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What changed in SITIME Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SITIME Corp's 2023 and 2024 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 2024 report.

+289 added−284 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-26)

Top changes in SITIME Corp's 2024 10-K

289 paragraphs added · 284 removed · 242 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

83 edited+15 added−10 removed50 unchanged
Biggest changeIn addition, with the highly diverse nature of industrial applications and the need for unique operating frequencies, we believe the programmable architecture of our Precision Timing products provides an advantage. Timing devices used in aerospace and defense applications such as rockets and satellites need to withstand extreme vibration forces and temperature gradients during operation.
Biggest changeWe believe our Precision Timing solutions can perform better than legacy quartz-based solutions in demanding industrial environments and with lower power consumption and higher reliability. In addition, with the highly diverse nature of industrial applications and the need for unique operating frequencies, we believe the programmable architecture of our Precision Timing products provides an advantage.
We leverage our global network of distributors to address the broad set of end markets we serve. For our largest accounts, dedicated sales personnel work with the end customer to ensure that our solutions fully address the end customer’s timing needs.
We leverage our global network of distributors to address the broad set of end markets we serve. For our largest accounts, dedicated sales personnel work with the end customer to ensure that our solutions fully address the customer’s timing needs.
Our smaller customers can select the optimum timing solution for their needs by working directly with our distributors or by shopping on our online store, SiTimeDirect™. We operate a fabless business model, where we outsource manufacturing to semiconductor industry suppliers, which allows us to focus on, and excel in, the design, marketing, and sales of our products.
Our smaller customers can select the optimum timing solution for their needs by working directly with our sales personnel or distributors or by shopping on our online store, SiTimeDirect™. We operate a fabless business model, where we outsource manufacturing to semiconductor industry suppliers, which allows us to focus on, and excel in, the design, marketing, and sales of our products.
Precision Timing devices are well-suited for these applications, as they provide up to 50 times better acceleration sensitivity under vibration than comparable quartz-based solutions. 8 Table of Contents Mobile, IoT and Consumer The growing reliance on mobile devices and the IoT revolution has enabled the proliferation of billions of internet-connected devices in industrial and consumer applications.
Precision Timing devices are well-suited for these applications, as they provide up to 50 times better acceleration sensitivity under vibration than comparable quartz-based solutions. 8 Table of Contents Mobile, IoT and Consumer The growing reliance on mobile devices has enabled the proliferation of billions of internet-connected devices in industrial and consumer applications.
Our analog mixed-signal technologies include several innovative low-noise circuit-based oscillators, high-performance PLLs, low-noise data converters, and precision low-aging reference circuits. Many of our oscillators use temperature sensing to maximize frequency stability. Our low-power nano-ampere and high-resolution DualMEMS® microkelvin-resolution sensing technologies stabilize our Precision Timing solutions despite rapid temperature changes.
Our analog mixed-signal technologies include several innovative low-noise circuit-based oscillators, high-performance PLLs, low-noise data converters, and precision low-aging reference circuits. Many of our oscillators use temperature sensing to maximize frequency stability. Our low-power nano-ampere and high-resolution DualMEMS® sensing technologies stabilize our Precision Timing solutions despite rapid temperature changes.
Our Solutions and Technology Our Precision Timing solutions comprise of: • Oscillators and Clock ICs : We have a dedicated analog and mixed-signal engineering team focused on the most complex challenges related to oscillators, such as OCXOs, XOs, VCXOs, TCXOs, and DCXOs, and clock ICs, such as network synchronizers, jitter cleaners, clock generators, and buffers.
Our Solutions and Technology Our Precision Timing solutions comprise of: • Oscillators and Clock ICs : We have a dedicated analog and mixed-signal engineering team focused on the most complex challenges related to oscillators, such as OCXOs, Super-TCXOs, XOs, VCXOs, and DCXOs, and clock ICs, such as network synchronizers, jitter cleaners, clock generators, and buffers.
Companies that we primarily compete with include, but are not limited to, Abracon, LLC, Daishinku Corporation, Diodes Incorporated, Kyocera Corporation, Microchip Technology Inc., Murata Manufacturing Co., Ltd, Nihon Dempa Kogoyo., Ltd., Rakon Limited, Renesas Electronics Corporation, Seiko Epson Corporation, Skyworks Solutions, Inc., Texas Instruments Incorporated, and TXC Corporation.
Companies that we primarily compete with include, but are not limited to, Abracon, LLC, Daishinku Corp., Diodes Incorporated, Kyocera Corporation, Microchip Technology Inc., Murata Manufacturing Co., Ltd, Nihon Dempa Kogoyo., Ltd., Rakon Limited, Renesas Electronics Corporation, Seiko Epson Corporation, Skyworks Solutions, Inc., Texas Instruments Incorporated, and TXC Corporation.
SiTime is now a key provider of all differentiated products in timing – oscillators, clocks, and resonators combined with depth in engineering expertise in Precision Timing solutions. We sell our products through distributors, who in turn sell to our end customers. We also sell products directly to some of our end customers.
SiTime is now a key provider of all differentiated products in timing – oscillators, clocks, and resonators combined with depth in engineering expertise in Precision Timing solutions. We sell our products primarily through distributors, who in turn sell to our end customers. We also sell products directly to some of our end customers.
We plan to improve the performance of our current solution suite across a variety of key metrics, including size, power, frequency stability, phase noise, and signal quality, while adding new functionality. • Educate and promote the benefits of silicon technology .
We plan to improve the performance of our current solution suite across a variety of key metrics, including size, power, frequency stability, phase noise, and signal quality, while adding new functionality. • Educate and promote the benefits of silicon timing technology .
We believe that we have an advantage in delivering such integrated clocking solutions because the expertise related to these high-performance technologies resides in house. • Leveraged product development : Our solutions employ different combinations of MEMS and circuit components, enabling us to generate a vast number of custom part numbers, including over 40,000 unique part numbers shipped as of December 31, 2023. • Rapid time to market : Our solutions can typically be delivered within weeks of initial customer order and configuration, enabling us to reduce our end customers’ time to market.
We believe that we have an advantage in delivering such integrated clocking solutions because the expertise related to these high-performance technologies resides in house. • Leveraged product development : Our solutions employ different combinations of MEMS and circuit components, enabling us to generate a vast number of custom part numbers, including over 40,000 unique part numbers shipped as of December 31, 2024. • Rapid time to market : Our solutions can typically be delivered within weeks of initial customer order and configuration, enabling us to reduce our end customers’ time to market.
Precision timing, a category that SiTime created ("Precision Timing"), fills this need with the performance, power, size, and cost that is required by these new applications. We are a leading provider of Precision Timing solutions to the global electronics industry.
Precision timing, a category that SiTime created ("Precision Timing") fills this need with the performance, power, size, and cost that is required by these applications. We are a leading provider of Precision Timing solutions to the global electronics industry.
Below are some examples of end markets in which we believe our silicon-based timing is enabling or has the potential to enable, greater functionality than legacy solutions: Communications, Datacenter, and Enterprise Communications infrastructure equipment used in wireless base stations, wired infrastructure equipment, enterprise networks, cloud data centers, and artificial intelligence infrastructure must provide high performance and stability in demanding environments, which may include temperature fluctuations, mechanical shocks, and vibration.
Below are some examples of end markets in which we believe our silicon-based timing is enabling or has the potential to enable, greater functionality than legacy solutions: Communications, Datacenter, and Enterprise Communications infrastructure equipment used in wireless base stations, wired infrastructure equipment, enterprise networks, cloud data centers, and artificial intelligence infrastructure must provide high performance and stability in demanding environments, which may include temperature fluctuations, and vibration.
We create resonators in silicon using MEMS semiconductor technology, which is different than the quartz industry where the resonators are made from quartz crystals and are generally manufactured in non-semiconductor technologies. • Oscillators are active systems that combine resonators with analog mixed-signal ICs that cause the resonators to vibrate, generating accurate and stable clock signals.
We create resonators in silicon using MEMS semiconductor technology, which is different than the quartz industry where the resonators are made from quartz crystals and are generally manufactured in non-semiconductor technologies. • Oscillators are active systems that combine resonators with analog mixed-signal ICs that cause the resonators to vibrate - generating, amplifying, and sustaining accurate and stable clock signals.
We also offer what we consider to be leading solutions across a range of attributes, including Allan deviation, power supply noise rejection, temperature-sensing resolution, and integrated phase jitter. • MEMS resonators : We pioneered the silicon MEMS timing industry with the MEMS First®, EpiSeal®, and TempFlat® processes and technologies.
We also offer what we consider to be leading solutions across a range of performance attributes, including Allan deviation, power supply noise rejection, temperature-sensing resolution, and integrated phase jitter. • MEMS resonators : We pioneered the silicon MEMS timing industry with the MEMS First®, EpiSeal®, TempFlat® and ApexMEMS processes and technologies.
For the automotive market, our solutions can be utilized in automotive electronics, including advanced driver assistance systems (“ADAS”) for self-driving cars, which require increased timing accuracy. For the industrial market, our products offer programmability and high reliability for the diverse operating conditions of industrial equipment, including high temperatures, mechanical shock, and vibration.
For the automotive market, our solutions can be utilized in automotive electronics, including advanced driver assistance systems (“ADAS”) for self-driving cars, which require increased timing accuracy. For the industrial market, our products offer programmability and high reliability for the diverse operating conditions of industrial equipment, including high temperature, mechanical shock, and vibration.
To maximize MEMS first-silicon success, we have also developed our own MEMS simulation tools. We are also different in that our MEMS resonators are made using semiconductor technology which has significant benefits in features, performance, manufacturing, and cost, while the quartz suppliers use quartz crystal material.
To maximize MEMS first-silicon success, we have also developed our own MEMS simulation tools. We are also different in that our MEMS resonators are made using semiconductor technology which has significant benefits in features, performance, manufacturing, and cost, while the quartz resonator and oscillator suppliers use quartz crystal material.
Our Precision Timing solutions are the heartbeat of our customers’ electronic systems, providing the timing functionality that is needed for electronics to operate reliably and correctly. We provide Precision Timing solutions that are differentiated by high performance, high resilience, and high reliability, along with programmability, small size, and low power consumption.
Our Precision Timing solutions are the heartbeat of our customers’ electronic systems, providing the timing functionality that is needed for electronics to operate reliably and accurately. We provide Precision Timing solutions that are differentiated by high performance, high resilience, and high reliability, along with programmability, small size, and low power consumption.
Limitations of Legacy Quartz-based Solutions Quartz crystal has been the predominant technology of choice for resonators for over half a century and will continue to play a role in the timing market. In a quartz oscillator, a quartz crystal resonator is paired with a silicon-based clock IC in a ceramic package.
Limitations of Legacy Quartz-based Solutions Quartz crystal has been the predominant technology of choice for resonators for over half a century and will continue to play a role in the timing market. In a quartz-based oscillator, a quartz crystal resonator is paired with a silicon-based clock IC in a ceramic or metal package.
In the event we receive an adverse result in any litigation, we could be required to pay substantial damages, seek licenses from third parties, which may not be available on reasonable terms or at all, cease sale of products, expend significant resources to develop alternative technology, or discontinue the use of processes requiring the relevant technology.
In the event we receive an adverse result in 14 Table of Contents any litigation, we could be required to pay substantial damages, seek licenses from third parties, which may not be available on reasonable terms or at all, cease sale of products, expend significant resources to develop alternative technology, or discontinue the use of processes requiring the relevant technology.
The patent rights obtained under the license agreement with Bosch expire between 2024 and 2029, and the license agreement expires upon expiration of the last patent licensed under the agreement. We do not believe there will be any significant impact upon expiration of these patents.
The patent rights obtained under the license agreement with Bosch expire between 2025 and 2029, and the license agreement expires upon expiration of the last patent licensed under the agreement. We do not believe there will be any significant impact upon expiration of these patents.
As electronics evolve to deliver higher performance levels, even in increasingly challenging environments, while also being more complex and size-constrained, we believe they will require more sophisticated semiconductor-based timing solutions that cannot be developed in legacy quartz crystal-based technologies.
As electronics evolve to deliver higher performance, connectivity, and intelligence, even in increasingly challenging environments, while also being more complex and size-constrained, we believe they will require more sophisticated semiconductor-based timing solutions that cannot be developed in legacy quartz crystal-based technologies.
We intend to continue expanding our end customer base through direct dialogue with large strategic accounts, partnerships with large distributors, as well as grow direct online sales with the SiTimeDirect store.
We expect to continue expanding our end customer base through direct dialogue with large strategic accounts, partnerships with large distributors, as well as grow direct online sales with the SiTimeDirect store.
MEMS technology is also inherently well-suited to produce timing solutions that are small, and offer high performance, resilience and programmability. Timing solutions based on MEMS technology are manufactured using semiconductor processes in fabrication plants with high capacity, allowing for cost-effective high-volume manufacturing.
MEMS technology is also inherently well-suited to produce timing solutions that are small, and offer high performance, resilience and programmability. Timing solutions based on MEMS technology are manufactured using semiconductor processes in fabs with high capacity, allowing for cost-effective high-volume manufacturing.
In this aspect, we are different than quartz-based providers, who typically have expertise in designing and manufacturing resonator components, but usually outsource the analog and packaging. We also have a deep understanding of mechanical, electrical, and thermal properties of materials, which is a key requirement for developing our proprietary MEMS processes.
In this aspect, we believe we are different than quartz-based oscillator and resonator providers, who typically have expertise in designing and manufacturing resonator components, but usually outsource the analog circuit design and packaging. We also have a deep understanding of the mechanical, electrical, and thermal properties of materials, which is a key requirement for developing our proprietary MEMS processes.
The resilience of our products becomes an increasing advantage as equipment is placed in dense, harsh environments and moves closer to the customer with the rollout of 5G, the rapid expansion in cloudification, and deployment of hyperscale datacenters.
The resilience of our products becomes an increasing advantage as equipment is placed in dense, harsh environments and moves closer to the customer with the rollout of 5G, the rapid expansion in cloudification, and deployment of hyperscale and artificial intelligence ("AI") datacenters.
We subject our third-party manufacturing contractors to rigorous qualification requirements to meet the high quality and reliability standards required of our products. We carefully qualify each of our partners and their processes 12 Table of Contents before applying the technology to our products.
We subject our third-party manufacturing contractors to rigorous qualification requirements to meet the high quality and reliability standards required of our products. We carefully qualify each of our partners and their processes before applying the technology to our products.
More complex electronic systems require advanced timing solutions that may integrate a variety of oscillators, clock ICs, and resonators. The complexity of these timing solutions increases significantly when the performance requirements of the systems that use them increase, such as electronic systems required to support the 5G communication network infrastructure.
More complex electronic systems require advanced timing solutions that may use a variety of oscillators, clock ICs, and resonators. The complexity of these timing solutions increases significantly when the performance requirements of the systems that use them increase, such as electronic systems required to support AI datacenters or 5G communication network infrastructure.
As a result, we believe revenue attributable to our largest end customer accounted for approximately 21%, 20%, and 22% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
(“Apple”), our largest end customer. As a result, we believe revenue attributable to our largest end customer accounted for approximately 22%, 21%, and 20% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
We intend to continue to broaden our product portfolio by offering additional varieties of oscillators, expanding into the clock IC market and expanding our business in standalone resonators. • Continue to attract and acquire new customers .
We intend to continue to broaden our product portfolio by offering additional varieties of oscillators, expanding into the clock IC market and growing our business in standalone resonators. 10 Table of Contents • Continue to attract and acquire new customers .
(“Arrow”), and Quantek Technology Corporation (“Quantek”), three of our distributor customers, each directly accounted for more than 10% of our revenue in the years ended December 31, 2023, 2022, and 2021. Additionally, Sabre Technologies Pte. Ltd ("Sabre") directly accounted for 11 Table of Contents more than 10% of our revenue for the year ended December 31, 2023.
(“Arrow”), and Quantek Technology Corporation (“Quantek”), three of our distributor customers, each directly accounted for more than 10% of our revenue in the years ended December 31, 2024, 2023, and 2022. Additionally, Sabre Technologies Pte. Ltd ("Sabre") directly accounted for more than 10% of our revenue for the year ended December 31, 2023.
For the aerospace market, our solutions provide lower acceleration sensitivity for end products that operate in rugged conditions. For the mobile, IoT and consumer market, our timing solutions have the advantage of offering high performance at optimal power consumption and size, as our customers fit more functionality into smaller devices.
