Equity Method Investment in Equity Investee

12 Months Ended

Jun. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Equity Method Investment in Equity Investee

On December 1, 2021 (the “Effective Date”), Alpha & Omega Semiconductor (Shanghai) Ltd. (“AOS SH”) and Agape Package Manufacturing (Shanghai) Limited (“APM SH”), each a wholly-owned subsidiary of the Company, entered into a share transfer agreement (“STA”) with a third-party investor to sell a portion of the Company's equity interest in the JV Company which consists of a power semiconductor packaging, testing and 12-inch wafer fabrication facility in Chongqing, China (the “Transaction”). The Transaction closed on December 2, 2021 (the “Closing Date”), which reduced the Company’s equity interest in the JV Company from 50.9% to 48.8%. Also, the Company’s right to designate directors on the board of the JV Company was reduced to three (3) out of seven (7) directors, from four (4) directors prior to the Transaction. As a result of the Transaction and other factors, the Company no longer has a controlling financial interest in the JV Company and has determined that the JV Company was deconsolidated from the Company’s consolidated financial statements effective as of the Closing Date. In connection with the deconsolidation and in accordance with ASC 810, the Company recorded a gain on deconsolidation of $399.1 million during the fiscal year ended June 30, 2022 in the condensed consolidated statements of operations. The gain on deconsolidation of the JV Company was calculated as follows:


	(in thousands)

Cash received for sales of shares in the JV Company	$	16,924
Fair value of retained equity method investment	393,124
Carrying amount of non-controlling interest	143,889
Cumulative translation adjustment removal	1,793
Carrying amount of net assets of the JV Company at December 1, 2021	(156,637)

Gain on deconsolidation of the JV Company	$	399,093

On December 24, 2021, the Company entered into a share transfer agreement with another third-party investor, pursuant to which the Company sold to this investor 1.1% of outstanding equity interest held by the Company in the JV Company. In addition, the JV Company adopted an employee equity incentive plan and issued an equity interest equivalent to 3.99% of the JV Company in exchange to cash. As a result of these two transactions, the Company owned 45.8% of the equity interest in the JV Company as of December 31, 2021.

On January 26, 2022, the JV Company completed a financing transaction pursuant to a corporate investment agreement (the “Investment Agreement”) between the JV Company and certain third-party investors (the “New Investors”). Under the Investment Agreement, the New Investors purchased newly issued equity interest of the JV Company, representing approximately 7.82% of post-transaction outstanding equity interests of the JV Company, for a total purchase price of RMB 509 million (or approximately USD 80 million based on the currency exchange rate as of January 26, 2022) (the “Investment”). Following the closing of the Investment and as of June 30, 2022, the percentage of outstanding JV equity interest beneficially owned by the Company was reduced to 42.2%.

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


	(in thousands)
Gain on 1.1% equity interest sold	$	475
Loss on diluted equity interest from issuance of shares under the employee equity incentive plan	(8,116)
Gain on 7.82% equity interest sold	4,501

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

In February 2024, the JV Company repurchased certain shares that were previously issued to employees under the employee equity incentive plan, which increased the Company’s percentage of equity ownership in the JV Company by 0.54%. As of June 30, 2024, the percentage of outstanding JV equity interest beneficially owned by the Company was 42.8%.

The Company accounts for its investment in the JV Company as an equity method investment and reports its equity in earnings or loss of the JV Company on a three-month lag due to an inability to timely obtain financial information of the JV Company. During the fiscal years ended June 30, 2024, 2023 and 2022, the Company recorded $4.8 million, $1.4 million and $2.6 million of its equity in loss of the JV Company, respectively, using lag reporting.

Summarized Financial Information

The following table presents summarized financial information for the JV Company (in thousands):


	As of March 31, 2024		As of March 31, 2023		As of March 31, 2022
Current assets	$	86,280	$	122,324	$	198,323
Non-current assets	$	338,450	$	333,165	$	364,777
Current liabilities	$	70,776	$	122,340	$	251,988
Non-current liabilities	$	81,899	$	36,525	$	76,207

	For the period April 1, 2023 to March 31, 2024		For the period April 1, 2022 to March 31, 2023		For the period December 2, 2021 to March 31, 2022
Revenue	$	128,951	$	178,974	$	68,972
Gross loss (income)	$	(1,844)	$	(4,502)	$	870
Operating expenses	$	9,174	$	5,939	$	2,280
Net loss	$	9,477	$	4,906	$	6,197