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Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
    The domestic and foreign components of income before taxes are:

 Year Ended June 30, 
 202420232022
(in thousands)
U.S. operations$9,079 $19,001 $16,684 
Non-U.S. operations(11,722)711 478,386 
Net income (loss) before income taxes
$(2,643)$19,712 $495,070 

    The provision for income taxes is comprised of:
Year Ended June 30, 
202420232022
(in thousands)
U.S. federal taxes:
Current$485 $1,093 $645 
Deferred1,652 549 2,260 
Non-U.S. taxes:
Current3,187 4,620 7,749 
Deferred(1,669)(404)28,599 
State taxes, net of federal benefit:
Current(6)79 5 
Total provision for income taxes$3,649 $5,937 $39,258 
The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows (in percentage):

 Year Ended June 30,
 202420232022
United States statutory rate21.0 %21.0 %21.0 %
Stock-based compensation(3.7)0.2 0.0 
Foreign taxes, net(186.9)13.5 (14.3)
Outside basis difference on equity method investment27.4 (1.0)1.2 
Tax credits 86.2 (13.3)(0.3)
Non-deductible expenses(6.9)1.5 — 
Tax exempt income2.8 (1.5)— 
Withholding taxes— 9.0 — 
Non-deductible executive compensation(78.6)7.3 0.5 
Foreign derived intangible income deduction0.0 (7.2)(0.3)
Other0.6 0.6 0.1 
 (138.1)%30.1 %7.9 %
    
    Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:
 June 30, 
 20242023
(in thousands)
Deferred tax assets:
Accrued compensation$2,188 $2,218 
Net operating loss carryforwards— 18 
Depreciation6,286 5,360 
Tax credits16,161 15,180 
Operating lease liabilities4,574 4,567 
Capitalized R&D costs1,398 1,116 
Accruals and reserves445 558 
Total deferred tax assets31,052 29,017 
Valuation allowance(7,266)(6,686)
Total deferred tax assets, net of valuation allowance23,786 22,331 
Deferred tax liabilities:
Depreciation and amortization(19,062)(16,899)
Right of use assets(4,328)(4,315)
Investments(26,263)(27,864)
Total deferred tax liabilities(49,653)(49,078)
Net deferred tax liabilities
$(25,867)$(26,747)
The breakdown between deferred tax assets and liabilities is as follows:
 June 30, 
 20242023
(in thousands)
Deferred tax assets$549 $536 
Deferred tax liabilities(26,416)(27,283)
Net deferred tax liabilities$(25,867)$(26,747)

The Company’s valuation allowance related to deferred income taxes as reflected in the consolidated balance sheets was $7.3 million and $6.7 million as of June 30, 2024 and 2023, respectively. The change in valuation allowance for June 30, 2024 and 2023 was an increase of $0.6 million and an increase of $0.9 million, respectively.

At June 30, 2024 and 2023, the Company provided a valuation allowance for its state research and development credit carryforward deferred tax assets of $7.3 million and $6.7 million, respectively, as it generated more state tax credits each year than it can utilize. The Company intends to maintain a valuation allowance equal to the state research and development credit carryforwards in excess of the state net deferred tax liabilities on all other state book/tax differences and net operating loss carryforward.

At June 30, 2024, the Company had federal research and development tax credit carryforwards of approximately $8.2 million. The federal tax credits begin to expire in 2040, if not utilized.  At June 30, 2024, the Company had state tax credit carryforwards of approximately $9.9 million, of which $9.0 million carryforward indefinitely, $0.6 million have a 10 to 15 year life (beginning to expire in 2033) and $0.3 million with a 20 year life, (beginning to expire in 2038).

The Company intends to reinvest the undistributed earnings of its foreign subsidiaries indefinitely, except for Alpha and Omega Semiconductor (Cayman) Ltd. and AOS International LP. As of June 30, 2024, the cumulative earnings of Alpha and Omega Semiconductor (Cayman) and AOS International LP totaled $46.2 million, and there was no deferred tax liability
recorded as there is no income nor withholding tax amongst the applicable jurisdictions. As of June 30, 2024, the cumulative amount of undistributed earnings of its foreign entities considered permanently reinvested is $414.6 million. Should the Company decide to remit this income to its Bermuda parent company in a future period, its provision for income taxes may increase materially in that period. The determination of the unrecognized deferred tax liability on these earnings is not practicable due to the complexity and variety of assumptions necessary to estimate the tax. As of June 30, 2024, the Company has recorded a deferred tax liability of $26.3 million for the basis difference related to our investment in the JV Company.
A reconciliation of the beginning and ending amount of unrecognized tax benefits from July 1, 2021 to June 30, 2024 is as follows:
 Year Ended June 30, 
 202420232022
(in thousands)
Balance at beginning of year$9,335 $8,609 $7,645 
Additions based on tax positions related to the current year764 804 1,121 
Reductions based on tax positions related to prior years(11)(68)(40)
Reductions due to lapse of applicable statute of limitations— (10)(117)
Balance at end of year$10,088 $9,335 $8,609 
At June 30, 2024, the total unrecognized tax benefits of $10.1 million included $7.1 million of unrecognized tax benefits that have been netted against the related deferred tax assets. The remaining $3.0 million of unrecognized tax benefits was recorded within long-term income tax payable on the Company's consolidated balance sheet as of June 30, 2024. The Company cannot reasonably estimate the timing and amount of potential cash settlements on the unrecognized tax benefits.

The total unrecognized tax benefits of $10.1 million at June 30, 2024 included $6.9 million that, if recognized, would reduce the effective income tax rate in future periods. It is reasonably possible that the Company will recognize approximately $0.2 million reduction to its uncertain tax positions during the next twelve months due to a lapse in the applicable statute of limitations..
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. The amount of interest and penalties accrued at June 30, 2024 was $0.5 million, of which $0.2 million was recognized in the year ended June 30, 2024. The amount of interest and penalties accrued at June 30, 2023 was $0.3 million, of which $0.1 million was recognized in the year ended June 30, 2023.
The Company files its income tax returns in the United States and in various foreign jurisdictions. The tax years 2004 to 2024 remain open to examination by U.S. federal and state tax authorities due to tax attribute carryovers. The tax years 2018 to 2024 remain open to examination by foreign tax authorities.