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What changed in Monolithic Power Systems's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Monolithic Power Systems's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+298 added−289 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-29)

Top changes in Monolithic Power Systems's 2024 10-K

298 paragraphs added · 289 removed · 247 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

53 edited+5 added−6 removed33 unchanged
Biggest changeThe following table is a summary of the various end market applications for our products, and those markets’ contribution as a percentage of our total revenue: Percentage of Total Revenue End Markets Applications 2023 2022 2021 Storage and computing Storage applications, commercial notebooks, and graphics cards 27.0 % 25.3 % 21.2 % Automotive Advanced driver assistance systems, infotainment, digital cockpit, USB connectors, body electronics, and lighting applications 21.7 % 16.7 % 16.9 % Enterprise Data Cloud-based CPU server applications, and server artificial intelligence (“AI”) applications 17.7 % 14.0 % 9.6 % Consumer Home appliances, gaming, smart TVs, lighting, monitors, and stereos 12.9 % 17.8 % 23.4 % Communications 4G and 5G infrastructure, satellite communications, and other wireless applications 11.3 % 14.0 % 13.6 % Industrial Power sources, industrial meter, security applications, and other industrial equipment 9.4 % 12.2 % 15.3 % 5 Table of Contents Product Families Our proprietary process and packaging technologies enable us to design and deliver smaller, single-chip power management ICs.
Biggest changeThe following table is a summary of the various key end market applications for our products, and those markets’ contribution as a percentage of our total revenue: Percentage of Total Revenue End Markets Applications 2024 2023 2022 Enterprise Data Cloud-based and on-premises CPU server and workstation applications, and server artificial intelligence (“AI”) applications 32.5 % 17.7 % 14.0 % Storage and computing Storage applications, notebooks, and graphics cards 22.7 % 27.0 % 25.3 % Automotive Advanced driver assistance systems, infotainment, USB connectors, body electronics, motion control and lighting systems 18.8 % 21.7 % 16.7 % Communications Network infrastructure, satellite communications, optical modules, and other wireless applications 10.2 % 11.3 % 14.0 % Consumer Home appliances, gaming, smart TVs, lighting, monitors, and stereos 9.1 % 12.9 % 17.8 % Industrial Power sources, industrial meter, security applications, and other industrial equipment 6.7 % 9.4 % 12.2 % 5 Table of Contents Product Families Our proprietary process and packaging technologies enable us to design and deliver smaller, single-chip power management ICs.
They include our standards for chemical and hazardous waste management, rules on use of personal protective equipment, and safety training plans. Our largest testing facilities in Chengdu, China are ISO 14001 and ISO 45001 certified. • We support the well-being of our employees. In certain offices, we offer onsite flu shot clinics and other annual health checkups and workshops.
They include our standards for chemical and hazardous waste management, rules on the use of personal protective equipment, and safety training plans. Our largest testing facilities in Chengdu, China are ISO 14001 and ISO 45001 certified. • We support the well-being of our employees. In certain offices, we offer onsite flu shot clinics and other annual health checkups and workshops.
We also offer free exercise classes, strength training and yoga in some of our offices. 9 Table of Contents Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports that are filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge.
We also offer free exercise classes, strength training and yoga in some of our offices. 8 Table of Contents Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports that are filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge.
He holds a B.S.E.E. degree from San Jose State University. Saria Tseng has served as our Vice President, General Counsel and Corporate Secretary since 2004 and additionally as our Vice President, Strategic Corporate Development since 2009. Ms. Tseng joined the Company from MaXXan Systems, Inc., where she was Vice President and General Counsel from 2001 to 2004. Previously, Ms.
He holds a B.S.E.E. degree from San Jose State University. Saria Tseng previously served as our Vice President, General Counsel and Corporate Secretary since 2004 and additionally as our Vice President, Strategic Corporate Development since 2009. Ms. Tseng joined the Company from MaXXan Systems, Inc., where she was Vice President and General Counsel from 2001 to 2004. Previously, Ms.
Our efforts to comply with these government regulations could have material impacts on our capital expenditures and operating expenses, revenue, resource allocation, operations, competitive position, or financial condition, though the magnitude and duration of such impacts are uncertain and difficult to quantify. Refer to “Item 1A.
Our efforts to comply with these government regulations could have material impacts on our capital expenditures, operating expenses, revenue, resource allocation, operations, competitive position, or financial condition, and the magnitude and duration of such impacts are uncertain and difficult to quantify. Refer to “Item 1A.
Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit both applications engineering and design engineering personnel, our ability to introduce new products, and our ability to maintain the rate at which we introduce these new products, and our ability to meet our and customers’ energy efficiency goals.
Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit both applications engineering and design engineering personnel, our ability to introduce new products, our ability to maintain the rate at which we introduce these new products, and our ability to meet our end customers’ energy efficiency goals.
We believe that our DC to DC products are differentiated in the market, particularly with respect to their high degree of integration, high voltage operation, high load current, high switching speed, small footprint, and high energy efficiency.
We believe our DC to DC products are differentiated in the market, particularly with respect to their high degree of integration, high voltage operation, high load current, high switching speed, small footprint, and high energy efficiency.
These technologies simplify the design process and are applicable across a wide range of analog applications within the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.
These technologies simplify the design process and are applicable across a wide range of analog applications within the storage and computing, enterprise data, automotive, industrial, communications and consumer end markets.
We also disclose on our website our report on environment, social responsibility and governance. Information contained on our website is not a part of this Annual Report on Form 10-K.
We also disclose on our website our report on the environment, social responsibility and governance. Information contained on our website is not a part of this Annual Report on Form 10-K.
Blegen held a number of executive finance and accounting positions for other publicly traded technology companies, including Xilinx, Inc. and Credence Systems. Mr. Blegen holds a B.A. from the University of California, Santa Barbara. Deming Xiao has served as our President of Asia Operations since January 2008. Since joining us in May 2001, Mr.
Blegen held a number of executive finance and accounting positions for other publicly traded technology companies, including Xilinx, Inc. and Credence Systems. Mr. Blegen holds a B.A. from the University of California, Santa Barbara. Deming Xiao previously served as our President of Asia Operations since January 2008. Since joining us in May 2001, Mr.
Xiao holds a B.S. in Semiconductor Physics from Sichuan University, Chengdu, China and an M.S.E.E. from Wayne State University. Maurice Sciammas has served as our Senior Vice President of Worldwide Sales and Marketing since 2007. Mr.
Xiao holds a B.S. in Semiconductor Physics from Sichuan University, Chengdu, China and an M.S.E.E. from Wayne State University. Maurice Sciammas previously served as our Senior Vice President of Worldwide Sales and Marketing since 2007. Mr.
Mixed-signal ICs combine digital and analog functions onto a single chip and play an important role in bridging real world to digital systems. Analog and Mixed-Signal Markets. We focus on the market for high performance analog and mixed-signal ICs.
Mixed-signal ICs combine digital and analog functions onto a single chip and play an important role in bridging real world applications to digital systems. We focus on the market for high performance analog and mixed-signal ICs.
We believe process technologies are key strategic components to our future growth. Our growth is fueled by our customers’ need for our power-efficient solutions. Consequently, we focus on continually improving the energy efficiency of our products in our research and development efforts in all three targeted areas.
We believe process technologies are key strategic components to our future growth. 6 Table of Contents Our growth is fueled by our customers’ need for our power-efficient solutions. Consequently, we focus on continually improving the energy efficiency of our products in our research and development efforts in all three targeted areas.
Our issued patents are scheduled to expire at various times through December 2043. Our patents are material to our business, but we do not rely on any one particular patent for our success.
Our issued patents are scheduled to expire at various times through December 2044. Our patents are material to our business, but we do not rely on any one particular patent for our success.
However, because a majority of our revenue is attributable to sales to customers in Asia, changes in the relative value of the dollar may create pricing pressures for our products. In 2023, 2022 and 2021, our revenue from sales to customers in Asia was 87%, 86% and 90%, respectively. Our sales are made primarily pursuant to standard individual purchase orders.
However, because a majority of our revenue is attributable to sales to customers in Asia, changes in the relative value of the dollar may create pricing pressures for our products. In 2024, 2023 and 2022, our revenue from sales to customers in Asia was 94%, 87% and 86%, respectively. Our sales are made primarily pursuant to standard individual purchase orders.
However, there is no assurance that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering our markets. In addition, there has recently been a high level of consolidation in the semiconductor industry.
However, there is no assurance that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products introduced by existing competitors or new companies entering our markets. In addition, there has historically been a high level of consolidation in the semiconductor industry.
Tseng holds Master of Laws degrees from the University of California at Berkeley and the Chinese Culture University in Taipei. 10 Table of Contents
Tseng holds Master of Laws degrees from the University of California at Berkeley and the Chinese Culture University in Taipei. 9 Table of Contents
We also make available on our website the charters for our audit committee, compensation committee, and nominating and corporate governance committee, our code of ethics, our director voting policy and our code of social responsibility. In addition, we will disclose on our website any amendments to, or waivers from, our code of ethics.
We also make available on our website certain corporate documents and policies, including the charters for our audit committee, compensation committee, and nominating and corporate governance committee, our code of ethics, our director voting policy and our code of social responsibility. In addition, we will disclose on our website any amendments to, or waivers from, our code of ethics.
Government regulations and import/export controls can be complex and are subject to change in the future, and accordingly, we are unable to assess the possible effect of compliance with future requirements.
Government regulations and import/export controls can be complex and are subject to change in the future, and in some cases unexpectedly, and accordingly, we are unable to assess the possible effect of compliance with future requirements.
Furthermore, the laws of the countries in which our products are or may be developed, manufactured or sold may not protect our products and intellectual property rights to the same extent as laws in the United States. Our failure to adequately protect our proprietary technologies could materially harm our business.
Furthermore, the laws of the countries in which our products are or may be developed, manufactured or sold may not protect our products and intellectual property rights to the same extent as laws in the U.S. Our failure to adequately protect our proprietary technologies could materially harm our business.
Item 1. Business General Monolithic Power Systems, Inc. (“MPS”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions. Incorporated in 1997, our three core strengths include deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.
Item 1. Business General Monolithic Power Systems, Inc. (“MPS,” “we,” or “us”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions. Incorporated in 1997, our three core strengths include deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.
The assembled ICs are then sent for final testing to the facilities in China, Taiwan and Malaysia that we and our partners utilize prior to shipping to our customers. The manufacturing facilities we utilize in Asia enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs.
The assembled ICs are then sent for final testing to the facilities in China, Taiwan and Malaysia that we and our partners utilize prior to shipping to our customers. Our strategy is to maintain a diversified supply chain. The manufacturing facilities we utilize in Asia enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs.
In general, we have elected to pursue patent protection for aspects of our circuit and device designs that we believe are patentable and to protect our manufacturing process technologies by maintaining those process technologies as trade secrets. As of December 31, 2023, we had 1,701 patents/applications issued or pending, of which 585 patents have been issued in the United States.
In general, we have elected to pursue patent protection for aspects of our circuit and device designs that we believe are patentable and to protect our manufacturing process technologies by maintaining those process technologies as trade secrets. As of December 31, 2024, we had 1,917 patents/applications issued or pending, of which 608 patents have been issued in the U.S.
If these or future acquisitions are successful, competition may intensify and our competitors may have additional resources to compete against us. We operate in the cyclical semiconductor industry. While we are subject to industry downturns, we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.
If these or future acquisitions are successful, competition may intensify, as our competitors add resources with which to compete against us. We operate in the cyclical semiconductor industry. While we are subject to industry downturns, we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term.
Our product families are differentiated from those of our competitors with respect to their high degree of integration and strong levels of accuracy, power efficiency, quality and longevity, making them cost-effective and more sustainable relative to many competing solutions. Our key product families include the following: Direct Current ( “ DC ” ) to DC Products.
Our product families are differentiated from those of our competitors with respect to their high degree of integration and strong levels of accuracy, power efficiency, quality and longevity, making them cost-effective and more sustainable relative to many competing solutions.
We do not tolerate discrimination of any kind and have adopted policies for reporting concerns or violations. • We are an equal-opportunity employer, and we make employment decisions based on merit and business needs.
We provide unconscious bias training to promote an environment of inclusivity. We do not tolerate discrimination of any kind and have policies for reporting concerns or violations. • We are an equal-opportunity employer, and we make employment decisions based on merit and business needs.
Our ability to achieve revenue growth will depend in part upon our ability to continue to innovate while fulfilling our customers’ evolving needs, enter new market segments, obtain design wins, grow our sales to customers in regions outside China, Taiwan and other Asian markets, expand our customer base and continue to secure manufacturing capacity.
Our ability to achieve revenue growth will depend, in part, upon our ability to continue to innovate while fulfilling our customers’ evolving needs, enter new market segments, obtain design wins, grow our sales in a diversified way across regions, expand our customer base and continue to secure manufacturing capacity.
If any of our products are found to infringe and we are unable to obtain necessary licenses or other rights on acceptable terms, we would either have to change our product so that it does not infringe or stop making the infringing product, which could have a material adverse effect on our operating results, financial condition and cash flows. 7 Table of Contents Manufacturing We utilize a fabless business model, working with third parties to manufacture and assemble our ICs.
If any of our products are found to infringe and we are unable to obtain necessary licenses or other rights on acceptable terms, we would either have to change our product so that it does not infringe or stop making the infringing product, which could have a material adverse effect on our operating results, financial condition and cash flows.
We strive to maintain a culture that encourages innovation and create a workplace that values diverse backgrounds, a healthy and safe environment, and professional growth opportunities. • We continue to recruit new talent from a diverse candidate pool through various university recruitment programs and employment websites targeting underrepresented groups. We provide unconscious bias training to promote an environment of inclusivity.
We strive to maintain a culture that encourages innovation and create a workplace that values diverse skill sets and experience, a healthy and safe environment, and professional growth opportunities. • We continue to recruit new talent from a diverse candidate pool through various university recruitment programs and employment websites targeting underrepresented groups.
Information About Executive Officers Information regarding our executive officers as of February 29, 2024 is as follows: Name Age Position Michael Hsing 64 President, Chief Executive Officer and Director Bernie Blegen 66 Executive Vice President and Chief Financial Officer Deming Xiao 61 Executive Vice President and President of Asia Operations Maurice Sciammas 64 Executive Vice President and Senior Vice President of Worldwide Sales and Marketing Saria Tseng 53 Executive Vice President, Strategic Corporate Development, General Counsel and Corporate Secretary Michael Hsing has served as the chairman of our Board of Directors and has served as our President and Chief Executive Officer since founding MPS in August 1997.
