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What changed in MAXLINEAR, INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MAXLINEAR, INC'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.

+491 added−470 removedSource: 10-K (2025-01-29) vs 10-K (2024-01-31)

Top changes in MAXLINEAR, INC's 2024 10-K

491 paragraphs added · 470 removed · 380 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+7 added−22 removed115 unchanged
Biggest changeAs a result, we believe our solutions have exceptional levels of functional integration and performance, low manufacturing cost, and reduced power consumption versus competition. These solutions also enable shorter design cycles, significant design flexibility and low system-level cost across a range of markets.
Biggest changeOur ability to design analog and mixed-signal circuits in CMOS allows us to efficiently combine analog functionality and complex digital signal processing logic in the same integrated circuit. As a result, we believe our solutions have exceptional levels of functional integration and performance, low manufacturing cost, and reduced power consumption versus competition.
Optical transceivers operate across the widest bandwidths available and must preserve the necessary SNR throughout their bandwidth. These 7 Table of Contents transceiver systems must compensate for impairments introduced as the signal propagates through wire, fiber or wireless mediums, as well as isolate the desired signals from the undesired signals that are invariably present in their wide operating frequency range.
Optical transceivers operate across the widest bandwidths available and must preserve the necessary SNR throughout their bandwidth. These transceiver systems must compensate for impairments introduced as the signal propagates through wire, fiber or wireless mediums, as well as isolate the desired signals from the undesired signals that are invariably present in their wide operating 7 Table of Contents frequency range.
This imposes severe limits to the high-speed conversion of electrical signals to optical signals, and vice versa, owing to the bandwidth limitations, nonlinearities, and noise properties in lasers, modulators, and photo detectors used in optical modules. 8 Table of Contents ▪ Form Factor: Optical transceivers are required to conform to multi-source agreement, or MSA, standardized form factors, which in turn determine the number of transceiver ports that can fit in the face plates of standard server, storage, and switch rack units.
This imposes severe limits to the high-speed conversion of electrical signals to optical signals, and vice versa, owing to the bandwidth limitations, nonlinearities, and noise properties in lasers, modulators, and photo detectors used in optical modules. ▪ Form Factor: Optical transceivers are required to conform to multi-source agreement, or MSA, standardized form factors, which in turn determine the number of transceiver ports that can fit in the face plates of standard server, storage, 8 Table of Contents and switch rack units.
These regulations various aspects of our business and include regulations regarding environmental, health, and safety matters, such as laws and regulations adopted by the U.S. Occupational Safety and Health Administration or similar authorities in other jurisdictions. We believe that our properties and operations comply in all material respects with applicable laws protecting the environment and worker health and safety.
These regulations impact various aspects of our business and include regulations regarding environmental, health, and safety matters, such as laws and regulations adopted by the U.S. Occupational Safety and Health Administration or similar authorities in other jurisdictions. We believe that our properties and operations comply in all material respects with applicable laws protecting the environment and worker health and safety.
Our efforts include maintaining an anti-slavery policy, and a business partner labor standards policy which bars the use of forced or child labor and slavery and a conflict minerals policy governing the use and distribution of 3TG minerals, as well as conducting due diligence before allowing a potential supplier to become a preferred supplier.
Our efforts also include maintaining an anti-slavery policy, and a business partner labor standards policy which bars the use of forced or child labor and slavery and a conflict minerals policy governing the use and distribution of 3TG minerals, as well as conducting due diligence before allowing a potential supplier to become a preferred supplier.
Challenges Faced by Providers of Systems and RF Transceivers and Optical Interconnects Designing and implementing state-of-the-art RF and optical transceiver systems is difficult owing to the high operating frequency ranges and wide frequency bands employed by communication signals, and the low power budgets of applications.
Challenges Faced by Providers of Systems and RF Transceivers and High Speed Interconnects Designing and implementing state-of-the-art RF and optical transceiver systems is difficult owing to the high operating frequency ranges and wide frequency bands employed by communication signals, and the low power budgets of applications.
By solving the specific problems faced by our customers, we can minimize the risks associated with our customers’ adoption of our new integrated circuit products and reduce the length of time from the start of product design to customer revenue.
By solving the specific problems faced by our customers, we minimize the risks associated with our customers’ adoption of our new integrated circuit products and reduce the length of time from the start of product design to customer revenue.
We will continue to invest in this capability and strive to be an innovation leader in this market. • Leverage and Expand our Existing Customer Base: We target customers who are leaders in their respective markets.
We will continue to invest in this capability and be an innovation leader in this market. • Leverage and Expand our Existing Customer Base: We target customers who are leaders in their respective markets.
We offer this via a combination of competitive base salary, time-based equity incentives and bonus plans linked to financial performance that are designed to motivate and reward personnel with annual grants of stock-based and cash-based incentive compensation awards to our employees, some of which 16 Table of Contents vest over a period of four years, plus other benefits, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve both our short and long-term objectives.
We offer this via a combination of competitive base salary, time-based equity incentives and bonus plans linked to financial performance that are designed to motivate and reward personnel with annual grants of stock-based and cash-based incentive compensation awards to our employees, some of which vest over a period of four years, plus other benefits, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve both our short and long-term objectives.
We aim to continue to leverage our core analog and digital signal co-processing competencies to expand into other communications markets with similar performance requirements.
We continue to leverage our core analog and digital signal co-processing competencies to expand into other communications markets with similar performance requirements.
Likewise, data transmission is achieved by disaggregating the user’s data signal and transmitting it over multiple available frequency bands spanning a wide frequency spectrum. For example, in the cable modem and broadband gateway markets, it is necessary to support the simultaneous reception of multiple high-definition video streams, video conferencing, and data applications in many system designs.
Likewise, data transmission is achieved by disaggregating the user’s data signal and transmitting it over multiple available frequency bands spanning a wide frequency spectrum. For example, in the broadband gateway markets, it is necessary to support the simultaneous reception of multiple high-definition video streams, video conferencing, and data applications in many system designs.
In this Form 10-K, unless the context otherwise requires, the “Company,” “we,” “us” and “our” refer to MaxLinear, Inc. and its directly and indirectly wholly-owned subsidiaries. Our website address is www.maxlinear.com. The contents of our website are not incorporated by reference into this Form 10-K.
In this Form 10-K, unless the context otherwise requires, the “Company,” “we,” “us” and “our” refer to MaxLinear, Inc. and its directly and indirectly wholly-owned 4 Table of Contents subsidiaries. Our website address is www.maxlinear.com. The contents of our website are not incorporated by reference into this Form 10-K.
While the remaining duration on the individual patents in our patent portfolio varies, we believe that the duration of our issued patents is adequate relative to the expected lives of our products. We own numerous trademarks related to our current products that have been registered in the United States and 5 pending U.S. trademark applications.
While the remaining duration on the individual patents in our patent portfolio varies, we believe that the duration of our issued patents is adequate relative to the expected lives of our products. We own numerous trademarks related to our current products that have been registered in the United States and 4 pending U.S. trademark applications.
The integration of the entire system on a single-chip or utilizing minimal number of silicon dies reduces the number of external board-level components, decreases board space, improves performance, simplifies customers’ product design, and significantly reduces power consumption. 9 Table of Contents • Low-power design methodology: The superior energy efficiency of our products reflects our years of cumulative experience and research and development, or R&D, investment in system architecture, semiconductor device modeling, and integrated circuit design expertise.
The integration of the entire system on a single-chip or utilizing minimal number of silicon dies reduces the number of external board-level components, decreases board space, improves performance, simplifies customers’ product design, and significantly reduces power consumption. • Low-power design methodology: The superior energy efficiency of our products reflects our years of cumulative experience and research and development, or R&D, investment in system architecture, semiconductor device modeling, and integrated circuit design expertise.
For more details regarding our executive compensation, refer to information incorporated by reference from the information set forth under the captions “Executive Compensation” and “Compensation Discussion and Analysis” in either an amendment to this Form 10-K or our upcoming 2024 Proxy Statement.
For more details regarding our executive compensation, refer to information incorporated by reference from the information set forth under the captions “Executive Compensation” and “Compensation Discussion and Analysis” in either an amendment to this Form 10-K or our upcoming 2025 Proxy Statement.
Some of our targeted customers for our optical interconnect solutions are module makers who are vertically integrated, where we compete with internally supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.
Some of our targeted customers for our high speed interconnect solutions are module makers who are vertically integrated, where we compete with internally supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.
In October 2022, BIS announced additional restrictions on products and/or technology destined for use in the People’s Republic of China, including additional export controls and/or requirements on (1) 15 Table of Contents certain advanced computing integrated circuits, computer commodities that contain such integrated circuits and certain semiconductor manufacturing items; (2) products and/or technologies that may be destined for facilities capable of producing certain advanced node integrated circuits; and (3) transactions involving items for supercomputer and semiconductor manufacturing end uses.
In October 2022, BIS announced additional restrictions on products and/or technology destined for use in the People’s Republic of China, including additional export controls and/or requirements on (1) certain advanced computing integrated circuits, computer commodities that contain such integrated circuits and certain semiconductor manufacturing items; (2) products and/or technologies that may be destined for facilities capable of producing certain advanced node integrated circuits; and (3) transactions involving items for supercomputer and semiconductor manufacturing end uses.
Competition We compete with both established and development-stage semiconductor companies that design, manufacture and market analog and mixed-signal broadband RF receivers, optical interconnects, high-performance interface, data and video compression and encryption, and power management products.
Competition We compete with both established and development-stage semiconductor companies that design, manufacture and market analog and mixed-signal broadband RF receivers, high speed interconnects, high-performance interface, data and video compression and encryption, and power management products.
Current litigation and any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights ” and in “Item 3 — Legal Proceedings.” Governmental Regulation Our business and operations around the world are subject to government regulation at the international, national, state, provincial, and local level.
Current litigation and any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights ” and in “Item 3 — Legal Proceedings.” 14 Table of Contents Governmental Regulation Our business and operations around the world are subject to government regulation at the international, national, state, provincial, and local level.
For example, revenue generated from sales of our cable modem products during the years ended December 31, 2023, 2022 and 2021 related principally to sales to Asian ODM’s and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
For example, revenue generated from sales of our modem products during the years ended December 31, 2024, 2023 and 2022 related principally to sales to Asian ODM’s and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
They may also rely on real-time communication with systems of IoT devices including sensors, lighting, and actuators; smart speakers, smart lighting and other 5 Table of Contents smart appliances in the connected home; commercial air-conditioning and refrigeration; video surveillance equipment; manufacturing machinery; and point-of-sale and asset tracking systems.
They may also rely on real-time communication with systems of IoT devices including sensors, lighting, and actuators; smart speakers, smart lighting and other smart appliances in the connected home; commercial air-conditioning and refrigeration; video surveillance equipment; manufacturing machinery; and point-of-sale and asset tracking systems.
Because our products often are building block semiconductors which provide functions that in some cases can be integrated into more complex integrated circuits, we also face competition from manufacturers of integrated circuits, some of 13 Table of Contents which may be existing customers or platform partners that develop their own integrated circuit products.
Because our products often are building block semiconductors which provide functions that in some cases can be integrated into more complex integrated circuits, we also face competition from manufacturers of integrated circuits, some of which may be existing customers or platform partners that develop their own integrated circuit products.
We believe that the principal competitive factors in our markets include the following: • product performance; • features and functionality; • energy efficiency; • size; • ease of system design; • customer support; • product roadmap; • reputation; • reliability; and • price. We believe that we compete favorably as measured against each of these criteria.
We believe that the principal competitive factors in our markets include the following: • product performance; • features and functionality; • energy efficiency; • size; • ease of system design; • customer support; • product roadmap; • reputation; • reliability; and 13 Table of Contents • price. We believe that we compete favorably as measured against each of these criteria.
ITEM 1. BUSINESS 4 Table of Contents Corporate Information We incorporated in the State of Delaware in September 2003. Our executive offices are located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and our telephone number is (760) 692-0711.
ITEM 1. BUSINESS Corporate Information We incorporated in the State of Delaware in September 2003. Our executive offices are located at 5966 La Place Court, Suite 100, Carlsbad, California 92008, and our telephone number is (760) 692-0711.
We intend to continue to focus on sales to customers who are leaders in our current target markets, and to build on our relationships with these leading customers to define and enhance our product roadmap.
We focus on sales to customers who are leaders in our current target markets, and to build on our relationships with these leading customers to define and enhance our product roadmap.
We own foreign counterparts of certain of these registered trademarks in Brazil, Canada, Chile, China, the EU, Germany, Great Britain, Hong Kong, India, Israel, Japan, South Korea, Singapore, and Taiwan. We also claim common law rights in certain other trademarks that are not registered. Trademark rights may continue for a limited duration or in perpetuity, provided certain requirements are met.
We own foreign counterparts of certain of these registered trademarks in Brazil, Canada, Chile, China, the EU, Germany, Hong Kong, India, Israel, Japan, South Korea, Singapore, Taiwan and United Kingdom. We also claim common law rights in certain other trademarks that are not registered. Trademark rights may continue for a limited duration or in perpetuity, provided certain requirements are met.
It is possible that we may be provided with information in the future that could negatively affect the scope or enforceability of either our present or future patents. Furthermore, our pending and future patent applications may or may not 14 Table of Contents be granted under the scope of the claims originally submitted in our patent applications.
It is possible that we may be provided with information in the future that could negatively affect the scope or enforceability of either our present or future patents. Furthermore, our pending and future patent applications may or may not be granted under the scope of the claims originally submitted in our patent applications.
All these usage scenarios depend on reliable, fast, low-latency networks, enabled by advances in semiconductor devices which integrate wide spectrum/broadband, high-frequency circuits together with digital signal processing algorithms. Such devices not only expand the available network bandwidth, but also utilize that bandwidth more efficiently.
All these usage scenarios depend on reliable, fast, low-latency networks, enabled by advances in semiconductor devices which integrate wide spectrum/broadband, high-frequency 5 Table of Contents circuits together with digital signal processing algorithms. Such devices not only expand the available network bandwidth, but also utilize that bandwidth more efficiently.
We consider our primary competitors to be companies with a proven track record of supporting market leaders and the technical capability to develop and bring to market competing broadband RF receiver and RF receiver SoC, modem, and optical interconnect products.
We consider our primary competitors to be companies with a proven track record of supporting market leaders and the technical capability to develop and bring to market competing broadband RF receiver and RF receiver SoC, modem, and high speed interconnect products.
Our distributors are independent entities that assist us in identifying and servicing customers in a particular territory, usually on a non-exclusive basis. Sales to distributors accounted for approximately 50%, 46%, and 47% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively.
Our distributors are independent entities that assist us in identifying and servicing customers in a particular territory, usually on a non-exclusive basis. Sales to distributors accounted for approximately 44%, 50%, and 46% of our net revenue in the years ended December 31, 2024, 2023 and 2022, respectively.
All connectivity standards rely on multiple wireless or wireline transceivers or single large bandwidth transceivers to improve the data handling capacity and ability to talk to multiple devices simultaneously. • Industrial & Multi-Market : Manufacturing systems are increasingly being connected to each other and to the cloud.
All connectivity standards rely on 6 Table of Contents multiple wireless or wireline transceivers or single large bandwidth transceivers to improve the data handling capacity and ability to talk to multiple devices simultaneously. • Industrial & Multi-Market : Manufacturing systems are increasingly being connected to each other and to the cloud.
Within this range of processes, we use a variety of process technology nodes ranging from 0.25µ down to 5 nanometer. We depend on independent silicon foundry manufacturers to support our wafer fabrication requirements. Our key foundry partners include Taiwan Semiconductor Manufacturing Corporation, or TSMC, in Taiwan, and United Microelectronics Corporation, or UMC, in Taiwan and Singapore.
Within this range of processes, we use a variety of process technology nodes ranging from 0.25µ down to 3 nanometer. We depend on independent silicon foundry manufacturers to 11 Table of Contents support our wafer fabrication requirements. Our key foundry partners include Taiwan Semiconductor Manufacturing Corporation, or TSMC, in Taiwan, and United Microelectronics Corporation, or UMC, in Taiwan and Singapore.
Our engineering design teams are located in Carlsbad, Irvine, and San Jose in California; Boston, Massachusetts; Singapore; Shanghai, and Shenzhen in China; Taipei and Hsinchu in Taiwan; Bangalore and Chennai in India; and Austria, Canada, Germany, Israel, and Spain.
Our engineering design teams are located in Carlsbad, Irvine, and San Jose in California; Singapore; Shanghai, and Shenzhen in China; Taipei and Hsinchu in Taiwan; Bangalore and Chennai in India; Canada, Germany, Israel, and Spain.
Our ability to achieve the highest levels of integration of all analog/RF and digital signal processing functionality on the same chip minimizes power consumption by eliminating such signal transitions. Our solutions disproportionately impact our end-customer’s product power dissipation, such as in cable modems, cable FDX fiber nodes, 400Gbps optical transceiver modules, and large 5G antenna radio transceiver arrays.
Our ability to achieve the highest levels of integration of all analog/RF and digital signal processing functionality on the same chip minimizes power consumption by eliminating such signal transitions. Our solutions disproportionately impact our end-customer’s product power dissipation, 9 Table of Contents such as in cable modems, 400Gbps optical transceiver modules, and large 5G antenna radio transceiver arrays.
We work closely with our vendors in providing a supplier forecast six to twelve months in advance to ensure they have an adequate supply of raw materials to cover our forecast. 11 Table of Contents Manufacturing We use third-party foundries and assembly and test contractors to manufacture, assemble and test our products.
We work closely with our vendors in providing a supplier forecast three to twelve months in advance to ensure they have an adequate supply of raw materials to cover our forecast. Manufacturing We use third-party foundries and assembly and test contractors to manufacture, assemble and test our products.