For the aerospace market, our solutions provide high reliability and lower acceleration sensitivity for end products that operate in rugged conditions. For the mobile, IoT and consumer market, our timing solutions offer high performance at optimal power consumption and size, as our customers fit more functionality into smaller devices.
These limitations impact the precision and quality of the timing signal in harsh conditions. Precision MEMS Timing Solutions Poised to Disrupt the Market In recent years, advances in silicon-based manufacturing and packaging techniques have allowed the development of alternatives to quartz crystal technology. We believe that MEMS is an ideal technology for resonator design.
Precision MEMS Timing Solutions Poised to Disrupt the Market In recent years, advances in silicon-based manufacturing and packaging techniques have allowed the development of alternatives to quartz crystal technology. We believe that MEMS is an ideal technology for resonator design.
Pernas directly accounted for 20%, 20%, and 24% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively, Arrow directly accounted for 18%, 17%, and 14% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively and Quantek directly accounted for 13%, 12%, and 10% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
Pernas directly accounted for 24%, 20%, and 20% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively, Arrow directly accounted for 19%, 18%, and 17% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively and Quantek directly accounted for 13%, 13%, and 12% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
The following table illustrates our current portfolio of products by target end market: Communications, Datacenter, & Enterprise Automotive, Aerospace & Defense, Industrial, Medical Mobile, IoT & Consumer Low Jitter Oscillators High Temp Oscillators Clock Generators Low Power Oscillators DCXO In-System Programmable Low Jitter Oscillators Clock Buffers μPower 32 kHz Oscillators VCXO DCXO In-System Programmable Network Synchronizers/ Jitter Cleaners μPower 32 kHz TCXO TCXO/VCTCXO/ DCTCXO VCXO Active Resonators Low Power TCXO OCXO/DCOCXO Low Power Oscillators Low Power DCXO Network Synchronizers/ Jitter Cleaners Spread Spectrum Oscillators Active Resonators Clock Generators TCXO/VCTCXO/ DCTCXO TCXO/VCTCXO/ DCTCXO Clock Buffers μPower 32 kHz Oscillators Active Resonators Our Customers We sell our Precision Timing products to distributors, who in turn sell our products to our end customers.
The following table illustrates our current portfolio of products by target end market: 11 Table of Contents Products by Market Communications, Datacenter, & Enterprise Automotive, Aerospace & Defense, Industrial Mobile, IoT & Consumer Low Jitter Oscillators High Temp Oscillators Clock Generators Low Power Oscillators DCXO In-System Programmable Low Jitter Oscillators Clock Buffers μPower 32 kHz Oscillators VCXO DCXO In-System Programmable Network Synchronizers/ Jitter Cleaners μPower 32 kHz TCXO TCXO/VCTCXO/ DCTCXO VCXO OCXO/DCOCXO Low Power TCXO OCXO/DCOCXO Low Power Oscillators Low Power DCXO Network Synchronizers/ Jitter Cleaners Spread Spectrum Oscillators Active Resonators Clock Generators TCXO/VCTCXO/ DCTCXO TCXO/VCTCXO/ DCTCXO Clock Buffers μPower 32 kHz Oscillators Spread Spectrum Oscillators Our Customers While our sales personnel interact directly with our end customers to sell our Precision Timing products, such sales are executed through distributors, who in turn sell our products to our end customers.
As of December 31, 2023, we had 181 full-time equivalent employees supporting research and development efforts worldwide (representing approximately 47% of our total employee base). Intellectual Property We rely primarily on patent, copyright, trademark, and trade secret laws, as well as confidentiality and non-disclosure agreements, and other contractual protections, to protect our technologies and proprietary know-how.
As of December 31, 2024, we had 182 full-time equivalent employees supporting research and development efforts worldwide. Intellectual Property We rely primarily on patent, copyright, trademark, and trade secret laws, as well as confidentiality and non-disclosure agreements, and other contractual protections, to protect our technologies and proprietary know-how.
We believe our MEMS resonators are easy to integrate into silicon-based oscillators and clock ICs, and allow us to develop tightly-integrated Precision Timing solutions. • Advanced system-level integration : We have extensive know-how in integrating various timing components into elegant system-level solutions.
Because our MEMS resonators are manufactured in silicon using semiconductor processes, they are easier to integrate into silicon-based oscillators and clock ICs, and allow us to develop tightly-integrated Precision Timing solutions. • Advanced system-level integration : We have extensive know-how in integrating various timing components into elegant system-level solutions.
(“UTAC”) in Thailand, Hana Semiconductor (Ayutthaya) Co., Ltd in Thailand, Daishinku Corp ("Daishinku") in Japan, and STATS ChipPAC Pte Ltd. in Singapore. • Warehousing . Our products are warehoused at our outsourced semiconductor assembly and test facilities located in Malaysia, Taiwan, and Thailand.
(“Carsem”) in Malaysia, United Test and Assembly Center Ltd. 13 Table of Contents (“UTAC”) in Thailand, Hana Semiconductor (Ayutthaya) Co., Ltd in Thailand, Daishinku Corp. (“Daishinku”) in Japan, and STATS ChipPAC Pte Ltd. in Singapore. • Warehousing . Our products are warehoused at our outsourced semiconductor assembly and test facilities located in Malaysia, Taiwan, and Thailand.
As of December 31, 2023, we had 382 full-time equivalent employees located in locations including the United States, France, Malaysia, the Netherlands, Taiwan, Japan, Finland, Ukraine, Germany, South Korea, and India, including 181 in research and development, 145 in sales, general, and administrative, and 56 in operations.
As of December 31, 2024, we had 395 full-time equivalent employees located in locations including the United States, France, Malaysia, the Netherlands, Taiwan, Japan, Finland, Ukraine, Germany, South Korea, and India, including 182 in research and development, 143 in sales, general, and administrative, and 70 in operations.
In addition, as electronic systems become more complex, feature-rich, and robust, they require more sophisticated timing systems that can seamlessly integrate a variety of oscillators, clock ICs, and resonators in various system-level combinations. This 7 Table of Contents seamless integration is more difficult with legacy quartz systems.
In addition, as electronic systems become more complex, feature-rich, and robust, they require more sophisticated timing systems that can seamlessly integrate a variety of oscillators, clock ICs, and resonators in various system-level combinations. This seamless integration is more difficult with legacy quartz systems. These limitations impact the precision and quality of the timing signal in harsh conditions.
This outsourced manufacturing approach allows us to focus our resources on the design, sale, and marketing of our products. In addition, we believe that outsourcing many of our manufacturing and assembly activities provides us with the flexibility needed to respond to new market opportunities and scale for customer demand, simplifies our operations, and significantly reduces our capital commitments.
In addition, we believe that outsourcing many of our manufacturing and assembly activities provides us with the flexibility needed to respond to new market opportunities and scale for customer demand, simplifies our operations, and significantly reduces our capital commitments.
Timing is the heartbeat of digital electronic systems, ensuring that the system runs smoothly and reliably by providing and distributing clock signals to various critical components such as central processing units, communication and interface ICs, and radio frequency components.
Here, timing ensures that the system runs smoothly and reliably by providing and distributing clock signals to various critical components such as central processing units, communication and interface ICs, and radio frequency components.
Item 1. Business Overview The ability to accurately measure and reference time has been essential to humankind’s greatest inventions and technological advances. Timing technology has continued to evolve over centuries, forming a critical aspect of broader technological evolution.
Item 1. Business Overview The ability to accurately measure and reference time has been essential to humankind’s greatest inventions and technological advances. Timing technology has continued to evolve over centuries, underpinning broader technological evolution and is the heartbeat of digital electronic systems.
We design each key building block of the timing system, from MEMS resonators to oscillator circuits to clock ICs. Our ability to combine our MEMS resonators with analog-mixed signal components in a fabless semiconductor supply chain allows us to build full timing solutions from the ground up, enabling our customers to focus on their core expertise.
Our ability to combine our MEMS resonators with analog-mixed signal components in a fabless semiconductor supply chain allows us to build full timing solutions from the ground up, enabling our customers to focus on their core expertise.
We strive to attract and retain the most talented employees in the industry and across the globe by offering competitive compensation and benefits that support their health, financial, and emotional well-being. Our compensation philosophy is based on rewarding each employee’s individual contributions.
We strive to attract and retain the most talented employees in the industry and across the globe by offering competitive compensation and benefits that support their health, financial, and emotional well-being. Our compensation philosophy is based on rewarding each employee’s individual contributions. We use a combination of fixed and variable pay including base salary, bonuses, performance awards, and stock-based compensation.
We sell our products worldwide through multiple channels, including our direct sales force and a network of distributors, contract manufacturers, contracted sales representatives, and independent design houses, as well as SiTimeDirect, our self-service online store. Our global sales strategy includes direct sales and distributors covering over 15,000 end customer accounts since inception.
We sell our products worldwide through multiple channels, including our direct sales force and a network of distributors, contract manufacturers, contracted sales representatives, and independent design houses, as well as SiTimeDirect, our self-service online store.
These manufacturing processes have allowed the hermetically-sealed resonator die to be housed in industry-standard, low-cost plastic packages. These processes and technologies improve resonator stability, increase quality and reliability, and decrease aging effects.
These manufacturing processes and technologies have allowed the hermetically sealed resonator die to be housed in industry-standard, low-cost plastic packages or use advanced packaging techniques such as wafer-level chip-scale packing. These processes and technologies improve resonator stability, increase quality and reliability, and decrease aging effects.
As of December 31, 2023, we had 119 issued U.S. patents, expiring generally between 2026 and 2040, and 42 pending U.S. patent applications (including 13 provisional applications). We also had four foreign issued patents expiring in 2036 and four pending foreign patent applications.
As of December 31, 2024, we had 134 issued U.S. patents, expiring generally between 2026 and 2040, and 51 pending U.S. patent applications (including 11 provisional applications). We also had five foreign issued patents expiring in 2036 and five pending foreign patent applications.
Additionally, many of our products have added integrated functions such as on-chip regulators and load capacitors which reduce the need for external components and decrease the overall system size. • Low power : Our solutions operate at low power levels and have differentiated power-saving features such as NanoDrive™ and FlexSwing™, making them well-suited for mobile, IoT and other power-sensitive applications. • Programmability : Our devices are configurable across a wide range of parameters, including frequency, stability metrics, voltage parameters, and temperature ranges, among others.
Additionally, many of our products have added integrated functions such as on-chip regulators and load capacitors which reduce the need for external components and decrease the overall system size. 9 Table of Contents • Low power : Our solutions operate at low power levels and have differentiated power-saving features such as NanoDrive™ and FlexSwing™, making them well-suited for mobile, IoT and other power-sensitive applications.
Our engineers work closely with our foundries and other contractors to increase yield, lower manufacturing costs, and improve product quality. • Fabrication . We currently utilize a range of semiconductor process generations to develop and manufacture our products.
Our engineers work closely with our foundries and other contractors to increase yield, lower manufacturing costs, and improve product quality. • Fabrication . We currently utilize a range of semiconductor process generations to develop and manufacture our products. We use Robert Bosch LLC (“Bosch”) in Germany, Taiwan Semiconductor Manufacturing Company (“TSMC”) in Taiwan, and Teledyne Digital Imaging Inc.
We provide our employees and their families with access to a variety of health and wellness programs, including benefits that support their physical and mental health. We maintain an office in Lviv, Ukraine. In connection with Russia’s invasion of Ukraine in February 2022, we have prioritized the safety and welfare of our employees and their families in Ukraine.
We provide our employees and their families with access to a variety of health and wellness programs, including benefits that support their physical and mental 15 Table of Contents health. We maintain an office in Lviv, Ukraine.
Through this and other efforts, we expect to enable customers to create reference architectures and purchase complete solutions. Our knowledge of the end systems architecture, its future trajectory, and the clock tree are important for developing better Precision Timing products, as well as helping customers get the best system performance and reliability.
Our knowledge of the end systems architecture, its future trajectory, and the clock tree are important for developing better Precision Timing products, as well as helping customers get the best system performance and reliability.
The programmability of our product platforms enables us to generate solutions quickly to customer specifications. We are well established with our core offering of oscillator products that comprise a MEMS resonator and an analog mixed-signal IC that are integrated into a package.
We are well established with our core offering of oscillator products that comprise a MEMS resonator and an analog mixed-signal IC that are integrated into a package.
We encourage periodic and meaningful conversations between managers and employees, including discussions regarding feedback, alignment of goals, and professional development. We encourage all employees to continue learning and provide learning opportunities as well as internal opportunities for cross functional work to support this. All employees receive training, including in the prevention of sexual harassment and abusive conduct in the workplace.
We regularly review our employees and assess the needs of the business to identify our talent needs. We encourage periodic and meaningful conversations between managers and employees, including discussions regarding feedback, alignment of goals, and professional development. We encourage all employees to continue learning and provide learning opportunities as well as internal opportunities for cross functional work to support this.
However, quartz timing devices, largely unchanged in decades, have many inherent limitations, including limited frequency ranges, sensitivity to rapid temperature changes, vulnerability to vibration and mechanical shock, susceptibility to frequency jumps at specific temperatures, and limited programmability. Quartz devices must be housed in ceramic packaging, and thus are difficult to integrate into standard semiconductor packages.
However, quartz timing devices, largely unchanged in decades, have many inherent limitations, including limited frequency ranges, sensitivity to rapid temperature changes, vulnerability to vibration 7 Table of Contents and mechanical shock, susceptibility to frequency jumps at specific temperatures, and limited programmability.
Quartz products require dedicated manufacturing facilities and have relatively long lead times due to the need to specify various characteristics well in advance of production, without the ability to reconfigure them during the design cycle.
Quartz devices must be housed in specialized (i.e., ceramic) packaging, and thus are difficult to integrate into standard semiconductor packages. Quartz products require dedicated manufacturing facilities and have relatively long lead times due to the need to specify various characteristics well in advance of production, without the ability to reconfigure them during the design cycle.
We offer employees benefits that vary by country and are designed to meet or exceed local laws and to be competitive in the marketplace. Examples of benefits offered in the U.S. include: a 401(k) plan with employer contributions; health benefits; life, business travel, and disability insurance; additional voluntary insurance; paid time off and parental leave; and paid counseling assistance.
Examples of benefits offered in the U.S. include: a 401(k) plan with employer contributions; health benefits; life, business travel, and disability insurance; additional voluntary insurance; paid time off and parental leave; and paid counseling assistance.
Despite our efforts to protect our intellectual property, unauthorized parties may still copy, misappropriate, or otherwise obtain and use our software, technology, or other information that we regard as our proprietary intellectual property.
Trade secrets can be difficult to protect and some courts inside and outside of the United States are less willing or unwilling to protect trade secrets. Despite our efforts to protect our intellectual property, unauthorized parties may still copy, misappropriate, or otherwise obtain and use our software, technology, or other information that we regard as our proprietary intellectual property.
This provides design flexibility for the customer, and enabling us to produce a vast number of custom timing products on demand with short lead times. 9 Table of Contents • High quality and reliability : The combination of our materials, design, and manufacturing processes enables us to produce high quality products with long-term reliability.
This provides design flexibility for the customer, and enables us to produce a vast number of custom timing products on demand with short lead times. • High quality and reliability : The combination of our materials, design, and manufacturing processes enables us to produce high quality products with long-term reliability. • Flexible integration : Our MEMS resonators and clock ICs allow a wide range of packaging and integration methodologies to support various levels of size, cost, and electrical, thermal, and mechanical performance.
Our programmable architecture also plays a key role in ensuring optimal production flexibility, as it allows us to offer shorter lead times and the ability to meet custom requirements more easily.
Our programmable architecture also plays a key role in ensuring optimal production flexibility. In contrast to products offered by traditional timing device suppliers, our products are batch produced and then custom programmed to customer needs, allowing us to offer shorter lead times and the ability to meet custom requirements more easily.
Based on the sell-through information provided to us from distributors who identify end customers, we believe that the majority of our products sold to Pernas and Quantek are in turn incorporated into products of Apple Inc. (“Apple”), our largest end customer.
Other than Pernas, Quantek, Arrow and Sabre, no other single direct customer accounted for more than 10% of our revenue in the years ended December 31, 2024, 2023, and 2022. 12 Table of Contents Based on the sell-through information provided to us from distributors who identify end customers, we believe that the majority of our products sold to Pernas and Quantek are in turn incorporated into products of Apple Inc.