Information About Executive Officers Information regarding our executive officers as of March 3, 2025 is as follows: Name Age Position Michael Hsing 65 President, Chief Executive Officer and Director Bernie Blegen 67 Executive Vice President and Chief Financial Officer Deming Xiao 62 Executive Vice President, Global Operations Maurice Sciammas 65 Executive Vice President, Worldwide Sales and Marketing Saria Tseng 54 Executive Vice President, Strategic Corporate Development, General Counsel and Corporate Secretary Michael Hsing has served as the chairman of our Board of Directors and has served as our President and Chief Executive Officer since founding MPS in August 1997.
DC to DC ICs are used to convert and control voltages within a broad range of electronic systems, such as cloud-based CPU servers, server AI applications, storage applications, commercial notebooks, digital cockpit, power sources, home appliances, 4G and 5G infrastructure and satellite communications applications.
For example, DC to DC ICs are used to convert and control voltages within a broad range of electronic systems, such as cloud-based and on-premises CPU servers and workstation applications, server AI applications, storage applications, notebooks, infotainment, power sources, home appliances, network infrastructure and satellite communications applications.
Our research and development efforts are generally targeted at three areas: systems architecture, circuit design and implementation, and process technologies. In the area of systems architecture, we are exploring new ways of solving our customers’ system design challenges and are investing in the development of systems expertise in new markets and applications that align well with our core capabilities.
In the area of systems architecture, we are exploring new ways of solving our customers’ system design challenges and are investing in the development of systems expertise in new markets and applications that align well with our core capabilities.
ODMs typically design and manufacture electronic products on behalf of OEMs, and EMS providers typically provide manufacturing services for OEMs and other electronic product suppliers. In 2023, our three largest distributors accounted for 26%, 19% and 10% of our total revenue. In 2022, our two largest distributors accounted for 24% and 19% of our total revenue.
ODMs typically design and manufacture electronic products on behalf of OEMs. In 2024, our two largest distributors accounted for 31% and 20% of our total revenue. In 2023, our three largest distributors accounted for 26%, 19% and 10% of our total revenue. In 2022, our two largest distributors accounted for 24% and 19% of our total revenue.
Our third-party distributors are subject to distribution agreements with us, which allow the distributors to sell our products to end customers and other resellers, including OEMs, ODMs or EMS providers. Our value-added resellers may second source our products and provide other services to customers.
In addition, we sell directly to certain original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”) and end customers. Our third-party distributors are subject to distribution agreements with us, which allow the distributors to sell our products to end customers and other resellers, including OEMs and ODMs. Our value-added resellers may second source other products and provide other services to customers.
Risk Factors” for further discussion of material risks related to government policies and regulations on environmental laws, international trade policies and restrictions, including tariffs on imports of foreign goods and regulations restricting the export of goods and services between the U.S. and China. 8 Table of Contents Human Capital Management Our performance is substantially dependent on the performance of our executive officers and key employees.
Risk Factors” for further discussion of material risks related to government policies and regulations on environmental laws, international trade policies and restrictions, including tariffs on imports of foreign goods and regulations restricting the export of goods and services between the U.S. and China.
We believe that we are competitive in the markets in which we sell and on the basis of key competitive factors in our industry, particularly because our ICs typically are smaller in size, are highly integrated with lower energy consumption, possess higher levels of power management functionalities and achieve high performance specifications at lower price points than most of our competitors.
We believe that we are competitive in the markets in which we sell, because our ICs typically are smaller in size, are highly integrated with lower energy consumption, and achieve higher performance specifications than most of our competitors.
Customers, Sales and Marketing We have sales offices in China, India, Japan, Singapore, South Korea, Taiwan, the United States and throughout Europe. Our products typically require a highly technical sales and applications engineering effort where we assist our customers in the design and use of our products in their application.
Customers, Sales and Marketing We have sales offices in various locations in Asia, Europe and the U.S. Our products typically require a highly technical sales and applications engineering effort where we assist our customers in the design and use of our products in their application.
Due to the relative complexity of the design of our analog and mixed-signal ICs, our engineers generally have many years of experience and greater circuit design aptitude. Analog engineers with advanced skills are limited in number and difficult to replace. The loss of the services of key officers, managers, engineers and other technical personnel would materially harm our business.
Human Capital Management Our performance is substantially dependent on the performance of our executive officers and key employees. Due to the relative complexity of the design of our analog and mixed-signal ICs, our engineers generally have many years of experience and greater circuit design aptitude. Analog engineers with advanced skills are limited in number and difficult to replace.
This fabless approach allows us to focus our engineering and design resources on our strengths and to reduce our fixed costs and capital expenditures.
Manufacturing We utilize a fabless business model, working with third parties to manufacture and assemble our ICs. This fabless approach allows us to focus our engineering and design resources on our strengths and to reduce our fixed costs and capital expenditures.
In addition, we allow for limited stock rotation in certain agreements. Because our sales are primarily billed and payable in United States dollars, our sales are generally not subject to fluctuating currency exchange rates.
These agreements provide that payment for purchases from us will generally occur within 30 to 90 days from the date of invoice. In addition, we allow for limited stock rotation in certain agreements. Because our sales are primarily billed and payable in U.S. dollars, our sales are generally not subject to fluctuating currency exchange rates.
The Lighting Control product family accounted for 6% of our total revenue in 2023 and 5% of our total revenue in both 2022 and 2021. In the future, we plan to continue to introduce new products within our existing product families, as well as in new innovative product categories.
In the future, we plan to continue to introduce new products within our existing product families, as well as in new innovative product categories.
Our principal executive office is located in Kirkland, Washington. We have over 3,500 employees worldwide, with locations in Asia (primarily in China, India, Japan, Singapore, South Korea and Taiwan), Europe (primarily in France, Germany, Hungary, Italy, Portugal, Spain, Switzerland and the United Kingdom) and the United States. Industry Overview Semiconductors comprise the basic building blocks of electronic systems and equipment.
Our principal executive office is located in Kirkland, Washington. We have over 4,000 employees worldwide, with various locations in Asia, Europe and the U.S. Industry Overview Semiconductors comprise the basic building blocks of electronic systems and equipment.
We maintain a staff of applications engineers who work directly with our customers’ engineers in the development of their systems’ electronics containing our products.
We maintain a staff of applications engineers who work directly with our customers’ engineers in the development of their systems’ electronics containing our products. Once we secure our product positioning through our technical sales and applications engineers’ efforts, we then sell our products through third-party distributors and value-added resellers.
We believe that our operations and facilities comply in all material respects with applicable environmental laws and worker health and safety laws. We are also subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we have operations or otherwise do business.
We and our supply chain, including the end products which contain our products, are also subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we, our supply chain or the providers of such end products, have operations or otherwise do business.
Through our research and development efforts, we have developed a collection of intellectual property and know-how that we are able to leverage across our products and markets. These include the development of high efficiency power devices, the design of precision analog circuits and systems, expertise in mixed-signal design, and integration and the development of proprietary semiconductor process technologies.
Research and Development We have assembled a qualified team of engineers in various locations in Asia, Europe and the U.S. with core competencies in analog and mixed-signal design. Through our research and development efforts, we have developed a collection of intellectual property and know-how that we are able to leverage across our products and markets.
We have targeted product and market areas that we believe have the ability to offer above-average growth over the long term compared to the semiconductor industry as a whole.
We have targeted product and market areas that we believe allow us to operate at above-average growth over the long term compared to the semiconductor industry as a whole. End Markets and Applications We design and develop our products for the enterprise data, storage and computing, automotive, communications, consumer, and industrial end markets.
Current distribution agreements with several of our major distributors provide that each distributor has the non-exclusive right to sell and shall use its best efforts to promote and develop a market for our products. These agreements provide that payment for purchases from us will generally occur within 30 to 90 days from the date of invoice.
Our revenue from indirect sales to this customer was below 10% in both 2023 and 2022. Current distribution agreements with several of our major distributors provide that each distributor has the non-exclusive right to sell and shall use its best efforts to promote and develop our products in various markets.
In addition, in response to market conditions, we may slow the rate of manufacturing our products, which could result in insufficient inventory levels and reduced sales if we underestimate the demand for our products. 6 Table of Contents Research and Development We have assembled a qualified team of engineers primarily in China, the United States, Taiwan, Spain, Switzerland, Hungary, Portugal and Germany with core competencies in analog and mixed-signal design.
In addition, in response to market conditions, we may slow the rate of manufacturing our products, which could result in insufficient inventory levels and reduced sales if we underestimate the demand for our products.
Our future success depends, in part, on our ability to attract, train, retain, and motivate highly qualified technical and managerial personnel, and there can be no assurance we will be successful. As of December 31, 2023, we employed 3,564 employees primarily in Asia, Europe, South America and the United States, compared with 3,247 employees as of December 31, 2022.
The loss of the services of key officers, managers, engineers and other technical personnel would materially harm our business. Our future success depends, in part, on our ability to attract, train, retain, and motivate highly qualified technical and managerial personnel, and there can be no assurance we will be successful.
We compete with domestic and international semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products and, in some cases, have a broader number of product offerings that may enable them to more effectively market and sell to customers and engage sales partners.
Our industry is characterized by decreasing average selling prices over the life of a product. We compete with domestic and international semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products.
Certain employees are subject to collective bargaining agreements and we believe that we have good relations with these employees. We have never experienced an employee-based work stoppage or strike.
As of December 31, 2024, we employed 4,017 employees in various locations in Asia, Europe and the U.S., compared with 3,564 employees as of December 31, 2023. Certain employees are subject to collective bargaining agreements. We have never experienced an employee-based work stoppage or strike.
We are in direct and active competition, with respect to one or more of our product lines, with several manufacturers of such products, of varying size and financial strength. We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, Semtech, STMicroelectronics and Texas Instruments.
We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, Semtech, STMicroelectronics and Texas Instruments. 7 Table of Contents We expect continued competition from existing competitors as well as competition from new entrants into the semiconductor market.
In 2021, our three largest distributors accounted for 26%, 15% and 10% of our total revenue. No other distributors or end customers accounted for more than 10% of our full-year, total revenue in any of the periods presented.
No other direct customers accounted for more than 10% of our full-year, total revenue in any of the periods presented. Our revenue from indirect sales to one customer, which primarily comprised power management solutions for AI applications, was 17% of our total revenue in 2024.
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End Markets and Applications We design and develop our products for the storage and computing, enterprise data, automotive, industrial, communications and consumer markets, with the storage and computing market representing the largest portion of our revenue in 2023.
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Enterprise data was our largest end market in 2024.
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The DC to DC product family accounted for 94% of our total revenue in 2023 and 95% of our total revenue in both 2022 and 2021. Lighting Control Products. Lighting control ICs are used in backlighting and general illumination products.
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Our key product families include, but not limited to, the Direct Current (“DC”) to DC, Alternating Current (“AC”) to DC, driver metal-oxide-semiconductor field-effect transistor, power management IC, current limit switch and lighting control products.
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Lighting control ICs for backlighting are used in systems that provide the light source for LCD panels typically found in computers and notebooks, monitors, car navigation systems and televisions. Backlighting solutions are typically either white light emitting diode lighting sources or cold cathode fluorescent lamps.
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These include the development of high efficiency power devices, the design of precision analog circuits and systems, expertise in mixed-signal design, packaging and solution development, integration and the development of proprietary semiconductor process technologies. Our research and development efforts are generally targeted at three areas: systems architecture, circuit design and implementation, and process technologies.
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Once we secure our product positioning through our technical sales and applications engineers’ efforts, we then sell our products through third-party distributors, value-added resellers and directly to original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”), electronic manufacturing service (“EMS”) providers and other end customers.
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In some cases, our competitors have a broader number of product offerings that may enable them to more effectively market and sell to customers and engage sales partners. We are in direct and active competition, with respect to one or more of our product lines, with several manufacturers of such products.
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Our industry is characterized by decreasing average selling prices over the life of a product.
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We believe that our operations and facilities comply in all material respects with applicable environmental laws and worker health and safety laws.
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We expect continued competition from existing competitors as well as competition from new entrants into the semiconductor market.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

122 edited+31 added−15 removed167 unchanged
Biggest changeDollar relative to other currencies, including the Renminbi; • our reliance on key suppliers in China, which may expose us to political, cultural, regulatory, economic, foreign currency, operational and capacity shortage risks; • our ability to achieve growth rates or financial performance comparable to past years; • changes in general demand for electronic products in the end markets that we serve; • our ability to accurately forecast sales and expenses due to the nature of our business as a component supplier; • our ability to timely develop and introduce new products, and the acceptance of our new products in the marketplace; • our dependency on a limited number of customers, including distributors and value-added resellers, for a significant portion of our revenue; • potential product liability risks due to defects or failures to meet specifications; • lengthy sales cycles for our products balanced against the fixed nature of a substantial portion of our expenses; • availability of adequate manufacturing capacity from our suppliers, and our ability to increase product sales in spite of capacity issues; 11 Table of Contents • increases in unanticipated costs as a result of increasing manufacturing capacity; • our dependency on third-party suppliers for wafer purchases and potential increases in prices for wafers due to general capacity shortages; • our ability to deliver products on a timely basis despite disruptions in our relationships with assembly and test subcontractors; • our ability to manage our inventory levels, including the levels of inventory held by our distributors; • increases in manufacturing costs due to commodity price increases; • the highly cyclical nature of the semiconductor industry, and increased competition due to industry consolidation; • competition from companies with greater financial and technological resources, and customers developing products internally; • the impact of system upgrades, cyberattacks or other system security, data protection and privacy breaches on our business operations; • the impact of various U.S. and international laws and regulations regarding data protection on our business operations; • our significant investment of resources in research and development that may not result in increased future sales; • our ability to realize the anticipated benefits of any business acquisitions and other strategic investments; • the impact of new tax laws on our tax provision and tax planning; • risks in connection with our internal control over financial reporting and the identified material weakness; • our failure to comply with various governmental laws and regulations related to environmental, social and governance (“ESG”) initiatives or our failure to meet our own ESG goals and targets; • our ability to successfully defend ourselves in legal proceedings and protect our intellectual property, and the significant increase in legal expenses as a result of such proceedings; • the loss of key personnel; • risks associated with owning our stock, including volatility in our trading price due to our business and financial performance, analyst downgrades, failure to meet our own or analyst expectations, changes to our stock repurchase or dividend program, and dilution from issuance of additional shares; • health risks, climate crises and other natural disasters; and • financial market, economy and geopolitical uncertainties. 12 Table of Contents Risks Associated with Our Significant Operations in Asia, Particularly in China We derive most of our revenue from direct or indirect sales to customers in Asia and have significant operations in Asia, which may expose us to political, cultural, regulatory, economic, foreign exchange, and operational risks.
