The Company has a variety of business relationships with Ablecom and Compuware. Ablecom and Compuware are both Taiwan corporations. Ablecom is one of the Company’s major contract manufacturers; Compuware is both a distributor of the Company’s products and a contract manufacturer for the Company. Ablecom’s Chief Executive Officer, Steve Liang, is the brother of Charles Liang, the Company’s President, Chief Executive Officer and Chairman of the Board. Steve Liang and his family members owned approximately 28.8% of Ablecom’s stock and Charles Liang and his spouse, Sara Liu, who is also an officer and director of the Company, collectively owned approximately 10.5% of Ablecom’s capital stock as of December 31, 2021. Bill Liang, a brother of both Charles Liang and Steve Liang, is a member of the Board of Directors of Ablecom. Bill Liang is also the Chief Executive Officer of Compuware, a member of Compuware’s Board of Directors and a holder of a significant equity interest in Compuware. Steve Liang is also a member of Compuware’s Board of Directors and is an equity holder of Compuware. Charles Liang and Sara Liu do not own any capital stock of Compuware and the Company does not own any of Ablecom or Compuware’s capital stock.

Under these agreements, the Company outsources to Ablecom a portion of its design activities and a significant part of its server chassis manufacturing as well as an immaterial portion of other components. Ablecom manufactured approximately 88.3% and 91.6% of the chassis included in the products sold by the Company during the three months ended December 31, 2021 and 2020, respectively, and 90.3% and 92.6% of the chassis included in the products sold by the Company during the six months ended December 2021 and 2020, respectively. With respect to design activities, Ablecom generally agrees to design certain agreed-upon products according to the Company’s specifications, and further agrees to build the tools needed to manufacture the products. The Company pays Ablecom for the design and engineering services, and further agrees to pay Ablecom for the tooling. The Company retains full ownership of any intellectual property resulting from the design of these products and tooling.

With respect to the manufacturing aspects of the relationship, Ablecom purchases most of materials needed to manufacture the chassis from third parties and the Company provides certain components used in the manufacturing process (such as power supplies) to Ablecom through consignment or sales transactions. Ablecom uses these materials and components to manufacture the completed chassis and then sell them back to the Company. For the components purchased from the Company, Ablecom sells the components back to the Company at a price equal to the price at which the Company sold the components to Ablecom. The Company and Ablecom frequently review and negotiate the prices of the chassis the Company purchases from Ablecom. In addition to inventory purchases, the Company also incurs other costs associated with design services, tooling and other miscellaneous costs from Ablecom.

The Company’s exposure to financial loss as a result of its involvement with Ablecom is limited to potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company’s products such that the Company incurs a loss on the sale or cannot sell the products. Outstanding purchase orders from the Company to Ablecom were $49.4 million and $40.2 million at December 31, 2021 and June 30, 2021, respectively, effectively representing the exposure to financial loss. The Company does not directly or indirectly guarantee any obligations of Ablecom, or any losses that the equity holders of Ablecom may suffer. Since Ablecom manufactures substantially all the chassis that the Company incorporates into its products, if Ablecom were to suddenly be unable to manufacture chassis for the Company, the Company’s business could suffer if the Company is unable to quickly qualify substitute suppliers who can supply high-quality chassis to the Company in volume and at acceptable prices.

The Company has entered into a distribution agreement with Compuware, under which the Company appointed Compuware as a non-exclusive distributor of the Company’s products in Taiwan, China and Australia. Compuware assumes the responsibility to install the Company's products at the site of the end customer, if required, and administers customer support in exchange for a discount from the Company's standard price for its purchases.

Under these agreements, the Company outsources to Compuware a portion of its design activities and a significant part of its power supplies manufacturing as well as an immaterial portion of other components. With respect to design activities, Compuware generally agrees to design certain agreed-upon products according to the Company’s specifications, and further agrees to build the tools needed to manufacture the products. The Company pays Compuware for the design and engineering services, and further agrees to pay Compuware for the tooling. The Company retains full ownership of any intellectual property resulting from the design of these products and tooling. With respect to the manufacturing aspects of the relationship, Compuware purchases most of materials needed to manufacture the power supplies from outside markets and uses these materials to manufacture the products and then sell those products to the Company. The Company and Compuware frequently review and negotiate the prices of the power supplies the Company purchases from Compuware.

Compuware also manufactures motherboards, backplanes and other components used on printed circuit boards for the Company. The Company sells to Compuware most of the components needed to manufacture the above products. Compuware uses the components to manufacture the products and then sells the products back to the Company at a purchase price equal to the price at which the Company sold the components to Compuware, plus a “manufacturing value added” fee and other miscellaneous charges and costs including overhead and labor. The Company and Compuware frequently review and negotiate the amount of the “manufacturing value added” fee that will be included in the price of the products the Company purchases from Compuware. In addition to the inventory purchases, the Company also incurs costs associated with design services, tooling assets, and miscellaneous costs.

The Company’s exposure to financial loss as a result of its involvement with Compuware is limited to potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company’s products such that the Company incurs a loss on the sale or cannot sell the products. Outstanding purchase orders from the Company to Compuware were $50.9 million and $71.0 million at December 31, 2021 and June 30, 2021, respectively, effectively representing the exposure to financial loss. The Company does not directly or indirectly guarantee any obligations of Compuware, or any losses that the equity holders of Compuware may suffer.

In October 2016, the Company entered into agreements pursuant to which the Company contributed certain technology rights in connection with an investment in a privately-held company (the "Corporate Venture") located in China to expand the Company's presence in China. The Corporate Venture is 30% owned by the Company and 70% owned by another company in China. The transaction was closed in the third fiscal quarter of 2017 and the investment is accounted for using the equity method. As such, the Corporate Venture is also a related party.

