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What changed in MAXLINEAR, INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MAXLINEAR, INC's 2022 and 2023 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 2023 report.

+602 added−549 removedSource: 10-K (2024-01-31) vs 10-K (2023-02-01)

Top changes in MAXLINEAR, INC's 2023 10-K

602 paragraphs added · 549 removed · 371 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

90 edited+37 added−20 removed79 unchanged
Biggest changeWe expect this trend to continue owing to: • The rapid rise of social media and crowd-sourced real-time content; • The proliferation of on-demand Over-The-Top, or OTT, video services such as Netflix and Amazon Prime; • Rapid growth in data center and cloud-based services such as Amazon Web Services, Google Search and Apps, and AI/machine learning; • The “remote economy” accelerated by the COVID-19 pandemic, the shift to work-from-home, and increasing dependence on video conferencing services such as Zoom; • The proliferation of “Internet of Things”, or IoT, including internet-connected appliances within the home, manufacturing industries, and enterprises; and • The advent and growth of broadband 4G/5G wireless mobile internet connectivity.
Biggest changeWe expect this trend to continue owing to: • Accelerated expansion of advanced data center technologies and cloud-based services including, Amazon Web Service, or AWS, Google Cloud Platform, and software as service, or SAAS, in general; • The explosive emergence of artificial intelligence, or AI, platforms and services such as OpenAI/Bing and Google Bard, which broadly amplify human ability to harness high-performance computing within the data center; • Continued proliferation of on-demand Over-The-Top, or OTT, video services such as Netflix, Amazon Prime and Disney+; • The “remote economy” accelerated by the COVID-19 pandemic, the shift to work-from-home, and increasing reliance on services such as Zoom, Microsoft Teams, and Google Meet; • The proliferation of “Internet of Things”, or IoT, including internet-connected devices and systems within the home, manufacturing industries, and enterprises; and • Large-scale proliferation and advancement of wireless broadband services, whether through 5G+ or WiFi, which act as an accelerant for all these technologies.
Cloud services and machine learning are dependent upon the ability to interconnect vast numbers of servers and storage inside a data center with extremely low latency and highest bandwidth to enable the entire data center to act as a single computing or data processing unit.
Cloud services and machine learning are dependent upon the ability to interconnect vast numbers of servers and storage inside a data center with extremely low latency and the highest bandwidth to enable the entire data center to act as a single computing or data processing unit.
For all these reasons, improving the bandwidth and power efficiency of data center networking technology within and between data centers remains a critical challenge for the evolution of next-generation data centers. • 5G Wireless Infrastructure: Expensive, finite, fractured and non-contiguous 5G wireless spectrum is being utilized more efficiently by aggregating or bonding multiple non-contiguous channels of spectrum with highly complex radio transceivers in a wireless base-station radio unit.
For all these reasons, improving the bandwidth and power efficiency of data center networking technology within and between data centers remains a critical challenge for the evolution of next-generation data centers. • 5G Wireless Infrastructure: Expensive, finite, fractured and discontiguous 5G wireless spectrum is being utilized more efficiently by aggregating or bonding multiple non-contiguous channels of spectrum with highly complex radio transceivers in a wireless base-station radio unit.
In addition, such narrowband receiver implementations suffer from signal integrity issues, reliability, and thermal challenges owing to the proximity of sensitive multiple RF receivers and discrete components in a limited PCB footprint. 6 • Signal Clarity Performance Requirements: In communications systems, performance is limited by the quality of the received/transmitted signal that can be supported throughout the channel bandwidth.
In addition, such narrowband receiver implementations suffer from signal integrity issues, reliability, and thermal challenges owing to the proximity of sensitive multiple RF receivers and discrete components in a limited PCB footprint. • Signal Clarity Performance Requirements: In communications systems, performance is limited by the quality of the received/transmitted signal that can be supported throughout the channel bandwidth.
Also, higher order modulation of communication signals requires extremely high SNR to maximize data capacity in a finite spectrum, which greatly increases the difficulty of implementing broadband systems. • Power Consumption: Power consumption has become a major concern inside communication systems, including home access gateways, wireless base-stations and data center infrastructure applications.
Also, higher order modulation of communication signals requires extremely high SNR to maximize data capacity in a finite spectrum, which greatly increases the difficulty of implementing broadband systems. • Power Consumption: Power consumption has become a major concern inside communication systems, including access gateways, wireless base-stations and data center infrastructure applications.
Our products exemplify our core integrated circuit design and communications systems engineering capabilities: • Proprietary broadband/RF, analog and mixed-signal transceiver front ends: Our analog and mixed-signal IC designers implement complex broadband radio transceiver front-ends and data converters in standard silicon CMOS processes, which enables single-die integration of a complete digital signal processing communication system.
Our products exemplify our core integrated circuit design and communications systems engineering capabilities: • Proprietary broadband/RF, analog and mixed-signal transceiver front ends: Our analog and mixed-signal integrated circuit designers implement complex broadband radio transceiver front-ends and data converters in standard silicon CMOS processes, which enables single-die integration of a complete digital signal processing communication system.
Our competitors may obtain patents that block or limit our ability to develop new technology and/or improve our existing products. If our products were found to infringe any patents or other intellectual property rights held by third parties, we could be prevented from selling our products or be subject to litigation fees, statutory fines and/or other significant expenses.
Third parties may obtain patents that block or limit our ability to develop new technology and/or improve our existing products. If our products were found to infringe any patents or other intellectual property rights held by third parties, we could be prevented from selling our products or be subject to litigation fees, statutory fines and/or other significant expenses.
Standardization of transceiver form factors and rack unit face plates allows data center operators to upgrade network speeds of existing installations by simply replacing older optical transceivers and switches with newer faster ones, 7 rather than having to overhaul installed fiber infrastructure and floorplan.
Standardization of transceiver form factors and rack unit face plates allows data center operators to upgrade network speeds of existing installations by simply replacing older optical transceivers and switches with newer faster ones, rather than having to overhaul installed fiber infrastructure and floorplan.
We believe that the principal competitive factors in our markets include the following: • product performance; • features and functionality; • energy efficiency; • size; • ease of system design; • customer support; • product roadmap; • reputation; 12 • reliability; and • price. We believe that we compete favorably as measured against each of these criteria.
We believe that the principal competitive factors in our markets include the following: • product performance; • features and functionality; • energy efficiency; • size; • ease of system design; • customer support; • product roadmap; • reputation; • reliability; and • price. We believe that we compete favorably as measured against each of these criteria.
The key challenges of capturing and processing high quality broadband communications signals include: • Receiving single or multiple RF/digital communications signals spanning multiple frequency bands over a wide spectrum: Many of the advanced high-data-rate applications require the simultaneous RF reception of multiple channels or frequency bands in order to first aggregate, and then subsequently demodulate, the data signal, which is spread over discrete disparate frequency bands.
The key challenges of capturing and processing high quality broadband communications signals include: • Receiving RF/digital communications signals spanning multiple frequency bands over a wide spectrum: Many of the advanced high-data-rate applications require the simultaneous RF reception of multiple channels or frequency bands in order to first aggregate, and subsequently demodulate, the data signal, which is spread over discrete disparate frequency bands.
In wired optical infrastructure applications inside data centers, rapidly increasing network server and switch face-plate density trends are aggressively driving reduction of the size of optical transceiver interconnects. In 5G wireless infrastructure, space on the base-station radio towers where the radios and modems are mounted, is highly constrained and is a significant portion of operating costs.
In wired optical infrastructure applications inside data centers, rapidly increasing network server and switch face-plate density trends are aggressively driving reduction of the size of optical transceiver interconnects. In 5G wireless infrastructure, space and weight capacity on the base-station radio towers where the radios and modems are mounted, is highly constrained and is a significant portion of operating costs.
We offer this via a combination of competitive base salary, time-based equity incentives and bonus plans linked to financial performance that are designed to motivate and reward personnel with annual grants of stock-based and cash-based incentive compensation awards to our employees, some of which vest over a period of four years, plus other benefits, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve both our short and long-term objectives.
We offer this via a combination of competitive base salary, time-based equity incentives and bonus plans linked to financial performance that are designed to motivate and reward personnel with annual grants of stock-based and cash-based incentive compensation awards to our employees, some of which 16 Table of Contents vest over a period of four years, plus other benefits, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve both our short and long-term objectives.
Low power 8 dissipation not only simplifies costly thermal design, but also eliminates the need for bulky fans and other cooling aids.
Low power dissipation not only simplifies costly thermal design, but also eliminates the need for bulky fans and other cooling aids.
For example, revenue generated from sales of our cable modem products during the years ended December 31, 2022, 2021 and 2020 related principally to sales to Asian ODM’s and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
For example, revenue generated from sales of our cable modem products during the years ended December 31, 2023, 2022 and 2021 related principally to sales to Asian ODM’s and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
This imposes severe limits to the high-speed conversion of electrical signals to optical signals, and vice versa, owing to the bandwidth limitations, nonlinearities, and noise properties in lasers, modulators, and photo detectors used in optical modules. ◦ Form Factor: Optical transceivers are required to conform to multi-source agreement, or MSA, standardized form factors, which in turn determine the number of transceiver ports that can fit in the face plates of standard server, storage, and switch rack units.
This imposes severe limits to the high-speed conversion of electrical signals to optical signals, and vice versa, owing to the bandwidth limitations, nonlinearities, and noise properties in lasers, modulators, and photo detectors used in optical modules. 8 Table of Contents ▪ Form Factor: Optical transceivers are required to conform to multi-source agreement, or MSA, standardized form factors, which in turn determine the number of transceiver ports that can fit in the face plates of standard server, storage, and switch rack units.
The integration of the entire system on a single-chip or utilizing minimal number of silicon dies reduces the number of external board-level components, decreases board space, improves performance, simplifies customers’ product design, and significantly reduces power consumption. • Low-power design methodology: The superior energy efficiency of our products reflects our years of cumulative experience and research and development, or R&D, investment in system architecture, semiconductor device modeling, and integrated circuit design expertise.
The integration of the entire system on a single-chip or utilizing minimal number of silicon dies reduces the number of external board-level components, decreases board space, improves performance, simplifies customers’ product design, and significantly reduces power consumption. 9 Table of Contents • Low-power design methodology: The superior energy efficiency of our products reflects our years of cumulative experience and research and development, or R&D, investment in system architecture, semiconductor device modeling, and integrated circuit design expertise.
For more details regarding our executive compensation, refer to information incorporated by reference from the information set forth under the captions “Executive Compensation” and “Compensation Discussion and Analysis” in either an amendment to this Form 10-K or our upcoming 2023 Proxy Statement.
For more details regarding our executive compensation, refer to information incorporated by reference from the information set forth under the captions “Executive Compensation” and “Compensation Discussion and Analysis” in either an amendment to this Form 10-K or our upcoming 2024 Proxy Statement.
Densification, or increasing the number of wireless base-stations per unit area, also improves network capacity and coverage. In turn, the wireless and optical backhaul transport networks required to connect the higher number of base-station cells must have greater data capacity.
Densification, the process of increasing the number of wireless base-stations per unit area, also improves network capacity and coverage. In turn, the wireless and optical backhaul transport networks required to connect the higher number of base-station cells must have greater data capacity.
We own foreign counterparts of certain of these registered trademarks in Brazil, Canada, Chile, China, the EU, Germany, Great Britain, Hong Kong, India, Israel, Japan, Korea, Malaysia, Singapore, Taiwan, and Thailand. We also claim common law rights in certain other trademarks that are not registered.Trademark rights may continue for a limited duration or in perpetuity, provided certain requirements are met.
We own foreign counterparts of certain of these registered trademarks in Brazil, Canada, Chile, China, the EU, Germany, Great Britain, Hong Kong, India, Israel, Japan, South Korea, Singapore, and Taiwan. We also claim common law rights in certain other trademarks that are not registered. Trademark rights may continue for a limited duration or in perpetuity, provided certain requirements are met.
Refer to Intellectual Property Rights section below for a list of our trademarks and trade names. All other trademarks and trade names appearing in this Form 10-K are the property of their respective owners. Overview We are a provider of communications systems-on-chip, or SoC, solutions used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications.
Refer to Intellectual Property Rights section below for a list of our trademarks and trade names. All other trademarks and trade names appearing in this Form 10-K are the property of their respective owners. Overview We are a provider of communications systems-on-chip, or SoCs, used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications.
Analog and digital signal processing is employed to improve SNR in the received and transmitted signals. Beamforming and MIMO of radio signals also significantly improves SNR ratio, but requires sophisticated RF, analog and digital signal co-processing, and software expertise.
Analog and digital signal processing is employed to improve SNR in the received and transmitted signals. Beamforming and MMIMO of radio signals also significantly improves SNR ratio, but requires sophisticated RF, analog and digital signal co-processing, and software expertise.
Upon successful completion of the quality assurance procedures, all of our products are stored and shipped to our customers or distributors directly from our third-party contractors in accordance with our shipping instructions.
Upon successful completion of the quality assurance procedures, all of our products are stored and shipped to our customers or distributors directly from third-party contractors and logistics agents in accordance with our shipping instructions.
Because our products often are building block semiconductors which provide functions that in some cases can be integrated into more complex integrated circuits, we also face competition from manufacturers of integrated circuits, some of which may be existing customers or platform partners that develop their own integrated circuit products.
Because our products often are building block semiconductors which provide functions that in some cases can be integrated into more complex integrated circuits, we also face competition from manufacturers of integrated circuits, some of 13 Table of Contents which may be existing customers or platform partners that develop their own integrated circuit products.
We work closely with our vendors in providing a supplier forecast six to twelve months in advance to ensure they have an adequate supply of raw materials to cover our forecast. Manufacturing We use third-party foundries and assembly and test contractors to manufacture, assemble and test our products.
We work closely with our vendors in providing a supplier forecast six to twelve months in advance to ensure they have an adequate supply of raw materials to cover our forecast. 11 Table of Contents Manufacturing We use third-party foundries and assembly and test contractors to manufacture, assemble and test our products.
ITEM 1. BUSINESS Corporate Information We incorporated in the State of Delaware in September 2003. Our executive offices are located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and our telephone number is (760) 692-0711.
ITEM 1. BUSINESS 4 Table of Contents Corporate Information We incorporated in the State of Delaware in September 2003. Our executive offices are located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and our telephone number is (760) 692-0711.
It is possible that we may be provided with information in the future that could negatively affect the scope or enforceability of either our present or future patents. Furthermore, our pending and future patent applications may or may not be granted under the scope of the claims originally submitted in our patent applications.
It is possible that we may be provided with information in the future that could negatively affect the scope or enforceability of either our present or future patents. Furthermore, our pending and future patent applications may or may not 14 Table of Contents be granted under the scope of the claims originally submitted in our patent applications.
We acknowledge that we, along with the semiconductor and technology industry as a whole, can do more to advance gender and racial equality by increasing representation of underrepresented minorities as well as females in leadership and technical positions including engineering and other roles.
We acknowledge that we, along with the semiconductor and broader technology industry, can do more to advance gender and racial equality by increasing representation of underrepresented minorities as well as females in leadership and technical positions including engineering and other roles.
Our products not only integrate the entire physical layer, or PHY, but also implement complete protocol stacks along with ready-for-use product level interface functionality and associated platform software. We also provide the most efficient and cost-effective platform level power management IC solutions that regulate and monitor the power consumption for our chips and other circuits on the platform.
Our products not only integrate the entire physical layer, or PHY, but also implement complete protocol stacks along with ready-for-use product level interface functionality and associated platform software. We also provide efficient and cost-effective platform level power management integrated circuit solutions that regulate and monitor the power consumption for our chips and other circuits on the platform.
Likewise, data transmission is achieved by disaggregating the user’s data signal and transmitting it over multiple available frequency bands spanning a wide frequency spectrum. For example, in the cable modem and broadband gateway markets, it is necessary to support the simultaneous reception of multiple channels of high-definition video, voice, and data applications in many system designs.
Likewise, data transmission is achieved by disaggregating the user’s data signal and transmitting it over multiple available frequency bands spanning a wide frequency spectrum. For example, in the cable modem and broadband gateway markets, it is necessary to support the simultaneous reception of multiple high-definition video streams, video conferencing, and data applications in many system designs.
We have assembled a team of highly skilled semiconductor and embedded software design engineers with expertise in broadband RF, mixed-signal and high-performance analog integrated circuit design, digital signal processing, communications systems and SoC design. As of December 31, 2022, we had approximately 1,368 employees in our R&D group.
We have assembled a team of highly skilled semiconductor and embedded software design engineers with expertise in broadband RF, mixed-signal and high-performance analog integrated circuit design, digital signal processing, communications systems and SoC design. As of December 31, 2023, we had approximately 1,328 employees in our R&D group.
Our distributors are independent entities that assist us in identifying and servicing customers in a particular territory, usually on a non-exclusive basis. Sales to distributors accounted for approximately 46%, 47%, and 49% of our net revenue in the years ended December 31, 2022, 2021 and 2020, respectively.
Our distributors are independent entities that assist us in identifying and servicing customers in a particular territory, usually on a non-exclusive basis. Sales to distributors accounted for approximately 50%, 46%, and 47% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively.
While the remaining duration on the individual patents in our patent portfolio varies, we believe that the duration of our issued patents is adequate relative to the expected lives of our products. We own numerous trademarks related to our current products that have been registered in the United States and 2 pending U.S. trademark registrations.
