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What changed in LATTICE SEMICONDUCTOR CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of LATTICE SEMICONDUCTOR CORP's 2024 and 2025 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 2025 report.

+233 added−200 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in LATTICE SEMICONDUCTOR CORP's 2025 10-K

233 paragraphs added · 200 removed · 170 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Communications and Computing customers need to address a variety of challenges. ● As client compute devices become smaller and smarter, there is a need for small form factor devices with power efficiency to interface with a variety of sensors and add intelligence. ● As server architectures become increasingly complex, customers need simplified control logic, enhanced hardware platform security, system status monitoring, and rigorous power and thermal management. ● Networks typically require progressively higher bandwidth and increased reliability as more data is demanded by connected devices. ● As wireless cellular sites become more compact, there is a growing requirement for smaller form factors optimized for low power consumption and thermal management.
Biggest changeOur Communications and Computing customers need to address a variety of challenges. ● As server architectures become increasingly complex, customers need simplified control logic, enhanced hardware platform security, system status monitoring, and rigorous power and thermal management. ● As client compute devices become smaller and smarter, there is a need for small form factor devices with power efficiency to interface with a variety of sensors and add intelligence. ● Networks typically require progressively higher bandwidth and increased reliability as more data is demanded by connected devices, and increasingly require more security as providers embrace disaggregation and openness with the adoption of open radio access networks ("ORAN"). ● As wireless cellular sites become more compact, there is a growing requirement for smaller form factors optimized for low power consumption and thermal management.
The latest member of the family, the iCE40 UltraPlus™ device, is focused on IoT Edge devices with its AI capabilities, low power, and small form factor. ● The Lattice CrossLink™ device family are our "Video Connectivity FPGAs" and are optimized for high-speed video and sensor applications for the Industrial, Automotive, Communications, Computing, and Consumer markets.
The latest member of the family, the iCE40 UltraPlus™ device, is focused on IoT Edge devices with its AI capabilities, low power, and small form factor. ● The Lattice CrossLink™ device family are our "Video Connectivity small FPGAs" and are optimized for high-speed video and sensor applications for the Industrial, Automotive, Communications, Computing, and Consumer markets.
We believe that continued investment in research and development is required to maintain and improve our competitive position. Our research and development activities are focused on new proprietary products, advanced packaging, existing product enhancements, software development tools, soft IP cores, and application focused hardware and software solutions.
We believe that continued investment in research and development is required to maintain and improve our competitive position. Our research and development activities are focused on new proprietary FPGA products, advanced packaging, existing product enhancements, software development tools, soft IP cores, and application focused hardware and software solutions.
In order for us to attract the best talent, we provide a collaborative, diverse, inclusive, and innovative work environment, competitive compensation, and recognition to give our employees the opportunity to grow. We are focused on developing diverse teams and continuing to build an inclusive culture that inspires leadership, encourages innovative thinking, and supports the development and advancement of all.
In order for us to attract the best talent, we provide a collaborative, inclusive, and innovative work environment, competitive compensation, and recognition to give our employees the opportunity to grow. We are focused on developing inclusive teams and continuing to build a culture that inspires leadership, encourages innovative thinking, and supports the development and advancement of all.
Wafer sort testing is primarily performed by ASE in Taiwan and Malaysia, Amkor in Japan, and our second source, King Yuan Electronics Co. (“KYEC”) in Taiwan. Following assembly, but prior to customer shipment, each product undergoes final testing and quality assurance procedures. Final testing is performed by ASE and Amkor.
Wafer sort testing is primarily performed by ASE in Taiwan and Malaysia, Amkor in Japan, and our second source King Yuan Electronics Company (“KYEC”) in Taiwan. Following assembly, but prior to customer shipment, each product undergoes final testing and quality assurance procedures. Final testing is performed by ASE and Amkor.
We believe that Lattice has developed products and solutions with differentiated advantages. Legacy Semiconductor Products We also sell Video Connectivity ASSPs, although we are not developing new products in this area and their support requirements are minimal. IP Licensing and Services Lattice has a broad set of technological capabilities and many U.S. and international patents.
We believe that Lattice has developed products and solutions with differentiated advantages. Legacy Semiconductor Products We also sell Video Connectivity ASSPs, although we are not developing new products in this area and their support requirements are minimal. 5 Table of Contents IP Licensing and Services Lattice has a broad set of technological capabilities and many U.S. and international patents.
We have achieved and maintained ISO9001:2015 Quality Management Systems Certification and released a line of products qualified to the AEC-Q100 Reliability Standard in support of Automotive product offerings in addition to ISO26262 certification on both Automotive products and software. After wafer fabrication and initial testing, we ship wafers to independent subcontractors for assembly.
We have achieved and maintained ISO9001:2015 Quality Management Systems Certification and released a line of products qualified to the AEC-Q100 Reliability Standard in support of Automotive product offerings in addition to ISO26262 certification on both Automotive products and software. 6 Table of Contents After wafer fabrication and initial testing, we ship wafers to independent subcontractors for assembly.
We are able to take advantage of the ongoing advanced process technology development efforts of semiconductor foundries and apply those technologies when they become most economically beneficial to us and to our customers. 5 Table of Contents We rely on third party vendors to provide cost-effective and efficient supply chain services.
We are able to take advantage of the ongoing advanced process technology development efforts of semiconductor foundries and apply those technologies when they become most economically beneficial to us and to our customers. We rely on third party vendors to provide cost-effective and efficient supply chain services.
We have developed integrated system-level solution stacks, including Lattice Automate™ for industrial automation and robotics, Lattice mVision™ for low power embedded vision, Lattice ORAN™ for robust control data security, flexible fronthaul synchronization, and low power hardware acceleration for secure, adaptable, Open Radio Access Network (ORAN) deployment, Lattice sensAI™ for Edge AI applications, Lattice Sentry™ for implementing hardware security, and our newest solution stack - Lattice Drive™ for advanced, flexible automotive system designs and applications.
We have developed integrated system-level solution stacks, including Lattice Automate™ for industrial automation and robotics, Lattice mVision™ for low power embedded vision, Lattice ORAN™ for robust control data security, flexible fronthaul synchronization, and low power hardware acceleration for secure, adaptable, ORAN deployment, Lattice sensAI™ for Edge AI applications, Lattice Sentry™ for implementing hardware security, and our newest solution stack - Lattice Drive™ for advanced, flexible automotive system designs and applications.
We offer employees benefits that vary by country and are designed to address local laws and cultures and to be competitive in the marketplace. 7 Table of Contents Corporate Information and Public Information Availability Our corporate headquarters are located at 5555 NE Moore Court, Hillsboro, Oregon 97124, and our website is www.latticesemi.com .
We offer employees benefits that vary by country and are designed to address local laws and cultures and to be competitive in the marketplace. Corporate Information and Public Information Availability Our corporate headquarters are located at 5555 NE Moore Court, Hillsboro, Oregon 97124, and our website is www.latticesemi.com .
Lattice FPGAs help solve these customer problems. Our FPGAs are optimized for input/output ("I/O") expansion, hardware acceleration, and hardware management. Our FPGAs consume power at very low rates, which reduces operating costs. Their small form factor enables higher functional density in less space.
Lattice FPGAs help solve these customer problems. Our FPGAs are optimized for input/output ("I/O") expansion, hardware acceleration, “first-on, last-off” hardware security, and hardware management. Our FPGAs consume power at very low rates, which reduces operating costs. Their small form factor enables higher functional density in less space.
Our small-sized, low-power FPGAs not only provide the I/O expansion, bridging, connectivity, and processing inherent in FPGAs, but they also form the backbone of several integrated solutions, including motor control, complete High Definition ("HD") camera and DVR solutions on a single FPGA device, and Human-Machine Interfaces ("HMI") on a chip.
Our small-sized, low power FPGAs not only provide the I/O expansion, bridging, connectivity, and processing inherent in FPGAs, but they also form the backbone of several integrated solutions, including hardware-based security, motor control, complete High Definition ("HD") camera and Digital Video Recorder ("DVR") solutions on a single FPGA device, and Human-Machine Interfaces ("HMI") on a chip.
We partner with Samsung Semiconductor ("Samsung") to develop and manufacture the first low-power FPGA on 28nm fully depleted silicon-on-insulator ("FD-SOI") technology, which is used in our Nexus platform of FPGA products.
We partner with Samsung Semiconductor ("Samsung") to develop and manufacture the first low-power FPGA on 28nm FD-SOI technology, which is used in our Nexus platform of FPGA products.
Our sales team attempts to drive multi-generational design wins within these OEMs and leverages our distribution partners to grow our broad customer base. We provide global technical support to our end customers with engineering staff based at our headquarters, product development centers, and selected field sales offices.
Our sales team attempts to drive multi-generational design wins within these OEMs and leverages our distribution partners to grow our broad customer base. We provide global technical support to our end customers with engineering staff based at our headquarters, product development centers, and selected field sales offices. We maintain numerous domestic and international field sales offices in major metropolitan areas.
Further, we have application software such as Glance by Mirametrix™ that allows users to control the AI and computer vision experience of their end systems for Client computing, industrial, and automotive applications. Depending on the application, we may compete with other FPGA vendors, as well as producers of ASICs, ASSPs, and microcontrollers.
Further, we have edge AI application software such as Glance by Mirametrix™ that allows users to control the AI and computer vision experiences for a variety of edge applications, including client computing, industrial, and automotive applications. Depending on the application, we may compete with other FPGA vendors, as well as producers of ASICs, ASSPs, and microcontrollers.
These research and development activities occur primarily at our sites in Hillsboro, Oregon; San Jose, California; Montreal, Canada; Shanghai, China; Muntinlupa City, Philippines; and Penang, Malaysia.
These research and development activities occur primarily at our sites in Hillsboro, Oregon; San Jose, California; Montreal, Canada; Shanghai, China; Metro Manila, Philippines; Pune, India; and Penang, Malaysia.
Drivers and passengers are demanding better in-cabin experiences including entertainment, diagnostics, and enhanced safety — often involving multiple displays, cameras, and sensors. ● As factories and automotive manufacturers continue their evolution of computerization, power reduction, faster time to design-in and market, lower costs are becoming increasingly normal. Our product portfolio helps solve these challenges.
Drivers and passengers are demanding better in-cabin experiences including entertainment, diagnostics, and enhanced safety — often involving multiple displays, cameras, and sensors. ● As factories and automotive manufacturers continue their evolution of computerization, power reduction, system security, faster time to design-in and market, lower costs are becoming increasingly essential. Our product portfolio helps provide solutions that benefit our customers.
Our Industrial and Automotive customers face numerous challenges: ● As factories automate to improve efficiency and employee safety, sensors, machine vision, and robotics are proliferating, in turn requiring increasing amounts of data to be gathered, connected, and processed. ● Automobiles and other forms of transportation are also becoming smarter and more connected.
Our Industrial and Automotive customers have many opportunities to use technology to increase automation, efficiency, and productivity: ● As factories automate to improve efficiency and employee safety, sensors, machine vision, and robotics are proliferating, in turn requiring increasing amounts of data to be gathered, connected, and processed. ● Automobiles and other forms of transportation are also becoming smarter and more connected.
These licenses support our continuing ability to make and sell these products to our customers. While our various IP rights are important to our success, we believe our business as a whole is not materially dependent on any particular patent or license, or any particular group of patents or licenses.
While our various IP rights are important to our success, we believe our business as a whole is not materially dependent on any particular patent or license, or any particular group of patents or licenses.
Backlog Our backlog consists of orders from distributors and certain OEMs that generally require delivery within the next year.
Both foreign and domestic sales are denominated in U.S. dollars. Backlog Our backlog consists of orders from distributors and certain OEMs that generally require delivery within the next year.
They are control-oriented and offer optimized cost per I/O and cost per look-up table. Mach™ FPGAs are widely used across our three end market groups: Communications and Computing, Industrial and Automotive, and Consumer.
They are control-oriented and offer optimized cost per I/O and cost per look-up table. Mach™ FPGAs are widely used across our three end market groups: Communications and Computing, Industrial and Automotive, and Consumer. The Lattice MachXO5D™-NX family, the latest devices built on the award-winning Lattice Nexus™ platform are the newest addition to the Mach™ FPGA family.