These laws and regulations are complex, may change frequently and with limited notice, and may continue to become more stringent over time. We may incur significant expenditures in a future period as a result.
These laws and regulations are complex, may change frequently and with 15 Table of Contents limited notice, and may continue to become more stringent over time. We may incur significant expenditures in a future period as a result.
We have assembled a team of highly skilled semiconductor and embedded software design engineers with expertise in broadband RF, mixed-signal and high-performance analog integrated circuit design, digital signal processing, communications systems and SoC design. As of December 31, 2023, we had approximately 1,328 employees in our R&D group.
We have assembled a team of highly skilled semiconductor and embedded software design engineers with expertise in RF, mixed-signal and high-performance analog integrated circuit design, digital signal processing, communications systems and SoC design. As of December 31, 2024, we had approximately 941 employees in our R&D group.
We consider our global employee relations to be good. In 2023, our employee voluntary turnover rate was 7%. Our human capital resources objectives include, as applicable, attracting and retaining talented and experienced employees, advisors, and consultants. We utilize multiple online search tools, specialized recruiting firms, employee referral programs and university hires to ensure a varied outreach approach for candidates.
We consider our global employee relations to be good. Our human capital resources objectives include, as applicable, attracting and retaining talented and experienced employees, advisors, and consultants. We utilize multiple online search tools, specialized recruiting firms, employee referral programs and university hires to ensure a varied outreach approach for candidates.
Females represented 29% of our outside directors, 11% of senior management, 15% of our technical roles, and 19% of our total workforce. Of our total employee workforce, 9% is represented by Work Councils in Austria and Germany. The Work Council groups, common to these countries, are comprised of employees elected by the general employee base.
Females represented 29% of our outside directors, 7% of senior management, 14% of our technical roles, and 19% of our total workforce. Of our total employee workforce, 3% is represented by Work Councils in Austria and Germany. The Work Council groups, common to these countries, are comprised of employees elected by the general employee base.
Our competitors include companies with much longer operating histories, greater name recognition, access to larger customer bases and substantially greater financial, technical and operational resources, as well as smaller companies specializing in narrow markets, to internal or vertically integrated engineering groups within certain of our customers. In addition, our industry is experiencing substantial consolidation.
Our competitors include companies with much longer operating histories, greater name recognition, and substantially greater financial, technical and operational resources, as well as smaller companies specializing in narrow markets, to internal or vertically integrated engineering groups within certain of our customers. In addition, our industry experiences substantial consolidation.
We also rely on certain vendors to supply turnkey products, including, in particular, Intel Corporation, for certain products we sell. This outsourced manufacturing approach allows us to focus our resources on the design, sale and marketing of our products.
We also rely on certain vendors to supply turnkey products for certain products we sell. This outsourced manufacturing approach allows us to focus our resources on the design, sale and marketing of our products.
We intend to leverage our core competency in developing highly integrated RF transceiver and RF transceiver SoCs in standard CMOS process technology to address additional markets within broadband communications, communications infrastructure, and connectivity markets that we believe offer high growth potential. • Expand Global Presence: Due to the global nature of our supply chain and customer locations, we intend to resume expansion of our sales, design and technical support organization both in the United States and overseas in future years as we develop products to drive future growth.
We intend to leverage our core competency in developing highly integrated RF transceiver and RF transceiver SoCs in standard CMOS process technology to address additional markets within broadband communications, communications infrastructure, and connectivity markets that we believe offer high growth potential. • Expand Global Presence: Due to the global nature of our supply chain and customer locations, we continue to expand our sales, design, operations and technical support organization both in the United States and overseas.
We are committed to the use of a socially responsible supply chain to reduce the risk of human rights violations and the use of conflict minerals (tin, tungsten, tantalum and gold, or 3TG) from the Democratic Republic of Congo and certain adjoining countries.
We are committed to the use of a socially responsible supply chain to reduce the risk of human rights violations and the use of conflict minerals (tin, tungsten, tantalum and gold, or 3TG) from the Democratic Republic of Congo and certain adjoining countries. The results of our conflict minerals surveys are reported annually on a conflict minerals report.
Among other things, we monitor our global environmental footprint, both directly and indirectly, and in our development efforts, our engineers are consistently focused on improving the power efficiency and thermal performance of our chips, minimizing water consumption and waste, promoting recycling of reusable materials, and providing customer satisfaction through compliance with global environmental regulations as they relate to our products and operations.
In our development efforts, our engineers are consistently focused on improving the power efficiency and thermal performance of our chips, minimizing water consumption and waste, promoting recycling of reusable materials, and providing customer satisfaction through compliance with global environmental regulations as they relate to our products and operations.
The majority of our assembly/packaging and test requirements are supported by the following independent subcontractors: Advanced Semiconductor Engineering, or ASE, Greatek Electronics, Inc., JCET Group Co., Ltd, Signetics Corporation, SIGURD Microelectronics Corp., and Silicon Precision Industries. Quality Assurance. We have implemented significant quality assurance procedures to assure high levels of product quality for our customers.
The majority of our assembly/packaging and test requirements are supported by the following independent subcontractors: Advanced Semiconductor Engineering, or ASE, Greatek Electronics, Inc., Signetics Corporation, SIGURD Microelectronics Corp., and Silicon Precision Industries. Quality Assurance. We have implemented significant quality assurance procedures to assure high levels of product quality for our customers. Our operations are certified under ISO 9001:2015 standards.
Our operations are certified under ISO 9001:2015 standards. We closely monitor the work-in-progress information and production records maintained by our suppliers, and communicate with our third-party contractors to assure high levels of product quality and an efficient manufacturing time cycle.
We closely monitor the work-in-progress information and production records maintained by our suppliers, and communicate with our third-party contractors to assure high levels of product quality and an efficient manufacturing time cycle.
In addition, our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, such as the overall demand volatility for semiconductor solutions across a diverse range of communications, industrial and multimarket applications, the timing of receipt, reduction or cancellation of significant orders, the gain or loss of significant customers, market acceptance of our products and our customers’ products, our ability to timely develop, introduce and market new products and technologies, the availability and cost of products from our suppliers, new product and technology introductions by competitors, intellectual property disputes and the timing and extent of product development costs.
From time to time, these and other factors, together with changes in general economic conditions, cause significant upturns and downturns in the industry, and in our business in particular. 16 Table of Contents In addition, our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, such as the overall demand volatility for semiconductor solutions across a diverse range of communications, industrial and multimarket applications, the timing of receipt, reduction or cancellation of significant orders, the gain or loss of significant customers, market acceptance of our products and our customers’ products, our ability to timely develop, introduce and market new products and technologies, the availability and cost of products from our suppliers, new product and technology introductions by competitors, intellectual property disputes and the timing and extent of product development costs.
Additionally, our products are compliant with the Restriction of Hazardous Substances, or RoHS, and Registration, Evaluation, Authorization and Restriction of Chemicals, or REACH, standards in the European Union, or EU. Socially responsible supply chain.
Additionally, our 12 Table of Contents products are compliant with the Restriction of Hazardous Substances, or RoHS, and Registration, Evaluation, Authorization and Restriction of Chemicals, or REACH, standards in the European Union, or EU.
Further, we remove any suppliers that continue to fail to meet our business partner labor standards and conflict minerals policies after being provided the opportunity to remedy non-compliance via implementation of a corrective action plan. Equity, diversity, and inclusion .
Further, we remove any suppliers that continue to fail to meet our business partner labor standards and conflict minerals policies after being provided the opportunity to remedy non-compliance via implementation of a corrective action plan. We also participate in recycling of integrated circuits and boards.
We target applications that require stringent overall system performance and low power consumption. As new and challenging communication applications proliferate, we believe that many of these applications may benefit from our SoC solutions combining analog and mixed-signal processing with digital signal processing functions.
As new and challenging communication applications proliferate, we believe that many of these applications may benefit from our SoC solutions combining analog and mixed-signal processing with digital signal processing functions.
We operate across eighteen countries and are sensitive to the many cultures and backgrounds constituting our employee base. As of December 31, 2023, we had 1,759 full-time employees, including 1,328 in R&D, 265 in sales and marketing, 37 in operations and semiconductor technology and 129 in administration.
We operate across eighteen countries and are sensitive to the many cultures and backgrounds constituting our employee base. As of December 31, 2024, we had 1,294 full-time employees, including 941 in R&D, 213 in sales and marketing, 30 in operations and semiconductor technology and 110 in administration.
Products shipped to China accounted for 11%, 16% and 12% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively. Products shipped to Vietnam accounted for 13% of our net revenue in the year ended December 31, 2021.
Products shipped to China accounted for 11% and 16% of our net revenue in the years ended December 31, 2023, and 2022, respectively, and less than 10% in the year ended December 31, 2024.
We believe that we have 10 Table of Contents assembled a high-quality team in all the areas of expertise required at an integrated circuit design and communications systems company. Providing an attractive work environment for all of our employees is important to us.
We have assembled a high-quality team in all the areas of expertise required at an integrated circuit design and communications systems company. Providing an attractive work environment for all of our employees is important to us. We believe that our ability to attract the best engineers is a critical component of our future growth and success in our chosen markets.
In particular, we expect to align our regional support to our customer base. We believe that our customers will increasingly expect this kind of local capability and support. • Attract and Retain Top Talent: We are committed to recruiting and retaining highly talented personnel with proven expertise in the design, development, marketing and sales of communications integrated circuits.
In particular, we are aligned regionally to support to our customer base. • Attract and Retain Top Talent: We are committed to recruiting and retaining highly talented personnel with proven expertise in the design, development, marketing and sales of communications integrated circuits.
Industry Background Over the last three decades, ubiquitous internet connectivity has driven exponential growth in data content, delivery, distribution, and consumption.
In addition, we generate revenue from certain intellectual property sale agreements. Industry Background Over the last three decades, ubiquitous internet connectivity has driven exponential growth in data content, delivery, distribution, and consumption.
With respect to our indirect environmental impact, we consider and monitor the practices of our current and prospective foundry partners and suppliers in assessing environmental risks in our supply chain and in selecting key vendors. We believe that our key suppliers have made a public commitment to integrate sustainability and sensitivity to environmental impact into their manufacturing processes.
With respect to our indirect environmental impact, we consider and monitor the practices of our current and prospective foundry partners and suppliers in assessing environmental risks in our supply chain and in selecting key vendors.
We have employees across 18 countries: 49% are in Asia, 25% in the Americas, 14% in Europe and 12% in the Middle East. Our workforce is represented by the following race/ethnicities: 62% Asian, 30% White or Middle Eastern, 8% Latinx or Hispanic origin, with 44% Asian and 56% White or Middle Eastern in senior management.
We have employees across 17 countries: 52% are in Asia, 26% in the Americas, 12% in Europe and 10% in the Middle East. Our workforce is represented by the following race/ethnicities: 67% Asian, 24% White or Middle Eastern, 9% Latinx or Hispanic origin, with 53% Asian and 47% White or Middle Eastern in senior management.
If we are unable to protect our intellectual property, our business could be adversely affected .” The semiconductor industry is characterized by frequent litigation and other vigorous offensive and protective enforcement actions over rights to intellectual property. Moreover, there are numerous patents in the semiconductor industry, and new patents are being granted rapidly worldwide.
The scope of the claims submitted or granted may or may not be sufficiently broad to protect our proprietary technologies. The semiconductor industry is characterized by frequent litigation and other vigorous offensive and protective enforcement actions over rights to intellectual property. Moreover, there are numerous patents in the semiconductor industry, and new patents are being granted rapidly worldwide.
The focal point of network performance to and within the location is a gateway. These gateways not only determine the internet speeds coming into the location, but also the speed at which content is distributed throughout the location. Broadband modems – whether coaxial, fiber, or DSL, are needed to process increasingly wider portions of the spectrum carried by these media.
The focal point of network performance to and within the location is a gateway. These gateways not only determine the internet speeds coming into the location, but also the speed at which content is distributed throughout the location.
Our customers include electronics distributors, module makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, which incorporate our products in a wide range of electronic devices.
These solutions also enable shorter design cycles, significant design flexibility and low system-level cost across a range of markets. Our customers primarily include electronics distributors, module makers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs, which incorporate our products in a wide range of electronic devices.
Our products not only integrate the entire physical layer, or PHY, but also implement complete protocol stacks along with ready-for-use product level interface functionality and associated platform software. We also provide efficient and cost-effective platform level power management integrated circuit solutions that regulate and monitor the power consumption for our chips and other circuits on the platform.
Our products not only integrate the entire physical layer, or PHY, but also implement complete protocol stacks along with ready-for-use product level interface functionality and associated platform software.
Products shipped to Asia accounted for 75%, 82% and 83% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively. Products shipped to Hong Kong accounted for 37%, 43%, and 40% of our net revenue in the years ended December 31, 2023, 2022 and 2021, respectively.
In the years ended December 31, 2024, 2023 and 2022, ten customers accounted for approximately 60%, 54% and 65% of our net revenue, respectively. Products shipped to Asia accounted for 75%, 75% and 82% of our net revenue in the years ended December 31, 2024, 2023 and 2022, respectively.
For example, we often experience flat-to-declining revenue in the first quarter of each fiscal year and increasing revenue in the second quarter of each fiscal year. Our historical growth may have reduced the impact of seasonal or cyclical factors that might have influenced our business to date.
For example, we often experience flat-to-declining revenue in the first quarter of each fiscal year and increasing revenue in the second quarter of each fiscal year.
By providing a highly integrated reference design solution that our customers can incorporate in their products with minimal modifications, we enable our customers to design cost-effective high-performance SoC-based solutions rapidly. A significant portion of our sales are through distributors based in Asia, who then resell our product.
Customers We sell our products, directly and indirectly, to OEMs, module makers and ODMs, and we refer to these as our end customers. By providing a highly integrated reference design solution that our customers can incorporate in their products with 10 Table of Contents minimal modifications, we enable our customers to design cost-effective high-performance SoC-based solutions rapidly.
Corporate Social Responsibility As we continue to expand our presence around the world, we are mindful of our responsibility to reduce our carbon footprint, maintain a socially responsible supply chain, and advance equity, diversity and inclusion. Our board of directors and Nominating and Corporate Governance Committee oversees our environmental, social and governance directives. Reduce our carbon footprint .
Corporate Social Responsibility and Sustainability As we continue to expand our presence around the world, we are mindful of our responsibility to assess and mitigate climate risks, reduce our greenhouse gas emissions, and maintain a socially responsible supply chain.
Advanced implementations of Wi-Fi deploy as many as eight transceivers inside a single gateway box, combined with Wi-Fi extenders to improve coverage in a large area. 6 Table of Contents Consequently, the number of transceivers required, whether for wireless or broadband wireline access and distribution, increases proportionally to the increase in the number of broadband access connections.
For example, newer generations of Wi-Fi utilize increasing multiplicity of transceivers to enhance throughput. Advanced implementations of Wi-Fi deploy as many as eight transceivers inside a single gateway box, combined with Wi-Fi extenders to improve coverage in a large area.
Research and Development We believe that our future success depends on our ability to both improve our existing products and to develop new products for both existing and new markets. We direct our R&D efforts largely to the development of new high-performance, mixed-signal RF transceivers and SOCs for the connected home, wired and wireless infrastructure, and industrial and multi-market applications.
Research and Development We believe that our future success depends on our ability to both improve our existing products and to develop new products for both existing and new markets.
We are currently assessing additional measures to further reduce our emissions, which are reported annually on our website, and we plan to set formal targets for reducing emissions in the future. As a fabless semiconductor design company, we do not manufacture our products and, with respect to the activities we conduct directly, we believe we leave a limited environmental footprint.
For more information regarding the power efficiency and thermal performance of our products, refer to our corporate social responsibility and sustainability page on our website. Socially responsible supply chain. As a fabless semiconductor design company, we do not manufacture our products and, with respect to the activities we conduct directly, we believe we leave a limited environmental footprint.
This results in state-of-the-art performance, highest energy efficiency or lowest power, smallest form factor, and the lowest manufacturing cost of a target function. For example, in cable DOCSIS3.1 data gateways, our single-chip FSC receivers digitize the entire cable spectrum and aggregate multiple frequency bands or channels using analog and digital signal co-processing to enable multi-gigabit data services.
This results in state-of-the-art performance, highest energy efficiency or lowest power, smallest form factor, and the lowest manufacturing cost of a target function.
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In most cases, these products are designed on a single silicon-die using standard digital complementary metal oxide semiconductor, or CMOS, manufacturing processes and conventional packaging technologies. Importantly, our ability to design analog and mixed-signal circuits in CMOS allows us to efficiently combine analog functionality and complex digital signal processing logic in the same integrated circuit.
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Broadband modems – whether coaxial, fiber, fixed wireless or DSL, are needed to process increasingly wider portions of the spectrum carried by these media.
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For example, newer generations of Wi-Fi utilize increasing multiplicity of transceivers to enhance throughput.
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Consequently, the number of transceivers required, whether for wireless or broadband wireline access and distribution, increases proportionally to the increase in the number of broadband access connections.
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There is a 100-fold reduction in power per unit bandwidth while increasing the total data throughput by an even greater factor.
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A significant portion of our sales are through distributors based in Asia, who then resell our product. A significant portion of our net revenue has historically been generated by a limited number of customers through sales of our products, as well as consideration under intellectual property sale agreements.
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We believe that our ability to attract the best engineers is a critical component of our future growth and success in our chosen markets. Customers We sell our products, directly and indirectly, to OEMs, module makers and ODMs, and we refer to these as our end customers.
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Our board of directors and Nominating and Corporate Governance Committee oversees our corporate social responsibility and sustainability directives, while the Audit Committee oversees enterprise risk management, which includes an assessment of enterprise risks, including climate risks. Climate risk assessment.