Biggest changeDollar relative to other currencies, including the Renminbi; • our reliance on key suppliers in China, which may expose us to political, cultural, regulatory, economic, foreign currency, operational and capacity shortage risks; • our ability to achieve growth rates or financial performance comparable to past years; • changes in general demand for electronic products in the end markets that we serve; • our ability to accurately forecast sales and expenses due to the nature of our business as a component supplier; • our ability to timely develop and introduce new products, and the acceptance of our new products in the marketplace; • our dependency on a limited number of customers for a significant portion of our revenue; • potential product liability risks due to defects or failures to meet specifications; • lengthy sales cycles for our products balanced against the fixed nature of a substantial portion of our expenses; • availability of adequate manufacturing capacity from our suppliers, and our ability to increase product sales in spite of capacity issues; 10 Table of Contents • increases in unanticipated costs as a result of increasing manufacturing capacity; • our dependency on third-party suppliers for wafer purchases and potential increases in prices for wafers due to general capacity shortages; • our ability to deliver products on a timely basis despite disruptions in our relationships with assembly and test subcontractors; • our ability to manage our inventory levels, including the levels of inventory held by our distributors; • increases in manufacturing costs due to commodity price increases; • the highly cyclical nature of the semiconductor industry, and increased competition due to industry consolidation; • competition from companies with greater financial and technological resources, and customers developing products internally; • the impact of system upgrades, cyberattacks or other system security, data protection and privacy breaches on our business operations; • the impact of various U.S. and international laws and regulations regarding data protection on our business operations; • our significant investment of resources in research and development that may not result in increased future sales; • our ability to realize the anticipated benefits of any business acquisitions and other strategic investments; • the impact of new tax laws and interpretations of those laws on our tax provision and tax planning; • the complexity of certain accounting areas; • risks in connection with our internal control over financial reporting; • our failure to comply with various governmental laws and regulations related to environmental, social and governance (“ESG”) initiatives or our failure to meet our own ESG goals and targets; • our ability to successfully defend ourselves in legal proceedings and protect our intellectual property, and the significant increase in legal expenses as a result of such proceedings; • risks in connection with the use of open-source code software; • the loss of key personnel; • risks associated with owning our stock, including volatility in our trading price due to our business and financial performance, analyst downgrades, failure to meet our own or analyst expectations, changes to our stock repurchase or dividend program, and dilution from issuance of additional shares; and • economy and geopolitical uncertainties and risks associated with business continuity in the event of natural or other disasters including pandemics, war, climate crises and other natural disasters. 11 Table of Contents Risks Associated with Our Significant Operations in Asia, Particularly in China We derive most of our revenue from direct or indirect sales to customers in Asia and have significant operations in Asia, which may expose us to political, cultural, regulatory, economic, foreign exchange, and operational risks.
Any of such regulatory restrictions could, in turn, impact the sales of our products supporting AI applications. There has been increasing rhetoric, in some cases coupled with legislative or executive action, from several U.S. and foreign leaders regarding tariffs against foreign imports of certain materials.
Any of such regulatory restrictions could, in turn, impact the sales of our products supporting AI applications. There has been increasing rhetoric, in some cases coupled with legislative or executive action, from several U.S. and foreign leaders regarding tariffs against foreign imports of certain products and materials.
Although we provide our suppliers with rolling forecasts of our production requirements, their ability to provide wafers to us is limited by the available capacity, particularly capacity in the geometries we require, at the facilities in which they manufacture wafers for us. As a result, this lack of capacity has at times constrained our product sales and revenue growth.
Although we provide our suppliers with rolling forecasts of our production requirements, their ability to provide wafers to us is limited by their available capacity, particularly capacity in the geometries we require, at the facilities in which they manufacture wafers for us. As a result, this lack of capacity has at times constrained our product sales and revenue growth.
In addition, events such as the Russia-Ukraine conflict, the Middle East conflict and supply chain disruptions may materially impact our assembly suppliers’ ability to operate. Any future product delivery delays or disruptions in our relationships with our subcontractors could have a material adverse effect on our financial condition, results of operations and cash flows.
In addition, events such as the Russia-Ukraine conflict, the Middle East conflict and supply chain disruptions may materially impact our assembly or testing suppliers’ ability to operate. Any future product delivery delays or disruptions in our relationships with our subcontractors could have a material adverse effect on our financial condition, results of operations and cash flows.
We may face competition from customers developing products internally. Our customers generally have substantial technological capabilities and financial resources. Some customers have traditionally used these resources to develop their own products internally. The future prospects for our products in these markets are dependent in part upon our customers’ acceptance of our products as an alternative to their internally developed products.
We may face competition from customers developing products internally. Our customers generally have substantial technological capabilities and financial resources. Some customers have traditionally used these resources to develop their own products internally. The prospects for our products in these markets are dependent in part upon our customers’ acceptance of our products as an alternative to their internally developed products.
While we are committed to maintaining strong ESG strategies, practices, policies and disclosures, there can be no assurance that we will be able to achieve our goals, or that our compliance initiatives will be deemed sufficiently robust by regulators, stockholders, customers and other key stakeholders.
While we are committed to maintaining strong ESG strategies, practices, policies and disclosures, there can be no assurance that we will be able to achieve our goals, or that our compliance initiatives and efforts will be deemed sufficiently robust by regulators, stockholders, customers and other key stakeholders.
The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit application engineers and design talent, introduce new products, and maintain the rate at which we introduce these new products.
The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit application engineers and design talent, introduce new products, and maintain the rate at which we introduce new products.
Litigation may be necessary to enforce our intellectual property rights, and we may have to defend ourselves, and in some circumstances our key customers or suppliers, against additional infringement claims. Such litigation is very costly.
Litigation may be necessary to enforce our intellectual property rights, and we may have to defend ourselves, and in some circumstances our key customers or suppliers, against infringement claims. Such litigation is very costly.
Sales cycles for our products are lengthy for a number of reasons, including: • our customers usually complete an in-depth technical evaluation of our products before they place a purchase order; • the commercial adoption of our products by OEMs and ODMs is typically limited during the initial release of their product to evaluate product performance and consumer demand; • our products must be designed into our customers’ products or systems; and • the development and commercial introduction of our customers’ products incorporating new technologies are frequently delayed.
Sales cycles for our products are lengthy for a number of reasons, including: • our customers usually complete an in-depth technical evaluation of our products before they place a purchase order; • the commercial adoption of our products by OEMs and ODMs is typically limited during the initial release of their product to evaluate product performance and consumer demand; • our products must be designed into our customers’ products or systems; and • the development and commercial introduction of our customers’ products incorporating our products are frequently delayed.
Significant deterioration in the liquidity or financial condition of any such major customers or any group of our customers could have a material adverse impact on the collectability of our accounts receivable and our future financial condition and operating results.
Significant deterioration in the liquidity or financial condition of any of our major customers or any group of our customers could have a material adverse impact on the collectability of our accounts receivable and our future financial condition and operating results.
We believe that the application of our products in the storage and computing, enterprise data, automotive, industrial, communication and consumer markets will continue to account for the majority of our revenue.
We believe that the application of our products in the storage and computing, enterprise data, automotive, industrial, communication and consumer end markets will continue to account for the majority of our revenue.
As part of our business strategy, from time to time we review acquisition prospects that would complement our current product offerings, enhance our design capability or offer other competitive opportunities.
As part of our business strategy, from time to time we review acquisition prospects that would complement our current product offerings, enhance our design capability or offer other business opportunities.
If we are unable to increase or maintain our manufacturing capacity, we may be unable to meet demand, which would harm our revenue and results of operations and may result in a loss of customers as they seek supply from other sources. 19 Table of Contents We currently depend on third-party suppliers to provide us with wafers for our products.
If we are unable to increase or maintain our manufacturing capacity, we may be unable to meet demand, which would harm our revenue and results of operations and may result in a loss of customers as they seek supply from other sources. 17 Table of Contents We currently depend on third-party suppliers to provide us with wafers for our products.
An increase in the price or a decrease in the availability of these commodities and similar commodities that we use could negatively impact our business and results of operations. 20 Table of Contents Risks Associated with Industry Dynamics and Competition The highly cyclical nature of the semiconductor industry, which has resulted in significant and sometimes prolonged downturns, could materially and adversely affect our financial condition and results of operations.
An increase in the price or a decrease in the availability of these commodities and similar commodities that we use could negatively impact our business and results of operations. 18 Table of Contents Risks Associated with Industry Dynamics and Competition The highly cyclical nature of the semiconductor industry, which has resulted in significant and sometimes prolonged downturns, could materially and adversely affect our financial condition and results of operations.
These uncertainties may impede our ability to enforce contracts in China and could materially and adversely affect our business and results of operations. Furthermore, China’s legal system is based in part on government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effects.
These uncertainties or adverse rulings may impede our ability to enforce contracts in China and could materially and adversely affect our business and results of operations. Furthermore, China’s legal system is based in part on government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effects.
All of these factors could have a material and adverse impact on our business, financial condition and results of operations. 18 Table of Contents Because of the lengthy sales cycles for our products and the fixed nature of a significant portion of our expenses, we may incur substantial expenses before we earn associated revenue and may not ultimately achieve our forecasted sales for our products.
All of these factors could have a material and adverse impact on our business, financial condition and results of operations. 16 Table of Contents Because of the lengthy sales cycles for our products and the fixed nature of a significant portion of our expenses, we may incur substantial expenses before we earn associated revenue and may not ultimately achieve our forecasted sales for our products.
In addition, if we experience supply delays or limitations, our customers may reduce their purchase levels with us and/or seek alternative solutions to meet their demand, which could materially and adversely impact our business and results of operations. There may be unanticipated costs associated with increasing our third-party suppliers’ manufacturing capacity.
In addition, if we experience supply delays or limitations, our customers may reduce their purchase levels with us and/or seek alternative solutions to meet their demand, which could materially and adversely impact our revenue and results of operations. There may be unanticipated costs associated with increasing our third-party suppliers’ manufacturing capacity.
Additionally, if our stock price declines, it may be more difficult for us to raise capital and may have other adverse effects on our business. 28 Table of Contents There can be no assurance that we will continue to declare cash dividends in any particular amounts or at all.
Additionally, if our stock price declines, it may be more difficult for us to raise capital and may have other adverse effects on our business. 27 Table of Contents There can be no assurance that we will continue to declare cash dividends in any particular amounts or at all.
We compete with domestic and foreign semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products, and, in some cases, may have a broader number of product offerings that enable them to more effectively market and sell to customers and engage sales partners.
We compete with domestic and foreign semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products, and, in some cases, may have broader product offerings that enable them to more effectively market and sell to customers and engage sales partners.
In addition, from time to time, governments may provide subsidies or make other investments that could give competitive advantages to many semiconductor companies. For example, in August 2022, the U.S. enacted the CHIPS Act, which, among other things, provides funding to increase domestic production and research and development in the semiconductor industry.
In addition, from time to time, governments may provide subsidies or make other investments that could give competitive advantages to competing semiconductor companies. For example, in August 2022, the U.S. enacted the CHIPS Act, which, among other things, provides funding to increase domestic production and research and development in the semiconductor industry.
Future sales prospects also are dependent upon acceptance of third-party sourcing for products as an alternative to in-house development. Customers may continue to increase their use of internally developed components. They may also decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products.
Future sales prospects also are dependent upon acceptance and qualification of third-party sourcing for products as an alternative to in-house development. Customers may continue to increase their use of internally developed components. They may also decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products.
The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, many of which are beyond our control, including: • actual or anticipated results of operations and financial performance, including our ability to accurately forecast future demand for our products; • actual or anticipated manufacturing capacity limitations; • our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and successfully secure manufacturing capacity; • our ability to maintain or increase our gross margins; • costs of increasing wafer capacity and qualifying additional third-party wafer fabrication facilities; • our loss of key customers; • investments in sales and marketing resources to enter new markets; • commencement of or developments relating to litigation; • cyberattacks or other system security, data protection and privacy breaches; • the inclusion, exclusion or deletion of our common stock from any major trading indices, such as the S&P 500 Index; • our sale of common stock or other securities in the future; • any mergers, acquisitions or divestitures of assets undertaken by us; • our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; • our ability to meet or exceed the guidance that we provide to our investors and analysts; • our ability to continue the stock repurchase program and pay quarterly cash dividends to stockholders; • our ability to meet or exceed our, our investors’ or analysts’ expectations; • market reactions to guidance from other semiconductor companies or third-party research groups; • market reactions to merger and acquisition activities in the semiconductor industry, and rumors or expectations of further consolidation in the industry; • investor perceptions of us and our business strategies; • the breadth and liquidity of the market for our common stock; 27 Table of Contents • trading activity in our common stock, including short positions; • actions by institutional or other large stockholders; • changes in the estimation of the future size and growth rate of our markets; • introduction of new products by us or our competitors; • general economic, industry and market conditions worldwide, including any global economic downturn; • developments generally affecting the semiconductor industry; • terrorist acts or acts of war, including the ongoing Ukraine-Russia and Middle East conflicts; • epidemics and pandemics; • developments with respect to intellectual property rights; • conditions and trends in technology industries; • changes in market valuation or earnings of our competitors; • government debt default; • changes in corporate tax laws; • government policies and regulations on international trade policies and restrictions, including tariffs on imports of foreign goods; • export controls, trade and economic sanctions and regulations, and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; • ratings published by third-party organizations with respect to our ESG compliance efforts; • our compliance with regulatory mandates focusing on ESG issues, including climate risks and social initiatives; and • our performance against the ESG guidelines set by institutional stockholders and customers, and our ability to meet or exceed their expectations.
