controlling interest to be around $2.7 million On a non-GAAP basis, excluding estimated production ramp-up costs relating to the JV company, this item is expected to be approximately $0.1 million.

29:08 As part of our normal practice, we are not assuming any obligations to update this information. With that, we will open the call for questions. Operator, please start the Q&A session. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Your first question comes from David Williams from Loop Capital. Please go ahead. Hey, good evening. Thanks for taking my question and congratulations on the guidance. That's a very strong revenue. And if I kind of look back over the last couple of quarters or couple of years, That looks to be a fairly high level of revenue.

29:57 Can you kind of talk a little bit about where the greatest level of demand is and maybe what your confidence level is in the guidance range? Sure, David. This guidance for the June quarter primarily reflected the demand surge in the computing and gaming area that we're seeing right now. and some other areas that are not performing to the level that last year we saw. For example, in the smartphone area, some industrial areas, those areas are definitely down.

30:47 For us, with our long-term commitment in the computing area. This time, we saw a pretty strong surge in the month of March, I would say, started. We saw demand for our products. So that's where we adjusted our productions. And this time, our CQ joint venture actually provided us with flexibility of production and a much needed capacity to support this sudden surge in computing demand. So, I mean, we are managing this surge in what going after those business opportunities. On the other hand, I want to be cautious about the outlook for the second half of the year.

32:08 I mean, we don't know whether or not this surge in demand will be short-term or can extended for a while. So at this point, we're very happy. And then, you know, the Chongqing Joint Venture can support us for a much needed supply. I mean, Mike, do you have anything you want to add? Well, thank you, Yifan. And thank you, David, for the question. Actually, we're very thankful. Thank God that in such a Thank you very much for your time. to newer customers. However, this new business will need capacity to support. And our Oregon Fab, from very beginning, we knew, we know that the capacity is very limited. And indeed, since last year, it starts to be full capacity. And this JV, of course, coming in right time.

33:40 Of course, it takes some time to bring up there. And right now, we are very thankful that they come in to serve this is a surge and you start to produce a good result to us and we are very, very thankful. Fantastic. Thanks for the commentary. Very helpful. If we kind of think about how much flexibility, how much capacity came out of the JV this quarter, can you give us anything that maybe quantifies that or maybe to what level of revenue was provided by the JV? Sure. I mean, at this point, I mean, the because of the uncertainties about the overall market demand and then, you know, right now it's hard to say about the second half of the year.

34:31 Right now, we are unable to determine when we can ramp up this phase one to the target rate. Given that, you know, you can tell from our June quarter's guidance, I mean, this incremental revenues are all supported by our Chongqing joint venture. Over there, we still have capacity to support even higher demand if this Thank you very much.

35:46 We'll see. Okay. You might add up a little bit more. Okay. Yes, indeed, we still have some capacity in the Chongqing JV for more business. However, our first phase plan really is to reach the break-even in the cash flow. So we do have the capacity, but not overly, not too much in other words. So enough to support near term. Okay, that's the fact. Thank you. Okay. So you feel comfortable that you can satisfy your demand coming in the June quarter through the additional capacity in the JV?

36:32 Yes, yes. Okay, got it. And maybe if you have a sense of the channel inventory health, are you seeing any maybe pull-in orders or anything that would give you any concern in terms of inventory overstocking or just generally the health of the channel? Okay, sure. Well, channel inventory right now, you know, we are at an... made a range of our target, like in two to three months. Last couple of quarters were at the low end of the channel inventory. This quarter, because of the better than expected production recovery, we actually benefited from this production recovery.

37:27 so that we can serve better on this demand search. So right now, the incremental channel inventory was pretty much in the computing area, which is much needed inventory for provided to our customers for this June quarter. Okay, fantastic. And just one more if I can here, and I'll jump back in the queue, but you talked a little bit about the controller and the progress there. How close are you? I know you said in the past about the year's end.

38:12 Do you think there's an opportunity to accelerate that and maybe drive that controller revenue up before the year end? Hi David, this is Stephen. Yeah, let me comment on that. So actually our digital power has been addressing two markets. One has been advanced computing and the second one is telecom. And we're actually pretty close to getting a design win actually on the advanced computing side at a graphics card maker. And it's kind of going into more of a consumer side of that, but We're pretty excited about this one. We're hoping and expecting this to generate revenue closer to the end of the year once the project ramps up. So we expect that to come as near-term revenue. The other portions I think we're still in the development phase in terms of development and working with the customers. So we're anticipating it'll still take some time to develop the revenue for the other portion of the business.

