Alpha and Omega Semiconductor to sell 20.3% stake in China joint venture

SUNNYVALE - Alpha and Omega Semiconductor Limited (NASDAQ:AOSL), a semiconductor company with a market capitalization of $823 million and annual revenue of $681 million, announced Monday it has entered into an agreement to sell approximately 20.3% of its joint venture in Chongqing, China for $150 million in cash.

The semiconductor company will receive payment in four installments, subject to certain conditions. The transaction is expected to close before the end of 2025, according to a company press release. InvestingPro data shows AOSL maintains a healthy balance sheet with more cash than debt and a strong current ratio of 2.57, indicating solid liquidity to support this transaction.

The stake represents about half of AOS’s 39.2% holding in the joint venture, which operates power semiconductor packaging, testing, and 12-inch wafer fabrication facilities. AOS expects to recognize an impairment charge for the quarter ended June 30, 2025, on a GAAP basis. According to InvestingPro’s analysis, which includes 8 additional key insights available to subscribers, the company has shown volatile stock performance with a beta of 2.11.

Stephen Chang, Chief Executive Officer of AOS, said the company will continue to have access to the joint venture’s manufacturing and testing capacity under existing agreements, with protection for AOS’s proprietary technology and intellectual property.

"By realizing a portion of the value we have built with CQJV, we can reinvest in the people, tools, and intellectual property that expand our product portfolio, while preserving the supply partnership that underpins our growth strategy," Chang said.

The company plans to use proceeds from the sale to invest in technology, research and development projects, and acquire assets complementary to its business operations. While currently operating at a loss, InvestingPro analysts project a return to profitability this fiscal year, suggesting potential upside from these strategic investments.

Needham & Company served as the exclusive financial advisor to AOS in the transaction, while ROTH Capital Partners provided a fairness opinion to the Special Committee of the Board of Directors.

In other recent news, Alpha and Omega Semiconductor reported its Q3 FY2025 earnings, revealing a non-GAAP EPS of -$0.10, which missed the forecast of $0.0033. The company’s revenue was $164.6 million, slightly below the expected $167.77 million, marking a 9.7% increase year-over-year. Despite the earnings miss, the company noted significant growth in its computing and power supply segments, with a 14.8% and 32.4% year-over-year increase, respectively. In another development, Alpha and Omega Semiconductor reached a settlement with the U.S. Department of Commerce’s Bureau of Industry and Security, agreeing to pay $4.25 million to resolve export control allegations. The company stated that this settlement will not impact its ongoing business operations. Additionally, Alpha and Omega Semiconductor launched a new 25V MOSFET designed for high-power density applications, which is now available in production quantities. Stifel analysts maintained a Sell rating on the company’s stock, citing limited near-term gross margin expansion despite a slight increase in revenue forecasts for the upcoming quarter. The analysts also acknowledged the positive development of the company’s AI accelerator daughter card, contributing to growth in graphics for computing.

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