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A significant portion of our net revenue has historically been generated by a limited number of customers. In the years ended December 31, 2023, 2022 and 2021, ten customers accounted for approximately 54%, 65% and 69% of our net revenue, respectively.
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We have completed an initial assessment of climate risks utilizing the Task Force on Climate-related Financial Disclosure, or TCFD, Guidance on Risk Management Integration and Disclosure, and present disclosures around the risk assessment and other matters in accordance with TCFD guidance on our corporate social responsibility and sustainability page on our website. Greenhouse gas emissions.
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In the year ended December 31, 2023, one of our direct customers represented 10% of our net revenue, and in the years ended December 31, 2022 and 2021, two of our direct customers represented 31% and 26%, respectively, of our net revenue.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

194 edited+62 added−23 removed318 unchanged
Biggest changeAny current or future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights. • If we are unable to protect our intellectual property, our business could be adversely affected. • We face risks related to security vulnerabilities in our products. • The use of open source software in our products, processes and technology may expose us to additional risks and harm our intellectual property. 19 Table of Contents Risks Relating to Reliance on Third Parties • Failure to manage our relationships with our third-party contractors successfully, or impacts from volatility in global supply, natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products. • Should any of our distributors cease or be forced to stop distributing our products, our business would suffer. • A lack of long-term supply contracts, and any supply disruption could have a material adverse effect on our business. • Any failure of third parties to provide services and technology could have a material adverse effect on our business.
Biggest changeRisks Relating to Reliance on Third Parties • A lack of long-term supply contracts, and any supply disruption could have a material adverse effect on our business. • Failure to manage our relationships with our third-party contractors successfully, or impacts from volatility in global supply, natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products. • Should any of our distributors cease or be forced to stop distributing our products, our business would suffer. • Any failure of third parties to provide services and technology could have a material adverse effect on our business.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
Even if we are able to finance such payments through the incurrence of additional indebtedness, any material increase in our indebtedness would adversely affect our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations. Issuing additional shares of our common stock, if material, will result in dilution of existing shares outstanding.
Even if we are able to finance such payments through the incurrence of additional indebtedness, any material increase in our indebtedness would adversely affect our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations. Issuing additional shares of our common stock, if material, will result in dilution of existing shares outstanding.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
Our operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future.
Our revenue and operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future.
The loss of the services of one or more of our key employees, especially our management and key design and technical personnel, or our inability to retain, attract and motivate qualified design and technical and other personnel, could have a material adverse effect on our business, financial condition and results of operations.
The loss of the services of one or more of our key employees, especially our management and key design and technical personnel, or our inability to retain, attract and motivate our management and qualified design and technical and other personnel, could have a material adverse effect on our business, financial condition and results of operations.
Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.
Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
We expect that we may not be able to obtain financing on favorable terms if at all or raise additional capital for any such payments.
Even if we are able to finance such payments through the incurrence of additional indebtedness, any material increase in our indebtedness would adversely affect our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations. Issuing additional shares of our common stock, if material, will result in dilution of existing shares outstanding.
Even if we are able to finance such payments through the incurrence of additional indebtedness, any material increase in our indebtedness would adversely affect our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations. Issuing additional shares of our common stock, if material, will result in dilution of existing shares outstanding.
A cybersecurity incident or other compromise of our information technology systems could result in unauthorized publication of confidential business or proprietary information belonging to us, a customer, supplier, employee or other third party, including personal data, result in violations of privacy or other laws, expose us to a risk of litigation, cause us to incur direct losses if attackers initiate wire transfers or access our bank or investment accounts, or damage our reputation.
A cybersecurity incident or other compromise of our information technology systems could result in unauthorized publication or misuse of confidential business or proprietary information belonging to us, a customer, supplier, employee or other third party, including personal data, result in violations of privacy or other laws, expose us to a risk of litigation, cause us to incur direct losses if attackers initiate wire transfers or access our bank or investment accounts, or damage our reputation.
Please refer to the Risk Factor entitled “ Our operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth, if any.
Please refer to the Risk Factor entitled “ Our revenue and operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth, if any.
Third parties have in the past and may in the future assert against us and our customers and distributors their patent and other intellectual property rights to technologies that are important to our business. For example, we were recently involved in a litigation with Bell Semiconductor, which has since been settled pursuant to a Settlement and Patent License Agreement.
Third parties have in the past and may in the future assert against us and our customers and distributors their patent and other intellectual property rights to technologies that are important to our business. For example, we were involved in a litigation with Bell Semiconductor, which has since been settled pursuant to a Settlement and Patent License Agreement.
In addition, our current credit agreement, and any new loan agreements, contain and would likely contain financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.
In addition, our current credit agreement, and any new loan agreements, contain and would likely contain financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, any future stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.
If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. The costs of complying with these laws (including the costs of any investigations, remediation, auditing and monitoring) could adversely affect our current or future business.
If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other penalties or sanctions. The costs of complying with these laws (including the costs of any investigations, remediation, auditing and monitoring) could adversely affect our current or future business.
Our business has been impacted and may continue to be impacted by geopolitical conditions such as international trade wars (including between the United States and China), the military conflict in Israel, the Russia-Ukraine conflict, and increased political tensions in Russia, Europe, the Middle East and Asia.
Our business has been impacted and may continue to be impacted by geopolitical conditions such as international trade wars (including between the United States and China), the military conflict in Israel and Gaza, the Russia-Ukraine conflict, and increased political tensions in Europe, the Middle East and Asia.
Our revenue has declined, and we may not sustain our current level of revenue, which has declined, and/or manage future growth effectively. The impact of excess inventory in the channel has continued to influence our customers’ expected demand for certain of our products.
Our revenue has declined, and we may not sustain our current level of revenue, which has declined, and/or manage future growth effectively. The impact of excess inventory in the channel has continued to influence our customers’ expected demand for certain of our products and negatively impact our revenue.
Risks Related to Our Business • We face intense competition and expect competition to increase in the future, which could have a material adverse effect on our revenue, revenue growth rate, if any, and market share. • Global economic conditions, including factors such as high inflation or a potential recession, could continue to adversely affect our business, financial condition, and results of operations. • We are subject to the cyclical nature of the semiconductor industry. • A significant variance in our operating results or rates of growth, if any, could continue to lead to substantial volatility in our stock price.
Risks Relating to Our Business • We face intense competition and expect competition to increase in the future, which could have a material adverse effect on our revenue, revenue growth rate, if any, and market share. • Global economic conditions, including factors such as high inflation or a potential recession, could continue to adversely affect our business, financial condition, and results of operations. • We are subject to the cyclical nature of the semiconductor industry. • A significant variance in our operating results or rates of growth, if any, could continue to lead to substantial volatility in our stock price.
In addition, climate change and new or revised rules and regulations related thereto, including regulations with respect to greenhouse gas emissions and regulations enacted by the SEC and recent legislation enacted in California, which may impact our business in numerous ways.
In addition, climate change and new or revised rules and regulations related thereto, including regulations with respect to greenhouse gas emissions and regulations enacted by the SEC and recent legislation enacted in California, may impact our business in numerous ways.
To the extent that we do business with parties on the Entity List under approved export licenses, our business could be affected if the government delays, denies, or otherwise does not grant or renew required licenses.
To the extent that we do business with parties on the Entity List under approved export licenses, our business could be affected if the government delays, denies, or otherwise does not grant, amend, or renew required licenses.
We experience cyber-attacks of varying degrees on our technology infrastructure and systems and notwithstanding our defensive measures, experienced programmers, hackers, state actors, or others may be able to penetrate our security controls through attacks such as phishing, impersonating authorized users, ransomware, viruses, worms and other malicious software programs, software supply chain attacks, exploitation of design flaws, bugs and other security weaknesses 29 Table of Contents and vulnerabilities, covert introduction of malware to computers and networks, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event or that may continue undetected for an extended period of time.
We experience cyber-attacks of varying degrees on our technology infrastructure and systems and notwithstanding our defensive measures, experienced programmers, hackers, state actors, or others may be able to penetrate our security controls through attacks such as phishing, impersonating authorized users, ransomware, viruses, worms and other malicious software programs, software supply chain attacks, exploitation of design flaws, bugs and other security weaknesses and vulnerabilities, covert introduction of malware to computers and networks, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event or that may continue undetected for an extended period of time.
Other areas of our business which could be disrupted or subject to negative impacts of negative global economic conditions may include, but may not be limited to, the following: • Reduced ability to accurately predict our future revenue and budget future expenses; • Inefficiencies, delays and additional costs in design win, product development, production and fulfillment; • Accounts receivable collection issues should any of our limited and significant customers experience liquidity concerns; • Material impacts to the value of our common stock, which may result in impairment of our goodwill; • Material impairment of our assets, if recoverability thereof becomes a concern; and • Decreased availability of capital or access thereto in the United States and from other jurisdictions in which we operate.
Other areas of our business which could be disrupted or subject to negative impacts of negative global economic conditions may include, but may not be limited to, the following: • Reduced ability to accurately predict our future revenue and budget future expenses; • Inefficiencies, delays and additional costs in design win, product development, production and fulfillment; • Accounts receivable collection issues should any of our limited and significant customers experience liquidity concerns; • Material impacts to the value of our common stock, which may result in impairment of our goodwill; • Material impairment of our assets, if recoverability thereof becomes a concern; and 22 Table of Contents • Decreased availability of capital or access thereto in the United States and from other jurisdictions in which we operate.
Failure to obtain any required license would likely result in a loss of business and a corresponding negative impact on our financial position and results of operations. 27 Table of Contents We cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, which products may be subject to such actions or what actions may be taken by other countries in retaliation.
Failure to obtain any required license would likely result in a loss of business and a corresponding negative impact on our financial position and results of operations. 28 Table of Contents We cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, which products may be subject to such actions or what actions may be taken by other countries in retaliation.
In addition, the Revolving Facility provisions under the June 23, 2021 Credit Agreement include financial covenants such as an initial maximum secured net leverage ratio of 3.5 to 1, which temporarily increases to 3.75 to 1 following the consummation of certain material permitted acquisitions, and operational covenants that may adversely affect our ability to engage in certain activities, including obtaining additional financing, granting liens, undergoing certain fundamental changes, or making investments or certain restricted payments, and selling assets, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.
In addition, the Revolving Facility provisions under the June 23, 2021 Credit Agreement include financial covenants such as an initial maximum secured net leverage ratio of 3.50 to 1.00, which temporarily increases to 3.75 to 1.00 following the consummation of certain material permitted acquisitions, and operational covenants that may adversely affect our ability to engage in certain activities, including obtaining additional financing, granting liens, undergoing certain fundamental changes, or making investments or certain restricted payments, and selling assets, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.
Please refer to the Risk Factor entitled “If we are required to pay any damages in connection with legal proceedings related to the termination of the Merger Agreement with Silicon Motion, including for any alleged breaches of the Merger Agreement, or if we agree to make any payments in any settlement of legal proceedings related to the termination of the Merger Agreement, the amount of such damages or payments could be significant and require us to draw down on all our existing lines of credit and use our cash resources, which may not be sufficient to satisfy any damages or payments and could have a material adverse effect on our business, operating results, and financial condition.
Please refer to the Risk Factor entitled “If we are required to pay any damages in connection with legal proceedings related to the termination of the Merger 19 Table of Contents Agreement with Silicon Motion, including for any alleged breaches of the Merger Agreement, or if we agree to make any payments in any settlement of legal proceedings related to the termination of the Merger Agreement, the amount of such damages or payments could be significant and require us to draw down on all our existing lines of credit and use our cash resources, which may not be sufficient to satisfy any damages or payments and could have a material adverse effect on our business, operating results, and financial condition.
Specifically, if we are required to pay damages in connection with legal proceedings related to the termination of the Merger Agreement, including for alleged breaches of the Merger Agreement, or if we agree to make any payments in any settlement of legal proceedings related to the termination of the Merger Agreement, and we finance all or a portion of the payment of damages through the incurrence of additional indebtedness, any materially increased indebtedness could have important consequences to investors in our common stock, including the following: • our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, or other purposes may be limited or financing may be unavailable; • rising interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products as well as the business of our distributors; • we could be subject to substantial variable interest rate risk because our interest rate under term loans typically varies based on a fixed margin over an indexed rate (such as for the Initial Term Loan under the June 23, 2021 Credit Agreement) or an adjusted base rate.
Specifically, if we are required to pay damages in connection with legal proceedings related to the termination of the Merger Agreement, including for alleged breaches of the Merger Agreement, or if we agree to make any payments in any settlement of legal proceedings related to the termination of the Merger Agreement, and we finance all or a portion of the payment of damages through the incurrence of additional indebtedness, any materially increased indebtedness could have important consequences to investors in our common stock, including the following: 20 Table of Contents • our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, or other purposes may be limited or financing may be unavailable; • high interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products as well as the business of our distributors; • we could be subject to substantial variable interest rate risk because our interest rate under term loans typically varies based on a fixed margin over an indexed rate (such as for the Initial Term Loan under the June 23, 2021 Credit Agreement) or an adjusted base rate.
In response, many of those trading partners, including China, have imposed or proposed new or higher tariffs on American products. We have experienced weakening demand in China, and continuing changes in government trade policies create a heightened risk of further increased tariffs that impose barriers to international trade and could further decrease international demand.
In response, many of those trading partners, including China, have imposed or proposed new or higher tariffs on American products. We have experienced and are continuing to experience weakening demand in China, and continuing changes in government trade policies create a heightened risk of further increased tariffs that impose barriers to international trade and could further decrease international demand.
These provisions provide for the following: • authorize our Board of Directors to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our Board of Directors, our Chairman of the Board of Directors, or our President; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; • establish that our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms; • provide that our directors may be removed only for cause; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • specify that no stockholder is permitted to cumulate votes at any election of directors; and • require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.
These provisions provide for the following: • authorize our Board of Directors to issue, without further action by the stockholders, up to 25,000,000 shares of undesignated preferred stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our Board of Directors, our Chairman of the Board of Directors, or our President; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; • establish that our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms; 49 Table of Contents • provide that our directors may be removed only for cause; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • specify that no stockholder is permitted to cumulate votes at any election of directors; and • require super majority votes of the holders of our common stock to amend specified provisions of our charter documents.
Based upon our review of all positive and negative evidence, as of December 31, 2023, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.
Based upon our review of all positive and negative evidence, as of December 31, 2024, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.
Specifically, our indebtedness and rising interest rates have important consequences to investors in our common stock, including the following: • rising interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products as well as the business of our distributors; • we are subject to variable interest rate risk because our interest rate under the Initial Term Loan under the June 23, 2021 Credit Agreement varies based on a fixed margin of 2.25% per annum over an adjusted Term SOFR rate or 1.25% per annum over an adjusted base rate and our interest rate for any outstanding principal under the revolving credit facility varies based a margin of 0% to 0.75% over adjusted base rate or a margin of 1.00% to 1.75% over an adjusted Term SOFR rate, and we are also subject to commitment fees ranging from 0.175% to 0.25% on the undrawn portion of the Revolving Facility.
Specifically, our indebtedness and high interest rates have important consequences to investors in our common stock, including the following: • high interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products as well as the business of our distributors; • we are subject to variable interest rate risk because our interest rate under the Initial Term Loan under the June 23, 2021 Credit Agreement varies based on a fixed margin of 2.25% per annum over an adjusted Term SOFR rate or 1.25% per annum over an adjusted base rate and our interest rate for any outstanding principal under the revolving credit facility varies based a margin of 0% to 0.75% over adjusted base rate or a margin of 1.00% to 1.75% over an adjusted Term SOFR rate, and we are also subject to commitment fees ranging from 0.175% to 0.25% on the 39 Table of Contents undrawn portion of the Revolving Facility.
Our products are used in application areas that create new or increased cybersecurity and privacy risks, including applications that gather and process large amounts of data, such as the cloud or Internet of Things, and critical infrastructure, payment card applications, and automotive applications.
Our products are used in application areas that create new or increased cybersecurity and privacy risks, including applications that gather and process large amounts of data, such as the cloud or Internet of Things, or artificial intelligence, and critical infrastructure, payment card applications, and automotive applications.
If interest rates were to continue to increase substantially, and we incur additional indebtedness, it would adversely affect our operating results and could affect our ability to service the indebtedness; • a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business; • our level of indebtedness, combined with rising interest rates, could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships, and obtain financing for such transactions; and 21 Table of Contents • our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.
If interest rates were to increase substantially, and we incur additional indebtedness, it would adversely affect our operating results and could affect our ability to service the indebtedness; • a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business; • our level of indebtedness, combined with high interest rates, could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships, and obtain financing for such transactions; and • our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.
We sell a significant portion of our products to manufacturers of cable broadband voice and data modems and gateways, satellite outdoor units or LNB’s, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.
We sell a significant portion of our products to manufacturers of cable broadband voice and data modems and gateways, satellite outdoor units, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.
In addition, consolidation trends among Pay-TV and broadband operators may continue, which could delay or lead to cancellations of major spending programs and have a material adverse effect on our future operating results and financial condition. 31 Table of Contents We may be unable to make the substantial and productive research and development investments that are required to remain competitive in our business.
In addition, consolidation trends among Pay-TV and broadband operators may continue, which could delay or lead to cancellations of major spending programs and have a material adverse effect on our future operating results and financial condition. We may be unable to make the substantial and productive research and development investments that are required to remain competitive in our business.
If interest rates were to continue to increase substantially, it would adversely affect our operating results and could affect our ability to service our indebtedness; 38 Table of Contents • a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business; • our level of indebtedness, combined with rising interest rates, could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships, and obtain financing for such transactions; and • our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.
If interest rates were to increase substantially, it would adversely affect our operating results and could affect our ability to service our indebtedness; • a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business; • our level of indebtedness, combined with high interest rates, could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships, and obtain financing for such transactions; and • our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.
