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What changed in LATTICE SEMICONDUCTOR CORP's 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of LATTICE SEMICONDUCTOR CORP's 2025 and 2026 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2026 report.

+289 added−239 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-14)

Top changes in LATTICE SEMICONDUCTOR CORP's 2026 10-K

289 paragraphs added · 239 removed · 203 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

35 edited+20 added−6 removed45 unchanged
Biggest changeIn particular, we believe there are several emerging trends in servers, infrastructure, and smart devices that are opportunities for Lattice: ● With the growth of hyperscale data-centers, our “processor agnostic” solutions are ideal for dataplane, control, and connect functions in enterprise and data-center server applications. ● With the expected continued Communications infrastructure build-out from 5G deployment and beyond, as well as continued data-center network expansion, Lattice solutions are being adopted to control and connect a variety of functions in critical systems. ● With the increase in electrification and the proliferation of sensors in smart factories, smart homes, and automobiles, our low power, small form factor solutions are ideal for everything from battery powered systems and sensor applications to embedded vision. ● With the increase in artificial intelligence ("AI") and a multitude of applications at the network edge, Lattice devices support applications like face detection, image recognition, and video analytics. ● With the demand for more hardware security in the Communications, Computing, Industrial, Automotive, and Consumer markets, our devices provide enhanced platform security.
Biggest changeIn particular, we believe there are several emerging trends in servers, infrastructure, and smart devices that are opportunities for Lattice: ● With the growth of hyperscale data centers, our “processor agnostic” solutions are ideal for dataplane, control, and connect functions in enterprise and data center server applications. ● With the continued data center network expansion, as well as continued Communications infrastructure build-out from 5G deployment and beyond, Lattice solutions are being adopted to control and connect a variety of functions in critical systems. ● Vision and intelligence in systems are increasing electrification and the proliferation of sensors in smart factories, smart homes, and automobiles.
Drivers and passengers are demanding better in-cabin experiences including entertainment, diagnostics, and enhanced safety — often involving multiple displays, cameras, and sensors. ● As factories and automotive manufacturers continue their evolution of computerization, power reduction, system security, faster time to design-in and market, lower costs are becoming increasingly essential. Our product portfolio helps provide solutions that benefit our customers.
Drivers and passengers are demanding better in-cabin experiences including entertainment, diagnostics, and enhanced safety — often involving multiple displays, cameras, and sensors. ● As factories and automotive manufacturers continue their evolution of computerization, power reduction, system security, faster time to design-in and market, and lower costs are becoming increasingly essential. Our product portfolio helps provide solutions that benefit our customers.
In the Consumer Market , you can find our solutions making products smarter and smaller, including smart home devices, prosumer devices, sound bars, high end projectors, Augmented Reality ("AR") / Virtual Reality ("VR"), and wearables. Our Consumer customers are driven by the need to deliver richer and more responsive experiences. They typically require: ● More intelligence and computing power.
In the Consumer Market , you can find our solutions making products smarter and smaller, including smart home devices, prosumer devices, sound bars, high end projectors, Augmented Reality ("AR") / Virtual Reality ("VR") devices, and wearables. Our Consumer customers are driven by the need to deliver richer and more responsive experiences. They typically require: ● More intelligence and computing power.
We source silicon wafers from our foundry partners, TSMC, Samsung, UMC, USJC, and Epson, pursuant to agreements with each company and their respective affiliates. We negotiate wafer volumes, prices, and other terms with our foundry partners and their respective affiliates on a periodic basis.
We source silicon wafers from our foundry partners, UMC, USJC, Samsung, TSMC, and Epson, pursuant to agreements with each company and their respective affiliates. We negotiate wafer volumes, prices, and other terms with our foundry partners and their respective affiliates on a periodic basis.
In order for us to attract the best talent, we provide a collaborative, inclusive, and innovative work environment, competitive compensation, and recognition to give our employees the opportunity to grow. We are focused on developing inclusive teams and continuing to build a culture that inspires leadership, encourages innovative thinking, and supports the development and advancement of all.
In order for us to attract the best talent, we provide a collaborative and innovative work environment, competitive compensation, and recognition to give our employees the opportunity to grow. We are focused on developing teams and continuing to build a culture that inspires leadership, encourages innovative thinking, and supports the development and advancement of all.
Wafer sort testing is primarily performed by ASE in Taiwan and Malaysia, Amkor in Japan, and our second source King Yuan Electronics Company (“KYEC”) in Taiwan. Following assembly, but prior to customer shipment, each product undergoes final testing and quality assurance procedures. Final testing is performed by ASE and Amkor.
Wafer sort testing is primarily performed by ASE in Taiwan and Malaysia, and by our second source King Yuan Electronics Company (“KYEC”) in Taiwan. Following assembly, but prior to customer shipment, each product undergoes final testing and quality assurance procedures. Final testing is performed by ASE and Amkor.
Seasonality We periodically experience variability in our sales volumes and financial results due to seasonal trends in the end markets we serve, the cyclical nature of the semiconductor industry, and general economic conditions. 7 Table of Contents IP, Patents, and Licensing We seek to protect our products, technologies, and IP primarily through patents, trade secrets, copyrights, trademark registrations, licensing restrictions, confidentiality agreements, and other approaches designed to protect proprietary information.
Seasonality We periodically experience variability in our sales volumes and financial results due to seasonal trends in the end markets we serve, the cyclical nature of the semiconductor industry, and general economic conditions. 8 Table of Contents IP, Patents, and Licensing We seek to protect our products, technologies, and IP primarily through patents, trade secrets, copyrights, trademark registrations, licensing restrictions, confidentiality agreements, and other approaches designed to protect proprietary information.
We have achieved and maintained ISO9001:2015 Quality Management Systems Certification and released a line of products qualified to the AEC-Q100 Reliability Standard in support of Automotive product offerings in addition to ISO26262 certification on both Automotive products and software. 6 Table of Contents After wafer fabrication and initial testing, we ship wafers to independent subcontractors for assembly.
We have achieved and maintained ISO9001:2015 Quality Management Systems Certification and released a line of products qualified to the AEC-Q100 Reliability Standard in support of Automotive product offerings in addition to ISO26262 certification on both Automotive products and software. 7 Table of Contents After wafer fabrication and initial testing, we ship wafers to independent subcontractors for assembly.
Products need to be "always-on" and "always-aware." ● Longer battery lives for handheld devices and reduced energy consumption for plugged-in devices. ● Real-time transmission of higher resolution video content on larger screen sizes. ● Fast design cycles. Products must be quickly and easily differentiated. ● Smaller form factors.
Products need to be "always-on" and "always-aware." ● Longer battery lives for wireless devices and reduced energy consumption for plugged-in devices. ● Real-time transmission of higher resolution video content on larger screen sizes. ● Fast design cycles. Products must be quickly and easily differentiated. ● Smaller form factors.
During assembly, wafers are separated into individual die and encapsulated in plastic packages. We have qualified two major assembly partners, ASE and Amkor Technology ("Amkor") and are second sourced where volume and customer requirements are necessary. All ASE and Amkor manufacturing of our products is in Asia.
During assembly, wafers are separated into individual die and encapsulated in plastic packages. We have qualified two major assembly partners, ASE and Amkor Technology ("Amkor") and are second sourced where volume and customer requirements make it necessary. All ASE and Amkor manufacturing of our products is in Asia.
Our small-sized, low power FPGAs not only provide the I/O expansion, bridging, connectivity, and processing inherent in FPGAs, but they also form the backbone of several integrated solutions, including hardware-based security, motor control, complete High Definition ("HD") camera and Digital Video Recorder ("DVR") solutions on a single FPGA device, and Human-Machine Interfaces ("HMI") on a chip.
Our small-sized, low power FPGAs not only provide the I/O expansion, bridging, connectivity, and processing inherent in FPGAs, but they also form the backbone of several integrated solutions, including hardware-based security, motor control, complete High Definition ("HD") camera and Digital Video Recorder ("DVR") solutions on a single FPGA device, and HMI on a chip.
We have developed integrated system-level solution stacks, including Lattice Automate™ for industrial automation and robotics, Lattice mVision™ for low power embedded vision, Lattice ORAN™ for robust control data security, flexible fronthaul synchronization, and low power hardware acceleration for secure, adaptable, ORAN deployment, Lattice sensAI™ for Edge AI applications, Lattice Sentry™ for implementing hardware security, and our newest solution stack - Lattice Drive™ for advanced, flexible automotive system designs and applications.
We have developed integrated system-level solution stacks, including Lattice Automate™ for industrial automation and robotics, Lattice mVision™ for low power embedded vision, Lattice ORAN™ for robust control data security, flexible fronthaul synchronization, and low power hardware acceleration for secure, adaptable, ORAN deployment, Lattice sensAI™ for Edge AI applications, Lattice Sentry™ for implementing hardware security, and Lattice Drive™ for advanced, flexible automotive system designs and applications.
In fiscal years 2024, 2023, and 2022, sales to distributors accounted for approximately 89%, 87%, and 89%, respectively, of our net revenue. We depend on our distributors to sell our products to end customers, complete order fulfillment, and maintain sufficient inventory of our products. Our distributors also provide technical support and other value-added services to our end customers.
In fiscal years 2025, 2024, and 2023, sales to distributors accounted for approximately 84%, 89%, and 87%, respectively, of our net revenue. We depend on our distributors to sell our products to end customers, complete order fulfillment, and maintain sufficient inventory of our products. Our distributors also provide technical support and other value-added services to our end customers.
Products need to lay flatter on the wall or fit more easily into pockets. ● Various levels of video processing and analytics. Lattice FPGAs bring multiple benefits to these customers. An FPGA’s parallel architecture enables faster processing than competing devices, such as microcontrollers, allowing for a user experience with shorter pauses and fewer delays.
Products need to lay flatter on the wall or fit more easily into pockets. ● Various levels of video processing and analytics. 4 Table of Contents Lattice FPGAs bring multiple benefits to these customers. An FPGA’s parallel architecture enables faster processing than competing devices, such as microcontrollers ("MCUs"), allowing for a user experience with shorter pauses and fewer delays.
Item 1. Business Overview Lattice Semiconductor Corporation and its subsidiaries (“Lattice,” the “Company,” “we,” “us,” or “our”) develop technologies that we monetize through differentiated programmable logic semiconductor products, system solutions, design services, and licenses. Lattice is the low power programmable leader.
Item 1. Business Overview Lattice Semiconductor Corporation and its subsidiaries (“Lattice,” the “Company,” “we,” “us,” or “our”) develop technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and technology licenses. Lattice is the low power programmable leader.
The content on any website referred to in this filing is not incorporated by reference into this filing unless expressly noted otherwise. 8 Table of Contents
The content on any website referred to in this filing is not incorporated by reference into this filing unless expressly noted otherwise. 9 Table of Contents
Finally, our FPGAs are I/O rich, which allows for more connections with system application specific integrated circuits ("ASICs") and application specific standard products ("ASSPs"). 3 Table of Contents Examples of where our products enable intelligent automation in the Industrial and Automotive Market include industrial Internet of Things ("IoT") and "Industry 4.0", machine vision, robotics, factory automation, advanced driver assistance systems ("ADAS"), and automotive infotainment.
Finally, our FPGAs are I/O rich, which allows for more connections with system ASICs and ASSPs. Examples of where our products enable intelligent automation in the Industrial and Automotive Market include industrial Internet of Things ("IoT") and "Industry 4.0", machine vision, robotics, factory automation, advanced driver assistance systems ("ADAS"), and automotive infotainment.
We solve customer problems across the network, from the Edge to the Cloud, in the Communications, Computing, Industrial, Automotive, and Consumer markets. Our technology, long-standing relationships, and commitment to world-class support enable our customers to create a smart, secure, and connected world.
We solve customer problems across the network, from the Edge to the Cloud, in the Communications, Computing, Industrial, Automotive, and Consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.
We believe that Lattice has developed products and solutions with differentiated advantages. Legacy Semiconductor Products We also sell Video Connectivity ASSPs, although we are not developing new products in this area and their support requirements are minimal. 5 Table of Contents IP Licensing and Services Lattice has a broad set of technological capabilities and many U.S. and international patents.
Legacy Semiconductor Products We also sell Video Connectivity ASSPs, although we are not developing new products in this area and their support requirements are minimal. 6 Table of Contents IP Licensing and Services Lattice has a broad set of technological capabilities and many U.S. and international patents.
We have one global distributor, and we also have regional distribution in Asia, Japan, Europe, and Israel. Additionally, we sell through three major on-line distributors. Revenue from foreign sales as a percentage of total revenue was 82% for both fiscal 2024 and 2023, and 86% for fiscal 2022. We assign revenue to geographies based on ship-to location of our customers.
We have one global distributor, and we also have regional distributors in Asia, Japan, Europe, and Israel. Additionally, we sell through four major e-commerce distributors. Revenue from foreign sales as a percentage of total revenue was 83% for fiscal 2025, and 82% for both fiscal 2024 and 2023. We assign revenue to geographies based on ship-to location of our customers.
The latest device family – Lattice CrossLinkU-NX – are the industry’s first FPGAs with integrated USB device functionality in their class, designed to meet growing customer needs to simplify USB-based design for applications across the Computing, Industrial, Automotive, and Consumer markets.
The latest device family – Lattice CrossLinkU-NX™ – are the industry’s first FPGAs with integrated USB device functionality in their class, designed to meet growing customer needs to simplify USB-based design for applications across the Computing, Industrial, Automotive, and Consumer markets. ● Lattice Certus-NX™, Lattice CertusPro™ – General purpose small FPGAs built on the Lattice Nexus platform.