We believe our employees are the foundation of our success and that our future growth depends, in part, on our ability to continue to attract and retain key executive, technical, sales, and management personnel.
Recognizing and respecting our global presence, we strive to maintain an inclusive workforce everywhere we operate. As of December 28, 2024, we had 1,110 employees worldwide. We believe our employees are the foundation of our success and that our future growth depends, in part, on our ability to continue to attract and retain key executive, technical, sales, and management personnel.
They offer customers the optimal cost per gate, Digital Signal Processing ("DSP") capability, and Serialize-Deserialize ("SERDES") connectivity. ECP devices are optimized for the Communications and Computing market but also find significant use in the Industrial, Automotive, and Consumer markets.
ECP devices are optimized for the Communications and Computing market but also find significant use in the Industrial, Automotive, and Consumer markets.
The latest introductions in our general purpose family, Lattice Avant-G™ and Lattice Avant-X™ FPGAs, are designed to solve key customer challenges by combining class-leading power efficiency, size and performance with an optimized feature set tailored to the needs of mid-range FPGA applications like sensor fusion, datapath networking, and AI. ● The Lattice Mach™ device family are our “Control & Security FPGAs” and are designed for platform management and security applications.
The latest introduction in our general purpose family, Lattice Certus-N2™ FPGAs, are designed to solve key customer challenges by combining advanced connectivity, optimized power and performance, leading security, and small size, with an optimized feature set tailored to the needs of a wide range of small FPGA applications like system expandability, secure bridging, and AI enablement. ● The Lattice Avant-E ™ , Avant-G ™ , and Avant-X ™ device families are our “low power edge and advanced connectivity mid-range FPGAs” optimized for applications in Industrial, Automotive, Communications and Compute markets providing low power, small form factor, and advanced security.
Seasonality We periodically experience variability in our sales volumes and financial results due to seasonal trends in the end markets we serve, the cyclical nature of the semiconductor industry, and general economic conditions.
Seasonality We periodically experience variability in our sales volumes and financial results due to seasonal trends in the end markets we serve, the cyclical nature of the semiconductor industry, and general economic conditions. 7 Table of Contents IP, Patents, and Licensing We seek to protect our products, technologies, and IP primarily through patents, trade secrets, copyrights, trademark registrations, licensing restrictions, confidentiality agreements, and other approaches designed to protect proprietary information.
In addition to protecting innovations designed into our products, our ownership and maintenance of patents is an important factor in the determination of our share of the royalties from the implementation of the HDMI standard. Our current patents will expire at various times over the next 20 years, subject to our payment of periodic maintenance fees.
We hold numerous United States and international patents and have patent applications pending in the United States and internationally. In addition to protecting innovations designed into our products, our ownership and maintenance of patents is an important factor in the determination of our share of the royalties from the implementation of the HDMI standard.
Revenue from foreign sales as a percentage of total revenue was 82%, 86%, and 88% for fiscal 2023, 2022, and 2021, respectively. We assign revenue to geographies based on ship-to location of our customers. Both foreign and domestic sales are denominated in U.S. dollars.
We have one global distributor, and we also have regional distribution in Asia, Japan, Europe, and Israel. Additionally, we sell through three major on-line distributors. Revenue from foreign sales as a percentage of total revenue was 82% for both fiscal 2024 and 2023, and 86% for fiscal 2022. We assign revenue to geographies based on ship-to location of our customers.
We depend on our distributors to sell our products to end customers, complete order fulfillment, and maintain sufficient inventory of our products. Our distributors also provide technical support and other value-added services to our end customers. We have multiple global distributors. We also have regional distribution in Asia, Japan, Europe, and Israel, and we sell through three major on-line distributors.
In fiscal years 2024, 2023, and 2022, sales to distributors accounted for approximately 89%, 87%, and 89%, respectively, of our net revenue. We depend on our distributors to sell our products to end customers, complete order fulfillment, and maintain sufficient inventory of our products. Our distributors also provide technical support and other value-added services to our end customers.
This programmability allows our customers flexibility and reduced time to market while allowing us to offer the chips to many different customers in many different markets. Lattice FPGA product families include: ● The Lattice Avant™, Certus™ and LatticeECP™ device families are our “General Purpose FPGAs” and address a broad range of applications across multiple markets.
This programmability allows our customers flexibility and reduced time to market while allowing us to offer the chips to many different customers in many different markets. Lattice has taken a platform approach to accelerate time to market when developing product families of FPGAs. This approach enables Lattice to create one foundational platform that is the basis multiple FPGA product families.
We believe that our patents have value, and we expect to file future patent applications in both the United States and abroad on significant inventions, as we deem appropriate. We have acquired various licenses from third parties to certain technologies that are implemented in IP cores or embedded in our products.
Our current patents will expire at various times over the next 20 years, subject to our payment of periodic maintenance fees. We believe that our patents have value, and we expect to file future patent applications in both the United States and abroad on significant inventions, as we deem appropriate.
The Lattice MachXO5T™-NX family, the latest devices built on the award-winning Lattice Nexus™ platform are the newest addition to the Mach™ FPGA family, bringing Lattice’s long-standing leadership in control FPGAs to a broader set of control function designs and applications for enterprise networking, machine vision, and industrial IoT. 4 Table of Contents ● The Lattice iCE™ device family are our “Ultra Low Power FPGAs.” Their small size and ultra-low power make them the optimal products for each of our core segments where small form factor and customizing is required.
They extend Lattice’s long-standing leadership in secure control FPGAs, offering crypto-agile algorithms, hardware root of trust features with integrated flash, and fail-safe remote field updates for reliable and secure product lifecycle management. ● The Lattice iCE™ device family are our “Ultra Low Power small FPGAs.” Their small size and ultra-low power make them the optimal products for each of our core segments where small form factor and customizing is required.
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We maintain numerous domestic and international field sales offices in major metropolitan areas. 6 Table of Contents In fiscal years 2023, 2022, and 2021, sales to distributors accounted for approximately 87%, 89%, and 87%, respectively, of our net revenue.
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Furthermore, our FPGAs are adjacent to the sensors in industrial and automotive, enabling our customers to run their “far edge” AI models and workloads at low latency.
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IP, Patents, and Licensing We seek to protect our products, technologies, and IP primarily through patents, trade secrets, copyrights, trademark registrations, licensing restrictions, confidentiality agreements, and other approaches designed to protect proprietary information. We hold numerous United States and international patents and have patent applications pending in the United States and internationally.
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Lattice FPGA platforms, and their related FPGA product families, are segmented into small and mid-range categories. ● Lattice small FPGA platforms: Lattice’s small FPGA platforms include Lattice Nexus™, which was introduced in 2019, and Lattice Nexus™ 2, introduced in 2024.
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Recognizing and respecting our global presence, we strive to maintain a diverse and inclusive workforce everywhere we operate. As of December 30, 2023, we had 1,156 employees worldwide.
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The Lattice Nexus FPGA platform combines Lattice’s long-standing low power FPGA expertise with leading 28nm fully depleted silicon-on-insulator ("FD-SOI") semiconductor manufacturing technology to deliver industry leading low power, high performance, high reliability and small form factor.
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Lattice Nexus 2 builds on the company’s small FPGA leadership, offering significant improvements in power and performance efficiency, advanced connectivity, and leading security relative to the competition.
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Typical logic capacity for small FPGAs can go up to 150K LUTS ("Look up tables"). 4 Table of Contents ● Lattice mid-range FPGA platform: Lattice’s mid-range FPGA platform, Lattice Avant™, was introduced in 2022.
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The Lattice Avant™ 16nm FinFET platform is purpose-built to bring the company’s power efficient architecture, small size, and performance leadership to mid-range FPGAs, offering best-in-class power efficiency, advanced connectivity, and optimized compute. Lattice mid-range FPGAs can extend from 150K LUTS to 500K LUTS. Based on these platforms, Lattice provides general purpose function FPGAs and specialized FPGAs optimized for specific applications.
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General Purpose FPGAs: ● The Lattice Avant-G™, Certus™ and Lattice ECP™ device families are our “General Purpose FPGAs” and address a broad range of applications across multiple markets. They offer customers the optimal cost per gate, Digital Signal Processing ("DSP") capability, and Serialize-Deserialize ("SERDES") connectivity.
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The Avant-X™ device family is the latest purpose-built mid-range FPGA with 25G SERDES supporting multi protocols including 25G Ethernet and PCIe 4.0 which are widely used in communications and high speed industrial applications Specialized FPGAs: ● The Lattice Mach™ device family are our “Control & Security small FPGAs” and are designed for platform management and security applications.
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We have acquired various licenses from third parties to certain technologies that are implemented in IP cores or embedded in our products. These licenses support our continuing ability to make and sell these products to our customers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe occurrence of any of these business disruptions could adversely affect our competitive position and result in significant losses, decrease demand for our products, seriously harm our revenue, profitability and financial condition, increase our costs and expenses, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain, result in the need to impose employee travel restrictions, and require substantial expenditures and recovery time in order to fully resume operations.
Biggest changeOur worldwide operations and supply chain could be disrupted by natural or human-induced disasters including, but not limited to, earthquakes, tsunamis, or floods; hurricanes, cyclones, or typhoons; fires, or other extreme weather conditions; power or water shortages; telecommunications failures; materials scarcity and price volatility; manufacturing equipment failures; IT system failures; cybersecurity attacks; data breaches; medical epidemics or pandemics; terrorist acts, civil unrest, military actions, conflicts, or wars; or other natural or man-made disasters or catastrophic events. 21 Table of Contents The occurrence of any of these business disruptions could adversely affect our competitive position and result in significant losses, decrease demand for our products, seriously harm our revenue, profitability and financial condition, increase our costs and expenses, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain, result in the need to impose employee travel restrictions, and require substantial expenditures and recovery time in order to fully resume operations.
If we are unable to comply, or are unable to cause our suppliers or subcontractors to comply, with such policies or provisions or meet the requirements of our customers and investors, a customers may stop purchasing products form us or an investor may sell their shares, and may take legal action against us, which could harm our reputation, revenue, and results of operations.
If we are unable to comply, or are unable to cause our suppliers or subcontractors to comply, with such policies or provisions or meet the requirements of our customers and investors, customers may stop purchasing products form us or an investor may sell their shares, and may take legal action against us, which could harm our reputation, revenue, and results of operations.
GAAP that may impact our business. ● Changes to financial accounting standards applicable to us and any related changes to our business practices. ● Exposure to unanticipated tax consequences as a result of changes in effective tax rates, tax laws and our global organizational structure and operations. ● Weakness in our internal control over financial reporting and business processes. ● Our ability to compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel. ● Our failure to adequately foresee and insure against risks related to our business. ● Limitations to our flexibility caused by incurring indebtedness. ● Risks relating to the use or application of emerging technologies, including artificial intelligence ("AI") ● The impact of climate change and climate change-related policies & regulations on our business.
GAAP that may impact our business. ● Changes to financial accounting standards applicable to us and any related changes to our business practices. ● Exposure to unanticipated tax consequences as a result of changes in effective tax rates, tax laws and our global organizational structure and operations. ● Weakness in our internal control over financial reporting and business processes. ● Our ability to compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel. ● Our failure to adequately foresee and insure against risks related to our business. ● Limitations to our flexibility caused by incurring indebtedness. ● Risks relating to the use or application of emerging technologies, including AI ● The impact of climate change and climate change-related policies & regulations on our business.
We rely on our business processes to, among other things, coordinate with our suppliers, manage our supply chain efficiently, manufacture high quality products and comply with various laws and regulations.
We rely on our and their business processes to, among other things, coordinate with our suppliers, manage our supply chain efficiently, manufacture high quality products and comply with various laws and regulations.