While the remaining duration on the individual patents in our patent portfolio varies, we believe that the duration of our issued patents is adequate relative to the expected lives of our products. We own numerous trademarks related to our current products that have been registered in the United States and 5 pending U.S. trademark applications.
Certain of our products and technology are subject to the Export Administration Regulations, or EAR, which are administered by the United States Department of Commerce’s Bureau of Industry and Security, or BIS, and we may be required to obtain an export license before we can export certain controlled products or technology to specified countries or customers.
Certain of our products and technology are subject to the U.S. Export Administration Regulations, or EAR, which are administered by the United States Department of Commerce’s Bureau of Industry and Security, or BIS, and we are required to obtain an export license before we can export certain controlled products or technology to specified countries or customers.
There are also challenges that are specific to the processing of high-speed optical interconnect signals in our target data center markets. ◦ Optical Fiber Channel Impairments: The inherent optical properties of the fiber material result in impairments to the optical signal as it propagates along the fiber.
There are also challenges that are specific to the processing of high-speed optical interconnect signals in our target data center markets. ▪ Optical Fiber Channel Impairments: The inherent optical properties of fiber cables and connectors result in impairments to the optical signal as it propagates along the fiber.
Our primary merchant semiconductor competitors include Broadcom, Inc., Qualcomm Incorporated, Realtek Semiconductor Corp., Nokia Corp., Skyworks Solutions, Inc., Xilinx, Inc., Altera Corporation, Credo Semiconductor Inc., MediaTek, Inc., Marvell Technology Group Ltd., MACOM Technology Solutions Holdings, Inc., Texas Instruments Incorporated, Analog Devices, Inc., Renesas Electronics Corporation, and Microchip Technology Inc.
Our primary merchant semiconductor competitors include Broadcom, Inc., Qualcomm Incorporated, Realtek Semiconductor Corp., Skyworks Solutions, Inc., Credo Semiconductor Inc., MediaTek, Inc., Marvell Technology Group Ltd., MACOM Technology Solutions Holdings, Inc., Texas Instruments Incorporated, Analog Devices, Inc., Renesas Electronics Corporation, Microchip Technology Inc. and Semtech Corporation.
Our efforts include maintaining a supplier policy which bars the use of forced or child labor and slavery and a conflict minerals policy governing the use and distribution of 3TG minerals, as well as conducting due diligence before allowing a potential supplier to become a preferred supplier.
Our efforts include maintaining an anti-slavery policy, and a business partner labor standards policy which bars the use of forced or child labor and slavery and a conflict minerals policy governing the use and distribution of 3TG minerals, as well as conducting due diligence before allowing a potential supplier to become a preferred supplier.
We may experience a loss of revenues or supply while we are obtaining licenses needed to do business with certain customers, suppliers, and any other business partners who are added to the Entity List, and failure to obtain any required license could result in a reduction of anticipated revenues or supply until an alternate source of supply can be obtained.
We have experienced and could continue to experience a loss of revenues or supply while we are obtaining licenses needed to do business with certain customers, suppliers, and any other business partners who are added to the Entity List, and failure to obtain any required license has resulted and could in the future result in a reduction of anticipated revenues or supply until an alternate source of supply can be obtained.
OEMs meet these stringent requirements via multiple narrow- or wide-band RF receivers, each of which is dedicated to the reception of a single frequency band. An alternate, but highly challenging, approach involves Full Spectrum Capture, or FSC TM , receiver SoCs, which can receive and digitize the entire available RF frequency spectrum in the transmission medium.
OEMs meet these stringent requirements via multiple narrow- or wide-band RF receivers, each of which is dedicated to the reception of a single frequency band. An alternate, but highly challenging, approach involves Full Spectrum Capture, or FSCTM, receiver SoCs, which can process the entire available RF frequency spectrum in the transmission medium.
We intend to leverage our core competency in developing highly integrated RF transceiver and RF transceiver SoCs in standard CMOS process technology to address additional markets within broadband communications, communications infrastructure, and connectivity markets that we believe offer high growth potential. • Expand Global Presence: Due to the global nature of our supply chain and customer locations, we intend to continue to expand our sales, design and technical support organization both in the United States and overseas.
We intend to leverage our core competency in developing highly integrated RF transceiver and RF transceiver SoCs in standard CMOS process technology to address additional markets within broadband communications, communications infrastructure, and connectivity markets that we believe offer high growth potential. • Expand Global Presence: Due to the global nature of our supply chain and customer locations, we intend to resume expansion of our sales, design and technical support organization both in the United States and overseas in future years as we develop products to drive future growth.
We have implemented significant quality assurance procedures to assure high levels of product quality for our customers. Our operations are certified under ISO 9001:2015 standards. We closely monitor the work-in-progress information and production records maintained by our suppliers, and communicate with our third-party contractors to assure high levels of product quality and an efficient manufacturing time cycle.
Our operations are certified under ISO 9001:2015 standards. We closely monitor the work-in-progress information and production records maintained by our suppliers, and communicate with our third-party contractors to assure high levels of product quality and an efficient manufacturing time cycle.
From time to time, these and other factors, together with changes in general economic conditions, cause significant upturns and downturns in the industry, and in our business in particular. 15 In addition, our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, such as the overall demand volatility for semiconductor solutions across a diverse range of communications, industrial and multimarket applications, the timing of receipt, reduction or cancellation of significant orders, the gain or loss of significant customers, market acceptance of our products and our customers’ products, our ability to timely develop, introduce and market new products and technologies, the availability and cost of products from our suppliers, new product and technology introductions by competitors, intellectual property disputes and the timing and extent of product development costs.
In addition, our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, such as the overall demand volatility for semiconductor solutions across a diverse range of communications, industrial and multimarket applications, the timing of receipt, reduction or cancellation of significant orders, the gain or loss of significant customers, market acceptance of our products and our customers’ products, our ability to timely develop, introduce and market new products and technologies, the availability and cost of products from our suppliers, new product and technology introductions by competitors, intellectual property disputes and the timing and extent of product development costs.
Corporate Social Responsibility As we continue to expand our presence around the world, we are mindful of our responsibility to maintain a socially responsible supply chain, reduce our carbon footprint, and give back to our local communities. Our board of directors and Nominating and Corporate Governance Committee oversees our environmental, social and governance directives. Socially responsible supply chain.
Corporate Social Responsibility As we continue to expand our presence around the world, we are mindful of our responsibility to reduce our carbon footprint, maintain a socially responsible supply chain, and advance equity, diversity and inclusion. Our board of directors and Nominating and Corporate Governance Committee oversees our environmental, social and governance directives. Reduce our carbon footprint .
We offer competitive benefits tailored to local markets and laws and designed to support employee health, welfare and retirement; examples of such benefits may include flexible Fridays which allow employees to work from home; paid time off; 401(k), pension or other retirement plans; employee leave to support well-being of employees and their dependents; employee stock purchase plan; basic and voluntary life, disability and supplemental insurance; medical, dental and vision insurance; health savings and flexible spending accounts; relocation assistance; and employee assistance programs.
We offer competitive benefits tailored to local markets and laws and designed to support employee health, welfare and retirement; examples of such benefits may include hybrid work schedules with one flexible day allowing all employees globally to work from home; paid time off; 401(k), pension or other retirement plans; employee leave or part-time arrangements to support well-being of employees and their dependents; sabbaticals; bereavement leave; employee stock purchase plan; basic and voluntary life, disability and supplemental insurance; medical, dental and vision insurance; health savings and flexible spending accounts; relocation assistance; and employee assistance programs.
In that regard, our executive compensation programs have tended to place a relatively heavier weighting on equity compensation than our peers and include a performance-based metric to executives’ equity incentives in addition to other forms of compensation offered to all employees.
Our executive compensation structure aligns executive incentives with the long-term growth objectives of MaxLinear, including long-term share price appreciation. In that regard, our executive compensation programs have tended to place a relatively heavier weighting on equity compensation than our peers and include a performance-based metric to executives’ equity incentives in addition to other forms of compensation offered to all employees.
The development of broadband, low power, integrated communication SoC solutions is at the heart of competitiveness across a range of different businesses spanning broadband wireline access, mobile data services, hyperscale cloud data centers, and cloud computation and storage markets.
To summarize, the innovation in broadband, low power, integrated communication SoCs is the engine of competitiveness across a range of different businesses spanning broadband wireline access, mobile data services, hyperscale cloud data centers, and cloud computation and storage markets.
Products shipped to Vietnam accounted for 13% of our net revenue in the year ended December 31, 2021. Although a large percentage of our products are shipped to Asia, we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outside Asia.
Although a large percentage of our products are shipped to Asia, we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outside Asia.
Among other things, we monitor our global environmental footprint, both directly and indirectly including measuring and reporting our greenhouse gas emissions and energy usage, and taking steps to reduce such usage; transitioning away from one-time use to sustainable reusable office products; and in our development efforts, our engineers are consistently focused on improving the power efficiency and thermal performance of our chips, minimizing waste, promoting recycling of reusable materials, and providing customer satisfaction through compliance with global environmental regulations as they relate to our products and operations.
Among other things, we monitor our global environmental footprint, both directly and indirectly, and in our development efforts, our engineers are consistently focused on improving the power efficiency and thermal performance of our chips, minimizing water consumption and waste, promoting recycling of reusable materials, and providing customer satisfaction through compliance with global environmental regulations as they relate to our products and operations.
Examples of such devices include cable Data Over Cable Service Interface Specifications, or DOCSIS, fiber and DSL broadband modems and gateways; Wi-Fi and wireline routers for home networking; radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; fiber-optic modules for data center, metro, and long-haul transport networks; as well as power management and interface products used in these and many other markets.
Examples of such devices include radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; optical transceivers targeting hyperscale data centers; Wi-Fi and wireline routers for home networking; broadband modems compliant with Data Over Cable Service Interface Specifications, or DOCSIS, passive optical fiber standards, or PON, and digital subscriber line, or DSL; as well as power management and interface products used in these and many other markets.
A significant portion of our sales are through distributors based in Asia, who then resell our product. 9 A significant portion of our net revenue has historically been generated by a limited number of customers. In the years ended December 31, 2022, 2021 and 2020, ten customers accounted for approximately 65%, 69% and 68% of our net revenue, respectively.
A significant portion of our net revenue has historically been generated by a limited number of customers. In the years ended December 31, 2023, 2022 and 2021, ten customers accounted for approximately 54%, 65% and 69% of our net revenue, respectively.
In 5G wireless access infrastructure applications, the cost of provisioning power to base-station antenna towers and the operating cost attributable to energy consumption is high.
These switches and transceivers now consume an increasingly significant fraction of total data center power. In 5G wireless access infrastructure applications, the cost of provisioning power to base-station antenna towers and the operating cost attributable to energy consumption is high.
Products shipped to Hong Kong accounted for 43%, 40%, and 42% of our net revenue in the years ended December 31, 2022, 2021 and 2020, respectively. Products shipped to China accounted for 16%, 12% and 17% of our net revenue in the years ended December 31, 2022, 2021 and 2020, respectively.
Products shipped to Asia accounted for 75%, 82% and 83% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively. Products shipped to Hong Kong accounted for 37%, 43%, and 40% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively.
Consequently, the data traffic growth inside the data center has significantly outstripped the data traffic flowing to and from the data center. Currently, while server connections are transitioning from 10Gbps to 25Gbps or 100Gbps links, router and switch connections are moving from 100Gbps to 400Gbps speed interconnections.
Consequently, the data traffic growth inside the data center has significantly outstripped the data traffic flowing to and from the data center. Currently, while server connections are transitioning from 10Gbps to 25Gbps or 100Gbps speeds, router and switch connections are moving from 100G to 400 and 800Gbps interconnections, with the next generation of switch connections (under development) targeting 1600Gbps.
We expect a strong trend of continuous upgrade of network bandwidth and latency (i.e. the delay between sender and receiver) in order to keep pace with the exponential growth of network data traffic generated by the above activities. For example, cloud-based services increasingly require stringent low latency and extremely high-speed network connections between servers and storage within a data center.
These factors, individually and combined, have created economic pressure to continuously upgrade network bandwidth and latency (i.e. the delay between sender and receiver) in order to exploit the exponential growth of the above activities. For example, cloud-based services increasingly require stringent low latency and extremely high-speed network connections between servers and storage within a data center.
Additionally, our products are compliant with the Restriction of Hazardous Substances, or RoHS, and Registration, Evaluation, Authorization and Restriction of Chemicals, or REACH, standards in the European Union, or EU. Contributing to community. We encourage our employees to contribute to local communities.
Additionally, our products are compliant with the Restriction of Hazardous Substances, or RoHS, and Registration, Evaluation, Authorization and Restriction of Chemicals, or REACH, standards in the European Union, or EU. Socially responsible supply chain.
Optical transceivers operate across the widest bandwidths available and must preserve the necessary SNR throughout their bandwidth. These transceiver systems must isolate the desired signals from the undesired signals that are invariably present in their wide operating frequency range.
Optical transceivers operate across the widest bandwidths available and must preserve the necessary SNR throughout their bandwidth. These 7 Table of Contents transceiver systems must compensate for impairments introduced as the signal propagates through wire, fiber or wireless mediums, as well as isolate the desired signals from the undesired signals that are invariably present in their wide operating frequency range.
We believe that we have assembled a high-quality team in all the areas of expertise required at an integrated circuit design and communications systems company. We provide an attractive work environment for all of our employees. We believe that our ability to attract the best engineers is a critical component of our future growth and success in our chosen markets.
We believe that we have 10 Table of Contents assembled a high-quality team in all the areas of expertise required at an integrated circuit design and communications systems company. Providing an attractive work environment for all of our employees is important to us.
With respect to our indirect environmental impact, we monitor the practices of our foundry partners and believe that each of them has made a public commitment to integrate sustainability and sensitivity to environmental impact into their manufacturing processes.
With respect to our indirect environmental impact, we consider and monitor the practices of our current and prospective foundry partners and suppliers in assessing environmental risks in our supply chain and in selecting key vendors. We believe that our key suppliers have made a public commitment to integrate sustainability and sensitivity to environmental impact into their manufacturing processes.
For example, inside the home, Wi-Fi capacity and bandwidth improvement require increasing the number of transceivers per access point with greater channel bandwidths. As a result, the home Wi-Fi gateway has significant heat dissipation challenges within the system due to the increase in power consumption.
For example, Wi-Fi capacity and bandwidth improvement require increasing the number of transceivers per access point with greater channel bandwidths. As a result, Wi-Fi gateway faces significant heat dissipation challenges within the system as more performance and functionality are squeezed into smaller enclosures.
Likewise, within the data center, physical limitations in the ability to remove heat efficiently from network switches, and the optical transceivers plugged into them, are the main obstacles to increasing data center network bandwidth at and beyond 400Gbps speed per optical transceiver. These switches and transceivers now consume an increasingly significant fraction of total data center power.
Likewise, within the data center, physical limitations in the ability to remove heat efficiently from network switches, and the optical transceivers plugged into them, are the main obstacles to increasing data center network bandwidth at and beyond 400Gbps speed per optical transceiver since these transceivers must fit into the same standardized module form factors as prior generations.
These impairments degrade signal integrity due to the loss of light intensity and other adverse modal, chromatic and polarization dispersion effects on the propagating light. Further, electrical signal impairments are introduced in the process of conversion of optical signals to electrical signals, which together reduce the maximum data throughput and limit the distance over which data can propagate over fiber.
Further, electrical signal impairments are introduced in the process of conversion of optical signals to electrical signals, which together reduce the maximum data throughput and limit the distance over which data can propagate over fiber.
Additionally, certain of the acquired products of the Wi-Fi and Broadband assets business are supplied to us under the terms of a supply agreement with Intel. Assembly/packaging and Test. Upon completion of the silicon processing at the foundry, we forward the finished silicon wafers to independent assembly/packaging and test service subcontractors.
We generally do not depend on a single source for the supply of our materials. Additionally, certain of products are supplied to us under the terms of a supply agreement with Intel. Outsourced Semiconductor Assembly and Test. Upon completion of the silicon processing at the foundry, we forward the finished silicon wafers to independent semiconductor assembly and test service subcontractors.
We believe that our properties and operations comply in all material respects with applicable laws protecting the environment and worker health and safety. We do not manufacture our own products but do maintain laboratory space at certain of our facilities to facilitate the development, evaluation, and testing of our products. These laboratories may maintain quantities of hazardous materials.
We do not manufacture our own products but do maintain laboratory space at certain of our facilities to facilitate the development, evaluation, and testing of our products. These laboratories may maintain quantities of hazardous materials.
Challenges Faced by Providers of Systems and RF Transceivers and Optical Interconnects Designing and implementing high-frequency, high-bandwidth RF transceiver systems is extremely challenging owing to the high operating frequency ranges and wide frequency bands across which the communication signal is transmitted.
Challenges Faced by Providers of Systems and RF Transceivers and Optical Interconnects Designing and implementing state-of-the-art RF and optical transceiver systems is difficult owing to the high operating frequency ranges and wide frequency bands employed by communication signals, and the low power budgets of applications.
In addition, if our customers fail to comply with these regulations and laws, we may be required to suspend sales to these customers, which could damage our reputation and negatively impact our results of operations.