We also worked with our employees worldwide to minimize any disruption to our operations and business as a result of Russia’s invasion of Ukraine. We regularly review our employees and assess the needs of the business to identify our talent needs.
In connection with Russia’s invasion of Ukraine in February 2022, we have prioritized the safety and welfare of our employees and their families in Ukraine. We also worked with our employees worldwide to minimize any disruption to our operations and business as a result of Russia’s invasion of Ukraine.
Upon the completion of processing at the foundry, we use third-party contractors for packaging, assembly, and testing, including Advanced Semiconductor Engineering, Inc. (“ASE”) in Taiwan, Carsem (M) Sdn Bhd. (“Carsem”) in Malaysia, United Test and Assembly Center Ltd.
("Teledyne") in Canada as our primary foundries and suppliers for our MEMS timing devices and analog mixed-signal circuit ICs. • Package, Assembly and Testing . Upon the completion of processing at the foundry, we use third-party contractors for packaging, assembly, and testing, including Advanced Semiconductor Engineering, Inc. (“ASE”) in Taiwan, Carsem (M) Sdn Bhd.
With the addition of all four categories of clock products including network synchronizers, jitter cleaners, clock generators, and buffers, we now offer a comprehensive portfolio of timing solutions.
Ltd. and certain of its affiliated entities (together, "Aura") relating to Aura's timing business and clock products that significantly expands our presence within the clocking market. With the addition of all four categories of clock products including network synchronizers, jitter cleaners, clock generators, and buffers, we now offer a comprehensive portfolio of timing solutions.
Key elements of our strategy include: • Extend our leadership in Precision Timing . SiTime pioneered the Precision Timing category, and we intend to continue driving innovation in the timing market and working with our ecosystem partners to help set the timing standards of the future.
SiTime pioneered the Precision Timing category, and we intend to continue driving innovation in the timing market and working with our ecosystem partners to help set the timing standards of the future. Through this and other efforts, we expect to enable customers to create reference architectures and purchase complete solutions.
Based on the production schedules of key customers, our products typically see stronger revenue in the second half of our fiscal year. However, there can be no assurance that this trend will occur in future years. Manufacturing We operate a fabless business model and use third-party foundries and assembly and test contractors to manufacture, assemble, and test our semiconductor products.
Seasonality Our revenue has historically been subject to some seasonal variation. Based on the production schedules of key customers, our products typically see stronger revenue in the second half of our fiscal year. However, there can be no assurance that this trend will occur in future years.
In addition to differentiating our solutions based on technical features and value, we also intend to provide value to our customers on business metrics by leveraging our fabless semiconductor infrastructure.
In addition to differentiating our solutions based on technical features and value, we also intend to provide value to our customers on business metrics by leveraging our fabless semiconductor infrastructure. These benefits may include shorter lead times, higher quality and reliability, and therefore lower cost of ownership for the end customer.
Our flexible and programmable Precision Timing solutions offer the following benefits: • High performance : Our portfolio of MEMS-based Precision Timing products allows us to provide our customers with high performance solutions across a wide range of attributes including stability over temperature, vibration, phase jitter, and other metrics. • Small size : Our solutions have a small footprint and package size, optimizing the end customer’s board area.
Our flexible and programmable Precision Timing solutions offer the following benefits: • High performance : Our portfolio of MEMS-based Precision Timing products allows us to provide our customers with high performance solutions across a wide range of attributes including stability over temperature, low sensitivity to vibration, low phase jitter, and other metrics. • High resilience: Due to the unique properties of silicon, construction of our resonators, and advancements in our analog design circuits, systems, and packaging, our products provide resilience and robustness against the harsh operating conditions of many end-products.
Industrial equipment, ranging from factory machinery to diagnostic equipment, is often exposed to environments characterized by temperature fluctuation, mechanical shocks, vibration, and electromagnetic interference. We believe our Precision Timing solutions can perform better than legacy quartz-based solutions in demanding industrial environments and with lower power consumption and higher reliability.
We believe Precision Timing can address many of the challenges associated with this demanding automotive ecosystem. Industrial equipment, ranging from factory machinery to diagnostic equipment, is often exposed to environments characterized by temperature fluctuation, mechanical shocks, vibration, electromagnetic interference, and power supply noise.
We have a strategic accounts strategy executed by our direct sales force focused on design engineers, system architects and executive decision makers for the world’s leading electronics companies. These customers lead electronics innovation for their segments, from communications, 5G, automotive, and consumer IoT, and build in SiTime Precision Timing solutions that deliver the performance required by these devices.
We have a strategic accounts strategy executed by our direct sales force focused on design engineers, system architects and executive decision makers for the world’s leading electronics companies.
We regularly review succession plans and focus on promoting internal talent to help grow our employees' careers.
All employees receive training, including in the prevention of sexual harassment and abusive conduct in the workplace. We regularly review succession plans and focus on promoting internal talent to help grow our employees' careers.
Our ability to integrate MEMS-based resonators with analog mixed-signal products allows us to develop oscillators and clock ICs in diverse permutations, which helps us solve difficult timing challenges. Using advanced packaging designs, we believe we can design our products to fit in the smallest footprints in the industry.
Our ability to integrate MEMS-based resonators with analog mixed-signal products allows us to develop oscillators and clock ICs in diverse permutations, which helps us innovate without the boundaries imposed by legacy materials. Our all-silicon approach enables us to solve difficult timing challenges in new ways.
In addition, in 2022, we launched SiTimeDirect, a self-service online store supporting 24/7 sales of SiTime oscillators, shipped to over 30 countries globally. Our expert inside sales team supports a “self-service model” for customers.
In addition, in 2022, we launched SiTimeDirect, a self-service online store supporting 24/7 sales of SiTime oscillators. Our expert inside sales team supports a “self-service model” for customers. SiTime’s unique programmability combined with the convenience of an online store, with rapid configuration and fulfillment, makes SiTimeDirect a unique approach in the semiconductor industry for Precision Timing solutions.
These benefits may include shorter lead times, higher quality and reliability, and therefore lower cost of ownership for the end customer. 10 Table of Contents Our Products Our Precision Timing products are designed to address a wide range of applications across a broad array of end markets. Our product portfolio encompasses oscillators, clock ICs, and resonators.
Our Products Our Precision Timing products are designed to address a wide range of applications across a broad array of end markets. Our product portfolio encompasses oscillators, clock ICs, and resonators. The programmability of our product platforms enables us to generate solutions quickly to customer specifications.
We intend to continue to educate current and prospective customers about the benefits of our Precision Timing solutions relative to their existing and future products. Our Timing Essentials Learning Hub is an online educational platform established to share our knowledge, though-leadership, and technology leadership. • Identify and promote new and emerging applications for our technologies .
We intend to continue to educate current and prospective customers about the benefits of our Precision Timing solutions relative to their existing and future products.
Our all-silicon solutions are based on three fundamental areas of expertise: micro-electro-mechanical systems (“MEMS”), analog mixed-signal design capabilities, and advanced system-level integration expertise. These areas of expertise enable us to design silicon MEMS resonators, analog circuits, as well as systems and packaging, and put these all together to deliver a system-level solution that solves customers’ complex timing problems.
Our all-silicon solutions are based on four fundamental areas of technical expertise: micro-electro-mechanical systems (“MEMS”), analog mixed-signal design, and advanced system-level integration and software. This expertise, along with the knowledge of our customers' systems, gives our products a significant edge as we address customers’ complex timing problems.
This model also allows us to operate with lower capital expenditure investment than other semiconductor companies that own fabs. A fabless infrastructure gives us production flexibility and the ability to scale capacity up and down quickly to meet demand.
A fabless infrastructure gives us production flexibility and the ability to scale capacity up and down to meet demand.
In December 2023, we closed the acquisition of certain assets and the exclusive license to certain intellectual property from Aura Semiconductor Pvt. Ltd. and certain of its affiliated entities (together, "Aura") relating to Aura's timing 6 Table of Contents business and clock products.
Historically, our revenue has been substantially delivered from sales of oscillator systems across our target end markets. 6 Table of Contents In December 2023, we acquired clocking products through the acquisition of certain assets and the exclusive license to certain intellectual property from Aura Semiconductor Pvt.
If the timing solution within the equipment fails, networks can shut down, leading to service disruptions and higher operating costs. Automotive, Industrial, and Aerospace In automotive applications, timing technology must perform reliably over the life of an automobile in an environment characterized by vibration, mechanical shocks, electromagnetic interference, wide and rapid temperature change.
Automotive, Industrial, and Aerospace In the past few years, the automotive industry has expanded the use of electronics in vehicles for diverse purposes such as sensing, ADAS, computing, and in-vehicle infotainment. In these applications, timing technology must perform reliably over the life of an automobile in an environment characterized by vibration, mechanical shocks, electromagnetic interference, wide and rapid temperature change.
We use a combination of fixed 14 Table of Contents and variable pay including base salary, bonuses, performance awards, and stock-based compensation. The principal purposes of our equity incentive plans are to attract, retain, and motivate selected employees through the granting of stock-based compensation awards.
The principal purposes of our equity incentive plans are to attract, retain, and motivate selected employees through the granting of stock-based compensation awards. We offer employees benefits that vary by country and are designed to meet or exceed local laws and to be competitive in the marketplace.
Sabre directly accounted for 10%, 6%, and 4% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Other than Pernas, Quantek, Arrow and Sabre, no other single direct customer accounted for more than 10% of our revenue in the years ended December 31, 2023, 2022, and 2021.
Sabre directly accounted for 10% of our revenue for the year ended December 31, 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, MegaChips will have the ability to exert significant influence over many matters affecting us, either through its board representative or as a stockholder, including: • determinations with respect to our business plans and policies, including the appointment and removal of our officers; • any determinations with respect to mergers and other business combinations; • our acquisition or disposition of assets; • our financing activities; • the allocation of business opportunities that may be suitable for us and MegaChips; • the payment of dividends on our common stock; and • the number of shares available for issuance under our stock plans. 36 Table of Contents MegaChips’ significant ownership position may discourage transactions involving a change of control of us, including transactions in which other holders of our common stock might otherwise receive a premium for their shares over the then current market price.
Biggest changeAs a result, they will have the ability to exert significant influence over many matters affecting us, either through a board representative or as a stockholder, including: • determinations with respect to our business plans and policies, including the appointment and removal of our officers; • any determinations with respect to mergers and other business combinations; • our acquisition or disposition of assets; • our financing activities; • the payment of dividends on our common stock; and • the number of shares available for issuance under our stock plans.
New or future changes in tax laws, regulations, and treaties, or the interpretation thereof, in addition to tax regulations enacted but not in effect, tax policy initiatives and reforms under consideration in the United States or related to the Organization for Economic Co-operation and Development’s (“OECD”), Base Erosion and Profit Shifting Project (“BEPSP”), the European Commission’s state aid investigations, and other initiatives could have an adverse effect on the taxation of international businesses.
New or future changes in tax laws, regulations, and treaties, or the interpretation thereof, in addition to tax regulations enacted but not in effect, tax policy initiatives and reforms under consideration in the United States or related to the Organization for Economic Co-operation and Development’s, Base Erosion and Profit Shifting Project (“BEPSP”), the European Commission’s state aid investigations, and other initiatives could have an adverse effect on the taxation of international businesses.
The trading price and volume of our common stock is likely to be volatile and could fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • macroeconomic conditions, • actual or anticipated fluctuations in our results of operations due to, among other things, changes in customer demand, product life cycles, pricing, ordering patterns, and unforeseen operating costs; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • announcements by our significant customers of changes to their product offerings, business plans, or strategies; 38 Table of Contents • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in the semiconductor industry; • timing and seasonality of the end-market demand; • cyclical fluctuations in the semiconductor market; • price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • any major change in our management; • lawsuits threatened or filed against us; and • other events or factors, including those resulting from geopolitical activities, war, incidents of terrorism, natural disasters, pandemics, or responses to these events.
The trading price and volume of our common stock is likely to be volatile and could fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • macroeconomic conditions, • actual or anticipated fluctuations in our results of operations due to, among other things, changes in customer demand, product life cycles, pricing, ordering patterns, and unforeseen operating costs; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • announcements by our significant customers of changes to their product offerings, business plans, or strategies; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in the semiconductor industry; • timing and seasonality of the end-market demand; • cyclical fluctuations in the semiconductor market; • price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • any major change in our management; • lawsuits threatened or filed against us; and • other events or factors, including those resulting from geopolitical activities, war, incidents of terrorism, natural disasters, pandemics, or responses to these events.
For example, the Internal Revenue Service (“IRS”), or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property in connection with our intercompany research and development cost sharing arrangement and legal structure.
For example, the Internal Revenue Service, or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property in connection with our intercompany research and development cost sharing arrangement and legal structure.
We currently rely on Bosch for our MEMS fabrication, and primarily on TSMC for our analog circuits fabrication, and any disruption in the supply of wafers or any increases in the wafer or materials prices could adversely affect our gross margins and our ability to meet customer demands in a timely manner, or at all, and lead to reduced revenue.
We currently rely primarily on Bosch and Teledyne for our MEMS fabrication, and primarily on TSMC for our analog circuits fabrication, and any disruption in the supply of wafers or any increases in the wafer or materials prices could adversely affect our gross margins and our ability to meet customer demands in a timely manner, or at all, and lead to reduced revenue.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common 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, the Chairman of our board of directors, or our Chief Executive Officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; 37 Table of Contents • provide that our directors may be removed only for cause; • provide that vacancies on our board of directors may be filled by a majority of directors then in office, even if less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common 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, the Chairman of our board of directors, or our Chief Executive Officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed only for cause; • provide that vacancies on our board of directors may be filled by a majority of directors then in office, even if less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.
In the event of a major earthquake, hurricane, flooding, or other catastrophic event, including with respect to climate change, such as fire, power loss, telecommunications failure, cyber-attack, war, terrorist attack, political, social, or economic unrest, pandemic, epidemic, health crisis, or disease outbreak, such as the COVID-19 pandemic, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our product development, breaches of data security, or loss of critical data, any of which could have an adverse effect on our future results of operations.
In the event of a major earthquake, hurricane, flooding, or other catastrophic event, including with respect to climate change, such as fire, power loss, telecommunications failure, cyber-attack, war, terrorist attack, political, social, or economic unrest, pandemic, epidemic, health crisis, or disease outbreak, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our product development, breaches of data security, or loss of critical data, any of which could have an adverse effect on our future results of operations.
If any future proceedings result in an adverse outcome, we could be required to: • cease the manufacture, use or sale of the applicable products, processes, or technology; • pay substantial damages for infringement by us or our customers; • expend significant resources to develop non-infringing products, processes, or technology, which may not be successful; • license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all; • cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; 35 Table of Contents • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; or • pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology, if available.
If any future proceedings result in an adverse outcome, we could be required to: • cease the manufacture, use or sale of the applicable products, processes, or technology; • pay substantial damages for infringement by us or our customers; • expend significant resources to develop non-infringing products, processes, or technology, which may not be successful; • license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all; • cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; or • pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology, if available.
As a result of our international focus, we face numerous challenges and risks, including: • complexity and costs of managing international operations, including manufacturing, assembly, and testing of our products and associated costs; • geopolitical and military conflicts, including the effects of Russia’s invasion of Ukraine; • economic instability, including the effects of rising inflation and increased interest rates; • limited protection for, and vulnerability to theft of, our intellectual property rights, including our trade secrets; • compliance with local laws and regulations and unanticipated changes in local laws and regulations, including tax laws and regulations; • trade and foreign exchange restrictions and higher tariffs, including the ongoing trade tensions between the U.S. and China that has resulted in higher tariffs on certain semiconductor products and increased trade restrictions; 19 Table of Contents • timing and availability of import and export licenses and other governmental approvals, permits, and licenses, including export classification requirements; • foreign currency fluctuations and exchange losses relating to our international operating activities; • restrictions imposed by the U.S. government or foreign governments on our ability to do business with certain companies or in certain countries as a result of international political conflicts and the complexity of complying with those restrictions; • transportation delays and other consequences of limited local infrastructure, and disruptions, such as large scale outages or interruptions of service from utilities or telecommunications providers; • difficulties in staffing international operations; • changes in immigration policies which may impact our ability to hire personnel; • local business and cultural factors that differ from our normal standards and practices; • differing employment practices and labor relations; • requirements in foreign countries which may impact availability of personnel, such as mandatory military service in countries such as Ukraine, Taiwan, and Finland; • heightened risk of terrorist acts; • regional health issues and the impact of public health epidemics on employees and the global economy, such as the worldwide COVID-19 pandemic; • power outages and natural disasters; and • travel, work-from-home or other restrictions or stoppages, like those imposed by governments around the world as a result of the COVID-19 pandemic.