General Risk Factors ● Our operations are subject to the effects of rising inflation and recessionary concerns. ● Disruptions to our worldwide operations and supply chain due to natural or human-induced disasters. ● The trading price of our common stock has been and may continue to be subject to volatility. ● The impact of actual and potential litigation and unfavorable results of legal proceedings on our business. ● Disruption in and impacts of acquisitions, divestitures, strategic investments and strategic partnerships on our business. 9 Table of Contents Factors Related to Economic, Political, Legal & Regulatory Business Conditions Our global business operations expose us to various economic, political, and business risks, which could impact our business, operating results and financial condition.
General Risk Factors ● Our operations are subject to the effects of rising inflation and recessionary concerns. ● Disruptions to our worldwide operations and supply chain due to natural or human-induced disasters. ● The trading price of our common stock has been and may continue to be subject to volatility. ● Disruption in and impacts of acquisitions, divestitures, strategic investments and strategic partnerships on our business. ● The impact of actual and potential litigation and unfavorable results of legal proceedings on our business. ● The impact of pandemics or widespread global health problems on our business. 9 Table of Contents Factors Related to Economic, Political, Legal & Regulatory Business Conditions Our global business operations expose us to various economic, political, and business risks, which could impact our business, operating results and financial condition.
General Risk Factors Our operations are subject to the effects of inflationary pressures and recessionary concerns. Global economic conditions have recently experienced historically high levels of inflation, and there is increasing concern about the potential for recession.
General Risk Factors Our operations are subject to the effects of inflationary pressures and recessionary concerns. Global economic conditions have recently experienced historically high levels of inflation, and there is increasing concern about the potential for recession and/or economic slowdown.
While we may issue guidance, difficulty in forecasting financial performance, relative customer and product mix, and the unpredictability of unknown variables and their impact on our financial performance may impair the accuracy of our forward-looking financial measures. 20 Table of Contents Accounting requirements related to sales through our distribution channel could result in our reporting revenue in excess of demand.
While we may issue guidance, difficulty in forecasting financial performance, relative customer and product mix, and the unpredictability of unknown variables and their impact on our financial performance may impair the accuracy of our forward-looking financial measures. Accounting requirements related to sales through our distribution channel could result in our reporting revenue in excess of demand.
Accounting standards also require us to make estimates and assumptions in connection with the preparation of our financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations, cash flows and financial condition. Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.
Accounting standards also require us to make estimates and assumptions in connection with the preparation of our financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations, cash flows and financial condition. 15 Table of Contents Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.
The imposition by the United States of tariffs, sanctions or other restrictions on goods imported from outside of the United States or countermeasures imposed in response to such government actions could adversely affect our operations or our ability to sell our products globally, which could adversely affect our operating results and financial condition.
The imposition by the United States of tariffs, sanctions or other restrictions on goods exported from the United States or imported into the United States or countermeasures imposed in response to such government actions could adversely affect our operations or our ability to sell our products globally, which could adversely affect our operating results and financial condition.
Unfavorable or uncertain market conditions and risks relating to the adoption, use or application of emerging technologies, including artificial intelligence ( “ AI ” ), by our customers and in our business, may impact financial results and could result in reputational and financial harm and liability.
Unfavorable or uncertain market conditions and risks relating to the adoption, use or application of emerging technologies, including AI , by our customers and in our business, may impact financial results and could result in reputational and financial harm and liability.
Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cybersecurity and other threats or incidents in the future. In some circumstances, we may partner with third-party providers and provide them with certain data, including sensitive data, or the ability to access or otherwise process such data.
Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cybersecurity and other threats or incidents in the future. 14 Table of Contents In some circumstances, we may partner with third-party providers and provide them with certain data, including sensitive data, or the ability to access or otherwise process such data.
These, as well as future controls impacting the semiconductor ecosystem, may impact the global supply chain and could result in shortages of key materials that our suppliers and foundry partners require to satisfy our needs.
These increasing restrictions, as well as additional future controls impacting the semiconductor ecosystem, may impact the global supply chain and could result in shortages of key materials that our suppliers and foundry partners require to satisfy our needs.
Furthermore, various levels of government are focused on tax reform and other legislative actions to increase tax revenue. 15 Table of Contents We also may be impacted by changes in the tax laws of the United States and foreign jurisdictions.
Furthermore, various levels of government are focused on tax reform and other legislative actions to increase tax revenue. We also may be impacted by changes in the tax laws of the United States and foreign jurisdictions.
For example, the military conflict between Israel and Hamas and the potential for regional expansion, the continuing military conflict between Ukraine and Russia, as well as the financial and trade-related restrictions associated with Russia and Belarus and economic sanctions on certain individuals and entities in Russia and Belarus, may further disrupt global supply chains and could result in shortages of key materials that our suppliers and foundry partners require to satisfy our needs.
For example, conflict in the Middle East, the continuing military conflict between Ukraine and Russia, as well as the financial and trade-related restrictions associated with Russia and Belarus and economic sanctions on certain individuals and entities in Russia and Belarus, may further disrupt global supply chains and could result in shortages of key materials that our suppliers and foundry partners require to satisfy our needs.
Risk Factor Summary Factors Related to Economic, Political, Legal & Regulatory Business Conditions ● Economic, political, and business conditions related to our global business. ● The impact of tariffs, trade sanctions or similar actions on our business. ● Legal and regulatory conditions related to our global business. ● The impact of pandemics or widespread global health problems on our business.
Risk Factor Summary Factors Related to Economic, Political, Legal & Regulatory Business Conditions ● Economic, political, and business conditions related to our global business. ● The impact of tariffs, trade sanctions or similar actions on our global business. ● Legal and regulatory conditions related to our global business.
Any adverse change to our relationships or agreements with our distributors, a failure by one or more of our distributors to perform its obligations to us, a reduction in a distributor's business volume with us, or consolidation in the distribution industry could have a material impact on our business, including a reduction in our access to certain end customers, or our ability to sell our products.
Any adverse change to our relationships or agreements with our distributors, a failure by one or more of our distributors to perform its obligations to us, a reduction in a distributor's business volume with us, any reduction in pricing on products sold to any key customer or distributor, or consolidation in the distribution industry, could have a material impact on our business, including a reduction in our access to certain end customers, our ability to sell our products, or our financial results.
Any failure to maintain an effective system of internal controls over financial reporting could limit our ability to report our financial results accurately and timely, which could adversely affect our business, financial results, and stock price. We must also maintain high quality business processes.
Any failure to maintain an effective system of internal controls over financial reporting could limit our ability to report our financial results accurately and timely, which could adversely affect our business, financial results, and stock price. We must also maintain high quality business processes, and we also use third-party IT vendors and their business processes.
For purposes of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice business, which includes intellectual property and semiconductor devices. There were no impairment charges to goodwill or amortizable intangible assets in fiscal years 2023, 2022, or 2021.
For purposes of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice business, which includes intellectual property and semiconductor devices. There were no impairment charges to goodwill in fiscal years 2024, 2023, or 2022. Impairment charges related to amortizable intangible assets from our acquisition of Mirametrix, Inc.
While as of December 30, 2023, we had no borrowings outstanding under the 2022 Credit Agreement, the incurrence of indebtedness could impact the Company.
While as of December 28, 2024, we had no borrowings outstanding under the 2022 Credit Agreement, the incurrence of indebtedness could impact the Company.
Any failure to maintain high quality business processes, or to effectively adjust our business processes to changing circumstances and needs, could limit our ability to meet our business’ needs, which could adversely affect our business, financial results, and stock price.
Any failure by us, or by our third-party IT vendors, to maintain high quality business processes, or to effectively adjust our or their business processes to changing circumstances and needs, could limit our ability to meet our business’ needs, which could adversely affect our business, financial results, and stock price.
Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business.
Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business. 22 Table of Contents Pandemics or other widespread public health problems could adversely affect our business, results of operations, and financial condition in a material way.
If our third-party supply chain providers were to reduce or discontinue services for us or their operations are disrupted as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease, or other natural disaster or catastrophic event, weak economic conditions, inflation, recession, labor market disruptions, or any other reason, our financial condition and results of operations could be adversely affected. 19 Table of Contents Factors Related to Our Sales and Revenue Our revenues depend on our relationships with our distributors and on a concentrated group of end customers.
If our third-party supply chain providers were to reduce or discontinue services for us or their operations are disrupted as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease, or other natural disaster or catastrophic event, weak economic conditions, inflation, recession, labor market disruptions, or any other reason, our financial condition and results of operations could be adversely affected.
Our future growth and the success of new product introductions depend upon numerous factors, including: ● timely completion and introduction of new product designs; ● ability to generate new design opportunities and design wins, including those which result in sales of significant volume; ● achievement of necessary volume of production to achieve acceptable cost; ● availability of specialized field application engineering resources supporting demand creation and customer adoption of new products; ● ability to utilize advanced manufacturing process technologies; ● achieving acceptable yields and obtaining adequate production capacity from our wafer foundries and assembly and test subcontractors; ● ability to obtain advanced packaging; ● availability of supporting software design tools; ● utilization of predefined IP logic; ● customer acceptance of advanced features in our new products; and ● market acceptance of our customers' products.
Our future growth and the success of new product introductions depend upon numerous factors, including: ● timely completion and introduction of new product designs; ● ability to generate new design opportunities and design wins, including those which result in sales of significant volume; ● achievement of necessary volume of production to achieve acceptable cost; ● availability of specialized field application engineering resources supporting demand creation and customer adoption of new products; ● ability to utilize advanced manufacturing process technologies; ● achieving acceptable yields and obtaining adequate production capacity from our wafer foundries and assembly and test subcontractors; ● the avoidance or management of significant quality or reliability issues; ● ability to obtain advanced packaging; ● availability of supporting software design tools; ● utilization of predefined IP logic; ● customer acceptance of advanced features in our new products; and ● market acceptance of our customers' products. 19 Table of Contents The failure of any of these factors, among others, could adversely affect our product innovation, development and introduction efforts and our financial condition and results of operations.
For these reasons, investors should not rely on recent or historical trends to predict future trading prices of our common stock, financial condition, results of operations, or cash flows. Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results.
For these reasons, investors should not rely on recent or historical trends to predict future trading prices of our common stock, financial condition, results of operations, or cash flows. Acquisitions, divestitures, strategic investments and strategic partnerships could disrupt our business and adversely affect our financial condition and operating results.
An adverse change in the relationships with, or performance of, our distributors, or any reduction in the use of our products by our end customers, could harm our sales and significantly decrease our revenue.
Factors Related to Our Sales and Revenue Our revenues depend on our relationships with our distributors and on a concentrated group of end customers. An adverse change in the relationships with, or performance of, our distributors, or any reduction in the use of our products by our end customers, could harm our sales and significantly decrease our revenue.
We may be subject to warranty claims and other costs related to our products. In general, we warrant our products for varying lengths of time against non-conformance to our specifications and certain other defects.
In general, we warrant our products for varying lengths of time against non-conformance to our specifications and certain other defects.
Ultimately, the impacts of climate change, whether involving physical risks (such as disruptions resulting from climate-related events or rising sea levels) or transition risks (such as regulatory changes, changes in market dynamics or increased operating costs, including the cost of insurance) are expected to be widespread and unpredictable and may materially adversely affect our business and financial results.
Ultimately, the impacts of climate change, whether involving physical risks (such as disruptions resulting from climate-related events or rising sea levels) or transition risks (such as regulatory changes, changes in market dynamics or increased operating costs, including the cost of insurance) are expected to be widespread and unpredictable and may materially adversely affect our business and financial results. 18 Table of Contents Factors Related to Our Markets and Product Development The semiconductor industry routinely experiences cyclical market patterns and our products are used across different end markets.
Our business strategy includes licensing our intellectual property to companies that incorporate it into their technologies that address multiple markets, including markets where we participate and compete.
Factors Related to Intellectual Property The intellectual property licensing component of our business strategy increases our business risk and fluctuation of our revenue and margins. Our business strategy includes licensing our intellectual property to companies that incorporate it into their technologies that address multiple markets, including markets where we participate and compete.
The semiconductor industry is highly competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing, and sales resources than us.
We compete against companies that have significantly greater resources than us and numerous other product solutions. The semiconductor industry is highly competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing, and sales resources than us.