The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, many of which are beyond our control, including: • actual or anticipated results of operations and financial performance, including our ability to accurately forecast future demand for our products; • actual or anticipated manufacturing capacity limitations; • our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and successfully secure manufacturing capacity; • our ability to maintain or increase our gross margins; • costs of increasing wafer capacity and qualifying additional third-party wafer fabrication facilities; • the loss of, or a material reduction in sales to, our key customers, or rumors with respect thereto; • investments in sales and marketing resources to enter new markets; • commencement of or developments relating to litigation; • cyberattacks or other system security, data protection and privacy breaches; • the inclusion, exclusion or deletion of our common stock from any major trading indices, such as the S&P 500 Index; • our sale of common stock or other securities in the future; • any mergers, acquisitions or divestitures of assets undertaken by us; • our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; • our ability to meet or exceed the guidance that we provide to our investors and analysts; • the extent to which we execute the stock repurchase program and continue payment of quarterly cash dividends to stockholders; • our ability to meet or exceed our, investors’ or analysts’ expectations; • market reactions to guidance from other semiconductor companies or third-party research groups; • market reactions to merger and acquisition activities in the semiconductor industry, and rumors or expectations of further consolidation in the industry; • investor perceptions of us and our business strategies; • the breadth and liquidity of the market for our common stock; • trading activity in our common stock, including short positions; 26 Table of Contents • actions by institutional or other large stockholders; • changes in the estimation of the future size and growth rate of our markets; • introduction of new products by us or our competitors; • general economic, industry and market conditions worldwide, including any global economic downturn; • developments generally affecting the semiconductor industry or specific segments of the industry in which we compete; • terrorist acts or acts of war, including the ongoing Ukraine-Russia and Middle East conflicts; • epidemics and pandemics; • developments with respect to intellectual property rights; • conditions and trends in technology industries; • changes in market valuation or earnings of our competitors; • government debt default; • changes in corporate tax laws; • government policies and regulations on international trade policies and restrictions, including tariffs on imports of foreign goods; • export controls, trade and economic sanctions and regulations, and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; • ratings published by third-party organizations with respect to our ESG compliance efforts; • our compliance with regulatory mandates focusing on ESG issues, including climate risks and social initiatives; and • our performance against the ESG guidelines set by institutional stockholders and customers, and our ability to meet or exceed their expectations.
Any additional regulations or the amendment of previously implemented regulations could require us and our manufacturing partners and suppliers to change our business plans, increase our costs, or limit our ability to sell products and conduct business activities in China, which could materially and adversely affect our business and operating results.
Any additional regulations or the amendment or reinterpretation of previously implemented regulations could require us and our manufacturing partners and suppliers to change our business plans, increase our costs, or limit our ability to manufacture or sell products and conduct business activities in China, which could materially and adversely affect our business and operating results.
We are subject to U.S. laws and regulations that could limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other individuals, including, in certain cases, dealings with or between our employees and subsidiaries.
We are subject to U.S. laws and regulations that could limit or restrict the export of some of our products, supplies and services and may restrict our transactions with certain customers, business partners and other individuals, including, in certain cases, dealings with or between us and our employees and subsidiaries.
A significant portion of our manufacturing, assembly and packaging capacity comes from key suppliers located in China. As a result, we are subject to significant political, regulatory, economic, foreign exchange, and operational risks due to this geographic concentration in our business.
A significant portion of our manufacturing, testing, assembly and packaging capacity comes from key suppliers located in China. As a result, we are subject to significant political, regulatory, tax, economic, foreign exchange, and operational risks due to this geographic concentration in our business.
A decrease in our growth rates, or a decline in revenue, could materially and adversely affect our business and results of operations. If demand for our products declines in the major end markets that we serve, our revenue will decrease and our results of operations and financial condition would be materially and adversely affected.
A decrease in our rate of growth, or a decline, in revenue, could materially and adversely affect our business and results of operations. If demand for our products declines in the major end markets that we serve, our revenue will decrease and our results of operations and financial condition would be materially and adversely affected.
In addition, if we are unsuccessful in integrating Axign, or any acquired company or business into our operations, or if integration is more difficult than anticipated, we may experience disruptions that could harm our business and result in our failure to realize the anticipated benefits of the acquisitions.
If we are unsuccessful in integrating any acquired company or business into our operations, or if integration is more difficult than anticipated, we may experience disruptions that could harm our business and result in our failure to realize the anticipated benefits of the acquisitions.
If we are not successful in any of our intellectual property defenses, we may have to cease production of certain products, design around such technologies, or pay royalty payments, any of which could harm our financial condition and our business.
If we are not successful in any of our intellectual property defenses, we may have to cease production of certain products, design around such technologies, or pay royalty payments to license technology, any of which could harm our financial condition and our business.
Although we were able to successfully execute our contingency plan and our operations were not materially and adversely disrupted by the events, we cannot guarantee that we will be able to mitigate the operational risks caused by extreme weather conditions or other events in the future.
Although we were able to successfully execute our contingency plan and our operations were not materially and adversely disrupted by the events, we cannot guarantee that we will be able to mitigate the operational risks caused by extreme weather conditions or other events.
If our customers, including distributors, reduce their orders from us, do not manage their inventory correctly or misjudge their customers’ demand, our shipments to and orders from our customers may vary significantly or decline on a quarterly basis, and we may have difficulty forecasting our expenses and inventory levels, which could reduce our revenue, result in inventory write offs, and adversely affect our financial condition and results of operations.
If our customers reduce their orders from us, do not manage their inventory correctly or misjudge their customers’ demand, our shipments to and orders from our customers may vary significantly or decline on a quarterly basis, and we may have difficulty forecasting our expenses and inventory levels, which could reduce our revenue or revenue opportunities, result in inventory write-offs, and adversely affect our financial condition and results of operations.
If we fail to continue to adequately staff our sales, engineering, financial and legal positions, maintain or upgrade our business systems and maintain internal controls that meet the demands of our business, we may not be able to effectively execute our business strategy.
If we fail to continue to adequately staff our sales, engineering, financial and legal functions, maintain or upgrade our business systems and maintain internal controls that meet the demands of our business, we may not be able to effectively execute our business strategy.
Any investigation or allegations of any potential violations of the FCPA or other anti-corruption laws by the U.S. or foreign authorities could harm our reputation and have an adverse impact on our business, financial condition and results of operations.
Any investigation or allegations of any potential violations of anti-corruption laws by the U.S. or foreign authorities could harm our reputation and have an adverse impact on our business, financial condition and results of operations.
In addition, many of our customers increasingly include stringent environmental and other non-standard compliance requirements in their contracts with us or request significant amount of data from us for their Scope 3 emissions reporting.
In addition, many of our customers increasingly include stringent environmental and other non-standard compliance requirements in their contracts with us or request significant amount of data from us for their Scope 3 emissions reporting and supply chain compliance.
Because industry practice allows customers to reschedule or cancel orders on relatively short notice, backlog is not always a good indicator of our future sales. If customer cancellations or purchase order changes occur, we could lose anticipated sales and not have sufficient time to reduce our inventory and operating expenses.
Our sales are made by purchase orders. Because industry practice allows customers to reschedule or cancel orders on relatively short notice, backlog is not always a good indicator of our future sales. If customer cancellations or purchase order changes occur, we could lose anticipated sales and not have sufficient time to reduce our inventory and operating expenses.
If our suppliers extend lead times, limit supplies or the types of capacity we require, or increase prices due to capacity constraints or other factors, our revenue and gross margin may materially decline.
If our suppliers extend lead times, limit supplies or the types of capacity we require, or increase prices due to capacity constraints or other factors, our gross margin may materially and unexpectedly decline.
Some of the risks that may adversely affect our ability to integrate or realize any anticipated benefits from the acquired companies, businesses or assets include those associated with: • unexpected losses of key employees or customers of the acquired companies or businesses; • integrating the acquired company’s standards, processes, procedures and controls with our operations; • coordinating new product and process development; 23 Table of Contents • hiring additional management and other critical personnel; • increasing the scope, geographic diversity and complexity of our operations; • difficulties in consolidating facilities and transferring processes and know-how; • difficulties in the assimilation of acquired operations, technologies or products; • undisclosed liabilities of the acquired businesses and potential legal disputes with founders or stockholders of acquired companies; • our inability to commercialize acquired technologies; • the projected business potential is not realized and as a result, we may be required to take an impairment charge related to goodwill or acquired intangibles that would impact our profitability; • difficulties in assessing the fair value of earn-out arrangements; • diversion of management’s attention from other business concerns; and • adverse effects on existing business relationships with customers.
Some of the risks that may adversely affect our ability to integrate or realize any anticipated benefits from the acquired companies, businesses or assets include those associated with: • unexpected losses of key employees or customers of the acquired companies or businesses; • integrating the acquired company’s standards, processes, procedures and controls with our operations; • coordinating new product and process development; • hiring additional management and other critical personnel; • increasing the scope, geographic diversity and complexity of our operations; • difficulties in consolidating facilities and transferring processes and know-how; • difficulties in the assimilation of acquired operations, technologies or products; • undisclosed liabilities of the acquired businesses and potential legal disputes with founders or stockholders of acquired companies; • our inability to commercialize acquired technologies; • the projected business potential is not realized and as a result, we may be required to take an impairment charge related to goodwill or acquired intangibles that would impact our profitability; • difficulties in assessing the fair value of earn-out arrangements; • diversion of management’s attention from other business concerns; and • adverse effects on existing business relationships with customers. 22 Table of Contents Alternatively, third parties may be interested in acquiring us.
Such incidents could subject us to significant monetary damages, regulatory enforcement actions and/or criminal prosecution, and cause us to lose customers and their related revenue in the future. Risks Associated with Strategic Investments and Initiatives Our success depends on our investment of significant resources in research and development.
Such incidents could subject us to significant monetary damages, regulatory enforcement actions and/or criminal prosecution, and cause us to lose customers and their related revenue in the future. 21 Table of Contents Risks Associated with Strategic Investments and Initiatives Our success depends on our investment of significant resources in research and development.
Moreover, we believe a high percentage of our products are eventually sold to a number of OEMs and ODMs. Although we communicate with OEMs and/or ODMs in an attempt to achieve “design wins,” which are decisions by OEMs and/or ODMs to incorporate our products, we do not have purchase commitments from these end users.
Moreover, we believe a high percentage of our products are eventually sold to a number of OEMs and ODMs. Although we communicate with OEMs and/or ODMs in an attempt to achieve “design wins,” which are decisions by OEMs and/or ODMs to incorporate our products, we do not have purchase commitments from these customers.
We cannot guarantee that our products will continue to compete favorably, or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering this market, which would materially and adversely affect our results of operations and our financial condition.
We cannot guarantee that our products will continue to compete favorably, or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering our markets , which would materially and adversely affect our results of operations and our financial condition.
In addition, any new or amended laws and regulations related to, among other things, foreign investments and manufacturing could have a material adverse effect on our business and our ability to operate business in China. From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights.
In addition, any new or amended laws and regulations related to foreign investments, manufacturing or other matters could have a material adverse effect on our business and our ability to operate business in China. From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights.
If any of these situations were to occur, our business, financial condition and results of operations could be materially and adversely affected. Risks Associated with IT and Cybersecurity Implementation of enhanced enterprise resource planning (“ERP”) or other IT systems could result in significant disruptions to our operations.
If any of these situations were to occur, our business, financial condition and results of operations could be materially and adversely affected. 19 Table of Contents Risks Associated with IT and Cybersecurity Implementation of enhanced enterprise resource planning (“ERP”) or other IT systems could result in significant disruptions to our operations.
If the value of the Renminbi rises against the U.S. Dollar, there could be an increase in our manufacturing costs relative to competitors who have manufacturing facilities located outside China, which could adversely affect our financial results and operations. In addition, our sales are primarily denominated in the U.S. Dollar. If the value of the U.S.
Dollar, there could be an increase in our manufacturing costs relative to competitors who have manufacturing facilities located outside China, which could adversely affect our financial results and operations. In addition, our sales are primarily denominated in the U.S. Dollar. If the value of the U.S.
Should we fail to improve or maintain our gross margins in the future, and accordingly develop and introduce sufficiently differentiated products that result in higher gross margins than industry averages, our business, financial condition and results of operations could be materially and adversely affected.
Should we fail to improve or maintain our gross margins in the future, and accordingly develop and introduce sufficiently differentiated products that result in higher gross margins than industry averages or meet or exceed our historical margins, our business, financial condition and results of operations could be materially and adversely affected.
These risks involve forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. Risk Factors Summary The following summary description sets forth an overview of the material risks we are exposed to in the normal course of our business activities.
These risks include those related to forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. Risk Factors Summary The following summary description sets forth an overview of the material risks we are exposed to in the normal course of our business activities.
Due to the complexity associated with the calculation of our tax provision, including the effects of the enactment of new tax laws, we engage third-party tax advisors to assist us in the calculation.
For example, due to the complexity associated with the calculation of our tax provision, including the effects of the enactment of new tax laws, we engage third-party tax advisors to assist us in the calculation.
Although such measures have not significantly affected our business or operations, future developments could adversely affect our operating results and financial condition. 29 Table of Contents
Although such measures have not significantly affected our business or operations, future developments could adversely affect our operating results and financial condition. 28 Table of Contents
We incur foreign currency exchange gains or losses related to certain transactions, including intercompany transactions between the U.S. and our foreign subsidiaries, that are denominated in currencies other than the functional currencies. Fluctuations in the value of the U.S.
We incur foreign currency exchange gains or losses related to certain transactions, including intercompany transactions between the U.S. and our foreign subsidiaries, that are denominated in currencies other than the functional currencies used by those subsidiaries. Fluctuations in the value of the U.S.
While we restrict the use of third-party and open-source AI tools, such as ChatGPT, our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses additional risks relating to the protection of data, including the potential exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.
While we restrict the use of third-party and open-source AI tools, such as ChatGPT, our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses risks relating to the potential exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.
If any of these situations were to arise, it could have a material impact on our business, financial condition and results of operations. The price and availability of commodities (e.g., gold, copper and silicon) may adversely impact our ability to deliver our products in a timely and cost-effective manner, and may adversely affect our business and results of operations.
If any of these situations were to arise, it could have a material impact on our business, financial condition and results of operations. The price and availability of commodities, such as gold, copper and silicon, may adversely impact our ability to deliver our products in a timely and cost-effective manner, and may adversely affect our business and results of operations.
Determination of the HTS and the origin of the goods is a technical matter that can be subjective in nature. Accordingly, although we believe our classifications of both HTS and origin are appropriate, there is no certainty that our assessment will be consistent with that of the U.S. government.
Determination of the HTS and the origin of the goods is a technical matter that can be subjective in nature. Accordingly, although we believe our classifications of both HTS and origin are appropriate, there is no certainty that our assessment will be consistent with that of the U.S. government, particularly under the new U.S. administration.