As a result of our international focus, we face numerous challenges and risks, including: • complexity and costs of managing international operations, including manufacturing, assembly, and testing of our products and associated costs; • geopolitical and military conflicts, including the effects of Russia’s invasion of Ukraine; • economic instability, including the effects of rising inflation and increased interest rates; • limited protection for, and vulnerability to theft of, our intellectual property rights, including our trade secrets; 20 Table of Contents • compliance with local laws and regulations and unanticipated changes in local laws and regulations, including tax laws and regulations; • trade and foreign exchange restrictions and higher tariffs, including the ongoing trade tensions between the U.S. and China that has resulted in higher tariffs on certain semiconductor products and increased trade restrictions; • timing and availability of import and export licenses and other governmental approvals, permits, and licenses, including export classification requirements; • foreign currency fluctuations and exchange losses relating to our international operating activities; • restrictions imposed by the U.S. government or foreign governments on our ability to do business with certain companies or in certain countries as a result of international political conflicts and the complexity of complying with those restrictions; • transportation delays and other consequences of limited local infrastructure, and disruptions, such as large scale outages or interruptions of service from utilities or telecommunications providers; • difficulties in staffing international operations; • changes in immigration policies which may impact our ability to hire personnel; • local business and cultural factors that differ from our normal standards and practices; • differing employment practices and labor relations; • requirements in foreign countries which may impact availability of personnel, such as mandatory military service in countries such as Ukraine, Taiwan, and Finland; • heightened risk of terrorist acts; • regional health issues and the impact of public health epidemics on employees and the global economy; • power outages and natural disasters; and • travel, work-from-home or other restrictions or stoppages, like those imposed by governments around the world as a result of pandemics.
Factors relating to our business that may contribute to fluctuations in our operating results include the following factors, as well as other factors described elsewhere in this report: • macroeconomic conditions; • cyclical fluctuations in the semiconductor market; • customer demand and product life cycles; • the receipt, reduction, or cancellation of, or changes in the forecasts or timing of, orders by customers; • fluctuations in the levels of inventories held by our distributors or end customers; • the gain or loss of significant customers; • changes in our pricing, product cost, and product mix; • supply chain disruptions, delays, shortages, and capacity limitations; • 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; • our research and development costs and related new product expenditures and our ability to achieve cost reductions in a timely or predictable manner; 17 Table of Contents • seasonality and fluctuations in sales by product manufacturers that incorporate our Precision Timing solutions into their products; • end-market demand into which we have limited insight, including cyclicality, seasonality, and the competitive landscape; • socioeconomic or political conditions in the countries where we operate or where our products are sold or used; • the impact of any pandemic, epidemic, or outbreak of disease, including the emergence of new variants of the COVID-19 pandemic, on our business, suppliers, and customers; • fluctuations in our manufacturing yields; • significant warranty claims, including those not covered by our suppliers; • new accounting pronouncements or changes in existing accounting standards; and • loss of one or more of our executive officers or other key employees; As a result of these and other factors, you should not rely on the results of any prior quarterly or annual periods, or any historical trends reflected in such results, as indications of our future revenue or operating performance.
Factors relating to our business that may contribute to fluctuations in our operating results include the following factors, as well as other factors described elsewhere in this report: • macroeconomic conditions; • cyclical fluctuations in the semiconductor market; • customer demand and product life cycles; • the receipt, reduction, or cancellation of, or changes in the forecasts or timing of, orders by customers; • fluctuations in the levels of inventories held by our distributors or end customers; • the gain or loss of significant customers; • changes in our pricing, product cost, and product mix; • supply chain disruptions, delays, shortages, and capacity limitations; • 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; • our research and development costs and related new product expenditures and our ability to achieve cost reductions in a timely or predictable manner; • seasonality and fluctuations in sales by product manufacturers that incorporate our Precision Timing solutions into their products; • end-market demand into which we have limited insight, including cyclicality, seasonality, and the competitive landscape; • socioeconomic or political conditions in the countries where we operate or where our products are sold or used; 18 Table of Contents • the impact of any pandemic, epidemic, or outbreak of disease, on our business, suppliers, and customers; • fluctuations in our manufacturing yields; • significant warranty claims, including those not covered by our suppliers; • new accounting pronouncements or changes in existing accounting standards; and • loss of one or more of our executive officers or other key employees; As a result of these and other factors, you should not rely on the results of any prior quarterly or annual periods, or any historical trends reflected in such results, as indications of our future revenue or operating performance.
Except for our agreement with Bosch for MEMS wafers, we do not have any long-term supply agreements with any of our other manufacturing suppliers. These third-party manufacturers often serve customers that are larger than us or require a greater portion of their services, which may decrease our relative importance and negotiating leverage with these third parties.
Except for our agreement with Robert Bosch LLC ("Bosch") for MEMS wafers, we do not have any long-term supply agreements with any of our other manufacturing suppliers. These third-party manufacturers often serve customers that are larger than us or require a greater portion of their services, which may decrease our relative importance and negotiating leverage with these third parties.
Any of these factors, alone or in combination with others, could harm our business, financial condition, and results of operations and result in a loss of market share and an increase in pricing pressure. 26 Table of Contents We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract or retain highly skilled employees could adversely affect our business.
Any of these factors, alone or in combination with others, could harm our business, financial condition, and results of operations and result in a loss of market share and an increase in pricing pressure. 27 Table of Contents We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract or retain highly skilled employees could adversely affect our business.
We updated the Section 382 analysis through December 31, 2023 and concluded there have not been any additional ownership changes as defined under Section 382 since the June 16, 2020 follow-on offering. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
We updated the Section 382 analysis through December 31, 2024 and concluded there have not been any additional ownership changes as defined under Section 382 since the June 16, 2020 follow-on offering. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
Although we maintain a qualification and performance surveillance process and we believe that sources of supply for engineered materials, raw materials, and components are generally adequate, it is difficult to predict what effects limited or delayed availability, or price increases 28 Table of Contents may have in the future.
Although we maintain a qualification and performance surveillance process and we believe that sources of supply for engineered materials, raw materials, and components are generally adequate, it is difficult to predict what effects limited or delayed availability, or price increases 29 Table of Contents may have in the future.
In addition, we are unable to predict what future tax reform may be proposed or enacted or what effect such changes would have on our business, but any changes, to the extent they are brought into tax legislation, regulations, policies, or practices, could increase our effective tax rates in the countries where we have operations and have 31 Table of Contents an adverse effect on our overall tax rate, along with increasing the complexity, burden and cost of tax compliance, all of which could impact our business, financial condition, and results of operations.
In addition, we are unable to predict what future tax reform may be proposed or enacted or what effect such changes would have on our business, but any changes, to the extent they are brought into tax legislation, regulations, policies, or practices, could increase our effective tax rates in the countries where we have operations and have an adverse effect on our overall tax rate, along with increasing the complexity, burden and cost of tax compliance, all of which could impact our business, financial condition, and results of operations.
Some industry standards may not be widely adopted or implemented uniformly and competing standards may emerge that may be preferred by our distributors or our end customers. Our ability to compete in the future will depend on our ability to identify and ensure compliance with evolving industry standards in our target markets, as well as in the timing IC industry.
Some industry standards may not be widely adopted or implemented uniformly and competing standards may emerge that may be preferred by our distributors or our end customers. Our ability to compete in the future will depend on our ability to identify and ensure compliance with evolving industry standards in our target markets, as well as in the timing semiconductor industry.
Any of the above could decrease the benefits we expect to receive from the agreement with Aura and adversely affect our financial condition and operating results. 27 Table of Contents We may make acquisitions in the future that could disrupt our business, cause dilution to our stockholders, reduce our financial resources, and harm our business.
Any of the above could decrease the benefits we expect to receive from the agreement with Aura and adversely affect our financial condition and operating results. 28 Table of Contents We may make acquisitions in the future that could disrupt our business, cause dilution to our stockholders, reduce our financial resources, and harm our business.
The acquisition may not further our business strategy as we expected and we may experience unanticipated costs or liabilities associated with the acquisition, which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of the acquisition including intangible assets and goodwill.
The acquisition may not further our business strategy as we expect and we may experience unanticipated costs or liabilities associated with the acquisition, which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of the acquisition including intangible assets and goodwill.
We currently rely on Bosch and TSMC as our primary foundries and suppliers for our MEMS timing devices and analog circuits, respectively, and only a few foundry vendors have the capability to manufacture our most advanced solutions, in particular with respect to our MEMS solution.
We currently rely on Bosch, TSMC and Teledyne as our primary foundries and suppliers for our MEMS timing devices and analog circuits, and only a few foundry vendors have the capability to manufacture our most advanced solutions, in particular with respect to our MEMS solution.
Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, and results of operations and result in a diversion of the time and resources of our management and board of directors.
Alternatively, if 38 Table of Contents a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, and results of operations and result in a diversion of the time and resources of our management and board of directors.
If we engage alternative supply sources, we may incur additional costs and encounter difficulties and/or delays in qualifying the supply sources. For example, we have a license agreement with Bosch under which Bosch granted us a license to use certain patents.
If we engage alternative supply sources, we may incur additional costs and encounter difficulties and/or delays in qualifying the supply sources. For example, we had a license agreement with Bosch under which Bosch granted us a license to use certain patents.
As of December 31, 2023, a majority of our cash and short-term investment balances were maintained with Wells Fargo & Co., Morgan Stanley, and U.S. Bancorp. We may seek, or be required to seek, debt financing. We may seek, or be required to seek, debt financing.
As of December 31, 2024, a majority of our cash and short-term investment balances were maintained with Wells Fargo & Co., Morgan Stanley, and U.S. Bancorp. We may seek, or be required to seek, debt financing. We may seek, or be required to seek, debt financing.
Our agreements with customers and other third-parties generally include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from our solutions included in their products.
Our agreements with customers and other third-parties generally include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of 36 Table of Contents intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from our solutions included in their products.
Sales attributable to Apple, our largest end customer accounted for approximately 21%, 20%, and 22% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively. We anticipate revenue attributable to this customer will fluctuate from period to period.
Sales attributable to Apple, our largest end customer accounted for approximately 22%, 21%, and 20% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively. We anticipate revenue attributable to this customer will fluctuate from period to period.
Based on our review of our customers annually and as of December 31, 2023, substantially all of which are large distributors, OEMs, and system manufacturers, we had $0.1 million and $0.1 million in allowance for credit losses as of December 31, 2023 and December 31, 2022, respectively.
Based on our review of our customers annually and as of December 31, 2024, substantially all of which are large distributors, OEMs, and system manufacturers, we had $0.1 million and $0.1 million in allowance for credit losses as of December 31, 2024 and December 31, 2023, respectively.
Additionally, public health crises, such as an outbreak of contagious diseases like the COVID-19 pandemic, may affect the production capabilities of our suppliers, including as a result of quarantines, closures of production facilities, lack of supplies, or delays caused by restrictions on travel or work-from-home orders. Restrictions like these could limit our suppliers’ ability to operate their manufacturing facilities.
Additionally, public health crises, such as an outbreak of contagious diseases, may affect the production capabilities of our suppliers, including as a result of quarantines, closures of production facilities, lack of supplies, or delays caused by restrictions on travel or work-from-home orders. Restrictions like these could limit our suppliers’ ability to operate their manufacturing facilities.
The Company will not carry back any NOLs as they did not have taxable income in prior years. Risks Related to Intellectual Property Our failure to adequately protect our intellectual property rights could impair our ability to compete effectively or defend ourselves from litigation, which could harm our business, financial condition, and results of operations.
The Company will not carry back any NOLs as they did not have taxable income in prior years. 34 Table of Contents Risks Related to Intellectual Property Our failure to adequately protect our intellectual property rights could impair our ability to compete effectively or defend ourselves from litigation, which could harm our business, financial condition, and results of operations.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of California state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of California state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
Any such regulatory consequences, litigation, claim, or dispute, whether successful or not, could subject us to additional costs, divert the attention of our management, or impair our reputation. Each of these consequences could have a material adverse effect on our business, results of operations and financial condition.
Any such regulatory consequences, litigation, claim, or dispute, whether successful or 31 Table of Contents not, could subject us to additional costs, divert the attention of our management, or impair our reputation. Each of these consequences could have a material adverse effect on our business, results of operations and financial condition.
These review procedures include the development of a review checklist to ensure that we will apply the applicable accounting guidance under Accounting Standards Codification ("ASC") 230, Statement of Cash Flows.
These review procedures included the development of a review checklist to ensure that we will apply the applicable accounting guidance under Accounting Standards Codification ("ASC") 230, Statement of Cash Flows.
Additionally, in the ordinary course of business we collect and store sensitive data, including intellectual property and proprietary business information as well as personal 32 Table of Contents information of our customers and employees, in data centers and on information technology systems, including systems that may be controlled or maintained by third parties.
Additionally, in the ordinary course of business we collect and store sensitive data, including intellectual property and proprietary business information as well as personal information of our customers and employees, in data centers and on information technology systems, including systems that may be controlled or maintained by third parties.
If we are 18 Table of Contents unable to maintain our relationship with Bosch or TSMC, our ability to produce high-quality products could suffer, which in turn could harm our business, financial condition, and results of operations. We currently primarily rely on Advanced Semiconductor Engineering, Inc. (“ASE”), Carsem (M) Sdn. Bhd. (“Carsem”), and United Test and Assembly Center Ltd.
If we are unable to maintain our relationship with Bosch, TSMC, or Teledyne, our ability to produce high-quality products could suffer, which in turn could harm our business, financial condition, and results of operations. We currently primarily rely on Advanced Semiconductor Engineering, Inc. (“ASE”), Carsem (M) Sdn. Bhd. (“Carsem”), and United Test and Assembly Center Ltd.
Litigation, whether we are a plaintiff or a defendant, can be expensive and time-consuming and may divert the efforts of our management and other personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.
Litigation, whether we are a plaintiff or a defendant, can be expensive and time-consuming and may divert 35 Table of Contents the efforts of our management and other personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.
If we do not continue to achieve design wins in the short term, our revenue in the following years may deteriorate. Further, a significant portion of our revenue in any period may depend on a single product design win with a large customer.
If we do not continue to achieve design wins in the short term, our revenue in the following years may deteriorate. 21 Table of Contents Further, a significant portion of our revenue in any period may depend on a single product design win with a large customer.
Any attack on the information technology systems of us or one of our vendors, suppliers, or customers may be difficult to detect, designed to remain dormant until a triggering event, or may continue undetected for an extended period of time.
Any attack on the information technology systems of us or one of our vendors, suppliers, or customers may be difficult to detect, designed to remain dormant until a 33 Table of Contents triggering event, or may continue undetected for an extended period of time.
In addition, approximately 86%, 88%, and 94% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively, was from distributors with ship-to locations outside the United States, although we believe the majority of our end customers are based in the U.S. based on sell-through information provided by these distributors.
In addition, approximately 92%, 86%, and 88% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively, was from distributors with ship-to locations outside the United States, although we believe the majority of our end customers are based in the U.S. based on sell-through information provided by these distributors.
We also had a follow-on offering on June 16, 2020, which resulted in greater than 50% change under Section 382. We completed an updated Section 382 analysis based on this new change event and determined 33 Table of Contents that it will not prohibit us from eventually utilizing our carryforwards.
We also had a follow-on offering on June 16, 2020, which resulted in greater than 50% change under Section 382. We completed an updated Section 382 analysis based on this new change event and determined that it will not prohibit us from eventually utilizing our carryforwards.
Reduced demand for our customers’ products has led to a buildup of inventory at many of our customers, including distributors, and their affiliates, partners, and contract manufacturers, which 15 Table of Contents has and may continue to adversely affect demand for our products.
Reduced demand for our customers’ products has led to a buildup of inventory at many of our customers, including distributors, and their affiliates, partners, and contract manufacturers, which has and may continue to adversely affect demand for our products.