We partner with United Microelectronics Corporation ("UMC") and its subsidiary United Semiconductor Japan Corporation ("USJC") to manufacture our products on its 130nm, 90nm, 65nm, and 40nm CMOS process technologies, as well as embedded flash memory in these process nodes. We partner with Seiko Epson ("Epson") to manufacture our 500nm, 350nm, 250nm and 180nm products.
Wafer Fabrication Lattice partners with United Microelectronics Corporation ("UMC") and its subsidiary United Semiconductor Japan Corporation ("USJC") to manufacture our products on its 130nm, 90nm, 65nm, and 40nm CMOS process technologies, as well as embedded flash memory in these process nodes.
Our Industrial and Automotive customers have many opportunities to use technology to increase automation, efficiency, and productivity: ● As factories automate to improve efficiency and employee safety, sensors, machine vision, and robotics are proliferating, in turn requiring increasing amounts of data to be gathered, connected, and processed. ● Automobiles and other forms of transportation are also becoming smarter and more connected.
Additionally, our Industrial and Automotive customers have many opportunities to use technology to increase automation, efficiency, and productivity: ● As factories automate to improve efficiency and employee safety, sensors, machine vision, and robotics are proliferating, in turn requiring increasing amounts of data to be gathered, connected, and processed. ● As physical AI and humanoids/robots gain traction across factory floors and beyond, motor control, machine vision, sensor connectivity, speech recognition, person/object detection, safety, security, and low latency are critical. ● Automobiles and other forms of transportation are also becoming smarter and more connected.
Our Communications and Computing customers need to address a variety of challenges. ● As server architectures become increasingly complex, customers need simplified control logic, enhanced hardware platform security, system status monitoring, and rigorous power and thermal management. ● As client compute devices become smaller and smarter, there is a need for small form factor devices with power efficiency to interface with a variety of sensors and add intelligence. ● Networks typically require progressively higher bandwidth and increased reliability as more data is demanded by connected devices, and increasingly require more security as providers embrace disaggregation and openness with the adoption of open radio access networks ("ORAN"). ● As wireless cellular sites become more compact, there is a growing requirement for smaller form factors optimized for low power consumption and thermal management.
In the Communications and Computing Market , our solutions can be used as primary processors or as FPGA companion chips to AI and processing applications, playing key roles in computing systems such as servers and client devices, 5G wireless infrastructure, switches, routers, and other related applications. 3 Table of Contents Our Communications and Computing customers need to address a variety of challenges. ● As server architectures become increasingly complex, customers need simplified control logic, enhanced hardware platform security, system status monitoring, and rigorous power and thermal management. ● Networks typically require progressively higher bandwidth and increased reliability as more data is demanded by connected devices, and increasingly require more security as providers embrace disaggregation and openness with the adoption of open radio access networks ("ORAN"). ● As wireless cellular sites become more compact, there is a growing requirement for smaller form factors optimized for low power consumption and thermal management.
Wafer Fabrication Lattice partners with Taiwan Semiconductor Manufacturing Company ("TSMC") to develop and manufacture on 16nm technology, which is used in our Avant platform of FPGA products, and to manufacture our 350nm, 130nm, 55nm and 40nm products.
We partner with Taiwan Semiconductor Manufacturing Company ("TSMC") to develop and manufacture on 16nm technology, which is used in our Avant and Nexus 2 platforms of FPGA products, and to manufacture our 350nm, 130nm, 55nm and 40nm products. We partner with Seiko Epson ("Epson") to manufacture our 500nm, 350nm, 250nm and 180nm products.
Recognizing and respecting our global presence, we strive to maintain an inclusive workforce everywhere we operate. As of December 28, 2024, we had 1,110 employees worldwide. We believe our employees are the foundation of our success and that our future growth depends, in part, on our ability to continue to attract and retain key executive, technical, sales, and management personnel.
As of January 3, 2026, we had 1,174 employees worldwide. We believe our employees are the foundation of our success and that our future growth depends, in part, on our ability to continue to attract and retain key executive, technical, sales, and management personnel.
Further, we have edge AI application software such as Glance by Mirametrix™ that allows users to control the AI and computer vision experiences for a variety of edge applications, including client computing, industrial, and automotive applications. Depending on the application, we may compete with other FPGA vendors, as well as producers of ASICs, ASSPs, and microcontrollers.
Further, we have edge AI application software such as Glance by Mirametrix™ that allows users to control the AI and computer vision experiences for a variety of edge applications, including client computing, industrial, and automotive applications. We believe that Lattice has developed products and solutions with differentiated advantages.
Our Markets and Customers We sell our products globally in three end market groups: Communications and Computing, Industrial and Automotive, and Consumer. We also provide Intellectual Property ("IP") licensing and services to these end markets.
This is one of several catalysts that increase our confidence in Lattice’s long‑term growth opportunities as we continue to execute our strategy. Our Markets and Customers We sell our products globally in three end market groups: Communications and Computing, Industrial and Automotive, and Consumer. We also provide Intellectual Property ("IP") licensing and services to these end markets.
The latest introduction in our general purpose family, Lattice Certus-N2™ FPGAs, are designed to solve key customer challenges by combining advanced connectivity, optimized power and performance, leading security, and small size, with an optimized feature set tailored to the needs of a wide range of small FPGA applications like system expandability, secure bridging, and AI enablement. ● The Lattice Avant-E ™ , Avant-G ™ , and Avant-X ™ device families are our “low power edge and advanced connectivity mid-range FPGAs” optimized for applications in Industrial, Automotive, Communications and Compute markets providing low power, small form factor, and advanced security.
Lattice FPGAs based on the Lattice Nexus™ 2 FPGA platform include: ● Lattice Certus-N2™ – General purpose small FPGAs designed to solve key customer challenges by combining advanced connectivity, optimized power and performance, leading security, and small size, with an optimized feature set tailored to the needs of a wide range of small FPGA applications like system expandability, secure bridging, and AI enablement. ● Lattice mid-range FPGA platform: Lattice’s mid-range FPGA platform, Lattice Avant™, was introduced in 2022.
The Lattice Avant™ 16nm FinFET platform is purpose-built to bring the company’s power efficient architecture, small size, and performance leadership to mid-range FPGAs, offering best-in-class power efficiency, advanced connectivity, and optimized compute. Lattice mid-range FPGAs can extend from 150K LUTS to 500K LUTS. Based on these platforms, Lattice provides general purpose function FPGAs and specialized FPGAs optimized for specific applications.
The Lattice Avant™ 16nm FinFET platform is purpose-built to bring the company’s power efficient architecture, small size, and performance leadership to mid-range FPGAs, offering best-in-class power efficiency, advanced connectivity, and optimized compute. Lattice mid-range FPGAs are targeted at applications requiring logic density from 150K SLCs ("System Logic Cells") to above 600K SLCs.
CrossLink combines the power and speed benefits of hardened video camera and display bridging cores with the flexibility of FPGA fabric and Lattice CrossLinkPlus™ devices provide users with instant-on capabilities for video display. Lattice CrossLink-NX™ FPGAs, built on the Lattice Nexus platform, provide the lowest power in the smallest packages in their class, higher performance, and high reliability.
CrossLink™ combines the power and speed benefits of hardened video camera and display bridging cores with the flexibility of FPGA fabric and Lattice CrossLinkPlus™ devices provide users with instant-on capabilities for video display. ● Lattice ECP™ – Small FPGAs optimized for low cost, small form factor, and low power consumption, ECP™ FPGAs are designed for compact, high-volume applications.
This programmability allows our customers flexibility and reduced time to market while allowing us to offer the chips to many different customers in many different markets. Lattice has taken a platform approach to accelerate time to market when developing product families of FPGAs. This approach enables Lattice to create one foundational platform that is the basis multiple FPGA product families.
This programmability allows our customers flexibility and reduced time to market, while allowing us to offer the chips to many different customers in many different markets. Lattice understands product obsolescence cycles can dramatically impact our customers’ business.
The latest member of the family, the iCE40 UltraPlus™ device, is focused on IoT Edge devices with its AI capabilities, low power, and small form factor. ● The Lattice CrossLink™ device family are our "Video Connectivity small FPGAs" and are optimized for high-speed video and sensor applications for the Industrial, Automotive, Communications, Computing, and Consumer markets.
The latest member of the family, the iCE40 UltraPlus™ device, is focused on IoT Edge devices with its AI capabilities, low power, and small form factor. Starting in 2019, Lattice shifted to a platform-based engineering approach to accelerate time to market when developing product families of FPGAs.
ECP devices are optimized for the Communications and Computing market but also find significant use in the Industrial, Automotive, and Consumer markets.
Optimized for the Communications and Computing market, but also find significant use in the Industrial, Automotive, and Consumer markets. ● Lattice iCE™ – Lattice’s ultra-low power small FPGAs. Their small size and ultra-low power make them the optimal products for each of our core segments where small form factor and customization is required.
Typical logic capacity for small FPGAs can go up to 150K LUTS ("Look up tables"). 4 Table of Contents ● Lattice mid-range FPGA platform: Lattice’s mid-range FPGA platform, Lattice Avant™, was introduced in 2022.
Typical logic capacity for small FPGAs can go up to 200K LUTs ("Look Up Tables"). 5 Table of Contents Lattice FPGAs based on the Lattice Nexus™ FPGA platform include: ● Lattice CrossLink-NX™ – Video Connectivity small FPGAs, Lattice CrossLink-NX™ FPGAs, built on the Lattice Nexus platform, provide the lowest power in the smallest packages in their class, higher performance, and high reliability.
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To serve these needs, customer solutions require power efficiency, memory bandwidth, processing power, and the ability to integrate complex functionality into a highly compact footprint. These requirements align with the capabilities of our FPGA devices. Our flexible, low power, small form factor, performance optimized FPGAs put us in a unique position to meet these growing market needs.
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Our low power, small form factor solutions are ideal for systems and sensor applications. ● With the increase in artificial intelligence ("AI") and a multitude of applications at the network edge, Lattice devices support applications like face detection, image recognition, human-machine interface ("HMI"), and video analytics. ● With the demand for more hardware security in the Communications, Computing, Industrial, Automotive, and Consumer markets, our devices provide enhanced platform security enabling post-quantum algorithms.
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In the Communications and Computing Market , our solutions play key roles in computing systems such as servers and client devices, 5G wireless infrastructure, switches, routers, and other related applications.
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In addition, the FPGA market is continuing to grow in importance to the overall semiconductor market, driven by five secular trends acting as tailwinds.
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General Purpose FPGAs: ● The Lattice Avant-G™, Certus™ and Lattice ECP™ device families are our “General Purpose FPGAs” and address a broad range of applications across multiple markets. They offer customers the optimal cost per gate, Digital Signal Processing ("DSP") capability, and Serialize-Deserialize ("SERDES") connectivity.
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Lattice is uniquely positioned to address these trends. ● AI is driving shorter design cycles, allowing less time to integrate auxiliary functions. ● As application specific integrated circuit (“ASIC”) and application specific standard part ("ASSP") development costs continue to increase, allocating more functions to FPGAs improves the Return on Investment on ASICs and ASSPs and drives more designs for FPGAs. ● As the cost of advanced nodes increase, mature process FPGAs are more economical to perform certain functions. ● Emerging applications like security have fast-changing requirements.
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The Avant-X™ device family is the latest purpose-built mid-range FPGA with 25G SERDES supporting multi protocols including 25G Ethernet and PCIe 4.0 which are widely used in communications and high speed industrial applications Specialized FPGAs: ● The Lattice Mach™ device family are our “Control & Security small FPGAs” and are designed for platform management and security applications.
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A perfect example is Post Quantum Cryptography ("PQC") for which FPGA programmability offers more adaptable solutions than fixed-function ASICs that can’t easily be redesigned. ● Edge AI requires contextual intelligence near the sensor. In these applications, Lattice’s “far-edge” FPGAs can offload processing and enable the “near-edge” inference chip to focus on other tasks.
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They are control-oriented and offer optimized cost per I/O and cost per look-up table. Mach™ FPGAs are widely used across our three end market groups: Communications and Computing, Industrial and Automotive, and Consumer. The Lattice MachXO5D™-NX family, the latest devices built on the award-winning Lattice Nexus™ platform are the newest addition to the Mach™ FPGA family.
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Lattice FPGAs are already in these sockets today performing other functions, which gives Lattice a competitive advantage with customers. The small and mid‑range FPGA segments are growing faster than the overall FPGA market, led by new applications in data centers and cloud, robotics, industrial automation, autonomous vehicles, electrification, IoT, telematics, aerospace and defense, and AI across these segments.
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They extend Lattice’s long-standing leadership in secure control FPGAs, offering crypto-agile algorithms, hardware root of trust features with integrated flash, and fail-safe remote field updates for reliable and secure product lifecycle management. ● The Lattice iCE™ device family are our “Ultra Low Power small FPGAs.” Their small size and ultra-low power make them the optimal products for each of our core segments where small form factor and customizing is required.
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These applications have driven a rapid expansion of sensors, which require massive amounts of data to be bridged, aggregated, and fused to upstream processing units. Lattice has an existing foothold in these markets today, and our goal is to be the market leader in the growing far‑edge AI segment.
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Our Industrial and Automotive customers leverage our devices in the following use cases: ● As an FPGA companion chip to vision and motion control applications: in humanoids, industrial robots, medical, Aerospace & Defense, and automotive applications. ● As the AI “brain” in far-edge and physical AI applications. ● In multi-function applications such as HMI, camera/lidar/radar sensor fusion, signal processing, control, and communication.