To the extent that we fail to timely introduce new products or to quickly penetrate new markets, our business, financial condition and results of operations could be materially and adversely affected.
To the extent that we fail to timely obtain design wins, introduce new products or to quickly penetrate new markets, our business, financial condition and results of operations could be materially and adversely affected.
We are subject to numerous risks and factors that could cause a decrease in our growth rates, or a decline in revenue compared to past periods, including increased competition, loss of certain of our customers, unfavorable changes in our operations, reduced global electronics demand, a deterioration in market conditions including as a result of the global economic downturn, end-customer market downturn, market acceptance and penetration of our current and future products, and litigation.
We are subject to numerous risks and factors that could cause a decrease in our growth rates, or a decline in revenue compared to past periods, including increased competition, loss of certain of our customers, unfavorable changes in our operations, changing technologies and customer requirements and demand, reduced global electronics demand, a deterioration in market conditions including as a result of the global economic uncertainties and tariffs, end-customer market downturns, market acceptance and penetration of our current and future products, and litigation.
Dollar relative to other foreign currencies, which could affect the competitiveness of our products; • transportation delays and other supply chain issues; • changes in tax regulations in China that may impact our tax status in Chengdu, Hangzhou and other regions where we have significant operations; • multi-tiered distribution channels that may diminish visibility to end customer pricing and purchase patterns; • international political relationships and acts or threats of war; • terrorism and threats of terrorism; • adverse weather conditions or other natural disasters that may cause work stoppages and affect our operations in China; • work stoppages related to employee dissatisfaction; • economic, social and political instability; • longer accounts receivable collection cycles; • enforcing contracts generally; and • less effective protection of intellectual property and contractual arrangements.
Dollar relative to other currencies, which could affect the competitiveness of our products; • transportation delays and other supply chain issues; • changes in tax regulations in China that may impact our tax status in Chengdu, Hangzhou and other regions where we have significant operations; • multi-tiered distribution channels that may diminish visibility to end customer pricing and purchase patterns; • international political relationships and acts or threats of war; • terrorism and threats of terrorism; • adverse weather conditions or other natural disasters that may cause work stoppages and affect our operations in China; • work stoppages; • economic, social and political instability; • longer accounts receivable collection cycles; • currency exchange rate fluctuations impacting intercompany transactions; • enforcing contracts generally; and • less effective protection of intellectual property and contractual arrangements.
Dollar relative to foreign currencies could increase the amount of foreign currency exchange losses we record, which could have an adverse and material impact on our results of operations. A significant portion of our manufacturing capacity comes from suppliers in China, which exposes us to political, cultural, regulatory, economic, foreign exchange, and operational risks.
Dollar relative to foreign currencies could increase the amount of foreign currency exchange losses we record, which could have an adverse and material impact on our results of operations. 14 Table of Contents A significant portion of our manufacturing, testing, assembly and packaging capacity comes from suppliers in China, which exposes us to political, cultural, regulatory, economic, foreign exchange, and operational risks.
We anticipate that future growth of our business will require increased manufacturing capacity on the part of third-party supply foundries, assembly shops, and testing facilities for our products. In order to facilitate such growth, we may need to enter into strategic transactions, investments and other activities, with both our current suppliers and new suppliers.
We anticipate that future growth of our business will require increased manufacturing capacity from our third-party supply foundries, assembly shops, and testing facilities. In order to facilitate such growth, we may need to enter into strategic transactions, investments and other activities, with both our current suppliers and new suppliers.
It is difficult for us to predict the impact, if any, the implementation of the national security law will have on our business, as such impact will depend on future developments, which are highly uncertain and cannot be predicted. Fluctuations in the value of the U.S.
It is difficult for us to predict the impact, if any, the implementation of these laws and regulations will have on our business, as such impact will depend on future developments, which are highly uncertain and cannot be predicted. Fluctuations in the value of the U.S.
Our failure to comply with these laws could result in penalties which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations. We are subject to the FCPA, the U.K.
Our failure to comply with these laws could result in penalties which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations. We are subject to the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K.
Such unpredictability towards our contractual, property and procedural rights and any failure to quickly respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations and proceed with our business plans in China. 15 Table of Contents We are subject to export laws, trade policies and restrictions including international tariffs that could materially and adversely affect our business and results of operations.
Such unpredictability regarding our contractual, property and procedural rights and any failure to quickly respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations and execute on our business plans in China. 13 Table of Contents We are subject to export laws, trade policies and restrictions including international tariffs that could materially and adversely affect our business and results of operations.
Bribery Act and other anti-corruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively all the time or protect us against liability under these laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire.
Although we have implemented policies and procedures designed to ensure that we, our employees and other intermediaries comply with anti-corruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively all the time or protect us against liability under these laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire.
Increased investments in research and development will increase our operating expenses, which may negatively impact our operating results, and we may not achieve the return on these investments that we anticipate, or be able to reduce such expenses in a timely manner if we experience a downturn in sales.
Increased investments in research and development will increase our operating expenses and may divert investment from other areas of our business, which may negatively impact our operating results, and we may not achieve the return on these investments that we anticipate, or be able to reduce such expenses in a timely manner if we experience a downturn in sales.
There are risks inherent in doing business in Asia, and internationally in general, including: • changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S. and in the countries in which we manufacture or sell our products, and governmental action to restrict our ability to sell to foreign customers where sales of products may require export licenses; • trade restrictions imposed by the U.S. related to goods imported from regions in China with records of forced labor and other human rights issues; • currency exchange rate fluctuations impacting intercompany transactions; • fluctuations in the value of the U.S.
There are risks inherent in doing business in Asia, and internationally in general, including: • changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S., particularly those associated with the recent change in administration, and in the countries in which we manufacture or sell our products, and governmental action or restrict our ability to sell to foreign customers where sales of products may require export licenses; • trade restrictions imposed by the U.S. related to goods imported from regions in China with records of forced labor and other human rights issues; • fluctuations in the value of the U.S.
These operational, legal, compliance and other risks could damage our reputation and materially and adversely affect our business, financial condition and results of operations. 25 Table of Contents Given our inability to control the timing and nature of significant events in our legal proceedings that either have arisen or may arise, our legal expenses are difficult to forecast and may vary substantially from our publicly disclosed forecasts with respect to any given quarter, which could contribute to increased volatility in our stock price and financial condition.
These operational, legal, compliance and other risks could damage our reputation and materially and adversely affect our business, financial condition and results of operations. 24 Table of Contents Given our inability to control the timing and nature of significant events in our legal proceedings that either have arisen or may arise, our legal expenses are difficult to forecast and may vary substantially from our publicly disclosed forecasts with respect to any given quarter, and we could be liable for significant damages or other expenses, which could harm our stock price and financial condition.
If any of our wafer suppliers are acquired, become insolvent or capacity constrained, or are otherwise unable to provide us sufficient wafers at acceptable yields or at anticipated costs, our revenue and gross margin may decline or we may not be able to fulfill our customer orders. We have supply arrangements with certain suppliers for the production of wafers.
If any of our wafer suppliers are acquired, become insolvent or capacity constrained, or are otherwise unable to provide us sufficient wafers at acceptable yields or at anticipated costs, our revenue and gross margin may decline or we may not be able to fulfill our customer orders.
This could lead to more variability in our operating results and could have a material adverse effect on our business, financial condition and results of operations. We compete against many companies with substantially greater financial and other resources, and our market share may be reduced if we are unable to respond to our competitors effectively.
This could harm our operating results and could have a material adverse effect on our business, financial condition and results of operations. We compete against many companies with substantially greater financial and other resources, and our market share may decline if we are unable to respond to our competitors effectively.
If we are not successful in litigation that could be brought against us or our customers, we could be ordered to pay monetary fines and/or damages, including expenses and damages against our customers. If we are found liable for willful patent infringement, damages could be significant.
From time to time, we are a party to various legal proceedings. If we are not successful in litigation that could be brought against us or our customers, we could be ordered to pay monetary fines and/or damages, including expenses and damages against our customers. If we are found liable for willful patent infringement, damages could be significant.
If we are not in compliance with the FCPA and other laws governing the conduct of business with government entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, including restatements of our financial reports, which could have a material adverse impact on our business, financial condition, results of operations and liquidity.
If we are not in compliance with applicable anti-corruption laws (including local laws), we may be subject to criminal and civil penalties and other remedial measures, including restatements of our financial reports, which could have a material adverse impact on our business, financial condition, results of operations and liquidity.
All of these factors continue to be exacerbated by the adverse effects of macroeconomic factors, including inflation, increased interest rates, supply chain disruptions, decreased economic output, fluctuations in currency rates, the Russia-Ukraine conflict and the Middle East conflict.
All of these factors continue to be exacerbated by the adverse effects of macroeconomic factors, including inflation, increased interest rates, decreased economic output, fluctuations in currency rates, and geopolitical tensions, such as the Russia-Ukraine conflict and the Middle East conflict.
Such activities are subject to a number of risks, including: • the costs and expense associated with such activities, including requirements to make long-term purchase commitments including upfront cash deposits to our suppliers; • the availability of modern foundries to be developed, acquired, leased or otherwise made available to us or our third-party suppliers; • the ability of foundries and our third-party suppliers to obtain the advanced equipment used in the production of our products; • delays in identifying and negotiating agreements with new foundries and suppliers; and • environmental, engineering or manufacturing qualification problems relating to existing or new foundry facilities, including delays in qualification of new foundries by our customers.
The need for additional manufacturing, assembly and testing involves numerous risks, including: • the costs and expense associated with such increased capacity, including requirements to make long-term purchase commitments including upfront cash deposits to our suppliers; • the availability of modern foundries to be developed, acquired, leased or otherwise made available to us or our third-party suppliers; • the ability of foundries and our third-party suppliers to obtain the advanced equipment used in the production of our products; • delays in identifying and negotiating agreements with new foundries and suppliers; and • environmental, engineering or manufacturing qualification problems relating to existing or new foundry facilities, including delays in qualification of new foundries by our customers.
We have significant business operations in Taiwan, and many of our manufacturing partners and suppliers are located in Taiwan. Accordingly, our business, financial condition and results of operations may be affected by changes in governmental and economic policies in Taiwan, social instability and diplomatic and social developments in or affecting Taiwan due to its unique international political status.
Accordingly, our business, financial condition and results of operations may be affected by changes in governmental and economic policies in Taiwan, social instability and diplomatic and social developments in or affecting Taiwan due to its unique international political status.
For the year ended December 31, 2023, 87% of our revenue was from customers in Asia.
For the year ended December 31, 2024, 94% of our revenue was from customers in Asia.
Dollar relative to other foreign currencies, including the Renminbi, may adversely affect our results of operations. Many of our manufacturing and other suppliers are and will continue to be primarily located in China for the foreseeable future. In connection with the global economic downturn, there has been an increased level of global currency fluctuation and volatility.
Dollar relative to other currencies, including the Renminbi, may adversely affect our results of operations. Many of our manufacturing and other suppliers are and will continue to be primarily located in China for the foreseeable future. Recently, there has been an increased level of global currency fluctuation and volatility. If the value of the Renminbi rises against the U.S.
The success of a new product depends on accurate forecasts of long-term market demand and future technological developments, as well as on a variety of other factors, including: • timely and efficient completion of process design and device structure improvements; • timely and efficient implementation of manufacturing, assembly, and test processes; • the ability to secure and effectively utilize fabrication capacity in different geometries; • product performance; • product availability and pricing; 17 Table of Contents • product quality and reliability; and • effective marketing, sales and services.
The success of a new product depends on our ability to achieve design wins with key distributors and end-customers, as well as our ability to accurately forecast long-term market demand and future technological developments, as well as on a variety of other factors, including: • timely and efficient completion of process design and device structure improvements; • timely and efficient implementation of manufacturing, assembly, and test processes; • the ability to secure and effectively utilize fabrication capacity in different geometries; 15 Table of Contents • product performance; • integration with other components and technologies; • product availability and pricing; • product quality and reliability; and • effective marketing, sales and services.
Due to the sensitive political climate these regulations created, there are increasing risks that this China’s national security law may trigger sanctions or other forms of restrictions by foreign governments including the U.S., which could affect companies conducting business in Hong Kong.
Due to the sensitive political climate these laws and regulations created, there are risks that these laws and regulations, or future, more stringent laws or regulations, may trigger sanctions or other forms of restrictions by foreign governments including the U.S., which could affect companies, including us, conducting business in Hong Kong.
Many of our competitors have significantly greater resources than we have and are able to invest substantially greater amounts into research and development initiatives than we are, which could harm our ability to innovate and compete.
Many of our competitors have significantly greater resources than we have and are able to invest substantially greater amounts into research and development initiatives than we are, which could reduce the technological advances that we may be able to achieve and may harm our ability to compete.
Our sales to distributors are also subject to higher volatility because they service demand from multiple levels of the supply chain which, in itself, is inherently difficult to forecast.
In addition, demand for our products is influenced by our customers’ ability to manage their inventory. Our sales to distributors are also subject to higher volatility because they service demand from multiple levels of the supply chain which, in itself, is inherently difficult to forecast.
We cannot guarantee that our stock repurchase program will enhance long-term stockholder value. In October 2023, our Board of Directors approved a stock repurchase program authorizing the repurchase of up to $640 million in the aggregate of our common stock. The repurchase program will expire on October 29, 2026.
We cannot guarantee that our stock repurchase program will enhance long-term stockholder value. In February 2025, our Board of Directors approved a stock repurchase program authorizing the repurchase of up to $500 million of our common stock. The repurchase program will expire in February 2028.
We may also be subject to unanticipated legal proceedings, which would result in us incurring unexpected legal expenses. If we fail to meet the expectations of securities or industry analysts as a result of unexpected changes in our legal expenses, our stock price could be materially and adversely affected. Future legal proceedings may divert our financial and management resources.
If we fail to meet the expectations of securities or industry analysts as a result of unexpected changes in our legal expenses or we are found liable for significant damages or other expenses, our stock price and results of operations could be materially and adversely affected. Future legal proceedings may divert our financial and management resources.
Although our management has an established long-term strategy to diversify capacity outside China, there is no guarantee that we will be able to identify, qualify and engage additional foundry partners and assembly and packaging suppliers in other regions in order to mitigate these risks, or that the quality, price or terms of such production will be sufficient or acceptable to us, any of which could negatively and materially harm our business and results of operations. 16 Table of Contents Risks Associated with Product Demand and Sales We may not achieve growth rates or financial performance comparable to past years.
