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What changed in SILICON LABORATORIES INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SILICON LABORATORIES 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.

+199 added−216 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-01)

Top changes in SILICON LABORATORIES INC.'s 2024 10-K

199 paragraphs added · 216 removed · 152 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also focus design and engineering efforts on technologies that simplify and accelerate adoption by customers of security features engineered into our silicon chips. Our expertise in analog-intensive, mixed-signal IC design in CMOS and software development allows us to develop new and innovative products that are highly integrated and secure, simplifying our customers’ designs and improving their time-to-market.
Biggest changeOur expertise in analog-intensive, mixed-signal integrated chip (“IC”) design in CMOS, as well as in software development allows us to create new and innovative products that are highly integrated and secure, simplifying our customers’ designs and improving their time-to-market. Industry Background The Internet of Things is about connecting embedded applications to the Internet.
In addition, designs must meet numerous wireless standards deployed in various environments and serving diverse requirements. Our combined expertise in IC design and software development allows us to engineer modules that provide robust, high-performance connections in challenging wireless environments. We have developed wireless modules based on numerous wireless standards, including Z-Wave, Bluetooth, Zigbee, Thread, Wi-Fi and sub-GHz.
In addition, designs must meet numerous wireless standards deployed in various environments and serving diverse requirements. Our combined expertise in IC design and software development allows us to engineer modules that provide robust, high-performance connections in challenging wireless environments. We have developed wireless modules based on numerous wireless standards, including Bluetooth, sub-GHz, Thread, Wi-Fi, Zigbee and Z-Wave.
We believe that our fabless manufacturing model significantly reduces our capital requirements and allows us to focus our resources on design, development and marketing of our ICs. Once the silicon wafers have been produced, they are shipped directly to our third-party assembly subcontractors. The assembled ICs are then moved to the final testing stage.
We believe that our fabless manufacturing model significantly reduces our capital requirements and allows us to focus our resources on the design, development and marketing of our ICs. Once the silicon wafers have been produced, they are shipped directly to our third-party assembly subcontractors. The assembled ICs are then moved to the final testing stage.
We compete with Broadcom, Espressif, Infineon, MediaTek, Microchip, Nordic Semiconductor, NXP, Qualcomm, Renesas, STMicroelectronics, Synaptics, Telink, Texas Instruments and others. We expect to face competition in the future from our current competitors, other manufacturers and designers of semiconductors and start-up semiconductor design companies.
We compete with Broadcom, Espressif, Infineon, MediaTek, Microchip, Nordic Semiconductor, NXP, Qualcomm, Renesas, STMicroelectronics, Synaptics, Telink, Texas Instruments and others. We expect to face competition in the future from our current competitors, other manufacturers, designers of semiconductors and start-up semiconductor design companies.
Our family of products are ideally suited to ultra-low power IoT embedded systems that include energy friendly 8-bit mixed-signal microcontrollers, ultra-low power 32-bit microcontroller and wireless MCU connectivity solutions using the ARM® Cortex-M0+/M3/M4 and newer M33 cores. Single and multi-protocol SoC devices and modules provide flexible, highly integrated solutions designed to meet demanding requirements of IoT applications.
Our family of products are ideally suited to ultra-low power IoT embedded systems that include energy friendly 8-bit mixed-signal microcontrollers, ultra-low power 32-bit microcontrollers and wireless MCU connectivity solutions using the ARM® Cortex-M0+/M3/M4 and newer M33 cores. Single and multi-protocol SoC devices and modules provide flexible, highly integrated solutions designed to meet demanding requirements of IoT applications.
In addition to being able to manage numerous application tasks, an RTOS enhances scalability, and makes complex applications predictable and reliable. To address these application needs, we acquired Micrium, an embedded RTOS provider. Micrium has established itself as a reliable, high performance and trusted RTOS software platform, with an installed base that has grown to millions of devices.
In addition to being able to manage numerous application tasks, an RTOS enhances scalability, and makes complex applications predictable and reliable. To address these application needs, in 2016 we acquired Micrium, an embedded RTOS provider. Micrium has established itself as a reliable, high-performance and trusted RTOS software platform, with an installed base that has grown to millions of devices.
By doing so, we create products that, when compared to many competing products, offer the following benefits: ● Require less printed circuit board (PCB) space; ● Reduce the use of external components lowering the system cost and simplifying design; ● Offer superior performance improving our customers’ end products; ● Provide increased reliability and manufacturability, improving customer yields; and/or ● Reduce system power requirements enabling smaller form factors and/or longer battery life.
By doing so, we create products that, when compared to many competing products, offer the following benefits: ● Require less printed circuit board (“PCB”) space; ● Reduce the use of external components lowering the system cost and simplifying design; ● Offer superior performance improving our customers’ end products; ● Provide increased reliability and manufacturability, improving customer yields; and/or ● Reduce system power requirements enabling smaller form factors and/or longer battery life.
We could also face competition from module makers or other systems suppliers that may include mixed-signal components in their products that could eliminate the need for our ICs.
We could also face competition from module makers or other systems suppliers that may include mixed-signal components in their products, which could eliminate the need for our ICs.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the investor relations page of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the investor relations page of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
Additionally, to manage the wide variety of signals on a monolithic piece of silicon including electrical noise, harmonics and other electronic distortions requires a fundamental knowledge of device physics and accumulated design expertise. Software Expertise Our software expertise allows us to develop products for markets where intelligent data capture, high-performance processing and communication are increasingly important product differentiators.
Additionally, managing the wide variety of signals on a monolithic piece of silicon including electrical noise, harmonics and other electronic distortions requires a fundamental knowledge of device physics and accumulated design expertise. Software Expertise Our software expertise allows us to develop products for markets where intelligent data capture, high-performance processing and communication are increasingly important product differentiators.
In-house protocol stacks and Micrium® real-time operating system (RTOS) help simplify software development for IoT developers by coordinating and prioritizing multiprotocol connectivity, SoC peripherals and other system-level activities. ​ 3 Table of Contents We group our products as Industrial & Commercial or Home & Life based on the target markets they address.