In addition, if our customers fail to comply with these regulations and laws, we may be required to suspend sales to these customers, which could damage our reputation and negatively impact our results of operations. The technology industry is subject to intense media, political, and regulatory scrutiny, which can increase our exposure to government investigations, legal actions, and penalties.
Within this range of processes, we use a variety of process technology nodes ranging from 0.18µ down to 14 nanometer. We depend on independent silicon foundry manufacturers to support our wafer fabrication requirements.
Within this range of processes, we use a variety of process technology nodes ranging from 0.25µ down to 5 nanometer. We depend on independent silicon foundry manufacturers to support our wafer fabrication requirements. Our key foundry partners include Taiwan Semiconductor Manufacturing Corporation, or TSMC, in Taiwan, and United Microelectronics Corporation, or UMC, in Taiwan and Singapore.
Our human capital resources objectives include, as applicable, attracting and retaining talented and experienced employees, advisors, and consultants. We utilize multiple online search tools, specialized recruiting firms, employee referral programs and university hires to ensure a varied outreach approach for candidates. We aim to increase our hiring and retention of female talent including direct hires or interns from universities.
We consider our global employee relations to be good. In 2023, our employee voluntary turnover rate was 7%. Our human capital resources objectives include, as applicable, attracting and retaining talented and experienced employees, advisors, and consultants. We utilize multiple online search tools, specialized recruiting firms, employee referral programs and university hires to ensure a varied outreach approach for candidates.
We request the return of reporting forms related to conflict minerals from our suppliers under the Responsible Minerals Initiative, or RMI, Conflict Minerals Survey. Further, we seek to remove any suppliers that continue to fail to meet our supplier and conflict minerals policies after being provided the opportunity to remedy non-compliance via implementation of a corrective action plan.
Further, we remove any suppliers that continue to fail to meet our business partner labor standards and conflict minerals policies after being provided the opportunity to remedy non-compliance via implementation of a corrective action plan. Equity, diversity, and inclusion .
In the years ended December 31, 2022, 2021 and 2020, two of our direct customers represented 31%, 26% and 28%, respectively, of our net revenue. Products shipped to Asia accounted for 82%, 83% and 82% of our net revenue in the years ended December 31, 2022, 2021 and 2020, respectively.
In the year ended December 31, 2023, one of our direct customers represented 10% of our net revenue, and in the years ended December 31, 2022 and 2021, two of our direct customers represented 31% and 26%, respectively, of our net revenue.
These complex radio transceivers can also be configured in large antenna arrays to direct wireless signals more efficiently to specific users, also known as Massive Multiple-Input Multiple Output beamforming, or MMIMO. Beamforming vastly improves coverage (range), maximizes data rates (bandwidth), and creates spectral efficiency (data rate per unit spectrum).
These complex radio transceivers can also be configured in large antenna arrays to direct wireless signals more efficiently to specific users, also known as Massive Multiple-Input Multiple Output beamforming, or MMIMO. Beamforming vastly improves the efficiency with which spectrum is used (thereby increasing network capacity), as well as cell tower coverage (range), allowing an operator to do more with less.
In addition, the EAR imposes broad controls on entities listed on sanctioned persons lists, including the BIS “Denied Persons” list and BIS Entity List.
In addition, BIS imposes broad restrictions on certain identified entities and individuals, including those identified on the BIS “Denied Persons” list and BIS Entity List.
Customers We sell our products, directly and indirectly, to OEMs, module makers and ODMs, and we refer to these as our end customers. By providing a highly integrated reference design solution that our customers can incorporate in their products with minimal modifications, we enable our customers to design cost-effective high-performance SoC-based solutions rapidly.
By providing a highly integrated reference design solution that our customers can incorporate in their products with minimal modifications, we enable our customers to design cost-effective high-performance SoC-based solutions rapidly. A significant portion of our sales are through distributors based in Asia, who then resell our product.
Implementing 5G access and transport functionality within base-stations requires radio transceivers that can process larger radio spectrum bandwidths; have expanded RF range; compensate for signal distortion from high-power amplifiers; support beamforming in large antenna arrays; and have the ability to transport high speed data to and from the network, all in a low-cost, power-efficient design. • Industrial & Multi-Market : Increasingly, in the industrial world, manufacturing equipment and appliances are connected to each other and to the cloud to better optimize utilization, improve power consumption, and plant management.
Implementing 5G access and transport functionality within base-stations requires radio transceivers that can process larger radio spectrum bandwidths; have expanded RF range; compensate for signal distortion from high-power amplifiers; support beamforming in large antenna arrays; and have the ability to transport high speed data to and from the network, all in a low-cost, power-efficient design. • Broadband Access: Several drivers of broadband services have grown in significance in the last few years, including hybrid work-from-home, and the number and diversity of streaming service offerings.
Current litigation and any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights ” and in “Item 3 — Legal Proceedings.” Governmental Regulation Our business and operations around the world are subject to government regulation at the national, state, provincial, or local level addressing, among other matters, applicable environmental laws; health and safety laws and regulations adopted by government agencies such as the Occupational Safety and Health Administration; laws relating to export controls and economic sanctions; securities laws; rules of industry standards bodies such as The International Organization for Standardization; and, rules or regulations promulgated by governmental agencies such as the Federal Trade Commission, among others.
Current litigation and any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights ” and in “Item 3 — Legal Proceedings.” Governmental Regulation Our business and operations around the world are subject to government regulation at the international, national, state, provincial, and local level.
Of our total employee workforce, 10% is represented by Work Councils in Austria and Germany. The Work Council groups, common to these countries, are comprised of employees elected by the general employee base. We consider our global employee relations to be good. In 2022, our employee voluntary turnover rate was 11%.
Females represented 29% of our outside directors, 11% of senior management, 15% of our technical roles, and 19% of our total workforce. Of our total employee workforce, 9% is represented by Work Councils in Austria and Germany. The Work Council groups, common to these countries, are comprised of employees elected by the general employee base.
As a fabless semiconductor design company, we do not manufacture our products and, with respect to the activities we conduct directly, we believe we leave a limited environmental footprint.
We are currently assessing additional measures to further reduce our emissions, which are reported annually on our website, and we plan to set formal targets for reducing emissions in the future. As a fabless semiconductor design company, we do not manufacture our products and, with respect to the activities we conduct directly, we believe we leave a limited environmental footprint.
Legacy equipment and new installations need to communicate with each other via newer and older connectivity protocol standards. This, in turn creates growth opportunities for interface products, and interface bridge products supporting multiple protocols.
To make connectivity economical, legacy equipment and new installations need to communicate with each other via newer and older connectivity protocol standards.
We may be required to initiate litigation in order to enforce any patents issued to us, or to determine the scope or validity of a third-party’s patent or other proprietary rights. We may in the future be contacted by third parties suggesting that we seek a license to intellectual property rights that they may believe we are 13 infringing.
We have initiated and could in the future be required to initiate litigation in order to enforce any patents issued to us, or to determine the scope or validity of a third-party’s patent or other proprietary rights, as described in “Risk Factors – Risks Related to Intellectual Property – We utilize a significant amount of intellectual property in our business.
The technology industry is subject to intense media, political, and regulatory scrutiny, which can increase our exposure to government investigations, legal actions, and penalties. 14 Human Capital Our future success depends on our ability to retain, attract and motivate qualified personnel, and achieving those objectives requires us to maintain a work environment and culture that values diversity.
Human Capital Our future success depends on our ability to retain, attract and motivate qualified personnel, and achieving those objectives requires us to maintain a work environment and culture that values diversity. As the source of our technological and product innovations, our design and technical personnel represent a significant asset.
Also, IoT devices are generating an increasing amount of internet traffic and require low network latency. These IoT devices include smart speakers, smart lighting and other smart appliances in the connected home; commercial air-conditioning; video surveillance equipment; manufacturing machinery; and point-of-sale asset tracking systems.
They may also rely on real-time communication with systems of IoT devices including sensors, lighting, and actuators; smart speakers, smart lighting and other 5 Table of Contents smart appliances in the connected home; commercial air-conditioning and refrigeration; video surveillance equipment; manufacturing machinery; and point-of-sale and asset tracking systems.
For example, we believe that three of our largest manufacturing partners, Taiwan Semiconductor Manufacturing Corporation, Intel Corporation, and United Microelectronics Corporation, each maintain well-developed environmental management and sustainability programs that are publicly avowed and supported by the highest levels of management within those organizations. We also participate in recycling of integrated circuits and boards.
For example, according to their company websites, four of our largest manufacturing partners, Advanced Semiconductor Engineering, Intel Corporation, Taiwan Semiconductor Manufacturing, and United Microelectronics Corporation, each maintain well-developed environmental management and sustainability programs that are publicly avowed and supported by the highest levels of management within those organizations and have either set targets to reach net zero greenhouse gas emissions, or otherwise reduce such emissions, 12 Table of Contents including in their manufacturing plans and processes.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may not sustain our current growth rate and/or manage future growth effectively. • Unforeseen delays or expenses caused by undetected defects or bugs in our products could reduce the market acceptance of our new products, damage our reputation and adversely affect our operating costs. • We must be able to attract, train and retain qualified personnel and senior management, or our business, financial conditions, results of operations and prospects could suffer. • If we fail to timely develop and introduce new or enhanced products, our ability to attract and retain customers and compete could be harmed. • We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could negatively affect our inventory levels, sales and operating results. • We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly as we seek to enter new markets where we may not have prior experience. • Customers require us to undergo a lengthy and expensive qualification process which does not assure product sales. • We incur significant expenditures to win business and customer product plan cancellations may adversely affect our results of operations. • Our operating results may fluctuate significantly from factors that could adversely affect our business and stock price. • We are subject to the cyclical nature of the semiconductor industry. • A failure to maintain compliance with governmental regulations could have a material adverse effect on our business. • We have been and may be subject to future information technology failures, including security breaches and cyber-attacks, that could disrupt our operations and adversely affect our business, operations, and financial results.
Biggest changeIncreased tariffs or the imposition of other barriers to international trade could decrease demand and have a material adverse effect on our revenues and operating results. • We will lose sales if we are unable to obtain or retain government authorization to export certain of our products or technology or if such authorizations are revoked, and we will be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations. • We also are subject to risks associated with international geopolitical and military conflicts. • We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from major customers has had and could continue to have a material adverse effect on our revenue and operating results. • Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome. 18 Table of Contents • We have been and may in the future be subject to information technology failures, including security breaches, cyber-attacks, design defects or system failures, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results. • Average selling prices of our products have and could decrease in the future, which could have a material adverse effect on our revenue and gross margins. • If we fail to penetrate new applications and markets, our revenue, revenue growth rate, if any, and financial condition could be materially and adversely affected. • A significant portion of our revenue is attributable to demand for our products in markets for broadband solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results. • We may be unable to make the substantial productive research and development investments that are required to remain competitive in our business. • The complexity of our products could result in unforeseen delays or expenses caused by undetected defects or bugs, which could reduce the market acceptance of our new products, damage our reputation with current or prospective customers and adversely affect our operating costs. • Our operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. • If we fail to develop and introduce new or enhanced products on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed. • We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could continue to negatively affect our inventory levels, sales and operating results. • We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly as we seek to enter new markets where we may not have prior experience. • Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process which does not assure product sales. • We incur significant expenditures to win business and customer product plan cancellations may adversely affect our results of operations. • A failure to maintain compliance with governmental regulations could have a material adverse effect on our business. • If we are unable to attract, train and retain qualified personnel and senior management, our business, financial condition, results of operations and prospects could suffer. • We are subject to a variable amount of interest on the principal balance of our credit agreements and could continue to be adversely impacted by rising interest rates in the future.
Our operating results are subject to substantial quarterly and annual fluctuations and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future.
Our operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future.
Furthermore, any upturn in the semiconductor industry could result in increased competition for access to third-party foundry and assembly capacity. We are dependent on the availability of this capacity to manufacture and assemble all of our products. None of our third-party foundry or assembly contractors has provided assurances that adequate capacity will be available to us in the future.
Furthermore, any future upturn in the semiconductor industry could result in increased competition for access to third-party foundry and assembly capacity. We are dependent on the availability of this capacity to manufacture and assemble all of our products. None of our third-party foundry or assembly contractors has provided assurances that adequate capacity will be available to us in the future.
Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.
Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.
These provisions provide for the following: • authorize our Board of Directors to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock; 45 • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our Board of Directors, our Chairman of the Board of Directors, or our President; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; • establish that our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms; • provide that our directors may be removed only for cause; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • specify that no stockholder is permitted to cumulate votes at any election of directors; and • require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.
These provisions provide for the following: • authorize our Board of Directors to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our Board of Directors, our Chairman of the Board of Directors, or our President; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; • establish that our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms; • provide that our directors may be removed only for cause; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • specify that no stockholder is permitted to cumulate votes at any election of directors; and • require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.
If we fail to satisfy the conditions for receipt of these tax incentives, or to the extent U.S. or other tax authorities challenge our operation under these favorable tax incentive programs or our intercompany transfer pricing agreements, our taxable income could be taxed at higher federal or foreign statutory rates and our income tax liability and 49 expense could materially increase beyond our projections.
If we fail to satisfy the conditions for receipt of these tax incentives, or to the extent U.S. or other tax authorities challenge our operation under these favorable tax incentive programs or our intercompany transfer pricing agreements, our taxable income could be taxed at higher federal or foreign statutory rates and our income tax liability and expense could materially increase beyond our projections.
We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could negatively affect our inventory levels, sales and operating results. Our revenue is generated on the basis of shipments of products under purchase orders with our customers rather than long-term purchase commitments.
We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could continue to negatively affect our inventory levels, sales and operating results. Our revenue is generated on the basis of shipments of products under purchase orders with our customers rather than long-term purchase commitments.
If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. The costs of complying with these laws (including the costs of any investigations, auditing and monitoring) could adversely affect our current or future business.
If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. The costs of complying with these laws (including the costs of any investigations, remediation, auditing and monitoring) could adversely affect our current or future business.
For example, beginning in 2022, the Tax Cuts and Jobs Act, or the Tax Act, eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174. This has increased our effective tax rate and our cash tax payable in 2022.
For example, beginning in 2022, the Tax Cuts and Jobs Act, or the Tax Act, eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174. This has increased our effective tax rate and our cash tax payable since 2022.
Such financial and operational covenants will include compliance with a secured net leverage ratio test. Accordingly, outstanding indebtedness could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders.
Such financial and operational covenants include compliance with a secured net leverage ratio test. Accordingly, outstanding indebtedness could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders.
These risks are exacerbated by the fact that some of our customers’ products likely will have short life cycles. Although this has not occurred to date, failure to obtain a design win could prevent us from 33 offering an entire generation of a product.
These risks are exacerbated by the fact that some of our customers’ products likely will have short life cycles. Although this has not occurred to date, failure to obtain a design win could prevent us from offering an entire generation of a product.
If we fail to comply with these requirements in the manufacture or 35 distribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products in commerce until the products or component substances are brought into compliance.
If we fail to comply with these requirements in the manufacture or distribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products in commerce until the products or component substances are brought into compliance.
The loan agreement is also expected to contain financial and operational covenants that would adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.
Any loan agreement is also expected to contain financial and operational covenants that would adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.
Worsening economic instability could result in a cancellation of such orders or otherwise adversely affect spending for information technology and limit our ability to forecast future demand for our products, which could reduce expected revenues or result in a write-down of any excess or obsolete inventory.
Worsening economic instability could continue to result in a cancellation of such orders or otherwise adversely affect spending for information technology and limit our ability to forecast future demand for our products, which could reduce expected revenues or result in a write-down of any excess or obsolete inventory.
It is possible that foundry customers that are larger and better financed than we are, or that have long-term agreements with our foundry, may induce our foundry to reallocate capacity to them. This reallocation could impair 44 our ability to secure the supply of components that we need.
It is possible that foundry customers that are larger and better financed than we are, or that have long-term agreements with our foundry, may induce our foundry to reallocate capacity to them. This reallocation could impair our ability to secure the supply of components that we need.
If larger companies do 37 not support the same industry standards that we do, or if competing standards emerge, market acceptance of our products could be adversely affected, which would harm our business. Products for communications applications are based on industry standards that are continually evolving.
If larger companies do not support the same industry standards that we do, or if competing standards emerge, market acceptance of our products could be adversely affected, which would harm our business. Products for communications applications are based on industry standards that are continually evolving.
In addition to a significant portion of our wafer supply coming from Taiwan, Singapore, and China, substantially all of our products undergo packaging and final testing in Taiwan, Singapore, China, South Korea, and Thailand.
In addition to a significant portion of our wafer supply coming from Taiwan, Singapore, China and South Korea, substantially all of our products undergo packaging and final testing in Taiwan, Singapore, China, South Korea, Malaysia, and Thailand.
Although our board of directors has authorized a stock repurchase program, any determination to resume our stock repurchase program and execute our stock repurchase program will be subject to, among other things, our financial position and results of operations, available cash and cash flow, capital requirements, and other factors, as well as our board of director’s continuing determination that the repurchase program are in the best interests of our shareholders and is in compliance with all laws and agreements applicable to the repurchase program.
Although our Board of Directors has authorized a stock repurchase program, any determination to resume our stock repurchase program and execute our stock repurchase program will be subject to, among other things, our financial position and results of operations, available cash and cash flow, capital requirements, and other factors, as well as our Board of Director’s continuing determination that the repurchase program are in the best interests of our stockholders and is in compliance with all laws and agreements applicable to the repurchase program.