39:09 So we expect, in a nutshell, we do expect some business in the short term, but it will be kind of small just to start out with and with some more mild growth going into 2021. Great. Well, thanks again and the best of luck on the quarter. Stay healthy, please. Thank you. Thank you. Your next question comes from Torres Vonberg from Steeple. Yes, thank you. Question on gross margin. So I do recognize the Oregon Fabric fall, but I was expecting a little bit more fall through from the 10 to 15 million higher revenue in the June quarter. So is the lower gross margin just a pure function of the revenue mix?

39:54 Hi, Torrey. This, you know, the higher... revenue and guidance for the June quarter. The margin, you know, we did not increase much over there. A couple of things. One is, you know, that we baked in some ASP erosion and, you know, we would expect at the economic recession time, you know, this, you know, some other areas that, you know, we would expect and some price erosion. Another thing is, you know, this incremental revenue is pretty much supported by our joint venture.

40:40 So joint venture by providing pro forma the production run-up cost and actually, you know, you can tell the margin benefit will be reflected in the production run-up cost reduction. So then, you know, in the March quarter, we perform out the $6.7 million, $6.5 million also. For the June quarter, we're expecting, you know, about a $5 million production ramp-up cost from the joint venture. So that will be the gist of it.

41:27 That's very helpful. And you mentioned a $50 million loan. Could you elaborate a little bit on the terms of that loan? And as far as the usage of that money, is that going to go down to pay down some of the JV debt? Or is it going to be spent more on CapEx as you continue to ramp up Phase 1 and eventually Phase 2? This $50 million of loans that... for CapEx and for working capital. So the terms are pretty much similar to their previous loans. It's in the five years range and similar interest rate, a little bit down, actually, better rates than before.

42:18 This will be used for... remaining on payment for the CapEx and for the Phase I and for some working capital for the company. Great. And do you have a CapEx number for the JV for this year? CapEx for this fiscal year, that will be June quarter. I would think a little bit higher than this March quarter's $3 or $4 million CapEx payment. That just depends on the timing of the payment. So there are some remaining payments that they need to make after the As a reminder, to ask a question, press star 1 on your telephone keypad.

43:41 Your next question comes from Craig Ellis from B Reilly FBR. Yeah, thanks for taking the question, team, and congratulations on doing such a good job in the March quarter navigating a real volatile environment. I wanted to start just with a couple of clarifications. The first one, with respect to the prior target for the JV ramp, we had been looking for a revenue ramp to $37.5 million in the September quarter. and I understand we've got a much different environment but what I've wanted to dig into is the reason that the company's uncomfortable sticking with that guidance because the design wins aren't there to get to the 37 and a half million or the design wins are there but maybe the unit volumes on those wins is now different than you thought or is it that those two things are fine and maybe you're just concerned about from other suppliers that would go in kits that are related to the design wins that you have. Maybe it's other things, but I'm just trying to understand what the specific factors are and where you are overall relative to the design wins that are needed to get to a 37.5 million runway for that facility.

44:58 Okay, sure, Craig. This is for Marty. because of the overall market demand. I mean, at this point, it's so volatile. I mean, it's just kind of, you know, in the March quarter, we saw the market shift, you know, like a roller coaster. And then, you know, with the mobile market demand down so dramatically, and then later on over the quarter, you know, We saw a surge in the demand for computing. I mean, all those things, and also, you know, a lot of uncertainties related to this, you know, pandemic, and, you know, we don't know how long it will last, and then, I mean, those recessions.

45:57 For sure, we're in... Thank you very much. Thank you. Thank you. Thank you. have provided guidance, you know, when we can ramp up to the target run rate of phase one. We'll closely monitor it and then we will provide further guidance when we gain more visibility.

47:17 Okay, going back to a clarification on gross margin, Terry, Victoria fleshed out the fiscal fourth quarter, but on the third quarter it was about 150 basis points better than I expected. So what allowed the company to perform so well? And obviously, we had reduced estimates into quarter just given the choppy environment. But were there any incremental positives in the quarter that allowed you to offset some of what was likely incremental COGS costs in a COVID environment? Sure. In the March quarter, yes, I would both margin came in higher than our guidance. It was primarily because our production recovery was better than we expected.

48:10 And I mean, we expected more decline in the production level. So I got to give credit to our and other employees, especially in China. They fought through this lockdown and then the shortage of labor for pretty much most of the time, February and March. So with the limited workforce over there and then they they produced much higher output for us through overtime, through commitment, and really demonstrated ownership over there. Given the situations, not only the shortage of labor, but also the all of these disruptions of logistics, a lot of shortages on some materials, or even clean room masks.

49:33 For a while they were down to a pretty low level. They fought through it. That contributed to our overall gross margin. performed better than we expected. Okay. Got it. And then moving on to consumer... Let me get back to the... This is Mike Chang, if you don't mind. Let me add a few words about this Chongqing JV of the forecast. Yes, facing this recession and the unknown COVID-19 impact, I think we should be more conservative But however, I'd like to point out the progress in the loading in the Tongji Jet is progressively, accordingly, and improving.