In-house protocol stacks and Micrium® real-time operating system (“RTOS”) help simplify software development for IoT developers by coordinating and prioritizing multiprotocol connectivity, SoC peripherals and other system-level activities. ​ 3 Table of Contents We group our products as Industrial & Commercial or Home & Life based on the target markets they address.
Our sensor products include optical sensors (proximity, ambient light gestures and heart rate monitoring), as well as relative humidity (RH) / temperature sensors and Hall effect magnetic sensors. These devices leverage our mixed-signal capability to provide high accuracy, process technology to improve performance and lower power consumption than competing parts.
Our sensor products include optical sensors (proximity, ambient light gestures and heart rate monitoring), as well as relative humidity (“RH”) / temperature sensors and Hall effect magnetic sensors. These devices leverage our mixed-signal capability to provide high accuracy, process technology to improve performance and lower power consumption than competing parts.
This operation can be performed by the same contractor that assembled the IC, other third-party test subcontractors or within our internal facilities prior to shipping to our customers. During fiscal 2022, most of our units shipped were tested by offshore third-party test subcontractors.
This operation can be performed by the same contractor that assembled the IC, other third-party test subcontractors or within our internal facilities prior to shipping to our customers. During fiscal 2023, most of our units shipped were tested by offshore third-party test subcontractors.
The software we have developed to address these markets enables machine-to-machine communications, providing intelligence to electronic systems. Our products integrate high-performance, low-power wireless and microcontroller ICs with reliable and scalable software into a flexible and robust networking platform. The demand for low-power, small-footprint wireless technology is accelerating as more and more IP-enabled end points are being connected to the IoT.
The software we have developed to address these markets enables machine-to-machine communications, providing intelligence to electronic systems. Our products integrate high-performance, low-power wireless and microcontroller ICs with reliable and scalable software into a flexible and robust networking platform. The demand for low-power, small-footprint wireless technology is accelerating as more and more IP-enabled endpoints are being connected to the IoT.
We have built a leading wireless development platform and product portfolio for the IoT based on Bluetooth®, sub-GHz proprietary technologies, Thread, Wi-Fi®, Zigbee® and Z-Wave®. Our products integrate complex mixed-signal functions that are frequently performed by numerous discrete components in competing products into a single chip, chipset or system-on-chip (SoC).
We have built a leading wireless development platform and product portfolio for the IoT based on Bluetooth®, sub-GHz proprietary technologies, Wi - SUN, Thread, Wi-Fi®, Zigbee® and Z-Wave®. Our products integrate complex mixed-signal functions that are frequently performed by numerous discrete components in competing products into a single chip, chipset or system-on-chip (“SoC”).
Leveraging the Industrial IoT allows companies to increase production and efficiency, understand and improve processes, and predict faults in processes before downtime occurs. Industrial IoT solutions address energy efficiency, operation excellence and smart usage of commercial spaces.
Leveraging the Industrial IoT allows companies to increase production and efficiency, understand and improve processes, and predict faults in processes before downtime occurs. Industrial IoT solutions address energy efficiency, operational excellence and smart usage of commercial spaces.
Innovative solutions don’t stop at our products – we are also actively supporting research to improve safety, sustainability, and overall quality of life in densifying cities as the founding corporate partner for the Smart City Living Lab at The International Institute of Information Technology in Hyderabad, India.
Innovative solutions do not stop at our products – we are also actively supporting research to improve safety, sustainability, and overall quality of life in densifying cities as the founding corporate partner for the Smart City Living Lab at The International Institute of Information Technology in Hyderabad, India.
Our IC production employs submicron process geometries which are readily available from leading foundry suppliers worldwide, thus increasing the likelihood that manufacturing capacity will be available throughout our products’ life cycles. We currently partner primarily with Taiwan Semiconductor Manufacturing Co. (TSMC) and Semiconductor Manufacturing International Corporation (SMIC) to manufacture the majority of our semiconductor wafers.
Our IC production employs submicron process geometries which are readily available from leading foundry suppliers worldwide, thus increasing the likelihood that manufacturing capacity will be available throughout our products’ life cycles. We currently partner primarily with Taiwan Semiconductor Manufacturing Co. (“TSMC”) and Semiconductor Manufacturing International Corporation (“SMIC”) to manufacture the majority of our semiconductor wafers.
We have focused attention on improving our environmental, social and governance (“ESG”) metrics. We included diversity, equity and inclusion (“DEI”) metrics as a component of senior management bonuses for fiscal 2022. These principles are also reflected in our employee training, in particular with respect to our policies against harassment, discrimination and the elimination of bias in the workplace.
We have focused attention on improving our environmental, social and governance (“ESG”) metrics. We included diversity and inclusion metrics as a component of senior management bonuses for fiscal 2023. These principles are also reflected in our employee training, in particular with respect to our policies against harassment, discrimination and the elimination of bias in the workplace.
Direct and distribution customers buy on an individual purchase order basis, rather than pursuant to long-term agreements. We consider our customer to be the end customer purchasing either directly from a distributor, a contract manufacturer or us. During fiscal 2022, our ten largest end customers accounted for 20% of our revenues.
Direct and distribution customers buy on an individual purchase order basis, rather than pursuant to long-term agreements. We consider our customer to be the end customer purchasing either directly from a distributor, a contract manufacturer or us. During fiscal 2023, our ten largest end customers accounted for 22% of our revenues.
Our smart home solutions provide the functionality consumers demand while delivering features that accelerate adoption - privacy, simplicity, and performance. ​ - Home automation/security systems - Smart speaker - Smart lighting - HVAC control - Smart cameras - Smart appliances - Smart home sensing ​ ​ ​ 4 Table of Contents Target Market Applications ​ ​ ​ Connected Health ​ ​ Smart medical devices, such as pulse oximeters, ECG monitors, and fitness wearables, make healthcare more accessible and are improving lives around the world.