Many of our competitors have substantially greater financial and other resources with which to withstand similar adverse 24 economic or market conditions in the future.
Many of our competitors have substantially greater financial and other resources with which to withstand similar adverse economic or market conditions in the future.
Increased tariffs or the imposition of other barriers to international trade could have a material adverse effect on our revenues and operating results. The United States has imposed or proposed new or higher tariffs on certain products exported by a number of U.S. trading partners, including China, Europe, Canada, and Mexico.
Increased tariffs or the imposition of other barriers to international trade could decrease demand and have a material adverse effect on our revenues and operating results. The United States has imposed or proposed new or higher tariffs on certain products exported by a number of U.S. trading partners, including China, Europe, Canada, and Mexico.
We must conform the manufacture and distribution of our semiconductors to various laws and adapt to regulatory requirements in all countries as these requirements change.
We must also conform the manufacture and distribution of our semiconductors to various laws and adapt to regulatory requirements in all countries as these requirements change.
The CCPA gives California residents the right to access, delete and opt out of certain sharing of their information, and imposes penalties for failure to comply. California has adopted a new law, the California Privacy Rights Act of 2020, or CPRA, that substantially expands the CCPA and is effective as of January 1, 2023.
The CCPA gives California residents the right to access, delete and opt out of certain sharing of their information, and imposes penalties for failure to comply. California has adopted a new law, the California Privacy Rights Act of 2020, or CPRA, that substantially expands the CCPA and was effective as of January 1, 2023.
Based upon our review of all positive and negative evidence, as of December 31, 2022, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.
Based upon our review of all positive and negative evidence, as of December 31, 2023, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.
We may not be able to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary regulatory approvals or complete such transactions on terms that are favorable to us.
We may not be able to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary antitrust approvals or complete such transactions on terms that are favorable to us.
These differences may occur in the future, and the adverse impact of these differences between forecasts and actual results could grow if we are successful in selling in and expanding the customer base for our products. In addition, the rapid pace of innovation in our industry could render significant portions of our inventory obsolete.
These differences may occur in the future, and the adverse impact of these differences between forecasts and actual results could grow if we are not successful in expanding the customer base for our products. In addition, the rapid pace of innovation in our industry could render significant portions of our inventory obsolete.
The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest at either an Adjusted LIBOR plus a fixed applicable margin of 2.25% or an Adjusted Base Rate plus a fixed applicable margin of 1.25%, at our option.
The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest at either an Adjusted Term SOFR plus a fixed applicable margin of 2.25% or an Adjusted Base Rate plus a fixed applicable margin of 1.25%, at our option.
If we are unable to sustain and manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we may fail to satisfy customer requirements, maintain product quality, execute our business plan, or respond to competitive pressures.
If we are unable to resume and manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we may fail to satisfy customer requirements, maintain product quality, execute our business plan, or respond to competitive pressures.
In particular, we believe that we will need to develop new products in part to respond to changing dynamics and trends in our end user markets, including (among other trends) consolidation among cable and satellite operators, potential industry shifts away from the hardware devices and other technologies that incorporate certain of our products, and changes in consumer television viewing habits and how consumers access and receive broadcast content and digital broadband services.
In particular, we believe that we will need to develop new products in part to respond to changing dynamics and trends in our end user markets, including (among other trends) consolidation among cable and satellite operators, potential industry shifts away from the hardware devices and other technologies that incorporate certain of our products, advances in artificial intelligence, and changes in consumer television viewing habits and how consumers access and receive broadcast content and digital broadband services.
Our Executive Incentive Bonus Plan permits the settlement of awards under the plan in the form of shares of our common stock. We have issued shares of our common stock to settle such bonus awards for our employees, including executives, for the 2014 to 2021 performance periods, and we intend to continue this practice in the foreseeable future.
Our Executive Incentive Bonus Plan permits the settlement of awards under the plan in the form of shares of our common stock. We have issued shares of our common stock to settle such bonus awards for our employees, including executives, for the 2014 to 2022 performance periods, and we intend to continue this practice in the foreseeable future.
In addition, consolidation trends among Pay-TV and broadband operators may continue, which could delay or lead to cancellations of major spending programs and have a material adverse effect on our future operating results and financial condition. We may be unable to make the substantial and productive research and development investments that are required to remain competitive in our business.
In addition, consolidation trends among Pay-TV and broadband operators may continue, which could delay or lead to cancellations of major spending programs and have a material adverse effect on our future operating results and financial condition. 31 Table of Contents We may be unable to make the substantial and productive research and development investments that are required to remain competitive in our business.
Our business is subject to various laws and regulations in the United States and other jurisdictions where we do business, including but not limited to laws, regulations and other legal requirements related to packaging; product content; labor and employment; imports; export controls; anti-corruption; personal and data privacy; cybersecurity; human rights; conflict minerals; environment, health and safety; competition and antitrust; and intellectual property ownership and infringement.
Our business is subject to various laws and regulations in the United States and other jurisdictions where we do business, including but not limited to laws, regulations and other legal requirements related to packaging; product content; labor and employment; import and customs; export controls; anti-corruption; personal and data privacy; cybersecurity; human rights; conflict minerals; environment, health and safety; competition and antitrust; and intellectual property ownership and infringement.
In particular, from time to time, we receive correspondence from competitors and other third parties seeking to engage us in discussions concerning potential claims against us, and we receive correspondence from customers seeking indemnification for potential claims related to infringement claims asserted against down-stream users of our products.
In addition, from time to time, we receive correspondence from competitors and other third parties seeking to engage us in discussions concerning potential claims against us, and we receive correspondence from customers seeking indemnification for potential claims related to infringement claims asserted against down-stream users of our products.
We and our subsidiaries may, subject to any limitations in the terms of our existing loan facilities or the Senior Secured Credit Facilities, incur additional debt, secure existing or future debt, recapitalize our debt or take a number of other actions that are not limited by the terms of our term loans that could have the effect of diminishing our ability to make payments under the indebtedness when due.
We and our subsidiaries may, subject to any limitations in the terms of our existing loan facilities, incur additional debt, secure existing or future debt, recapitalize our debt or take a number of other actions that are not limited by the terms of our term loans that could have the effect of diminishing our ability to make payments under the indebtedness when due.
We have further expanded our product offerings to include Wi-Fi, ethernet and broadband gateway processor systems-on-chip, or SoCs, and intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in SoCs, ASICs, and field-programmable gate 29 arrays, or FPGAs, used in next-generation communication and artificial intelligence systems.
We have further expanded our product offerings to include Wi-Fi, ethernet and broadband gateway processor SoCs and intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in SoCs, ASICs, and field-programmable gate arrays, or FPGAs, used in next-generation communication and artificial intelligence systems.
In addition, our customers can cancel purchase orders or defer the shipments of our products under certain circumstances. Our products are manufactured using a silicon foundry according to our estimates of customer demand, which requires us to make separate demand forecast assumptions for every customer, each of which may introduce significant variability into our aggregate estimate.
In addition, our customers can and have requested to cancel purchase orders or defer the shipments of our products under certain circumstances. Our products are manufactured using a silicon foundry according to our estimates of customer demand, which requires us to make separate demand forecast assumptions for every customer, each of which may introduce significant variability into our aggregate estimate.
In addition, we are often required to rely on third parties, including hardware, software, and services vendors, as well as our customers and end users, to develop and/or deploy mitigation techniques, and the availability, effectiveness, and performance impact of mitigation techniques can depend solely or in part on the actions of these third parties in determining whether, when, and how to develop and deploy mitigations.
In addition, we are often required to rely on third parties, including hardware, software, and services vendors, as well as our customers and end users, to develop and/or deploy mitigation techniques, and the availability, effectiveness, and performance impact of mitigation techniques can depend solely or in part on the actions of these 43 Table of Contents third parties in determining whether, when, and how to develop and deploy mitigations.
This unpredictability could cause our customers to delay or reduce their capital expenditures and spending on our products, which would delay and lengthen sales cycles and negatively affect the overall demand for our products.
This unpredictability has and could continue to cause our customers to delay or reduce their capital expenditures and spending on our products, which would delay and lengthen sales cycles and negatively affect the overall demand for our products.
As of December 31, 2022, our aggregate indebtedness was $125.0 million from an initial secured term B loan facility, or the Initial Term Loan under the June 23, 2021 Credit Agreement.
As of December 31, 2023, our aggregate indebtedness was $125.0 million from an initial secured term B loan facility, or the Initial Term Loan under the June 23, 2021 Credit Agreement.
In addition, delays in development could impair our relationships with our strategic customers and negatively impact sales of the products under development. Moreover, it is possible that our customers may develop their own products or adopt a competitor’s solution for products that they currently buy from us.
In addition, delays in development could impair our relationships with our strategic customers and negatively impact sales of the products under development. Moreover, it is possible that our customers may develop their own products or adopt a 28 Table of Contents competitor’s solution for products that they currently buy from us.
We experience cyber-attacks of varying degrees on our technology infrastructure and systems and notwithstanding our defensive measures, experienced programmers, hackers or state actors may be able to penetrate our security controls through attacks such as phishing, impersonating authorized users, ransomware, viruses, worms and other malicious software programs, exploitation of design flaws, bugs and other security weaknesses and vulnerabilities, covert introduction of malware to computers and networks, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event or that may continue undetected for an extended period of time.
We experience cyber-attacks of varying degrees on our technology infrastructure and systems and notwithstanding our defensive measures, experienced programmers, hackers, state actors, or others may be able to penetrate our security controls through attacks such as phishing, impersonating authorized users, ransomware, viruses, worms and other malicious software programs, software supply chain attacks, exploitation of design flaws, bugs and other security weaknesses 29 Table of Contents and vulnerabilities, covert introduction of malware to computers and networks, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event or that may continue undetected for an extended period of time.
We are subject to commitment fees ranging from 0.175% to 0.25% on the undrawn portion of the Revolving Facility, and any outstanding loans under the Revolving Facility will bear interest at either an Adjusted LIBOR plus a margin of 1.00% to 1.75% or an Adjusted Base Rate plus a margin of 0% to 0.75%.
We are subject to commitment fees ranging from 0.175% to 0.25% on the undrawn portion of the Revolving Facility, and any outstanding loans under the Revolving Facility will bear interest at either an Adjusted Term SOFR plus a margin of 1.00% to 1.75% or an Adjusted Base Rate plus a margin of 0% to 0.75%.
We cannot guarantee that: • any of our present or future patents or patent claims will not lapse or be invalidated, circumvented, challenged or abandoned; • our intellectual property rights will provide competitive advantages to us; • our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; • any of our pending or future patent applications will be issued or have the coverage originally sought; • our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; • any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; or • we will not lose the ability to assert our intellectual property rights against or to license our technology to others and collect royalties or other payments. 41 In addition, our competitors or others may design around our protected patents or technologies.
We cannot guarantee that: • any of our present or future patents or patent claims will not lapse or be invalidated, circumvented, challenged or abandoned; • our intellectual property rights will provide competitive advantages to us; • our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; • any of our pending or future patent applications will be issued or have the coverage originally sought; • our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; • any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; or • we will not lose the ability to assert our intellectual property rights against or to license our technology to others and collect royalties or other payments.
We investigate these requests and claims as received and could be required to enter license agreements with respect to third party intellectual property rights or indemnify third parties, either of which could have a material adverse effect on our future operating results.
We investigate these requests and claims as received 41 Table of Contents and could be required to enter license agreements with respect to third party intellectual property rights or indemnify third parties, either of which could have a material adverse effect on our future operating results.
Any such supply chain attack could have magnified damages to our business as a direct result of the attack as well as due to a lock of credibility or reputation with our customers.
Any such supply chain attack could have magnified damages to our business as a direct result of the attack as well as due to a loss of credibility or reputation with our customers.
The June 23, 2021 Credit Agreement also provides for a revolving credit facility of up to $100.0 million, or the Revolving Facility, which remains undrawn as of December 31, 2022.
The June 23, 2021 Credit Agreement also provides for a revolving credit facility of up to $100.0 million, or the Revolving Facility, which remains undrawn as of December 31, 2023.
Our failure to anticipate or timely develop new or enhanced products or technologies in response to technological shifts could result in decreased revenue and our competitors winning more competitive bid processes, known as “design wins.” In particular, we may experience difficulties with product design, manufacturing, marketing or certification that could delay or prevent our development, introduction or marketing of new or enhanced products.
Our failure to anticipate or timely develop new or enhanced products or technologies in response to technological shifts has resulted, and could in the future, result in decreased revenue and our competitors winning more competitive bid processes, known as “design wins.” In particular, we may experience difficulties with product design, manufacturing, marketing or certification that could delay or prevent our development, introduction or marketing of new or enhanced products.
Such catastrophes could result in the disruption of our product shipments, foundry, assembly, or test capacity. We have recorded goodwill and other intangible assets in connection with business acquisitions. Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.
Such catastrophes could result in the disruption of our product shipments, foundry, assembly, or test capacity. 49 Table of Contents We have recorded goodwill and other intangible assets in connection with business acquisitions. Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.
Risks Relating to Intellectual Property We have settled in the past intellectual property litigation, are currently facing, and may in the future face additional claims of intellectual property infringement. Any current or future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights.
Risks Relating to Intellectual Property We have settled in the past intellectual property litigation and may in the future face additional claims of intellectual property infringement. Any current or future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights.
Additionally, price volatility of our common stock over a given period may cause the average price at which we repurchase our common stock to exceed the stock’s market price at a given point in time. We may further increase or decrease the amount of repurchases of our common stock in the future.
Additionally, price volatility of our common stock over a given period may cause the average price at which we repurchase our common stock to exceed the stock’s market price at a given point in time. 48 Table of Contents We may further increase or decrease the amount of repurchases of our common stock in the future.
These factors include those listed below in this Item 1A and those discussed elsewhere in this Form 10-K. We encourage investors to review these factors carefully. We may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission, or SEC.
These factors include those listed below in this Item 1A and those discussed elsewhere in this Form 10-K. We encourage investors to review these factors carefully. We may from time to time make additional written and oral forward- 17 Table of Contents looking statements, including statements contained in our filings with the Securities and Exchange Commission, or SEC.
We cannot provide assurances that similar disruptions of distribution arrangements in the future, the imposition of governmental prohibitions on selling our products to particular customers, further sanctions on Russia or other countries, and/or increases in costs of certain raw materials and transportation will not also adversely affect our revenues and operating results.
We cannot provide assurances that we will not face disruptions of distribution arrangements in the future, including through the imposition of governmental prohibitions on selling our products to particular customers, further sanctions on Russia or other countries, and/or increases in costs of certain raw materials and transportation that will also adversely affect our revenues and operating results.
Any catastrophic loss to any of these facilities would likely disrupt our operations, delay production, shipments and revenue and result in significant expenses to repair or replace the facility. The majority of the factories we use for foundry, assembly and test, and warehousing services, are located in Asia, principally in China, Taiwan, and Singapore.
Any catastrophic loss to any of these facilities would likely disrupt our operations, delay production, shipments and revenue and result in significant expenses to repair or replace the facility. The majority of the factories we use for foundry, assembly and test, and warehousing services, are located in Asia, principally in China, Taiwan, South Korea, Malaysia, Singapore and Thailand.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, our management, including our principal executive officer and principal financial officer, does not expect that our 51 Table of Contents disclosure controls and procedures will prevent all error and all fraud.
Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement will amortize in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable on June 23, 2028.
Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable on June 23, 2028.
We have adopted a stock repurchase program to repurchase shares of our common stock; however, any future decisions to reduce or discontinue purchasing our common stock pursuant to our stock repurchase programs could cause the market price for our common stock to decline.
We have adopted a stock repurchase program to repurchase shares of our common stock; however, any future decisions to reduce or discontinue purchasing our common stock, after we resume such purchasing, pursuant to our stock repurchase programs could cause the market price for our common stock to decline.
Any security breaches or incidents or other unauthorized access by third parties to the systems of our suppliers, 36 service providers, or other third parties with access to our sensitive data, or the existence of computer viruses, ransomware or other malicious code in their data, software, or hardware, could result in disruptions or failures of systems used in our business and expose us to a risk of loss, misappropriation, unavailability and other unauthorized processing of information.
Any security breaches or incidents or other unauthorized access by third parties to the systems of our suppliers, service providers, or other third parties with access to our sensitive data, or the existence of computer viruses, ransomware or other malicious code in their data, software, or hardware, could result in disruptions or failures of systems used in our business, payments to fraudulent bank accounts, and expose us to a risk of loss, misappropriation, unavailability and other unauthorized processing of information.
These factors include those discussed in this “Risk Factors” section of the Annual Report on Form 10-K and others such as: • any developments related to our pending merger with Silicon Motion; • actual or anticipated fluctuations in our financial condition and operating results; • overall conditions in the semiconductor market; • addition or loss of significant customers; • changes in laws or regulations applicable to our products, including export controls; • geopolitical changes impacting our business, including with respect to China and Taiwan; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of technological innovations by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; • departures of, and inability to attract, qualified key personnel; • competition from existing products or new products that may emerge; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; 46 • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies; • acquisitions may not be accretive and may cause dilution to our earnings per share; • announcement or expectation of additional financing efforts; • sales of our common stock by us or our stockholders; and • general economic and market conditions, including the impacts from sanctions against Russia and the military conflict in Ukraine, increased inflationary pressures, interest rate changes, and the global COVID-19 pandemic.