50:29 So beyond June, really, we cannot comment on anything. We cannot focus on anything. But this woman, I'm very much pleased by the performance. Thank you. Okay, got it. Thanks for that, Mike. Moving on to consumers gaming ramps. So it looks like gaming is accounting for about half of the sequential growth if I've got the bottoms up modeling right in the June quarter. So twofold question. Once we exit the June quarter, where will we be with respect to that ramp? Is there further growth coming in September or will you really realize all the benefits of the gaming design win in the June quarter and then may be going back and connecting in with Tori's question. Since this is half the sequential growth and given the decline in gross margins, would it be fair to assume that this design win as a high volume design win is coming in below corporate average?

51:29 Yeah, this is Stephen. Let me comment on the gaming thing. We're pretty excited to be able to share this because we are winning multiple sockets in this gaming system. and as gaming systems go, definitely they're preparing for a pre-production. At this point, the system's not released yet. It's going to release in the second half of this year. Hopefully, there's no delays or anything, but we don't see anything as of yet. We do expect our business with this to continue to grow, but it all definitely depends on the customer's own ramp-up rate. I think whenever these things launch, there's usually a big push. especially they're trying to do for Christmas and then after that they see how how the acceptance is and then they push further but you know we believe that this would be a pretty good growth area for us so we're excited but we're also cautious especially given this coronavirus time.

52:25 Do you have any sense for what your share is with that topic Steve? The share, I mean, our share in there, or was that what you're asking? Yeah, are you sole sourced into the sockets that you're in, or do you think you have a majority share? I think it depends on which socket it is. Some things we have a better share, others we don't. The good thing is we actually have quite a few number of sockets inside, so it depends which one you're talking about, but none of them are sole sourced. They always want multiple sources for these systems. Okay, great. Good for you guys. and then just connecting two of the end markets. So some fancy footwork to realize the strength in PCs. The question as we look ahead, can PCs get back to some of the highs that we had seen last year with the strength that you're seeing near-term team? And then secondly, we went into this year thinking that comms was gonna be the sequential or the year-on-year growth driver and we were allocating capacity towards comms.

53:30 Clearly we've got some unit headwinds, but as you look to the back half of the calendar year and the design wind funnel that you have, do you feel like from stable revenues in June, you have the opportunity to really grow that business in the back half? Or would we really look to calendar 21 before we were able to see significant growth of current revenue levels? Yeah, let me answer that one too. So, regarding PC, definitely we're very excited about the growth in PCs. Normally in a regular year, Q1 typically is a down season. So actually where we're at and only dropping just a few percentage points in the first quarter is a pretty big unusual type of thing for us. So we do expect computing to continue to be strong.

54:20 All along we've always stuck to PC as one of our core areas of business and we'll continue to do that. and we continue to also grow there into higher content with power ICs and driver MOS. So we do expect to continue and to maintain and grow our foothold in PC. Of course, this is all pending the overall market. We don't know how long this current surge is going to last for, but we believe our position at least in what's there is good. Regarding communications, what remains to be seen is how the peak smartphone season is going to be in this coming September quarter and December quarter. And we know that, at least in the March quarter, overall phone shipments were actually down quite sharply. But actually, our battery protection business was also down, but actually wasn't as down as compared to the overall market.

55:21 We're still in some pretty good positions at the global filmmakers, but of course we're dependent upon their own shipments to see how they'll be doing in this upcoming peak season. So yes, I think there is possibility for growth, but there's also a lot of dynamics that we have to account for as well. So we hesitate to put a firm number into the second half, but yes, potentially we could be growing and going into the second half even further. And just to further clarify the last point, Stephen, can you see the... The air interface of the design winds that you have, for example, is it visible to you whether you're designed into a 5G or a 4G phone in the back half of the year?

56:09 Because obviously the unit dynamics are going to be dramatically different. Half on half, 5G phones are likely to be up two to two and a half X in the first half, but 4G phones will be nowhere near that as good. So any visibility on whether you're in 4G or 5G? We don't necessarily always know which model we're designing until the things get finally released, but we feel pretty confident about where we're at position-wise, at least at each of the phone makers that we've been in. So, design-wise, I think we're in a good position. In terms of what the actual volumes would be, of course, we don't know what's going to happen there until it happens.

56:55 but right now we are preparing for a ramp but we don't know how strong of a ramp it would be. Okay, great. Thanks for all the help. Good luck, team. Thanks. Thank you. There are no further questions at this time. I will turn the call back over to the presenters. This concludes our earnings call today. Thank you for your interest in AOS and we look forward to talking to you again next quarter. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.