President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”) on August 16, 2022 and the CHIPS and Science Act of 2022 on August 9, 2022. These laws implemented tax provisions, including a 1% excise tax on certain stock repurchases made by publicly traded corporations after December 31, 2022, and provided for various incentives and tax credits.
The Inflation Reduction Act of 2022 implemented certain tax provisions, including a 1% excise tax on certain stock repurchases made by publicly traded corporations after December 31, 2022, and provided for various incentives and tax credits.
To the extent that such cost reductions and new product introductions do not occur in a timely manner, because of inflation, increases in personnel costs, employee turnover, or other factors, or that our products do not achieve market acceptance or market acceptance at acceptable pricing, our margins, operating results, and financial condition could be materially adversely affected.
To the extent that such cost reductions and new product introductions do not occur in a timely manner, because of inflation, increases in personnel costs, employee turnover, or other factors, or that our products experience significant quality or reliability issues, or do not achieve market acceptance or market acceptance at acceptable pricing, our margins, operating results, and financial condition could be materially adversely affected. 12 Table of Contents Furthermore, worldwide manufacturing capacity for our products may be impacted by many factors which may impact availability and cost.
Weakness in our internal control over financial reporting and business processes could adversely affect our business and financial results. We are required to maintain internal controls over financial reporting. We review these controls regularly and deficiencies may be identified from time t o time. I n the future, we may identify material weaknesses in our internal controls over financial reporting.
We review these controls regularly and deficiencies may be identified from time t o time. I n the future, we may identify material weaknesses in our internal controls over financial reporting.
We continue to commit significant resources to implementing new systems to standardize our processes worldwide and to develop our capabilities in these areas. We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.
We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.
If any of our other customers or suppliers become subject to sanctions or other regulatory scrutiny, if our customers are affected by tariffs or other government trade restrictions, or if we become subject to retaliatory regulatory measures, our business and financial condition could be adversely affected.
If any of our other customers or suppliers become subject to sanctions or other regulatory scrutiny, if our customers are affected by tariffs or other government trade restrictions, or if we become subject to retaliatory regulatory measures, our business and financial condition could be adversely affected. 11 Table of Contents Our global business operations expose us to various legal and regulatory risks, which could impact our business, operating results and financial condition.
The U.S. government may add additional Chinese companies to its restricted entity list or impose additional licensing requirements that we may be unable to meet in a timely manner or at all.
The U.S. government has continued to and is likely to continue to add additional Chinese companies to restricted or prohibited party lists or impose additional licensing requirements that we may be unable to meet in a timely manner or at all.
Our common stock has experienced substantial price volatility in the past and may continue to do so in the future. Additionally, the technology industry and the stock market as a whole has experienced extreme volatility that often has been unrelated to the performance of particular companies.
Additionally, the technology industry and the stock market as a whole has experienced extreme volatility that often has been unrelated to the performance of particular companies.
If there are significant product defects, the costs to remediate such defects, net of reimbursed amounts from our vendors, if any, or to resolve warranty claims may adversely affect our financial condition and results of operations and may harm our reputation. 12 Table of Contents Factors Related to Intellectual Property The intellectual property licensing component of our business strategy increases our business risk and fluctuation of our revenue and margins.
If there are significant product defects, the costs to remediate such defects, net of reimbursed amounts from our vendors, if any, or to resolve warranty claims may adversely affect our financial condition and results of operations and may harm our reputation.
If they are unable to do so on a timely and cost-effective basis in sufficient quantities and using competitive technologies, we may incur significant costs or delays. We rely on foundries in Japan, Korea and Taiwan to supply and fabricate silicon wafers for our semiconductor products, including Taiwan Semiconductor Manufacturing, Samsung Semiconductor, United Microelectronics Corporation, and Seiko Epson.
Factors Related to Manufacturing our Products We rely on subcontractors to supply and fabricate silicon wafers and to perform assembly and test operations for our semiconductor products. If they are unable to do so on a timely and cost-effective basis in sufficient quantities and using competitive technologies, we may incur significant costs or delays.
If we are unable to accomplish any of the foregoing, or to offset the volatility of cyclical changes in the semiconductor industry or our end markets through diversification into other markets, these factors could materially and adversely affect our business, financial condition, and operating results. 18 Table of Contents Our success and future revenue depend on our ability to develop and introduce new products that achieve customer and market acceptance.
If we are unable to accomplish any of the foregoing, or to offset the volatility of cyclical changes in the semiconductor industry or our end markets through diversification into other markets, these factors could materially and adversely affect our business, financial condition, and operating results.
A shortage in manufacturing capacity could hinder our ability to meet product demand and therefore reduce our revenue. Silicon wafers constitute a material portion of our product cost, and if we are unable to purchase wafers at favorable prices, due to supply constraints, inflation, or other factors, our margins, results of operations, and financial condition may be adversely affected.
Silicon wafers constitute a material portion of our product cost, and if we are unable to purchase wafers at favorable prices, due to supply constraints, inflation, or other factors, our margins, results of operations, and financial condition may be adversely affected. We may be subject to warranty claims and other costs related to our products.
These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create accounting rules and regulations.
We prepare our consolidated financial statements to conform to generally accepted accounting principles in the United States. These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create accounting rules and regulations.
We may need to expend significant financial and development resources to analyze, correct, eliminate, or work around errors or defects or to eliminate or otherwise address security vulnerabilities, and we and our third-party service providers may face difficulties or delays in identifying or otherwise responding to any potential security breach or incident. 14 Table of Contents Further, the increase in cyberattacks has resulted in an increased focus on cybersecurity by certain government agencies.
We may need to expend significant financial and development resources to analyze, correct, eliminate, or work around errors or defects or to eliminate or otherwise address security vulnerabilities, and we and our third-party service providers may face difficulties or delays in identifying or otherwise responding to any potential security breach or incident.
Our IT systems are subject to power and telecommunication outages and other system failures. Further, despite our current security measures, our IT systems may be vulnerable to cybersecurity threats and suffer cybersecurity incidents.
Further, despite our security measures, our IT systems may be vulnerable to cybersecurity threats and suffer cybersecurity incidents. These systems are also supported by subcontractors and third-party providers who may also be subject to power and telecommunication outages or other general system failures and disruptions and cybersecurity threats and cybersecurity incidents.
These disruptions could make it more difficult and costly for us to deliver our products and services, obtain components or other supplies through our supply chain, maintain, or resume operations or perform other critical corporate functions, and could reduce customer demand for our products and services. 17 Table of Contents The increasing concern over climate change could also result in transition risks such as shifting customer preferences.
These disruptions could make it more difficult and costly for us to deliver our products and services, obtain components or other supplies through our supply chain, maintain, or resume operations or perform other critical corporate functions, and could reduce customer demand for our products and services.
Outbreaks have resulted, and could again, result in significant government measures to control the spread of disease, including, among others, restrictions on travel, manufacturing, and the movement of employees. Jurisdictions in which we operate have had varying responses to pandemic and other widespread public health problems and the impact of such responses is difficult to anticipate.
Pandemics, epidemics or other widespread public health problems could negatively impact our business. Outbreaks have resulted, and could again result, in significant government measures to control the spread of disease, including, among others, restrictions on travel, manufacturing, and the movement of employees.
Additionally, our markets are also characterized by evolving industry standards and increased demand for more features and performance, which requires higher levels of integration and more advanced process technology.
There are no guarantees that our products will be included in the next generation of products introduced by these customers. Additionally, our markets are also characterized by evolving industry standards and increased demand for more features and performance, which requires higher levels of integration and more advanced process technology.
AI poses emerging ethical issues and presents risks and challenges that could affect its adoption, and therefore our business.
We and our customers are increasingly building AI capabilities into many products and services. AI poses emerging ethical issues and presents risks and challenges that could affect its adoption, and therefore our business.
We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed generally every three years. In the fourth quarter of fiscal 2019, the HDMI Founders adopted a new agreement covering the five-year period beginning January 1, 2018.
We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed generally every three years. The previous allocation, adopted in 2019, expired at the end of fiscal 2022, and the HDMI Founders are currently negotiating a new agreement covering the sharing period that began January 1, 2023.
This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products.
This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products. Any infringement claim, indemnification claim, or impairment or loss of use of our intellectual property could materially adversely affect our financial condition and results of operations.
We depend on a concentrated group of distributors to sell our products to end customers, complete order fulfillment, maintain sufficient inventory of our products and provide services to our end customers. In fiscal 2023, revenue attributable to sales to distributors accounted for 87% of our total revenue, with two distributors accounting for 52% of total revenue.
We depend on a concentrated group of distributors to sell our products to end customers, complete order fulfillment, maintain sufficient inventory of our products and provide services to our end customers.
Third parties may attempt to misappropriate our intellectual property through electronic or other means or assert infringement claims against us in the future.
From time to time, third parties, including our competitors, have asserted against us patent, copyright, and other intellectual property rights to technologies that are important to us. Third parties may attempt to misappropriate our intellectual property through electronic or other means or assert infringement claims against us in the future.
The identification of suitable acquisition, strategic investment or strategic partnership candidates can be costly and time consuming and can distract our management team from our current operations.
We may pursue growth opportunities by acquiring complementary businesses, solutions or technologies through strategic transactions, investments or partnerships. The identification of suitable acquisition, strategic investment or strategic partnership candidates can be costly and time consuming and can distract our management team from our current operations.
Prevailing economic conditions and global credit markets could adversely impact our ability to sell material assets, restructure or refinance our debt on terms acceptable to us, or at all, or we may not be able to restructure or refinance our debt without incurring significant additional fees and expenses. 16 Table of Contents The 2022 Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and our subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the 2022 Credit Agreement.
The 2022 Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and our subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the 2022 Credit Agreement.
Noncompliance with these requirements could result in penalties, fines, liabilities, or reputational harm, which could harm our business or financial results. We are also subject to import/export regulations and applicable executive orders. These laws, regulations, and orders are complex, may change frequently and with limited notice, and have generally and may continue to become more stringent over time.
Noncompliance with these requirements could result in penalties, fines, liabilities, or reputational harm, which could harm our business or financial results. We are also subject to import/export regulations, rules regarding bulk data transfers, and applicable executive orders.
A failure of these systems, cybersecurity incidents, or cyber-fraud may cause business disruptions, compromise our intellectual property or other sensitive information, or result in losses. We rely on information technology ("IT") networks and systems to collect, process, maintain, use, share, disseminate, and dispose of our information and manage our operations, including financial reporting.
Factors Related to Overall Business & Operations Our business depends on the use of information technology systems. A failure of these systems, cybersecurity incidents, or cyber-fraud may cause business disruptions, compromise our intellectual property or other sensitive information, or result in losses.
We may also be a target for unsolicited acquisition or business combination offers. Appropriately reviewing and responding to any such offer can be costly and complex, and diverts the efforts and attention of management. 22 Table of Contents Item 1B. Unresolved Staff Comments None.
We may also be a target for unsolicited acquisition or business combination offers. Appropriately reviewing and responding to any such offer can be costly and complex, and diverts the efforts and attention of management. Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results.
Furthermore, worldwide manufacturing capacity for our products may be impacted by many factors which may impact availability and cost. If the demand for silicon wafers or assembly material exceeds market supply, or if suppliers increase prices to cover the cost of rising inflation, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive.
If the demand for silicon wafers or assembly material exceeds market supply, or if suppliers increase prices to cover the cost of rising inflation, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive. A shortage in manufacturing capacity could hinder our ability to meet product demand and therefore reduce our revenue.
Further, our subcontractors are themselves subject to many of the same operational and business risks that we face and describe herein that, if occur and are disruptive to their operations, could adversely affect us. Our margins are dependent on our achieving continued yield and quality improvements, cost reductions, and the supply and cost of wafers and materials .
Further, our subcontractors are themselves subject to many of the same operational and business risks that we face and describe herein, including many operating in regions with significant geopolitical risk, that, if they occur and are disruptive to their operations, could adversely affect us.
If we fail to manage transition risks and customer expectations in an effective manner, customer demand for our solutions, products, and services could diminish, and our profitability could suffer.
These expectations may cause us to incur additional costs or make other changes to our operations to respond to them, which could adversely affect our financial results. If we fail to manage transition risks and customer expectations in an effective manner, customer demand for our solutions, products, and services could diminish, and our profitability could suffer.