Although our management has established a long-term strategy to diversify capacity outside China, there is no guarantee that we will be able to identify, qualify and engage additional foundry partners and other suppliers in other regions in a timely manner or at all in order to mitigate these risks, or that the quality, price or terms of such production will be sufficient or acceptable to us, any of which could negatively and materially harm our business and results of operations.
The operation of our business also depends upon our ability to retain these employees, as they hold a significant amount of institutional knowledge about us and our products and, if they were to terminate their employment, our sales, operations and internal control over financial reporting could be adversely affected. 26 Table of Contents Risks Associated with Ownership of Our Stock The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors.
The operation of our business also depends upon our ability to retain these employees, as they hold a significant amount of institutional knowledge about us and our products and, if they were to terminate their employment, our sales, operations and internal control over financial reporting could be adversely affected.
If we fail to expand our customer base and significantly reduce the geographic concentration of our customers, we will continue to be subject to the foregoing risks, which could materially and adversely affect our business, financial condition and results of operations. 13 Table of Contents Our business has been and may be significantly impacted by worldwide economic conditions, in particular changing economic conditions in China.
If we fail to expand our customer base and significantly reduce the geographic concentration of our customers, we will continue to be subject to the foregoing risks, which could materially and adversely affect our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Governance As an important part of our risk management processes, cybersecurity is a focus area for our Board and management. Our Nominating and Corporate Governance Committee (the “NCG Committee”), which consists of independent members of the Board of Directors, is responsible for the oversight of risks from cybersecurity threats.
Biggest changeOur Nominating and Corporate Governance Committee (the “NCG Committee”), which consists of independent members of the Board of Directors, is responsible for the oversight of risks from cybersecurity threats. The NCG Committee receives quarterly updates from the Cybersecurity Steering Committee. These updates include existing and emerging cybersecurity threats, risks, cybersecurity incident management and key information security initiatives.
We address cybersecurity risks in our business, technical operations, privacy and compliance issues through a diversified approach including threat-monitoring and assessments by third-parties, adopting IT security ISO standards/governance, proactive risk and compliance reviews.
We address cybersecurity risks in our business, technical operations, privacy and compliance operations and programs through a diversified approach including threat-monitoring and assessments by third -parties, adopting IT security ISO standards/governance, and proactive risk and compliance reviews.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We recognize the imperative to diligently manage cybersecurity risks as defined in Item 106(a) of Regulation S-K. Such risks include operational risks of ransomware, phishing, fraud, extortion, harm to employees or customers and violation of data privacy or security laws.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We recognize it is imperative to diligently manage cybersecurity risks as defined in Item 106(a) of Regulation S-K. Such risks include operational risks of ransomware, phishing, fraud, extortion, harm to employees or customers and violation of data privacy or security laws.
In order to defend against cybersecurity incidents, we carry out real-time cybersecurity threat monitoring of IT assets, perform penetration testing, audit applicable data policies and conduct directed employee training. We also monitor existing and emerging laws and regulations related to data protection and information security and implement appropriate changes.
In order to defend against cybersecurity incidents, we carry out real-time cybersecurity threat monitoring of IT assets, perform penetration testing, audit applicable data policies and conduct directed employee training. We also monitor new technologies and existing and emerging laws and regulations related to data protection and information security and implement changes that help to mitigate risk.
The Cybersecurity Steering Committee actively participates in the cybersecurity risk management and strategy processes as described above, and regularly reports to senior management and the NCG Committee. 30 Table of Contents
The Cybersecurity Steering Committee actively participates in the cybersecurity risk management and strategy processes as described above, and regularly reports to senior management and the NCG Committee.
There are no identified cybersecurity threats that have materially affected or are reasonably likely to materially affect our results of operations, or financial condition as of the date of this Annual Report on Form 10-K. See “Risk Factors” for more information on our cybersecurity risks.
There are no identified cybersecurity threats that have materially affected or are reasonably likely to materially affect our results of operations, or financial condition as of the date of this Annual Report on Form 10-K.
The NCG Committee receives quarterly updates from the Cybersecurity Steering Committee. These updates include existing and emerging cybersecurity threats, risks, cybersecurity incident management and key information security initiatives. The NCG Committee also provides updates to our cybersecurity risk management and strategy programs to the Board of Directors on a quarterly basis.
The NCG Committee also provides updates to our cybersecurity risk management and strategy programs to the Board of Directors on a quarterly basis.
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To date, we do not believe we have experienced any material information security breaches and have not incurred significant operating expenses related to information security breaches. See “Risk Factors” for more information on our cybersecurity risks. Cybersecurity Governance As an important part of our risk management processes, cybersecurity is a focus area for our Board and management.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties As of December 31, 2023, our owned and leased facilities in excess of 10,000 square feet consisted of: United States Other Countries Total (in square feet) Owned facilities 216,000 923,000 1,139,000 Leased facilities - 290,000 290,000 Total facilities 216,000 1,213,000 1,429,000 We also lease other sales and marketing, and research and development offices in Asia, Europe and the United States.
Biggest changeOther Countries Total (In square feet) Owned facilities 216,000 948,000 1,164,000 Leased facilities 23,000 302,000 325,000 Total facilities 239,000 1,250,000 1,489,000 We also lease other sales and marketing, and research and development offices in Asia, Europe and the U.S. We believe that our existing facilities are suitable for our current operations. 29 Table of Contents
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We believe that our existing facilities are suitable for our current operations.
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Item 2. Properties As of December 31, 2024, our owned and leased facilities each in excess of 10,000 square feet consisted of: U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThese proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend. We defend ourselves vigorously against any such claims. As of December 31, 2023 , there were no material pending legal proceedings to which we were a party.
Biggest changeThese proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend. We defend ourselves vigorously against any such claims. As of December 31, 2024 , there were no material pending legal proceedings to which we were a party.
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On February 4, 2025, a purported class action lawsuit was filed against us and certain of our executives. The lawsuit is captioned Waterford Twp. Gen. Emps. Ret. Sys. v. Monolithic Power Systems, Inc., et al. , No. 25-cv-220 (W.D.
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Wash.), and alleges that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, by making material misstatements or omissions relating to our business, including with respect to our business relationship with Nvidia. The lawsuit seeks an unspecified amount of damages as well as attorneys’ fees and other relief.
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We believe the lawsuit is meritless and intend to defend against it vigorously.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table represents details of our stock repurchase transactions during the fourth quarter of 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands, except per share amounts) November 1, 2023 – November 30, 2023 5 $ 505.65 5 $ 637,465 December 1, 2023 – December 31, 2023 2 $ 603.15 2 $ 636,259 Total 7 $ 533.45 7 Dividend Policy We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.
Biggest changeThe following table represents details of our stock repurchase transactions during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (In thousands, except per share amounts) October 1, 2024 – October 31, 2024 2 $ 911.51 2 $ 620,002 November 1, 2024 – November 30, 2024 980 $ 632.89 980 $ - Total 982 $ 633.55 982 In February 2025, the Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028.
The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the stockholders. 32 Table of Contents Stock Performance Graph The following graph compares the cumulative five-year total return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the PHLX Semiconductor Sector Index.
The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the stockholders. 31 Table of Contents Stock Performance Graph The following graph compares the cumulative five-year total return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the PHLX Semiconductor Sector Index.
The information contained in this stock performance graph section shall not be deemed to be “ soliciting material, ” or “ filed ” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. 33 Table of Contents
The information contained in this stock performance graph section shall not be deemed to be “ soliciting material, ” or “ filed ” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. 32 Table of Contents
An investment of $100 is assumed to have been made in our common stock on December 31, 2018, and its performance relative to the performance of a similar investment in the two indexes is shown through December 31, 2023, assuming the reinvestment of dividends. Historic stock performance is not indicative of future performance.
An investment of $100 is assumed to have been made in our common stock on December 31, 2019, and its performance relative to the performance of a similar investment in the two indexes is shown through December 31, 2024, assuming the reinvestment of dividends. Historic stock performance is not indicative of future performance.
Issuer Purchases of Equity Securities In October 2023, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026. Shares are retired upon repurchase.
Issuer Purchases of Equity Securities In October 2023, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $640.0 million of our common stock through October 29, 2026. Shares were retired upon repurchase.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “MPWR”. Holders of Common Stock As of February 22, 2024, there were 68 registered holders of record of our common stock.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “MPWR”. Holders of Common Stock As of February 21, 2025, there were 81 registered holders of record of our common stock.
We repurchased approximately 7,000 shares of our common stock for an aggregate purchase price of $3.7 million during the year ended December 31, 2023. Stock repurchases under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate.
Shares are retired upon repurchase. The repurchases, if any, will be funded from available working capital and cash repatriation from its subsidiaries. Stock repurchases under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate.
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We repurchased approximately 1.0 million and 7,000 shares of our common stock for an aggregate purchase price of $636.2 million and $3.7 million during the years ended December 31, 2024 and 2023, respectively.
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Dividend Policy We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations The following table summarizes our results of operations: Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Revenue $ 1,821,072 100.0 % $ 1,794,148 100.0 % $ 1,207,798 100.0 % Cost of revenue 799,953 43.9 745,596 41.6 522,339 43.2 Gross profit 1,021,119 56.1 1,048,552 58.4 685,459 56.8 Operating expenses: Research and development 263,643 14.5 240,171 13.4 190,627 15.8 Selling, general and administrative 275,740 15.1 281,596 15.6 232,415 19.3 Total operating expenses 539,383 29.6 521,767 29.0 423,042 35.1 Operating income 481,736 26.5 526,785 29.4 262,417 21.7 Other income (expense), net 24,105 1.3 (1,848 ) (0.1 ) 9,802 0.8 Income before income taxes 505,841 27.8 524,937 29.3 272,219 22.5 Income tax expense 78,467 4.3 87,265 4.9 30,196 2.5 Net income $ 427,374 23.5 % $ 437,672 24.4 % $ 242,023 20.0 % 36 Table of Contents Revenue The following table summarizes our revenue by end market: Year Ended December 31, End Market 2023 % of Revenue 2022 % of Revenue 2021 % of Revenue (in thousands, except percentages) Storage and Computing $ 491,139 27.0 % $ 452,594 25.3 % $ 255,933 21.2 % Enterprise Data 322,980 17.7 251,415 14.0 116,345 9.6 Automotive 394,665 21.7 300,016 16.7 204,335 16.9 Industrial 172,717 9.4 219,179 12.2 184,784 15.3 Communications 204,911 11.3 251,452 14.0 164,091 13.6 Consumer 234,660 12.9 319,492 17.8 282,310 23.4 Total $ 1,821,072 100.0 % $ 1,794,148 100.0 % $ 1,207,798 100.0 % Revenue for the year ended December 31, 2023 was $1,821.1 million, an increase of $27.0 million, or 1.5%, from $1,794.1 million for the year ended December 31, 2022.
Biggest changeResults of Operations The following table summarizes our results of operations: Year Ended December 31, 2024 2023 2022 (In thousands, except percentages) Revenue $ 2,207,100 100.0 % $ 1,821,072 100.0 % $ 1,794,148 100.0 % Cost of revenue 986,230 44.7 799,953 43.9 745,596 41.6 Gross profit 1,220,870 55.3 1,021,119 56.1 1,048,552 58.4 Operating expenses: Research and development 324,748 14.7 263,643 14.5 240,171 13.4 Selling, general and administrative 356,764 16.2 275,740 15.1 281,596 15.6 Total operating expenses 681,512 30.9 539,383 29.6 521,767 29.0 Operating income 539,358 24.4 481,736 26.5 526,785 29.4 Other income (expense), net 33,554 1.6 24,105 1.3 (1,848 ) (0.1 ) Income before income taxes 572,912 26.0 505,841 27.8 524,937 29.3 Income tax expense (benefit), net (1,213,788 ) (55.0 ) 78,467 4.3 87,265 4.9 Net income $ 1,786,700 81.0 % $ 427,374 23.5 % $ 437,672 24.4 % Revenue The following table summarizes our revenue by end market: Year Ended December 31, End Market 2024 % of Revenue 2023 % of Revenue 2022 % of Revenue (In thousands, except percentages) Enterprise Data $ 716,264 32.5 % $ 322,980 17.7 % $ 251,415 14.0 % Storage and Computing 501,576 22.7 491,139 27.0 452,594 25.3 Automotive 413,973 18.8 394,665 21.7 300,016 16.7 Communications 225,905 10.2 204,911 11.3 251,452 14.0 Consumer 202,015 9.1 234,660 12.9 319,492 17.8 Industrial 147,367 6.7 172,717 9.4 219,179 12.2 Total $ 2,207,100 100.0 % $ 1,821,072 100.0 % $ 1,794,148 100.0 % Revenue for the year ended December 31, 2024 was $2.2 billion, an increase of $386.0 million, or 21.2%, from $1.8 billion for the year ended December 31, 2023.
In the event we determine that it is more likely than not that we would be able to realize the deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance for the deferred tax assets would increase income in the period such determination was made.
In the event we determine that it is more likely than not that we would be able to realize the deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance for the deferred tax assets would increase income in the period such determination is made.
Typical supply chain lead times for orders are generally 16 to 26 weeks. These factors, combined with the fact that our customers can cancel or reschedule orders without significant penalty to the customer, make the forecasting of our orders and revenue difficult.
Typical supply chain lead times for orders are generally 16 to 26 weeks. These factors, combined with the fact that our customers can cancel or reschedule orders without significant penalty to the customer, make the forecasting of our orders, revenue and expenses difficult.
The extent and duration of the direct and indirect impact of macroeconomic events on our business, results of operations and overall financial position remain uncertain and depend on future developments. We closely monitor changes to export control laws, trade regulations and other trade requirements.
The extent and duration of the direct and indirect impact of macroeconomic events on our business, results of operations and overall financial position remain uncertain and depend on future developments. We closely monitor changes to export control laws, tariffs, trade regulations and other trade requirements.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements and related notes which appear under Item 8 in this Annual Report on Form 10-K. This discussion and analysis contain, in addition to historical information, forward-looking statements that involve risks and uncertainties.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements and related notes which appear under Item 8 in this Annual Report on Form 10-K. This discussion and analysis contains, in addition to historical information, forward-looking statements that involve risks and uncertainties.
Discussions of 2021 results and year-to-year comparisons between 2022 and 2021 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.