Our smart home solutions provide the functionality consumers demand while delivering features that accelerate adoption - privacy, simplicity, and performance. ​ - Home automation/security systems - Smart speaker - Smart lighting - HVAC control - Smart cameras - Smart appliances - Smart home sensing - Smart locks - Window/blinds controls ​ ​ ​ ​ 4 Table of Contents Target Market Applications ​ ​ ​ Connected Health ​ ​ Smart medical devices, such as continuous glucose monitors, pulse oximeters, ECG monitors, and fitness wearables, make healthcare more accessible and are improving lives around the world.
We highly value our engineering talent and strive to maintain a very high bar when bringing new recruits to the company. Research and development expenses were $332.3 million, $273.2 million and $235.2 million in fiscal 2022, 2021 and 2020, respectively. Technology Our product development process facilitates the design of highly-innovative, analog-intensive, mixed-signal ICs.
We highly value our engineering talent and strive to maintain a very high bar when bringing new recruits to the company. Research and development expenses were $337.7 million, $332.3 million and $273.2 million in fiscal 2023, 2022 and 2021, respectively. Technology Our product development process facilitates the design of highly innovative, analog-intensive, mixed-signal ICs.
Although we sell the products to, and are paid by distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, represented 33% and 17% of our revenues during fiscal 2022, respectively. We maintain numerous sales offices in Asia, the Americas and Europe.
Although we sell the products to, and are paid by distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, represented 34% and 15% of our revenues during fiscal 2023, respectively. We maintain numerous sales offices in Asia, the Americas and Europe.
As of December 31, 2022, we had 1,459 issued or pending United States and foreign patents. Patents generally have a term of twenty years from the date they are filed. As our patent portfolio has been built over time, the remaining terms of the individual patents in our patent portfolio vary.
As of December 30, 2023, we had 1,496 issued or pending United States and foreign patents. Patents generally have a term of twenty years from the date they are filed. As our patent portfolio has been built over time, the remaining terms of the individual patents in our patent portfolio vary.
Revenue is attributed to a geographic area based on the shipped-to location. The percentage of our revenues derived from outside of the United States was 83% in fiscal 2022.
Revenue is attributed to a geographic area based on the shipped-to location. The percentage of our revenues derived from outside of the United States was 88% in fiscal 2023.
Our low-power, high-performance wireless SoCs and modules simplify this process and accelerate time-to-market to develop secure, reliable, smart medical devices. ​ - Consumer health & fitness (wearables) - Connected medical products - Medical instrumentation - Patient monitoring ​ Customers, Sales and Marketing We market our products through our direct sales force and through a network of independent sales representatives and distributors.
Our low-power, high-performance wireless SoCs and modules simplify this process and accelerate time-to-market to develop secure, reliable, smart medical devices. ​ - Diabetes management - Consumer health & fitness (wearables) - Elderly care - Patient monitoring - Activity tracking ​ Customers, Sales and Marketing We market our products through our direct sales force and through a network of independent sales representatives and distributors.
Our leading Internet of Things (“IoT”) platform helps customers quickly create secure, intelligent connected devices. Our team and technology assist customers to build connected devices that measurably solve development challenges, including energy efficiency, and enable applications that support better health, innovative infrastructure and sustainable cities.
Our leading platform, purpose-built for the Internet of Things (“IoT”), helps customers quickly create secure, intelligent, connected devices. Our team and technology assist customers in solving development challenges, including energy efficiency, to build connected devices for applications that support better health, innovative infrastructure, and sustainable cities.
These trends require more and more interaction between the analog world we live in and the digital world of computing, which is driving the need for analog-intensive, mixed-signal circuits in a wide range of electronic products. Traditional mixed-signal designs relied upon solutions built with numerous, complex discrete analog and digital components.
The IoT requires interaction between the analog world we live in and the digital world of computing, which drives the need for analog-intensive, mixed-signal circuits in a wide range of electronic products. Traditional mixed-signal designs relied upon solutions built with numerous, complex discrete analog and digital components.
Disruptions to our business and supply chain (and the business and supply chains of our customers) could cause significant delays in shipments of our products until we are able to shift our manufacturing, assembling or testing from the affected subcontractor to another third-party vendor.
Disruptions to our business and supply chain (and the business and supply chains of our customers) could cause significant delays in shipments of our products until we are able to shift our manufacturing, assembling or testing from the affected subcontractor to another third-party vendor. Backlog We include in backlog accepted product purchase orders from customers and worldwide distributor stocking orders.
We strive to meet this objective by offering competitive compensation and benefits in a diverse, inclusive, equitable and safe workplace, with opportunities for our employees to grow and develop in their careers. As of December 31, 2022, we employed 1,964 people, of whom 67% were in engineering roles. Women represented 22% of our workforce and men represented 78%.
We strive to meet this objective by offering competitive compensation and benefits in a diverse, inclusive, equitable and safe workplace, with opportunities for our employees to grow and develop in their careers. As of December 30, 2023, we employed 1,846 people, of whom 71% were in engineering roles. Women represented 23% of our workforce and men represented 77%.
We believe the development of our company culture, along with competitive compensation, career growth and development opportunities have helped increase employee tenure and reduce voluntary turnover. During fiscal 2022, our voluntary employee turnover rate was 9%. The health and safety of our employees is of utmost important to us.
We believe the development of our company culture, along with competitive compensation, career growth and development opportunities have helped increase employee tenure and reduce voluntary turnover. During fiscal 2023, our voluntary employee turnover rate was 8%. The well-being of our employees is of utmost importance to us.
The following summarizes the products that we have introduced to customers: Wireless Microcontrollers and Sensor Products Our EFM32™, EFM8™, 8051, wireless MCUs and wireless SoCs are based on numerous wireless protocols, including Bluetooth, sub-GHz proprietary technologies, Thread, Wi-Fi, Zigbee and Z-Wave technologies.
Revenues during fiscal 2023, 2022 and 2021 were generated predominately by sales of our mixed-signal products. The following summarizes the products that we have introduced to customers: Wireless Microcontrollers and Sensor Products Our EFM32™, EFM8™, 8051, wireless MCUs and wireless SoCs are based on numerous wireless protocols, including Bluetooth, sub-GHz proprietary technologies, Thread, Wi-Fi, Zigbee and Z-Wave technologies.