Based on our shipment information, we believe that revenue attributable to our ten largest end customers accounted for 49%, 47% and 49% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
Based on our shipment information, we believe that revenue attributable to our ten largest end customers accounted for 59%, 49% and 47% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
A future pandemic, epidemic, health crisis, or other outbreak of disease, including the emergence of new COVID-19 variants, may negatively and materially impact our business, results of operations, and financial condition, due to: • a global economic recession or depression that could significantly reduce demand and/or prices for our products; • reduced productivity in our product development, operations, marketing, sales, and other activities; • government mandates, guidance, or recommendations regarding shutdown, closures, or other restrictions; • disruptions to our supply chain; • higher rate of losses on our accounts receivable due to credit defaults; or • volatility in our stock price.
A future pandemic, epidemic, health crisis, or other outbreak of disease, may negatively and materially impact our business, results of operations, and financial condition, due to: • a global economic recession or depression that could significantly reduce demand and/or prices for our products; • reduced productivity in our product development, operations, marketing, sales, and other activities; • government mandates, guidance, or recommendations regarding shutdown, closures, or other restrictions; • disruptions to our supply chain; • higher rate of losses on our accounts receivable due to credit defaults; or • volatility in our stock price.
If we increase operations in other currencies in the future, we may experience foreign exchange gains or losses due to the volatility of other currencies compared to the U.S. dollar. Certain of our employees are located in Malaysia, the Netherlands, Taiwan, Japan, Korea, Germany, Finland, France, Ukraine, and India.
If we increase operations in other currencies in the future, we may experience foreign exchange gains or losses due to the volatility of other currencies compared to the U.S. dollar. Certain of our employees are located primarily in Finland, India, Japan, Malaysia, the Netherlands, Taiwan, and Ukraine.
We cannot assure that our existing material weakness will be remediated or that additional material weaknesses will not exist or otherwise be discovered, any of which could adversely affect our reputation, financial condition, and results of operations.
We cannot assure that additional material weaknesses will not exist or otherwise be discovered, any of which could adversely affect our reputation, financial condition, and results of operations.
If we determine that an ownership change has occurred and our ability to use our historical net operating loss and tax credit carryforwards is materially limited, it would harm our future business, financial condition, and results of operations by effectively increasing our future tax obligations.
If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is materially limited, it would harm our future business, financial condition, and results of operations by effectively increasing our future tax obligations.
We completed a Section 382 analysis and determined an ownership change occurred in 2014 and concluded that it had no impact on U.S. federal and California net operating losses or on U.S. federal research and development credits. Our initial public offering in November 2019 did not result in a change in ownership of greater than 50% under Section 382.
We completed a Section 382 analysis and determined an ownership change last occurred in 2014 and concluded that it had no impact on U.S. federal and California NOLs or on U.S. federal research and development credits. Our initial public offering in November 2019 did not result in a change in ownership of greater than 50% under Section 382.
Companies that we primarily compete with include, but are not limited to, Abracon LLC, Daishinku Corporation, Diodes Incorporated, Kyocera Corporation, Microchip Technology Inc., Murata Manufacturing Co., Ltd., Nihon Dempa Kogyo Co., Ltd., Rakon Limited, Renesas Electronics Corporation, Seiko Epson Corporation, Skyworks Solutions, Inc., Texas Instruments Incorporated, and TXC Corporation.
Companies that we primarily compete with include, but are not limited to, Abracon LLC, Daishinku Corp., Diodes Incorporated, Kyocera Corporation, Microchip Technology Inc., Murata Manufacturing 26 Table of Contents Co., Ltd., Nihon Dempa Kogyo Co., Ltd., Rakon Limited, Renesas Electronics Corporation, Seiko Epson Corporation, Skyworks Solutions, Inc., Texas Instruments Incorporated, and TXC Corporation.
Our competitors range 25 Table of Contents from large, international companies offering a wide range of timing products to smaller companies, including start-ups, specializing in narrow market verticals.
Our competitors range from large, international companies offering a wide range of timing products to smaller companies, including start-ups, specializing in narrow market verticals.
The U.S. federal research and development tax credit carryforwards begin to expire in 2025 and the state research and development tax credit carryforwards carry forward indefinitely. These net operating loss and U.S. federal tax credit carryforwards could expire unused and/or be unavailable to offset future income tax liabilities.
The U.S. federal research and development tax credit carryforwards begin to expire in 2025 and the state research and development tax credit carryforwards carry forward indefinitely. These NOL and U.S. federal tax credit carryforwards could expire unused and/or be unavailable to offset future income tax liabilities.
The potential impact that a future pandemic, epidemic, health crisis, or other outbreak of disease, including the emergence of new COVID-19 variants could have on our business, results of operations, and financial condition, and on the other risk factors described in this “Risk Factors” section, remain unclear and difficult to predict.
The potential impact that a future pandemic, epidemic, health crisis, or other outbreak of disease, could have on our business, results of operations, and financial condition, and on the other risk factors described in this “Risk Factors” section, remain unclear and difficult to predict.
As discussed elsewhere in this Annual Report on Form 10-K, we identified a material weakness in our internal control over financial reporting related to the misclassification of “interest received upon maturity of held-to-maturity securities” as an investing activity instead of as an operating activity in the respective condensed consolidated statements of cash flows for the periods ended March 31, 2023, June 30, 2023, and September 30, 2023.
As discussed elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 26, 2024, we identified a material weakness in our internal control over financial reporting related to the misclassification of “interest received upon maturity of held-to-maturity securities” as an investing activity instead of as an operating activity in the respective condensed consolidated statements of cash flows for the periods ended March 31, 2023, June 30, 2023, and September 30, 2023.
Under this agreement, we are required to pay a royalty fee to Bosch if we engage third parties to manufacture, or if we decide to manufacture ourselves, certain generations of our MEMS wafers through March 31, 2024. In addition, shipments could be significantly delayed while these sources are qualified for volume production.
Under this agreement, we were required to pay a royalty fee to Bosch if we engaged third parties to manufacture, or if we decided to manufacture ourselves, certain generations of our MEMS wafers until March 31, 2024. In addition, shipments could be significantly delayed while these sources are qualified for volume production.
Our top three distributors by revenue together accounted for approximately 51%, 49%, and 48% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
Our top three distributors by revenue together accounted for approximately 56%, 51%, and 49% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
Our revenue in previous periods may not be indicative of future performance and our revenue may fluctuate over time. Our revenue has fluctuated over time. Our revenue was $144.0 million, $283.6 million, and $218.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Our revenue in previous periods may not be indicative of future performance and our revenue may fluctuate over time. Our revenue has fluctuated over time. Our revenue was $202.7 million, $144.0 million, and $283.6 million for the years ended December 31, 2024, 2023, and 2022, respectively.
As of December 31, 2023, we had U.S. federal, state and foreign net operating loss (“NOL”), carryforwards of approximately $230.2 million, $83.7 million and $1.7 million, respectively, and U.S. federal and state research and development tax credit carryforwards of approximately $3.9 million and $3.6 million, respectively. The U.S. federal, state, and the foreign NOL carryforwards begin to expire in 2028.
As of December 31, 2024, we had U.S. federal, state and foreign net operating loss (“NOL”), carryforwards of approximately $250.7 million, $84.5 million and $2.0 million, respectively, and U.S. federal and state research and development tax credit carryforwards of approximately $3.9 million and $3.6 million, respectively. The U.S. federal, state, and the foreign NOL carryforwards begin to expire in 2028.
Although we carry product liability insurance, this insurance is subject to significant deductibles and may not adequately cover our costs arising from defects in our products or otherwise. 24 Table of Contents Defects in our products or failures to meet product specifications could harm our relationships with our customers and damage our reputation.
Although we carry product liability insurance, this insurance is subject to significant deductibles and may not adequately cover our costs arising from defects in our products or otherwise. Defects in our products or failures to meet product specifications could harm our relationships with our customers and damage our reputation. Our products must meet demanding specifications for quality, performance, and reliability.
Any of the foregoing could harm our business, financial condition, and results of operations. Risks Related to MegaChips Corporation’s Ownership Position in Our Common Stock As long as MegaChips holds a significant amount of our stock, our other shareholders’ ability to influence matters requiring stockholder approval will be limited.
Any of the foregoing could harm our business, financial condition, and results of operations. Risks Related to Concentration of Ownership in Our Common Stock As long as a limited number of stockholders hold a significant amount of our stock, our other stockholders’ ability to influence matters requiring stockholder approval will be limited.
Our products must meet demanding specifications for quality, performance, and reliability. Defects in our products or failure of our products to meet required product specifications may cause our customers to be reluctant to buy our products, which could harm our ability to retain existing customers and attract new customers and adversely impact our reputation.
Defects in our products or failure of our products to meet required product specifications may cause our customers to be reluctant to buy our products, 25 Table of Contents which could harm our ability to retain existing customers and attract new customers and adversely impact our reputation.
In certain circumstances, if we do not comply with the terms of a government contract or with regulations or statutes, we could be subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civil and criminal penalties or be debarred or suspended from obtaining future contracts for a specified period of time, which could have an adverse effect on our business.
In certain circumstances, if we do not comply with the terms of a government contract or with regulations or statutes, we could be subject to downward contract price adjustments or refund obligations or could in extreme circumstances be assessed civil and criminal penalties or be debarred or suspended from obtaining future contracts for a specified period of time, which could have an adverse effect on our business. 32 Table of Contents Tax regulatory authorities may disagree with our positions and conclusions regarding certain tax positions resulting in unanticipated costs or non-realization of expected benefits.
If our customers discover design flaws, defects, errors, or bugs in their products, or if they experience changing market requirements, failed evaluations or field trials, or incompatible deliverables from other vendors, they may delay, change, or cancel a project, and we may have incurred significant additional development costs and may not be able to recoup our costs, which in turn would adversely affect our business, financial condition, and results of operations.
If our customers discover design flaws, defects, errors, or bugs in their products, or if they experience changing market requirements, failed evaluations or field trials, or incompatible deliverables from other vendors, they may delay, change, or cancel a project, and we may have incurred significant additional development costs and may not be able to recoup our costs, which in turn would adversely affect our business, financial condition, and results of operations. 22 Table of Contents Our target customer and product markets may not grow or develop as we currently expect, and if we fail to penetrate new markets and scale successfully within those markets, our revenue and financial condition would be harmed.
We may be unable to predict the timing or development of trends in our target markets with any accuracy. If we fail to accurately predict market requirements or market demand for these solutions, our business will suffer. A market shift towards an industry standard that we may not support could significantly decrease the demand for our solutions.
If we fail to accurately predict market requirements or market demand for these solutions, our business will suffer. A market shift towards an industry standard that we may not support could significantly decrease the demand for our solutions.
Further, if our target customer markets do 21 Table of Contents not grow or develop in ways that we currently expect, demand for our technology may not materialize as expected, which would also negatively impact our business, financial condition, and results of operations.
Further, if our target customer markets do not grow or develop in ways that we currently expect, demand for our technology may not materialize as expected, which would also negatively impact our business, financial condition, and results of operations. We may be unable to predict the timing or development of trends in our target markets with any accuracy.
As long as MegaChips continues to be our largest stockholder, it will continue to have significant influence over us. For example, as long as MegaChips continues to hold a significant or the largest ownership position in our outstanding common stock, MegaChips may have the ability to affect the outcome of any stockholder vote during this period.
As a result, this group of stockholders has the ability to significantly influence us through this ownership position For example, as long as this group of stockholders continue to hold a significant or the largest ownership position in our outstanding common stock, they may have the ability to affect the outcome of any stockholder vote during this period.
As of December 31, 2023, we had 119 issued U.S. patents, expiring generally between 2026 and 2040 and 42 pending U.S. patent applications (including 13 provisional applications). We also had four foreign issued patents expiring in 2036 and four pending foreign patent applications.
As of December 31, 2024, we had 134 issued U.S. patents, expiring generally between 2026 and 2040 and 51 pending U.S. patent applications (including 11 provisional applications). We also had 5 foreign issued patents expiring in 2036 and 5 pending foreign patent applications.
As we grow our business, our revenue may fluctuate in future periods due to a number of reasons, which may include macroeconomic conditions, slowing demand for 23 Table of Contents our products, increasing competition, a decrease in the growth of our overall market or market saturation, or our failure to capitalize on growth opportunities.
As we grow our business, our revenue may fluctuate in future periods due to a number of reasons, which may include macroeconomic conditions, slowing demand for our products, increasing competition, a decrease in the growth of our overall market or market saturation, or our failure to capitalize on growth opportunities. 24 Table of Contents If we are unable to manage our growth effectively, we may not be able to execute our business plan and our operating results could suffer.
Failure to comply with the laws associated with our activities outside of the United States could subject us to penalties and other adverse consequences. We face significant risks if we fail to comply with anti-corruption laws and anti-bribery laws, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.S.
We face significant risks if we fail to comply with anti-corruption laws and anti-bribery laws, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.S.
Further, adverse economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults. As a result, global macroeconomic conditions have had and may continue to have a material adverse effect on our business, results of operations, and financial condition. We are subject to the cyclical nature of the semiconductor industry.
As a result, global macroeconomic conditions have had and may continue to have a material adverse effect on our business, results of operations, and financial condition. 16 Table of Contents We are subject to the cyclical nature of the semiconductor industry.
A material weakness is a deficiency, or a 30 Table of Contents combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
We cannot assure you that the steps we have taken will prevent 34 Table of Contents unauthorized use of our intellectual property, or that others will not develop technologies similar or superior to our technology or design around our intellectual property.
We cannot assure you that the steps we have taken will prevent unauthorized use of our intellectual property, or that others will not develop technologies similar or superior to our technology or design around our intellectual property. Our failure to effectively protect our intellectual property could reduce the value of our technology in licensing arrangements or in cross-licensing negotiations.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. Management, under the oversight from the Audit Committee, is implementing additional review procedures to enhance our internal control over financial reporting with respect to the statement of cash flows in order to remediate the material weakness.
Management, under the oversight from the Audit Committee, implemented additional review procedures to enhance our internal control over financial reporting with respect to the statement of cash flows in order to remediate the material weakness.
Our failure to effectively protect our intellectual property could reduce the value of our technology in licensing arrangements or in cross-licensing negotiations. In addition, we also rely on contractual protections with our customers, suppliers, distributors, employees, and consultants, and we implement security measures designed to protect our trade secrets and know-how.
In addition, we also rely on contractual protections with our customers, suppliers, distributors, employees, and consultants, and we implement security measures designed to protect our trade secrets and know-how.
If we are unable to consistently introduce new products that ship in volume, or if our transition to these new products does not successfully occur prior to any decrease in revenue from our prior products, our revenue will likely decline significantly and rapidly. 22 Table of Contents Pandemics, epidemics, or other outbreaks of disease have had and may in the future have an adverse impact upon our business, results of operations, and financial condition.
If we are unable to consistently introduce new products that ship in 23 Table of Contents volume, or if our transition to these new products does not successfully occur prior to any decrease in revenue from our prior products, our revenue will likely decline significantly and rapidly.
Substantially all of our revenue to date has been attributable to sales of MEMS oscillators. We have expanded our products to include clock IC and timing sync solutions.
Our target markets include the communications, datacenter, and enterprise, automotive, industrial, aerospace, and mobile, IoT, and consumer markets. Substantially all of our revenue to date has been attributable to sales of MEMS oscillators. We have expanded our products to include clock IC and timing synchronization solutions.
Certain of our manufacturing, packaging, assembly, and testing facilities are located outside of the United States, including Malaysia, Taiwan, and Thailand, where we are subject to increased risk of political and economic instability, difficulties in managing operations, difficulties in enforcing contracts and our intellectual property, severe weather, and employment and labor difficulties.
We enter into capacity agreements with certain of our OSATs from time to time which may adversely impact our gross margins and results of operations if we do not purchase required minimum quantities. 19 Table of Contents Certain of our manufacturing, packaging, assembly, and testing facilities are located outside of the United States, including Malaysia, Taiwan, and Thailand, where we are subject to increased risk of political and economic instability, difficulties in managing operations, difficulties in enforcing contracts and our intellectual property, severe weather, and employment and labor difficulties.
The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, including MegaChips, or the perception in the market that holders of a large number of shares intend to sell their shares.
The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, including MegaChips, or the perception in the market that holders of a large number of shares intend to sell their shares. 37 Table of Contents Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.