Since October 2022, the United States has taken steps to restrict the export of certain advanced semiconductor products and technology to the People’s Republic of China as well as a number of specific Chinese companies, due to national security and human rights concerns.
Since October 2022, the United States has taken steps to restrict the export of certain advanced semiconductor products and technology to China as well as a number of specific Chinese companies, due to national security and human rights concerns.
In addition, rising interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products and our distributors ’ business.
In addition, high interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products and our distributors ’ business.
Additionally, we cannot be certain that our insurance coverage will be adequate or otherwise protect us with respect to claims, expenses, fines, penalties, business loss, data loss, litigation, regulatory actions, or other impacts arising from any of the security breaches or incidents outlined above, or that such coverage will continue to be available on acceptable terms or at all.
Additionally, we cannot be certain that our insurance coverage will be adequate or otherwise protect us with respect to claims, expenses, fines, penalties, business loss, data loss, litigation, regulatory actions, or other impacts arising from any of the 31 Table of Contents security breaches or incidents outlined above, or that such coverage will continue to be available on acceptable terms or at all.
Any of these results could adversely affect our business, operations and financial results, potentially in a material manner. Average selling prices of our products have and could decrease in the future, which could have a material adverse effect on our revenue and gross margins.
Any of these results could adversely affect our business, operations and financial results, potentially in a material manner. Average selling prices of our products have previously decreased and could decrease in the future, which could have a material adverse effect on our revenue and gross margins.
We are focused on securing design wins to develop RF receivers and RF receiver SoCs, MoCA and G.hn SoCs, DBS-ODU SoCs, physical medium devices for optical modules, interface and power management devices, and SoC solutions targeting infrastructure opportunities within the telecommunications, wireless, industrial and multimarket and Wi-Fi and broadband operator markets for use in our customers’ products.
We are focused on securing design wins to develop RF receivers and RF receiver SoCs, MoCA and G.hn SoCs, DBS-ODU SoCs, physical medium devices for optical modules, interface and power management devices, and SoC solutions targeting infrastructure opportunities within the telecommunications, wireless, industrial and multi-market and Wi-Fi and broadband operator markets for use in our customers’ products.
In addition, we have implemented a reduction in force and the attendant layoffs has resulted and could result in the risk of claims being made by or on behalf of affected employees. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices.
In addition, we have implemented reductions in force and the attendant layoffs has resulted and could result in the risk of claims being made by or on behalf of affected employees. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices.
Such indebtedness adversely affects our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.
Such indebtedness adversely affects our operating results and cash-flows, as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to 18 Table of Contents finance such transactions.
In addition, we are often required to rely on third parties, including hardware, software, and services vendors, as well as our customers and end users, to develop and/or deploy mitigation techniques, and the availability, effectiveness, and performance impact of mitigation techniques can depend solely or in part on the actions of these 43 Table of Contents third parties in determining whether, when, and how to develop and deploy mitigations.
In addition, we are often required to rely on third parties, including hardware, software, and services vendors, as well as our customers and end users, to develop and/or deploy mitigation techniques, and the availability, effectiveness, and performance impact of mitigation techniques can depend solely or in part on the actions of these third parties in determining whether, when, and how to develop and deploy mitigations.
Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies, including us. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
Although our policies, procedures, and controls are designed to detect and prevent potential violations and maintain ongoing compliance with applicable export controls laws, we cannot assure you that we have been or will be at all times in complete compliance with such laws and regulations. For example, our products could be diverted to bad actors.
Although our policies, procedures, and controls are designed to detect and prevent potential violations and maintain ongoing compliance with applicable export controls laws, we cannot assure you that we have been or will be at all times in complete compliance with such laws and regulations. For example, our products could be diverted to bad actors by third parties.
If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. The absence of comparable restrictions imposed on competitors based in other countries may adversely affect our competitive position.
If we violate or fail to comply with any of these requirements, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. The absence of comparable restrictions imposed on competitors based in other countries may adversely affect our competitive position.
Excess or obsolete inventory levels could result in unexpected expenses or increases in our reserves that could adversely affect our business, operating results and financial condition. Conversely, if we were to underestimate customer demand or if sufficient manufacturing capacity were unavailable, we could forego revenue opportunities, potentially lose market share and damage our customer relationships.
Excess or obsolete inventory levels has resulted and continue to result in unexpected expenses or increases in our reserves that could adversely affect our business, operating results and financial condition. Conversely, if we were to underestimate customer demand or if sufficient manufacturing capacity were unavailable, we could forego revenue opportunities, potentially lose market share and damage our customer relationships.
In response to the United States tightening export controls on China, China has instituted restrictions of its own that affect U.S. companies and may impact us and related entities. We have experienced weakening demand in China, and such future developments related to U.S.-China relations may also have an impact on our supply chain.
In response to the United States tightening export controls on China, China has instituted restrictions of its own that affect U.S. companies and may impact us and related entities. We have experienced and are continuing to experience weakening demand in China, and such future developments related to U.S.-China relations may also have an impact on our supply chain.
The CCPA gives California residents the right to access, delete and opt out of certain sharing of their information, and imposes penalties for failure to comply. California has adopted a new law, the California Privacy Rights Act of 2020, or CPRA, that substantially expands the CCPA and was effective as of January 1, 2023.
The CCPA gives California residents the right to access, delete and opt out of certain sharing of their information, and imposes penalties for failure to comply. California has adopted a new law, the California Privacy Rights Act of 2020, or CPRA, that substantially 40 Table of Contents expands the CCPA and was effective as of January 1, 2023.
Should any of our distributors cease or be forced to stop distributing our products, our business would suffer. We currently sell a large portion of our products to customers through our distributors, who maintain their own inventories of our products.
Should any of our distributors cease or be forced to stop distributing our products, our business would suffer. We currently sell a significant portion of our products to customers through our distributors, who maintain their own inventories of our products.
As of December 31, 2023, our aggregate indebtedness was $125.0 million from an initial secured term B loan facility, or the Initial Term Loan under the June 23, 2021 Credit Agreement.
As of December 31, 2024, our aggregate indebtedness was $125.0 million from an initial secured term B loan facility, or the Initial Term Loan under the June 23, 2021 Credit Agreement.
Any failure to comply with applicable laws could adversely affect our business and operating results. We have implemented policies and procedures, including adoption of an anti-corruption policy and procedures with respect to applicable export control laws, but there can be no assurance that our policies and procedures will prove effective.
Any failure to comply with applicable laws or regulatory approvals could adversely affect our business and operating results. We have implemented policies and procedures, including adoption of an anti-corruption policy and procedures with respect to applicable export control laws, but there can be no assurance that our policies and procedures will prove effective.
Our failure to obtain required import or export approval for our products may adversely affect our business, and other limitations imposed on our ability to export or sell our products may also harm our international and domestic revenue.
Our inability to obtain required import or export approval for our products may adversely affect our business, and other limitations imposed on our ability to export or sell our products may also harm our international and domestic revenue.
We investigate these requests and claims as received 41 Table of Contents and could be required to enter license agreements with respect to third party intellectual property rights or indemnify third parties, either of which could have a material adverse effect on our future operating results.
We investigate these requests and claims as received and could be required to enter license agreements with respect to third-party intellectual property rights or indemnify third parties, either of which could have a material adverse effect on our future operating results.
We depend on these vendors to ensure that our corporate infrastructure will consistently meet our business requirements and legal obligations. The ability of these third-party vendors to successfully provide reliable and high quality services is subject to technical and operational uncertainties that are beyond our control.
We depend on these vendors to ensure 47 Table of Contents that our corporate infrastructure will consistently meet our business requirements and legal obligations. The ability of these third-party vendors to successfully provide reliable and high quality services is subject to technical and operational uncertainties that are beyond our control.
Our income tax provision is subject to volatility and our ability to use our deferred tax assets to offset future taxable income may be limited since we are subject to tax examinations, which may adversely impact our future effective tax rate and operating results. Excess tax benefits associated with employee stock-based compensation are included in income tax expense.
Our income tax provision is subject to volatility and our ability to use our deferred tax assets to offset future taxable income may be limited, which may adversely impact our future effective tax rate and operating results. Excess tax benefits associated with employee stock-based compensation are included in income tax expense.
The June 23, 2021 Credit Agreement also provides for a revolving credit facility of up to $100.0 million, or the Revolving Facility, which remains undrawn as of December 31, 2023.
The June 23, 2021 Credit Agreement also provides for a revolving credit facility of up to $100.0 million, or the Revolving Facility, which remains undrawn as of December 31, 2024.
Furthermore, during challenging economic times, our customers may face challenges in gaining timely access to sufficient credit, which could impact their ability to make timely payments to us.
Furthermore, during inflationary economic times, our customers may face challenges in gaining timely access to sufficient credit, which could impact their ability to make timely payments to us.
From time to time, we have reduced the average unit price of our products due to competitive pricing pressures, new product introductions by us or our competitors, and for other reasons, and we expect that we will have to 30 Table of Contents do so again in the future.
From time to time, we have reduced the average unit price of our products due to competitive pricing pressures, new product introductions by us or our competitors, and for other reasons, and we expect that we will have to do so again in the future.
Such catastrophes could result in the disruption of our product shipments, foundry, assembly, or test capacity. 49 Table of Contents We have recorded goodwill and other intangible assets in connection with business acquisitions. Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.
Such catastrophes could result in the disruption of our product shipments, foundry, assembly, or test capacity. We have recorded goodwill and other intangible assets in connection with business acquisitions. Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.
These factors include: • changes in political, regulatory, legal or economic conditions; • geopolitical conflicts and tensions, especially as between the United States and China, that could destabilize trading relationships and economic activity; 24 Table of Contents • restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments and trade protection measures, including export controls and restrictions, duties and quotas and customs duties and tariffs; • disruptions of capital and trading markets; • changes in import and/or export control restrictions and regulations by governments, such as changes to licensing requirements or other anti-diversion enforcement measures, as a result of ongoing armed conflict and geopolitical tensions among the United States, China, Russia, Ukraine and other countries; • transportation delays; • civil disturbances or political instability; • other unpredictable geopolitical turmoil, including terrorism, war or political or military coups, including the current conflict in Israel (and any broadening of the conflict); • differing employment practices and labor standards; • limitations on our ability under local laws to protect our intellectual property; • local business and cultural factors that differ from our customary standards and practices; • nationalization and expropriation; • changes in tax laws; • public health emergencies, such as another outbreak of COVID-19 or other communicable disease; • currency fluctuations relating to our international operating activities; and • difficulty in obtaining distribution and support.
These factors include: • changes in political, regulatory, legal or economic conditions; • geopolitical conflicts and tensions, especially between the United States and China, that could destabilize trading relationships and economic activity; • restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments and trade protection measures, including export controls and restrictions, duties and quotas and customs duties and tariffs; • disruptions of capital and trading markets; • changes in import and/or export control restrictions and regulations by governments, such as changes to licensing requirements or other anti-diversion enforcement measures, as a result of ongoing armed conflict and geopolitical tensions among the United States, China, Russia, Ukraine, Iran, Israel, Lebanon, and other countries; • transportation delays; • civil disturbances or political instability; • other unpredictable geopolitical turmoil, including terrorism, war or political or military coups, including the current conflict in Israel and continued escalation of Israel's conflicts with Iran and Lebanon; • differing employment practices and labor standards; • limitations on our ability under local laws to protect our intellectual property; • local business and cultural factors that differ from our customary standards and practices; • nationalization and expropriation; • changes in tax laws; • public health emergencies, such as another outbreak of COVID-19 or other communicable disease; • currency fluctuations relating to our international operating activities; and • difficulty in obtaining distribution and support.
Earthquakes, fire, flooding, drought, or other natural disasters in Taiwan or the Pacific Rim region, or political unrest, war, labor strikes, work stoppages or public health crises, such as the outbreak of COVID-19, in countries where our contractors’ facilities are located could result in the disruption of our product shipments, foundry, assembly, or test capacity.
Earthquakes, wildfires and other fires, flooding, drought, or other natural disasters in Taiwan or the Pacific Rim region, or political unrest, war, labor strikes, work stoppages or public health crises, such as the outbreak of COVID-19, in countries where our contractors’ facilities are located could result in the disruption of our product shipments, foundry, assembly, or test capacity.
In recent months, there have been substantial legislative and regulatory developments on climate-related issues, including proposed, issued and implemented legislation and rulemakings that would require companies to assess and/or disclose climate metrics, risks, opportunities, policies and practices.
In recent months, there have been substantial legislative and regulatory developments on climate-related issues, including proposed, issued and implemented legislation and rule makings that would require companies to assess and/or disclose climate metrics, risks, opportunities, policies and practices.
These factors include those listed below in this Item 1A and those discussed elsewhere in this Form 10-K. We encourage investors to review these factors carefully. We may from time to time make additional written and oral forward- 17 Table of Contents looking statements, including statements contained in our filings with the Securities and Exchange Commission, or SEC.
These factors include those listed below in this Item 1A and those discussed elsewhere in this Form 10-K. We encourage investors to review these factors carefully. We may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission, or SEC.
Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and adversely affect our cash flows.
Our interpretations and conclusions regarding the tax incentives are not binding on 52 Table of Contents any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and adversely affect our cash flows.
Although we maintain reserves for reasonably estimable liabilities and purchase product liability insurance, if a catastrophic product liability claim were to occur, our reserves may be inadequate to cover the uninsured portion of such claims.
Although we maintain reserves for reasonably estimable liabilities and purchase product liability insurance, if a 33 Table of Contents catastrophic product liability claim were to occur, our reserves may be inadequate to cover the uninsured portion of such claims.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, our management, including our principal executive officer and principal financial officer, does not expect that our 51 Table of Contents disclosure controls and procedures will prevent all error and all fraud.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud.
A significant downturn or upturn could have a material adverse effect on our business and operating results. 23 Table of Contents A significant variance in our operating results or rates of growth, if any, could continue to lead to substantial volatility in our stock price.
A significant downturn or upturn could have a material adverse effect on our business and operating results. A significant variance in our operating results or rates of growth, if any, could continue to lead to substantial volatility in our stock price.
Our limited operating experience in new markets or potential markets we may enter, combined with the rapidly evolving nature of our markets in general, substantial uncertainty concerning how these markets may develop and other factors beyond our control reduces our ability to accurately forecast quarterly or annual revenue.
Our limited operating experience in new markets such as data center markets or potential markets we may enter, combined with the rapidly evolving nature of our markets in general, substantial uncertainty concerning how these markets may develop and other factors beyond our control reduces our ability to accurately forecast quarterly or annual revenue.
Sales to distributors accounted for approximately 50%, 46% and 47% of our net revenue in the year ended December 31, 2023, 2022, and 2021, respectively. Upon shipment of product to these distributors, title to the inventory transfers to the distributor and the distributor is invoiced, generally with 30 to 60 day terms.
Sales to distributors accounted for approximately 44%, 50% and 46% of our net revenue in the year ended December 31, 2024, 2023, and 2022, respectively. Upon shipment of product to these distributors, title to the inventory transfers to the distributor and the distributor is invoiced, generally with 30 to 60 day terms.
Monitoring unauthorized use of our intellectual property is difficult and costly. Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.
Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.
These factors include those discussed in this “Risk Factors” section of this report and others such as: • any developments related to our terminated merger with Silicon Motion; • actual or anticipated fluctuations in our financial condition and operating results; • overall conditions in the semiconductor market; • addition or loss of significant customers; • changes in laws or regulations applicable to our products, including export controls; • geopolitical changes impacting our business, including with respect to China and Taiwan; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of technological innovations by us or our competitors; 47 Table of Contents • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; • departures of, and inability to attract, qualified key personnel; • competition from existing products or new products that may emerge; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies; • actions by institutional or activist stockholders; • acquisitions may not be accretive and may cause dilution to our earnings per share; • announcement or expectation of additional financing efforts; • sales of our common stock by us or our stockholders; and • general economic and market conditions, including the impacts from sanctions against Russia and the military conflict in Ukraine and Israel, increased inflationary pressures, interest rate changes, and the global COVID-19 pandemic.
These factors include those discussed in this “Risk Factors” section of this report and others such as: • any developments related to our terminated merger with Silicon Motion; • actual or anticipated fluctuations in our financial condition and operating results; • overall conditions in the semiconductor market; • addition or loss of significant customers; • changes in laws or regulations applicable to our products, including export controls; • geopolitical changes impacting our business and markets, including with respect to China and Taiwan and the change in the U.S. presidential administration; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of technological innovations by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; • departures of, and inability to attract, qualified key personnel; • competition from existing products or new products that may emerge; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies; • actions by institutional or activist stockholders; 48 Table of Contents • acquisitions may not be accretive and may cause dilution to our earnings per share; • announcement or expectation of additional financing efforts; • sales of our common stock by us or our stockholders; and • general economic and market conditions, including the impacts from sanctions against Russia and the military conflicts in Ukraine and among Israel, Iran and Lebanon, increased inflationary pressures, and interest rate changes.
We currently expect that revenue will fluctuate in the future, from period-to-period, consistent with the cyclical nature of our industry, and we expect to experience further decline in revenue in the first quarter of 2024 due to current macroeconomic conditions impacting customer demand for various products.
We currently expect that revenue will fluctuate in the future, from period-to-period, consistent with the cyclical nature of our industry, and we could experience further decline in revenue in the future due to current macroeconomic conditions impacting customer demand for various products.
Products shipped to Asia accounted for 75% of our net revenue in the year ended December 31, 2023. In addition, as of December 31, 2023, approximately 78% of our employees are located outside of the United States. The majority of our products are manufactured, assembled and tested in Asia, and our major distributors are located in Asia.
Products shipped to Asia accounted for 75% of our net revenue in the year ended December 31, 2024. In addition, as of December 31, 2024, approximately 76% of our employees are located outside of the United States. The majority of our products are manufactured, assembled and tested in Asia, and our major distributors are located in Asia.