Discussions of 2022 results and year-to-year comparisons between 2023 and 2022 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024.
We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. Our revenue from direct or indirect sales to customers in Asia was 87%, 86% and 90% for the years ended December 31, 2023, 2022 and 2021, respectively.
We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. Our revenue from direct or indirect sales to customers in Asia was 94%, 87% and 86% for the years ended December 31, 2024, 2023 and 2022, respectively.
Cash Requirements Although consequences of economic uncertainty and macroeconomic conditions and other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,108.5 million as of December 31, 2023, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.
Cash Requirements Although consequences of economic uncertainties and macroeconomic conditions and other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $862.9 million as of December 31, 2024, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.
We will continue to monitor any changes or developments to export control laws, trade regulations and other trade requirements, or interpretations thereof and are committed to complying with all applicable trade laws, regulations and other requirements. 34 Table of Contents Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).
We will continue to monitor any changes or developments to export control laws, trade regulations and other trade requirements, or interpretations thereof and are committed to complying with all applicable trade laws, regulations and other requirements. 33 Table of Contents Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S.
Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month. As of December 31, 2023, accrued dividends totaled $47.9 million.
Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month. As of December 31, 2024, accrued dividends totaled $59.8 million.
The effective tax rate was lower than the federal statutory rate of 21% primarily due to foreign income from our subsidiaries in Bermuda and China being taxed at lower statutory tax rates and a return to provision true-up adjustment which primarily resulted from a calculation refinement of our capitalization of research and experimental expenditures under Section 174 of the Internal Revenue Code (the “IRC”).
The effective tax rate was lower than the federal statutory rate of 21% primarily due to lower statutory tax rates at certain of our foreign subsidiaries and a return to provision true-up adjustment which primarily resulted from a calculation refinement of our capitalization of research and experimental expenditures under Section 174 of the Internal Revenue Code (the “IRC”).
In February 2024, our Board of Directors approved an increase in the quarterly cash dividend from $1.00 per share to $1.25 per share, which amount will be paid on April 15, 2024 to all stockholders of record as of the close of business on March 29, 2024.
In February 2025, our Board of Directors approved an increase in the quarterly cash dividend from $1.25 per share to $1.56 per share, which amount will be paid on April 15, 2025 to all stockholders of record as of the close of business on March 31, 2025.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis, including those related to revenue recognition, stock-based compensation, inventories, income taxes and contingencies.
(“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis, including those related to income taxes valuation allowances, inventory valuation and stock-based compensation.
Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) R&D expenses $ 263,643 $ 240,171 $ 190,627 As a percentage of revenue 14.5 % 13.4 % 15.8 % R&D expenses were $263.6 million, or 14.5% of revenue, for the year ended December 31, 2023, and $240.2 million, or 13.4% of revenue, for the year ended December 31, 2022.
Year Ended December 31, 2024 2023 2022 (In thousands, except percentages) R&D expenses $ 324,748 $ 263,643 $ 240,171 As a percentage of revenue 14.7 % 14.5 % 13.4 % R&D expenses were $324.7 million, or 14.7% of revenue, for the year ended December 31, 2024, and $263.6 million, or 14.5% of revenue, for the year ended December 31, 2023.
We are subject to industry downturns, but we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.
We are subject to industry downturns, but we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term.
Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, including the impact of the 2023 banking crisis, global economic downturn, Russia-Ukraine conflict and the Middle East conflict.
Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, global economic uncertainties and geopolitical tensions.
Operating Leases Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities and equipment. As of December 31, 2023, these obligations totaled $7.9 million, of which $2.3 million was short-term.
As of December 31, 2024, the remaining liability totaled $6.2 million, all of which was short-term. Operating Leases Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities and equipment.
Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Cost of revenue $ 799,953 $ 745,596 $ 522,339 As a percentage of revenue 43.9 % 41.6 % 43.2 % Gross profit $ 1,021,119 $ 1,048,552 $ 685,459 Gross margin 56.1 % 58.4 % 56.8 % Cost of revenue was $800.0 million, or 43.9% of revenue, for the year ended December 31, 2023, and $745.6 million, or 41.6% of revenue, for the year ended December 31, 2022.
Year Ended December 31, 2024 2023 2022 (In thousands, except percentages) Cost of revenue $ 986,230 $ 799,953 $ 745,596 As a percentage of revenue 44.7 % 43.9 % 41.6 % Gross profit $ 1,220,870 $ 1,021,119 $ 1,048,552 Gross margin 55.3 % 56.1 % 58.4 % Cost of revenue was $986.2 million, or 44.7% of revenue, for the year ended December 31, 2024, and $800.0 million, or 43.9% of revenue, for the year ended December 31, 2023.
Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) SG&A expenses $ 275,740 $ 281,596 $ 232,415 As a percentage of revenue 15.1 % 15.6 % 19.3 % SG&A expenses were $275.7 million, or 15.1% of revenue, for the year ended December 31, 2023, and $281.6 million, or 15.6% of revenue, for the year ended December 31, 2022.
Year Ended December 31, 2024 2023 2022 (In thousands, except percentages) SG&A expenses $ 356,764 $ 275,740 $ 281,596 As a percentage of revenue 16.2 % 15.1 % 15.6 % SG&A expenses were $356.8 million, or 16.2% of revenue, for the year ended December 31, 2024, and $275.7 million, or 15.1% of revenue, for the year ended December 31, 2023.
Macroeconomic Conditions and Recent Regulations During 2023, the semiconductor industry faced, and continues to face, a number of macro-economic challenges including reduced consumer spending, fluctuations in demand for semiconductors, rising inflation, increased interest rates, and fluctuations in currency rates. We remain cautious in light of continued challenging macroeconomic conditions and will continue to monitor the potential impact on our operations.
Macroeconomic Conditions and Regulations The semiconductor industry has historically been impacted by various macro-economic challenges including fluctuations in consumer spending, fluctuations in demand for semiconductors, rising inflation, increased interest rates, and fluctuations in currency rates. We remain cautious in light of continued challenging macroeconomic conditions and will continue to monitor the potential impact on our operations.
The decrease in the effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax, the addition of a valuation allowance against China deferred tax assets arising from the indefinite extension of the R&D super deduction policy in China, and excess tax benefits from stock-based compensation.
The lower effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax, the addition of a valuation allowance against foreign subsidiaries’ deferred tax assets arising from the indefinite extension of an R&D super deduction policy, and excess tax benefits from stock-based compensation.
This decrease was a result of broad market weakness across all segments. Cost of Revenue and Gross Margin Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses.
Cost of Revenue and Gross Margin Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses.
For the year ended December 31, 2023, the $54.9 million increase in cash used in financing activities compared to the prior period was primarily due to a $47.9 million increase in dividend and dividend equivalent payments.
For the year ended December 31, 2024, the $688.5 million increase in cash used in financing activities compared to the prior period was primarily due to a $632.5 million increase in stock repurchases and a $54.8 million increase in dividends and dividend equivalent payments.
As of December 31, 2023 and 2022, we had a valuation allowance of $35.0 million and $20.3 million, respectively, attributable to management’s determination that it is more likely than not that certain deferred tax assets will not be fully realized.
As of December 31, 2024 and 2023, we had a valuation allowance of $3.6 billion and $35.0 million, respectively, attributable to management’s determination that it is more likely than not that certain deferred tax assets will not be fully realized. In 2024, one of the Company’s foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025.
Stock-Based Compensation For equity awards with performance conditions, as well as awards containing both market and performance conditions, we recognize compensation expense when it becomes probable that the performance goals will be achieved.
Conversely, if actual demand or market conditions are more favorable, inventories may be sold that were previously written down. Stock-Based Compensation For equity awards with performance conditions, as well as awards containing both market and performance conditions, we recognize compensation expense when it becomes probable that the performance goals will be achieved.
As a result, our stock-based compensation expense is subject to volatility and may fluctuate significantly each quarter due to changes in our probability assessment of achievement of the performance conditions or actual results being different from projections made by management.
As a result, our stock-based compensation expense is subject to volatility and may fluctuate significantly each quarter due to changes in our probability assessment of achievement of the performance conditions or actual results being different from projections made by management. 34 Table of Contents Recent Accounting Pronouncements See Note 1 of the Notes to Consolidated Financial Statements regarding a recently adopted accounting pronouncement and recent accounting pronouncements not yet adopted as of December 31, 2024.
The increase in revenue was primarily due to increases in the average selling prices resulting primarily from product mix, partially offset by lower shipment volume. For the year ended December 31, 2023, revenue from the storage and computing market increased $38.5 million, or 8.5%, from the same period in 2022.
The increase in revenue was primarily due to increases in shipment volume and average selling prices resulting primarily from product mix. 35 Table of Contents For the year ended December 31, 2024, revenue from the enterprise data market increased $393.3 million, or 121.8%, from the same period in 2023.
We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.
The repurchases, if any, will be funded from available working capital and cash repatriation from our subsidiaries. We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.
Research and Development ( “ R&D ” ) R&D expenses primarily consist of cash compensation and benefits, stock-based compensation and deferred compensation for design and product engineers, expenses related to new product development and supplies, and facility costs.
The decrease in gross margin was mainly driven by higher inventory write-downs as a percentage of revenue. Research and Development ( “ R&D ” ) R&D expenses primarily consist of cash compensation and benefits, stock-based compensation and deferred compensation for design and product engineers, expenses related to new product development and supplies, and facility costs.
Revenue from the automotive market increased $94.6 million, or 31.5%, from the same period in 2022. This increase was primarily driven by increased sales of our highly integrated applications supporting advanced driver assistance systems, body electronics and the digital cockpit. Revenue from the industrial market decreased $46.5 million, or 21.2%, from the same period in 2022.
Revenue from the automotive market increased $19.3 million, or 4.9%, from the same period in 2023. This increase was primarily driven by increased sales of our highly integrated applications supporting advanced driver assistance systems, partially offset by lower sales of applications supporting body electronics and infotainment.
As of December 31, 2023 and through the date we filed this Annual Report, no existing or newly introduced restrictions have had a material impact on our revenue and operations.
As of December 31, 2024 and through the date we filed this Annual Report, no restrictions or requirements have had a material impact on our revenue and operations; however, such restrictions can be enacted quickly and unexpectedly and could impact our business in the future.
As of December 31, 2023, $369.9 million of cash and cash equivalents and $528.0 million of short-term investments were held by our international subsidiaries. For the year ended December 31, 2023, we repatriated $140 million of cash from our Bermuda subsidiary to the U.S. with minimal tax impact. The proceeds are primarily used to fund our ongoing business operations.
As of December 31, 2024, $611.9 million of cash and cash equivalents and $164.4 million of short-term investments were held by our foreign subsidiaries. For the years ended December 31, 2024 and 2023, we repatriated $642 million and $140 million, respectively, of cash from a foreign subsidiary to the U.S. with minimal tax impact.
Summary of Cash Flows The following table summarizes our cash flow activities: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 638,213 $ 246,674 $ 320,010 Net cash used in investing activities (178,726 ) (12,510 ) (378,886 ) Net cash used in financing activities (183,725 ) (128,785 ) (90,206 ) Effect of change in exchange rates (3,310 ) (6,039 ) 3,400 Net increase (decrease) in cash, cash equivalents and restricted cash $ 272,452 $ 99,340 $ (145,682 ) For the year ended December 31, 2023, the $391.5 million increase in cash provided by operating activities compared to the prior period was primarily due to decreased inventory purchases, decreased prepaid wafer expenses, increased accounts receivable collections and other changes in working capital.
We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested. 37 Table of Contents Summary of Cash Flows The following table summarizes our cash flow activities: Year Ended December 31, 2024 2023 2022 (In thousands) Net cash provided by operating activities $ 788,410 $ 638,213 $ 246,674 Net cash provided by (used in) investing activities 223,047 (178,726 ) (12,510 ) Net cash used in financing activities (872,227 ) (183,725 ) (128,785 ) Effect of change in exchange rates (8,470 ) (3,310 ) (6,039 ) Net increase in cash, cash equivalents and restricted cash $ 130,760 $ 272,452 $ 99,340 For the year ended December 31, 2024, the $150.2 million increase in cash provided by operating activities compared to the prior period was primarily due to increased accounts receivable collections, partially offset by increased inventory purchases.
Likewise, should it be determined that additional amounts of the net deferred tax assets will not be realized in the future, an adjustment to increase the deferred tax assets valuation allowance will be charged to income in the period such determination is made. 35 Table of Contents Contingencies We record a contingent liability related to pending legal and regulatory proceedings when it is probable that a loss has been incurred and the amount is reasonably estimable.
Likewise, should it be determined that additional amounts of the net deferred tax assets will not be realized in the future, an adjustment to increase the deferred tax assets valuation allowance will be charged to income in the period such determination is made.
This increase was partially offset by an $8.1 million decrease in cash compensation expenses, which was driven by decreased bonuses. 37 Table of Contents Selling, General and Administrative ( “ SG&A ” ) SG&A expenses primarily include cash compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, sales commissions, travel expenses, facilities costs, third party service fees and litigation expenses.
Selling, General and Administrative ( “ SG&A ” ) SG&A expenses primarily include cash compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, sales commissions, travel expenses, facilities costs, third party service fees and legal expenses.
Other Long-Term Obligations Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents. As of December 31, 2023, these obligations totaled $83.1 million. Acquisition On January 3, 2024, we acquired Axign, a Dutch company for $33.8 million in cash.
Other Long-Term Obligations Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents. As of December 31, 2024, these obligations totaled $98.6 million.
The $54.4 million increase in cost of revenue was primarily driven by product mix, partially offset by lower inventory write-downs and warranty expenses. Gross margin was 56.1% for the year ended December 31, 2023, compared with 58.4% for the year ended December 31, 2022.
The $186.2 million increase in cost of revenue was primarily driven by increases in shipment volume and the average costs due to product mix. Gross margin was 55.3% for the year ended December 31, 2024, compared with 56.1% for the year ended December 31, 2023.
Capital Return to Stockholders In October 2023, our Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026. Shares are retired upon repurchase.
As of December 31, 2024, these obligations totaled $15.8 million, of which $3.6 million was short-term. 38 Table of Contents Capital Return to Stockholders In October 2023, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $640.0 million of our common stock through October 29, 2026.
This increase was primarily driven by increased sales of products for notebooks. Revenue from the enterprise data market increased $71.6 million, or 28.5%, from the same period in 2022. This increase was primarily due to higher sales of our power management solutions for AI applications.