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Lattice FPGAs offer customers supply peace of mind through a commitment to product longevity, with a large number of Lattice devices having been supported in the market for over 20 years. This is fulfilled by multi-sourcing key elements of the silicon supply chain and adding redundancy to assembly and test across multiple reputable suppliers.
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Lattice maintains customer support and supply of a variety of long-standing FPGA families that have been in market for more than a decade and still garner strong customer demand today. The architectures for each of these FPGAs were developed using a highly tailored engineering approach to address a specific type of application.
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These include: ● Lattice MachXO™ – Secure control small FPGAs designed to offer an unprecedented mix of low cost and high functionality in a single device. MachXO2™ FPGAs deliver high system performance, a robust architecture, support for enhanced I/O features, on-chip User Flash Memory, hardened control functions and flexible security features.
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MachXO3™ is an instant-on, lowest cost per I/O, non-volatile FPGA line, ideally suited for control programmable logic device ("PLD") and bridging applications across many types of systems in communications, computing, industrial, and consumer segments.
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MachXO3D™ builds on the XO3 architecture, adding an immutable embedded security block, enhanced control functions, expanded user flash memory, and is available in Commercial, Industrial, and AEC-Q100 qualified Automotive grade.
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MachXO4™ FPGAs combine low power consumption, embedded flash, high I/O density, and instant-on capability, with integrated hardened functions, broad programmability, and native support for industry-standard interfaces. ● Lattice CrossLink™ – Video connectivity small FPGAs, optimized for high-speed video and sensor applications for the Industrial, Automotive, Communications, Computing, and Consumer markets.
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This approach enables Lattice to create one foundational platform that is the basis of multiple FPGA product families. Based on these platforms, Lattice provides general purpose function FPGAs and specialized FPGAs optimized for specific applications.
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Certus-NX™ lead the general-purpose FPGA market in I/O density, delivering up to twice the I/O density per mm 2 in comparison to similar competing FPGAs, and provide best-in-class power savings, small size, reliability, instant-on performance, and support fast PCI Express (PCIe™) and Gigabit Ethernet interfaces to enable data co-processing, signal bridging, and system control.
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CertusPro-NX™ FPGAs offer leading power efficiency and the highest bandwidth in the smallest form factor in comparison to similar devices, and launched as the only FPGAs in their class with support for Low-Power Double Data Rate 4 ("LPDDR4") external memory. ● Lattice MachXO5-NX™, Lattice MachXO5D-NX™, Lattice MachXO5-NX TDQ™ – Lattice’s line of Control & Security small FPGAs based on the Nexus™ platform.
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MachXO5-NX™ secure control FPGAs offer increased logic and memory resources, robust 3.3 V I/O support, and a differentiated security feature set with class-leading power efficiency and reliability. MachXO5D-NX™ FPGAs offer crypto-agile algorithms, hardware root of trust features with integrated flash, and fail-safe remote field updates for reliable and secure product lifecycle management.
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The latest addition to the family, MachXO5-NX TDQ™ FPGAs are the industry’s first secure control FPGAs with full Commercial National Security Algorithm ("CNSA") 2.0-compliant PQC support.
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Lattice FPGAs based on the Lattice Avant™ FPGA platform include: ● Lattice Avant-E™ – Mid-range FPGAs designed to solve key customer challenges at the Edge by combining class-leading power efficiency, size and performance with an optimized feature set tailored to the needs of Edge applications like data processing and AI. ● Lattice Avant-G™ – General purpose mid-range FPGAs that address a broad range of applications across multiple markets, offering class-leading power efficiency, small size, and optimized performance, with up to 12.5G SERDES, fast external memory support, class-leading bitstream encryption and authentication, and efficient edge AI processing capabilities. ● Lattice Avant-X™ – Purpose-built mid-range FPGAs with advanced connectivity, including 25G SERDES supporting multi protocols including 25G Ethernet and PCIe 4.0 which are widely used in communications and high-speed industrial applications.
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Depending on the application, we may compete with other FPGA vendors, as well as producers of ASICs, ASSPs, and microcontrollers, or may act as a companion chip to other chips.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur worldwide operations and supply chain could be disrupted by natural or human-induced disasters including, but not limited to, earthquakes, tsunamis, or floods; hurricanes, cyclones, or typhoons; fires, or other extreme weather conditions; power or water shortages; telecommunications failures; materials scarcity and price volatility; manufacturing equipment failures; IT system failures; cybersecurity attacks; data breaches; medical epidemics or pandemics; terrorist acts, civil unrest, military actions, conflicts, or wars; or other natural or man-made disasters or catastrophic events. 21 Table of Contents The occurrence of any of these business disruptions could adversely affect our competitive position and result in significant losses, decrease demand for our products, seriously harm our revenue, profitability and financial condition, increase our costs and expenses, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain, result in the need to impose employee travel restrictions, and require substantial expenditures and recovery time in order to fully resume operations.
Biggest changeThe occurrence of any of these business disruptions could adversely affect our competitive position and result in significant losses, decrease demand for our products, seriously harm our revenue, profitability and financial condition, increase our costs and expenses, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain, result in the need to impose employee travel restrictions, and require substantial expenditures and recovery time in order to fully resume operations.
Concerns over climate change, as well as the adoption of new laws or regulations, may also impact market dynamics and may result in shifts in customer expectations, preferences, or requirements, which may require us to change our practices or incur increased costs or adversely impact customer demand for our products and services.
Concerns over climate, as well as the adoption of new laws or regulations, may also impact market dynamics and may result in shifts in customer expectations, preferences, or requirements, which may require us to change our practices or incur increased costs or adversely impact customer demand for our products and services.
The trading price of our common stock has and may continue to fluctuate widely due to various factors, including, but not limited to, actual or anticipated fluctuations in our financial condition and operating results; changes in financial estimates by us or financial or other market estimates and ratings by securities and other analysts; our ability to develop new products, enter new market segments, gain market share, manage cybersecurity and litigation risk, diversify our customer base, and successfully secure manufacturing capacity; news regarding our products or products of our competitors; any mergers, acquisitions or divestitures of assets undertaken by us; inflationary conditions, interest rate changes, and recessionary concerns; regulatory changes to international trade policies, economic sanctions, or export controls, such as new licensing requirements for exporting certain chip-related technology to China; terrorist acts or acts of war, including the ongoing conflict between Ukraine and Russia; epidemics and pandemics; trading activity in our common stock, including stock repurchases, actions by institutional or other large stockholders, or our inclusion in market indices; or general economic, industry, and market conditions worldwide.
The trading price of our common stock has and may continue to fluctuate widely and rapidly due to various factors, including, but not limited to, actual or anticipated fluctuations in our financial condition and operating results; changes in financial estimates by us or financial or other market estimates and ratings by securities and other analysts; our ability to develop new products, enter new market segments, gain market share, manage cybersecurity and litigation risk, diversify our customer base, and successfully secure manufacturing capacity; news regarding our products or products of our competitors; any mergers, acquisitions or divestitures of assets undertaken by us; inflationary conditions, interest rate changes, and recessionary concerns; regulatory changes to international trade policies, economic sanctions, or export controls, such as new licensing requirements for exporting certain chip-related technology to China; terrorist acts or acts of war, including the ongoing conflict between Ukraine and Russia; epidemics and pandemics; trading activity in our common stock, including stock repurchases, actions by institutional or other large stockholders, or our inclusion in market indices; or general economic, industry, and market conditions worldwide.
We cannot assure that our licensing customers will continue to license our technology on commercially favorable terms or at all, or that these customers will introduce and sell products incorporating our technology, accurately report royalties owed to us, pay agreed upon royalties, honor agreed upon market restrictions, or maintain the confidentiality of our proprietary information, or will not infringe upon or misappropriate our intellectual property.
We cannot assure that our licensing customers will continue to license our technology on commercially favorable terms or at all, or that these customers will introduce and sell products incorporating our technology, accurately or timely report royalties owed to us, pay agreed upon royalties, honor agreed upon market restrictions, or maintain the confidentiality of our proprietary information, or will not infringe upon or misappropriate our intellectual property.
Such extreme events are driving changes in market dynamics, stakeholder expectations, and local, national and international climate change policies and regulations, any of which could result in disruptions to us, our suppliers, vendors, customers and logistics hubs, and may impact employees’ abilities to commute or to work from home effectively.
Such extreme events are driving changes in market dynamics, stakeholder expectations, and local, national and international climate policies and regulations, any of which could result in disruptions to us, our suppliers, vendors, customers and logistics hubs, and may impact employees’ abilities to commute or to work from home effectively.
The increasing concern over climate change could also result in transition risks such as shifting customer preferences. Changing customer preferences may result in increased expectations regarding our solutions, products, and services, including the use of packaging materials and other components in our products and their environmental impact.
The increasing concern over climate could also result in transition risks such as shifting customer preferences. Changing customer preferences may result in increased expectations regarding our solutions, products, and services, including the use of packaging materials and other components in our products and their environmental impact.
A number of countries, as well as organizations such as the Organisation for Economic Co-operation and Development, which represents a coalition of member countries, support the 15% global minimum tax initiative, and have adopted or intend to adopt laws to implement this initiative.
A number of countries, as well as organizations such as the Organisation for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, support the 15% global minimum tax initiative, and have adopted or intend to adopt laws to implement this initiative.
We have significant domestic and international operations. Our international operations include foreign sales offices to support our international customers and distributors, which account for the majority of our revenue, and operational and research and development sites in China, the Philippines, Malaysia, and other Asian locations.
We have significant domestic and international operations. Our international operations include foreign sales offices to support our international customers and distributors, which account for the majority of our revenue, and operational and research and development sites in China, the Philippines, Malaysia, India, and other Asian locations.
As the February 2025, U.S. executive order contains provisions allowing for further increases in the scope and amount of tariffs in the event of retaliatory countermeasures, and the future of existing tariffs, and the possibility for new tariffs, remains very uncertain.
The February 2025 U.S. executive order contains provisions allowing for further increases in the scope and amount of tariffs in the event of retaliatory countermeasures, and the future of existing tariffs, and the possibility for new tariffs, remains very uncertain.
Furthermore, adverse macroeconomic conditions, such as rising inflation and labor shortages, may affect demand for our products or increase our product or labor costs, negatively impacting our revenues, gross margins, and overall financial results.
Furthermore, adverse macroeconomic conditions, such as inflation and labor shortages, may affect demand for our products or increase our product or labor costs, negatively impacting our revenues, gross margins, and overall financial results.
Additionally, concerns over climate change have resulted in, and are expected to continue to result in, the adoption of legal and regulatory requirements designed to address climate change, as well as legal and regulatory requirements requiring certain climate-related disclosures.
Additionally, concerns over climate have resulted in, and are expected to continue to result in, the adoption of legal and regulatory requirements designed to address climate, as well as legal and regulatory requirements requiring certain climate-related disclosures.
If our relationships with any material customers were to diminish, if these customers were to develop their own solutions or adopt alternative solutions or competitors' solutions, if any one or more of our concentrated groups of customers were to experience significantly adverse financial conditions, including as a result of inflation, economic slowdown or recession, or labor market disruptions, or if as a result of trade disputes or sanctions these customers were restricted from purchasing our products, our results could be adversely affected.
If our relationships with any material customers were to diminish, if these customers were to develop their own solutions or adopt alternative solutions or competitors' solutions, if any one or more of our material customers were to experience significantly adverse financial conditions, including as a result of inflation, economic slowdown or recession, or labor market disruptions, or if as a result of trade disputes or sanctions these customers were restricted from purchasing our products, our results could be adversely affected.
If any of our other customers or suppliers become subject to sanctions or other regulatory scrutiny, if our customers are affected by tariffs or other government trade restrictions, or if we become subject to retaliatory regulatory measures, our business and financial condition could be adversely affected. 11 Table of Contents Our global business operations expose us to various legal and regulatory risks, which could impact our business, operating results and financial condition.
If any of our other customers or suppliers become subject to sanctions or other regulatory scrutiny, if our customers are affected by tariffs or other government trade restrictions, or if we become subject to retaliatory regulatory measures, our business and financial condition could be adversely affected. 13 Table of Contents Our global business operations expose us to various legal and regulatory risks, which could impact our business, operating results and financial condition.
Ultimately, the impacts of climate change, whether involving physical risks (such as disruptions resulting from climate-related events or rising sea levels) or transition risks (such as regulatory changes, changes in market dynamics or increased operating costs, including the cost of insurance) are expected to be widespread and unpredictable and may materially adversely affect our business and financial results. 18 Table of Contents Factors Related to Our Markets and Product Development The semiconductor industry routinely experiences cyclical market patterns and our products are used across different end markets.
Ultimately, the impacts of climate, whether involving physical risks (such as disruptions resulting from climate-related events or rising sea levels) or transition risks (such as regulatory changes, changes in market dynamics or increased operating costs, including the cost of insurance) are expected to be widespread and unpredictable and may materially adversely affect our business and financial results. 21 Table of Contents Factors Related to Our Markets and Product Development The semiconductor industry routinely experiences cyclical market patterns and our products are used across different end markets.
Our ability to mitigate these risks will depend on our continued effective maintaining, training, monitoring and enforcement of appropriate policies and procedures governing the use of AI tools, and the results of any such use, by us or our partners. Climate change and climate change-related policies and regulations may have a long-term impact on our business.