Inventory oversupply has also led and could continue to lead to inventory write-downs, including charges for any excess or obsolete inventory, which could negatively impact our gross margins; • failure by us, our customers, or their end customers to qualify a selected supplier; • reduced control over delivery schedules and quality; • shortages of materials; • misappropriation of our intellectual property; 44 Table of Contents • limited warranties on wafers or products supplied to us; • potential increases in prices; and • our use of foundry partners who are currently subject to BIS restrictions, to manufacture certain of our products may be impaired if one or more of the following were to occur: (1) we are unable to obtain U.S. export licenses authorizing its interactions and technology exchanges with these foundry partners, or (2) if BIS increases export control restrictions to Chinese foundries without the ability for us to obtain a U.S. export license, or (3) U.S. providers of semiconductor manufacturer equipment are unable to export such equipment or related spare or replacement parts used in the manufacture of our products, or obtain a license to export such equipment and parts, to current or future Chinese foundry partners.
Inventory oversupply has also led and could continue to lead to inventory write-downs, including charges for any excess or obsolete inventory, which could negatively impact our gross margins; • failure by us, our customers, or their end customers to qualify a selected supplier; • reduced control over delivery schedules and quality; • shortages of materials; • misappropriation of our intellectual property; • limited warranties on wafers or products supplied to us; • potential increases in costs of our products; • costs to switch to alternate sources of supply for certain products and/or delays in sales of such products, if a supplier does not continue to supply certain products; and • our use of foundry partners who are currently subject to BIS restrictions, to manufacture certain of our products may be impaired if one or more of the following were to occur: (1) we are unable to obtain U.S. export licenses 46 Table of Contents authorizing its interactions and technology exchanges with these foundry partners or if there are delays in obtaining such licenses, or (2) if BIS increases export control restrictions to Chinese foundries without the ability for us to obtain a U.S. export license, or (3) U.S. providers of semiconductor manufacturer equipment are unable to export such equipment or related spare or replacement parts used in the manufacture of our products, or obtain a license to export such equipment and parts, to current or future Chinese foundry partners.
The potential impact to us of these legislative and regulatory developments is uncertain at this time, although we expect that the emerging legal and regulatory requirements on climate-related issues will result in additional compliance and may require us to spend significant resources and divert 36 Table of Contents management attention.
The potential impact to us of these legislative and regulatory developments is uncertain at this time, although we expect that the emerging legal and regulatory requirements on climate-related issues will result in additional compliance and may require us to spend or add significant resources and divert management attention.
Increased tariffs or the imposition of other barriers to international trade could decrease demand and have a material adverse effect on our revenues and operating results. • We will lose sales if we are unable to obtain or retain government authorization to export certain of our products or technology or if such authorizations are revoked, and we will be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations. • We also are subject to risks associated with international geopolitical and military conflicts. • We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from major customers has had and could continue to have a material adverse effect on our revenue and operating results. • Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome. 18 Table of Contents • We have been and may in the future be subject to information technology failures, including security breaches, cyber-attacks, design defects or system failures, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results. • Average selling prices of our products have and could decrease in the future, which could have a material adverse effect on our revenue and gross margins. • If we fail to penetrate new applications and markets, our revenue, revenue growth rate, if any, and financial condition could be materially and adversely affected. • A significant portion of our revenue is attributable to demand for our products in markets for broadband solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results. • We may be unable to make the substantial productive research and development investments that are required to remain competitive in our business. • The complexity of our products could result in unforeseen delays or expenses caused by undetected defects or bugs, which could reduce the market acceptance of our new products, damage our reputation with current or prospective customers and adversely affect our operating costs. • Our operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. • If we fail to develop and introduce new or enhanced products on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed. • We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could continue to negatively affect our inventory levels, sales and operating results. • We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly as we seek to enter new markets where we may not have prior experience. • Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process which does not assure product sales. • We incur significant expenditures to win business and customer product plan cancellations may adversely affect our results of operations. • A failure to maintain compliance with governmental regulations could have a material adverse effect on our business. • If we are unable to attract, train and retain qualified personnel and senior management, our business, financial condition, results of operations and prospects could suffer. • We are subject to a variable amount of interest on the principal balance of our credit agreements and could continue to be adversely impacted by rising interest rates in the future.
In addition, we will be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations. • We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from major customers has had and could continue to have a material adverse effect on our revenue and operating results. • Any legal proceedings or claims against us or potential violations of applicable regulations could be costly and time-consuming to defend and could harm our reputation regardless of the outcome. • We have been and may in the future be subject to information technology failures, including security breaches, cyber-attacks, design defects or system failures, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results. • Average selling prices of our products have previously decreased and could decrease in the future, which could have a material adverse effect on our revenue and gross margins. • If we fail to penetrate new applications and markets, our revenue, revenue growth rate, if any, and financial condition could be materially and adversely affected. • A significant portion of our revenue is attributable to demand for our products in markets for broadband solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators has adversely affected, and could continue to adversely affect our future revenues and operating results. • We may be unable to make the substantial productive research and development investments that are required to remain competitive in our business. • The complexity of our products could result in unforeseen delays or expenses caused by undetected defects or bugs, which could reduce the market acceptance of our new products, damage our reputation with current or prospective customers and adversely affect our operating costs. • Our revenue and operating results are subject to substantial quarterly and annual fluctuations and have fluctuated in the past and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price. • If we fail to develop and introduce new or enhanced products on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed. • We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could continue to negatively affect our inventory levels, sales and operating results. • We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly as we seek to enter new markets where we may not have prior experience. • Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process which does not assure product sales. • We incur significant expenditures to win business and customer product plan cancellations may adversely affect our results of operations. • A failure to maintain compliance with governmental regulations could have a material adverse effect on our business. • If we are unable to attract, train and retain qualified personnel and senior management, our business, financial condition, results of operations and prospects could suffer. • We are subject to a variable amount of interest on the principal balance of our credit agreements and could continue to be adversely impacted by high interest rates in the future.
Some of our targeted customers for our optical interconnect solutions are module makers who are vertically integrated, where we compete with internally supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.
Some of our targeted customers for our high speed interconnect solutions are module makers who are vertically integrated, where we compete with internally 21 Table of Contents supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.
In addition, inventory oversupply could potentially lead to more inventory write-downs, including charges for any excess or obsolete inventory which could negatively impact our gross margins. Our products are incorporated in numerous consumer devices, and demand for such products is ultimately driven by consumer demand for products such as televisions, personal computers, automobiles, and cable modems.
Inventory oversupply could potentially lead to more inventory write-downs, including charges for any excess or obsolete inventory which could negatively impact our gross margins. Our products are incorporated in numerous consumer devices, and demand for such products is ultimately driven by consumer demand for products such as televisions, personal computers, automobiles, and cable modems. Many of these purchases are discretionary.
If we are unable to protect our trademarks in certain jurisdictions, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty in such jurisdictions. We face risks related to security vulnerabilities in our products.
If we are unable to protect our trademarks in certain 44 Table of Contents jurisdictions, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty in such jurisdictions. We face risks related to security vulnerabilities in our products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+6 added−1 removed4 unchanged
Biggest changeWe have allocated adequate resources and have designated high-level personnel, including our Chief Information Security Officer, to manage the cybersecurity risk assessment and mitigation process. As part of our overall risk management program, we regularly provide required training to employees at all levels and in all departments on cybersecurity. The Company also participates in a cybersecurity risk insurance policy.
Biggest changeAs part of our overall risk management program, we regularly provide required training to employees at all levels and in all departments on cybersecurity. 53 Table of Contents Our Cyber Security Operations Control center integrates feeds from all key areas of our infrastructure (email, network, endpoint, identity, firewall) into a centralized security information event management, or SIEM, system.
Members of the Cybersecurity Committee are appointed by, and serve at the discretion of, the Board. The Cybersecurity Committee consists of at least three members of the Board, all of whom are independent. Each member has a working familiarity and/or experience with cybersecurity, IT strategy, IT development and deployment, or IT risk assessment and management, including information security management.
The Cybersecurity Committee consists of at least three members of the Board, all of whom are independent. Each member has a working familiarity and/or experience with cybersecurity, IT strategy, IT development and deployment, or IT risk assessment and management, including information security management.
Our Chief Information Security Officer and representatives from the Cybersecurity Committee provide quarterly briefings to the Audit Committee of the Board regarding our company’s cybersecurity risks and activities, including but not limited to any recent cybersecurity incidents and related responses, and any cybersecurity systems testing. The Audit Committee provides regular updates to the Board on relevant information regarding cybersecurity.
Our executives and IT management and representatives from the Cybersecurity Committee provide quarterly briefings to the Audit Committee of the Board regarding our company’s cybersecurity risks and activities, including but not limited to any recent cybersecurity incidents and related responses, and any cybersecurity systems testing. The Audit Committee provides regular updates to the Board on relevant information regarding cybersecurity.
The Company also has not incurred any net expenses from penalties and/or settlements from any material cybersecurity breaches during the years ended December 31, 2023, 2022, and 2021.
The Company also has not incurred any net expenses from penalties and/or settlements from any material cybersecurity breaches during the years ended December 31, 2024, 2023 and 2022. 54 Table of Contents
In addition, our Chief Information Security Officer and representatives from the Cybersecurity Committee provide annual briefings to the Board on cybersecurity risks, related mitigation, and other related responses and activities. Breaches The last known cybersecurity breach occurred in 2020. The Company has not experienced any material cybersecurity breach in the years ended December 31, 2023, 2022 and 2021.
In addition, our executives and IT management and representatives from the Cybersecurity Committee provide annual briefings to the Board on cybersecurity risks, related mitigation, and other related responses and activities. Breaches The Company has not experienced any material cybersecurity breach in the years ended December 31, 2024, 2023 and 2022.
Our Chief Information Security Officer and the Cybersecurity Committee are informed about policies and processes to monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Our executives and IT management and the Cybersecurity Committee are informed about policies and processes to monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents.
As part of our risk management process, we may engage third party experts to help identify and assess risks from cybersecurity threats. Our risk management process also encompasses cybersecurity risks associated with our use of third-party service providers.
As part of our risk management process, we may engage third party experts to help identify and assess risks from cybersecurity threats. Our risk management process also encompasses cybersecurity risks associated with our use of third-party service providers. This process involves evaluating their infrastructure security policies and controls to ensure high levels of code quality.
Following these risk assessments, we design, implement, and maintain reasonable safeguards to minimize the identified risks; reasonably address any identified gaps in existing safeguards; update existing safeguards as necessary; and monitor the effectiveness of our safeguards.
Following these risk assessments, we design, implement, and maintain reasonable safeguards to minimize the identified risks; reasonably address any identified gaps in existing safeguards; update existing safeguards as necessary; and monitor the effectiveness of our safeguards. We follow the Critical Security Controls, or CIS, guidance to defend our systems and networks against the most prevalent cyber-attacks.
Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, as well as through the Cybersecurity Committee of the Board of Directors (the “Cybersecurity Committee”).
Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Members of the Cybersecurity Committee are appointed by, and serve at the discretion of, the Board.
Our Chief Information Security Officer and the Cybersecurity Committee are primarily responsible to assess and manage material risks from cybersecurity threats.
Our executives and IT management and the Cybersecurity Committee are primarily responsible to assess and manage material risks from cybersecurity threats. Our executives and IT management and the Cybersecurity Committee oversee key cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Removed
Our Chief Information Security Officer has twenty-five years of cybersecurity experience, has completed a Masters in Information Security Engineering, and holds several cybersecurity certifications. 52 Table of Contents Our Chief Information Security Officer and the Cybersecurity Committee oversee key cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Added
We have allocated adequate resources and have designated executives and IT management personnel to manage the cybersecurity risk assessment and mitigation process. We track quarterly Risk Register scores, which are derived from assessments of impact and likelihood, and monitor adoption rates of CIS controls to gauge our progress.
Added
These metrics are systematically tracked and reported to the board on a quarterly basis.
Added
This system is integrated with our Incident Response Plan, or IRP, which provides a process for responding to different types of cybersecurity incidents and designates responsibilities and actions to be taken in responding to such incidents. The IRP aims to eradicate problems as quickly as possible, while gathering actionable intelligence, restoring business functions, improving detection, and preventing reoccurrence.
Added
It includes guidelines for determining incident type, severity, roles and responsibilities, and escalation points. Furthermore, we perform regular third-party security penetration testing and cyber tabletop exercises with key stakeholders to simulate responding to a hypothetical cybersecurity incident. We contract with third-party security monitoring services, performing active, automated searches of indexed darknet databases.
Added
Additionally, we perform quarterly vulnerability scans against our network infrastructure and systems exposed to the Internet. The Company also participates in a cybersecurity risk insurance policy.
Added
Our cybersecurity risk management is overseen by a senior IT executive with ten years of cybersecurity experience, which includes both Fortune 500 and large semiconductor companies, and thirty-five years of experience in various technology domains, such as IT Infrastructure, Cloud, Cybersecurity, and Application Development.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our principal office spaces in Carlsbad, we have active leased facilities in Irvine, California; San Jose, California; Boston, Massachusetts; Burnaby, Canada; Bangalore and Chennai, India; Singapore; Taipei and Hsinchu, Taiwan; Shenzhen, Shanghai, and Hong Kong, China; Seoul, South Korea; Tokyo, Japan; Paterna, Spain; Villach, Austria; Munich, Germany; and in Petah Tikva, Israel. 53 Table of Contents
Biggest changeIn addition to our principal office spaces in Carlsbad, we have active leased facilities in Irvine, California; San Jose, California; Burnaby, Canada; Bangalore and Chennai, India; Singapore; Taipei and Hsinchu, Taiwan; Shenzhen, Shanghai, China; Seoul, South Korea; Tokyo, Japan; Paterna, Spain; Munich, Germany; and in Petah Tikva, Israel. 55 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

14 edited+20 added−1 removed8 unchanged
Biggest changeDish California alleges that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations owed to the Multimedia over Coax Alliance, or MoCA under MoCA’s Intellectual Property Rights (“IPR”) Policy. Dish California alleges that MaxLinear also allegedly violated the MoCA IPR Policy by failing to offer Dish California a fair, reasonable, and nondiscriminatory, or FRAND, license for these patents.
Biggest changeDish’s eight counterclaims revolve around a core allegation that MaxLinear is a member of the Multimedia over Coax Alliance (MoCA) and that MaxLinear violated its obligation under MoCA’s Intellectual Property Rights Policy, or IPR Policy, by acting with Entropic to rid the asserted patents of the RAND encumbrances.
As of December 31, 2023, no material loss contingencies have been accrued for litigation and other legal claims in our consolidated financial statements, since our management currently does not believe that the ultimate outcome of any of the matters described above is probable.
As of December 31, 2024, no material loss contingencies have been accrued for litigation and other legal claims in our consolidated financial statements, since our management currently does not believe that the ultimate outcome of any of the matters described above is probable.
Comcast needed this technology in order to effectively compete with fiber-optic internet providers. Instead of engaging MaxLinear to develop the FDX amplifier, Comcast shared MaxLinear’s proprietary designs with MaxLinear’s direct competitor. Comcast then worked with MaxLinear’s competitor to develop the FDX-amplifier technology.
MaxLinear alleges that Comcast needed this technology in order to effectively compete with fiber-optic internet providers. Instead of engaging MaxLinear to develop the FDX amplifier, Comcast allegedly shared MaxLinear’s proprietary designs with MaxLinear’s direct competitor. Comcast allegedly then worked with MaxLinear’s competitor to develop the FDX-amplifier technology.
Other Matters From time to time, the Company is subject to threats of litigation or actual litigation in the ordinary course of business as described in “Item 3 — Legal Proceedings,” some of which may be material. Results of litigation and claims are inherently unpredictable.
Other Matters From time to time, we are subject to threats of litigation or actual litigation in the ordinary course of business as described above, some of which may be material. Results of litigation and claims are inherently unpredictable.
Cox amended its counterclaims on January 9, 2024 and is asserting claims of breach of contract, unjust enrichment, and declaratory judgment against MaxLinear. Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. In the second action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims against MaxLinear.
Cox amended its counterclaims on January 9, 2024 and is asserting claims of breach of contract, unjust enrichment, and declaratory judgment against MaxLinear. Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. MaxLinear moved to dismiss Cox’s amended counterclaims on February 6, 2024.
MaxLinear brought claims for trade secret misappropriation, unfair competition, and breach of the parties’ non-disclosure agreement, and it sought an unspecified amount of compensatory damages, punitive damages, pre-judgment and post-judgment interest, costs, expenses, and attorney fees as well as an injunction against Comcast’s use or disclosure of MaxLinear’s trade secrets. 54 Table of Contents Dish Litigation On February 10, 2023, Entropic Communications, LLC, or Entropic filed claims for patent infringement against Dish Network Corporation, Dish Network LLC, Dish Network Service, LLC, and Dish Network California Service Corporation (together, “Dish”).
MaxLinear brought claims for trade secret misappropriation, unfair competition, and breach of the parties’ non-disclosure agreement, and it sought an unspecified amount of compensatory damages, punitive damages, pre-judgment and post-judgment interest, costs, expenses, and attorney fees as well as an injunction against Comcast’s use or disclosure of MaxLinear’s trade secrets.
In the first action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims alleging that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations under MoCA’s IPR Policy by assigning these patents and by failing to offer Cox a FRAND license for these patents.
In the first action, Cox alleges that when MaxLinear assigned certain patents to Entropic, MaxLinear violated its obligations under MoCA’s IPR Policy by assigning these patents and by allegedly failing to ensure that Cox would be offered a 57 Table of Contents FRAND license for these patents.