The semiconductor industry is highly cyclical and subject to downturns, such as we are currently seeing, and our revenue and gross margin can fluctuate significantly due to such downturns. These downturns can be severe and prolonged and can result in price erosion and weak demand for our products.
A significant downturn in the industry or in any of these end markets could cause a meaningful reduction in demand for our products and adversely affect our operating results. The semiconductor industry is highly cyclical and subject to downturns, such as we are currently seeing, and our revenue and gross margin can fluctuate significantly due to such downturns.
We compete in a dynamic environment characterized by rapid technology and product evolution, generally followed by a relatively longer process of ramping up to volume production on advanced technologies. Our end customers’ continued use of our products is frequently reevaluated, as certain of our customers' product life cycles are relatively short and they continually develop new products.
Our success and future revenue depend on our ability to develop and introduce new products that achieve customer and market acceptance. We compete in a dynamic environment characterized by rapid technology and product evolution, generally followed by a relatively longer process of ramping up to volume production on advanced technologies.
We have significant outstanding receivables with our top distributors, and expect our distributors to generate a significant portion of our revenue in the future.
In fiscal 2024, revenue attributable to sales to distributors accounted for 89% of our total revenue, with two distributors accounting for approximately 64% of total revenue, and we may experience further distributor consolidation. We have significant outstanding receivables with our top distributors, and expect our distributors to generate a significant portion of our revenue in the future.
There is no certainty that future impairment tests will indicate that goodwill or amortizable intangible assets will be deemed recoverable. As we continue to review our business operations and test for impairment or in connection with possible sales of assets, we may have impairment charges in the future, which may be material.
As we continue to review our business operations and test for impairment or in connection with possible sales of assets, we may have impairment charges in the future, which may be material. Changes to financial accounting standards may affect our results of operations and could cause us to change our business practices.
In addition, the inability of customers to obtain credit, the insolvency of one or more customers, or tariffs applicable to our customers’ products, could impact our sales. Any of these effects could impact our ability to effectively manage inventory levels and collect receivables, require additional restructuring actions, and decrease our revenue and profitability.
In addition, the inability of customers to obtain credit, the insolvency of one or more customers, or tariffs applicable to our customers’ products, could impact our sales.
Competition from these semiconductor companies may intensify as we offer more products in any of our end markets. These competitors include established, multinational semiconductor companies, as well as emerging companies.
Competition from these semiconductor companies may intensify as we offer more products in any of our end markets. These competitors include established, multinational semiconductor companies, as well as emerging companies. Additionally, our competitors may operate under more favorable regulatory environments or benefit from economic polices (such as subsidies or other protectionism) that provide them with additional competitive advantages.
If we are unable to adequately protect our new and existing intellectual property rights globally, our financial results and our ability to compete effectively may suffer. Our success depends in part on our proprietary technology, and we rely upon patent, copyright, trade secret, mask work, and trademark laws to protect our intellectual property globally.
Our success depends in part on our proprietary technology, and we rely upon patent, copyright, trade secret, mask work, and trademark laws to protect our intellectual property globally. We intend to continue to protect our proprietary technology, however, we may be unsuccessful in asserting our intellectual property rights or such rights may be invalidated, violated, circumvented, or challenged.
The nature of our business and length of our sales cycle makes our revenue, gross margin, net income, and inventory subject to fluctuation and difficult to accurately predict.
Any of these effects could impact our ability to effectively manage inventory levels and collect receivables, require additional restructuring actions, and decrease our revenue and profitability. 20 Table of Contents The nature of our business and length of our sales cycle makes our revenue, gross margin, net income, and inventory subject to fluctuation and difficult to accurately predict.
Additionally, the U.S. government has implemented controls regarding semiconductor- and supercomputer-related products and restrictions affecting U.S. persons’ ability to send certain chips and chip-related technology and software to China without an export license.
Additionally, the U.S. government has continued to increase restrictions on the export of semiconductor- and supercomputer-related products, including semi-conductor manufacturing affecting the ability to send U.S.-controlled certain chips, products containing those chips, chip-related technology and software, and items related to semi-conductor manufacturing worldwide without export authorization.
In particular, pandemics or other widespread public health problems may increase or change the severity of our other risks reported in this Annual Report on Form 10-K. 11 Table of Contents Factors Related to Manufacturing our Products We rely on subcontractors to supply and fabricate silicon wafers and to perform assembly and test operations for our semiconductor products.
In particular, pandemics or other widespread public health problems may increase or change the severity of our other risks reported in this Annual Report on Form 10-K. 23 Table of Contents Item 1B. Unresolved Staff Comments None.
If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, we could have difficulty competing in our highly competitive and innovative environment. Our insurance may not adequately cover certain risks and, as a result, our financial condition and results may be adversely affected.
If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, we could have difficulty competing in our highly competitive and innovative environment. Further, changes in immigration laws and regulations, or their administration or enforcement, may impair our ability to attract and retain qualified engineering personnel.
The HDMI Founders are currently negotiating a new agreement covering the next sharing period beginning January 1, 2023. The amount of our portion of the royalty allocation is dependent on the royalties generated by adopter sales of royalty-bearing HDMI technology, which are subject to variability in economic trends particularly in the market for consumer electronics.
The amount of our portion of the royalty allocation is dependent on the royalties generated by adopter sales of royalty-bearing HDMI technology, which are subject to variability in economic trends particularly in the market for consumer electronics. 13 Table of Contents If we are unable to adequately protect our new and existing intellectual property rights globally, our financial results and our ability to compete effectively may suffer.
If implemented by taxing authorities, such changes, as well as changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on our business, results of operations, or financial condition. In addition, future effective tax rates could be affected by changes in the valuation of deferred tax assets and liabilities.
Such countries and organizations are also actively considering changes to existing laws or have proposed or enacted new laws with changes to numerous long-standing tax principles. Such changes, as well as changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on our business, results of operations, or financial condition.
Changing customer preferences may result in increased expectations regarding our solutions, products, and services, including the use of packaging materials and other components in our products and their environmental impact. These expectations may cause us to incur additional costs or make other changes to our operations to respond to them, which could adversely affect our financial results.
The increasing concern over climate change could also result in transition risks such as shifting customer preferences. Changing customer preferences may result in increased expectations regarding our solutions, products, and services, including the use of packaging materials and other components in our products and their environmental impact.
The materials subject to these tariffs may impact the cost of raw materials used by our suppliers or in our customers’ products.
The tariff threatened against Taiwan may specifically target imports of semiconductor products, which, if imposed, could seriously and negatively affect our business and the U.S. economy overall. The materials subject to these tariffs may impact the cost or availability of raw materials used by our suppliers or in our customers’ products.
Additionally, in October 2022 the U.S. government announced controls regarding semiconductor- and supercomputer-related products and restrictions affecting U.S. persons’ ability to send certain chips and chip-related technology and software to China without an export license, which may impact the global supply chain and could negatively affect our business.
Additionally, the U.S. government continues to expand controls enacted in October 2022 restricting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing, and supercomputing to China without an export license.
These controls and restrictions were revised by the U.S. government in October 2023 with the intent to further restrict China’s ability to obtain such technology and to enhance U.S. national security interests. 10 Table of Contents Where license requirements are imposed, there can be no assurance that the U.S. government will grant licenses to permit the continuation of business with these customers.
It also is possible that the Chinese government or other governments will retaliate in ways that could impact our business. Where license requirements are imposed, there can be no assurance that the U.S. government will grant licenses to permit the continuation of business with these customers.
The Organisation for Economic Co-operation and Development, which represents a coalition of member countries, continues to advance proposals with changes to numerous long-standing tax principles, including the introduction of global minimum tax standards.
A number of countries, as well as organizations such as the Organisation for Economic Co-operation and Development, which represents a coalition of member countries, support the 15% global minimum tax initiative, and have adopted or intend to adopt laws to implement this initiative.
Concerns relating to the responsible use of new and evolving technologies, such as AI, in our and our customers’ products and services may result in reputational and financial harm and liability. We and our customers are increasingly building AI capabilities into many products and services.
For example, numerous U.S. states have proposed, and in certain cases enacted, legislation restricting the use of AI or imposing obligations in connection with its use, including by addressing forms of automated decision making. 17 Table of Contents Concerns relating to the responsible use of new and evolving technologies, such as AI, in our and our customers’ products and services may result in reputational and financial harm and liability.
The selection process for our products to be included in our customers' new products is highly competitive. There are no guarantees that our products will be included in the next generation of products introduced by these customers.
Our end customers’ continued use of our products is frequently reevaluated, as certain of our customers' product life cycles are relatively short and they continually develop new products. The selection process for our products to be included in our customers' new products is highly competitive.
Although it is impossible to completely predict the occurrences or consequences of any such events, forecasting disruptive events and building additional resiliency into our operations accordingly will become an increasing business imperative. 21 Table of Contents The trading price of our common stock has been and may continue to be subject to volatility in response to a variety of factors.
The trading price of our common stock has been and may continue to be subject to volatility in response to a variety of factors. Our common stock has experienced substantial price volatility in the past and may continue to do so in the future.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDuring 2019, we vacated a 23,680 square foot office space in Portland, Oregon, which we have subleased through the end of the lease in March 2025. In Muntinlupa City, Philippines, we lease a total of 50,503 square feet through May 2025 for research and development and operations facilities.
Biggest changeIn Metro Manila, Philippines, we lease a total of 50,503 square feet through May 2025 and another 8,333 square feet through March 2029 for research and development and operations facilities. In Shanghai, China, we lease 68,027 square feet through June 2025 for research and development operations.
In Shanghai, China, we lease 68,027 square feet through May 2024 for research and development operations. In Penang, Malaysia, we lease 23,272 square feet through September 2029 for research and development and operations facilities. We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff.
In Pune, India, we lease 29,055 square feet through March 2029 for research and development. In Penang, Malaysia, we lease 23,272 square feet through September 2029 for research and development and operations facilities. We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlso, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 23 Table of Contents PART II
Biggest changeAlso, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 24 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 23 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 24 Item 6. Reserved 25 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 35 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 25 Item 6. Reserved 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b) October 1, 2023 through October 28, 2023 — $ — — $ 99.7 October 29, 2023 through November 25, 2023 838,602 $ 57.46 838,602 $ 51.5 November 26, 2023 through December 30, 2023 34,392 $ 58.37 34,392 $ 250.0 Total 872,994 $ 57.49 872,994 $ 250.0 (a) All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our Board of Directors to purchase up to $150.0 million of our common stock announced August 8, 2022 (b) At December 30, 2023, this amount consists of the remaining portion of the $250 million program authorized through December 28, 2024 that was announced November 30, 2023 .
Biggest changeThe following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b) September 29, 2024 through October 26, 2024 — $ — — $ 203.0 October 27, 2024 through November 23, 2024 211,098 $ 52.11 211,098 $ 192.0 November 24, 2024 through December 28, 2024 155,871 $ 57.74 155,871 $ 100.0 Total 366,969 $ 54.50 366,969 $ 100.0 (a) All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our Board of Directors to purchase up to $250.0 million of our common stock announced November 30, 2023.
No shares were repurchased under the 2024 Repurchase Program during the fourth quarter of fiscal 2023.
No shares were repurchased under the 2025 Repurchase Program during the fourth quarter of fiscal 2024.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC". Holders As of February 12, 2024, we had approximately 160 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC". Holders As of February 10, 2025, we had approximately 145 stockholders of record.
Issuer Purchases of Equity Securities On August 8, 2022, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $150 million of outstanding common stock could be repurchased from time to time (the "2023 Repurchase Program"). The duration of the 2023 Repurchase Program was through December 30, 2023.
Issuer Purchases of Equity Securities On November 30, 2023, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $250 million of outstanding common stock could be repurchased from time to time (the "2024 Repurchase Program"). The duration of the 2024 Repurchase Program was through December 28, 2024.
The remaining portion of the $150 million program authorized through December 30, 2023 expired with no additional shares repurchased. 24 Table of Contents Comparison of Total Cumulative Stockholder Return The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 2018 through December 2023.