The Company recorded a deferred gain related to the contribution of certain technology rights. As of December 31, 2021 and June 30, 2021, the Company had unamortized deferred gain balance of $0 million and $1.0 million, respectively, in accrued liabilities in the Company’s condensed consolidated balance sheets.

The Company monitors the investment for events or circumstances indicative of potential impairment and makes appropriate reductions in carrying values if it determines that an impairment charge is required. In June 2020, the third-party parent company that controls the Corporate Venture was placed on a U.S. government export control list, along with several of the third-party parent's related entities and a separate listing for one of its subsidiaries. The Corporate Venture is not itself a restricted party. The Company has concluded that the Corporate Venture is in compliance with the new restrictions. The Company does not believe that the equity investment carrying value is impacted as of December 31, 2021. No impairment charge was recorded for the three and six months ended December 31, 2021 and 2020, respectively.

The Company sold products to the Corporate Venture and the Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture. To the extent that the elimination of intra-entity profits reduces the investment balance below zero, such amounts are recorded within accrued liabilities.


	Ablecom				Compuware				Corporate Venture				MPS				Total
	December 31, 2021		June 30, 2021		December 31, 2021		June 30, 2021		December 31, 2021		June 30, 2021		December 31, 2021		June 30, 2021		December 31, 2021		June 30, 2021

Accounts receivable	$	1	$	2	$	264	$	198	$	34,267	$	8,478	$	—	$	—	$	34,532	$	8,678
Other receivable (1)	$	4,933	$	5,575	$	29,847	$	18,173	$	—	$	—	$	222	$	89	$	35,002	$	23,837
Accounts payable	$	41,725	$	38,152	$	54,311	$	31,944	$	—	$	—	$	—	$	—	$	96,036	$	70,096
Accrued liabilities (2)	$	2,829	$	3,042	$	17,200	$	14,486	$	—	$	1,000	$	—	$	—	$	20,029	$	18,528


	Ablecom				Compuware				Corporate Venture				MPS				Total
	Three months ended December 31,				Three months ended December 31,				Three months ended December 31,				Three months ended December 31,				Three months ended December 31,
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020

Net sales	$	3	$	(31)	$	3,302	$	5,572	$	38,311	$	13,165	$	—	$	—	$	41,616	$	18,706
Purchases - inventory	$	47,520	$	21,818	$	46,821	$	29,017	$	—	$	—	$	2,387	$	697	$	96,728	$	51,532
Purchases - other miscellaneous items	$	2,867	$	2,762	$	347	$	626	$	—	$	—	$	—	$	—	$	3,214	$	3,388


	Ablecom				Compuware				Corporate Venture				MPS				Total
	Six months ended December 31,				Six months ended December 31,				Six months ended December 31,				Six months ended December 31,				Six months ended December 31,
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020

Net sales	$	10	$	(27)	$	19,004	$	18,871	$	53,524	$	19,577	$	—	$	—	$	72,538	$	38,421
Purchases - inventory	$	98,309	$	45,689	$	82,050	$	63,215	$	—	$	—	$	4,056	$	1,488	$	184,415	$	110,392
Purchases - other miscellaneous items	$	4,983	$	5,480	$	686	$	960	$	—	$	—	$	—	$	—	$	5,669	$	6,440


	Ablecom				Compuware				Corporate Venture				MPS				Total
	Six months ended December 31,				Six months ended December 31,				Six months ended December 31,				Six months ended December 31,				Six months ended December 31,
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020

Changes in accounts receivable	1		$	(29)	$	(66)	$	311	$	(25,789)	$	(6,586)	$	—	$	—	$	(25,854)	$	(6,304)
Changes in other receivable	$	641	$	308	$	(11,673)	$	7,246	$	—	$	—	$	(133)	$	75	$	(11,165)	$	7,629
Changes in accounts payable	$	3,573	$	(13,921)	$	22,367	$	(10,191)	$	—	$	—	$	—	$	—	$	25,940	$	(24,112)
Changes in accrued liabilities	$	(212)	$	867	$	2,713	$	(5,734)	$	(1,000)	$	—	$	—	$	—	$	1,501	$	(4,867)
Changes in other long-term liabilities	$	—	$	(513)	$	—	$	(158)	$	—	$	(1,000)	$	—	$	—	$	—	$	(1,671)
Purchases of property, plant and equipment	$	1,678	$	2,968	$	92	$	90	$	—	$	—	$	—	$	—	$	1,770	$	3,058
Unpaid property, plant and equipment	$	2,312	$	2,976	$	—	80		$	—	$	—	$	—	$	—	$	2,312	$	3,056

Pursuant to the Agreement, the Subsidiary will participate in purchasing 33.33% of the 137,225.97 square meters (approximately 34 acres) of land Ablecom has agreed to acquire from third-party landowners in proximity to the Company’s campus in Bade, Taiwan. Compuware will acquire 17.21% of such land and Ablecom will retain the remaining 49.46% of the land. Under the Agreement, fees and costs related to such land purchase would be borne by the parties according to their proportionate share of the land purchased. The Company intends to fund its proportionate share of the land purchased under the Agreement which is estimated to be approximately NTD789 million (or approximately US$28.3 million) from either available cash and/or borrowings under loan agreements the Subsidiary has in Taiwan. Amounts payable related to the purchase of the land are due in three installments based upon the achievement of specified milestones. The transaction is subject to various customary conditions precedent, including the receipt of government approvals, the discharge of mortgages and leases on the land, and the completion of due diligence. As of December 31, 2021, due diligence and discussions with government officials are continuing, and no installment payments have been made with respect to the transaction. If the transaction does not close within 12 months, Ablecom may offer the land to other parties.