Defendants expect to answer or move to dismiss by March 29, 2024. Comcast Litigation On December 1, 2023, MaxLinear filed claims against Comcast Management, LLC and Comcast Cable Communications, LLC (together, “Comcast”) in the United States District Court for the Southern District of New York.
MaxLinear intends to continue to vigorously defend its position. 56 Table of Contents Comcast Litigation On December 1, 2023, MaxLinear filed claims against Comcast Management, LLC and Comcast Cable Communications, LLC (together, “Comcast”) in the United States District Court for the Southern District of New York.
MaxLinear remains confident in its decision and will vigorously defend its right to terminate the Silicon Motion transaction without penalty. Class Action Complaint On August 31, 2023, a Silicon Motion stockholder filed a putative class action complaint in the United States District Court for the Southern District of California captioned Water Island Event-Driven Fund v.
On August 31, 2023, a Silicon Motion stockholder filed a putative class action complaint in the United States District Court for the Southern District of California captioned Water Island Event-Driven Fund v. MaxLinear, Inc., No. 23-cv-01607 (S.D. Cal.), against MaxLinear and certain of its current officers.
Dish California seeks an unspecified amount of compensatory damages, disgorgement, attorneys’ fees, experts’ fees, and costs. Cox Litigations On October 6, 2023, Cox Communications, Inc., CoxCom, LLC, and Cox Communications California, LLC (together, “Cox”) filed claims in two separate actions against MaxLinear in the United States District Court for the Central District of California.
Cox Litigations On February 10, 2023, Entropic sued Cox Communications, Inc., CoxCom, LLC, and Cox Communications California, LLC, or together, Cox, in two separate actions in the United States District Court for the Central District of California. On October 6, 2023, Cox filed counterclaims against MaxLinear in each of the two actions.
Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
MaxLinear intends to continue to vigorously defend its position. * * * The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
At that time, MaxLinear was not a party to the action. On September 21, 2023, Dish Network California Service Corporation (“Dish California”) filed four counterclaims against MaxLinear in the United States District Court for the Central District of California. The four claims are declaratory judgment, breach of contract, fraud and negligent misrepresentation, and civil conspiracy.
Dish Litigation On February 10, 2023, Entropic Communications, LLC, or Entropic filed claims for patent infringement against Dish Network Corporation, Dish Network LLC, Dish Network Service, LLC, and Dish Network California Service Corporation in the United States District Court for the Central District of California. At that time, MaxLinear was not a party to the action.
The complaint seeks compensatory damages, including interest, costs and expenses and such other equitable or injunctive relief that the court deems appropriate. MaxLinear will vigorously defend its position. On December 20, 2023, the Court appointed the lead plaintiffs, who are expected to file an amended complaint by February 15, 2024.
The Amended Complaint seeks compensatory damages, including interest, costs and expenses and such other relief that the court deems appropriate. On November 25, 2024, the MaxLinear defendants filed a motion to dismiss the Amended Complaint. MaxLinear intends to continue to vigorously defend its position.
MaxLinear, Inc. , No. 23-cv-01607 (S.D. Cal.), against MaxLinear and certain of its current officers. The complaint includes two claims: (1) an alleged violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; and (2) an alleged violation of Section 20(a) of the Exchange Act.
The complaint included two claims: (1) an alleged violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; and (2) an alleged violation of Section 20(a) of the Exchange Act. On December 20, 2023, the court appointed the lead plaintiffs, who filed the Consolidated Complaint on February 15, 2024.
Removed
The complaint alleges that the defendants made false and misleading statements and/or omitted material facts that MaxLinear had a duty to disclose, concerning the Company’s ability and intention to timely close the merger with Silicon Motion, including that: (i) MaxLinear had allegedly decided it would not consummate the merger because the economic circumstances surrounding the merger had materially changed, including a material downturn in the semiconductor industry and rising interest rates; (ii) MaxLinear had allegedly determined to unilaterally terminate the merger in the event the merger was approved by SAMR; (iii) MaxLinear had allegedly intended to argue that certain conditions in Article 6 of the Merger Agreement had not been satisfied as required by May 5, 2023 as a basis to terminate the merger; and (iv) as a result, MaxLinear had allegedly materially misrepresented the viability of the merger, the purported benefits of the merger, and the likelihood that the merger would be consummated.
Added
MaxLinear remains confident in its decision and will vigorously defend its right to terminate the Silicon Motion transaction without penalty. Silicon Motion Stockholder Litigation MaxLinear and certain of its officers have been named as defendants in two lawsuits brought by stockholders of Silicon Motion.
Added
The Consolidated Complaint alleged that the defendants made false and misleading statements and/or omitted material facts that MaxLinear had a duty to disclose, concerning the Company’s intention to close the merger with Silicon Motion. On August 28, 2024, the court granted the defendants a motion to dismiss holding that the plaintiffs lacked standing to sue MaxLinear and its officers.
Added
The case was dismissed without prejudice. On September 18, 2024, the plaintiffs filed an Amended Consolidated Complaint, or the Amended Complaint. The Amended Complaint includes the same two claims as alleged in the Consolidated Complaint and makes similar factual allegations against the MaxLinear defendants, but adds Silicon Motion and certain of its officers as additional defendants.
Added
On June 13, 2024, HBK Master Fund L.P. and HBK Merger Strategies Master Fund L.P., stockholders of Silicon Motion (the “HBK Plaintiffs”), filed an additional complaint in the United States District Court for the Southern District of California captioned HBK Master Fund L.P. v. MaxLinear, Inc., No. 24-cv-01033 (S.D.
Added
Cal.), against MaxLinear and certain of its current officers, which also alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act, and other violations. The complaint alleges that the defendants concealed their intention to terminate the merger with Silicon Motion from Silicon Motion’s shareholders.
Added
The complaint seeks compensatory damages, including interest, costs and expenses, punitive damages, and such other equitable or injunctive relief that the court deems appropriate. On January 2, 2025, the court granted the defendants a motion to dismiss holding that the plaintiffs lacked standing to sue MaxLinear and its officers. The case was dismissed without prejudice.
Added
On January 17, 2025, the HBK Plaintiffs filed an amended complaint, including the same two claims as alleged previously with similar factual allegations. The amended complaint seeks compensatory damages, including interest, costs and expenses, punitive damages, and such other relief that the court deems appropriate.
Added
On March 19, 2024, Comcast amended its claims for declaratory judgments, indemnification, and breach of the implied covenant of good faith and fair dealing, and on April 3, 2024, MaxLinear moved to dismiss all claims against it.
Added
On September 19, 2024, the court granted the motion to dismiss with respect to certain claims for declaratory judgment claim and denied the motion to dismiss with respect to the remaining claims.
Added
On September 23, 2024, Comcast filed amended claims for declaratory judgment, indemnification, and breach of the implied covenant of good faith and fair dealing, and on October 14, 2024, MaxLinear amended and refiled its trade secret and related claims. MaxLinear intends to continue to vigorously defend its position.
Added
On September 21, 2023, Dish Network California Service Corporation, or Dish California, filed four counterclaims against MaxLinear. The four claims are declaratory judgment, breach of contract, fraud and negligent misrepresentation, and civil conspiracy. On January 31, 2024, the Dish defendants, together with DISH Technologies L.L.C., or collectively, Dish, filed eight counterclaims (amended counterclaims for Dish California) against MaxLinear.
Added
The eight counterclaims are (1) breach of contract, (2) fraud and negligent misrepresentation, (3) fraud arising from a civil conspiracy, (4) quasi-contract for restitution/unjust enrichment, (5) combination in restraint of trade, (6) violation of the Cartwright Act (by Dish California only), (7) patent misuse, and (8) violation of Cal. Bus. & Prof. Code § 17200 et seq.
Added
Dish seeks an unspecified amount of compensatory damages, disgorgement, attorneys’ fees, experts’ fees, and costs. On February 21, 2024, MaxLinear moved to dismiss the Dish defendants’ counterclaim.
Added
On April 22, 2024, a Special Master issued a report and recommendation, or the R&R, which recommended granting the motion to dismiss with prejudice as to the following counterclaims: (1) quasi-contract for restitution/unjust enrichment, (2) combination in restraint of trade, (3) violation of the Cartwright Act, (4) patent misuse, and (5) violation of Cal. Bus. & Prof. Code § 17200.
Added
MaxLinear submitted objections to the R&R as to the remaining claims that were not dismissed. Dish submitted objections to the R&R’s recommended dismissal of the quasi-contract for restitution/unjust enrichment counterclaim. The court has not yet issued any ruling regarding the R&R or MaxLinear’s pending motion to dismiss. On July 30, 2024, this case was stayed until September 17, 2024.
Added
There was a motion to stay this case pending resolution of Inter Partes Review (“IPR”). MaxLinear intends to continue to vigorously defend its position.
Added
On April 22, 2024, a Special Master issued the R&R, which recommended granting the motion to dismiss with prejudice as to the unjust enrichment counterclaim but denying the motion as to the breach of contract and declaratory judgment counterclaims. MaxLinear submitted objections to the R&R’s denial-in-part.
Added
Cox submitted objections to the R&R as to the unjust enrichment counterclaim and as to certain findings related to the breach of contract counterclaim. The court has not yet issued any ruling regarding the R&R or MaxLinear’s pending motion to dismiss. In the second action, in response to Entropic suing Cox for patent infringement, Cox filed counterclaims against MaxLinear.
Added
Cox seeks an unspecified amount of compensatory damages, equitable relief, attorneys’ fees, expenses, and costs. MaxLinear moved to dismiss Cox’s amended counterclaims on February 6, 2024. On April 22, 2024, a Special Master issued the R&R, which recommended dismissing all Cox counterclaims with prejudice. Cox submitted objections to the R&R as to the unjust enrichment counterclaim.
Added
The court has not yet issued any ruling regarding the R&R or MaxLinear’s pending motion to dismiss. On July 30, 2024, these cases were stayed until September 17, 2024. There was a motion to stay pending resolution of IPR.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Stock Market LLC, or the Nasdaq, under the symbol MXL. According to our transfer agent, as of January 24, 2024, there were 54 record holders of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Stock Market LLC, or the Nasdaq, under the symbol MXL. According to our transfer agent, as of January 22, 2025, there were 52 record holders of our common stock.
The graph assumes an investment of $100 on December 31, 2018, and the reinvestment of any dividends. The comparisons in the graph below are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of our common stock. 56 Table of Contents Recent Sales of Unregistered Securities None.
The graph assumes an investment of $100 on December 31, 2019, and the reinvestment of any dividends. The comparisons in the graph below are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of our common stock. 59 Table of Contents Recent Sales of Unregistered Securities None.
We believe we have approximately 46,000 beneficial holders of our common stock. Dividend Policy We have never declared or paid cash dividends on our common stock.
We believe we have approximately 32,000 beneficial holders of our common stock. Dividend Policy We have never declared or paid cash dividends on our common stock.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on The Nasdaq Composite Index, The NYSE Composite Index and The Philadelphia Semiconductor Index. The period shown commences on December 31, 2018 and ends on December 31, 2023, the end of our last fiscal year.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on The Nasdaq Composite Index, The NYSE Composite Index and The Philadelphia Semiconductor Index. The period shown commences on December 31, 2019 and ends on December 31, 2024, the end of our last fiscal year.

Item 7. Management's Discussion & Analysis

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

85 edited+16 added−43 removed47 unchanged
Biggest changeThese estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expenses for tax and financial statement purposes and the realizability of assets in future years. 62 The following table sets forth our consolidated statement of operations data as a percentage of net revenue for the periods indicated: Year Ended December 31, 2023 2022 2021 Net revenue 100 % 100 % 100 % Cost of net revenue 44 42 44 Gross profit 56 58 56 Operating expenses: Research and development 39 26 31 Selling, general and administrative 19 15 17 Impairment losses — — — Restructuring charges 3 — — Total operating expenses 61 42 48 Income (loss) from operations (6) 16 7 Interest income 1 — — Interest expense (2) (1) (1) Other income (expense), net (3) — — Total other income (expense), net (4) (1) (2) Income (loss) before income taxes (9) 16 5 Income tax provision 1 4 1 Net income (loss) (11) % 11 % 5 % Net Revenue Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Broadband $ 203,519 $ 493,232 $ 492,482 $ (289,713) $ 750 (59) % — % % of net revenue 29 % 44 % 55 % Connectivity 138,228 303,925 149,285 (165,697) 154,640 (55) % 104 % % of net revenue 20 % 27 % 17 % Infrastructure 177,083 136,274 119,421 40,809 16,853 30 % 14 % % of net revenue 26 % 12 % 13 % Industrial and multi-market 174,433 186,821 131,210 (12,388) 55,611 (7) % 42 % % of net revenue 25 % 17 % 15 % Total net revenue $ 693,263 $ 1,120,252 $ 892,398 $ (426,989) $ 227,854 (38) % 26 % Net revenue decreased $427.0 million to $693.3 million for the year ended December 31, 2023, as compared to $1.1 billion for the year ended December 31, 2022 primarily as a result of macroeconomic conditions impacting customer demand, including excess inventory in the channel built up following the supply shortages in the prior year.
Biggest changeThese estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expenses for tax and financial statement purposes and the realizability of assets in future years. 64 Table of Contents The following table sets forth our consolidated statement of operations data as a percentage of net revenue for the periods indicated: Year Ended December 31, 2024 2023 Net revenue 100 % 100 % Cost of net revenue 46 44 Gross profit 54 56 Operating expenses: Research and development 62 39 Selling, general and administrative 38 19 Impairment losses — — Restructuring charges 15 3 Total operating expenses 116 61 Loss from operations (62) (6) Interest income 2 1 Interest expense (3) (2) Other income (expense), net (3) (3) Total other income (expense), net (4) (4) Loss before income taxes (66) (9) Income tax provision 2 1 Net loss (68) % (11) % Net Revenue Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Broadband $ 116,819 $ 203,519 $ (86,700) (43) % % of net revenue 32 % 29 % Connectivity 55,769 138,228 (82,459) (60) % % of net revenue 15 % 20 % Infrastructure 113,907 177,083 (63,176) (36) % % of net revenue 32 % 26 % Industrial and multi-market 74,033 174,433 (100,400) (58) % % of net revenue 21 % 25 % Total net revenue $ 360,528 $ 693,263 $ (332,735) (48) % Net revenue decreased $332.7 million to $360.5 million for the year ended December 31, 2024, as compared to $0.7 billion for the year ended December 31, 2023, as a result of macroeconomic conditions impacting customer demand, including excess inventory in the channel built up following the supply shortages in 2022.
For example, in the broadband data modem and gateway sectors, a design-in can have a product life cycle of 24 to 60 months. In the industrial and wired and wireless infrastructure markets, a design-in can have a product life cycle of 24 to 84 months and beyond.
For example, in the broadband data modem and gateway sectors, a design can have a product life cycle of 24 to 60 months. In the industrial and wired and wireless infrastructure markets, a design can have a product life cycle of 24 to 84 months and beyond.
Our future capital requirements will depend on many factors, including changes in revenue, the expansion of our engineering, sales and marketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products, any damages from legal proceedings related to the termination of the Merger Agreement with Silicon Motion or any alleged breaches of the Merger Agreement that we are required to pay, or any amounts we agree to pay in any settlement and any other potential material investments in, or acquisitions of, complementary businesses, services or technologies.
Our future capital requirements will depend on many factors, including changes in revenue, the expansion or contraction of our engineering, sales and marketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products, any damages from legal proceedings related to the termination of the Merger Agreement with Silicon Motion or any alleged breaches of the Merger Agreement that we are required to pay, or any amounts we agree to pay in any settlement and any other potential material investments in, or acquisitions of, complementary businesses, services or technologies.
Such indebtedness adversely affects our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interest of stockholders, including obtaining additional indebtedness to finance such transactions.
Such indebtedness adversely affects our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.
These solutions also enable shorter design cycles, significant design flexibility and low system-level cost across a range of markets. Our customers include electronics distributors, module makers, OEMs and ODMs, which incorporate our products in a wide range of electronic devices.
These solutions also enable shorter design cycles, significant design flexibility and low system-level cost across a range of markets. Our customers primarily include electronics distributors, module makers, OEMs and ODMs, which incorporate our products in a wide range of electronic devices.
As a result of the termination of the financing, the Company was required to pay to Wells Fargo Bank a ticking fee of $18.3 million, which is included in other income (expense), net in the year ended December 31, 2023.
As a result of the termination of the financing, in August 2023, the Company was required to pay to Wells Fargo Bank a ticking fee of $18.3 million, which is included in other income (expense), net in the year ended December 31, 2023.
The permanent tax item related to global intangible low-taxed income, or GILTI, also reflects recent legislative changes requiring the capitalization of research and experimentation costs, as well as limitations on the creditability of certain foreign income taxes.
The permanent tax item related to global intangible low-taxed income, or GILTI, also reflects the then recent legislative changes requiring the capitalization of research and experimentation costs, as well as limitations on the creditability of certain foreign income taxes.
Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications. All research and development costs are expensed as incurred. 61 Selling, General and Administrative.
Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications. All research and development costs are expensed as incurred. Selling, General and Administrative.
The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest, at the Company’s option, at a per annum rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50%, (y) the prime rate then in effect and (z) an adjusted LIBOR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus an applicable margin of 1.25% or (ii) an adjusted LIBOR rate, subject to a floor of 0.50%, plus an applicable margin of 2.25%.
The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest, at the Company’s option, at a per annum rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50%, (y) the prime rate then in effect and (z) an adjusted LIBOR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus an applicable margin 70 Table of Contents of 1.25% or (ii) an adjusted LIBOR rate, subject to a floor of 0.50%, plus an applicable margin of 2.25%.
During the year ended December 31, 2021, we did not record any material adjustments to the valuation of such assets. Income Taxes Estimates in our assessment of realizability of deferred tax assets that involve a significant level of estimation uncertainty and management judgment include projected future taxable income.