Our ability to mitigate these risks will depend on our continued maintaining, training, monitoring and enforcement of appropriate policies and procedures governing the use of AI tools, and the results of any such use, by us or our partners. Climate and climate-related policies and regulations may have a long-term impact on our business.
Revenue recognition standards require recognition of revenue based on estimates and may require us to record revenue from distributors that is in excess of actual end customer demand. Since we have limited ability to forecast inventory levels of our end customers, we depend on the timeliness and accuracy of resale reports from our distributors.
Revenue recognition standards require recognition of revenue based on estimates and may require us to record revenue from distributors that is in excess of actual end customer demand. Because we have limited ability to forecast inventory levels of our end customers, we depend on the timeliness and accuracy of resale reports from our distributors.
The impacts and frequency of any of the above could furthermore be exacerbated by climate change, particularly in countries where we, or our suppliers or customers, operate that have limited infrastructure and disaster recovery resources.
The impacts and frequency of any of the above could furthermore be exacerbated by climate dynamics, particularly in countries where we, or our suppliers or customers, operate that have limited infrastructure and disaster recovery resources.
Our target markets may not grow or develop as we currently expect, and demand may increase or change in one or more of our end markets, and changes in demand may reduce our revenue, lower our gross margin and effect our operating results.
Our target markets may not grow or develop as we currently expect, and demand may increase or change in one or more of our end markets, and changes in demand may reduce our revenue, lower our gross margin and affect our operating results.
While we may issue guidance, difficulty in forecasting financial performance, relative customer and product mix, and the unpredictability of unknown variables and their impact on our financial performance may impair the accuracy of our forward-looking financial measures. Accounting requirements related to sales through our distribution channel could result in our reporting revenue in excess of demand.
While we may issue guidance, difficulty in forecasting financial performance, relative customer and product mix, and the unpredictability of unknown variables and their impact on our financial performance may impair the accuracy of our forward-looking financial measures. 24 Table of Contents Accounting requirements related to sales through our distribution channel could result in our reporting revenue in excess of demand.
Accounting standards also require us to make estimates and assumptions in connection with the preparation of our financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations, cash flows and financial condition. 15 Table of Contents Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.
Accounting standards also require us to make estimates and assumptions in connection with the preparation of our financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations, cash flows and financial condition. Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.
Climate change also may reduce the availability or increase the cost of insurance for these negative impacts of natural disasters by contributing to an increase in the incidence and severity of such natural disasters.
Climate dynamics also may reduce the availability or increase the cost of insurance for these negative impacts of natural disasters by contributing to an increase in the incidence and severity of such natural disasters.
If such strategic transactions require us to seek additional debt or equity financing, we may not be able to obtain such financing on terms favorable to us or at all, and such transaction may adversely affect our liquidity and capital structure.
If such strategic transactions require us to seek additional debt or equity financing, we may not be able to obtain such financing on terms favorable to us or at all, and such transaction may adversely affect our liquidity, capital structure, and overall financial flexibility.
Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cybersecurity and other threats or incidents in the future. 14 Table of Contents In some circumstances, we may partner with third-party providers and provide them with certain data, including sensitive data, or the ability to access or otherwise process such data.
Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cybersecurity and other threats or incidents in the future. In some circumstances, we may partner with third-party providers and provide them with certain data, including sensitive data, or the ability to access or otherwise process such data.
Additionally, the U.S. government continues to expand controls enacted in October 2022 restricting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing, and supercomputing to China without an export license.
Additionally, the U.S. government continued, and may expand, controls enacted in October 2022 restricting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing, and supercomputing to China without an export license.
Risk Factor Summary Factors Related to Economic, Political, Legal & Regulatory Business Conditions ● Economic, political, and business conditions related to our global business. ● The impact of tariffs, trade sanctions or similar actions on our global business. ● Legal and regulatory conditions related to our global business.
Risk Factor Summary Factors Related to Economic, Political, Legal & Regulatory Business Conditions ● Economic, political, and business conditions related to our global business. ● The impact of tariffs, trade restrictions, export controls, sanctions or similar actions on our global business. ● Legal and regulatory conditions related to our global business.
GAAP that may impact our business. ● Changes to financial accounting standards applicable to us and any related changes to our business practices. ● Exposure to unanticipated tax consequences as a result of changes in effective tax rates, tax laws and our global organizational structure and operations. ● Weakness in our internal control over financial reporting and business processes. ● Our ability to compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel. ● Our failure to adequately foresee and insure against risks related to our business. ● Limitations to our flexibility caused by incurring indebtedness. ● Risks relating to the use or application of emerging technologies, including AI ● The impact of climate change and climate change-related policies & regulations on our business.
GAAP that may impact our business. ● Changes to financial accounting standards applicable to us and any related changes to our business practices. ● Exposure to unanticipated tax consequences as a result of changes in effective tax rates, tax laws and our global organizational structure and operations. ● Fluctuations in foreign currency exchange rates, and our foreign currency risk management and hedging activities. ● Weakness in our internal control over financial reporting and business processes. ● Our ability to compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel. ● Our failure to adequately foresee and insure against risks related to our business. ● Limitations to our flexibility caused by incurring indebtedness. ● Risks relating to the use or application of emerging technologies, including AI ● The impact of climate and climate-related policies & regulations on our business.
A significant downturn in the industry or in any of these end markets could cause a meaningful reduction in demand for our products and adversely affect our operating results. The semiconductor industry is highly cyclical and subject to downturns, such as we are currently seeing, and our revenue and gross margin can fluctuate significantly due to such downturns.
A significant downturn in the industry or in any of these end markets could cause a meaningful reduction in demand for our products and adversely affect our operating results. The semiconductor industry is highly cyclical and subject to downturns, such as we have seen recently, and our revenue and gross margin can fluctuate significantly due to such downturns.
For example, numerous U.S. states have proposed, and in certain cases enacted, legislation restricting the use of AI or imposing obligations in connection with its use, including by addressing forms of automated decision making. 17 Table of Contents Concerns relating to the responsible use of new and evolving technologies, such as AI, in our and our customers’ products and services may result in reputational and financial harm and liability.
For example, various jurisdictions have proposed, and in certain cases enacted, legislation restricting the use of AI or imposing obligations in connection with its use, including by addressing forms of automated decision-making. 20 Table of Contents Concerns relating to the responsible use of new and evolving technologies, such as AI, in our and our customers’ products and services may result in reputational and financial harm and liability.
Accordingly, our expectations are subject to change without warning and investors are cautioned not to place undue reliance on them. Our business could suffer as a result of tariffs and trade sanctions or similar actions.
Accordingly, our expectations are subject to change without warning and investors are cautioned not to place undue reliance on them. Our business could suffer as a result of tariffs, trade restrictions, export controls, sanctions or similar a ctions.
General Risk Factors ● Our operations are subject to the effects of rising inflation and recessionary concerns. ● Disruptions to our worldwide operations and supply chain due to natural or human-induced disasters. ● The trading price of our common stock has been and may continue to be subject to volatility. ● Disruption in and impacts of acquisitions, divestitures, strategic investments and strategic partnerships on our business. ● The impact of actual and potential litigation and unfavorable results of legal proceedings on our business. ● The impact of pandemics or widespread global health problems on our business. 9 Table of Contents Factors Related to Economic, Political, Legal & Regulatory Business Conditions Our global business operations expose us to various economic, political, and business risks, which could impact our business, operating results and financial condition.
General Risk Factors ● The effects of inflationary pressures, interest rate fluctuations, and recessionary or economic slowdown risks. ● Disruptions to our worldwide operations and supply chain due to natural or human-induced disasters. ● The trading price of our common stock has been and may continue to be subject to volatility. ● Disruption in and impacts of acquisitions, divestitures, strategic investments and strategic partnerships on our business. ● The impact of actual and potential litigation and unfavorable results of legal proceedings on our business. ● The impact of pandemics or widespread global health problems on our business. 10 Table of Contents Factors Related to Economic, Political, Legal & Regulatory Business Conditions Our global business operations expose us to various economic, political, and business risks, which could impact our business, operating results and financial condition.
Such shortages have resulted in inflationary cost increases for labor, materials, and services across the economy, and could continue to cause costs to increase as well as scarcity of certain products.
For instance, global supply chain disruptions have resulted in shortages in materials and services. Such shortages have resulted in inflationary cost increases for labor, materials, and services across the economy, and could continue to cause costs to increase as well as scarcity of certain products.
We have generated revenue from the sale of certain patents from our portfolio in the past, generally for non-core technology that we are no longer actively developing. While we plan to continue to monetize our patent portfolio through sales of non-core patents, we may not be able to realize adequate interest or prices for those patents.
We have generated revenue from the sale of certain patents from our portfolio in the past, generally for non-core technology that we are no longer actively developing. Any future efforts to monetize our patent portfolio through sales of non-core patents may not realize adequate interest or prices for those patents.
For purposes of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice business, which includes intellectual property and semiconductor devices. There were no impairment charges to goodwill in fiscal years 2024, 2023, or 2022. Impairment charges related to amortizable intangible assets from our acquisition of Mirametrix, Inc.
For purposes of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice business, which includes intellectual property and semiconductor devices. There were no impairment charges to goodwill in fiscal years 2025, 2024, or 2023. There were no impairment charges to amortizable intangible assets in fiscal years 2025 or 2023.
Factors Related to Our Sales and Revenue ● Our dependence on our distributors and a concentrated group of end customers. ● Fluctuations in and the unpredictability of our business and our sales cycles. ● Accounting requirements related to sales through our distribution channel.
Factors Related to Our Sales and Revenue ● Our dependence on our highly concentrated distributor model and our end customers. ● Fluctuations in and the unpredictability of our business and our sales cycles. ● Accounting requirements related to sales through our distribution channel.
If we are unable to service our debt, we may need to sell material assets, restructure or refinance our debt, or seek additional equity capital.
If we are unable to service our debt, we may need to sell material assets, restructure or refinance our debt, increase our borrowing capacity, or incur additional indebtedness, or seek additional equity capital.
The adoption of AI solutions may not develop in the manner or in the time periods we anticipate and as the markets for AI solutions are still developing, demand for these products may be unpredictable and may vary significantly from one period to another.
The adoption of AI solutions and other emerging technologies may not develop in the manner or in the time periods we anticipate and as these markets are still developing and continue to evolve, demand for products and solutions related to or that support such technologies may be unpredictable and may vary significantly from one period to another.
Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business. 22 Table of Contents Pandemics or other widespread public health problems could adversely affect our business, results of operations, and financial condition in a material way.
Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business, and any insurance coverage we maintain may be insufficient to cover all costs, damages, or liabilities associated with such matters. 26 Table of Contents Pandemics or other widespread public health problems could adversely affect our business, results of operations, and financial condition in a material way.
GAAP to test goodwill for possible impairment on an annual basis and to test goodwill and long-lived assets, including amortizable intangible assets, for impairment at any other time that circumstances arise indicating the carrying value may not be recoverable.
GAAP, and we may incur future impairments. We are required under U.S. GAAP to test goodwill for possible impairment on an annual basis and to test goodwill and long-lived assets, including amortizable intangible assets, for impairment at any other time that circumstances arise indicating the carrying value may not be recoverable.
To the extent that such cost reductions and new product introductions do not occur in a timely manner, because of inflation, increases in personnel costs, employee turnover, or other factors, or that our products experience significant quality or reliability issues, or do not achieve market acceptance or market acceptance at acceptable pricing, our margins, operating results, and financial condition could be materially adversely affected. 12 Table of Contents Furthermore, worldwide manufacturing capacity for our products may be impacted by many factors which may impact availability and cost.
To the extent that such cost reductions and new product introductions do not occur in a timely manner, because of inflation, increases in personnel costs, employee turnover, or other factors, or that our products experience significant quality or reliability issues, or do not achieve market acceptance or market acceptance at acceptable pricing, our margins, operating results, and financial condition could be materially adversely affected.
If our third-party supply chain providers were to reduce or discontinue services for us or their operations are disrupted as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease, or other natural disaster or catastrophic event, weak economic conditions, inflation, recession, labor market disruptions, or any other reason, our financial condition and results of operations could be adversely affected.
If our third-party supply chain providers were to reduce or discontinue services for us or their operations are disrupted as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease, or other natural disaster or catastrophic event, weak economic conditions, inflation, recession, labor market disruptions, or any other reason, our financial condition and results of operations could be adversely affected. 23 Table of Contents Factors Related to Our Sales and Revenue Our r evenues depend on a highly concentrated distribution model to sell to our end customers.
Our future growth and the success of new product introductions depend upon numerous factors, including: ● timely completion and introduction of new product designs; ● ability to generate new design opportunities and design wins, including those which result in sales of significant volume; ● achievement of necessary volume of production to achieve acceptable cost; ● availability of specialized field application engineering resources supporting demand creation and customer adoption of new products; ● ability to utilize advanced manufacturing process technologies; ● achieving acceptable yields and obtaining adequate production capacity from our wafer foundries and assembly and test subcontractors; ● the avoidance or management of significant quality or reliability issues; ● ability to obtain advanced packaging; ● availability of supporting software design tools; ● utilization of predefined IP logic; ● customer acceptance of advanced features in our new products; and ● market acceptance of our customers' products. 19 Table of Contents The failure of any of these factors, among others, could adversely affect our product innovation, development and introduction efforts and our financial condition and results of operations.