These factors include those discussed in this “Risk Factors” section of this report and others such as: • any developments related to our terminated merger with Silicon Motion; • actual or anticipated fluctuations in our financial condition and operating results; • overall conditions in the semiconductor market; • addition or loss of significant customers; • changes in laws or regulations applicable to our products, including export controls; • geopolitical changes impacting our business, including with respect to China and Taiwan; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of technological innovations by us or our competitors; 47 Table of Contents • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; • departures of, and inability to attract, qualified key personnel; • competition from existing products or new products that may emerge; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies; • actions by institutional or activist stockholders; • acquisitions may not be accretive and may cause dilution to our earnings per share; • announcement or expectation of additional financing efforts; • sales of our common stock by us or our stockholders; and • general economic and market conditions, including the impacts from sanctions against Russia and the military conflict in Ukraine and Israel, increased inflationary pressures, interest rate changes, and the global COVID-19 pandemic.
It is quite likely that competition in the markets in which we participate will increase in the future as existing competitors improve or expand their product offerings. In addition, a number of other public and private companies are in the process of developing competing products for our current and target markets.
It is quite likely that competition in the markets in which we participate will increase in the future as existing competitors improve or expand their product offerings. In addition, other companies are in the process of developing competing products for our current and target markets.
To sustain and manage any future growth successfully, we believe we must effectively, among other things: • successfully develop new products and penetrate new applications and markets; • recruit, hire, train and manage additional qualified engineers for our research and development activities, especially in the positions of design engineering, product and test engineering and applications engineering; • add sales personnel and expand customer engineering support offices; • implement and improve our administrative, financial and operational systems, procedures and controls; and • enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use.
To manage any future growth successfully, we believe we must effectively, among other things: • successfully develop new products and penetrate new applications and markets; • recruit, hire, train and manage additional qualified engineers for our research and development activities, especially in the positions of design engineering, product and test engineering and applications engineering; • implement and improve our administrative, financial and operational systems, procedures and controls; and • enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use.
Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.
Monitoring unauthorized use of our intellectual property is difficult and costly. Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.
If we are unable to protect our trademarks, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty. We face risks related to security vulnerabilities in our products.
If we are unable to protect our trademarks in certain jurisdictions, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty in such jurisdictions. We face risks related to security vulnerabilities in our products.
We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from one or more of our major customers could have a material adverse effect on our revenue and operating results.
We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from, one or more of our major customers has had and could continue to have a material adverse effect on our revenue and operating results.
Our primary merchant semiconductor competitors include Broadcom Inc., Qualcomm Incorporated, Realtek Semiconductor Corp., Nokia Corp., Skyworks Solutions, Inc., Xilinx, Inc., Altera Corporation, Credo Semiconductor Inc., MediaTek, Inc., Marvell Technology Group Ltd., MACOM Technology Solutions Holdings, Inc., Texas Instruments Incorporated, Analog Devices, Inc., Renesas Electronics Corporation, and Microchip Technology Inc.
Our primary merchant semiconductor competitors include Broadcom Inc., Qualcomm Incorporated, Realtek Semiconductor Corp., Skyworks Solutions, Inc., Credo Semiconductor Inc., MediaTek, Inc., Marvell Technology Group Ltd., MACOM Technology Solutions Holdings, Inc., Texas Instruments Incorporated, Analog Devices, Inc., Renesas Electronics Corporation, Microchip Technology Inc. and Semtech Corporation.
Any conflict or uncertainty in these countries, including due to natural disaster, public health or safety concerns, could have a material adverse effect on our business, financial condition and results of operations.
Any conflict or uncertainty in these countries, including due to geopolitical conditions, natural disasters, public health or safety concerns, could have a material adverse effect on our business, financial condition and results of operations.
In the future, these customers may decide not to purchase our products at all, may purchase fewer products than they did in the past, or may defer or cancel purchases or otherwise alter their purchasing patterns.
In the future, these customers may decide, as they have at times before, not to purchase our products at all, may purchase fewer products than they did in the past, or may defer or cancel purchases or otherwise alter their purchasing patterns.
If interest rates were to increase substantially, it would adversely affect our operating results and could affect our ability to service our indebtedness; • a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business; • our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships; and • our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.
If interest rates were to continue to increase substantially, it would adversely affect our operating results and could affect our ability to service our indebtedness; 38 Table of Contents • a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business; • our level of indebtedness, combined with rising interest rates, could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships, and obtain financing for such transactions; and • our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.
Please refer to the Risk Factor entitled “ Our operating results are 30 subject to substantial quarterly and annual fluctuations and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth.
Please refer to the Risk Factor entitled “ Our operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth, if any.
Global economic volatility and economic volatility in the specific markets in which the devices that incorporate our products are ultimately sold, including the impacts of current high rates of inflation and recession, can cause extreme difficulties for our customers and third-party vendors in accurately forecasting and planning future business activities.
Many of these purchases are discretionary. Global economic volatility and economic volatility in the specific markets in which the devices that incorporate our products are ultimately sold, including the impacts of current high rates of inflation and a potential recession, can cause extreme difficulties for our customers and third-party vendors in accurately forecasting and planning future business activities.
Our share repurchase program has been temporarily suspended since July 2022 due to our pending merger with Silicon Motion.
Our share repurchase program has been temporarily suspended since July 2022 due to our previously pending (now terminated) merger with Silicon Motion.
Any reduction or discontinuance by us of repurchases of our common stock pursuant to our current stock repurchase program could cause the market price of our common stock to decline.
Any reduction or discontinuance by us of repurchases of our common stock, after we resume such repurchases, pursuant to our current stock repurchase program could cause the market price of our common stock to decline.
As of December 31, 2022, we had approximately 78.7 million shares of common stock outstanding. 47 All shares of our common stock are freely tradable without restrictions or further registration under the Securities Act unless held by our “affiliates,” as that term is defined under Rule 144 of the Securities Act.
As of December 31, 2023, we had approximately 81.8 million shares of common stock outstanding. All shares of our common stock are freely tradable without restrictions or further registration under the Securities Act unless held by our “affiliates,” as that term is defined under Rule 144 of the Securities Act.
Although our policies, controls, and procedures are designed to maintain ongoing compliance with applicable export controls laws, we cannot assure you that we have been or will be at all times in complete compliance with such laws and regulations.
Although our policies, procedures, and controls are designed to detect and prevent potential violations and maintain ongoing compliance with applicable laws, we cannot assure you that we have been or will be at all times in compliance with such laws and regulations.
We sell a significant portion of our products to manufacturers of cable broadband voice and data modems and gateways, Pay-TV set-top boxes and gateways into cable and satellite operator markets, satellite outdoor units or LNB’s, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.
We sell a significant portion of our products to manufacturers of cable broadband voice and data modems and gateways, satellite outdoor units or LNB’s, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.
We have recently experienced fluctuations in the market price of our stock and declines in the market price of our stock could adversely affect our ability to attract, motivate or retain key employees.
We have experienced fluctuations, including declines, in the market price of our stock and reductions in force which could adversely affect our ability to attract, motivate or retain key employees.
In addition, the loan agreements will contain financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.
In addition, our current credit agreement, and any new loan agreements, contain and would likely contain financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.
If we fail to introduce new or enhanced products that meet the needs of our customers or penetrate new markets in a timely fashion, we will lose market share and our operating results will be adversely affected.
If we fail or are slow to introduce new or enhanced products that meet the needs of our customers or penetrate new markets in a timely fashion, as has happened previously or in the future, we will lose market share and our operating results will be adversely affected.
These factors include, among others: • changes in end-user demand for the products manufactured and sold by our customers; • the receipt, reduction or cancellation of significant orders by customers; • fluctuations in the levels of component inventories held by our customers; • the gain or loss of significant customers; • market acceptance of our products and our customers’ products; • our ability to develop, introduce, and market new products and technologies on a timely basis; • the timing and extent of product development costs; • new product announcements and introductions by us or our competitors; • incurrence of research and development and related new product expenditures; • seasonality or cyclical fluctuations in our markets; • government actions, by the United States, China or other countries, that impose barriers or restrictions that would impact our ability to sell or ship products to customers; • currency fluctuations; • fluctuations in IC manufacturing yields; • significant warranty claims, including those not covered by our suppliers; • changes in our product mix or customer mix; • potential indemnification claims, including those arising as a result of our contractual arrangements or intellectual property disputes; • intellectual property disputes; • loss of key personnel or inability to attract, retain and motivate qualified skilled workers; • impairment of long-lived assets, including masks and production equipment; • the effects of competitive pricing pressures, including decreases in average selling prices of our products; and 34 • uncertainties arising from the impact of the COVID-19 pandemic on the market and our business operations.
These factors include, among others: • seasonality or cyclical fluctuations in our markets; 32 Table of Contents • overall demand volatility for semiconductor solutions across a diverse range of communications, industrial and multimarket applications; • changes in end-user demand for the products manufactured and sold by our customers; • the receipt, reduction or cancellation of significant orders by customers; • fluctuations in the levels of component inventories held by our customers; • the gain or loss of significant customers; • market acceptance of our products and our customers’ products; • our ability to develop, introduce, and market new products and technologies on a timely basis; • the availability and cost of products from our suppliers; • the timing and extent of operating expenses, including costs related to product development and personnel compensation and benefits; • new product announcements and introductions by us or our competitors; • incurrence of research and development and related new product expenditures; • government actions, by the United States, China or other countries, that impose barriers or restrictions that would impact our ability to sell or ship products to customers; • currency fluctuations; • fluctuations in manufacturing yields of integrated circuits; • significant warranty claims, including those not covered by our suppliers; • changes in our product mix or customer mix; • potential indemnification claims, including those arising as a result of our contractual arrangements or intellectual property disputes; • intellectual property disputes; • timing and extent of product development costs; • loss of key personnel or inability to attract, retain and motivate qualified skilled workers; • impairment of long-lived assets, including masks and production equipment; and • the effects of competitive pricing pressures, including decreases in average selling prices of our products.
Factors that could affect our revenue from these large customers include the following: • substantially all of our sales to date have been made on a purchase order basis, which permits our customers to cancel, change or delay product purchase commitments with little or no notice to us and without penalty; • some of our customers have sought or are seeking relationships with current or potential competitors which may affect their purchasing decisions; 28 • service provider and OEM consolidation across cable, satellite, and fiber markets could result in significant changes to our customers’ technology development and deployment priorities and roadmaps, which could affect our ability to forecast demand accurately and could lead to increased volatility in our business; and • technological changes in our markets could lead to substantial volatility in our revenues based on product transitions, and particularly in our broadband markets, we face risks based on changes in the way consumers are accessing and using broadband and cable services, which could affect operator demand for our products.
Factors that could affect our revenue from these large customers include the following: • macroeconomic and business factors influencing such customers’ demand for our products, including excess inventory in the channel; • substantially all of our sales to date have been made on a purchase order basis, and we do not have long-term product purchase commitments with our customers; • some of our customers have sought or are seeking relationships with current or potential competitors which may affect their purchasing decisions; • service provider and OEM consolidation across cable, satellite, and fiber markets could result in significant changes to our customers’ technology development and deployment priorities and roadmaps, which could affect our ability to forecast demand accurately and could lead to increased volatility in our business; and • technological changes in our markets could lead to substantial volatility in our revenues based on product transitions, and particularly in our broadband markets, we face risks based on changes in the way consumers are accessing and using broadband and cable services, which could affect operator demand for our products.
In addition, we expect the internal resources of large, integrated original equipment manufacturers, or OEMs, may continue to enter our markets. Increased competition could result in price pressure, reduced profitability and loss of market share, any of which could materially and adversely affect our business, revenue, revenue growth rates, if any, and operating results.
In addition, we expect the internal resources of large, integrated OEMs may continue to enter our markets. Increased competition has resulted in price pressure, decreased demand, reduced revenue and profitability, and loss of market share, any of which could in the future materially and adversely affect our business, revenue, revenue growth rates, if any, and operating results.
We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts. In addition, we have a number of third-party patent and intellectual property license agreements.
We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our principal office spaces in Carlsbad, we have active leased facilities in Irvine, California; San Jose, California; Boston, Massachusetts; Burnaby, Canada; Bangalore and Chennai, India; Singapore; Taipei and Hsinchu, Taiwan; Shenzhen, Shanghai, and Hong Kong, China; Seoul, South Korea; Tokyo, Japan; Paterna, Spain; Villach, Austria; Munich, Germany; and in Petah Tikva, Israel.
Biggest changeIn addition to our principal office spaces in Carlsbad, we have active leased facilities in Irvine, California; San Jose, California; Boston, Massachusetts; Burnaby, Canada; Bangalore and Chennai, India; Singapore; Taipei and Hsinchu, Taiwan; Shenzhen, Shanghai, and Hong Kong, China; Seoul, South Korea; Tokyo, Japan; Paterna, Spain; Villach, Austria; Munich, Germany; and in Petah Tikva, Israel. 53 Table of Contents
ITEM 2. PROPERTIES Our corporate headquarters occupy approximately 68,000 square feet in Carlsbad, California under a lease that expires in December 2023. A full range of business and engineering functions are represented at our corporate headquarters, including a laboratory for research and development and manufacturing operations.
ITEM 2. PROPERTIES Our corporate headquarters occupy approximately 68,000 square feet in Carlsbad, California under a lease that expires in December 2029. A full range of business and engineering functions are represented at our corporate headquarters, including a laboratory for research and development and manufacturing operations.
Removed
We believe our current facilities are adequate to meet our current needs and are being utilized by our business. 50

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAn initial determination is expected from the judge on November 21, 2023, with a final determination from the Commission by March 21, 2024. Other Matters In addition, from time to time, we are subject to threats of litigation or actual litigation in the ordinary course of business, some of which may be material.
Biggest changeOther Matters From time to time, the Company is subject to threats of litigation or actual litigation in the ordinary course of business as described in “Item 3 — Legal Proceedings,” some of which may be material. Results of litigation and claims are inherently unpredictable.
We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
Regardless of the outcome, litigation can have an adverse impact on us because of litigation and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 51 PART II — FINANCIAL INFORMATION
Regardless of the outcome, litigation and claims can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.
We currently do not believe that the ultimate outcome of any of the matters described above is probable or reasonably estimable, or that these matters will have a material adverse effect on our business; however, the results of litigation and claims are inherently unpredictable.
As of December 31, 2023, no material loss contingencies have been accrued for litigation and other legal claims in our consolidated financial statements, since our management currently does not believe that the ultimate outcome of any of the matters described above is probable.
Removed
ITEM 3. LEGAL PROCEEDINGS Bell Semiconductor Litigation On August 11, 2022, Bell Semiconductor LLC filed suit against MaxLinear in the Southern District of California alleging infringement of U.S. Patent Nos. 6,436,807 and 7,007,259. MaxLinear answered the complaint on January 26, 2023 and the case is presently early in the fact discovery phase.
Added
ITEM 3. LEGAL PROCEEDINGS Dispute with Silicon Motion As previously disclosed, on July 26, 2023, MaxLinear terminated the Merger Agreement on multiple grounds.
Removed
The case is tentatively scheduled for trial in February 2024. On August 26, 2022, Bell Semiconductor LLC filed suit against MaxLinear in the Southern District of California alleging infringement of U.S. Patent Nos. 7,149,989 and 7,260,803. MaxLinear answered the complaint on January 26, 2023 and the case is presently early in the fact discovery phase.
Added
On August 16, 2023, Silicon Motion delivered to MaxLinear a notice, which Silicon Motion publicly disclosed, that it was purporting to terminate the Merger Agreement and that Silicon Motion would be commencing an arbitration before the Singapore International Arbitration Centre to seek damages from MaxLinear arising from MaxLinear’s alleged breaches of the Merger Agreement.
Removed
The case is tentatively scheduled for trial in February 2024. On October 7, 2022 Bell Semiconductor LLC filed suit against MaxLinear in the Southern District of California alleging infringement of U.S. Patent No. 7,396,760. This action has been stayed pending a parallel ITC investigation involving the same patent.
Added
Silicon Motion’s position is that MaxLinear’s Willful and Material Breaches (as such term is defined in the Merger Agreement) of the Merger Agreement prevented the Merger from being completed by August 7, 2023, and that MaxLinear is consequently liable for substantial monetary damages in excess of the termination fee as provided in the Merger Agreement.
Removed
Specifically, on October 13, 2023, Bell Semiconductor also filed suit against MaxLinear before the U.S. International Trade Commission alleging infringement of U.S. Patent No. 7,396,760. This was instituted by the Commission as Investigation No. 337-TA-1342 on November 23, 2022.
Added
On October 5, 2023, Silicon Motion filed a Notice of Arbitration with the Singapore International Arbitration Centre alleging that MaxLinear breached the Merger Agreement. Silicon Motion seeks payment of the termination fee, additional damages, fees, and costs. The arbitration will be confidential. MaxLinear believes that it properly terminated the Merger Agreement.
Removed
A schedule was set by the administrative law judge and key deadlines include a close of fact discovery on May 1, 2023, a close of expert discovery June 5, 2023, and an evidentiary hearing beginning on August 7, 2023.