Geopolitical tensions are leading to an increasing trend of customers seeking domestically produced products or reducing the dependence upon, or use of, products from certain countries, which could limit our ability to make sales to these customers. 16 Table of Contents Our end customers, or the distributors through which we sell to these customers, may choose to use products in addition to ours, use a different product altogether, or develop an in-house solution.
Geopolitical tensions are leading to an increasing trend of customers seeking domestically produced products or reducing the dependence upon, or use of, products from certain countries, which could limit our ability to make sales to these customers.
Most of our revenue has been from sales of products to distributors with ship-to locations outside of the United States. Many of our third-party suppliers are located outside of the United States.
If significant tariffs or other trade restrictions are placed on our products or third-party suppliers, our revenue and results of operations may be materially harmed. Most of our revenue has been from sales of products to distributors with ship-to locations outside of the United States. Many of our third-party suppliers are located outside of the United States.
If financing is not available when required or is not available on acceptable terms, it could harm our liquidity position and we may have to scale back our operations or limit our production activities, which in turn would harm our business, operating results, and financial condition. 29 Table of Contents If significant tariffs or other trade restrictions are placed on our products or third-party suppliers, our revenue and results of operations may be materially harmed.
If financing is not available when required or is not available on acceptable terms, it could harm our liquidity position and we may have to scale back our operations or limit our production activities, which in turn would harm our business, operating results, and financial condition. 30 Table of Contents Failure to comply with the laws associated with our activities outside of the United States could subject us to penalties and other adverse consequences.
We may not be able to maintain sales to our key customers or continue to secure key design wins for a variety of reasons, and our customers can stop incorporating our products into their product offerings with limited notice to us and suffer little or no penalty. 20 Table of Contents If we fail to anticipate or respond to technological shifts or market demands, or to develop new or enhanced products or technologies in response to the same in a timely manner, it could result in decreased revenue and the loss of our design wins to our competitors.
We may not be able to maintain sales to our key customers or continue to secure key design wins for a variety of reasons, and our customers can stop incorporating our products into their product offerings with limited notice to us and suffer little or no penalty.
Because we do not typically have long-term purchase commitments with our customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in turn exposes us to inventory risk, and may cause our business and results of operations to suffer.
Further, if our distributors’ relationships with our end customers, including our larger end customers, are disrupted for inability to deliver sufficient products or for any other reason, it could have a significant negative impact on our business, financial condition, and results of operations. 17 Table of Contents Because we do not typically have long-term purchase commitments with our customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in turn exposes us to inventory risk, and may cause our business and results of operations to suffer.
(“UTAC”) for assembly and testing, as well as Daishinku Corp. (“Daishinku”), UTAC, Hana Semiconductor (Ayutthaya) Co., Ltd, and ASE for ceramic packaging for some of our products. We enter into capacity agreements with certain of our OSATs from time to time which may adversely impact our gross margins and results of operations if we do not purchase required minimum quantities.
(“UTAC”) for assembly and testing, as well as Daishinku Corp. (“Daishinku”), UTAC, Hana Semiconductor (Ayutthaya) Co., Ltd, and ASE for ceramic packaging for some of our products.
If any corporate opportunity arises and if our directors and officers do not pursue it on our behalf, we may not become aware of, and may potentially lose, a significant business opportunity. Risks Related to Our Common Stock Substantial future sales of our common stock could cause the market price of our common stock to decline.
In addition, as a result of this significant influence, persons who we would like to invite to join our board of directors may decline to do so. Risks Related to Our Common Stock Substantial future sales of our common stock could cause the market price of our common stock to decline.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program is integrated in our overall enterprise risk management program. For example, our IT team works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact on our business.
Biggest changeFor example, our IT team works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact on our business. Our cybersecurity risk management program also seeks to manage cybersecurity risks associated with our use of third-party service providers through risk assessments and imposition of contractual obligations.
This team of business leaders works with our incident response team to help determine the severity of the impact of a cybersecurity incident, as well as to help mitigate and remediate cybersecurity incidents of which they are notified.
This team 40 Table of Contents of business leaders works with our incident response team to help determine the severity of the impact of a cybersecurity incident, as well as to help mitigate and remediate cybersecurity incidents of which they are notified.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have established policies and processes for assessing, identifying, and managing material risks from cybersecurity threats.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy 39 Table of Contents We have established policies and processes for assessing, identifying, and managing material risks from cybersecurity threats.
Our cybersecurity risk management program incorporates a variety of methods to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including: • risk assessments designed to help identify cybersecurity risks to our Information Systems and Data; • a team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • annual training of our employees at all levels and in all departments regarding cybersecurity awareness and protection of confidential information; and • a cybersecurity incident response plan that includes procedures for detecting and responding to cybersecurity incidents. 39 Table of Contents Additionally, our cybersecurity risk management program incorporates a variety of tools and services to assess, identify, and manage material risks from cybersecurity threats, including regular network and endpoint monitoring, vulnerability assessments, and penetration testing.
Our cybersecurity risk management program incorporates a variety of methods to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including: • risk assessments designed to help identify cybersecurity risks to our Information Systems and Data; • a team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • annual training of our employees at all levels and in all departments regarding cybersecurity awareness and protection of confidential information; and • a cybersecurity incident response plan that includes procedures for detecting and responding to cybersecurity incidents.
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Our cybersecurity risk management program also seeks to manage cybersecurity risks associated with our use of third-party service providers through risk assessments and imposition of contractual obligations.
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Additionally, our cybersecurity risk management program incorporates a variety of tools and services to assess, identify, and manage material risks from cybersecurity threats, including regular network and endpoint monitoring, vulnerability assessments, and penetration testing. Our cybersecurity risk management program is integrated in our overall enterprise risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOutside of the United States, we also lease facilities in various international locations that are used for research and development, sales, business development, operations, and administrative support. These international facilities are mainly located in Japan, Malaysia, the Netherlands, Taiwan, and Ukraine. We do not own any real property.
Biggest changeOutside of the United States, we also lease facilities in various international locations that are used for research and development, sales, business development, operations, and administrative support. These international facilities are mainly located in Japan, Malaysia, the Netherlands, Taiwan, Finland, India and Ukraine. We do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, and results of operations. 40 Table of Contents Item 4. Mine Safety Disclosures. Not applicable 41 Table of Contents PART II
Biggest changeWe are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, and results of operations. Item 4. Mine Safety Disclosures. Not applicable 41 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following line graph compares for the period beginning November 21, 2019, the initial trading date of our common stock on the Nasdaq Global Market, and ending on December 31, 2023, the last day of our fiscal year, the cumulative total stockholder return for our common stock, the Nasdaq Composite Index and Philadelphia Semiconductor Index and assumes reinvestment of any dividends.
Biggest changeThe following line graph compares the cumulative total stockholder return for our common stock, the Nasdaq Composite Index and Philadelphia Semiconductor Index for the five years ending on December 31, 2024. The graph assumes that $100 was invested on January 1, 2020 in our common stock and in each of the Nasdaq 100 Index and Philadelphia Semiconductor Index.
As of February 15, 2024, there were 28 holders of record (not including beneficial holders of stock held in street names) of our common stock. Dividend Policy We have never paid any cash dividends on our common stock.
As of February 10, 2025, there were 30 holders of record (not including beneficial holders of stock held in street names) of our common stock. Dividend Policy We have never paid any cash dividends on our common stock.
The stockholder return shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock, and we do not make or endorse any predictions as to future stockholder returns. 42 Table of Contents Company Name/Index Base Period 11/21/2019 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 SiTime Corporation 100.00 150.89 662.31 1,731.01 601.30 722.37 Nasdaq composite index 100.00 105.22 151.13 183.46 122.73 176.03 Philadelphia Semiconductor index 100.00 109.24 165.10 233.06 149.55 246.61 43 Table of Contents Item 6. [Reserved] 44 Table of Contents
The stockholder return shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock, and we do not make or endorse any predictions as to future stockholder returns. 42 Table of Contents Company Name/Index December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 SiTime Corporation 100.00 438.94 1,147.22 398.51 478.75 841.29 Nasdaq composite index 100.00 143.64 174.36 116.65 167.30 215.22 Philadelphia Semiconductor index 100.00 151.14 213.35 136.90 225.75 269.24 43 Table of Contents Item 6. [Reserved] 44 Table of Contents
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Our common stock is a component of each of the presented indices. Total return assumes reinvestment of dividends in each of the indices indicated.

Item 7. Management's Discussion & Analysis

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

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Biggest changeYear Ended December 31, Change 2023 vs 2022 2023 2022 2021 $ % (in thousands, except percentage) Revenue $ 143,993 $ 283,605 $ 218,808 $ (139,612) (49 %) Cost of revenue 61,905 100,643 79,346 (38,738) (38 %) Gross profit 82,088 182,962 139,462 (100,874) (55 %) Operating expenses: Research and development 97,589 90,288 52,104 7,301 8 % Selling, general and administrative 83,971 76,532 54,515 7,439 10 % Acquisition related costs 7,728 — — 7,728 n/a Total operating expenses 189,288 166,820 106,619 22,468 13 % Income (loss) from operations (107,200) 16,142 32,843 (123,342) (764 %) Interest income 26,958 7,291 — 19,667 270 % Other expense, net (141) (97) (488) (44) 45 % Income (loss) before income taxes (80,383) 23,336 32,355 (103,719) (444 %) Income tax expense (152) (82) (78) (70) 85 % Net income (loss) attributable to common stockholders and comprehensive income $ (80,535) $ 23,254 $ 32,277 $ (103,789) (446 %) A discussion of changes in our results of operations from fiscal 2021 to fiscal 2022 has been omitted from this Annual Report on Form 10-K, but may be found in “Part II, Item 7.
Biggest changeYear Ended December 31, Change 2024 vs 2023 2024 2023 2022 $ % (in thousands, except percentage) Revenue $ 202,697 $ 143,993 $ 283,605 $ 58,704 41 % Cost of revenue 98,203 61,905 100,643 36,298 59 % Gross profit 104,494 82,088 182,962 22,406 27 % Operating expenses: Research and development 106,855 97,589 90,288 9,266 9 % Selling, general and administrative 102,157 83,971 76,532 18,186 22 % Acquisition related costs 10,722 7,728 — 2,994 39 % Total operating expenses 219,734 189,288 166,820 30,446 16 % Income (loss) from operations (115,240) (107,200) 16,142 (8,040) 8 % Interest income 22,883 26,958 7,291 (4,075) (15 %) Other expense, net (758) (141) (97) (617) 438 % Income (loss) before income taxes (93,115) (80,383) 23,336 (12,732) 16 % Income tax expense (486) (152) (82) (334) 220 % Net income (loss) attributable to common stockholders and comprehensive income (loss) $ (93,601) $ (80,535) $ 23,254 $ (13,066) 16 % A discussion of changes in our results of operations from fiscal 2022 to fiscal 2023 has been omitted from this Annual Report on Form 10-K, but may be found in “Part II, Item 7.
The MD&A contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that involve risks and uncertainties, which are discussed under Part I, Item 1A. Overview The ability to accurately measure and reference time has been essential to many of humankind’s greatest inventions and technological advances.
The MD&A contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that involve risks and uncertainties, which are discussed under Part I, Item 1A. Overview The ability to accurately measure and reference time has been essential to humankind’s greatest inventions and technological advances.
The future effects of macroeconomic events on our business and results of operations, including inventory levels at our customer and their affiliates, partners, and contract manufacturers as well as demand for our products, are uncertain and difficult to predict.
The future effects of macroeconomic events on our business and results of operations, including inventory levels at our customers and their affiliates, partners, and contract manufacturers as well as demand for our products, are uncertain and difficult to predict.
We believe that some of our customers built up inventory of our products in 2022 to overcome the industry-wide supply constraints that occurred in the previous periods and that the macroeconomic events in 2022 and 2023 led to reduced demand for our customers' products, which led to an inventory buildup at some of our customers and their affiliates, partners and contract manufacturers, which has adversely affected sales of our products.
We believe that some of our customers built up inventory of our products in 2022 to overcome the industry-wide supply constraints that occurred in the previous periods and that the macroeconomic events in the second half of 2022 and through 2023 led to reduced demand for our customers' products, which led to an inventory buildup at some of our customers and their affiliates, partners and contract manufacturers, which has adversely affected sales of our products.
Customer Demand and Product Life Cycles Once customers design our Precision Timing solutions into their products, we closely monitor all aspects of their demand cycle, including the initial design phase, prototype production, volume production, and inventories, as well as end- 46 Table of Contents market demand, including seasonality, cyclicality, and the competitive landscape.
Customer Demand and Product Life Cycles Once customers design our Precision Timing solutions into their products, we closely monitor all aspects of their demand cycle, including the initial design phase, prototype production, volume production, and inventories, as well as end-market demand, including seasonality, cyclicality, and the competitive landscape.
At December 31, 2023 and 2022, we had research and development tax credit carryforwards of approximately $3.9 million and $3.9 million, respectively for U.S. federal income tax purposes and $3.6 million and $3.6 million, respectively for state income tax purposes.
At December 31, 2024 and 2023, we had research and development tax credit carryforwards of approximately $3.9 million and $3.9 million, respectively for U.S. federal income tax purposes and $3.6 million and $3.6 million, respectively for state income tax purposes.
The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as revenue projections over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured, and expected volatility.
The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as revenue projections over the term of the contingent earn-out period, discounted for the 53 Table of Contents period over which the initial contingent consideration is measured, and expected volatility.
Our research and development expense consists primarily of personnel costs, which include stock-based compensation, as well as pre-production engineering mask costs, software license and intellectual property expenses, design tools and prototype-related expenses, facility costs, supplies, professional and consulting fees, and allocated overhead costs, which may be offset by non-recurring engineering contra-expenses recorded in certain periods.
Our research and development expense consists primarily of personnel costs, as well as pre-production engineering mask costs, software license and intellectual property expenses, design tools and prototype-related expenses, facility costs, supplies, professional and consulting fees, and allocated overhead costs, which may be offset by non-recurring engineering contra-expenses recorded in certain periods.
We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates. Estimates associated with the 53 Table of Contents accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.
We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.
The net proceeds from the Sales Agreement were offset by tax withholdings paid on behalf of employees for net share settlement of $37.6 million. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles.
The net proceeds from the Sales Agreement were offset by tax withholdings paid on behalf of employees for net share settlement of $41.3 million. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles.
In May 2022, we entered into a Sales Agreement ("Sales Agreement") with Stifel, Nicolaus & Company, Incorporated ("Stifel"), under which we may offer and sell from time to time at our sole discretion, up to an aggregate of 800,000 shares of our common stock, par value $0.0001 per share, through Stifel as our sales agent.
In February 2024, we entered into a Sales Agreement ("Sales Agreement") with Stifel, Nicolaus & Company, Incorporated ("Stifel"), under which we may offer and sell from time to time at our sole discretion, up to an aggregate of 1,200,000 shares of our common stock, par value $0.0001 per share, through Stifel as our sales agent.
In 2020 and 2021 there were a number of industry-wide supply constraints affecting the supply of analog circuits manufactured by certain foundries, including Taiwan Semiconductor Manufacturing Company, and affecting outsourced semiconductor assembly and test providers.
In 2020 and 2021, there were a number of industry-wide supply constraints affecting the supply of analog circuits manufactured by certain foundries, including TSMC, and affecting outsourced semiconductor assembly and test providers.
Timing technology has continued to evolve over centuries, forming a critical aspect of broader technological evolution. Timing is the heartbeat of digital electronic systems, ensuring that the system runs smoothly and reliably by providing and distributing clock signals to various critical components such as central processing units, communication and interface ICs, and radio frequency components.
Timing technology has continued to evolve over centuries, underpinning broader technological evolution and is the heartbeat of digital electronic systems. Here, timing ensures that the system runs smoothly and reliably by providing and distributing clock signals to various critical components such as central processing units, communication and interface ICs, and radio frequency components.
Sales, General and Administrative Sales, general and administrative expense consists of personnel costs, including stock-based compensation, professional and consulting fees, accounting and audit fees, legal costs, field application engineering support, travel costs, advertising expenses, and allocated overhead costs.
Sales, General and Administrative Sales, general and administrative expense consists of personnel costs, professional and consulting fees, accounting and audit fees, legal costs, field application engineering support, travel costs, advertising expenses, and allocated overhead costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for fiscal 2022 filed with the SEC on February 27, 2023. Revenue We derive revenue primarily from sales of Precision Timing solutions to distributors who in turn sell to our end customers. We also sell products directly to some of our end customers.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for fiscal 2023 filed with the SEC on February 26, 2024. Revenue We derive revenue primarily from sales of Precision Timing solutions to distributors. We also sell products directly to some of our end customers.