As a result, we may be increasingly dependent on revenue derived from our newer products. 22 Table of Contents Our future growth and the success of new product introductions depend upon numerous factors, including: ● timely completion and introduction of new product designs; ● ability to generate new design opportunities and design wins, including those which result in sales of significant volume; ● achievement of necessary volume of production to achieve acceptable cost; ● availability of specialized field application engineering resources supporting demand creation and customer adoption of new products; ● ability to utilize advanced manufacturing process technologies; ● achieving acceptable yields and obtaining adequate production capacity from our wafer foundries and assembly and test subcontractors; ● the avoidance or management of significant quality or reliability issues; ● ability to obtain advanced packaging; ● availability of supporting software design tools; ● utilization of predefined IP logic; ● customer acceptance of advanced features in our new products; and ● market acceptance of our customers' products.
We cannot be certain that our insurance coverage will be adequate for cybersecurity liabilities incurred and, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
We cannot be certain that our insurance coverage will be adequate for cybersecurity liabilities incurred and, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. 17 Table of Contents We regularly test for goodwill and other impairments as required under U.S.
("Mirametrix") totaled approximately $13.9 million in fiscal year 2024. There were no impairment charges to amortizable intangible assets in fiscal years 2023 or 2022.There is no certainty that future impairment tests will indicate that goodwill or amortizable intangible assets will be deemed recoverable.
Impairment charges related to amortizable intangible assets from our acquisition of Mirametrix, Inc. ("Mirametrix") totaled approximately $13.9 million in fiscal year 2024. There is no certainty that future impairment tests will indicate that goodwill or amortizable intangible assets will be deemed recoverable.
We have undergone senior management transitions in the past, and may experience such transitions in the future. Effective succession planning is important for our long-term success. Failure to ensure effective transfers of knowledge and smooth transitions involving senior management could hinder our strategic planning and execution. None of our senior management is bound by written employment contracts.
Our success also depends significantly on the contributions of our senior management team. We have undergone senior management transitions in the past, and may experience such transitions in the future. Effective succession planning is important for our long-term success. Failure to ensure effective transfers of knowledge and smooth transitions involving senior management could hinder our strategic planning and execution.
While as of December 28, 2024, we had no borrowings outstanding under the 2022 Credit Agreement, the incurrence of indebtedness could impact the Company.
While as of January 3, 2026, we had no borrowings outstanding under the 2022 Credit Agreement, the incurrence of indebtedness could impact the Company.
Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies.
In addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers. Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies.
Factors Related to Intellectual Property ● Fluctuations in our revenue and margins caused by the intellectual property licensing component of our business strategy. ● Material fluctuations in our revenue and gross margins caused by intermittent sales of patents and significant licensing transactions. ● Variability in our share of royalties for the HDMI standard as a result of our evolving participation in the HDMI standard. ● Our ability to protect our new and existing intellectual property rights.
Factors Related to Intellectual Property ● Fluctuations in our revenue and margins caused by the intellectual property licensing component of our business strategy. ● Material fluctuations in our revenue and gross margins caused by intermittent sales of patents and significant licensing transactions. ● Our ability to protect our new and existing intellectual property rights.
Additionally, the U.S. government has continued to increase restrictions on the export of semiconductor- and supercomputer-related products, including semi-conductor manufacturing affecting the ability to send U.S.-controlled certain chips, products containing those chips, chip-related technology and software, and items related to semi-conductor manufacturing worldwide without export authorization.
Additionally, the U.S. government has continued, and may increase, restrictions on the export of semiconductor- and supercomputer-related products, including semiconductor manufacturing equipment, which may restrict the ability to export, reexport, or otherwise transfer U.S.-controlled certain chips, products containing those chips, chip-related technology and software, and items related to semiconductor manufacturing worldwide without export authorization.
Factors Related to Our Sales and Revenue Our revenues depend on our relationships with our distributors and on a concentrated group of end customers. An adverse change in the relationships with, or performance of, our distributors, or any reduction in the use of our products by our end customers, could harm our sales and significantly decrease our revenue.
An adverse change in the se relationships with, or performance of, our distributors, or any reduction in the use of our products by our end customers, could harm our sales and significantly decrease our revenue.
These restrictions also limit the fabrication of devices for certain Chinese companies where U.S. technology is involved in the fabrication process. Furthermore, in August 2020 the U.S. established additional licensing requirements for one of our China customers and its affiliates that limit any sales of products to that customer or for that customer’s products absent a license.
Furthermore, in August 2020 the U.S. established additional licensing requirements for one of our China customers and its affiliates that limit any sales of products to that customer or for that customer’s products absent a license.
Any increase in trade-related costs associated with such measures may impair the profitability of such international production, may strain our suppliers’ ability to reliably provide inputs necessary to produce these items, and may otherwise affect our partners’ abilities to provide our products at previously contracted prices. Our business and financial results could be negatively affected as a result.
Any increase in trade-related costs associated with such measures may impair the profitability of such international production, may strain our suppliers’ ability to reliably provide inputs necessary to produce these items, may otherwise affect our partners’ abilities to provide our products at previously contracted prices, and may limit our ability to absorb increased costs without raising prices to our customers.
We compete against companies that have significantly greater resources than us and numerous other product solutions. The semiconductor industry is highly competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing, and sales resources than us.
The semiconductor industry is highly competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing, and sales resources than us.
General Risk Factors Our operations are subject to the effects of inflationary pressures and recessionary concerns. Global economic conditions have recently experienced historically high levels of inflation, and there is increasing concern about the potential for recession and/or economic slowdown.
General Risk Factors We a re subject to the effects of inflationary pressures, interest rate fluctuations, and recessionary or economic slowdown risks . Global economic conditions have recently experienced historically high levels of inflation, and there is ongoing concern about the potential for recession and/or economic slowdown.
Further, our subcontractors are themselves subject to many of the same operational and business risks that we face and describe herein, including many operating in regions with significant geopolitical risk, that, if they occur and are disruptive to their operations, could adversely affect us.
Further, our subcontractors are themselves subject to many of the same operational and business risks that we face and describe herein, including many operating in regions with significant geopolitical risk, that, if they occur and are disruptive to their operations, could adversely affect us. 14 Table of Contents Our margins are dependent on our achieving continued yield and quality improvements, cost reductions, and the supply and cost of wafers and materials .
Volatility in the trading price of our common stock could also result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources.
Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. Volatility in the trading price of our common stock could also result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources.
Our customers or suppliers could also become subject to U.S. regulatory scrutiny or export restrictions. For example, in 2019 the U.S. Justice Department filed criminal charges against one of our customers in China and imposed a licensing requirement on this customer with a policy of denial for some items, which has limited our ability to do business with this customer.
Justice Department has in the past filed criminal charges against one of our customers in China and imposed a licensing requirement on this customer with a policy of denial for some items, which has limited our ability to do business with this customer.
Establishing, maintaining and managing multiple foundry and OSAT relationships requires the investment of management resources and costs. Qualifying and establishing reliable production at acceptable yields with a new contract manufacturer is a lengthy and often expensive process, and there is no guarantee we could timely find alternative contract manufacturers or at all.
Qualifying and establishing reliable production at acceptable yields with a new contract manufacturer is a lengthy and often expensive process, and there is no guarantee we could timely find alternative contract manufacturers or at all.
We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.
We continue to commit significant resources to implementing new systems to standardize our processes worldwide and to develop our capabilities in these areas. We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.
China responded by imposing significant tariffs on many items imported from the United States, among other measures which include export controls restricting the export of gallium and germanium to the United States.
China responded by imposing or threatening to impose significant trade measures, including tariffs on many items imported from the United States and export controls restricting the export of gallium, germanium, and other rare earth materials to the United States.
If the United States and Mexico or the United States and Canada are unable to reach long-term agreements, or if the President were to impose significant new tariffs against the European Union, Taiwan, or any other country or countries, the macroeconomic effect of any such tariffs could be significant.
If the affected countries are unable to reach long-term agreements, or if the President were to impose significant new tariffs, the macroeconomic effect of any such tariffs could be significant.
Silicon wafers constitute a material portion of our product cost, and if we are unable to purchase wafers at favorable prices, due to supply constraints, inflation, or other factors, our margins, results of operations, and financial condition may be adversely affected. We may be subject to warranty claims and other costs related to our products.
A shortage in manufacturing capacity could hinder our ability to meet product demand and therefore reduce our revenue. Silicon wafers constitute a material portion of our product cost, and if we are unable to purchase wafers at favorable prices, due to supply constraints, inflation, or other factors, our margins, results of operations, and financial condition may be adversely affected.
In fiscal 2024, we conducted a worldwide reduction in force that could cause disruptions in our operations, negatively affect employee morale, and make us a less attractive employer in the market for new talent.
In recent years, we have conducted worldwide reductions in force, and we periodically conduct targeted workforce reductions, which could cause disruptions in our operations, negatively affect employee morale, and make us a less attractive employer in the market for new talent.
Should there be a catastrophic loss due to an uninsured event (such as an earthquake) or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could be adversely affected.
Should there be a catastrophic loss due to an uninsured event (such as an earthquake) or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could be adversely affected. 19 Table of Contents We may incur indebtedness which could reduce our strategic flexibility and liquidity and may have other adverse effects on our results of operations.
With increased introduction of new products, we expect revenue related to mature products to decline over time in a normal product life cycle. As a result, we may be increasingly dependent on revenue derived from our newer products.
With increased introduction of new products, we expect revenue related to mature products to decline over time in a normal product life cycle.
In addition, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a catastrophic event, they may reduce or cancel their orders, or these events could otherwise result in a decrease in demand for our products.
In addition, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a catastrophic event, they may reduce or cancel their orders, or these events could otherwise result in a decrease in demand for our products. 25 Table of Contents The trading price of our common stock has been and may continue to be subject to volatility in response to a variety of factors.
Climate-related risks are inherent wherever our business is conducted. Global climate change is causing, and is projected to continue to cause, an increase in the frequency and intensity of certain natural disasters and adverse weather, such as drought, wildfires, storms, sea-level rise, flooding, heat waves, and cold waves, occurring more frequently or with greater intensity.
Global climate causes, and is projected to continue to cause, an increase in the frequency and intensity of certain natural disasters and adverse weather, such as power outages and grid instability, drought or other water scarcity, wildfires, storms, sea-level rise, flooding, severe heat, and severe cold, occurring more frequently or with greater intensity.
In 2020, the U.S. imposed additional regulatory restrictions on the sale of U.S. controlled technology to customers in China. These restrictions include establishing additional licensing requirements in order to sell U.S.-originated technology for certain applications or to companies that participate in the Chinese national security supply chain.
These restrictions include establishing additional licensing requirements in order to sell U.S.-originated technology for certain applications or to companies that participate in the Chinese national security supply chain. These restrictions also limit the fabrication of devices for certain Chinese companies where U.S. technology is involved in the fabrication process.
Our Licensing and services revenue fluctuates, sometimes significantly, from period to period because it is heavily dependent on a few key transactions being completed in a given period, the timing of which is difficult to predict and may not match our expectations.
In addition, as we sell groups of patents, we no longer have the opportunity to further sell or to license those patents and receive a continuing royalty stream. 15 Table of Contents Our Licensing and services revenue fluctuates, sometimes significantly, from period to period because it is heavily dependent on a few key transactions being completed in a given period, the timing of which is difficult to predict and may not match our expectations.
Recent inflation caused by global supply chain disruptions, strong economic recovery and associated widespread demand for goods, and government stimulus packages, among other factors, continues to impact our business. For instance, global supply chain disruptions have resulted in shortages in materials and services.
While inflation has moderated in certain regions and categories, cost pressures remain uneven and persistent, particularly for labor, energy, transportation, and certain materials and services. Recent inflation caused by global supply chain disruptions, strong economic recovery and associated widespread demand for goods, and government stimulus packages, among other factors, continues to impact our business.
Further, despite our security measures, our IT systems may be vulnerable to cybersecurity threats and suffer cybersecurity incidents. These systems are also supported by subcontractors and third-party providers who may also be subject to power and telecommunication outages or other general system failures and disruptions and cybersecurity threats and cybersecurity incidents.
These systems are also supported by subcontractors and third-party providers who may also be subject to power and telecommunication outages or other general system failures and disruptions and cybersecurity threats and cybersecurity incidents. The legal, regulatory and contractual environments surrounding information security, data privacy, and data protection are complex and evolving.
We may also be a target for unsolicited acquisition or business combination offers. Appropriately reviewing and responding to any such offer can be costly and complex, and diverts the efforts and attention of management. Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results.
Appropriately reviewing and responding to any such offer can be costly and complex, and diverts the efforts and attention of management. Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results. From time to time, we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business.
The imposition by the United States of tariffs, sanctions or other restrictions on goods exported from the United States or imported into the United States or countermeasures imposed in response to such government actions could adversely affect our operations or our ability to sell our products globally, which could adversely affect our operating results and financial condition.
The imposition by the United States of tariffs, sanctions or other restrictions on goods exported from the United States or imported into the United States or countermeasures imposed in response to such government actions could adversely affect our operations or our ability to sell our products globally, which could adversely affect our operating results and financial condition. 11 Table of Contents These restrictions include measures under United States’ authority under Section 232 of the Trade Expansion Act of 1962 to impose tariffs or other restrictions on imports deemed to threaten national security, including potentially with respect to semiconductors and products incorporating semiconductors.
Other countries outside of the European Union, including the United Kingdom and China, also have enacted robust legislation addressing privacy, data protection, and cybersecurity and providing for substantial penalties for noncompliance.
Other countries outside of the European Union, including the United Kingdom and China, also have enacted robust legislation addressing privacy, data protection, and cybersecurity and providing for substantial penalties for noncompliance. We are also subject to a wide range of other U.S. and international laws and regulations applicable to us, including anti-corruption and anti-bribery laws (such as the U.S.