This increase was primarily due to higher sales of our power management solutions for AI applications. Revenue from the communications market increased $21.0 million, or 10.2%, from the same period in 2023. The increase was a result of higher sales of power solutions for optical modules and routers, partially offset by lower sales of networking solutions.
See Note 11 of the Notes to Consolidated Financial Statements for further discussion. 38 Table of Contents Liquidity and Capital Resources December 31, 2023 2022 (in thousands, except percentages) Cash and cash equivalents $ 527,843 $ 288,607 Short-term investments 580,633 449,266 Total cash, cash equivalents and short-term investments $ 1,108,476 $ 737,873 Percentage of total assets 45.5 % 35.8 % Total current assets $ 1,819,499 $ 1,410,619 Total current liabilities (235,035 ) (263,400 ) Working capital $ 1,584,464 $ 1,147,219 As of December 31, 2023, we had cash and cash equivalents of $527.8 million and short-term investments of $580.6 million, compared with cash and cash equivalents of $288.6 million and short-term investments of $449.3 million as of December 31, 2022.
Liquidity and Capital Resources December 31, 2024 2023 (In thousands, except percentages) Cash and cash equivalents $ 691,816 $ 527,843 Short-term investments 171,130 580,633 Total cash, cash equivalents and short-term investments $ 862,946 $ 1,108,476 Percentage of total assets 23.9 % 45.5 % Total current assets $ 1,565,053 $ 1,819,499 Total current liabilities (294,567 ) (235,035 ) Working capital $ 1,270,486 $ 1,584,464 As of December 31, 2024, we had cash and cash equivalents of $691.8 million and short-term investments of $171.1 million, compared with cash and cash equivalents of $527.8 million and short-term investments of $580.6 million as of December 31, 2023.
Tax Cuts and Jobs Act enacted in December 2017 (the “2017 Tax Act”) . As permitted by the 2017 Tax Act, we have elected to pay the tax liability in installments on an interest-free basis through 2025. As of December 31, 2023, the remaining liability totaled $11.1 million, of which $4.9 million was short-term.
Transition Tax Liability The transition tax liability represents the one-time, mandatory deemed repatriation tax imposed on previously deferred foreign earnings under the U.S. Tax Cuts and Jobs Act enacted in December 2017 (the “2017 Tax Act”) . As permitted by the 2017 Tax Act, we have elected to pay the tax liability in installments on an interest-free basis through 2025.
Conversely, if actual demand or market conditions are more favorable, inventories may be sold that were previously written down. Accounting for Income Taxes Our calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws.
We believe the following critical accounting estimates reflect our significant judgments used in the preparation of our consolidated financial statements. Accounting for Income Taxes Our calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws.
For the year ended December 31, 2023, the $166.2 million increase in cash used in investing activities compared to the prior period was primarily due to an increase of $518.9 million in purchases of investments, partially offset by an increase of $340.4 million in sales of investments.
For the year ended December 31, 2024, the $401.8 million increase in cash provided by investing activities compared to the prior period was primarily due to a $1.0 billion year-over-year increase in the sale of investments, partially offset by a $500.8 million increase in the purchase of investments, an increase of $88.5 million in property and equipment purchases and a $33.3 million acquisition in the year ended December 31, 2024.
The $23.5 million increase in R&D expenses was primarily due to a $20.9 million increase in new product development expenses, a $5.6 million increase in expenses related to changes in the value of deferred compensation plan liabilities and a $1.8 million increase in depreciation.
The $61.1 million increase in R&D expenses was primarily due to a $27.7 million increase in cash compensation expenses and benefits, an $11.0 million increase in stock-based compensation expenses and related payroll taxes, a $7.6 million increase in new product development expenses and a $5.0 million increase consisting mostly of software licensing fees.
As of December 31, 2023, we had remaining prepayments under this agreement of $120.0 million reported in other long-term assets on the Consolidated Balance Sheet.
As of December 31, 2024, we had remaining prepayments under this agreement of $60.0 million reported in other long-term assets on the Consolidated Balance Sheets. As of December 31, 2024, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $60.0 million prepayment, were $616.8 million, of which $569.6 million was due within a year.
The decrease in the effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax. In December 2023, the Bermuda Corporate Income Tax Act of 2023 (the “Bermuda CIT Act”) was enacted and signed into law.
We will continue to evaluate the impact of this release or of other prospective guidance on our future global tax provision. In December 2023, Bermuda Corporate Income Tax Act of 2023 (the “Bermuda CIT Act”) was enacted and signed into law.
As the Bermuda CIT Act is not effective until January 1, 2025, we are evaluating whether or not to adopt this ETA. Based on information available, we have not recorded any changes to income tax expense related to the Bermuda CIT Act as of December 31, 2023.
As the Bermuda CIT Act is not effective until January 1, 2025, and we do not expect to realize material taxable income in Bermuda in 2025, no changes to income tax expense related to the Bermuda CIT Act have been recorded as of December 31, 2024. See Note 12 of the Notes to Consolidated Financial Statements for further discussion.
This decrease primarily reflected lower sales in applications for industrial automation, security and power sources. Revenue from the communications market decreased $46.5 million, or 18.5%, from the same period in 2022. The decrease was a result of lower 4G and 5G infrastructure sales. Revenue from the consumer market decreased $84.8 million, or 26.6%, from the same period in 2022.
Revenue from the industrial market decreased $25.4 million, or 14.7%, from the same period in 2023. This decrease primarily reflected lower sales of products related to industrial meter and security applications.
Income Tax Expense The income tax expense for the year ended December 31, 2023 was $78.5 million, or 15.5% of pre-tax income.
The effective tax rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax, the addition of a valuation allowance against foreign tax assets, and excess tax benefits from stock-based compensation. The income tax expense for the year ended December 31, 2023 was $78.5 million, or 15.5% of pre-tax income.
We may repatriate additional cash from our Bermuda subsidiary to fund our expenditures in future periods. We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.
The proceeds are primarily used to fund our stock repurchase program, dividend program and ongoing business operations. We may repatriate additional cash from certain foreign subsidiaries to fund our expenditures in future periods.
Other Income (Expense), Net Other income, net, was $24.1 million for the year ended December 31, 2023, compared with other expense, net, of $1.8 million for the year ended December 31, 2022.
The $81.0 million increase in SG&A expenses was driven by a $50.1 million increase in stock-based compensation expenses and related payroll taxes, a $16.4 million increase in cash compensation expenses and benefits, and a $6.7 million increase in professional services. 36 Table of Contents Other Income (Expense), Net Other income, net, was $33.6 million for the year ended December 31, 2024, compared with $24.1 million for the year ended December 31, 2023.
The income tax expense for the year ended December 31, 2022 was $87.3 million, or 16.6% of pre-tax income. The effective tax rate was lower than the federal statutory rate of 21% primarily due to foreign income from our subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.
The effective tax rate was lower than the federal statutory rate of 21% primarily due to tax benefits associated with a ten-year tax incentive. In 2024, one of our foreign subsidiaries was granted a ten-year tax incentive, beginning in 2025.
Removed
We derive a majority of our revenue from the sales of our DC to DC converter products which serve the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.
Added
For example, a change in forecasted income could impact the expected utilization of our tax incentive and result in an income tax benefit or additional income tax expense in our financial statements in the period such determination is made.
Removed
We believe the following critical accounting policies reflect our more significant judgments used in the preparation of our consolidated financial statements. Revenue Recognition We account for price adjustments and stock rotation rights as variable consideration that reduces the transaction price and recognize that reduction in the same period the associated revenue is recognized.
Added
Revenue from the storage and computing market increased $10.4 million, or 2.1%, from the same period in 2023. This increase was primarily driven by increased sales of products for notebooks. Revenue from the consumer market decreased $32.6 million, or 13.9%, from the same period in 2023. This decrease was a result of broad market weakness.
Removed
Certain U.S.-based distributors have price adjustment rights when they sell our products to their end customers at a price that is lower than the distribution price invoiced by us. When we receive claims from the distributors that products have been sold to the end customers at the lower price, we issue the distributors credit memos for the price adjustments.
Added
The increase was primarily due to an increase in amortization of discounts on available-for-sale securities, partially offset by an increase in charitable contributions. Income Tax Expense (Benefit), Net The net income tax benefit for the year ended December 31, 2024 was $1.2 billion, or 211.9% of pre-tax income.
Removed
We estimate the price adjustments using the expected value method based on an analysis of historical claims, at both the distributor and product level, as well as an assessment of any known trends of product sales mix.
Added
A deferred tax benefit of approximately $1.3 billion, net of $0.1 billion of valuation allowance, was recorded during the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive. Furthermore, the 2024 effective tax rate benefited from lower statutory tax rates at certain of our foreign subsidiaries.
Removed
Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases in accordance with the contract terms. We estimate the stock rotation returns using the expected value method based on an analysis of historical returns, and the current level of inventory in the distribution channel.
Added
In December 2024, we completed an intercompany transaction that resulted in one of our foreign subsidiaries recording a step up in the tax basis of intangible assets of approximately $23.2 billion. This resulted in a deferred tax difference between the U.S. GAAP basis and local tax basis of the specified intangibles.
Removed
Overall, our estimates of adjustments to contract price due to variable consideration have been materially consistent with actual results; however, these estimates are subject to management’s judgment and actual provisions could be different from our estimates and current provisions, resulting in future adjustments to our revenue and operating results.
Added
We do not expect to realize the deferred tax asset for U.S. GAAP purposes; therefore, we have recorded a full valuation allowance as of December 31, 2024. In January 2025, the OECD released new Administrative Guidance on the application of the Global Anti-Base Erosion Model Rules.
Removed
Based on the facts and circumstances in each matter, the determination of such liability requires significant judgment. In determining the amount of a contingent loss, we take into account advice received from experts for each specific matter regarding the status of legal proceedings, settlement negotiations, prior case history and other factors.
Added
The increase was also contributed by the receipt of prepaid wafer expenses in the year ended December 31, 2024 and other changes in working capital.
Removed
Should the judgments and estimates made by management need to be adjusted as additional information becomes available, we may need to record additional contingent losses that could materially and adversely impact our results of operations.
Added
As of December 31, 2024, the authorized amount under this program was utilized. In February 2025 , our Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $500.0 million of our common stock through February 2028 . Shares are retired upon repurchase.
Removed
Alternatively, if the judgments and estimates made by management are adjusted, for example, if a particular contingent loss does not occur, the contingent loss recorded would be reversed which could result in a favorable impact on our results of operations.
Removed
Recent Accounting Pronouncements See Note 1 of the Notes to Consolidated Financial Statements regarding a recently adopted accounting pronouncement and recent accounting pronouncements not yet adopted as of December 31, 2023.
Removed
The decrease in gross margin was mainly driven by product mix, partially offset by lower inventory write-downs and warranty expenses as a percentage of revenue.
Removed
The $5.9 million decrease in SG&A expenses was driven by a $12.4 million decrease in stock-based compensation expenses, an $8.8 million decrease in cash compensation expenses driven by decreased bonuses, and a $3.1 million decrease in litigation expenses.
Removed
This decrease was partially offset by a $10.1 million increase in expenses related to changes in the value of the deferred compensation plan liabilities, and an $8.2 million increase consisting mostly of travel related expenses, third party service expenses and software licensing fees.
Removed
The increase in other income was primarily due to an increase of $18.6 million in net interest income as a result of higher interest rates, and an increase of $15.1 million in income related to changes in the value of deferred compensation plan investments, partially offset by an increase of $9.0 million in charitable contributions.
Removed
The Bermuda CIT Act also includes an Economic Transition Adjustment (“ETA”) that requires MNE’s to revalue their assets and liabilities, excluding goodwill, at their fair value as of September 30, 2023. There is an election to opt out of the ETA.
Removed
In August 2022, the CHIPS Act and the Inflation Reduction Act of 2022 (the “IRA”) were enacted and signed into law, which did not have a material impact on our income tax provisions, results of operations or financial condition for the years ended December 31, 2023 or 2022.
Removed
We will continue to monitor any new developments related to the CHIPS Act and the IRA and evaluate their impact on our financial statements.
Removed
As of December 31, 2023, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $120.0 million prepayment, were $699.7 million, of which $367.8 million was classified as short-term. 39 Table of Contents Transition Tax Liability The transition tax liability represents the one-time, mandatory deemed repatriation tax imposed on previously deferred foreign earnings under the U.S.
Removed
We repurchased approximately 7,000 shares of our common stock for an aggregate purchase price of $3.7 million during the year ended December 31, 2023. As of December 31, 2023, $636.3 million remained available for future repurchases under the program.
Removed
See Note 17 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed4 unchanged
Biggest changeWe do not use derivative financial instruments in our investment portfolio. Foreign Currency Exchange Risk Our sales outside the United States are primarily transacted in U.S. dollars through our subsidiary in Bermuda. Accordingly, our sales are not generally impacted by foreign currency rate changes.
Biggest changeWe do not use derivative financial instruments in our investment portfolio. Foreign Currency Exchange Risk Our sales outside the U.S. are primarily transacted in U.S. dollars. Accordingly, our sales are not generally impacted by foreign currency rate changes.
Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting our investments to high quality debt instruments with relatively short-term maturities. Based on our investment positions as of December 31, 2023, the impact of changes in interest rates on our interest income was immaterial.
Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting our investments to high quality debt instruments with relatively short-term maturities. Based on our investment positions as of December 31, 2024, the impact of changes in interest rates on our interest income was immaterial.
Gains or losses from the remeasurement and settlement of the balances are reported in other income (expense), net, on the Consolidated Statements of Operations. Fluctuations in foreign currency exchange rates have not had a material impact on our results of operations for the periods presented. 40 Table of Contents
Gains or losses from the remeasurement and settlement of the balances are reported in other income (expense), net, on the Consolidated Statements of Operations. Fluctuations in foreign currency exchange rates have not had a material impact on our results of operations for the periods presented. 39 Table of Contents
Based on our investment positions as of December 31, 2023, a hypothetical 100 basis point increase in interest rates would result in a $4.5 million decline in the fair value of our investments. Any losses resulting from such interest rate changes would only be realized if we sold the investments prior to maturity.
Based on our investment positions as of December 31, 2024, a hypothetical 100 basis point increase in interest rates would result in a $0.1 million decline in the fair value of our investments. Any losses resulting from such interest rate changes would only be realized if we sold the investments prior to maturity.

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