As a result, manufacturers of electronic devices value providers that can supply them with mixed-signal solutions offering greater functionality, smaller size, and lower power requirements at a reduced cost and shorter time-to-market. 2 Table of Contents Products We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the IoT.
As a result, manufacturers of electronic devices value providers that can supply them with mixed-signal solutions offering greater functionality, smaller size, and lower power requirements at a reduced cost and shorter time-to-market.
Crowded RF environments, regulatory requirements, and security make development of these connected medical devices challenging for device manufacturers.
Regulatory requirements, product miniaturization needs, battery life, and security make development of these connected medical devices challenging for device manufacturers.
Our backlog may fluctuate significantly depending upon customer order patterns which may, in turn, vary considerably based on rapidly changing business circumstances. Accordingly, we do not believe that our backlog at any time is necessarily representative of actual sales for any succeeding period. Competition The markets for semiconductors generally, and for analog and mixed-signal ICs in particular, are intensely competitive.
Accordingly, we do not believe that our backlog at any time is necessarily representative of actual sales for any succeeding period. Competition The markets for semiconductors generally, and for analog and mixed-signal ICs in particular, are intensely competitive. We anticipate that the market for our products will continually evolve and will be subject to rapid technological change.
If our suppliers experience closures or reductions in their capacity utilization levels in the future, we may have difficulty sourcing materials necessary to fulfill production requirements.
We expect that our utilization of offshore third-party test subcontractors will remain substantial during fiscal 2024. 8 Table of Contents If our suppliers, due to unpredictable factors outside their control, experience closures or reductions in their capacity utilization levels in the future, we may have difficulty sourcing materials necessary to fulfill production requirements.
We provide our employees and their families with access to a variety of innovative, flexible and convenient health and wellness programs that support their physical and mental health by providing tools and resources to help them improve or maintain their health status.
We provide our employees and their families with access to a variety of innovative, flexible programs that support their physical, mental, and financial health as well as providing flexible work arrangements and generous time off programs. Corporate Social Responsibility As a global corporate citizen, we are committed to advancing responsible and sustainable operations throughout our supply chain.
We have continued to diversify our product portfolio and introduce new products and solutions through both organic investment and acquisitions. Revenues during fiscal 2022, 2021 and 2020 were generated predominately by sales of our mixed-signal products.
We have continued to diversify our product portfolio and introduce new products and solutions through both organic investment and acquisitions. The life cycles of our products are relatively long, given the amount of effort and time required in the design in process for our customers.
We offer comprehensive benefits to protect the health of our employees and their families as well as their way of life.
We offer comprehensive benefits resources and tools to address the healthcare and wellness needs of our employees and their families, enable them to manage their work-life balance, and plan for a secure future.
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Industry Background Intelligence is being added to electronic systems to enable internet connectivity, power efficiency, monitoring of health, safety and consumption of precious resources and an improved user experience. This in turn is increasing the demand for bandwidth, requiring more infrastructure to support higher-performance networks.
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We also focus design and engineering efforts on technologies that simplify and accelerate customer adoption of security features engineered into our silicon chips.
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The nearly ubiquitous availability of internet access and the increasing intelligence of electronic devices and mobility are enabling what is called the Internet of Things, a term that describes the exponential increase in IP-enabled devices connected to the internet.
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The phrase IoT describes the myriad of smart, connected devices that surround us today, deployed in a variety of home, life, commercial, and industrial applications. When MIT’s Kevin Ashton first used the phrase in 1999, he was promoting the possibilities of RFID, but today, the IoT describes an impressive array of devices and capabilities.
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We expect that our utilization of offshore third-party test subcontractors will remain substantial during fiscal 2023. 8 Table of Contents The impacts of the COVID-19 pandemic on our suppliers are uncertain, evolving and dependent on numerous unpredictable factors outside of our control.
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Machine learning is bringing greater intelligence to the edge on battery-powered devices. The IoT is monitoring patients’ health 24/7 to send rich data to doctors miles away. Smart, connected devices are detecting water leaks to improve sustainability and managing bee colonies to strengthen the food supply. It’s an industry of variety and impact.
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Capacity is currently limited at certain of our third-party foundry, assembly and test subcontractors due to a spike in semiconductor demand. Backlog We include in backlog accepted product purchase orders from customers and worldwide distributor stocking orders. Product orders in our backlog are subject to changes in delivery schedules or cancellation at the option of the purchaser typically without penalty.
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Whether in a door lock or a heart monitor, a smart home thermostat, or a municipal energy grid, Silicon Labs solutions are improving life and the sustainability of the planet.
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We anticipate that the market for our products will continually evolve and will be subject to rapid technological change.
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Silicon Labs has the breadth in its portfolio, depth of wireless connectivity expertise, and the focus on IoT to help its customers bring their innovative ideas to market quickly. 2 Table of Contents Products We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the IoT.
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We have taken additional health and safety measures due to the COVID-19 pandemic and will continue to adjust these as needed based upon health authority guidelines. Corporate Social Responsibility As a global corporate citizen, we are committed to advancing responsible and sustainable operations throughout our supply chain.
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Product orders in our backlog are subject to changes in delivery schedules or cancellation at the option of the purchaser typically without penalty. Our backlog may fluctuate significantly depending upon customer order patterns which may, in turn, vary considerably based on rapidly changing business circumstances.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, there is an increased risk that we may experience cybersecurity-related events such as COVID-19 themed phishing attacks and other security challenges as a result of most of our employees and our service providers working remotely from non-corporate managed networks during the ongoing COVID-19 pandemic and potentially continuing working remotely even after the COVID-19 pandemic has subsided. 16 Table of Contents In addition, the risk of cyber-attacks has increased in connection with the military conflict between Russia and Ukraine and the resulting geopolitical conflict.
Biggest changeAttempted or successful attacks against our products and services could damage our reputation with customers or users and reduce demand for our products and services. Additionally, there is an increased risk that we may experience cybersecurity-related events such as phishing attacks and other security challenges as a result of hybrid working arrangements and employees and our service providers working remotely.