If the demand for silicon wafers or assembly material exceeds market supply, or if suppliers increase prices to cover the cost of rising inflation, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive. A shortage in manufacturing capacity could hinder our ability to meet product demand and therefore reduce our revenue.
Furthermore, worldwide manufacturing capacity for our products may be impacted by many factors which may impact availability and cost. If the demand for silicon wafers or assembly material exceeds market supply, or if suppliers increase prices to cover the cost of rising inflation, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive.
Furthermore, any significant upturn in the semiconductor industry could result in increased competition for access to raw materials and third-party service providers. Additionally, our products are used across different end markets, and demand for our products is difficult to predict and may vary within or among our Industrial and Automotive, Communications and Computing, and Consumer end markets.
Additionally, our products are used across different end markets, and demand for our products is difficult to predict and may vary within or among our Industrial and Automotive, Communications and Computing, and Consumer end markets.
We depend on a concentrated group of distributors to sell our products to end customers, complete order fulfillment, maintain sufficient inventory of our products and provide services to our end customers.
We depend on a highly concentrated distribution model to sell our products to end customers, complete order fulfillment, maintain sufficient inventory of our products and provide services to our end customers. In fiscal 2025, revenue attributable to sales to distributors accounted for 84% of our total revenue, and two distributors accounted for approximately 69% of total revenue.
In general, we warrant our products for varying lengths of time against non-conformance to our specifications and certain other defects.
We may be subject to warranty claims and other costs related to our products. In general, we warrant our products for varying lengths of time against non-conformance to our specifications and certain other defects. From time to time, we may be subject to warranty and/or epidemic failure claims, disputes, or other assertions of product non-conformance by customers.
We maintain sensitive data on our networks and on the networks of our business partners and third-party providers, including proprietary and confidential information relating to our intellectual property, personnel, and business, and that of our customers and third-party providers.
If we experience employee turnover, could lead to disruptions in our processes, inadequate end user training or difficulty updating our IT systems and networks. 16 Table of Contents We maintain sensitive data on our networks and on the networks of our business partners and third-party providers, including proprietary and confidential information relating to our intellectual property, personnel, and business, and that of our customers and third-party providers.
We carry insurance customary for companies in our industry, including, but not limited to, liability, property, and casualty; workers' compensation; cyber liability; and business interruption insurance. We also insure our employees for basic medical expenses. In addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers.
Our insurance may not adequately cover certain risks and, as a result, our financial condition and results may be adversely affected. We carry insurance customary for companies in our industry, including, but not limited to, liability, property, and casualty; workers' compensation; cyber liability; and business interruption insurance. We also insure our employees for basic medical expenses.
Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S., additionally limiting the pool of available talent. Our success also depends significantly on the contributions of our senior management team.
Moreover, certain immigration policies in the U.S. may make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the U.S., additionally limiting the pool of available talent, including in certain international markets where we operate and where competition for skilled engineering and technical talent is particularly strong, such as parts of Asia.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn Pune, India, we lease 29,055 square feet through March 2029 for research and development. In Penang, Malaysia, we lease 23,272 square feet through September 2029 for research and development and operations facilities. We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff.
Biggest changeIn Penang, Malaysia, we lease 28,161 square feet through September 2029 for research and development and operations facilities. In Shanghai, China, we lease 24,251 square feet through February 2028 primarily for research and development operations. We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff.
In Metro Manila, Philippines, we lease a total of 50,503 square feet through May 2025 and another 8,333 square feet through March 2029 for research and development and operations facilities. In Shanghai, China, we lease 68,027 square feet through June 2025 for research and development operations.
In Metro Manila, Philippines, we lease a total of 50,503 square feet through May 2035 and another 8,333 square feet through March 2029 for research and development, operations, and administrative facilities. In Pune, India, we lease 42,728 square feet through March 2029 for research and development.
Item 2. Properties We lease a 47,800 square foot space in Hillsboro, Oregon as our corporate headquarters and a research and development facility through October 2028. In San Jose, California, we have 98,874 square feet under lease through September 2026, of which we use 49,579 square feet primarily for research and development.
Item 2. Properties We lease a 47,800 square foot space in Hillsboro, Oregon as our corporate headquarters and a research and development facility through October 2028. In San Jose, California, we lease 98,874 square feet through November 2033, which we use for research and development, engineering support, administrative, and other operational purposes.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlso, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 24 Table of Contents PART II
Biggest changeAlso, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 28 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 25 Item 6. Reserved 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 28 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 29 Item 6. Reserved 30 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b) September 29, 2024 through October 26, 2024 — $ — — $ 203.0 October 27, 2024 through November 23, 2024 211,098 $ 52.11 211,098 $ 192.0 November 24, 2024 through December 28, 2024 155,871 $ 57.74 155,871 $ 100.0 Total 366,969 $ 54.50 366,969 $ 100.0 (a) All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our Board of Directors to purchase up to $250.0 million of our common stock announced November 30, 2023.
Biggest changeThe following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2025: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b) September 28, 2025 through October 25, 2025 — $ — — $ 14.1 October 26, 2025 through November 22, 2025 217,506 $ 65.03 217,506 $ — November 22, 2025 through January 3, 2026 — $ — — $ 250.0 Total 217,506 $ 65.03 217,506 $ 250.0 (a) All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our Board of Directors to purchase up to $100.0 million of our common stock announced December 9, 2024.
No shares were repurchased under the 2025 Repurchase Program during the fourth quarter of fiscal 2024.
No shares were repurchased under the 2026 Repurchase Program during the fourth quarter of fiscal 2025.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC". Holders As of February 10, 2025, we had approximately 145 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC". Holders As of February 9, 2026, we had approximately 137 stockholders of record.
On December 9, 2024, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $100 million of outstanding common stock could be repurchased from time to time (the "2025 Repurchase Program"). The duration of the 2025 Repurchase Program is through December 31, 2025.
Issuer Purchases of Equity Securities On December 9, 2024, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $100 million of outstanding common stock could be repurchased from time to time (the "2025 Repurchase Program"). The duration of the 2025 Repurchase Program was through December 31, 2025.
During the fourth quarter of fiscal 2024, we repurchased 366,969 shares for $20.0 million, or an average price paid per share of $54.50. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2024 Repurchase Program were retired by the end of the fourth quarter of fiscal 2024.
During the fourth quarter of fiscal 2025, we repurchased 217,506 shares for $14.1 million, or an average price paid per share of $65.03. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2025 Repurchase Program were retired upon settlement.
We repurchased a total of 1,145,560 shares for $67.0 million, or an average price paid per share of $58.48, during fiscal year 2024.
During fiscal year 2025, we repurchased a total of 1,763,053 shares for $100.0 million, or an average price paid per share of $56.72.
The remaining portion of the $250 million program authorized through December 28, 2024 expired with no additional shares repurchased. 25 Table of Contents Comparison of Total Cumulative Stockholder Return The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 2019 through December 2024.
(b) At January 3, 2026, this amount consists of the remaining portion of the $250 million authorization that was announced December 5, 2025 . 29 Table of Contents Comparison of Total Cumulative Stockholder Return The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 2020 through December 2025.
Issuer Purchases of Equity Securities On November 30, 2023, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $250 million of outstanding common stock could be repurchased from time to time (the "2024 Repurchase Program"). The duration of the 2024 Repurchase Program was through December 28, 2024.
On December 5, 2025, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $250 million of outstanding common stock could be repurchased from time to time (the "2026 Repurchase Program"). The 2026 Repurchase Program has no termination date and may be suspended or discontinued at any time.
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(b) At December 28, 2024, this amount consists of the remaining portion of the $100 million program authorized through December 31, 2025 that was announced December 9, 2024 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. 28 Table of Contents Results of Operations Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table: Year Ended December 28, December 30, December 31, (In thousands) 2024 2023 2022 Revenue $ 509,401 100.0 % $ 737,154 100.0 % $ 660,356 100.0 % Gross margin 340,400 66.8 514,670 69.8 452,050 68.5 Research and development 159,302 31.3 159,770 21.7 135,767 20.6 Selling, general and, administrative 116,942 23.0 137,244 18.6 122,076 18.5 Amortization of acquired intangible assets 3,479 0.7 3,478 0.5 3,778 0.6 Restructuring 12,291 2.4 1,908 0.3 2,551 0.4 Impairment of acquired intangible assets 13,929 2.7 — — — 0.0 Acquisition related — — — — 511 0.1 Income from operations $ 34,457 6.8 % $ 212,270 28.8 % $ 187,367 28.4 % Revenue Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Revenue $ 509,401 $ 737,154 $ 660,356 (30.9 )% 11.6 % Revenue decreased $227.8 million, or 31%, in fiscal 2024 compared to fiscal 2023, primarily due to softer demand in industrial and automotive applications, telecommunications infrastructure deployments, and from continued inventory normalization by customers.
Biggest changeWe recognize deferred income taxes for local country income and withholding taxes that could be incurred on distributions of certain non-U.S. earnings or for outside basis differences in our subsidiaries, where we do not plan to indefinitely reinvest such earnings and basis differences. 32 Table of Contents Results of Operations Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table: Year Ended January 3, December 28, December 30, (In thousands) 2026 2024 2023 Revenue $ 523,262 100.0 % $ 509,401 100.0 % $ 737,154 100.0 % Gross margin 356,943 68.2 340,400 66.8 514,670 69.8 Research and development 187,983 35.9 159,302 31.3 159,770 21.7 Selling, general and, administrative 153,632 29.4 116,942 23.0 137,244 18.6 Amortization of acquired intangible assets 52 0.0 3,479 0.7 3,478 0.5 Restructuring and other 4,044 0.8 12,291 2.4 1,908 0.3 Impairment of acquired intangible assets — — 13,929 2.7 — — Income from operations $ 11,232 2.1 % $ 34,457 6.8 % $ 212,270 28.8 % Revenue Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Revenue $ 523,262 $ 509,401 $ 737,154 2.7 % (30.9 )% Revenue increased $13.9 million, or 3%, in fiscal 2025 compared to fiscal 2024, primarily due to stronger demand in data center applications, including general-purpose and AI-specific servers, as well as wireline networking components, partially offset by softer Industrial and Automotive end market demand and from continued inventory normalization by customers.
Revenue by End Market We sell our products globally to a broad base of customers in three primary end market groups: Communications and Computing, Industrial and Automotive, and Consumer. Across our end markets, our products are increasingly used for AI-related applications, including device usage in AI-optimized servers in data centers, AI-enabled PCs, and AI-enabled robotics and ADAS systems, among others.
Revenue by End Market We sell our products globally to a broad base of customers in three primary end market groups: Communications and Computing, Industrial and Automotive, and Consumer. Across our end markets, our products are increasingly used in AI-related applications, including device usage in AI-optimized servers in data centers, AI-enabled PCs, and AI-enabled robotics and ADAS systems, among others.
We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive, and consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.
We solve customer problems across the network, from the Edge to the Cloud, in the Communications, Computing, Industrial, Automotive, and Consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Lattice develops technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and licenses. Lattice is the low power programmable leader.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Lattice develops technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and technology licenses. Lattice is the low power programmable leader.
Other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. 33 Table of Contents There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated in accordance with GAAP.
Other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. 37 Table of Contents There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated in accordance with GAAP.
The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends used in the estimates. 27 Table of Contents Inventories and Cost of Revenue Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or net realizable value.
The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends used in the estimates. 31 Table of Contents Inventories and Cost of Revenue Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or net realizable value.
We calculate Days of inventory on hand on the basis of a 365-day year as Inventories at the end of the quarter divided by Cost of sales during the quarter annualized and then multiplied by 365 . 35 Table of Contents Credit Arrangements On September 1, 2022, we entered into our 2022 Credit Agreement.
We calculate Days of inventory on hand on the basis of a 365-day year as Inventories at the end of the quarter divided by Cost of sales during the quarter annualized and then multiplied by 365 . 39 Table of Contents Credit Arrangements On September 1, 2022, we entered into our 2022 Credit Agreement.
We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory.
We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory.
Liquidity and Capital Resources The following sections discuss material changes in our financial condition from the end of fiscal 2023, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources.
Liquidity and Capital Resources The following sections discuss material changes in our financial condition from the end of fiscal 2024, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources.
Our product development activities include new proprietary products, advanced packaging, existing product enhancements, software development tools, soft IP, and system solutions for high-growth applications such as Edge AI, 5G infrastructure, platform security, and factory automation.
Our product development activities include new proprietary products, advanced packaging, existing product enhancements, software development tools, soft IP, and system solutions for high-growth applications such as Edge AI, wireless and wireline infrastructure, platform security, and factory automation.
New Accounting Pronouncements The information contained under the heading "New Accounting Pronouncements" in Note 1 - Nature of Operations and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part II, Item 7.
New Accounting Pronouncements The information contained under the heading "New Accounting Pronouncements" in Note 1 - Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part II, Item 7.
Investing activities — Investing cash flows consist primarily of transactions related to capital expenditures and payments for software and intellectual property licenses . Net cash used by investing activities in fiscal 2024 was $37.7 million compared to $33.3 million in fiscal 2023.
Investing activities — Investing cash flows consist primarily of transactions related to capital expenditures and payments for software and intellectual property licenses . Net cash used by investing activities in fiscal 2025 was $62.3 million compared to $37.7 million in fiscal 2024.
See Note 1 - Nature of Operations and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report for further information on the significant accounting policies and methods used in the preparation of the consolidated financial statements.