During the year ended December 31, 2023, we sold 400,000 shares of our common stock under the Sales Agreement at a weighted average price of $115.06 per share resulting in net proceeds to us of $44.8 million, after deducting underwriting discounts and commissions and offering costs. Our purchase obligations primarily include design and simulation licenses.
During the year ended December 31, 2024, we sold 332,500 shares of our common stock under the Sales Agreement at a weighted average price of $151.91 per share resulting in net proceeds to us of $48.8 million, after deducting underwriting discounts and commissions and offering costs. Our purchase obligations primarily include design and simulation licenses.
The changes in operating assets and liabilities resulted in cash provided primarily due to higher accounts receivable due to timing of shipments, an increase in inventories as we managed our inventory levels, higher prepaid expenses and other assets related to advance payments to suppliers for inventory and royalties, offset by an increase in accounts payable and lower accrued expenses and other liabilities due to timing of payments.
The changes in operating assets and liabilities resulted in cash used for operations primarily due to higher accounts receivable due to timing of shipments, increase in inventories as we managed our inventory levels, higher prepaid expenses and other assets, partially offset by higher accrued expenses and other liabilities and higher accounts payable due to timing of payments.
We are dependent on the availability of this capacity to manufacture and assemble our products and we can provide no assurance that adequate capacity will be available to us in the future.
We are dependent on the availability of this capacity to manufacture and assemble our products and we can provide no assurance that adequate capacity will be available to us in the future. We cannot predict the duration or timing of any downturn or upturn in the semiconductor industry.
At December 31, 2023 and 2022, we had federal NOL carry-forwards of approximately $230.2 million and $213.3 million, respectively, state NOL carry-forwards of approximately $83.7 million 50 Table of Contents and $65.3 million, respectively, and foreign NOL carry-forwards of approximately $1.7 million and $1.7 million, respectively. These federal, state, and foreign net operating loss carry-forwards will expire beginning in 2028.
At December 31, 2024 and 2023, we had federal NOL carry-forwards of approximately $250.7 million and $230.2 million, respectively, state NOL carry-forwards of approximately $84.5 million and $83.7 million, respectively, and foreign NOL carry-forwards of approximately $2.0 million and $1.7 million, respectively. These federal, state, and foreign net operating loss carry-forwards will expire beginning in 2028.
As electronics evolve to deliver higher performance levels, even in increasingly challenging environments, while also being more complex and size-constrained, we believe they will require more semiconductor-based sophisticated timing solutions that cannot be developed in legacy quartz crystal-based technologies.
As electronics evolve to deliver higher performance, connectivity, and intelligence, even in increasingly challenging environments, while also being more complex and size-constrained, we believe they will require more sophisticated semiconductor-based timing solutions that cannot be developed in legacy quartz crystal-based technologies. Precision timing fills this need with the performance, power, size, and cost that is required by these applications.
Cost of revenue also includes depreciation of production equipment, inventory write-downs, amortization of internally developed software, shipping and handling costs, and allocation of overhead and facility costs. We also include credits for rebates received from foundries to cost of revenue.
Cost of revenue also includes depreciation of production equipment, inventory write-downs, shipping and handling costs, and allocation of overhead and facility costs. We also include credits for rebates received from third-party contract manufacturers in cost of revenue.
We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products. Variable consideration is estimated and reflected as an adjustment to the transaction price. Depending on the terms of the contract, variable consideration is estimated using either the expected value approach or the most likely value approach.
Variable consideration is estimated and reflected as an adjustment to the transaction price. Depending on the terms of the contract, variable consideration is estimated using either the expected value approach or the most likely value approach.
We determine variable consideration at the end of each reporting period, which consists primarily of price adjustments and product returns by estimating the amount of consideration we expect to receive from our customers based on historical experience. Adjustments for the variable consideration has been in the range of 2% to 4% on a quarterly basis for the current year.
We determine variable consideration at the end of each reporting period, which consists primarily of price adjustments and product returns by estimating the amount of consideration we expect to be entitled to from our customers based on historical experience.
We believe that continued investment in our products and services is important for our future growth and acquisition of new customers and, as a result, we expect our research and development expenses to continue to increase in absolute dollars.
There is no assurance that we will have non-recurring engineering contra-expense from period to period. We expense research and development costs as incurred. We believe that continued investment in our products is important for our future growth and acquisition of new customers and, as a result, we expect our research and development expenses to continue to increase in absolute dollars.
Our capital expenditures for property and equipment have primarily been for general business purposes, including machinery and equipment, leasehold improvements, acquired software, internally developed software used in production and support of our products, computer equipment used internally, and production masks to manufacture our products. In 2023, cash used in investing activities was $36.7 million.
Investing Activities Our investing activities consist primarily of the purchase of short-term investments and capital expenditures for property and equipment purchases. Our capital expenditures for property and equipment have primarily been for general business purposes, including machinery and equipment, leasehold improvements, acquired software, computer equipment used internally, and production masks to manufacture our products.
We may incur incremental costs in 2024 and beyond related to the Aura transaction. Interest Income and Other Expense, net Interest income and other expense consists primarily of interest income on our cash balances, and foreign exchange gains and losses.
We will continue to incur incremental costs beyond 2024 related to the Aura transaction arising from changes in the fair value of the sales-based earnout liability and accretion of acquisition consideration payable. Interest Income and Other Expense, net Interest income and other expense consists primarily of interest income on our cash balances, and foreign exchange gains and losses.
Selling, general and administrative expense increased by $7.4 million, or 10%, for the year ended December 31, 2023 compared to the same period in 2022, primarily due to higher stock-based compensation expense of $10.8 million, higher personnel costs of $1.0 million related to increased headcount, partially offset by $2.4 million reduction in sales commission payouts due to lower sales, lower consulting fees of $1.0 million, and lower advertising spend of $0.7 million.
Selling, general and administrative expense increased by $18.2 million, or 22%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to higher stock-based compensation expense of $12.0 million, higher wages and bonus of $4.2 million related to increased headcount, higher sales commission payouts of $0.7 million due to higher sales, and higher travel costs of $0.6 million.
International sales represented approximately 86%, 88%, and 94% of net revenues in 2023, 2022, and 2021, respectively. 48 Table of Contents Cost of Revenue, Gross Profit, and Gross Margin Cost of revenue consists of wafers acquired from third-party foundries, assembly, packaging, and test cost of our products paid to third-party contract manufacturers, and personnel and other costs associated with our manufacturing operations.
Cost of Revenue, Gross Profit, and Gross Margin Cost of revenue consists of wafers acquired from third-party foundries, assembly, packaging, and test cost of our products paid to third-party contract manufacturers, and personnel and other costs associated with our manufacturing operations.
Our customers have limited return rights under our contracts with them. If variable considerations are anticipated to exceed historical experience, we may adjust our sales returns allowance accordingly to properly reflect our net revenue.
Adjustments for the variable consideration has been in the range of 2% to 3% on a quarterly basis for the current year. Our customers have limited return rights under our contracts with them. If variable considerations are anticipated to exceed historical experience, we may adjust our sales returns allowance accordingly to properly reflect our net revenue.
We also consider design wins critical to our future success and anticipate being increasingly dependent on revenue from new design wins for our new higher-end products with higher average selling prices (“ASPs”).
We work closely with our customers to understand their product roadmaps and strategies. Our end customers continuously develop new products in existing and new application areas. We also consider design wins critical to our future success and anticipate being increasingly dependent on revenue from new design wins for our new higher-end products which have higher average selling prices (“ASPs”).
We believe that this inventory buildup will negatively impact the sales of our products until such inventory buildup is reduced and could result in decreases in our sales and margins, and could materially harm our results of operations.
We believe that while this inventory buildup has reduced through the second half of 2023 and in 2024, any further increase could negatively impact the sales of our products and could result in decreases in our sales and margins, and could materially harm our results of operations.
As of December 31, 2023 we also held $518.7 million of short-term investments in held-to-maturity securities which consisted of Treasury Bills. Our principal use of cash is to fund our operations, to support growth through capital investments, and to acquire complementary businesses, products, services, or technologies in the future.
As of December 31, 2024 and 2023, we also had cash and cash equivalents of $6.1 million and $9.5 million, respectively. Our principal use of cash is to fund our operations, to support growth through capital investments, and to acquire complementary businesses, products, services, or technologies in the future.
Revenue Recognition We derive our revenue from product sales primarily to distributors, who in turn sell to original equipment manufacturers or other end customers. We recognize product revenue, at a point in time, upon shipment when we satisfy our performance obligations as evidenced by the transfer of control of our products to customers.
Revenue Recognition We derive our revenue from product sales primarily to distributors. We recognize product revenue, at a point in time, upon shipment when we satisfy our performance obligations as evidenced by the transfer of control of our products to customers. We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products.
Inventories Inventories consist of raw materials, work-in-process, and finished goods and are stated at the lower of standard cost, determined using first-in first out method or market net realizable value. We review and set standard costs to approximate actual manufacturing costs.
Inventories Inventories consist of raw materials, work-in-process, and finished goods and are stated at the lower of standard cost, (which approximates actual cost on a first-in first out basis) or net realizable value.
Year Ended December 31, Change 2023 vs 2022 2023 2022 2021 $ % (in thousands except percentage) Operating Expenses: Research and development $ 97,589 $ 90,288 $ 52,104 $ 7,301 8 % Selling, general and administrative 83,971 76,532 54,515 7,439 10 % Acquisition related costs 7,728 — — 7,728 n/a Total operating expenses $ 189,288 $ 166,820 $ 106,619 $ 22,468 13 % Research and Development Our research and development efforts are focused on the design and development of Precision Timing solutions.
Year Ended December 31, Change 2024 vs 2023 2024 2023 2022 $ % (in thousands except percentage) Operating Expenses: Research and development $ 106,855 $ 97,589 $ 90,288 $ 9,266 9 % Selling, general and administrative 102,157 83,971 76,532 18,186 22 % Acquisition related costs 10,722 7,728 — 2,994 39 % Total operating expenses $ 219,734 $ 189,288 $ 166,820 $ 30,446 16 % 49 Table of Contents Research and Development Our research and development efforts are focused on the design and development of Precision Timing solutions.
If we are unable to raise additional capital when we need it, it would harm our business, results of operations and financial condition. 51 Table of Contents The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 8,056 $ 39,752 $ 59,078 Net cash used in investing activities (36,660) (560,088) (33,788) Net cash provided by (used in) financing activities 3,469 (4,522) 460,646 Net increase (decrease) in cash and cash equivalents $ (25,135) $ (524,858) $ 485,936 Operating Activities In 2023, net cash provided by operating activities of $8.1 million was primarily due to net loss of $80.5 million and a change in operating assets and liabilities of $4.3 million, offset by depreciation and amortization, stock-based compensation expense, net change in unrealized interest on held to maturity securities, change in fair value of sales based earnout liability and acquisition consideration payable for a total of $92.9 million.
If we are unable to raise additional capital when we need it, it would harm our business, results of operations and financial condition. 51 Table of Contents The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 23,190 $ 8,056 $ 39,752 Net cash provided by (used in) investing activities 64,759 (36,660) (560,088) Net cash provided by (used in) financing activities (91,311) 3,469 (4,522) Net increase decrease in cash and cash equivalents $ (3,362) $ (25,135) $ (524,858) Operating Activities In 2024, net cash provided by operating activities of $23.2 million was primarily due to net loss of $93.6 million and a change in operating assets and liabilities of $25.0 million, offset by non-cash expenses of $141.8 million.
Our programmable architecture also plays a key role in ensuring optimal production flexibility, as it allows us to offer shorter lead times and the ability to meet custom requirements more easily.
Our programmable architecture also plays a key role in ensuring optimal production flexibility. In contrast to products offered by traditional timing device suppliers, our products are batch produced and then custom programmed to customer needs, allowing us to offer shorter lead times and the ability to meet custom requirements more easily.
Year Ended December 31, Change 2023 vs 2022 2023 2022 2021 $ % (in thousands except percentage) Cost of Revenue $ 61,905 $ 100,643 $ 79,346 $ (38,738) (38 %) Gross Profit 82,088 182,962 139,462 (100,874) (55 %) Gross Margin 57 % 65 % 64 % Gross profit decreased by $100.9 million in the year ended December 31, 2023 compared to the same period in 2022.
Year Ended December 31, Change 2024 vs 2023 2024 2023 2022 $ % (in thousands except percentage) Cost of Revenue $ 98,203 $ 61,905 $ 100,643 $ 36,298 59 % Gross Profit 104,494 82,088 182,962 22,406 27 % Gross Margin 52 % 57 % 65 % Gross profit increased by $22.4 million in the year ended December 31, 2024 compared to the same period in 2023.
However, we expect our research and development expense to fluctuate as a percentage of revenue from period to period depending on the timing of these expenses. 49 Table of Contents Research and development expense increased by $7.3 million, or 8%, for the year ended December 31, 2023 compared to the same period in 2022, primarily due to an increase in stock-based compensation expense of $7.7 million, a decrease in non-recurring engineering contra-expense recognized of $5.1 million, an increase in depreciation and amortization of lab equipment and licenses of $2.7 million, and higher personnel costs of $1.4 million due to increased headcount, partially offset by lower engineering spend towards ongoing new product development of $9.5 million.
Research and development expense increased by $9.3 million, or 9%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to an increase in stock-based compensation expense of $5.0 million, a decrease in non-recurring engineering contra-expense recognized of $2.3 million, and higher engineering spend towards ongoing new product development of $1.6 million.
In 2022, net cash provided by operating activities of $39.8 million was primarily due to net income of $23.3 million and depreciation and amortization, stock-based compensation expense, and net change in unrealized interest on held to maturity investments of $67.5 million, partially offset by a change in operating assets and liabilities of $51.0 million.
In 2023, net cash provided by operating activities of $8.1 million was primarily due to a net loss of $80.5 million and a change in operating assets and liabilities of $4.3 million, offset by depreciation and amortization, stock-based compensation expense, a net change in unrealized interest on held to maturity securities, change in fair value of sales based earnout liability and acquisition consideration payable for a total of $92.9 million.
The decrease was primarily related to a decrease in sales volume by 47% as well as decrease in ASPs. Lower sales volume was driven by lower demand for our products due to macroeconomic conditions, and excess inventory buildup at many of our customers and end-customers, distributors and their affiliates, partners, and contract manufacturers.
Lower sales volume in the prior year was driven by excess inventory buildup at many of our customers, distributors and their affiliates, partners, and contract manufacturers, and lower demand for our products due to macroeconomic conditions. Our top ten direct customers, including distributors, accounted for approximately 84%, 82% and 74% of net revenues in 2024, 2023, and 2022, respectively.
The net proceeds from the Sales Agreement were offset by tax withholdings paid on behalf of employees for net share settlement of $41.3 million. 52 Table of Contents During the year ended December 31, 2022, we sold 225,334 shares of our common stock under the Sales Agreement resulting in net proceeds to us of $33.0 million, after deducting underwriting discounts and commissions of $0.7 million and offering costs of $0.2 million.
During the year ended December 31, 2024, we sold 332,500 shares of our common stock under the Sales Agreement resulting in net proceeds to us of $48.8 million, after deducting underwriting discounts and commissions of $1.0 million and offering costs of $0.7 million.
However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to new product introductions, existing product transitions into high-volume manufacturing, manufacturing costs, and our product mix.
However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to new product introductions, existing product transitions into high-volume manufacturing, manufacturing costs, and our product mix. 47 Table of Contents Cyclical Nature of the Semiconductor Industry The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand.
Four customers in 2023 and three customers each in 2022, and 2021, which are distributors of our products, each accounted for more than 10% of our net revenues.
Three customers each in 2024, and 2022, and four customers in 2023 which are distributors of our products, accounted for more than 10% of our net revenues. International sales,identified based upon the ship-to location of the customers who purchased the Company’s products, represented approximately 92%, 86%, and 88% of net revenues in 2024, 2023, and 2022, respectively.
Our Precision Timing solutions are the heartbeat of our customers’ electronic systems, providing the timing functionality that is needed for electronics to operate reliably and correctly. We provide Precision Timing solutions that are differentiated by high performance, high resilience, and high reliability, along with programmability, small size, and low power consumption.