Our international operations are subject to a number of risks, including: ● Complexity and costs of managing international operations and related tax obligations, including our headquarters for non-U.S. operations in Singapore; ● Protectionist laws and business practices, including trade restrictions, tariffs, export controls, quotas and other trade barriers, including China-U.S. trade policies; ● Trade tensions, geopolitical uncertainty, or governmental actions, including those arising from the trade dispute between the U.S. and China, may lead customers to favor products from non-US companies which could put us at a competitive disadvantage and result in decreased customer demand for our products and our customers’ products; ● Rising tensions and deteriorating military, political and economic relations between China and Taiwan could disrupt the operations of our third-party foundry, assembly and test subcontractors, which could severely impact our ability to manufacture the majority of our products and as a result, could adversely affect our business, revenues and results of operations; ● Restrictions or tariffs imposed on certain countries and sanctions or export controls imposed on customers or suppliers may affect our ability to sell and source our products; ● Difficulties related to the protection of our intellectual property rights in some countries; ● Public health crises, such as the COVID-19 pandemic, may affect our international operations, suppliers and customers and we may experience delays in product development, a decreased ability to support our customers and reduced design win activity if the travel restrictions or business shutdowns or slowdowns continue for an extended period of time in any of the countries in which we, our suppliers and our customers operate and do business; ● Multiple, conflicting and changing tax and other laws and regulations that may impact both our international and domestic tax and other liabilities and result in increased complexity and costs, including the impact of the Tax Cuts and Jobs Act, which increased our effective tax rate, in part due to the impact of the requirement to capitalize and amortize foreign research and development expenses beginning in 2022; ● Longer sales cycles; ● Greater difficulty in accounts receivable collection and longer collection periods; ● High levels of distributor inventory subject to price protection and rights of return to us; ● Political and economic instability; ● Risks that demand and the supply chain may be adversely affected by military conflict (including between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally; ● Greater difficulty in hiring and retaining qualified personnel; and ● The need to have business and operations systems that can meet the needs of our international business and operating structure.
Our international operations are subject to a number of risks, including: ● Complexity and costs of managing international operations and related tax obligations, including our headquarters for non-U.S. operations in Singapore; ● Protectionist laws and business practices, including trade restrictions, tariffs, export controls, quotas and other trade barriers, including China-U.S. trade policies; ● Trade tensions, geopolitical uncertainty, or governmental actions, including those arising from the trade dispute between the U.S. and China, may lead customers to favor products from non-US companies which could put us at a competitive disadvantage and result in decreased customer demand for our products and our customers’ products; ● Rising tensions and deteriorating military, political and economic relations between China and Taiwan could disrupt the operations of our third-party foundry, assembly and test subcontractors, which could severely impact our ability to manufacture the majority of our products and as a result, could adversely affect our business, revenues and results of operations; ● Restrictions or tariffs imposed on certain countries and sanctions or export controls imposed on customers or suppliers may affect our ability to sell and source our products; ● Difficulties related to the protection of our intellectual property rights in some countries; ● Public health crises, such as the COVID-19 pandemic, may affect our international operations, suppliers and customers and we may experience delays in product development, a decreased ability to support our customers and reduced design win activity if the travel restrictions or business shutdowns or slowdowns continue for an extended period of time in any of the countries in which we, our suppliers and our customers operate and do business; ● Multiple, conflicting and changing tax and other laws and regulations that may impact both our international and domestic tax and other liabilities and result in increased complexity and costs, including the impact of the Tax Cuts and Jobs Act, which increased our effective tax rate, in part due to the impact of the requirement to capitalize and amortize foreign research and development expenses beginning in 2022; ● Longer sales cycles; ● Greater difficulty in accounts receivable collection and longer collection periods; ● High levels of distributor inventory subject to price protection and rights of return to us; ● Political and economic instability; ● Risks that demand and the supply chain may be adversely affected by military conflict (including the ongoing conflicts in the Middle East and between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally; ● Greater difficulty in hiring and retaining qualified personnel; and ● The need to have business and operations systems that can meet the needs of our international business and operating structure.
Earthquakes, tsunamis, fire, flooding, lack of water or other natural disasters, an epidemic such as the current COVID-19 outbreak, political unrest, war, labor strikes or work stoppages in countries where our semiconductor manufacturers, assemblers and test subcontractors are located, likely would result in the disruption of our foundry, assembly or test capacity.
Earthquakes, tsunamis, fire, flooding, lack of water or other natural disasters, an epidemic such as the COVID-19 outbreak, political unrest, war, labor strikes or work stoppages in countries where our semiconductor manufacturers, assemblers and test subcontractors are located, likely would result in the disruption of our foundry, assembly or test capacity.
A number of factors, in addition to those cited in other risk factors applicable to our business, may contribute to fluctuations in our revenues and operating results, including: ● The timing and volume of orders received from our customers; ● The timeliness of our new product introductions and the rate at which our new products may cannibalize our older products; ● The rate of acceptance of our products by our customers, including the acceptance of new products we may develop for integration in the products manufactured by such customers, which we refer to as “design wins”; ● The time lag and realization rate between “design wins” and production orders; ● Supplier capacity constraints; ● The demand for, and life cycles of, the products incorporating our mixed-signal solutions; ● The rate of adoption of mixed-signal products in the markets we target; ● Deferrals or reductions of customer orders in anticipation of new products or product enhancements from us or our competitors or other providers of mixed-signal ICs; ● Changes in product mix; ● The average selling prices for our products could drop suddenly due to competitive offerings or competitive predatory pricing; ● The average selling prices for our products generally decline over time; ● Changes in market standards; ● Impairment charges related to inventory, equipment or other long-lived assets; 17 Table of Contents ● The software used in our products, including software provided by third parties, may not meet the needs of our customers; ● Our customers may not be able to obtain other components such as capacitors (which are currently in short supply) that they need to incorporate in conjunction with our products, leading to potential downturn in the demand for our products; ● Significant legal costs to defend our intellectual property rights or respond to claims against us; and ● The rate at which new markets emerge for products we are currently developing or for which our design expertise can be utilized to develop products for these new markets.