See Note 1 - Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report for further information on the significant accounting policies and methods used in the preparation of the consolidated financial statements.
Discussions of results for prior periods (fiscal 2023 compared to fiscal 2022) are incorporated by reference from our Annual Report on Form 10-K for the year ended December 30, 2023 .
Discussions of results for prior periods (fiscal 2024 compared to fiscal 2023) are incorporated by reference from our Annual Report on Form 10-K for the year ended December 28, 2024 .
The details of this arrangement are described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 28, 2024, we had no used or unused credit arrangements beyond the secured revolving loan facility described in the 2022 Credit Agreement.
The details of this arrangement are described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of January 3, 2026, we had no used or unused credit arrangements beyond the secured revolving loan facility described in the 2022 Credit Agreement.
On September 1, 2022, we entered into our 2022 Credit Agreement, as described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 28, 2024, we did not have significant long-term commitments for capital expenditures.
On September 1, 2022, we entered into our 2022 Credit Agreement, as described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of January 3, 2026, we did not have significant long-term commitments for capital expenditures.
Revenue from the Industrial and Automotive end market decreased by 45% in fiscal 2024 compared to fiscal 2023, primarily due to softer end market demand and from continued inventory normalization by customers.
Revenue from the Industrial and Automotive end market decreased by 18% in fiscal 2025 compared to fiscal 2024, primarily due to softer end market demand and from continued inventory normalization by customers.
While we do not consider AI applications as a distinct end market, we expect AI-related revenue to grow over the next few years based on the growing pipeline of AI-related design wins. Our AI revenue is derived from applications across all three of our end market segments.
While we do not consider AI applications as a distinct end market, we expect AI-related revenue to grow over the next few years based on the growing pipeline of AI-related design wins in a diverse set of applications across all three of our end market segments.
This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of December 28, 2024, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.
This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of January 3, 2026, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.
Restructuring The composition of our Restructuring activity, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Restructuring $ 12,291 $ 1,908 $ 2,551 100+% (25.2 )% Percentage of revenue 2.4 % 0.3 % 0.4 % Restructuring activity is generally comprised of expenses resulting from workforce reductions, cancellation of contracts, and consolidation of our facilities.
Restructuring and other The composition of our Restructuring activity, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Restructuring and other $ 4,044 $ 12,291 $ 1,908 (67.1 )% 100+% Percentage of revenue 0.8 % 2.4 % 0.3 % Restructuring and other activity is generally comprised of expenses resulting from workforce reductions, cancellation of contracts, and consolidation of our facilities.
Operating Expenses Research and Development Expense The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Research and development $ 159,302 $ 159,770 $ 135,767 (0.3 )% 17.7 % Percentage of revenue 31.3 % 21.7 % 20.6 % Research and development expense includes headcount-related costs, including cash- and stock-based compensation and benefits, R&D equipment expenses, engineering wafers, licenses, and outside engineering services.
Research and Development Expense The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Research and development $ 187,983 $ 159,302 $ 159,770 18.0 % (0.3 )% Percentage of revenue 35.9 % 31.3 % 21.7 % Research and development expense includes headcount-related costs, including cash- and stock-based compensation and benefits, R&D equipment expenses, engineering wafers, licenses, and outside engineering services.
Selling, General, and Administrative Expense The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Selling, general, and administrative $ 116,942 $ 137,244 $ 122,076 (14.8 )% 12.4 % Percentage of revenue 23.0 % 18.6 % 18.5 % Selling, general, and administrative expense includes costs for compensation and benefits related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.
Selling, General, and Administrative Expense The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Selling, general, and administrative $ 153,632 $ 116,942 $ 137,244 31.4 % (14.8 )% Percentage of revenue 29.4 % 23.0 % 18.6 % Selling, general, and administrative expense includes headcount-related costs, including cash- and stock-based compensation and benefits, related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.
We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs. 34 Table of Contents Liquidity Cash and cash equivalents (In thousands) December 28, 2024 December 30, 2023 $ Change % Change Cash and cash equivalents $ 136,291 $ 128,317 $ 7,974 6.2 % As of December 28, 2024, we had Cash and cash equivalents of $136.3 million, of which approximately $71.2 million in Cash and cash equivalents was held by our foreign subsidiaries.
We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs. 38 Table of Contents Liquidity Cash and cash equivalents (In thousands) January 3, 2026 December 28, 2024 $ Change % Change Cash and cash equivalents $ 133,886 $ 136,291 $ (2,405 ) (1.8 )% As of January 3, 2026, we had Cash and cash equivalents of $133.9 million, of which approximately $73.6 million was held by our foreign subsidiaries.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net income before net interest income (expense), income tax (benefit) expense, depreciation and amortization, stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, including but not limited to: litigation expense outside the ordinary course of business, restructuring, transformation, and other charges, impairments, and other non-recurring charges, if applicable for the periods presented.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net income before net interest income (expense), income tax expense (benefit), depreciation and amortization, stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, including but not limited to: legal expense outside the ordinary course of business, transformation charges incurred in connection with our multi‑year strategic initiative to realign our organizational structure and modernize our technology platforms, restructuring, impairments, and other charges, if applicable for the periods presented.
Days of inventory on hand increased over the period due to lower revenue. The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of sales in that quarter.
The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of sales in that quarter.
The net increase in Cash and cash equivalents of $8.0 million between December 30, 2023 and December 28, 2024 was primarily driven by cash flows from the following activities: Operating activities — Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities.
The net decrease in Cash and cash equivalents of $2.4 million between December 28, 2024 and January 3, 2026 was primarily driven by cash flows from the following activities: Operating activities — Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities.
The composition of our revenue by customer is presented in the following table: % of Total Revenue Year Ended December 28, December 30, December 31, 2024 2023 2022 Arrow 33.3 % 31.6 % 28.5 % Weikeng 31.2 20.5 30.3 Macnica 11.2 10.8 9.7 Future 3.5 12.6 8.3 Other distributors 10.2 11.9 12.7 All distributors 89.4 87.4 89.5 Direct customers 10.6 12.6 10.5 Total revenue 100.0 % 100.0 % 100.0 % 30 Table of Contents Gross margin The composition of our gross margin, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, (In thousands) 2024 2023 2022 Gross margin $ 340,400 $ 514,670 $ 452,050 Gross margin percentage 66.8 % 69.8 % 68.5 % Gross margin percentage decreased 300 basis points from fiscal 2023 to fiscal 2024.
The composition of our revenue by customer is presented in the following table: % of Total Revenue Year Ended January 3, December 28, December 30, 2026 2024 2023 Distributor A 30.9 % 33.3 % 31.6 % Distributor B 37.9 31.2 20.5 Distributor C 3.8 11.2 10.8 Distributor D — 3.5 12.6 Other distributors 11.2 10.2 11.9 All distributors 83.8 89.4 87.4 Direct customers 16.2 10.6 12.6 Total revenue 100.0 % 100.0 % 100.0 % 34 Table of Contents Gross margin The composition of our gross margin, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, (In thousands) 2026 2024 2023 Gross margin $ 356,943 $ 340,400 $ 514,670 Gross margin percentage 68.2 % 66.8 % 69.8 % Gross margin percentage increased 140 basis points from fiscal 2024 to fiscal 2025.
The composition of our revenue by geography is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Asia $ 332,747 65.3 % $ 443,765 60.2 % $ 464,904 70.5 % (25.0 )% (4.5 )% Americas 101,217 19.9 145,839 19.8 100,260 15.2 (30.6 ) 45.5 Europe 75,437 14.8 147,550 20.0 95,192 14.3 (48.9 ) 55.0 Total revenue $ 509,401 100.0 % $ 737,154 100.0 % $ 660,356 100.0 % (30.9 )% 11.6 % Revenue from Customers We sell our products to independent distributors and directly to customers.
The composition of our revenue by geography is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Asia $ 353,699 67.6 % $ 332,747 65.3 % $ 443,765 60.2 % 6.3 % (25.0 )% Americas 102,758 19.6 101,217 19.9 145,839 19.8 1.5 (30.6 ) Europe 66,805 12.8 75,437 14.8 147,550 20.0 (11.4 ) (48.9 ) Total revenue $ 523,262 100.0 % $ 509,401 100.0 % $ 737,154 100.0 % 2.7 % (30.9 )% Revenue from Customers We sell our products to independent distributors and directly to customers.
Revenue by Geography We have a diverse base of customers where distributors represent a significant portion of our total revenue. Our revenue by geographical market is based on the ship-to location of our customers, which can vary from time to time.
Revenue by Geography We have a diverse base of customers where distributors represent a significant portion of our total revenue. Our revenue by geographical market is based on the ship-to location of our customers, which can vary from time to time. Revenue in all regions for fiscal 2025 compared to fiscal 2024 has been impacted by the global macroeconomic environment.
Payments for tax withholdings on vesting of RSUs partially offset by employee exercises of stock options used net cash flows of $27.5 million in fiscal 2024, a decrease of approximately $16.2 million from the net $43.7 million used in fiscal 2023.
Payments for tax withholdings on vesting of RSUs partially offset by purchases under the employee stock purchase plan used net cash flows of $15.7 million in fiscal 2025, a decrease of approximately $11.8 million from the net $27.5 million used in fiscal 2024.
Financing activities — Financing cash flows consist primarily of activity on our long-term debt, repurchases of common stock, tax payments related to the net share settlement of restricted stock units, and proceeds from the exercise of options to acquire common stock. Net cash used by financing activities in fiscal 2024 was $94.5 million compared to $253.7 million in fiscal 2023.
Financing activities — Financing cash flows consist primarily of repurchases of common stock, tax payments related to the net share settlement of restricted stock units, and proceeds from the acquisition of common stock under our e mployee stock purchase plan . Net cash used by financing activities in fiscal 2025 was $115.7 million compared to $94.5 million in fiscal 2024.
This decrease was due to lower revenue shipments as well as the timing of when our customers want our products. We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.
This increase was due to order scheduling through the fourth quarter. We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.
The following are examples of end market applications for the fiscal years presented: Communications and Computing Industrial and Automotive Consumer Wireless Security and Surveillance Cameras Wireline Machine Vision Displays Data Networking Industrial Automation Wearables Server Computing Robotics Televisions Client Computing Automotive Home Theater Data Storage Drones Sound Systems Cloud Factory Automation Hyperscalers 29 Table of Contents The composition of our revenue by end market is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Communications and Computing $ 228,145 44.8 % $ 257,536 34.9 % $ 282,913 42.8 % (11.4 )% (9.0 )% Industrial and Automotive 236,949 46.5 433,482 58.8 319,398 48.4 (45.3 ) 35.7 Consumer 44,307 8.7 46,136 6.3 58,045 8.8 (4.0 ) (20.5 ) Total revenue $ 509,401 100.0 % $ 737,154 100.0 % $ 660,356 100.0 % (30.9 )% 11.6 % Revenue from the Communications and Computing end market decreased by 11% in fiscal 2024 compared to fiscal 2023 primarily due to softer end market demand in telecommunications infrastructure deployments and from continued inventory normalization by customers, partially offset by stronger demand in data center applications.
The following are examples of end market applications for the fiscal years presented: Communications and Computing Industrial and Automotive Consumer Wireless Security and Surveillance Cameras Wireline Machine Vision Displays Data Networking Industrial Automation Wearables Server Computing Robotics Televisions Client Computing Automotive Home Theater Data Storage Drones Sound Systems Cloud Factory Automation Hyperscalers 33 Table of Contents The composition of our revenue by end market is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Communications and Computing $ 292,716 55.9 % $ 228,145 44.8 % $ 257,536 34.9 % 28.3 % (11.4 )% Industrial and Automotive 193,965 37.1 236,949 46.5 433,482 58.8 (18.1 ) (45.3 ) Consumer 36,581 7.0 44,307 8.7 46,136 6.3 (17.4 ) (4.0 ) Total revenue $ 523,262 100.0 % $ 509,401 100.0 % $ 737,154 100.0 % 2.7 % (30.9 )% Revenue from the Communications and Computing end market increased by 28% in fiscal 2025 compared to fiscal 2024 primarily due to stronger demand in data center applications, including general-purpose and AI-specific servers, as well as wireline networking components.
Interest Income (Expense), net The composition of our Interest income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Interest income (expense), net $ 3,948 $ 2,041 $ (4,146 ) 93.4 % (149.2 )% Percentage of revenue 0.8 % 0.3 % (0.6 )% The change in Interest income (expense) for fiscal 2024 compared to fiscal 2023 was driven by increased interest income, coupled with lower interest expense as we paid off the outstanding balance of our long-term debt during the third quarter of fiscal 2023. 32 Table of Contents Other Income (Expense), net The composition of our Other income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Other income (expense), net $ (2,176 ) $ 545 $ (1,109 ) 100+% (149.1 )% Percentage of revenue (0.4 )% 0.1 % (0.2 )% For fiscal 2024 compared to fiscal 2023, the change in Other income (expense), net was primarily due to a $2.0 million write-off of a non-recoverable cost-method investment, and to foreign currency effects.
Interest Income (Expense), net The composition of our Interest income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Interest income (expense), net $ 2,896 $ 3,948 $ 2,041 (26.6 )% 93.4 % Percentage of revenue 0.6 % 0.8 % 0.3 % Interest income (expense) for fiscal 2025 compared to fiscal 2024 decreased primarily due to lower interest rates on cash and cash equivalents between the periods. 36 Table of Contents Other Income (Expense), net The composition of our Other income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Other income (expense), net $ (751 ) $ (2,176 ) $ 545 (65.5 )% 100+% Percentage of revenue (0.1 )% (0.4 )% 0.1 % For fiscal 2025 compared to fiscal 2024, the change in Other income (expense), net was primarily due to a $2.0 million write-off of a non-recoverable cost-method investment in the prior year period, and to foreign currency effects.