Added
MaxLinear remains confident in its decision and will vigorously defend its right to terminate the Silicon Motion transaction without penalty. Class Action Complaint On August 31, 2023, a Silicon Motion stockholder filed a putative class action complaint in the United States District Court for the Southern District of California captioned Water Island Event-Driven Fund v.
Added
MaxLinear, Inc. , No. 23-cv-01607 (S.D. Cal.), against MaxLinear and certain of its current officers. The complaint includes two claims: (1) an alleged violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; and (2) an alleged violation of Section 20(a) of the Exchange Act.
Added
The complaint alleges that the defendants made false and misleading statements and/or omitted material facts that MaxLinear had a duty to disclose, concerning the Company’s ability and intention to timely close the merger with Silicon Motion, including that: (i) MaxLinear had allegedly decided it would not consummate the merger because the economic circumstances surrounding the merger had materially changed, including a material downturn in the semiconductor industry and rising interest rates; (ii) MaxLinear had allegedly determined to unilaterally terminate the merger in the event the merger was approved by SAMR; (iii) MaxLinear had allegedly intended to argue that certain conditions in Article 6 of the Merger Agreement had not been satisfied as required by May 5, 2023 as a basis to terminate the merger; and (iv) as a result, MaxLinear had allegedly materially misrepresented the viability of the merger, the purported benefits of the merger, and the likelihood that the merger would be consummated.
Added
The complaint seeks compensatory damages, including interest, costs and expenses and such other equitable or injunctive relief that the court deems appropriate. MaxLinear will vigorously defend its position. On December 20, 2023, the Court appointed the lead plaintiffs, who are expected to file an amended complaint by February 15, 2024.
Added
Defendants expect to answer or move to dismiss by March 29, 2024. Comcast Litigation On December 1, 2023, MaxLinear filed claims against Comcast Management, LLC and Comcast Cable Communications, LLC (together, “Comcast”) in the United States District Court for the Southern District of New York.
Added
MaxLinear alleges that in 2020, MaxLinear shared its proprietary design and know-how for a full-duplex, or FDX, amplifier with Comcast in the hope of securing future business with Comcast. MaxLinear shared its design and know-how on several occasions, all pursuant to a non-disclosure agreement between MaxLinear and Comcast, with the expectation that Comcast would keep the information confidential.
Added
Comcast needed this technology in order to effectively compete with fiber-optic internet providers. Instead of engaging MaxLinear to develop the FDX amplifier, Comcast shared MaxLinear’s proprietary designs with MaxLinear’s direct competitor. Comcast then worked with MaxLinear’s competitor to develop the FDX-amplifier technology.
Added
MaxLinear brought claims for trade secret misappropriation, unfair competition, and breach of the parties’ non-disclosure agreement, and it sought an unspecified amount of compensatory damages, punitive damages, pre-judgment and post-judgment interest, costs, expenses, and attorney fees as well as an injunction against Comcast’s use or disclosure of MaxLinear’s trade secrets. 54 Table of Contents Dish Litigation On February 10, 2023, Entropic Communications, LLC, or Entropic filed claims for patent infringement against Dish Network Corporation, Dish Network LLC, Dish Network Service, LLC, and Dish Network California Service Corporation (together, “Dish”).
Added
At that time, MaxLinear was not a party to the action. On September 21, 2023, Dish Network California Service Corporation (“Dish California”) filed four counterclaims against MaxLinear in the United States District Court for the Central District of California. The four claims are declaratory judgment, breach of contract, fraud and negligent misrepresentation, and civil conspiracy.
Added
Dish California alleges that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations owed to the Multimedia over Coax Alliance, or MoCA under MoCA’s Intellectual Property Rights (“IPR”) Policy. Dish California alleges that MaxLinear also allegedly violated the MoCA IPR Policy by failing to offer Dish California a fair, reasonable, and nondiscriminatory, or FRAND, license for these patents.
Added
Dish California seeks an unspecified amount of compensatory damages, disgorgement, attorneys’ fees, experts’ fees, and costs. Cox Litigations On October 6, 2023, Cox Communications, Inc., CoxCom, LLC, and Cox Communications California, LLC (together, “Cox”) filed claims in two separate actions against MaxLinear in the United States District Court for the Central District of California.
Added
In the first action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims alleging that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations under MoCA’s IPR Policy by assigning these patents and by failing to offer Cox a FRAND license for these patents.
Added
Cox amended its counterclaims on January 9, 2024 and is asserting claims of breach of contract, unjust enrichment, and declaratory judgment against MaxLinear. Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. In the second action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims against MaxLinear.
Added
Cox alleges that MaxLinear granted CableLabs a non-exclusive, royalty-free license to all patents essential for compliance with DOCSIS specifications. It further alleges that MaxLinear breached this agreement when MaxLinear assigned certain patents to Entropic. Cox amended its counterclaims on January 9, 2024 and is asserting claims for breach of contract, unjust enrichment, and declaratory judgment.
Added
An unfavorable outcome of these matters may be reasonably possible in excess of recorded amounts; however, a reasonable estimate of the amount or range of such loss cannot be made at this time.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes an investment of $100 on December 31, 2017, and the reinvestment of any dividends. The comparisons in the graph below are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of our common stock. 52 Recent Sales of Unregistered Securities None.
Biggest changeThe graph assumes an investment of $100 on December 31, 2018, and the reinvestment of any dividends. The comparisons in the graph below are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of our common stock. 56 Table of Contents Recent Sales of Unregistered Securities None.
We believe we have approximately 42,000 beneficial holders of our common stock. Dividend Policy We have never declared or paid cash dividends on our common stock.
We believe we have approximately 46,000 beneficial holders of our common stock. Dividend Policy We have never declared or paid cash dividends on our common stock.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on The Nasdaq Composite Index, The NYSE Composite Index and The Philadelphia Semiconductor Index. The period shown commences on December 31, 2017 and ends on December 31, 2022, the end of our last fiscal year.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on The Nasdaq Composite Index, The NYSE Composite Index and The Philadelphia Semiconductor Index. The period shown commences on December 31, 2018 and ends on December 31, 2023, the end of our last fiscal year.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Stock Market LLC, or the Nasdaq, under the symbol MXL. According to our transfer agent, as of January 25, 2023, there were 52 record holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Stock Market LLC, or the Nasdaq, under the symbol MXL. According to our transfer agent, as of January 24, 2024, there were 54 record holders of our common stock.
Removed
Recent Repurchases of Equity Securities Period Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) Fiscal 2022 January 1, 2022 through January 31, 2022 128,500 $ 61.67 128,500 $ 68,539,400 February 1, 2022 through February 28, 2022 116,864 $ 60.81 116,864 $ 61,433,421 March 1, 2022 through March 31, 2022 195,085 $ 57.69 195,085 $ 50,179,597 April 1, 2022 through April 30, 2022 40,000 $ 47.97 40,000 $ 48,260,767 May 1, 2022 through May 31, 2022 42,000 $ 41.46 42,000 $ 46,519,356 June 1, 2022 through June 30, 2022 42,000 $ 36.91 42,000 $ 44,968,957 July 1, 2022 through July 31, 2022 — $ — — $ 44,968,957 August 1, 2022 through August 31, 2022 — $ — — $ 44,968,957 September 1, 2022 through September 30, 2022 — $ — — $ 44,968,957 October 1, 2022 through October 31, 2022 — $ — — $ 44,968,957 November 1, 2022 through November 30, 2022 — $ — — $ 44,968,957 December 1, 2022 through December 31, 2022 — $ — — $ 44,968,957 Total 564,449 564,449 ______________________ (1) On February 24, 2021, the Company publicly announced that its board of directors authorized a plan to repurchase up to $100 million of the Company’s common stock over a period ending February 16, 2024.
Added
Recent Repurchases of Equity Securities None. ITEM 6. [RESERVED]
Removed
The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions, and legal requirements. Any purchases will be funded from available working capital and may be effected through open market purchases, block transactions, and privately negotiated transactions.
Removed
The share repurchase program does not obligate the Company to make any repurchases and may be modified, suspended, or terminated by the Company at any time without prior notice. The share repurchase program has been temporarily suspended since July 2022 due to our pending merger with Silicon Motion. ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

69 edited+65 added−47 removed41 unchanged
Biggest changeThe following table sets forth our consolidated statement of income data as a percentage of net revenue for the periods indicated: Year Ended December 31, 2022 2021 Net revenue 100 % 100 % Cost of net revenue 42 44 Gross profit 58 56 Operating expenses: Research and development 26 31 Selling, general and administrative 15 17 Impairment losses — — Restructuring charges — — Total operating expenses 42 48 Income from operations 16 7 Interest income — — Interest expense (1) (1) Loss on extinguishment of debt — (1) Other income (expense), net — — Total other income (expense), net (1) (2) Income before income taxes 16 5 Income tax provision 4 1 Net income 11 % 5 % Net Revenue Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Broadband $ 493,232 $ 492,482 $ 750 — % % of net revenue 44 % 55 % Connectivity 303,925 149,285 154,640 104 % % of net revenue 27 % 17 % Infrastructure 136,274 119,421 16,853 14 % % of net revenue 12 % 13 % Industrial and multi-market 186,821 131,210 55,611 42 % % of net revenue 17 % 15 % Total net revenue $ 1,120,252 $ 892,398 $ 227,854 26 % Net revenue increased $227.9 million to $1.1 billion for the year ended December 31, 2022, as compared to $892.4 million for the year ended December 31, 2021.
Biggest changeThese estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expenses for tax and financial statement purposes and the realizability of assets in future years. 62 The following table sets forth our consolidated statement of operations data as a percentage of net revenue for the periods indicated: Year Ended December 31, 2023 2022 2021 Net revenue 100 % 100 % 100 % Cost of net revenue 44 42 44 Gross profit 56 58 56 Operating expenses: Research and development 39 26 31 Selling, general and administrative 19 15 17 Impairment losses — — — Restructuring charges 3 — — Total operating expenses 61 42 48 Income (loss) from operations (6) 16 7 Interest income 1 — — Interest expense (2) (1) (1) Other income (expense), net (3) — — Total other income (expense), net (4) (1) (2) Income (loss) before income taxes (9) 16 5 Income tax provision 1 4 1 Net income (loss) (11) % 11 % 5 % Net Revenue Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Broadband $ 203,519 $ 493,232 $ 492,482 $ (289,713) $ 750 (59) % — % % of net revenue 29 % 44 % 55 % Connectivity 138,228 303,925 149,285 (165,697) 154,640 (55) % 104 % % of net revenue 20 % 27 % 17 % Infrastructure 177,083 136,274 119,421 40,809 16,853 30 % 14 % % of net revenue 26 % 12 % 13 % Industrial and multi-market 174,433 186,821 131,210 (12,388) 55,611 (7) % 42 % % of net revenue 25 % 17 % 15 % Total net revenue $ 693,263 $ 1,120,252 $ 892,398 $ (426,989) $ 227,854 (38) % 26 % Net revenue decreased $427.0 million to $693.3 million for the year ended December 31, 2023, as compared to $1.1 billion for the year ended December 31, 2022 primarily as a result of macroeconomic conditions impacting customer demand, including excess inventory in the channel built up following the supply shortages in the prior year.
Cash used to fund operating expenses in our consolidated statements of cash flows excludes the impact of non-cash items such as amortization and depreciation of acquired intangible assets and leased right-of-use assets and property and equipment, stock-based compensation, impairment of intangible assets, impairment of leased right-of-use assets and related leasehold improvements and unrealized holding or realized gains or losses on marketable equity securities.
Cash used to fund operating expenses in our consolidated statements of cash flows excludes the impact of non-cash items such as amortization and depreciation of acquired intangible assets and leased right-of-use assets and property and equipment, stock-based compensation, impairment of intangible assets, impairment of leased right-of-use assets and related leasehold improvements and unrealized holding or realized gains or losses on marketable 68 equity securities.
The incentives are conditional upon our meeting certain minimum employment and investment thresholds within Singapore over time, and we may be required to return certain tax benefits in the event we do not achieve compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.
The incentives are conditional upon our meeting certain minimum employment and investment thresholds within Singapore 67 over time, and we may be required to return certain tax benefits in the event we do not achieve compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.
Net cash used in financing activities consisted of repayments of debt of $185.0 million, common stock repurchases of $31.5 million, minimum tax withholding paid on behalf of employees for restricted stock units of $28.9 million, partially offset by cash inflows from net proceeds from the issuance of common stock upon exercise of stock options of $5.0 million.
Net cash used in financing activities consisted of repayments of debt of $185.0 million, common stock repurchases of $31.5 million, and minimum tax withholding paid on behalf of employees for restricted stock units of $28.9 million, partially offset by cash inflows from net proceeds from the issuance of common stock upon exercise of stock options of $5.0 million.
These selection processes are typically lengthy, and as a result, our sales cycles will 54 vary based on the specific market served, whether the design win is with an existing or a new customer and whether our product being designed in our customer’s device is a first generation or subsequent generation product.
These selection processes are typically lengthy, and as a result, our sales cycles will vary based on the specific market served, whether the design win is with an existing or a new customer and whether our product being designed in our customer’s device is a first generation or subsequent generation product.
Materially different results can occur as circumstances change and additional information becomes known. We believe that the following accounting estimates we have identified as critical involve a greater degree of judgment and complexity than our other accounting policies.
Materially 59 different results can occur as circumstances change and additional information becomes known. We believe that the following accounting estimates we have identified as critical involve a greater degree of judgment and complexity than our other accounting policies.
Cost of net revenue includes the cost of finished silicon wafers processed by third-party foundries; costs associated with our outsourced packaging and assembly, test and shipping; costs of personnel, including salaries, benefits and stock-based compensation; equipment associated with manufacturing support, logistics and quality assurance; amortization of acquired developed technology and purchased licensed technology intangible assets; inventory fair value adjustments; amortization of certain production mask costs and computer-aided design software license costs; cost of production load boards and sockets; and an allocated portion of our occupancy costs.
Cost of net revenue includes the cost of finished silicon wafers processed by third-party foundries; costs associated with our outsourced packaging and assembly, test and shipping; costs of personnel, including salaries, benefits and stock-based compensation; equipment associated with manufacturing support, logistics and quality assurance; amortization of acquired developed technology and purchased licensed technology intangible assets; inventory fair value adjustments, if any; amortization of certain production mask costs and computer-aided design software license costs; cost of production load boards and sockets; and an allocated portion of our occupancy costs.
Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications. All research and development costs are expensed as incurred. Selling, General and Administrative.
Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications. All research and development costs are expensed as incurred. 61 Selling, General and Administrative.
The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the year ended December 31, 2022 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including a tax on global intangible low-taxed income, stock based compensation, excess tax benefits related to stock-based compensation, release of uncertain tax positions under ASC 740-10, and release of the valuation allowance on certain federal research and development credits.
The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the year ended December 31, 2022 resulted primarily from the mix of pre-tax income among jurisdictions, permanent tax items including a tax on global intangible low-taxed income, stock based compensation, excess tax benefits related to stock-based compensation, release of uncertain tax positions under ASC 740-10, and release of the valuation allowance on certain federal research and development credits.
In the year ended December 31, 2021, two of our customers accounted for 26% of our net revenue, and our ten largest customers collectively accounted for 69% of our net revenue, of which distributor customers comprised 27% of our net revenue.
In the year ended December 31, 2021, two of our direct customers accounted for 26% of our net revenue, and our ten largest customers collectively accounted for 69% of our net revenue, of which distributor customers comprised 27% of our net revenue.
For example, revenue generated from sales of our products during the years ended December 31, 2022, 2021 and 2020 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
For example, revenue generated from sales of our products during the years ended December 31, 2023, 2022 and 2021 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
Recent Developments Silicon Motion Merger On May 5, 2022, we entered into an agreement and plan of merger, or the Merger Agreement, with Silicon Motion Technology Corporation, or Silicon Motion, an exempted company with limited liability incorporated under the Law of the Cayman Islands, pursuant to which, subject to the terms and conditions thereof, we agreed to acquire Silicon Motion pursuant to a statutory merger of Shark Merger Sub, a wholly-owned subsidiary of MaxLinear, with and into Silicon Motion, with Silicon Motion surviving the merger as a wholly-owned subsidiary of MaxLinear.
Terminated Silicon Motion Merger On May 5, 2022, we entered into an agreement and plan of merger, or the Merger Agreement, with Silicon Motion Technology Corporation, or Silicon Motion, an exempted company with limited liability incorporated under the Law of the Cayman Islands, pursuant to which, subject to the terms and conditions thereof, we agreed to acquire Silicon Motion pursuant to a statutory merger of Shark Merger Sub, a wholly-owned subsidiary of MaxLinear, with and into Silicon Motion, with Silicon Motion surviving the merger as a wholly-owned subsidiary of MaxLinear.
We also receive a reduced withholding tax rate on certain intercompany royalty payments made by our Singapore subsidiary during the incentive period. We recorded a tax provision in the year ended December 31, 2022 at the incentive rate.
We also receive a reduced withholding tax rate on certain intercompany royalty payments made by our Singapore subsidiary during the incentive period. We recorded a tax provision in the year ended December 31, 2023 and year ended December 31, 2022 at the incentive rate.
Restructuring charges in the year ended December 31, 2021 primarily consisted of $1.3 million in employee severance-related charges and $0.6 million of lease-related charges, which primarily consisted of impairment of leased right-of-use assets and leasehold improvements.