During the year ended December 31, 2022, we did not record any material adjustments to the valuation of such assets. Income Taxes Estimates in our assessment of realizability of deferred tax assets that involve a significant level of estimation uncertainty and management judgment include projected future taxable income.
For example, revenue generated from sales of our products during the years ended December 31, 2023, 2022 and 2021 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
For example, revenue generated from sales of our products during the years ended December 31, 2024, 2023 and 2022 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.
Recently Issued Accounting Pronouncements See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently issued accounting pronouncements not yet adopted as of the date of this report, if any. Results of Operations The following describes the line items set forth in our consolidated statements of operations. Net Revenue.
Recently Issued Accounting Pronouncements See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently issued accounting pronouncements not yet adopted as of the date of this report, if any. Results of Operations The following describes the line items set forth in our consolidated statements of operations.
Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity on June 23, 2028. The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement.
Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity on June 23, 2028. The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement for LIBOR.
As of December 31, 2023, our indebtedness totaled $125.0 million, which consists of outstanding principal under the Initial Term Loan under the June 23, 2021 Credit Agreement. The June 23, 2021 Credit Agreement also provides the Company with the Revolving Facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of December 31, 2023.
As of December 31, 2024, our indebtedness totaled $125.0 million, which consists of outstanding principal under the Initial Term Loan under the June 23, 2021 Credit Agreement. The June 23, 2021 Credit Agreement also provides the Company with the Revolving Facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of December 31, 2024.
While we had been mitigating the impact of rising interest rates with large amounts of prepayments on our outstanding debt, if interest rates were to further increase substantially, it could have a material adverse effect on our operating results and affect our ability to service the indebtedness.
While we had been mitigating the impact of high interest rates with large amounts of prepayments on our outstanding debt, if interest rates were to further increase substantially, it could have a material adverse effect on our operating results and affect our ability to service the indebtedness.
Our consolidated balance sheet at December 31, 2023 included in other long-term liabilities $5.4 million for uncertain tax positions, some of which may result in cash payment and $15.0 million received from other parties for jointly funded research and development projects which will be recognized into income when the contingencies associated with the repayment conditions have been resolved.
Our consolidated balance sheet at December 31, 2024 included in other long-term liabilities $4.4 million for uncertain tax positions, some of which may result in cash payment and $15.0 million received from other parties for jointly funded research and development projects which will be recognized into income when the contingencies associated with the repayment conditions have been resolved.
Materially 59 different results can occur as circumstances change and additional information becomes known. We believe that the following accounting estimates we have identified as critical involve a greater degree of judgment and complexity than our other accounting policies.
Materially different results can occur as circumstances change and additional information becomes known. We believe that the following accounting estimates we have identified as critical involve a greater degree of judgment and complexity than our other accounting estimates.
During the year ended December 31, 2021, we did not record any material adjustments to the valuation of such assets, goodwill, or subsequent period adjustments to the consolidated statements of operations associated with our other business combinations.
During the year ended December 31, 2022, we did not record any material adjustments to the valuation of such assets, goodwill, or subsequent period adjustments to the consolidated statements of operations associated with our other business combinations.
Impairment of goodwill and long-lived assets impact our consolidated financial results in periods subsequent to their acquisition, and such amounts are disclosed in our consolidated financial statements. During the year ended December 31, 2023 and 2022, we recorded impairment of intangible assets of $2.4 million and $2.8 million, respectively, associated with certain acquired licensed technology.
Impairment of goodwill and long-lived assets impact our consolidated financial results in periods subsequent to their acquisition, and such amounts are disclosed in our consolidated financial statements. During the year ended December 31, 2024 and 2023, we recorded impairment of intangible assets of $1.2 million and $2.4 million, respectively, associated with certain acquired licensed technology.
Our customers’ products can be complex and, if our engagement results in a design win, can require significant time to define, design and result in volume production. Because the sales cycle for our products is long, we can incur significant design and development expenditures in circumstances where we do not ultimately recognize any revenue.
Our customers’ products can be complex and, if our engagement results in a design win, can require significant time to move into volume production. Because the sales cycle for our products is long, we can incur significant design and development expenditures in circumstances where we do not ultimately recognize any revenue.
The incentives are conditional upon our meeting certain minimum employment and investment thresholds within Singapore 67 over time, and we may be required to return certain tax benefits in the event we do not achieve compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.
The incentives are conditional upon our meeting certain minimum employment and investment thresholds within Singapore over time, and we may be required to return certain tax benefits in the event we do not achieve 68 Table of Contents compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.
In addition, rising interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service their interest and debt obligations, which in turn has an impact on customer demand for our products and our distributors' business ” for a discussion of how our indebtedness could have a material adverse effect on our liquidity and capital resources.
In addition, high interest rates may make it more difficult for us, our customers, and our distributors to obtain financing and service our respective interest and debt obligations, which in turn has an impact on customer demand for our products and our distributors ’ business ” for a discussion of how our indebtedness could have a material adverse effect on our liquidity and capital resources.
Restructuring charges for the year ended December 31, 2023 included $17.9 million in employee severance-related charges related to reductions in our workforce and $1.8 million in other charges driven by the abandonment of certain computer-assisted design software licenses used by the terminated workforce.
Restructuring charges in the year ended December 31, 2023 included $17.9 million in employee severance-related charges and $1.8 million in other charges driven by the abandonment of certain computer-assisted design software licenses used by the terminated workforce.
In the year ended December 31, 2022, two of our customers accounted for 31% of our net revenue, and our ten largest customers collectively accounted for 65% of our net revenue, of which distributor customers comprised 18% of our net revenue.
In the year ended December 31, 2022, two of our direct customers accounted for 31% of our net revenue, and our ten largest customers collectively accounted for 65% of our net revenue, of which distributor customers comprised 27% of our net revenue.
For certain customers, we sell multiple products into disparate end user applications such as cable modems and broadband gateways. Our business depends on winning competitive bid selection processes, known as design wins, to develop integrated circuits for use in our customers’ products.
For certain customers, we sell multiple products into disparate end user applications such as PON ODUs, Wi-Fi routers, broadband gateways and cable modems. Our business depends on winning competitive bid selection processes, known as design wins, to develop integrated circuits for use in our customers’ products.
We make certain estimates and judgments in determining income taxes for financial statement purposes.
Income tax provision. We make certain estimates and judgments in determining income taxes for financial statement purposes.
As of December 31, 2023, $125.0 million of principal was outstanding under a senior secured term B loan facility, or the “Initial Term Loan under the June 23, 2021 Credit Agreement.” The Company also has available a senior secured revolving credit facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of December 31, 2023.
As of December 31, 2024, $125.0 million of principal was outstanding under a senior secured term B loan facility, or the “Initial Term Loan under the June 23, 2021 Credit Agreement.” The Company also has available, subject to the terms and conditions of the agreement, a senior secured revolving credit facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of December 31, 2024.
In the year ended December 31, 2023, net revenue was $693.3 million, which was derived in part from sales of RF receivers and RF receiver SoC and connectivity solutions into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications.
In the year ended December 31, 2024, net revenue was $360.5 million, which was derived in part from sales of RF receivers and RF receiver SoC and connectivity solutions into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications, and from revenue from intellectual property sale agreements.
Silicon Motion is a provider of NAND flash controllers for solid state drives and other solid state storage devices. 58 On July 26, 2023, we terminated the Merger Agreement and notified Silicon Motion that we were relieved of our obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement were not satisfied and were incapable of being satisfied, (ii) Silicon Motion had suffered a Material Adverse Effect that was continuing, (iii) Silicon Motion was in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that gave rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date had passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023.
On July 26, 2023, we terminated the Merger Agreement and notified Silicon Motion that we were relieved of our obligations to close because, among other reasons, (i) certain conditions to closing set forth in the Merger Agreement were not satisfied and were incapable of being satisfied, (ii) Silicon Motion had suffered a Material Adverse Effect that was continuing, (iii) Silicon Motion was in material breach of representations, warranties, covenants, and agreements in the Merger Agreement that gave rise to the right of the Company to terminate, and (iv) in any event, the First Extended Outside Date had passed and was not automatically extended because certain conditions in Article 6 of the Merger Agreement were not satisfied or waived as of May 5, 2023.
During the year ended December 31, 2023 and 2022, we recorded impairment of intangible assets of $2.4 million and $2.8 million, respectively, associated with certain acquired licensed technology.
During the year ended December 31, 2024 and 2023, we recorded impairment of intangible assets of $1.2 million and $2.4 million, respectively, associated with certain acquired licensed technology.
In the year ended December 31, 2023, one customer accounted for 10% of our net revenue, and our ten largest customers collectively accounted for 54% of our net revenue, of which distributor customers accounted for 16% of our net revenue.
In the year ended December 31, 2023, one of our customers accounted for 10% of our net revenue, and our ten largest customers collectively accounted for 54% of our net revenue, of which distributor customers comprised 18% of our net revenue.
Please refer to the Risk Factor entitled “ As of September 30, 2023, our aggregate indebtedness was $125.0 million, and we are subject to a variable amount of interest on the principal balance of our credit agreements and could continue to be adversely impacted by rising interest rates in the future.
Please refer to the Risk Factor entitled “ As of December 31, 2024, our aggregate indebtedness was $125.0 million, and we are subject to a variable amount of interest on the principal balance of our credit agreements and could continue to be adversely impacted by high interest rates in the future.
The decline in operating cash flows was driven by a decline in revenue from decreased volume of shipments of broadband SOC and certain connectivity products as a result of macroeconomic conditions impacting customer demand for such products (as discussed under the heading, “Results of Operations,” above).
The decline in operating cash flows was driven by a decline in revenue from decreased volume of shipments of our products as a result of macroeconomic conditions impacting customer demand for our products (as discussed under the heading, “Results of Operations,” above).
We also receive a reduced withholding tax rate on certain intercompany royalty payments made by our Singapore subsidiary during the incentive period. We recorded a tax provision in the year ended December 31, 2023 and year ended December 31, 2022 at the incentive rate.
We also receive a reduced withholding tax rate on certain intercompany royalty payments made by our Singapore subsidiary during the incentive period. We recorded income taxes in the years ended December 31, 2024 and 2023 at the incentive rate.
Net revenue is generated from sales of radio-frequency, analog, digital, and mixed-signal integrated circuits for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications. A significant portion of our sales are to distributors, who then resell our products. Cost of Net Revenue.
Net revenue is generated from sales of radio-frequency, analog, digital, and mixed-signal integrated circuits for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications, as well as patent and intellectual property licenses. A significant portion of our sales are to distributors, who then resell our products. 63 Table of Contents Cost of Net Revenue.
However, on July 26, 2023, we terminated the Merger Agreement and were relieved of our obligations to close. We also use cash to pay down outstanding debt, repurchase our common stock under our stock repurchase plan, and from time to time, make investments.
However, on July 26, 2023, we terminated the Merger Agreement and were relieved of our obligations to close. From time to time, we may also use cash to pay down outstanding debt and/or make investments.
Workforce Reductions During the year ended December 31, 2023, we entered into two plans of restructuring to reduce our workforce, or the Workforce Reductions. The Workforce Reductions are intended to align our operational needs with the changes in macroeconomic conditions and the demand environment while continuing to support the long-term business strategy by reducing our operating expenses.
Workforce Reductions During the year ended December 31, 2024, we completed plans of restructuring to reduce our workforce, or the Workforce Reductions. The Workforce Reductions aligned our operational needs with the changes in macroeconomic conditions and the demand environment while continuing to support our long-term business strategy by reducing our operating expenses.
Approximately two-thirds of the employee severance-related charges are estimated statutory severance benefits payable in the jurisdictions in which the terminated employees were employed, with the remainder representing standard severance benefits.
A large portion of the employee severance-related charges are estimated statutory severance benefits payable in the jurisdictions in which the terminated employees were employed, with the remainder representing standard severance benefits.
During the years ended December 31, 2023, 2022 and 2021, we have not recorded any material net adjustments for such changes in estimates. 60 Impairment of Goodwill and Long-Lived Assets Estimates in our assessment of impairment of goodwill and long-lived assets that involve a significant level of estimation uncertainty and management judgment include the comparison of our market capitalization as of the annual impairment assessment date to the carrying value of goodwill, use of forecasted financial information for our projects remaining in IPR&D, if any, including growth rates and margin percentages, and a discount rate as of the annual IPR&D impairment assessment date, and our quarterly assessment of whether indicators of impairment exist with respect to all of our goodwill and long-lived assets.
Impairment of Goodwill and Long-Lived Assets Estimates in our assessment of impairment of goodwill and long-lived assets that involve a significant level of estimation uncertainty and management judgment include the comparison of our market capitalization as of the annual impairment assessment date to the carrying value of goodwill, use of forecasted financial information for our projects remaining in IPR&D, if any, including growth rates and margin percentages, and a discount rate as of the annual IPR&D impairment assessment date, and our quarterly assessment of whether indicators of impairment exist with respect to all of our goodwill and long-lived assets.
Other income (expense) generally consists of income (expense) generated from non-operating transactions, including a ticking fee paid to lenders following the termination of the Silicon Motion merger, net gains (losses) from sales of investments, and unrealized holding gains (losses) from certain investments required to be marked to market value. Income tax provision.
Other income (expense) generally consists of income (expense) generated from non-operating transactions, including a ticking fee paid to lenders following the termination of the Silicon Motion merger, net gains (losses) from sales or impairment of investments and/or income or losses from investments, if any, including unrealized holding gains (losses) from certain investments required to be marked to market value, if any, and a gain from partial curtailment of employee defined benefit obligations.
A significant portion of our net revenue has historically been generated by a limited number of customers. Sales to customers comprise both direct sales to customers and indirect sales through distributors.
A significant portion of our net revenue has historically been generated by a limited number of customers through sales of our products, as well as consideration under intellectual property sale agreements. Sales of products to customers comprise both direct sales to customers and indirect sales through distributors.
The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the year ended December 31, 2022 resulted primarily from the mix of pre-tax income among jurisdictions, permanent tax items including a tax on global intangible low-taxed income, stock based compensation, excess tax benefits related to stock-based compensation, release of uncertain tax positions under ASC 740-10, and release of the valuation allowance on certain federal research and development credits.
The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the year ended December 31, 2024 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including tax credits, stock based compensation, tax deficiencies related to stock-based compensation, release of uncertain tax positions under ASC 740-10, and the recognition of a valuation allowance on Singapore deferred tax assets.
Warranties and Indemnifications In connection with the sale of products in the ordinary course of business, we often make representations affirming, among other things, that our products do not infringe on the intellectual property rights of others, and agree to indemnify customers against third-party claims for such infringement.
Net cash used in financing activities was $26.4 million for the year ended December 31, 2023. 71 Table of Contents Warranties and Indemnifications In connection with the sale of products in the ordinary course of business, we often make representations affirming, among other things, that our products do not infringe on the intellectual property rights of others, and agree to indemnify customers against third-party claims for such infringement.
Research and Development. Research and development expense includes personnel-related expenses, including stock-based compensation, new product engineering mask costs, prototype integrated circuit packaging and test costs, computer-aided design software license costs, intellectual property license costs, reference design development costs, development testing and evaluation costs, depreciation expense, and allocated occupancy costs.
Research and development expense includes personnel-related expenses, including benefits and stock-based compensation, new product engineering mask costs, prototype integrated circuit packaging and test costs, computer-aided design software license costs, intellectual property license costs, reference design development costs, development testing and evaluation costs, depreciation expense, and allocated occupancy costs, partially offset by income from joint R&D projects and/or governmental R&D grants, if any.
The future payments related to uncertain tax positions recorded as other long-term liabilities have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities. Our primary sources of cash are cash receipts on accounts receivable from our shipment of products to distributors and direct customers.
The future payments related to uncertain tax positions recorded as other long-term liabilities have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.
Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $187.3 million, restricted cash of $1.1 million and net accounts receivable of $170.6 million. Additionally, as of December 31, 2023, our working capital, which we define as current assets less current liabilities, was $265.9 million.
Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $118.6 million, restricted cash of $1.0 million and net accounts receivable of $85.5 million. Additionally, as of December 31, 2024, our working capital, which we define as current assets less current liabilities, was $141.2 million.
We expect to complete informing affected employees of the Workforce Reductions by the end of the first quarter of 2024. Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with accounting principles that are generally accepted in the United States.
Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with accounting principles that are generally accepted in the United States.
The second amended and restated commitment letter dated October 24, 2022 with Wells Fargo Bank, N.A., or Wells Fargo Bank, and other lenders, and related financing commitments for the previously pending (now terminated) merger were also terminated upon termination of the Merger Agreement.
See Part I, Item 3 (Legal Proceedings) of this report for more information on legal proceedings related to the termination of the Merger Agreement. 61 Table of Contents The second amended and restated commitment letter dated October 24, 2022 with Wells Fargo Bank, N.A., or Wells Fargo Bank, and other lenders, and related financing commitments for the previously pending (now terminated) merger were also terminated upon termination of the Merger Agreement.
Other than our estimates of sell-through activity and customer return rates, there are no assumptions inherent in our estimates in the valuation of price adjustments and returns that would result in sensitivity of reported amounts to such assumptions. During the years ended December 31, 2023, 2022 and 2021 we have not recorded any material adjustments to such estimates.
Other than our forecasts of future demand, there are no assumptions inherent in our estimates in the valuation of inventory that would result in sensitivity of reported amounts to such assumptions. During the years ended December 31, 2024, 2023 and 2022, we have not recorded any material net adjustments for such changes in estimates.
Impairment losses consist of charges resulting from the impairment of intangible assets. Restructuring Charges . Restructuring charges consist of severance, lease and leasehold impairment charges, and other charges related to restructuring plans. Loss on Extinguishment of Debt.