A number of factors, in addition to those cited in other risk factors applicable to our business, may contribute to fluctuations in our revenues and operating results, including: ● The timing and volume of orders received from our customers; ● The timeliness of our new product introductions and the rate at which our new products may cannibalize our older products; ● The rate of acceptance of our products by our customers, including the acceptance of new products we may develop for integration in the products manufactured by such customers, which we refer to as “design wins”; ● The time lag and realization rate between “design wins” and production orders; ● Supplier capacity constraints; 14 Table of Contents ● The demand for, and life cycles of, the products incorporating our mixed-signal solutions; ● The rate of adoption of mixed-signal products in the markets we target; ● Deferrals or reductions of customer orders in anticipation of new products or product enhancements from us or our competitors or other providers of mixed-signal ICs; ● Changes in product mix; ● The average selling prices for our products could drop suddenly due to competitive offerings or competitive predatory pricing; ● The average selling prices for our products generally decline over time; ● Changes in market standards; ● Impairment charges related to inventory, equipment or other long-lived assets; ● The software used in our products, including software provided by third parties, may not meet the needs of our customers; ● Our customers may not be able to obtain other components such as capacitors that they need to incorporate in conjunction with our products, leading to potential downturn in the demand for our products; ● Significant legal costs to defend our intellectual property rights or respond to claims against us; and ● The rate at which new markets emerge for products we are currently developing or for which our design expertise can be utilized to develop products for these new markets.
Nation-state actors have in the past carried out, and may in the future carry out, cyber-attacks to achieve their aims and goals, which may include espionage, information operations, monetary gain, ransomware, disruption, and destruction. In February 2022, the U.S.
Nation-state actors have in the past carried out, and may in the future carry out, cyber-attacks to achieve their aims and goals, which may include espionage, information operations, monetary gain, ransomware, disruption, and destruction. In 2022, the U.S.
Any dispositions could harm our financial condition Any disposition of a business or product line would entail a number of risks that could materially and adversely affect our business and operating results, including: ● Diversion of management’s time and attention from our core business; ● Difficulties separating the divested business; ● Risks to relations with customers who previously purchased products from our disposed product line; ● Reduced leverage with suppliers due to reduced aggregate volume; ● Risks related to employee relations; ● Risks that the disposition is not completed on the expected timeline, or at all; ● Risks associated with the transfer and licensing of intellectual property; ● Risks that we do not realize the anticipated benefits from the disposition; ● Risks from third-party claims arising out of the disposition; ● Security risks and other liabilities related to the transition services provided in connection with the disposition; ● Tax issues associated with dispositions; and 22 Table of Contents ● Disposition-related disputes, including disputes over earn-outs and escrows.
Any dispositions could harm our financial condition Any disposition of a business or product line would entail a number of risks that could materially and adversely affect our business and operating results, including: ● Diversion of management’s time and attention from our core business; ● Difficulties separating the divested business; ● Risks to relations with customers who previously purchased products from our disposed product line; ● Reduced leverage with suppliers due to reduced aggregate volume; ● Risks related to employee relations; ● Risks that the disposition is not completed on the expected timeline, or at all; ● Risks associated with the transfer and licensing of intellectual property; ● Risks that we do not realize the anticipated benefits from the disposition; ● Risks from third-party claims arising out of the disposition; ● Security risks and other liabilities related to the transition services provided in connection with the disposition; ● Tax issues associated with dispositions; and ● Disposition-related disputes, including disputes over earn-outs and escrows.
Successful product development and market acceptance of our products depend on a number of factors, including: ● Requirements of customers; ● Accurate prediction of market and technical requirements; ● Timely completion and introduction of new designs; ● Timely qualification and certification of our products for use in our customers’ products; ● Commercial acceptance and volume production of the products into which our ICs will be incorporated; ● Availability of foundry, assembly and test capacity; ● Achievement of high manufacturing yields; ● Quality, price, performance, power use and size of our products; ● Availability, quality, price and performance of competing products and technologies; ● Our customer service, application support capabilities and responsiveness; ● Successful development of our relationships with existing and potential customers; ● Technology, industry standards or end-user preferences; and ● Cooperation of third-party software providers and our semiconductor vendors to support our chips within a system.
Successful product development and market acceptance of our products depend on a number of factors, including: ● Requirements of customers; ● Accurate prediction of market and technical requirements; ● Timely completion and introduction of new designs; 18 Table of Contents ● Timely qualification and certification of our products for use in our customers’ products; ● Commercial acceptance and volume production of the products into which our ICs will be incorporated; ● Availability of foundry, assembly and test capacity; ● Achievement of high manufacturing yields; ● Quality, price, performance, power use and size of our products; ● Availability, quality, price and performance of competing products and technologies; ● Our customer service, application support capabilities and responsiveness; ● Successful development of our relationships with existing and potential customers; ● Technology, industry standards or end-user preferences; and ● Cooperation of third-party software providers and our semiconductor vendors to support our chips within a system.
Even after the COVID-19 pandemic or a similar public health crisis has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession, economic downturn or increased unemployment that has occurred or may occur in the future.
Even after any public health crisis has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession, economic downturn or increased unemployment that has occurred or may occur in the future.
Any disruption resulting from these events, including the COVID-19 pandemic, could also cause significant delays in shipments of our products until we are able to shift our manufacturing, assembling or testing from the affected subcontractor to another third-party vendor.
Any disruption resulting from these events, including the COVID-19 pandemic or any other public health crisis, could also cause significant delays in shipments of our products until we are able to shift our manufacturing, assembling or testing from the affected subcontractor to another third-party vendor.
These errors could also cause significant re-engineering costs, the diversion of our engineering personnel’s attention from our product development efforts and cause significant customer relations and business reputation problems. Any defects could result in refunds, product replacement, product recall or other liability.
These errors could also cause significant re-engineering costs, the diversion of our engineering personnel’s attention from our product development efforts and cause significant customer relations and business reputation problems. Any defects could result in refunds, product replacement, product recall or other liability. Any of the foregoing could impose substantial costs and harm our business.