Restructuring charges in the year ended December 31, 2021 included $1.3 million in employee severance-related charges and $0.6 million of lease-related charges, which consisted of impairment of leased right-of-use assets and leasehold improvements.
In addition, their stockholders may receive up to an additional $2.6 million in potential contingent consideration, subject to the acquired business satisfying certain personnel objectives by June 17, 2023. Company Y is headquartered in Bangalore, India and operates as a provider of engineering design services.
In addition, Company Y stockholders may receive up to an additional $2.6 million in potential contingent consideration, subject to the acquired business satisfying certain personnel objectives by June 17, 2024. Company Y is headquartered in Bangalore, India and operates as a provider of engineering design services.
During the years ended December 31, 2021 and 2020, we did not record any material adjustments to the valuation of such assets. Income Taxes Estimates in our assessment of realizability of deferred tax assets that involve a significant level of estimation uncertainty and management judgment include projected future taxable income.
During the year ended December 31, 2021, we did not record any material adjustments to the valuation of such assets. Income Taxes Estimates in our assessment of realizability of deferred tax assets that involve a significant level of estimation uncertainty and management judgment include projected future taxable income.
In the year ended December 31, 2022, our top two customers accounted for 31% of our net revenue, and our ten largest customers collectively accounted for 65% of our net revenue, of which distributor customers accounted for 18% of our net revenue.
In the year ended December 31, 2022, two of our customers accounted for 31% of our net revenue, and our ten largest customers collectively accounted for 65% of our net revenue, of which distributor customers comprised 18% of our net revenue.
Importantly, our ability to design analog and mixed-signal circuits in CMOS allows us to efficiently combine analog functionality and complex digital signal processing logic in the same integrated circuit. As a result, our solutions have exceptional levels of functional integration and performance, low manufacturing cost, and reduced power consumption.
Importantly, our ability to design analog and mixed-signal circuits in CMOS allows us to efficiently combine analog functionality and complex digital signal processing logic in the same integrated circuit. As a result, we believe our solutions have exceptional levels of functional integration and performance, low manufacturing cost, and reduced power consumption versus competition.
In the year ended December 31, 2022, net revenue was $1.1 billion, which was derived in part from sales of RF receivers and RF receiver SoC and connectivity solutions into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications.
In the year ended December 31, 2023, net revenue was $693.3 million, which was derived in part from sales of RF receivers and RF receiver SoC and connectivity solutions into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications.
For certain customers, we sell multiple products into disparate end user applications such as cable modems, satellite set-top boxes and broadband gateways. Our business depends on winning competitive bid selection processes, known as design wins, to develop integrated circuits for use in our customers’ products.
For certain customers, we sell multiple products into disparate end user applications such as cable modems and broadband gateways. Our business depends on winning competitive bid selection processes, known as design wins, to develop integrated circuits for use in our customers’ products.
Cash Flows from Financing Activities Net cash used in financing activities was $240.4 million for the year ended December 31, 2022.
Net cash used in financing activities was $240.4 million for the year ended December 31, 2022.
Other than our estimates of sell-through activity and customer return rates, there are no assumptions inherent in our estimates in the valuation of inventory that would result in sensitivity of reported amounts to such assumptions. During the years ended December 31, 2022, 2021 and 2020 we have not recorded any material adjustments to such estimates.
Other than our estimates of sell-through activity and customer return rates, there are no assumptions inherent in our estimates in the valuation of price adjustments and returns that would result in sensitivity of reported amounts to such assumptions. During the years ended December 31, 2023, 2022 and 2021 we have not recorded any material adjustments to such estimates.
Restructuring charges for the year ended December 31, 2022 primarily consisted of $1.8 million in employee severance-related charges and $0.5 million of lease-related charges, which is comprised of impairment of leased right-of-use assets from partial abandonment of a facility.
Restructuring charges in the year ended December 31, 2022 included $1.8 million in employee severance-related charges and $0.5 million of lease-related charges, which is comprised of impairment of leased right-of-use assets from partial abandonment of a facility.
Cash Flows from Investing Activities Net cash used in investing activities was $91.8 million for the year ended December 31, 2022 and consisted of purchases of property and equipment of $41.3 million, purchases of investments of $29.3 million, purchases of intangible assets of $11.2 million and proceeds loaned under notes receivable of $10.0 million.
Net cash used in investing activities was $91.8 million for the year ended December 31, 2022 and consisted of purchases of property and equipment of $41.3 million, purchases of investments of $29.3 million, purchases of intangible assets of $11.2 million and proceeds loaned to a supplier under notes receivable of $10.0 million.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the sections titled “Business” and “Risk Factors” included elsewhere in this report. 53 Overview We are a provider of communications systems-on-chip, or SoC, solutions used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the sections titled “Business” and “Risk Factors” included elsewhere in this report. Overview We are a provider of communications SoCs used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications.
Acquisition of Company Y On January 17, 2023, the Company completed its acquisition of a business, or Company Y, pursuant to a Purchase and Sale Agreement, or the Purchase Agreement. The initial closing transaction consideration consisted of $9.9 million in cash.
Acquisition of Company Y On January 17, 2023, the Company completed its acquisition of a business, or Company Y, pursuant to a Purchase and Sale Agreement, or the Purchase Agreement. The transaction consideration included $9.8 million in cash.
For example, in the cable operator modem and gateway sectors, a design-in can have a product life cycle of 24 to 48 months. In the industrial and wired and wireless infrastructure markets, a design-in can have a product life cycle of 24 to 60 months and beyond.
For example, in the broadband data modem and gateway sectors, a design-in can have a product life cycle of 24 to 60 months. In the industrial and wired and wireless infrastructure markets, a design-in can have a product life cycle of 24 to 84 months and beyond.
Impairment of goodwill and long-lived assets impact our consolidated financial results in periods subsequent to their acquisition, and such amounts are disclosed in our consolidated financial statements. During the year ended December 31, 2022, we recorded impairment of intangible assets of $2.8 million associated with a 2021 acquisition.
Impairment of goodwill and long-lived assets impact our consolidated financial results in periods subsequent to their acquisition, and such amounts are disclosed in our consolidated financial statements. During the year ended December 31, 2023 and 2022, we recorded impairment of intangible assets of $2.4 million and $2.8 million, respectively, associated with certain acquired licensed technology.
Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity on June 23, 2028.
Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity on June 23, 2028. The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement.
While we are mitigating the impact of rising interest rates with large amounts of prepayments on our outstanding debt, if interest rates were to further increase substantially, particularly with respect to our anticipated debt associated with the Silicon Motion merger, it would have a material adverse effect our operating results and could affect our ability to service the indebtedness.
While we had been mitigating the impact of rising interest rates with large amounts of prepayments on our outstanding debt, if interest rates were to further increase substantially, it could have a material adverse effect on our operating results and affect our ability to service the indebtedness.
Cost of Net Revenue and Gross Profit Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Cost of net revenue $ 470,483 $ 396,566 $ 73,917 19 % % of net revenue 42 % 44 % Gross profit 649,769 495,832 153,937 31 % % of net revenue 58 % 56 % Cost of net revenue increased $73.9 million to $470.5 million for the year ended December 31, 2022, as compared to $396.6 million for the year ended December 31, 2021.
Cost of Net Revenue and Gross Profit Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Cost of net revenue $ 307,600 $ 470,483 $ 396,566 $ (162,883) $ 73,917 (35) % 19 % % of net revenue 44 % 42 % 44 % Gross profit $ 385,663 $ 649,769 $ 495,832 $ (264,106) $ 153,937 (41) % 31 % % of net revenue 56 % 58 % 56 % Cost of net revenue decreased $162.9 million to $307.6 million for the year ended December 31, 2023, as compared to $470.5 million for the year ended December 31, 2022.
Selling, General and Administrative Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Selling, general and administrative $ 168,008 $ 149,943 $ 18,065 12 % % of net revenue 15 % 17 % Selling, general and administrative expense increased $18.1 million to $168.0 million for the year ended December 31, 2022, as compared to $149.9 million for the year ended December 31, 2021.
Selling, General and Administrative Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Selling, general and administrative $ 132,156 $ 168,008 $ 149,943 $ (35,852) $ 18,065 (21) % 12 % % of net revenue 19 % 15 % 17 % Selling, general and administrative expense decreased $35.9 million to $132.2 million for the year ended December 31, 2023, as compared to $168.0 million for the year ended December 31, 2022.
Interest and Other Income (Expense ) Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Interest and other income (expense), net $ (6,045) $ (12,154) $ 6,109 (50) % % of net revenue (1) % (1) % Interest and other income (expense), net decreased by $6.1 million to a net expense of $6.0 million in the year ended December 31, 2022 from a net expense of $12.2 million for the year ended December 31, 2021.
Interest and Other Income (Expense ) Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Interest and other income (expense), net $ (25,589) $ (6,045) $ (12,154) $ (19,544) $ 6,109 323 % (50) % % of net revenue (4) % (1) % (1) % Interest and other income (expense), net changed by $19.5 million to a net expense of $25.6 million in the year ended December 31, 2023 from a net expense of $6.0 million for the year ended December 31, 2022.
Our future capital requirements will depend on many factors, including changes in revenue, the expansion of our engineering, sales and marketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products, our pending merger with Silicon Motion, and any other potential material investments in, or acquisitions of, complementary businesses, services or technologies.
Our future capital requirements will depend on many factors, including changes in revenue, the expansion of our engineering, sales and marketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products, any damages from legal proceedings related to the termination of the Merger Agreement with Silicon Motion or any alleged breaches of the Merger Agreement that we are required to pay, or any amounts we agree to pay in any settlement and any other potential material investments in, or acquisitions of, complementary businesses, services or technologies.
Impairment of Goodwill and Long-Lived Assets Estimates in our assessment of impairment of goodwill and long-lived assets that involve a significant level of estimation uncertainty and management judgment include the comparison of our market capitalization as of the annual impairment assessment date to the carrying value of goodwill, use of forecasted financial information for our projects remaining in IPR&D, including growth rates and margin percentages, and a discount rate as of the annual IPR&D impairment assessment date, and our quarterly assessment of whether indicators of impairment exist with respect to all of our goodwill and long-lived assets.
During the years ended December 31, 2023, 2022 and 2021, we have not recorded any material net adjustments for such changes in estimates. 60 Impairment of Goodwill and Long-Lived Assets Estimates in our assessment of impairment of goodwill and long-lived assets that involve a significant level of estimation uncertainty and management judgment include the comparison of our market capitalization as of the annual impairment assessment date to the carrying value of goodwill, use of forecasted financial information for our projects remaining in IPR&D, if any, including growth rates and margin percentages, and a discount rate as of the annual IPR&D impairment assessment date, and our quarterly assessment of whether indicators of impairment exist with respect to all of our goodwill and long-lived assets.
Restructuring Charges Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Restructuring charges $ 2,265 $ 2,204 $61 3% % of net revenue — % — % Restructuring charges increased $0.1 million to $2.3 million for the year ended December 31, 2022, compared to $2.2 million for the year ended December 31, 2021.
Restructuring Charges Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Restructuring charges $ 19,786 $ 2,265 $ 2,204 $ 17,521 $ 61 774% 3% % of net revenue 3 % — % — % Restructuring charges increased $17.5 million to $19.8 million for the year ended December 31, 2023, compared to $2.3 million for the year ended December 31, 2022.
Research and Development Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Research and development $ 296,442 $ 278,440 $ 18,002 6 % % of net revenue 26 % 31 % Research and development expense increased $18.0 million to $296.4 million for the year ended December 31, 2022 from $278.4 million in the year ended December 31, 2021.
Research and Development Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Research and development $ 269,504 $ 296,442 $ 278,440 $ (26,938) $ 18,002 (9) % 6 % % of net revenue 39 % 26 % 31 % Research and development, or R&D, expense decreased $26.9 million to $269.5 million for the year ended December 31, 2023 from $296.4 million in the year ended December 31, 2022.
Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with accounting principles that are generally accepted in the United States.
We expect to complete informing affected employees of the Workforce Reductions by the end of the first quarter of 2024. Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with accounting principles that are generally accepted in the United States.
We expect selling, general and administrative expenses to increase next quarter due to increased personnel costs and increase in future years as we grow our sales and marketing organization to expand into existing and new markets. 60 Impairment Losses Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Impairment losses $ 2,811 $ — $2,811 n/a % of net revenue — % — % Impairment losses in the year ended December 31, 2022 related to abandonment of certain acquired licensing agreements.
We are closely managing our selling, general and administrative expenses; however, we expect selling, general and administrative expenses to increase in future years when we return to growing our sales and marketing organization to expand into existing and new markets. 65 Impairment Losses Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Impairment losses $ 2,438 $ 2,811 $ — $ (373) $ 2,811 (13)% N/A % of net revenue — % — % — % Impairment losses in the year ended December 31, 2023 related to abandonment of certain acquired licensing agreements.
For example, a decision to abandon a project involving the technology underlying developed technology and IPR&D may result in immediate impairment of such assets in the quarter such decision is made.
For example, a decision to abandon a project involving the technology underlying developed technology and IPR&D, if any, may result in immediate impairment of such assets in the quarter such decision is made. As of the October 31 assessment date, we did not have any remaining IPR&D .
The reported amounts are sensitive to changes to certain assumptions used in the valuation. For example, if the discount rate used in our valuations increased by 1%, it would result in a decrease to the valuation of intangible assets of $3.8M for our 2020 acquisitions and $0.1M for our 2021 acquisition .
When reported amounts are material, they may be sensitive to changes to certain assumptions used in the valuation. If the discount rate used in our valuations increased by 1%, it would result in a decrease to the valuation of intangible assets of an immaterial amount for our 2023 and 2021 acquisitions .
We are a fabless integrated circuit design company whose products integrate all or substantial portions of a high-speed communication system, including radio frequency, or RF, high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management.
We are a fabless integrated circuit design company whose products integrate all or substantial portions of a high-speed communication system, including RF, high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management. In most cases, these products are designed on a single silicon-die, using standard digital CMOS manufacturing processes and conventional packaging technologies.
Our ability to achieve revenue growth in the future will depend, among other factors, on our ability to further penetrate existing markets; our ability to expand our target addressable markets by developing new and innovative products; changes in government trade policies; and our ability to obtain design wins with device manufacturers, in particular manufacturers of set-top boxes, data modems, and gateways for the broadband service provider, storage networking market, cable infrastructure market, industrial and automotive markets, and optical module and telecommunications infrastructure markets.
Our ability to achieve revenue growth in the future will depend, among other factors, on our ability to further penetrate existing markets; our ability to expand our target addressable markets by developing new and innovative products; changes in government trade policies; and our ability to obtain design wins with device manufacturers, in particular manufacturers of data modems, and gateways for the broadband service provider, storage networking market, cable infrastructure market, industrial and automotive markets, and optical module and telecommunications infrastructure markets. 57 Products shipped to Asia accounted for 75%, 82% and 83% of net revenue during the years ended 2023, 2022 and 2021, respectively, including 37%, 43% and 40%, respectively, from products shipped to Hong Kong and 11%, 16% and 12%, respectively, from products shipped to mainland China and 13% from products shipped to Vietnam in 2021.
Examples of such devices include cable Data Over Cable Service Interface Specifications, or DOCSIS, fiber and DSL broadband modems and gateways; Wi-Fi and wireline routers for home networking; radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; fiber-optic modules for data center, metro, and long-haul transport networks; as well as power management and interface products used in these and many other markets.
Examples of such devices include radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; optical transceivers targeting hyperscale data centers; Wi-Fi and wireline routers for home networking; broadband modems compliant with DOCSIS, PON, and DSL; as well as power management and interface products used in these and many other markets.
Cash used to fund capital purchases and acquisitions of businesses and investments are included in investing activities in our consolidated statements of cash flows.
Cash used to fund capital purchases and acquisitions of businesses and investments are included in investing activities in our consolidated statements of cash flows. Cash proceeds from issuance of common stock and debt and cash used to pay down outstanding debt or repurchase common stock are included in financing activities in our consolidated statements of cash flows.
The change in interest and other income (expense), net was primarily due to the positive impact of a non-recurring gain on sale of privately held investments of $3.4 million and decreased interest expense of $3.2 million associated with a lower outstanding principal balance of debt, partially offset by unrealized losses on investments and impacts from foreign currency exchange rate fluctuations. 61 Income Tax Provision Year Ended December 31, 2022 2021 $ Change % Change (dollars in thousands) Income tax provision $ 49,158 $ 5,901 $ 43,257 733 % % of pre-tax income (loss) 28 % 12 % The income tax provision for the year ended December 31, 2022 was $49.2 million compared to an income tax provision of $5.9 million for the year ended December 31, 2021.
The change in interest and other income (expense), net was due to the positive impact of a non-recurring gain on sale of privately held investments of $3.4 million and a decrease in interest expense of $3.2 million associated with a lower outstanding principal balance of debt, partially offset by unrealized losses on investments and impacts from foreign currency exchange rate fluctuations.
The amortization and depreciation of such assets, and change in fair value of contingent consideration, impact our consolidated financial results in periods subsequent to the acquisition, and such amounts are disclosed in our consolidated financial statements. During the year ended December 31, 2022, we recorded impairment of intangible assets of $2.8 million associated with a 2021 acquisition.