The remaining portion of the $250 million program authorized through December 28, 2024 expired with no additional shares repurchased. 25 Table of Contents Comparison of Total Cumulative Stockholder Return The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 2019 through December 2024.
On November 30, 2023, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $250 million of outstanding common stock could be repurchased from time to time (the "2024 Repurchase Program"). The duration of the 2024 Repurchase Program is through December 28, 2024.
On December 9, 2024, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $100 million of outstanding common stock could be repurchased from time to time (the "2025 Repurchase Program"). The duration of the 2025 Repurchase Program is through December 31, 2025.
During the fourth quarter of fiscal 2023, we repurchased 872,994 shares for $50.2 million, or an average price paid per share of $57.49, under the 2023 Repurchase Program. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2023 Repurchase Program were retired by the end of the fourth quarter of fiscal 2023.
During the fourth quarter of fiscal 2024, we repurchased 366,969 shares for $20.0 million, or an average price paid per share of $54.50. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2024 Repurchase Program were retired by the end of the fourth quarter of fiscal 2024.
We repurchased a total of 1,224,443 shares for $80.2 million, or an average price paid per share of $65.50, during fiscal year 2023.
We repurchased a total of 1,145,560 shares for $67.0 million, or an average price paid per share of $58.48, during fiscal year 2024.
Added
(b) At December 28, 2024, this amount consists of the remaining portion of the $100 million program authorized through December 31, 2025 that was announced December 9, 2024 .

Item 7. Management's Discussion & Analysis

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

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Biggest changeInterest Income (Expense), net The composition of our Interest income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Interest income (expense), net $ 2,041 $ (4,146 ) $ (2,738 ) (149.2 )% 51.4 % Percentage of revenue 0.3 % (0.6 )% (0.5 )% The change in Interest income (expense) for fiscal 2023 compared to fiscal 2022 was driven by increased interest income, coupled with lower interest expense as we paid off the outstanding balance of our long-term debt during the third quarter of fiscal 2023.
Biggest changeInterest Income (Expense), net The composition of our Interest income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Interest income (expense), net $ 3,948 $ 2,041 $ (4,146 ) 93.4 % (149.2 )% Percentage of revenue 0.8 % 0.3 % (0.6 )% The change in Interest income (expense) for fiscal 2024 compared to fiscal 2023 was driven by increased interest income, coupled with lower interest expense as we paid off the outstanding balance of our long-term debt during the third quarter of fiscal 2023. 32 Table of Contents Other Income (Expense), net The composition of our Other income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Other income (expense), net $ (2,176 ) $ 545 $ (1,109 ) 100+% (149.1 )% Percentage of revenue (0.4 )% 0.1 % (0.2 )% For fiscal 2024 compared to fiscal 2023, the change in Other income (expense), net was primarily due to a $2.0 million write-off of a non-recoverable cost-method investment, and to foreign currency effects.
The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends used in the estimates. 26 Table of Contents Inventories and Cost of Revenue Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or net realizable value.
The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends used in the estimates. 27 Table of Contents Inventories and Cost of Revenue Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or net realizable value.
The end market data we use is derived from data provided to us by our customers. With a diverse base of customers who may manufacture end products spanning multiple end markets, the assignment of revenue to a specific end market requires the use of judgment.
The end market data we use is derived from data provided to us by our distributors and end customers. With a diverse base of customers who may manufacture end products spanning multiple end markets, the assignment of revenue to a specific end market requires the use of judgment.
The income tax benefit from the release of a portion of the valuation allowance was partially offset by an increase in expense in fiscal 2023 as compared to fiscal 2022 primarily due to increased worldwide income and U.S. tax on foreign operations. We updated our evaluation of the valuation allowance position in the United States through December 30, 2023.
The income tax benefit from the release of a portion of the valuation allowance was partially offset by an increase in expense in fiscal 2023 as compared to fiscal 2022 primarily due to increased worldwide income and U.S. tax on foreign operations. We updated our evaluation of the valuation allowance position in the United States through December 28, 2024.
We calculate Days of inventory on hand on the basis of a 365-day year as Inventories at the end of the quarter divided by Cost of sales during the quarter annualized and then multiplied by 365 . Credit Arrangements On September 1, 2022, we entered into our 2022 Credit Agreement.
We calculate Days of inventory on hand on the basis of a 365-day year as Inventories at the end of the quarter divided by Cost of sales during the quarter annualized and then multiplied by 365 . 35 Table of Contents Credit Arrangements On September 1, 2022, we entered into our 2022 Credit Agreement.
New Accounting Pronouncements The information contained under the heading "New Accounting Pronouncements" in Note 1 - Nature of Operations and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part II, Item 7. 34 Table of Contents
New Accounting Pronouncements The information contained under the heading "New Accounting Pronouncements" in Note 1 - Nature of Operations and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part II, Item 7.
The details of this arrangement are described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 30, 2023, we had no used or unused credit arrangements beyond the secured revolving loan facility described in the 2022 Credit Agreement.
The details of this arrangement are described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 28, 2024, we had no used or unused credit arrangements beyond the secured revolving loan facility described in the 2022 Credit Agreement.
On September 1, 2022, we entered into our 2022 Credit Agreement, as described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 30, 2023, we did not have significant long-term commitments for capital expenditures.
On September 1, 2022, we entered into our 2022 Credit Agreement, as described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 28, 2024, we did not have significant long-term commitments for capital expenditures.
Impact of Global Economic Activity on our Business Increased financial market volatility, inflationary pressure, rising interest rates, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension continue to impact business globally and may impact our operations by causing disruption to our labor markets and supply chains.
Impact of Global Economic Activity on our Business Increased financial market volatility, inflationary pressure, interest rate changes, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension continue to impact business globally and may impact our operations by causing disruption to our labor markets and supply chains.
There continues to be uncertainty around the extent of market volatility, inflationary pressures, rising interest rates, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension, which may impact our liquidity and working capital needs in future periods.
There continues to be uncertainty around the extent of market volatility, inflationary pressures, interest rate changes, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension, which may impact our liquidity and working capital needs in future periods.
This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of December 30, 2023, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.
This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of December 28, 2024, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.
Financing activities — Financing cash flows consist primarily of activity on our long-term debt, repurchases of common stock, tax payments related to the net share settlement of restricted stock units, and proceeds from the exercise of options to acquire common stock. Net cash used by financing activities in fiscal 2023 was $253.7 million compared to $188.1 million in fiscal 2022.
Financing activities — Financing cash flows consist primarily of activity on our long-term debt, repurchases of common stock, tax payments related to the net share settlement of restricted stock units, and proceeds from the exercise of options to acquire common stock. Net cash used by financing activities in fiscal 2024 was $94.5 million compared to $253.7 million in fiscal 2023.
Discussions of results for prior periods (fiscal 2022 compared to fiscal 2021) are incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2022 .
Discussions of results for prior periods (fiscal 2023 compared to fiscal 2022) are incorporated by reference from our Annual Report on Form 10-K for the year ended December 30, 2023 .
Restructuring The composition of our Restructuring activity, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Restructuring $ 1,908 $ 2,551 $ 940 (25.2 )% 171.4 % Percentage of revenue 0.3 % 0.4 % 0.2 % Restructuring activity is generally comprised of expenses resulting from workforce reductions, cancellation of contracts, and consolidation of our facilities.
Restructuring The composition of our Restructuring activity, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Restructuring $ 12,291 $ 1,908 $ 2,551 100+% (25.2 )% Percentage of revenue 2.4 % 0.3 % 0.4 % Restructuring activity is generally comprised of expenses resulting from workforce reductions, cancellation of contracts, and consolidation of our facilities.
Within these end markets, there are multiple drivers, including: • Communications and Computing: data center servers and networking equipment, client computing platforms, and wireless and wireline communications infrastructure deployments, • Industrial and Automotive: factory automation, robotics, automotive electronics, and industrial IoT, • Consumer: smart home, prosumer, and other applications.
We also provide IP licensing and services to these end markets. Within these end markets, there are multiple drivers, including: • Communications and Computing: data center servers and networking equipment, client computing platforms, and wireless and wireline communications infrastructure deployments, • Industrial and Automotive: factory automation, robotics, automotive electronics, and industrial IoT, • Consumer: smart home, prosumer, and other applications.
We repurchased approximately 1.2 million shares of common stock for $80.0 million in fiscal 2023 compared to repurchases of approximately 2.0 million shares of common stock for $110.1 million in fiscal 2022.
We repurchased approximately 1.1 million shares of common stock for $67.0 million in fiscal 2024 compared to repurchases of approximately 1.2 million shares of common stock for $80.0 million in fiscal 2023.
The composition of our revenue by customer is presented in the following table: % of Total Revenue Year Ended December 30, December 31, January 1, 2023 2022 2022 Arrow 31.6 % 28.5 % 27.1 % Weikeng 20.5 30.3 37.2 Future 12.6 8.3 6.5 Macnica 10.8 9.7 6.6 Other distributors 11.9 12.7 9.9 All distributors 87.4 89.5 87.3 Direct customers 12.6 10.5 12.7 Total revenue 100.0 % 100.0 % 100.0 % Gross margin The composition of our gross margin, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, (In thousands) 2023 2022 2022 Gross margin $ 514,670 $ 452,050 $ 321,675 Gross margin percentage 69.8 % 68.5 % 62.4 % Gross margin percentage increased 130 basis points from fiscal 2022 to fiscal 2023.
The composition of our revenue by customer is presented in the following table: % of Total Revenue Year Ended December 28, December 30, December 31, 2024 2023 2022 Arrow 33.3 % 31.6 % 28.5 % Weikeng 31.2 20.5 30.3 Macnica 11.2 10.8 9.7 Future 3.5 12.6 8.3 Other distributors 10.2 11.9 12.7 All distributors 89.4 87.4 89.5 Direct customers 10.6 12.6 10.5 Total revenue 100.0 % 100.0 % 100.0 % 30 Table of Contents Gross margin The composition of our gross margin, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, (In thousands) 2024 2023 2022 Gross margin $ 340,400 $ 514,670 $ 452,050 Gross margin percentage 66.8 % 69.8 % 68.5 % Gross margin percentage decreased 300 basis points from fiscal 2023 to fiscal 2024.
Revenue from Asia decreased in fiscal 2023 compared to fiscal 2022 primarily due to the macroeconomic environment in the region, while revenue from the Americas and Europe increased due to increased demand in these regions driven by our Industrial and Automotive end market.
Revenue from Asia decreased in fiscal 2024 compared to fiscal 2023 primarily due to the macroeconomic environment in the region, while revenue from the Americas and Europe decreased due to reduced demand in these regions for our products in the Industrial and Automotive end market.
We do not maintain a valuation allowance in any foreign jurisdictions as we have concluded that it is more likely than not that we will realize those net deferred tax assets in the future periods.
We do not maintain a valuation allowance on a significant portion of our U.S. Federal deferred tax assets or in any foreign jurisdictions as we have concluded that it is more likely than not that we will realize those net deferred tax assets in the future periods.
The net decrease in Cash and cash equivalents of $17.4 million between December 30, 2023 and December 31, 2022 was primarily driven by cash flows from the following activities: Operating activities — Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities.
The net increase in Cash and cash equivalents of $8.0 million between December 30, 2023 and December 28, 2024 was primarily driven by cash flows from the following activities: Operating activities — Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities.
The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of sales in that quarter.
Days of inventory on hand increased over the period due to lower revenue. The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of sales in that quarter.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Lattice Semiconductor Corporation and its subsidiaries (“Lattice,” the “Company,” “we,” “us,” or “our”) develop technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and licenses. Lattice is the low power programmable leader.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Lattice develops technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and licenses. Lattice is the low power programmable leader.
We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists.
We continue to maintain a full valuation allowance against our state deferred tax assets due to insufficient income sources. We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists.