The impacts of the COVID-19 pandemic, or a similar public health crisis, on our business, customers, suppliers, employees, markets and financial results and condition are uncertain, evolving and dependent on numerous unpredictable factors outside of our control, including: ● The duration and impact of a global economic recession or depression that could reduce demand and/or pricing for our products; ● Disruptions to our business and supply chain (and the business and supply chains of our customers) in connection with the sourcing of materials, equipment and engineering support, and services from geographic areas impacted by the public health crisis, including disruptions caused by illnesses, quarantines and restrictions on people’s ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, and other travel or health-related restrictions; ● Delays or limitations on the ability of our customers to make timely payments; ● Governmental actions to limit exposure to and spreading of such infectious diseases, such as travel restrictions, quarantines and business shutdowns or slowdowns, facility closures or other restrictions; ● Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our operations and capital expenditures or to refinance our existing indebtedness; ● Potential asset impairments, including goodwill, intangible assets, investments and other assets; ● Complexities related to our employees temporarily working from home as well as increased cyber-related risks due to our employees working from home; ● Challenges with reopening our offices, including implementing a hybrid model of working from home or the office, establishing appropriate office safety protocols, maintaining our corporate culture, and continuing to attract, retain and motivate our employees; ● Potential failure of our computer systems or communication systems; and ● Investment-related risks, including difficulties in liquidating investments due to current market conditions and adverse investment performance.
The impacts of public health crises on our business, customers, suppliers, employees, markets and financial results and condition are uncertain and dependent on numerous unpredictable factors outside of our control, including: ● The duration and impact of a global economic recession or depression that could reduce demand and/or pricing for our products; ● Disruptions to our business and supply chain (and the business and supply chains of our customers) in connection with the sourcing of materials, equipment and engineering support, and services from geographic areas impacted by the public health crisis, including disruptions caused by illnesses, quarantines and restrictions on people’s ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, and other travel or health-related restrictions; ● Delays or limitations on the ability of our customers to make timely payments; 20 Table of Contents ● Governmental actions to limit exposure to and spreading of such infectious diseases, such as travel restrictions, quarantines and business shutdowns or slowdowns, facility closures or other restrictions; ● Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our operations and capital expenditures or to refinance our existing indebtedness; ● Potential asset impairments, including goodwill, intangible assets, investments and other assets; ● Increased cyber-related risks due to hybrid working models and increased remote working; ● Challenges with implementing and managing a hybrid model of working from home or the office, establishing appropriate office safety protocols, maintaining our corporate culture, and continuing to attract, retain and motivate our employees; ● Potential failure of our computer systems or communication systems; and ● Investment-related risks, including difficulties in liquidating investments due to current market conditions and adverse investment performance.
Most of the silicon wafers for the products that we have sold were manufactured either by Taiwan Semiconductor Manufacturing Co. (TSMC) or Semiconductor Manufacturing International Corporation (SMIC). Our customers typically complete their own qualification process.
Most of the silicon wafers for the products that we have sold were manufactured either by Taiwan Semiconductor Manufacturing Co. (“TSMC”) or Semiconductor Manufacturing International Corporation (“SMIC”). Our customers typically complete their own qualification process.
During fiscal 2022, 81% of our revenue was derived from distributors (and 49% of our revenue was derived from our two largest distributors). As we execute our indirect sales strategy, we must manage the potential conflicts that may arise with our direct sales efforts.
During fiscal 2023, 78% of our revenue was derived from distributors (and 49% of our revenue was derived from our two largest distributors). As we execute our indirect sales strategy, we must manage the potential conflicts that may arise with our direct sales efforts.
Cybersecurity and Infrastructure Security Agency issued a “Shields Up” alert for American organizations noting the potential for Russia’s cyber-attacks on Ukrainian government and critical infrastructure organizations to impact organizations both within and beyond the United States, particularly in the wake of sanctions imposed by the United States and its allies. These circumstances increase the likelihood of cyber-attacks and/or security breaches.
Cybersecurity and Infrastructure Security Agency issued a “Shields Up” alert for American organizations noting the potential for Russia’s cyber-attacks on Ukrainian government and critical infrastructure organizations to impact organizations both within and beyond the United States, particularly in the wake of sanctions imposed by the United States and its allies.
Item 1A. Risk Factors Global Business Risks We rely on third parties to manufacture, assemble and test our products, which subjects us to risks of disruptions in our supply chain We do not have our own wafer fab manufacturing facilities. Therefore, we rely on third-party vendors to manufacture the products we design.
We rely on third parties to manufacture, assemble and test our products, which subjects us to risks of disruptions in our supply chain We do not have our own wafer fab manufacturing facilities. Therefore, we rely on third-party vendors to manufacture the products we design.
We are subject to the cyclical nature of the semiconductor industry, which has been subject to significant fluctuations The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards, short product life cycles and wide fluctuations in product supply and demand.
Item 1A. Risk Factors Global Business Risks We are subject to the cyclical nature of the semiconductor industry, which has been subject to significant fluctuations The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards, short product life cycles and wide fluctuations in product supply and demand.
We may also experience significant period-to-period fluctuations in our revenues and operating results in the future due to a number of factors, and any such variations may cause our stock price to fluctuate. In some future period our revenues or operating results may be below the expectations of public market analysts or investors.
We may also experience significant period-to-period fluctuations in our revenues and operating results in the future due to a number of factors, and any such variations may cause our stock price to fluctuate. If our revenues or operating results are below the expectations of public market analysts or investors, our stock price may drop, perhaps significantly.
This has included the establishment of a headquarters in Singapore for non-U.S. operations. During fiscal 2022, the percentage of our revenues derived from outside of the United States was 83% (and the revenue associated with end customers in China was 14%, and revenue attributed to China based on shipped-to location was 33%).
This has included the establishment of a headquarters in Singapore for non-U.S. operations. During fiscal 2023, the percentage of our revenues derived from outside of the United States was 88% (and the revenue associated with end customers in China was 12%, and revenue attributed to China based on shipped-to location was 28%).