The amortization and depreciation of such assets, and change in fair value of contingent consideration, impact our consolidated financial results in periods subsequent to the acquisition, and such amounts are disclosed in our consolidated financial statements.
In the year ended December 31, 2020, two of our direct customers accounted for 28% of our net revenue, and our ten largest customers collectively accounted for 68% of our net revenue, of which distributor customers comprised 41% of our net revenue.
In the year ended December 31, 2023, one customer accounted for 10% of our net revenue, and our ten largest customers collectively accounted for 54% of our net revenue, of which distributor customers accounted for 16% of our net revenue.
As of December 31, 2022, our indebtedness totaled $125.0 million, which consists of outstanding principal under the Initial Term Loan under the June 23, 2021 Credit Agreement.
As of December 31, 2023, our indebtedness totaled $125.0 million, which consists of outstanding principal under the Initial Term Loan under the June 23, 2021 Credit Agreement. The June 23, 2021 Credit Agreement also provides the Company with the Revolving Facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of December 31, 2023.
The June 23, 2021 Credit Agreement, under which we entered into a senior secured term B loan facility and a revolving credit facility, permits us to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $175.0 million and (y) 100% of “Consolidated EBITDA” (as defined in such agreement), plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests.
The June 23, 2021 Credit Agreement, under which we entered into a senior secured term B loan facility and a revolving credit facility, permits us to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $175.0 million and (y) 100% of “Consolidated EBITDA” (as defined in such agreement), plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests. 69 The following is a summary of our working capital, cash and cash equivalents, and restricted cash for the periods indicated: December 31, 2023 2022 (in thousands) Working capital $ 265,896 $ 222,038 Cash and cash equivalents $ 187,288 $ 187,353 Short-term restricted cash 1,051 982 Long-term restricted cash 17 22 Total cash, cash equivalents, and restricted cash $ 188,356 $ 188,357 We believe that our $187.3 million of cash and cash equivalents at December 31, 2023 will be sufficient to fund our projected operating requirements for at least the next twelve months.
If projected future taxable income in the U.S., for example, were to increase from what we assumed in our estimates, in periods subsequent to recording valuation allowances, it may be more likely than not that a proportional amount of the valuation against deferred tax assets will be released, resulting in an impact to our tax provision (benefit). 57 Recently Issued Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to provide specific guidance to eliminate diversity in practice on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts from customers in a business combination consistent with revenue contracts with customers not acquired in an acquisition.
If projected future taxable income in the U.S., for example, were to increase from what we assumed in our estimates, in periods subsequent to recording valuation allowances, it may be more likely than not that a proportional amount of the valuation against deferred tax assets will be released, resulting in an impact to our tax provision (benefit).
Other than our forecasts of future demand, there are no assumptions inherent in our estimates in the valuation of inventory that would result in sensitivity of reported amounts to such assumptions. During the years ended December 31, 2022, 2021 and 2020, we have not recorded any material net adjustments for such changes in estimates.
Other than our forecasts of future demand, there are no assumptions inherent in our estimates in the valuation of inventory that would result in sensitivity of reported amounts to such assumptions.
Additionally, as of December 31, 2022, our working capital, which we define as current assets less current liabilities, was $222.0 million. Our primary uses of cash are to fund operating expenses and purchases of inventory, property and equipment, and from time to time, the acquisition of businesses. In May 2022, we entered into the Merger Agreement to acquire Silicon Motion.
We have not experienced any losses on our deposits of cash and cash equivalents. Our primary uses of cash are to fund operating expenses and purchases of inventory, property and equipment, and from time to time, the acquisition of businesses. In May 2022, we entered into the Merger Agreement to acquire Silicon Motion.
During the years ended December 31, 2021 and 2020, we did not record any material adjustments to the valuation of such assets, goodwill, or subsequent period adjustments to the consolidated statements of operations associated with our other business combinations. 56 Revenue Recognition Estimates in our revenue recognition that involve a significant level of estimation uncertainty include the estimates of price adjustments and returns under contractual stock rotation rights based on our analysis of expected value of actual price adjustment claims by distributors and product and historical return rates.
Revenue Recognition Estimates in our revenue recognition that involve a significant level of estimation uncertainty include the estimates of price adjustments and returns under contractual stock rotation rights based on our analysis of expected value of actual price adjustment claims by distributors and product historical return rates.
We will continue to monitor updates to our business along with guidance issued with respect to both Acts to determine whether any adjustments are needed to our consolidated tax provision in future periods. 62 Liquidity and Capital Resources As of December 31, 2022, we had cash and cash equivalents of $187.4 million, restricted cash of $1.0 million and net accounts receivable of $171.0 million.
We will continue to monitor updates to our business along with guidance issued with respect to both Acts to determine whether any adjustments are needed to our consolidated tax provision in future periods.
Other income (expense) generally consists of income (expense) generated from non-operating transactions, including sales of investments, and unrealized holding gains (losses) from certain investments required to be marked to market value. 58 Income tax provision. We make certain estimates and judgments in determining income taxes for financial statement purposes.
Other income (expense) generally consists of income (expense) generated from non-operating transactions, including a ticking fee paid to lenders following the termination of the Silicon Motion merger, net gains (losses) from sales of investments, and unrealized holding gains (losses) from certain investments required to be marked to market value. Income tax provision.
The following is a summary of our working capital, cash and cash equivalents, and restricted cash for the periods indicated: December 31, December 31, 2022 2021 (in thousands) Working capital $ 222,038 $ 196,709 Cash and cash equivalents $ 187,353 $ 130,572 Short-term restricted cash 982 105 Long-term restricted cash 22 1,061 Total cash, cash equivalents, and restricted cash $ 188,357 $ 131,738 64 The following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities for the periods indicated: Year Ended December 31, 2022 2021 (in thousands) Net cash provided by operating activities $ 388,726 $ 168,233 Net cash used in investing activities (91,762) (91,757) Net cash used in financing activities (240,401) (91,903) Effect of exchange rate changes on cash, cash equivalents and restricted cash 56 (2,869) Increase (decrease) in cash, cash equivalents and restricted cash $ 56,619 $ (18,296) Cash Flows from Operating Activities Net cash provided by operating activities was $388.7 million for the year ended December 31, 2022 and consisted of positive impact of net income of $125.0 million and non-cash items of $164.1 million, changes in operating assets and liabilities of $86.0 million, and excess tax benefits and deferred income taxes totaling $13.5 million.
The following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities for the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 43,372 $ 388,726 $ 168,233 Net cash used in investing activities (15,935) (91,762) (91,757) Net cash used in financing activities (26,356) (240,401) (91,903) Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,082) 56 (2,869) Increase (decrease) in cash, cash equivalents and restricted cash $ (1) $ 56,619 $ (18,296) Cash Flows from Operating Activities In the year ended December 31, 2023, net cash provided by operating activities was $43.4 million, compared to net cash provided by operating activities of $388.7 million for the year ended December 31, 2022.
Impact of the Global Economic Downturn Inflation, and uncertainty in customer demand and the worldwide economy has continued, and we may experience continued volatility in our sales and revenues in the near future. In particular, we believe an economic downturn and inventory oversupply due to changes in customer demand will add to volatility in managing the business.
Impact of Global Economic Uncertainty and Inventory Build Inflation and uncertainty in customer demand and the worldwide economy has continued, and we expect to experience continued decline in our sales and revenues in the first quarter of 2024.
Our customers include electronics distributors, module makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, who incorporate our products in a wide range of electronic devices.
These solutions also enable shorter design cycles, significant design flexibility and low system-level cost across a range of markets. Our customers include electronics distributors, module makers, OEMs and ODMs, which incorporate our products in a wide range of electronic devices.
The loan agreement is also expected to contain financial and operational covenants that would adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions ” for a discussion for a discussion of how our indebtedness could have a material adverse effect on our liquidity and capital resources.
Such indebtedness adversely affects our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interest of stockholders, including obtaining additional indebtedness to finance such transactions.
The Company also has available a senior secured revolving credit facility, or the Revolving Facility, in an aggregate principal amount of up to $100.0 million which remained undrawn as of December 31, 2022. The proceeds of the Revolving Facility may be used to finance the working capital needs and other general corporate purposes of the Company and its subsidiaries.
As of December 31, 2023, $125.0 million of principal was outstanding under a senior secured term B loan facility, or the “Initial Term Loan under the June 23, 2021 Credit Agreement.” The Company also has available a senior secured revolving credit facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of December 31, 2023.
In addition, inventory oversupply could also lead to inventory write-downs, including charges for any excess or obsolete inventory which could negatively impact our gross margins. However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time.
In particular, we believe an economic slowdown and inventory oversupply in the channel could continue to add to volatility in managing the business. In addition, inventory oversupply could potentially lead to more inventory write-downs, including charges for any excess or obsolete inventory which could negatively impact our gross margins.
Our consolidated balance sheet at December 31, 2022 included $6.0 million in other long-term liabilities for uncertain tax positions, some of which may result in cash payment.
Our consolidated balance sheet at December 31, 2023 included in other long-term liabilities $5.4 million for uncertain tax positions, some of which may result in cash payment and $15.0 million received from other parties for jointly funded research and development projects which will be recognized into income when the contingencies associated with the repayment conditions have been resolved.
The increase was primarily driven by higher sales and incremental expense. Gross profit percentage improved for the year ended December 31, 2022, as compared to the year ended December 31, 2021, due primarily to revenue mix and improved absorption of amortization of intangible assets.
Gross profit percentage improved for the year ended December 31, 2022, as compared to the year ended December 31, 2021, driven by improved mix of higher margin new products, higher margin infrastructure and industrial and multi-market product contributions, and improved margins from price increases that were passed along on certain products within our broadband, connectivity, and industrial and multi-market categories during the year, and improved absorption of amortization of intangible assets.
Cash proceeds from issuance of common stock and debt and cash used to pay down outstanding debt or repurchase common stock are included in financing activities in our consolidated statements of cash flows. 63 As of December 31, 2022, our material cash requirements include long-term debt, non-cancelable operating leases, inventory purchase obligations and other obligations, which primarily consist of contractual payments due for computer-aided design software, as follows: Payments due Total Less than 1 year 1-3 years 3-5 years More than 5 years (in thousands) Long term debt obligations $ 125,000 $ — $ — $ — $ 125,000 Operating lease obligations 36,178 11,445 15,461 8,695 577 Purchase obligations 132,772 132,635 137 — — Other obligations 29,920 20,820 9,100 — — Total $ 323,870 $ 164,900 $ 24,698 $ 8,695 $ 125,577 Our planned capital expenditures as of December 31, 2022 were not material.
As of December 31, 2023, our material cash requirements include long-term debt, non-cancelable operating leases, inventory purchase obligations and other obligations, which primarily consist of contractual payments due for computer-aided design software, as follows: Payments due Total Less than 1 year 1-3 years 3-5 years More than 5 years (in thousands) Long term debt obligations $ 125,000 $ — $ — $ 125,000 $ — Operating lease obligations 39,440 10,769 18,830 8,245 1,596 Purchase obligations 38,985 28,754 10,231 — — Other obligations 84,208 32,563 47,972 3,673 — Total $ 287,633 $ 72,086 $ 77,033 $ 136,918 $ 1,596 Our planned capital expenditures as of December 31, 2023 were not material.
We also use cash to pay down outstanding debt, repurchase our common stock under our stock repurchase plan, and from time to time, make investments. As of December 31, 2022, $125.0 million of principal was outstanding under a senior secured term B loan facility, or the Initial Term Loan under the June 23, 2021 Credit Agreement.
However, on July 26, 2023, we terminated the Merger Agreement and were relieved of our obligations to close. We also use cash to pay down outstanding debt, repurchase our common stock under our stock repurchase plan, and from time to time, make investments.
Net cash used in investing activities was $91.8 million for the year ended December 31, 2021 and consisted of cash used in the acquisitions of $40.0 million comprising $35.0 million in payments of purchase price from our 2020 acquisition of NanoSemi that were previously deferred under the terms of the merger agreement and $5.0 million to purchase a business, purchases of property and equipment of $39.2 million, purchases of intangible assets of $7.6 million, and purchases of investments in a private entity of $5.0 million.
Net cash used in investing activities was $15.9 million for the year ended December 31, 2023 and included purchases of property and equipment of $13.5 million, payments to acquire Company Y of $9.8 million, purchases of intangible assets of $6.4 million, and payments of contingent consideration related to our acquisition of Company X of $3.0 million.
The increase in broadband net revenue of $0.8 million was primarily from gateway revenues. The increase in connectivity revenue of $154.6 million was primarily driven by higher Wi-Fi and ethernet revenues as our supply improved and an increase in MoCA product shipments.
More than 50% of the revenue increase was driven by increased revenue from the introduction of our new Wi-Fi 6 product late in 2021. The increase in infrastructure revenues of $16.9 million was driven by an increase in shipments in the wireless infrastructure market.
Net cash used in financing activities consisted primarily of repayments of principal on outstanding debt of $409.8 million, common stock repurchases of $23.5 million, minimum tax withholding paid on behalf of employees for restricted stock units of $13.1 million, and payments of debt issuance costs of $4.2 million, partially offset by cash inflows from net proceeds from the issuance of debt of $350.0 million and from issuance of common stock upon exercise of stock options of $8.8 million. 65 We believe that our $187.4 million of cash and cash equivalents at December 31, 2022 will be sufficient to fund our projected operating requirements for at least the next twelve months, excluding anticipated cash expenditures for the pending merger and related integration costs which will be financed primarily through additional debt under the Senior Secured Credit Facilities.
Net cash used in financing activities consisted of payment of a ticking fee to lenders of $18.3 million associated with the termination of our debt commitment associated with the terminated Silicon Motion merger and repayments of minimum tax withholding paid on behalf of employees for restricted stock units of $12.6 million, partially offset by cash inflows from net proceeds from the issuance of common stock upon exercise of stock options of $4.6 million.
Removed
In most cases, these products are designed on a single silicon-die, using standard digital complementary metal oxide semiconductor, or CMOS, processes and conventional packaging technologies. We believe this approach enables our solutions to achieve superior power, performance, and cost relative to our industry competition.
Added
However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time. As supplier lead times continue to stabilize, we have seen and expect to continue to see a more normalized demand-planning horizon.
Removed
Our highly integrated semiconductor devices and platform-level solutions are primarily manufactured using low-cost CMOS process technology. CMOS processes are ideally suited for large digital logic implementations targeting high-volume and low-cost consumer applications.
Added
While we expect inventory to remain elevated in the near term, we expect channel inventory will continue to decline thereafter.
Removed
In addition, our proprietary CMOS-based radio and digital system architectures also enable shorter design cycles, significant design flexibility and low system-level cost across a wide range of broadband communications, wired and wireless infrastructure, and industrial and multi-market customer applications.
Added
Silicon Motion is a provider of NAND flash controllers for solid state drives and other solid state storage devices. 58 On July 26, 2023, we terminated the Merger Agreement and notified Silicon Motion that we were relieved of our obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement were not satisfied and were incapable of being satisfied, (ii) Silicon Motion had suffered a Material Adverse Effect that was continuing, (iii) Silicon Motion was in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that gave rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date had passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023.
Removed
Products shipped to Asia accounted for 82%, 83% and 82% of net revenue during the years ended 2022, 2021 and 2020, respectively, including 43%, 40% and 42%, respectively, from products shipped to Hong Kong and 16%, 12% and 17%, respectively, from products shipped to mainland China and 13% from products shipped to Vietnam in 2021.
Added
Under the terms of the Merger Agreement, MaxLinear was not required to pay a break-up fee or other fee as a result of the termination of the Merger Agreement on these grounds.
Removed
Silicon Motion is a provider of NAND flash controllers for solid state drives and other solid state storage devices.
Added
On August 16, 2023, Silicon Motion delivered a notice to us, which Silicon Motion publicly disclosed, that it was purporting to terminate the Merger Agreement and that Silicon Motion would be commencing an arbitration to seek damages from us arising from our alleged breaches of the Merger Agreement.
Removed
Under the terms of the Merger Agreement, the transaction consideration will consist of $93.54 in cash and 0.388 shares of our stock for each Silicon Motion American Depositary Share, or ADS, and $23.385 in cash and 0.097 shares of our common stock for each Silicon Motion ordinary share not represented by an ADS.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are currently mitigating the impact of rising interest rates with prepayments of principal on our indebtedness and we believe our operating cash held primarily for working capital purpose is sufficient to cover our interest obligations. ITEM 8.
Biggest changeWe currently believe our operating cash held primarily for working capital purpose is sufficient to cover our interest obligations, but we are monitoring the impact of rising interest rates on our ability to service our interest and debt obligations, obtain financing, and on our business in general. ITEM 8.
A hypothetical change of 100 basis points in such foreign currency exchange rates during the year ended December 31, 2022 would result in a change to translation gain in accumulated other comprehensive income of approximately $0.9 million. 66 Interest Rate Risk We are subject to a variable amount of interest on the principal balance of our credit agreements described above and could be adversely impacted by rising interest rates in the future.
A hypothetical change of 100 basis points in such foreign currency exchange rates during the year ended December 31, 2023 would result in a change to translation gain in accumulated other comprehensive income of approximately $1.0 million. 71 Interest Rate Risk We are subject to a variable amount of interest on the principal balance of our credit agreements described above and could be adversely impacted by rising interest rates in the future.

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