Impairment losses consist of charges resulting from the impairment of intangible assets. Restructuring Charges . Restructuring charges consist of severance, lease and leasehold impairment charges, and other charges related to restructuring plans. Interest and Other Income (Expense), Net. Interest and other income (expense), net includes interest income, interest expense and other income (expense).
Restructuring charges increased $0.1 million to $2.3 million for the year ended December 31, 2022, compared to $2.2 million for the year ended December 31, 2021.
Restructuring charges increased $17.5 million to $19.8 million for the year ended December 31, 2023, compared to $2.3 million for the year ended December 31, 2022.
The decrease was driven by a decreased volume of shipments of broadband SOC and certain connectivity products as a result of macroeconomic conditions impacting customer demand for such products.
The decrease was driven by a decreased volume of shipments of our products as a result of macroeconomic conditions impacting customer demand for such products as described above under “Net Revenue”.
Impairment losses in the year ended December 31, 2022 also related to abandonment of certain acquired licensing agreements.
Impairment losses in the year ended December 31, 2023 also related to abandonment of certain intellectual property licenses.
Cash used to fund operating expenses in our consolidated statements of cash flows excludes the impact of non-cash items such as amortization and depreciation of acquired intangible assets and leased right-of-use assets and property and equipment, stock-based compensation, impairment of intangible assets, impairment of leased right-of-use assets and related leasehold improvements and unrealized holding or realized gains or losses on marketable 68 equity securities.
Cash used to fund operating expenses in our consolidated statements of cash flows excludes the impact of non-cash items such as, but not limited to, amortization and depreciation of acquired intangible assets and leased right-of-use assets and property and equipment, stock-based compensation, impairment of assets, and gain on extinguishment of lease liabilities.
Cash used to fund capital purchases and acquisitions of businesses and investments are included in investing activities in our consolidated statements of cash flows. Cash proceeds from issuance of common stock and debt and cash used to pay down outstanding debt or repurchase common stock are included in financing activities in our consolidated statements of cash flows.
Cash used to fund capital purchases and acquisitions of businesses and investments are included in investing activities in our consolidated statements of cash flows.
The following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities for the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 43,372 $ 388,726 $ 168,233 Net cash used in investing activities (15,935) (91,762) (91,757) Net cash used in financing activities (26,356) (240,401) (91,903) Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,082) 56 (2,869) Increase (decrease) in cash, cash equivalents and restricted cash $ (1) $ 56,619 $ (18,296) Cash Flows from Operating Activities In the year ended December 31, 2023, net cash provided by operating activities was $43.4 million, compared to net cash provided by operating activities of $388.7 million for the year ended December 31, 2022.
The following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities for the periods indicated: Year Ended December 31, 2024 2023 (in thousands) Net cash provided by (used in) operating activities $ (45,295) $ 43,372 Net cash used in investing activities (23,446) (15,935) Net cash provided by (used in) financing activities 1,286 (26,356) Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,298) (1,082) Decrease in cash, cash equivalents and restricted cash $ (68,753) $ (1) Cash Flows from Operating Activities In the year ended December 31, 2024, net cash used in operating activities was $45.3 million, compared to net cash provided by operating activities of $43.4 million for the year ended December 31, 2023.
Net cash used in financing activities consisted of repayments of debt of $185.0 million, common stock repurchases of $31.5 million, and minimum tax withholding paid on behalf of employees for restricted stock units of $28.9 million, partially offset by cash inflows from net proceeds from the issuance of common stock upon exercise of stock options of $5.0 million.
Net cash provided by financing activities consisted of net proceeds from the issuance of common stock upon exercise of stock options of $4.1 million partially offset by cash outflows of repayments of minimum tax withholding paid on behalf of employees for restricted stock units of $2.8 million.
Income Tax Provision (Benefit) Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Income tax provision $ 9,337 $ 49,158 $ 5,901 $ (39,821) $ 43,257 (81) % 733 % % of pre-tax income (loss) (15) % 28 % 11 % The income tax provision for the year ended December 31, 2023 was $9.3 million compared to an income tax provision of $49.2 million for the year ended December 31, 2022, and an income tax provision of $5.9 million for the year ended December 31, 2021.
Income Tax Provision (Benefit) Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Income tax provision $ 6,481 $ 9,337 $ (2,856) (31) % % of pre-tax income (loss) (3) % (15) % The income tax provision for the year ended December 31, 2024 was $6.5 million compared to an income tax provision of $9.3 million for the year ended December 31, 2023.
The decrease was a result of decreases in stock-based compensation expenses of $30.1 million, amortization of intangibles of $9.0 million, bonuses of $7.8 million, and supplies and small tools of $1.6 million, partially offset by increases in payroll and other benefits expense of $7.4 million and legal fees of $4.9 million.
The increase was a result of increase in stock based compensation of $16.4 million, partially offset by decreases in payroll and other benefits expense of $6.2 million, bonuses of $1.7 million, commission expense of $1.1 million, and depreciation and amortization of $1.0 million.
Inventory Valuation Estimates in the valuation of inventory that involve a significant level of estimation uncertainty include our estimates of excess and obsolete inventory based on forecasts of future demand for our products in inventory.
During the years ended December 31, 2024, 2023 and 2022 we have not recorded any material adjustments to such estimates. Inventory Valuation Estimates in the valuation of inventory that involve a significant level of estimation uncertainty include our estimates of excess and obsolete inventory based on forecasts of future demand for our products in inventory.
In the year ended December 31, 2021, two of our direct customers accounted for 26% of our net revenue, and our ten largest customers collectively accounted for 69% of our net revenue, of which distributor customers comprised 27% of our net revenue.
In the year ended December 31, 2024, one customer accounted for 12% of our net revenue, and our ten largest customers collectively accounted for 60% of our net revenue, of which distributor customers accounted for 30% of our net revenue.
The June 23, 2021 Credit Agreement, under which we entered into a senior secured term B loan facility and a revolving credit facility, permits us to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $175.0 million and (y) 100% of “Consolidated EBITDA” (as defined in such agreement), plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests. 69 The following is a summary of our working capital, cash and cash equivalents, and restricted cash for the periods indicated: December 31, 2023 2022 (in thousands) Working capital $ 265,896 $ 222,038 Cash and cash equivalents $ 187,288 $ 187,353 Short-term restricted cash 1,051 982 Long-term restricted cash 17 22 Total cash, cash equivalents, and restricted cash $ 188,356 $ 188,357 We believe that our $187.3 million of cash and cash equivalents at December 31, 2023 will be sufficient to fund our projected operating requirements for at least the next twelve months.
The June 23, 2021 Credit Agreement, under which we entered into a senior secured term B loan facility and a revolving credit facility, permits us to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $175.0 million and (y) 100% of “Consolidated EBITDA” (as defined in such agreement), plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests.
Research and Development Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Research and development $ 269,504 $ 296,442 $ 278,440 $ (26,938) $ 18,002 (9) % 6 % % of net revenue 39 % 26 % 31 % Research and development, or R&D, expense decreased $26.9 million to $269.5 million for the year ended December 31, 2023 from $296.4 million in the year ended December 31, 2022.
Research and Development Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Research and development $ 225,189 $ 269,504 $ (44,315) (16) % % of net revenue 62 % 39 % Research and development, or R&D, expense decreased $44.3 million to $225.2 million for the year ended December 31, 2024 from $269.5 million in the year ended December 31, 2023.
The decrease in intangible amortization expense is from acquired assets becoming fully amortized as they reach the end of their useful lives. The increase in payroll and other benefits is from increase in headcount in certain administrative functions.
The decrease in depreciation and amortization is from assets becoming fully amortized as they reached the end of their useful lives.
Restructuring Charges Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Restructuring charges $ 19,786 $ 2,265 $ 2,204 $ 17,521 $ 61 774% 3% % of net revenue 3 % — % — % Restructuring charges increased $17.5 million to $19.8 million for the year ended December 31, 2023, compared to $2.3 million for the year ended December 31, 2022.
Restructuring Charges Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Restructuring charges $ 53,379 $ 19,786 $ 33,593 170% % of net revenue 15 % 3 % Restructuring charges increased $33.6 million to $53.4 million for the year ended December 31, 2024, compared to $19.8 million for the year ended December 31, 2023.
The increase was driven by increases in payroll and employee benefit expenses of $21.8 million, stock-based compensation and bonus expenses of $11.2 million, CAD design tools and other software license expenses of $5.8 million, consulting expenses of $3.1 million, and various other expenses of $6.1 million.
The decrease was driven by decreases in payroll and benefits expense of $24.2 million, CAD design tools and other software license expense of $8.6 million, stock based compensation of $5.4 million, prototype expense of $5.0 million, bonuses of $4.5 million, consulting expense of $4.1 million, depreciation expense of $1.5 million and occupancy expenses of $1.0 million.
Other than our forecasts of future demand, there are no assumptions inherent in our estimates in the valuation of inventory that would result in sensitivity of reported amounts to such assumptions.
Other than our estimates of sell-through activity and customer return rates, there are no assumptions inherent in our estimates in the valuation of price adjustments and returns that would result in 62 Table of Contents sensitivity of reported amounts to such assumptions.
As of December 31, 2023, our material cash requirements include long-term debt, non-cancelable operating leases, inventory purchase obligations and other obligations, which primarily consist of contractual payments due for computer-aided design software, as follows: Payments due Total Less than 1 year 1-3 years 3-5 years More than 5 years (in thousands) Long term debt obligations $ 125,000 $ — $ — $ 125,000 $ — Operating lease obligations 39,440 10,769 18,830 8,245 1,596 Purchase obligations 38,985 28,754 10,231 — — Other obligations 84,208 32,563 47,972 3,673 — Total $ 287,633 $ 72,086 $ 77,033 $ 136,918 $ 1,596 Our planned capital expenditures as of December 31, 2023 were not material.
As of December 31, 2024, our material cash requirements include long-term debt, non-cancelable operating leases, inventory purchase obligations and other obligations, which primarily consist of contractual payments due for computer-aided design software, as follows: Payments due Total Less than 1 year 1-3 years 3-5 years More than 5 years (in thousands) Long term debt obligations $ 125,000 $ — $ — $ 125,000 $ — Operating lease obligations 28,863 10,599 14,214 4,050 — Purchase obligations 51,262 39,872 11,390 — — Other obligations 55,286 32,131 23,155 — — Total $ 260,411 $ 82,602 $ 48,759 $ 129,050 $ — Our planned capital expenditures as of December 31, 2024 were not material.
We are closely managing our R&D expenses to meet evolving demand and are in the process of completing a workforce reduction which is anticipated to reduce R&D expense in the first quarter of 2024; however, we expect our research and development expenses to increase in future years as we develop products to drive future growth.
We are reducing our research and development spending, including via our Workforce Reductions, to meet evolving demand; however, we expect our research and development expenses to increase in future years as we develop products to drive future growth.
Selling, General and Administrative Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Selling, general and administrative $ 132,156 $ 168,008 $ 149,943 $ (35,852) $ 18,065 (21) % 12 % % of net revenue 19 % 15 % 17 % Selling, general and administrative expense decreased $35.9 million to $132.2 million for the year ended December 31, 2023, as compared to $168.0 million for the year ended December 31, 2022.
Selling, General and Administrative Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Selling, general and administrative $ 138,329 $ 132,156 $ 6,173 5 % % of net revenue 38 % 19 % 66 Table of Contents Selling, general and administrative expense increased $6.2 million to $138.3 million for the year ended December 31, 2024, as compared to $132.2 million for the year ended December 31, 2023.
The $24.4 million change in other income (expense), net primarily related to a loan ticking fee of approximately $18.3 million paid to lenders following the termination of the Silicon Motion merger, $4.3 million impact from foreign currency fluctuations, $2.8 million impact of realized and unrealized holding losses recognized on equity securities that were sold at the end of 2023 that were previously marked to market value in other income (expense), net, and partially offset by a gain of $1.0 million related to partial curtailment of defined benefit pension obligations.
Interest and other income (expense), net for the year ended December 31, 2023 included a loan ticking fee of approximately $18.3 million paid to lenders following the termination of the Silicon Motion merger, partially offset by $1.0 million gain related to partial curtailment of defined benefit pension obligations which did not recur in the 2024 period.
Cash Flows from Financing Activities Our use of cash in financing activities declined, as we moved from early paydown of debt to mitigate rising interest rates in 2022 to cash conservation in 2023 following the general slowdown in the market environment. Net cash used in financing activities was $26.4 million for the year ended December 31, 2023.
Net cash used in investing activities was $15.9 million for the year ended December 31, 2023. Cash Flows from Financing Activities We continued cash conservation in 2024 following the general slowdown in the market environment. Net cash provided by financing activities was $1.3 million for the year ended December 31, 2024.
The decrease was driven by decreases in bonuses of $21.9 million, payroll and benefits expense of $9.4 million, and consulting expense of $9.2 million, partially offset by the impact of decrease in income from joint R&D projects and governmental R&D grants offsetting our R&D expense of $11.3 million and an increase stock based compensation expense of $3.6 million.
These decreases were partially offset by a decrease in income from joint R&D and governmental grants of $10.9 million offset against R&D expense. The decrease in payroll and benefits expense, stock-based compensation, and bonuses are attributable to the Workforce Reductions and cost reduction measures.
Gross profit percentage decreased for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to reduced absorption of intangible amortization, partially offset by improvement from product mix. Product mix included higher margin backhaul product contributions relative to total revenues in 2023 as compared to 2022.
Gross profit percentage declined for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to reduced absorption of intangible amortization and fixed costs.
The amount of income from joint R&D projects and governmental grants varies from year to year depending on demand for such projects and availability of governmental R&D programs.
The amount of income from research and development funded by others also varies from period to period depending on availability of such funding, including governmental grants.
Net cash used in investing activities was $15.9 million for the year ended December 31, 2023 and included purchases of property and equipment of $13.5 million, payments to acquire Company Y of $9.8 million, purchases of intangible assets of $6.4 million, and payments of contingent consideration related to our acquisition of Company X of $3.0 million.
Cash Flows from Investing Activities Our use of cash in investing activities increased, as we increased investments in property equipment, including production masks. Net cash used in investing activities was $23.4 million for the year ended December 31, 2024 and consisted of purchases of property and equipment of $17.7 million and purchases of intangible assets of $5.8 million.
Connectivity revenue decreased $165.7 million due to decreased volume of shipments of certain products primarily associated with residential broadband market decline. The increase in infrastructure revenues of $40.8 million was primarily driven by an increase in the volume of wireless backhaul shipments.
Connectivity revenue decreased $82.5 million due to decreased volume of shipments of certain products associated with residential broadband market decline, partially offset by revenue from certain intellectual property sale agreements.
Operating cash flows were also impacted by changes in our working capital, which decreased $101.4 million, in particular, in 2023 we made $104.2 million in payments against our price protection liability and $11.8 million in severance and related payments from our workforce reductions. 70 In the year ended December 31, 2022, net cash provided by operating activities was $388.7 million, compared to net cash flow provided by operating activities of $168.2 million for the year ended December 31, 2021.
Operating cash flows were also impacted by changes in our working capital, which increased $68.4 million, in particular, in 2024, we collected accounts receivable of $177.6 million, which was partially offset by payments against our price protection liability of $44.6 million and severance and other payments from the Workforce Reductions of $34.5 million.
As a result of the Workforce Reductions, in the year ended December 31, 2023, we incurred $19.8 million in restructuring costs primarily related to severance costs and related expenses, and estimate that we will incur approximately $30 million to $40 million in restructuring costs in 2024 upon notice to the remaining affected employees of the Workforce Reductions.
As a result of the Workforce Reductions, in the year ended December 31, 2024 and 2023, we incurred $53.4 million and $19.8 million in restructuring costs. Refer to Note 4 in our consolidated financial statements included elsewhere in this report for more details regarding the Workforce Reductions.
We are closely managing our selling, general and administrative expenses; however, we expect selling, general and administrative expenses to increase in future years when we return to growing our sales and marketing organization to expand into existing and new markets. 65 Impairment Losses Year Ended December 31, 2023 2022 2021 $ Change % Change (dollars in thousands) Impairment losses $ 2,438 $ 2,811 $ — $ (373) $ 2,811 (13)% N/A % of net revenue — % — % — % Impairment losses in the year ended December 31, 2023 related to abandonment of certain acquired licensing agreements.
We are reducing our selling, general and administrative expenses, including via our Workforce Reductions; however, we expect selling, general and administrative expenses to increase in future years when we return to growing our sales and marketing organization to expand into existing and new markets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical change of 100 basis points in such foreign currency exchange rates during the year ended December 31, 2023 would result in a change to translation gain in accumulated other comprehensive income of approximately $1.0 million. 71 Interest Rate Risk We are subject to a variable amount of interest on the principal balance of our credit agreements described above and could be adversely impacted by rising interest rates in the future.
Biggest changeA hypothetical change of 100 basis points in such foreign currency exchange rates during the year ended December 31, 2024 would result in a change to translation gain in accumulated other comprehensive income of approximately $1.1 million.
We currently believe our operating cash held primarily for working capital purpose is sufficient to cover our interest obligations, but we are monitoring the impact of rising interest rates on our ability to service our interest and debt obligations, obtain financing, and on our business in general. ITEM 8.
We currently believe our operating cash held primarily for working capital purpose is sufficient to cover our interest obligations, but we are monitoring the impact of high interest rates on our ability to service our interest and debt obligations, obtain financing, and on our business in general. ITEM 8.
If LIBOR interest rates had increased by 10% during the periods presented, the rate increase would have resulted in an immaterial increase to interest expense.
Interest Rate Risk We are subject to a variable amount of interest on the principal balance of our credit agreements described above and could be adversely impacted by high interest rates in the future. If LIBOR interest rates had increased by 10% during the periods presented, the rate increase would have resulted in an immaterial increase to interest expense.

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