The composition of our revenue by geography is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Asia $ 443,765 60.2 % $ 464,904 70.5 % $ 384,568 74.6 % (4.5 )% 20.9 % Americas 145,839 19.8 100,260 15.2 80,870 15.7 45.5 24.0 Europe 147,550 20.0 95,192 14.3 49,889 9.7 55.0 90.8 Total revenue $ 737,154 100.0 % $ 660,356 100.0 % $ 515,327 100.0 % 11.6 % 28.1 % 29 Table of Contents Revenue from Customers We sell our products to independent distributors and directly to customers.
The composition of our revenue by geography is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Asia $ 332,747 65.3 % $ 443,765 60.2 % $ 464,904 70.5 % (25.0 )% (4.5 )% Americas 101,217 19.9 145,839 19.8 100,260 15.2 (30.6 ) 45.5 Europe 75,437 14.8 147,550 20.0 95,192 14.3 (48.9 ) 55.0 Total revenue $ 509,401 100.0 % $ 737,154 100.0 % $ 660,356 100.0 % (30.9 )% 11.6 % Revenue from Customers We sell our products to independent distributors and directly to customers.
Operating Expenses Research and Development Expense The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Research and development $ 159,770 $ 135,767 $ 110,518 17.7 % 22.8 % Percentage of revenue 21.7 % 20.6 % 21.4 % Research and development expense includes costs for compensation and benefits, stock-based compensation, engineering wafers, depreciation and amortization, licenses, and outside engineering services.
Operating Expenses Research and Development Expense The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Research and development $ 159,302 $ 159,770 $ 135,767 (0.3 )% 17.7 % Percentage of revenue 31.3 % 21.7 % 20.6 % Research and development expense includes headcount-related costs, including cash- and stock-based compensation and benefits, R&D equipment expenses, engineering wafers, licenses, and outside engineering services.
Investing activities — Investing cash flows consist primarily of transactions related to capital expenditures and payments for software and intellectual property licenses . Net cash used by investing activities in fiscal 2023 was $33.3 million compared to $34.9 million in fiscal 2022. This $1.6 million decrease was primarily a result of decreased capital expenditures.
Investing activities — Investing cash flows consist primarily of transactions related to capital expenditures and payments for software and intellectual property licenses . Net cash used by investing activities in fiscal 2024 was $37.7 million compared to $33.3 million in fiscal 2023.
The extent to which increased financial market volatility, inflationary pressures, global pandemics, and related uncertainty will impact our business activities will depend on future developments that are highly uncertain and cannot be predicted at this time.
The extent to which increased financial market volatility, inflationary pressures, global pandemics, and related uncertainty will impact our business activities will depend on future developments that are highly uncertain and cannot be predicted at this time. Additionally, our business is impacted by the cyclic correction affecting the broader semiconductor industry, which has seen softened demand across our end markets.
We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. 27 Table of Contents Results of Operations Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table: Year Ended December 30, December 31, January 1, (In thousands) 2023 2022 2022 Revenue $ 737,154 100.0 % $ 660,356 100.0 % $ 515,327 100.0 % Gross margin 514,670 69.8 452,050 68.5 321,675 62.4 Research and development 159,770 21.7 135,767 20.6 110,518 21.4 Selling, general and, administrative 137,244 18.6 122,076 18.5 105,617 20.5 Amortization of acquired intangible assets 3,478 0.5 3,778 0.6 2,613 0.5 Restructuring 1,908 0.3 2,551 0.4 940 0.2 Acquisition related — — 511 0.1 1,171 0.2 Income from operations $ 212,270 28.8 % $ 187,367 28.4 % $ 100,816 19.6 % Revenue Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Revenue $ 737,154 $ 660,356 $ 515,327 11.6 % 28.1 % Revenue increased $76.8 million, or 11.6%, in fiscal 2023 compared to fiscal 2022, primarily from increased demand for our products used in industrial automation, robotics applications, and data center servers, partially offset by lower demand for our products used in wireless infrastructure and consumer applications.
We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. 28 Table of Contents Results of Operations Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table: Year Ended December 28, December 30, December 31, (In thousands) 2024 2023 2022 Revenue $ 509,401 100.0 % $ 737,154 100.0 % $ 660,356 100.0 % Gross margin 340,400 66.8 514,670 69.8 452,050 68.5 Research and development 159,302 31.3 159,770 21.7 135,767 20.6 Selling, general and, administrative 116,942 23.0 137,244 18.6 122,076 18.5 Amortization of acquired intangible assets 3,479 0.7 3,478 0.5 3,778 0.6 Restructuring 12,291 2.4 1,908 0.3 2,551 0.4 Impairment of acquired intangible assets 13,929 2.7 — — — 0.0 Acquisition related — — — — 511 0.1 Income from operations $ 34,457 6.8 % $ 212,270 28.8 % $ 187,367 28.4 % Revenue Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Revenue $ 509,401 $ 737,154 $ 660,356 (30.9 )% 11.6 % Revenue decreased $227.8 million, or 31%, in fiscal 2024 compared to fiscal 2023, primarily due to softer demand in industrial and automotive applications, telecommunications infrastructure deployments, and from continued inventory normalization by customers.
We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.
This decrease was due to lower revenue shipments as well as the timing of when our customers want our products. We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.
We believe that investing in research and development is important to delivering innovative products to our customers and, therefore, we expect to continue to increase our investment in research and development. 30 Table of Contents Selling, General, and Administrative Expense The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Selling, general, and administrative $ 137,244 $ 122,076 $ 105,617 12.4 % 15.6 % Percentage of revenue 18.6 % 18.5 % 20.5 % Selling, general, and administrative expense includes costs for compensation and benefits related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.
Selling, General, and Administrative Expense The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Selling, general, and administrative $ 116,942 $ 137,244 $ 122,076 (14.8 )% 12.4 % Percentage of revenue 23.0 % 18.6 % 18.5 % Selling, general, and administrative expense includes costs for compensation and benefits related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.
Revenue from the Consumer end market decreased by 21% in fiscal 2023 compared to fiscal 2022 primarily due to macroeconomic weakness in Consumer. While we do not consider AI applications as a distinct end market, we expect AI-related revenue to grow over the next few years based on the growing pipeline of AI-related design wins.
While we do not consider AI applications as a distinct end market, we expect AI-related revenue to grow over the next few years based on the growing pipeline of AI-related design wins. Our AI revenue is derived from applications across all three of our end market segments.
We assign this revenue first to a specific end market using historical and anticipated usage of the specific products, if possible, and allocate the remainder to the end markets based on either historical usage for each product family or industry application data for certain product types. 28 Table of Contents The following are examples of end market applications for the fiscal years presented: Communications and Computing Industrial and Automotive Consumer Wireless Security and Surveillance Cameras Wireline Machine Vision Displays Data Backhaul Industrial Automation Wearables Server Computing Robotics Televisions Client Computing Automotive Home Theater Data Storage Drones The composition of our revenue by end market is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Communications and Computing $ 257,536 34.9 % $ 282,913 42.8 % $ 227,911 44.2 % (9.0 )% 24.1 % Industrial and Automotive 433,482 58.8 319,398 48.4 226,260 43.9 35.7 41.2 Consumer 46,136 6.3 58,045 8.8 61,156 11.9 (20.5 ) (5.1 ) Total revenue $ 737,154 100.0 % $ 660,356 100.0 % $ 515,327 100.0 % 11.6 % 28.1 % Revenue from the Communications and Computing end market decreased by 9% in fiscal 2023 compared to fiscal 2022 primarily due to softer end market demand in both wireless and wireline communications infrastructure, partially offset by strong demand in data center applications.
The following are examples of end market applications for the fiscal years presented: Communications and Computing Industrial and Automotive Consumer Wireless Security and Surveillance Cameras Wireline Machine Vision Displays Data Networking Industrial Automation Wearables Server Computing Robotics Televisions Client Computing Automotive Home Theater Data Storage Drones Sound Systems Cloud Factory Automation Hyperscalers 29 Table of Contents The composition of our revenue by end market is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Communications and Computing $ 228,145 44.8 % $ 257,536 34.9 % $ 282,913 42.8 % (11.4 )% (9.0 )% Industrial and Automotive 236,949 46.5 433,482 58.8 319,398 48.4 (45.3 ) 35.7 Consumer 44,307 8.7 46,136 6.3 58,045 8.8 (4.0 ) (20.5 ) Total revenue $ 509,401 100.0 % $ 737,154 100.0 % $ 660,356 100.0 % (30.9 )% 11.6 % Revenue from the Communications and Computing end market decreased by 11% in fiscal 2024 compared to fiscal 2023 primarily due to softer end market demand in telecommunications infrastructure deployments and from continued inventory normalization by customers, partially offset by stronger demand in data center applications.
This $65.6 million increase was due to the following activities. During fiscal 2023, we made discretionary payments totaling $130.0 million on our revolving loans under the 2022 Credit Agreement, an increase of $99.8 million from the $30.2 million of net payment and refinancing activity on our long-term debt in fiscal 2022.
This $159.2 million decrease was due to the following activities. During fiscal 2024, we had no balance outstanding on our long-term debt, while during fiscal 2023 we made discretionary payments totaling $130.0 million on revolving loans under the 2022 Credit Agreement.
Across our end markets, our products are increasingly used for Artificial Intelligence ("AI")-related applications, including device usage in AI-optimized servers in data centers, AI-enabled PCs, and AI-enabled robotics and ADAS systems, among others. We also provide IP licensing and services to our end markets.
Revenue by End Market We sell our products globally to a broad base of customers in three primary end market groups: Communications and Computing, Industrial and Automotive, and Consumer. Across our end markets, our products are increasingly used for AI-related applications, including device usage in AI-optimized servers in data centers, AI-enabled PCs, and AI-enabled robotics and ADAS systems, among others.
Details of our deferred tax assets and valuation allowance are discussed in Note 12 - Income Taxes to our Consolidated Financial Statements in Part II, Item 8 of this report. 32 Table of Contents Liquidity and Capital Resources The following sections discuss material changes in our financial condition from the end of fiscal 2022, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources.
Liquidity and Capital Resources The following sections discuss material changes in our financial condition from the end of fiscal 2023, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources.
Income Taxes The composition of our Income tax (benefit) expense is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Income tax (benefit) expense $ (44,205 ) $ 3,230 $ 1,704 (100+)% 89.6 % Our Income tax (benefit) expense includes taxes on foreign income and withholding taxes, partially offset by benefits resulting from excess tax benefits from stock-based compensation.
Income Taxes The composition of our Income tax (benefit) expense is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Income tax (benefit) expense $ (24,902 ) $ (44,205 ) $ 3,230 (43.7 )% (100+)% Our Income tax (benefit) expense on worldwide income for fiscal 2024 includes $27.7 million of income tax benefits due to the expiration of statutes of limitations that reduced our uncertain tax positions, as well as federal tax credits, and stock-based compensation.
We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs.
We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs. 34 Table of Contents Liquidity Cash and cash equivalents (In thousands) December 28, 2024 December 30, 2023 $ Change % Change Cash and cash equivalents $ 136,291 $ 128,317 $ 7,974 6.2 % As of December 28, 2024, we had Cash and cash equivalents of $136.3 million, of which approximately $71.2 million in Cash and cash equivalents was held by our foreign subsidiaries.
Amortization of Acquired Intangible Assets The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Amortization of acquired intangible assets $ 3,478 $ 3,778 $ 2,613 (7.9 )% 44.6 % Percentage of revenue 0.5 % 0.6 % 0.5 % The decrease in Amortization of acquired intangible assets for fiscal 2023 compared to fiscal 2022 was due to the end of the amortization period during the first quarter of fiscal 2022 for acquired intangible assets from previous acquisitions.
The decrease in Selling, general, and administrative expense for fiscal 2024 compared to fiscal 2023 was due primarily to a reduction in stock compensation expense from the forfeiture of equity awards by departing executives and reduced headcount-related costs as we aligned resources to the lower level of business, partially offset by other costs such as outside services and legal expenses. 31 Table of Contents Amortization of Acquired Intangible Assets The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, % Change in (In thousands) 2024 2023 2022 2024 2023 Amortization of acquired intangible assets $ 3,479 $ 3,478 $ 3,778 0.0 % (7.9 )% Percentage of revenue 0.7 % 0.5 % 0.6 % Amortization of acquired intangible assets was flat for fiscal 2024 compared to fiscal 2023.