A reconciliation of Net income to Adjusted EBITDA, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, (In thousands) 2024 2023 2022 GAAP Net income $ 61,131 $ 259,061 $ 178,882 GAAP Net income margin 12.0 % 35.1 % 27.1 % Interest (income) expense, net (3,948 ) (2,041 ) 4,146 Income tax (benefit) expense (24,902 ) (44,205 ) 3,230 Amortization of acquired intangible assets 3,479 3,478 3,778 Depreciation and other amortization 34,502 30,562 25,225 Stock-Based Compensation (1) 53,718 71,952 58,429 Litigation expense (2) 5,248 3,928 2,727 Restructuring, transformation, and other (3) 16,786 1,952 3,062 Impairment of acquired intangible assets 13,929 — — Other non-recurring charges 2,023 — 739 Adjusted EBITDA $ 161,966 $ 324,687 $ 280,218 Adjusted EBITDA margin 31.8 % 44.0 % 42.4 % (1) The adjustments for Stock-based compensation include related tax expenses.
A reconciliation of Net income to Adjusted EBITDA, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, (In thousands) 2026 2024 2023 GAAP Net income $ 3,084 $ 61,131 $ 259,061 GAAP Net income margin 0.6 % 12.0 % 35.1 % Interest (income) expense, net (2,896 ) (3,948 ) (2,041 ) Income tax expense (benefit) 10,293 (24,902 ) (44,205 ) Amortization of acquired intangible assets 52 3,479 3,478 Depreciation and other amortization 34,333 34,502 30,562 Stock-based compensation (1) 116,294 53,718 71,952 Incentive compensation to be settled in equity (2) 6,605 — — Transformation charges 5,388 2,770 — Legal expenses (3) 1,107 5,248 3,928 Restructuring and other 4,044 12,291 1,908 Impairment charges 3,497 13,929 — Other EBITDA adjustments 1,154 3,748 44 Adjusted EBITDA $ 182,955 $ 161,966 $ 324,687 Adjusted EBITDA margin 35.0 % 31.8 % 44.0 % (1) Includes stock-based compensation and related payroll tax expenses.
The decrease in Selling, general, and administrative expense for fiscal 2024 compared to fiscal 2023 was due primarily to a reduction in stock compensation expense from the forfeiture of equity awards by departing executives and reduced headcount-related costs as we aligned resources to the lower level of business, partially offset by other costs such as outside services and legal expenses. 31 Table of Contents Amortization of Acquired Intangible Assets The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Amortization of acquired intangible assets $ 3,479 $ 3,478 $ 3,778 0.0 % (7.9 )% Percentage of revenue 0.7 % 0.5 % 0.6 % Amortization of acquired intangible assets was flat for fiscal 2024 compared to fiscal 2023.
The increase in Selling, general, and administrative expense for fiscal 2025 compared to fiscal 2024 was primarily due to higher stock-based compensation associated with market-based and performance-based awards in the current year periods coupled with the prior year reduction in stock compensation expense from the forfeiture of equity awards by departing executives. 35 Table of Contents Amortization of Acquired Intangible Assets The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Amortization of acquired intangible assets $ 52 $ 3,479 $ 3,478 (98.5 )% 0.0 % Percentage of revenue 0.0 % 0.7 % 0.5 % The decrease in Amortization of acquired intangible assets for fiscal 2025 compared to fiscal 2024 was primarily due to the full impairment of the Mirametrix intangible assets in the fourth quarter of fiscal 2024.
Accounts receivable, net (In thousands) December 28, 2024 December 30, 2023 $ Change % Change Accounts receivable, net $ 81,060 $ 104,373 $ (23,313 ) (22.3 )% Days sales outstanding 63 56 7 Accounts receivable, net as of December 28, 2024 decreased by approximately $23.3 million, or approximately 22%, compared to December 30, 2023.
Accounts receivable, net (In thousands) January 3, 2026 December 28, 2024 $ Change % Change Accounts receivable, net $ 102,277 $ 81,060 $ 21,217 26.2 % Days sales outstanding 64 63 1 Accounts receivable, net as of January 3, 2026 increased by approximately $21.2 million, or approximately 26%, compared to December 28, 2024.
Restructuring costs increased in fiscal 2024 compared to fiscal 2023 primarily due to higher severance costs incurred under the Q3 2024 Plan as we aligned resources to the lower level of business.
Restructuring costs decreased in fiscal 2025 compared to fiscal 2024 primarily due to lower costs in the current year for severance under the Q3 2024 Plan as compared to higher costs in the prior year for severance under both the Q3 2024 and Q3 2023 Plans.
Income Taxes The composition of our Income tax (benefit) expense is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Income tax (benefit) expense $ (24,902 ) $ (44,205 ) $ 3,230 (43.7 )% (100+)% Our Income tax (benefit) expense on worldwide income for fiscal 2024 includes $27.7 million of income tax benefits due to the expiration of statutes of limitations that reduced our uncertain tax positions, as well as federal tax credits, and stock-based compensation.
Income Taxes The composition of our Income tax (benefit) expense is presented in the following table: Year Ended January 3, December 28, December 30, % Change in (In thousands) 2026 2024 2023 2025 2024 Income tax expense (benefit) $ 10,293 $ (24,902 ) $ (44,205 ) (141.3 )% (43.7 )% Our income tax expense (benefit) for fiscal 2025 was driven primarily by nondeductible expenses related to stock‑based compensation, partially offset by federal tax credits.
We repurchased approximately 1.1 million shares of common stock for $67.0 million in fiscal 2024 compared to repurchases of approximately 1.2 million shares of common stock for $80.0 million in fiscal 2023.
This $21.2 million increase was due to the following activities. During fiscal 2025, we repurchased approximately 1.8 million shares of common stock for $100.0 million compared to fiscal 2024, where we repurchased approximately 1.1 million shares of common stock for $67.0 million.
Cash provided by operating activities was $140.9 million in fiscal 2024 compared to $269.6 million in fiscal 2023. This decrease of $128.7 million was primarily driven by a decrease of $159.8 million provided by operating activities, partially offset by $31.1 million of net changes in working capital, primarily in Accounts receivable and Inventories.
Cash provided by operating activities was $175.1 million in fiscal 2025 compared to $140.9 million in fiscal 2024. This increase of $34.2 million was primarily driven by $17.9 million more cash provided by net income adjusted for non-cash items coupled with $16.3 million of net changes in working capital.
Accordingly, the fourth quarter of fiscal 2024 included $27.7 million of income tax benefits due to the expiration of statutes of limitations that reduced our uncertain tax positions.
The income tax benefit in fiscal 2024 includes $27.7 million of income tax benefits due to the expiration of statutes of limitations that reduced our uncertain tax positions, combined with federal tax credits and the impact of stock‑based compensation. We updated our evaluation of the valuation allowance position in the United States through January 3, 2026.
Reduced margins were primarily due to an approximately $7.0 million one-time charge for expiring production materials, and changes in product mix between the periods presented . The expiring production materials were purchased on behalf of the company by the OSATs in anticipation of a supply constraint and are no longer expected to be used.
Higher margins resulted primarily from the non-recurrence of an approximately $7.0 million one-time charge for expiring production materials in the prior year. Gross margin also benefitted from changes in product mix between the periods, partially offset by higher stock-based compensation associated with market and performance-based awards in the current year.
These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions. The decrease in Research and development expense for fiscal 2024 compared to fiscal 2023 was due primari ly to lower costs for outside services and R&D equipment expenses, partially offset by increased headcount-related costs and rent expense.
These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions.
Removed
Impact of Global Economic Activity on our Business Increased financial market volatility, inflationary pressure, interest rate changes, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension continue to impact business globally and may impact our operations by causing disruption to our labor markets and supply chains.
Added
The expiration of statutes of limitations may decrease our uncertain tax positions. We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.
Removed
The extent to which increased financial market volatility, inflationary pressures, global pandemics, and related uncertainty will impact our business activities will depend on future developments that are highly uncertain and cannot be predicted at this time. Additionally, our business is impacted by the cyclic correction affecting the broader semiconductor industry, which has seen softened demand across our end markets.
Added
Operating Expenses Operating expenses increased year-over-year primarily due to higher stock-based compensation in the current year periods; excluding stock-based compensation, operating expenses decreased year-over-year. See Note 10 – Stock-Based Compensation Plans for additional details.
Removed
Revenue from Asia decreased in fiscal 2024 compared to fiscal 2023 primarily due to the macroeconomic environment in the region, while revenue from the Americas and Europe decreased due to reduced demand in these regions for our products in the Industrial and Automotive end market.
Added
The increase in Research and development expense for fiscal 2025 compared to fiscal 2024 was primarily due to higher stock-based compensation associated with market-based and performance-based awards in the current year periods coupled with the prior year reduction in stock compensation expense from the forfeiture of equity awards by departing executives.
Removed
We expect gross margin to increase in future periods due to the non-recurrence of the one-time charge.
Added
(2) Includes accruals for the portion of our annual incentive plan that we intend to settle in equity. (3) Includes legal expenses outside the ordinary course of business, including those incurred defending against claims described in our 2024 10-K.
Removed
Impairment of Acquired Intangible Assets In connection with our acquisition of Mirametrix in November 2021 we recorded identifiable intangible assets related to existing technology, customer relationships, and trade name / trademarks.
Added
Adjusted EBITDA increased for fiscal 2025 compared to fiscal 2024 primarily as a result of higher revenue, the non-recurrence of an approximately $7.0 million one-time charge for expiring production materials in the prior year, and lower costs for outside services.
Removed
Our review of our strategic long-range plan completed at the end of fiscal 2024 concluded that the originally acquired Mirametrix intangible assets had limited future revenue potential due to a decline in customer demand, which we determined was an indicator of impairment.
Added
Inventories (In thousands) January 3, 2026 December 28, 2024 $ Change % Change Inventories $ 89,202 $ 103,410 $ (14,208 ) (13.7 )% Days of inventory on hand 178 207 (29 ) Inventories as of January 3, 2026 decreased $14.2 million, or approximately 14%, compared to December 28, 2024 primarily as a result of our continued optimization of inventory to efficient levels for the business, which also decreased Days of inventory on hand over the period.
Removed
Our assessment of the fair value of these intangible assets concluded that they had been fully impaired as of December 28, 2024, and we recorded an impairment charge of $13.9 million for fiscal 2024 in the Consolidated Statements of Operations.
Removed
The lower income tax benefit in fiscal 2024 was primarily due to the reduction in valuation allowance over the $56.9 million of U.S. Federal deferred tax assets in 2023.
Removed
The income tax benefit from the release of a portion of the valuation allowance was partially offset by an increase in expense in fiscal 2023 as compared to fiscal 2022 primarily due to increased worldwide income and U.S. tax on foreign operations. We updated our evaluation of the valuation allowance position in the United States through December 28, 2024.
Removed
(2) Legal expenses associated with the defense of claims that are outside the ordinary course of business that were brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde. (3) Restructuring, transformation, and other includes transformation charges of approximately $2.8 million for fiscal year 2024.
Removed
This $159.2 million decrease was due to the following activities. During fiscal 2024, we had no balance outstanding on our long-term debt, while during fiscal 2023 we made discretionary payments totaling $130.0 million on revolving loans under the 2022 Credit Agreement.
Removed
Inventories (In thousands) December 28, 2024 December 30, 2023 $ Change % Change Inventories $ 103,410 $ 98,826 $ 4,584 4.6 % Days of inventory on hand 207 175 32 Inventories as of December 28, 2024 increased $4.6 million, or approximately 5%, compared to December 30, 2023 primarily as a result of product buildup ahead of new product ramps and from softer demand as customers continue to normalize their own inventories.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed3 unchanged
Biggest changeHistorically, exposure to foreign currency exchange rate risk has not had a material impact on our results from operations. At times in the past, we have entered into foreign currency forward exchange contracts in relation to certain activities, which mitigated the foreign currency exchange rate exposure from an economic perspective, but these were not designated as "effective" hedges under U.S.
Biggest changeHistorically, exposure to foreign currency exchange rate risk has not had a material impact on our results from operations. We may enter into foreign currency forward exchange contracts in relation to certain activities, which mitigate the foreign currency exchange rate exposure from an economic perspective and may be designated as "effective" hedges under U.S. GAAP.
If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations. 36 Table of Contents
If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations. 40 Table of Contents
Interest Expense We may be exposed to interest rate risk via the terms of our 2022 Credit Agreement, which specifies an interest rate on revolving loans that consists of a variable-rate of interest and an applicable margin. While we have drawn from this credit facility in the past, we have no borrowings outstanding as of December 28, 2024.
Interest Expense We may be exposed to interest rate risk via the terms of our 2022 Credit Agreement, which specifies an interest rate on revolving loans that consists of a variable-rate of interest and an applicable margin. While we have drawn from this credit facility in the past, we have no borrowings outstanding as of January 3, 2026.
GAAP. Interest Rate Risk Interest Income Our interest income is sensitive to changes in the general level of interest rates. As of December 28, 2024, a hypothetical 100 basis point change in interest rates would have resulted in less than $1.5 million change in interest income.
Interest Rate Risk Interest Income Our interest income is sensitive to changes in the general level of interest rates. As of January 3, 2026, a hypothetical 100 basis point change in interest rates would have resulted in less than $1.5 million change in interest income.

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