We are a leading provider of Precision Timing solutions to the global electronics industry. Our Precision Timing solutions are the heartbeat of our customers’ electronic systems, providing the timing functionality that is needed for electronics to operate reliably and accurately.
We paid $3.3 million to purchase intangible assets in software licenses. All such payments were partially offset by $1,061.0 million proceeds from the maturity of held to maturity investments. In 2022, cash used in investing activities was $560.1 million. We paid $673.4 million to purchase short-term investments in held-to-maturity securities.
We paid $3.3 million to purchase intangible assets in software licenses. All such payments were partially offset by $1,061.0 million proceeds from the maturity of held to maturity investments. Financing Activities Our financing activities have primarily consisted of proceeds from issuance of shares, payment of withholding of taxes on restricted stock units and payment of acquisition related consideration and earnouts.
Our all-silicon solutions are based on three fundamental areas of expertise: micro-electro-mechanical systems (“MEMS”), analog mixed-signal design capabilities, and advanced system-level integration expertise. At the heart of our Precision Timing solutions are our MEMS, analog/mixed-signal, and systems technologies.
Our current solutions include various types of oscillators, as well as clock ICs and resonators. Our all-silicon solutions are based on three fundamental areas of technical expertise: MEMS, analog mixed-signal design, and advanced system-level integration.
For additional discussion please see Part I, Item 1A "Risk Factors" of this report, especially the risk factor titled “Global macroeconomic conditions have harmed and may continue to harm our business” and “Our revenue and operating results may fluctuate from period to period, which could cause our stock price to fluctuate.” Impact of COVID-19 on our Business The COVID-19 pandemic impacted our workforce and the operations of our customers and suppliers during 2022, however in 2023 it did not have a material impact on our workforce or, to our knowledge, the operations of our customers or suppliers.
For additional discussion please see Part I, Item 1A "Risk Factors" of this report, especially the risk factor titled “Global macroeconomic conditions have harmed and may continue to harm our business” and “Our revenue and operating results may fluctuate from period to period, which could cause our stock price to fluctuate.” 46 Table of Contents Key Factors Affecting Our Performance Customer Orders and Forecasts Because our sales are made pursuant to standard purchase orders, orders may be cancelled, reduced, or rescheduled with little or no notice and without penalty.
Year Ended December 31, Change 2023 vs 2022 2023 2022 2021 $ % (in thousands except percentage) Interest income $ 26,958 $ 7,291 $ — $ 19,667 270% Other expense, net (141) (97) (488) (44) 45 % Total interest income and other expense, net $ 26,817 $ 7,194 $ (488) $ 19,623 273% Interest income and other expense, net increased $19.6 million for the year ended December 31, 2023 compared to the same period in 2022, primarily related to higher interest income earned on short term investments and net unrealized loss on foreign exchange rates due to increased activities in our foreign subsidiaries and unfavorable exchange rate fluctuations.
Year Ended December 31, Change 2024 vs 2023 2024 2023 2022 $ % (in thousands except percentage) Interest income $ 22,883 $ 26,958 $ 7,291 $ (4,075) (15)% Other expense, net (758) (141) (97) (617) 438 % Total interest income and other expense, net $ 22,125 $ 26,817 $ 7,194 $ (4,692) (17)% 50 Table of Contents Interest income and other expense, net decreased $4.7 million for the year ended December 31, 2024 compared to the same period in 2023, primarily related to lower interest income earned on short term investments due to lower interest rates and a decrease in investment balances arising from acquisition related payments and higher capital expenditures.
Year Ended December 31, Change 2023 vs 2022 2023 2022 2021 $ % (in thousands except percentage) Income tax expense $ (152) $ (82) $ (78) $ (70) 85% Liquidity and Capital Resources As of December 31, 2023 and 2022, we had cash and cash equivalents of $9.5 million and $34.6 million, respectively.
Year Ended December 31, Change 2024 vs 2023 2024 2023 2022 $ % (in thousands except percentage) Income tax expense $ (486) $ (152) $ (82) $ (334) 220% Liquidity and Capital Resources As of December 31, 2024 and 2023 we held short-term investments in held-to-maturity securities of $412.7 million and $518.7 million, respectively, which consisted of Treasury Bills.
In addition, changes in forecasts or the timing of orders from customers exposes us to the risks of inventory shortages or excess inventory. We may not be able to fulfill increased demand, at least in the short term, as we do not intend to acquire excess inventory to pre-build custom products.
We may not be able to fulfill increased demand, at least in the short term, as we do not intend to acquire excess inventory to pre-build custom products. Design Wins with New and Existing Customers Our solutions enable our customers to differentiate their product offerings and position themselves to gain market share.
We paid $31.8 million largely to purchase test and other manufacturing equipment to support the increase in demand of our products and other property and equipment for general business purposes. We paid $3.9 million to purchase intangible assets in software licenses. All such payments were offset by $149.0 million proceeds from the maturity of held to maturity investments.
This was partially offset by purchases of $807.8 million of short-term investments in held-to-maturity securities, $36.2 million largely to purchase test and other manufacturing equipment to support our operations and other property and equipment for general business purposes, and $0.5 million to purchase intangible assets in software licenses. In 2023, cash used in investing activities was $36.7 million.
For our largest accounts, dedicated sales personnel work with the end customer to ensure that our solutions fully address the end customer’s timing needs. Our smaller customers can select the optimum timing solution for 45 Table of Contents their needs by working directly with our sales personnel or our distributors or by shopping on our online store, SiTimeDirect ™ .
We leverage our global network of distributors to address the broad set of end markets we serve. For our largest accounts, dedicated sales personnel work with the end customer to ensure that our solutions fully address the end customer’s timing needs.
Key Factors Affecting Our Performance Customer Orders and Forecasts Because our sales are made pursuant to standard purchase orders, orders may be cancelled, reduced, or rescheduled with little or no notice and without penalty. Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses.
Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers exposes us to the risks of inventory shortages or excess inventory.
We cannot predict the duration or timing of any downturn or upturn in the semiconductor industry. 47 Table of Contents Results of Operations The following table summarizes our results of operations for the periods presented.
Results of Operations The following table summarizes our results of operations for the periods presented.
Of the decrease, 6% was mainly due to lower sales volume causing an unfavorable absorption of our manufacturing overhead costs and the additional 2% decline was contributed by lower ASP for the year ended December 31, 2023. Gross margin may fluctuate from time to time due to a variety of factors.
Gross margin was lower by 5% in the year ended December 31, 2024 compared to the same period in 2023. The decrease was mainly due to higher amortization from acquired intangibles by 6%, partially offset by lower stock-based compensation costs by 1%. Gross margin may fluctuate from time to time due to a variety of factors.
We have a deep understanding of mechanical, electrical, and thermal properties of materials, which is a key requirement for developing our proprietary MEMS processes. To maximize MEMS first-silicon success, we have also developed our own MEMS simulation tools.
To maximize MEMS first-silicon success, we have also developed our own MEMS simulation tools.
We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products. Year Ended December 31, Change 2023 vs 2022 2023 2022 2021 $ % (in thousands except percentage) Revenue $ 143,993 $ 283,605 $ 218,808 $ (139,612) (49 %) Revenue decreased by $139.6 million, or 49%, for 2023 compared to 2022.
Year Ended December 31, Change 2024 vs 2023 2024 2023 2022 $ % (in thousands except percentage) Revenue $ 202,697 $ 143,993 $ 283,605 $ 58,704 41 % 48 Table of Contents Revenue increased by $58.7 million, or 41%, for 2024 compared to 2023.
Our products have been designed into over 300 applications across our target markets, including communications, datacenter and enterprise, automotive, industrial, aerospace, mobile, IoT and consumer. Our current solutions include various types of oscillators, as well as clock integrated circuits ("ICs"), and resonators.
We provide Precision Timing solutions that are differentiated by high performance, high resilience, and high reliability, along with programmability, small size, and low power consumption. Our products have been designed into over 300 applications across our target markets, including communications, datacenter and enterprise, automotive, industrial, aerospace, mobile, IoT, and consumer.
Our analog/mixed-signal die are developed using industry-standard processes and deliver high levels of performance using programmable phase-locked loops, temperature sensors, regulators, data converters, drivers and other building blocks. In 2023, we advanced our technology and expanded our product portfolio, including with the closing of an agreement with Aura Semiconductor Pvt.
Our analog/mixed-signal die are developed using industry-standard processes and deliver high levels of performance using programmable PLLs, temperature sensors, regulators, data converters, drivers and other building blocks. Unlike most clock IC vendors, we do not rely on quartz vendors to provide the quartz resonator clock reference that is required for their clock ICs to function.
Ltd. and certain of its affiliated entities (together, “Aura”) in December 2023 for the acquisition of certain assets and an exclusive license to certain intellectual property from Aura. The agreement provides that the intellectual property underlying the license from Aura will be delivered on an ongoing and periodic basis through July 2025.
In December 2023, we acquired clocking products through the acquisition of certain assets and the exclusive license to certain intellectual property from Aura Semiconductor Pvt. Ltd. and certain of its affiliated entities (together, "Aura") relating to Aura's timing business and clock products that significantly expands our presence within the clocking market.
Acquisition related costs Acquisition related costs include legal, regulatory, and other costs incurred towards the acquisition closed during the fiscal year. We expect these costs to be dependent on the occurrence of future acquisitions and to be non-recurring. The acquisition related costs incurred for the year ended December 31, 2023 were related to the completion of the Aura transaction.
Acquisition related costs Acquisition related costs include legal, regulatory, consulting, and other costs incurred towards the acquisition closed during the year ended December 31, 2023 and changes in the fair value of the sales-based earnout liability and interest accretion related to the acquisition consideration payable.
We sell our products primarily through distributors, who in turn sell to our end customers. We also sell products directly to some of our end customers. We leverage our global network of distributors to address the broad set of end markets we serve.
SiTime is now a key provider of all differentiated products in timing – oscillators, clocks, and resonators combined with depth in engineering expertise in Precision Timing solutions. We sell our products primarily through distributors, who in turn sell to our end customers. We also sell products directly to some of our end customers.
Historically, our revenue has been substantially delivered from sales of oscillator systems across our target end markets. In addition to oscillators, we have expanded our product portfolio to include clock IC and timing sync solutions. We seek to expand our presence in our end markets across all product categories.
We believe that the total timing market is approximately $10 billion in size. Since our founding, we have focused on transforming this market with compelling solutions that solve difficult timing problems. Historically, our revenue has been substantially delivered from sales of oscillator systems across our target end markets.
Gross profit decreased $104.2 million mainly from lower revenue. This decrease was partially offset by lower other manufacturing and overhead costs of $3.3 million. Gross margin was lower by 8% in the year ended December 31, 2023 compared to the same period in 2022.
Gross profit increased $41.2 million mainly from higher revenue. This increase was partially offset by higher amortization from acquired intangibles of $11.6 million, and higher other manufacturing and overhead costs of $6.8 million, which primarily consists of depreciation and amortization, freight and inventory reserves.
Removed
Precision timing, a category that we created (“Precision Timing”), fills this need with the performance, power, size, and cost that is required by these new applications. We are a leading provider of Precision Timing solutions to the global electronics industry.
Added
This expertise enables us to design silicon MEMS resonators, analog circuits, as well as systems and packaging, and bring these all together to deliver a system-level solution that synergistically solves customers’ complex timing problems.
Removed
The purchase price for the transaction is approximately $148 million in cash, and we paid approximately $36 million at closing in December 2023. The remaining purchase price for the transaction will be paid on a periodic basis upon Aura delivering products that meet certain specified criteria and contain the licensed intellectual property.
Added
In this aspect, we believe we are different than quartz-based timing providers, who typically have expertise in designing and manufacturing resonator components, but usually outsource the analog circuit design and packaging. We also have a deep understanding of the mechanical, electrical, and thermal properties of materials, which is a key requirement for developing our proprietary MEMS processes.
Removed
The consideration payable to Aura for the transaction also includes potential earnout payments based on agreed multiples of net revenue generated by sales by us of products containing licensed intellectual property through calendar year 2028, up to a maximum aggregate amount of $120 million.
Added
We are also different in that our MEMS resonators are made using semiconductor technology which has significant benefits in features, performance, manufacturing, and cost, while the quartz resonator and oscillator suppliers use quartz crystal material Compared to traditional clock IC suppliers, we are different in that we design the resonator in-house and can integrate it into the clock IC package.
Removed
The agreement with Aura contains certain covenants and restrictions, including certain geographic restrictions providing that for five years following closing of the transaction we are prohibited from selling products containing certain intellectual property licensed from Aura to entities with group headquarters of the design win customer located in the People's Republic of China ("PRC"), and Aura is prohibited from selling products containing certain intellectual property licensed to us to entities with group headquarters of the design win customer located outside the PRC.
Added
Our expertise creates supply chain advantages for us and most importantly, enables us to design and build complete timing systems that result in performance advantages, providing a complete solution to the customer. Our Precision Timing solutions are designed to be resilient to harsh environmental stressors.
Removed
We operate a fabless business model, allowing us to focus on the design, sales, and marketing of our products, quickly scale production, and significantly reduce our capital expenditures by using the semiconductor industry manufacturing infrastructure. A fabless infrastructure gives us production flexibility and the ability to scale capacity up and down quickly to meet demand.
Added
For the communications, datacenter and enterprise market, our products provide high performance and resilience in dense, less-controlled environments that experience extreme conditions.
Removed
Design Wins with New and Existing Customers Our solutions enable our customers to differentiate their product offerings and position themselves to gain market share. We work closely with our customers to understand their product roadmaps and strategies. Our end customers continuously develop new products in existing and new application areas.
Added
The resilience of our products becomes an increasing advantage as equipment is placed in dense, harsh environments and moves closer to the customer with the rollout of 5G, the rapid expansion in cloudification, and deployment of hyperscale and AI datacenters.
Removed
Cyclical Nature of the Semiconductor Industry The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand.
Added
For the automotive market, our solutions can be utilized in automotive electronics, including ADAS for self-driving cars, which require increased timing accuracy. For the industrial market, our products offer programmability and high reliability for the diverse operating conditions of industrial equipment, including high temperatures, mechanical shock, and vibration.
Removed
Lower ASPs of our products was primarily related to change in mix of the products we shipped. Our top ten direct customers, including distributors, accounted for approximately 82%, 74% and 76% of net revenues in 2023, 2022, and 2021, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed3 unchanged
Biggest changeDuring the year ended December 31, 2023 we generated $27.0 million in interest income due to higher cash, cash equivalents and short-term investment balances, and rising interest rates. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
Biggest changeDuring the year ended December 31, 2024 we generated $22.9 million in interest income through our cash, cash equivalents and short-term investment balances. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
As of December 31, 2023, the effect of a hypothetical 10% change in foreign currency exchanges rates applicable to our business would not have had a material impact on our historical consolidated financial statements. We do not currently have a hedging policy with respect to foreign currency exchange risk.
As of December 31, 2024, the effect of a hypothetical 10% change in foreign currency exchanges rates applicable to our business would not have had a material impact on our historical consolidated financial statements. We do not currently have a hedging policy with respect to foreign currency exchange risk.
As of December 31, 2023, a hypothetical 10% increase or decrease in market interest rates would change the fair value and related interest income on our interest-earning instruments of $518.7 million, by an increase or decrease of approximately $2.7 million for the twelve months ended December 31, 2023. 54 Table of Contents
As of December 31, 2024, a hypothetical 10% increase or decrease in market interest rates would change the fair value and related interest income on our interest-earning instruments of $412.7 million, by an increase or decrease of approximately $2.3 million for the twelve months ended December 31, 2024. 54 Table of Contents
Interest Rate Risk We had cash and cash equivalents of $9.5 million as of December 31, 2023 consisting of bank deposits, money market funds, and Treasury Bills. We also had short-term investments in held-to-maturity securities of $518.7 million consisting of Treasury Bills as of December 31, 2023. Such interest-earning instruments carry a degree of interest rate risk.
Interest Rate Risk We had cash and cash equivalents of $6.1 million as of December 31, 2024 consisting of bank deposits, money market funds, and Treasury Bills. We also had short-term investments in held-to-maturity securities of $412.7 million consisting of Treasury Bills as of December 31, 2024. Such interest-earning instruments carry a degree of interest rate risk.

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