Inventories (In thousands) December 30, 2023 December 31, 2022 $ Change % Change Inventories $ 98,826 $ 110,375 $ (11,549 ) (10.5 )% Days of inventory on hand 175 187 (12 ) Inventories as of December 30, 2023 decreased $11.5 million, or approximately 11%, compared to December 31, 2022 primarily as a result of increased product shipments to meet customer demand.
Inventories (In thousands) December 28, 2024 December 30, 2023 $ Change % Change Inventories $ 103,410 $ 98,826 $ 4,584 4.6 % Days of inventory on hand 207 175 32 Inventories as of December 28, 2024 increased $4.6 million, or approximately 5%, compared to December 30, 2023 primarily as a result of product buildup ahead of new product ramps and from softer demand as customers continue to normalize their own inventories.
Payments for tax withholdings on vesting of RSUs partially offset by employee exercises of stock options used net cash flows of $43.7 million in fiscal 2023, a decrease of approximately $4.1 million from the net $47.8 million used in fiscal 2022. 33 Table of Contents Accounts receivable, net (In thousands) December 30, 2023 December 31, 2022 $ Change % Change Accounts receivable, net $ 104,373 $ 94,018 $ 10,355 11.0 % Days sales outstanding - Overall 56 49 7 Accounts receivable, net as of December 30, 2023 increased by approximately $10.4 million, or approximately 11%, compared to December 31, 2022.
Payments for tax withholdings on vesting of RSUs partially offset by employee exercises of stock options used net cash flows of $27.5 million in fiscal 2024, a decrease of approximately $16.2 million from the net $43.7 million used in fiscal 2023.
This increase of $30.8 million was primarily driven by an increase of $40.1 million provided by improved operating performance, partially offset by $9.3 million of changes in working capital, primarily from cash used by accrued liabilities, payroll obligations, and accounts payable, net of cash provided by inventories.
Cash provided by operating activities was $140.9 million in fiscal 2024 compared to $269.6 million in fiscal 2023. This decrease of $128.7 million was primarily driven by a decrease of $159.8 million provided by operating activities, partially offset by $31.1 million of net changes in working capital, primarily in Accounts receivable and Inventories.
In the fourth quarter of fiscal 2023, we reduced the valuation allowance against a significant portion of our U.S. deferred tax assets resulting in the inclusion of $56.9 million of U.S. Federal deferred tax assets on our Consolidated Balance Sheets.
The lower income tax benefit in fiscal 2024 was primarily due to the reduction in valuation allowance over the $56.9 million of U.S. Federal deferred tax assets in 2023.
These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions.
These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions. The decrease in Research and development expense for fiscal 2024 compared to fiscal 2023 was due primari ly to lower costs for outside services and R&D equipment expenses, partially offset by increased headcount-related costs and rent expense.
Removed
Additionally, our business is impacted by the cyclic correction affecting the broader semiconductor industry, which has seen softened demand across our end markets and customers reducing or rebalancing their inventory levels.
Added
Accordingly, the fourth quarter of fiscal 2024 included $27.7 million of income tax benefits due to the expiration of statutes of limitations that reduced our uncertain tax positions.
Removed
Through the end of fiscal 2023, we demonstrated consistent and continued profitability over the preceding three-year period. In assessing the realizability of the deferred tax assets, we considered our operating environment and estimates about our ability to generate taxable income in future periods within the United States.
Added
We assign this revenue first to a specific end market using historical and anticipated usage of the specific products, if possible, and allocate the remainder to the end markets based on either historical usage for each product family or industry application data for certain product types.
Removed
As a result, in the fourth quarter of fiscal 2023, we concluded that our history of profitable operating results, including the current period results, along with our expectations about generating sufficient U.S. Federal taxable income, provided sufficient positive evidence supporting the realizability of our U.S. Federal deferred tax assets.
Added
Revenue from the Industrial and Automotive end market decreased by 45% in fiscal 2024 compared to fiscal 2023, primarily due to softer end market demand and from continued inventory normalization by customers.
Removed
Accordingly, we reduced the valuation allowance against a significant portion of our U.S. deferred tax assets resulting in the inclusion of $56.9 million of U.S. Federal deferred tax assets on our Consolidated Balance Sheets. We continue to maintain a full valuation allowance against our state deferred tax assets due to insufficient income sources.
Added
Reduced margins were primarily due to an approximately $7.0 million one-time charge for expiring production materials, and changes in product mix between the periods presented . The expiring production materials were purchased on behalf of the company by the OSATs in anticipation of a supply constraint and are no longer expected to be used.
Removed
Revenue by End Market We sell our products globally to a broad base of customers in three primary end market groups: Communications and Computing, Industrial and Automotive, and Consumer.
Added
We expect gross margin to increase in future periods due to the non-recurrence of the one-time charge.
Removed
Revenue from the Industrial and Automotive end market increased by 36% in fiscal 2023 compared to fiscal 2022, primarily due to strong customer adoption in a broad range of applications, including industrial automation and robotics. Growth in Automotive was driven by the adoption of new designs in advanced driver assistance ("ADAS") and infotainment applications.
Added
We believe that investing in research and development is important to delivering innovative products to our customers. We expect research and development expense to increase in the future, but to decline as a percentage of revenue.
Removed
Improved margins were driven by benefits from our gross margin expansion strategy including mix.
Added
Restructuring costs increased in fiscal 2024 compared to fiscal 2023 primarily due to higher severance costs incurred under the Q3 2024 Plan as we aligned resources to the lower level of business.
Removed
The increase in Research and development expense for fiscal 2023 compared to fiscal 2022 was due primari ly to increased headcount-related costs, including stock-based compensation, as we continue to invest in our long-term product roadmap, and depreciation and amortization related to our research and development equipment.
Added
Impairment of Acquired Intangible Assets In connection with our acquisition of Mirametrix in November 2021 we recorded identifiable intangible assets related to existing technology, customer relationships, and trade name / trademarks.
Removed
The increase in Selling, general, and administrative expense for fiscal 2023 compared to fiscal 2022 was due primarily to increased headcount-related costs, including stock-based compensation and other costs, related to demand creation to support the growth of our business.
Added
Our review of our strategic long-range plan completed at the end of fiscal 2024 concluded that the originally acquired Mirametrix intangible assets had limited future revenue potential due to a decline in customer demand, which we determined was an indicator of impairment.
Removed
Restructuring costs decreased in fiscal 2023 compared to fiscal 2022 due to lower costs in the current year periods for severance compared to higher costs in the prior year periods for lease right-of-use impairment and contract termination fees.
Added
Our assessment of the fair value of these intangible assets concluded that they had been fully impaired as of December 28, 2024, and we recorded an impairment charge of $13.9 million for fiscal 2024 in the Consolidated Statements of Operations.
Removed
Acquisition Related Charges The composition of our Acquisition related charges, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Acquisition related $ — $ 511 $ 1,171 (100.0 )% (56.4 )% Percentage of revenue — % 0.1 % 0.2 % 31 Table of Contents Acquisition related charges include legal and professional fees directly related to acquisitions.
Added
Details of our deferred tax assets and valuation allowance are discussed in Note 12 - Income Taxes to our Consolidated Financial Statements in Part II, Item 8 of this report.
Removed
For fiscal 2022 and 2021, Acquisition related charges were attributable to our acquisition of Mirametrix in November 2021 and were comprised primarily of professional services including legal and accounting fees, as well as closing costs.
Added
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net income before net interest income (expense), income tax (benefit) expense, depreciation and amortization, stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, including but not limited to: litigation expense outside the ordinary course of business, restructuring, transformation, and other charges, impairments, and other non-recurring charges, if applicable for the periods presented.
Removed
Other Income (Expense), net The composition of our Other income (expense), net, including as a percentage of revenue, is presented in the following table: Year Ended December 30, December 31, January 1, % Change in (In thousands) 2023 2022 2022 2023 2022 Other income (expense), net $ 545 $ (1,109 ) $ (452 ) (149.1 )% 145.4 % Percentage of revenue 0.1 % (0.2 )% (0.1 )% For fiscal 2023 compared to fiscal 2022, the change in Other income (expense), net was primarily due to a research credit of $0.9 million in the current year compared to the non-recurrence of $0.7 million of loss on the refinancing of our long-term debt in the prior year, and to foreign currency effects.
Added
We believe that the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results in the same manner as our management and our Board of Directors.
Removed
Liquidity Cash and cash equivalents (In thousands) December 30, 2023 December 31, 2022 $ Change % Change Cash and cash equivalents $ 128,317 $ 145,722 $ (17,405 ) (11.9 )% As of December 30, 2023, we had Cash and cash equivalents of $128.3 million, of which approximately $36.1 million in Cash and cash equivalents was held by our foreign subsidiaries.
Added
Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.
Removed
Cash provided by operating activities was $269.6 million in fiscal 2023 compared to $238.8 million in fiscal 2022.
Added
Other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. 33 Table of Contents There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated in accordance with GAAP.
Removed
This resulted primarily from the timing of when our customers wanted our products to be shipped during the fourth quarter of fiscal 2023 compared to the fourth quarter of fiscal 2022.
Added
Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these potential capital expenditures.
Added
Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items, as in the future we may incur expenses similar to the adjustments in this presentation.
Added
Evaluation of our performance should consider Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results.
Added
A reconciliation of Net income to Adjusted EBITDA, including as a percentage of revenue, is presented in the following table: Year Ended December 28, December 30, December 31, (In thousands) 2024 2023 2022 GAAP Net income $ 61,131 $ 259,061 $ 178,882 GAAP Net income margin 12.0 % 35.1 % 27.1 % Interest (income) expense, net (3,948 ) (2,041 ) 4,146 Income tax (benefit) expense (24,902 ) (44,205 ) 3,230 Amortization of acquired intangible assets 3,479 3,478 3,778 Depreciation and other amortization 34,502 30,562 25,225 Stock-Based Compensation (1) 53,718 71,952 58,429 Litigation expense (2) 5,248 3,928 2,727 Restructuring, transformation, and other (3) 16,786 1,952 3,062 Impairment of acquired intangible assets 13,929 — — Other non-recurring charges 2,023 — 739 Adjusted EBITDA $ 161,966 $ 324,687 $ 280,218 Adjusted EBITDA margin 31.8 % 44.0 % 42.4 % (1) The adjustments for Stock-based compensation include related tax expenses.
Added
(2) Legal expenses associated with the defense of claims that are outside the ordinary course of business that were brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde. (3) Restructuring, transformation, and other includes transformation charges of approximately $2.8 million for fiscal year 2024.
Added
Accounts receivable, net (In thousands) December 28, 2024 December 30, 2023 $ Change % Change Accounts receivable, net $ 81,060 $ 104,373 $ (23,313 ) (22.3 )% Days sales outstanding 63 56 7 Accounts receivable, net as of December 28, 2024 decreased by approximately $23.3 million, or approximately 22%, compared to December 30, 2023.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed4 unchanged
Biggest changeInterest Expense We may be exposed to interest rate risk via the terms of our 2022 Credit Agreement, which specifies an interest rate on revolving loans that consists of a variable-rate of interest and an applicable margin. While we have drawn from this credit facility in the past, we have no borrowings outstanding as of December 30, 2023.
Biggest changeInterest Expense We may be exposed to interest rate risk via the terms of our 2022 Credit Agreement, which specifies an interest rate on revolving loans that consists of a variable-rate of interest and an applicable margin. While we have drawn from this credit facility in the past, we have no borrowings outstanding as of December 28, 2024.
If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations. 35 Table of Contents
If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations. 36 Table of Contents
GAAP. Interest Rate Risk Interest Income Our interest income is sensitive to changes in the general level of interest rates. As of December 30, 2023, a hypothetical 100 basis point change in interest rates would have resulted in less than $1.5 million change in interest income.
GAAP. Interest Rate Risk Interest Income Our interest income is sensitive to changes in the general level of interest rates. As of December 28, 2024, a hypothetical 100 basis point change in interest rates would have resulted in less than $1.5 million change in interest income.

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