"The lower gross margin [in the last quarter] is the result of an additional one-time, non-cash inventory write-down totaling $12.0 million.
The $12.0 million inventory write-down is on top of the $2.7 million original inventory write-off estimate for the fourth quarter. In comparison, the inventory write-off amounts were $2.5 million, $3.0 million and $2.5 million for the first, second and third quarter of 2016, respectively. The vast majority of the additional write-down was related to certain aged inventories of traditional human vision CMOS image sensors.
Earlier in 2016, we decided to switch our strategy of the CIS business to focus on smart sensor, machine vision segments, as opposed to the traditional human vision segments. As part of this new strategic direction, we made a decision recently to expedite the sales of some aged inventories of human vision sensors. We believe it is appropriate that we write-down the inventory at this time, as we anticipate the need to offer discounted prices to accelerate the sales of some products and, for some other products where the potential revenues do not justify the efforts, stop the sales all together. Our new CIS strategy is backed by new products such as the Always-on-Sensor (AoS) and the structured light 3D scanning total solution which offer unique and market leading features. The new strategy is also backed by close collaboration and intensive development activities with certain heavyweight partners and customers.
Following this one-time write-down, we believe our inventory position to be healthy across CIS, driver IC and all other product areas."