We cannot predict the timing, strength, or duration of any economic slowdown or economic recovery. If the economy or markets in which we operate deteriorate, our business, financial condition, and results of operations would likely be materially and adversely affected. Downturns have been characterized by diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices.
If the economy or markets in which we operate deteriorate, our business, financial condition, and results of operations would likely be materially and adversely affected. Downturns have been characterized by diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices.
There are significant risks associated with relying on these third-party foundries and subcontractors, including: ● Failure by us, our customers or their end customers to qualify a selected supplier; ● Disruption to our suppliers’ operations due to geopolitical changes, including risks related to deteriorating relations between China and Taiwan; ● Potential insolvency of the third-party subcontractors; ● Reduced control over delivery schedules and quality; ● Limited warranties on wafers or products supplied to us; ● Potential increases in prices or payments in advance for capacity; ● Increased need for international-based supply, logistics and financial management; ● Disruption to our supply chain resulting from cyber-attacks on our suppliers’ information technology systems; 12 Table of Contents ● Their inability to supply or support new or changing packaging technologies; and ● Low test yields.
There are significant risks associated with relying on these third-party foundries and subcontractors, including: ● Failure by us, our customers or their end customers to qualify a selected supplier; ● Disruption to our suppliers’ operations due to geopolitical changes, including risks related to deteriorating relations between China and Taiwan; ● Potential insolvency of the third-party subcontractors; ● Reduced control over delivery schedules and quality; ● Limited warranties on wafers or products supplied to us; ● Potential increases in prices or payments in advance for capacity; ● Increased need for international-based supply, logistics and financial management; ● Disruption to our supply chain resulting from cyber-attacks on our suppliers’ information technology systems; ● Their inability to supply or support new or changing packaging technologies; and ● Low test yields. 15 Table of Contents We typically do not have long-term supply contracts with our third-party vendors which obligate the vendor to perform services and supply products to us for a specific period, in specific quantities, and at specific prices.
Upturns have been characterized by increased product demand and production capacity constraints created by increased competition for access to third-party foundry, assembly and test capacity. We are dependent on the availability of such capacity to manufacture, assemble and test our products. Foundry, assembly and test capacity is currently limited due to a spike in semiconductor demand.
Upturns have been characterized by increased product demand and production capacity constraints created by increased competition for access to third-party foundry, assembly and test capacity. We are dependent on the availability of such capacity to manufacture, assemble and test our products.
As a result, we have devoted and expect to continue to devote a large amount of resources to develop products based on new and emerging technologies and standards that will be commercially introduced in the future. Research and development expense during fiscal 2022 was $332.3 million, or 32.5% of revenues.
As a result, we have devoted and expect to continue to devote a large amount of resources to develop products based on new and emerging technologies and standards that will be commercially introduced in the future. Research and development expense during fiscal 2023 was $337.7 million, or 43.2% of revenues.
Failure to manage our distribution channel relationships could impede our future growth The future growth of our business will depend in large part on our ability to manage our relationships with current and future distributors and sales representatives, develop additional channels for the distribution and sale of our products and manage these relationships.
Our failure to do so could cause our revenues and gross profit to decline. 19 Table of Contents Failure to manage our distribution channel relationships could impede our future growth The future growth of our business will depend in large part on our ability to manage our relationships with current and future distributors and sales representatives, develop additional channels for the distribution and sale of our products and manage these relationships.
To maintain our gross profit, we will need to develop and introduce new products and product enhancements on a timely basis and continually reduce our costs. Our failure to do so could cause our revenues and gross profit to decline.
To maintain our gross profit, we will need to develop and introduce new products and product enhancements on a timely basis and continually reduce our costs.
These inventory risks are exacerbated when our customers purchase indirectly through contract manufacturers or hold component inventory levels greater than their consumption rate because this causes us to have less visibility regarding the accumulated levels of inventory for such customers.
These inventory risks are exacerbated when our customers purchase indirectly through contract manufacturers or hold component inventory levels greater than their consumption rate because this causes us to have less visibility regarding the accumulated levels of inventory for such customers. A resulting write-off of unusable or excess inventories would adversely affect our operating results.
Similarly, a decrease in the value of the U.S. dollar could reduce our buying power with respect to international suppliers. 14 Table of Contents Most of our current manufacturers, assemblers, test service providers, distributors and customers are concentrated in the same geographic region, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could disrupt our operations or sales Most of our foundries and several of our assembly and test subcontractors’ sites are located in Taiwan and most of our other foundry, assembly and test subcontractors are located in the Pacific Rim region.
Most of our current manufacturers, assemblers, test service providers, distributors and customers are concentrated in the same geographic region, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could disrupt our operations or sales Most of our foundries and several of our assembly and test subcontractors’ sites are located in Taiwan and most of our other foundry, assembly and test subcontractors are located in the Pacific Rim region.
Any of the foregoing could impose substantial costs and harm our business. 21 Table of Contents Product liability, data breach or cyber liability claims may be asserted with respect to our products. Many of our products focus on wireless connectivity and the IoT market and such connectivity may make these products particularly susceptible to cyber-attacks.
Product liability, data breach or cyber liability claims may be asserted with respect to our products. Many of our products focus on wireless connectivity and the IoT market and such connectivity may make these products particularly susceptible to cyber-attacks.
There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic or a similar public health crisis will be offset by increased sales in subsequent periods.
There can be no assurance that any decrease in sales resulting any public health crisis will be offset by increased sales in subsequent periods.
Our pursuit of necessary technological advances may require substantial time and expense. We may not be successful in developing or using new technologies or in developing new products or product enhancements that achieve market acceptance.
Our pursuit of necessary technological advances may require substantial time and expense. We may not be successful in developing or using new technologies or in developing new products or product enhancements that achieve market acceptance. If our products fail to achieve market acceptance, our growth prospects, operating results and competitive position could be adversely affected.
If the COVID-19 pandemic significantly disrupts the manufacture, shipment and sales of our products or the products of our customers, this may materially negatively impact our operating results for subsequent periods.
If such an event significantly disrupts the manufacture, shipment and sales of our products or the products of our customers, this may materially negatively impact our operating results.
We may be subject to information technology failures that could damage our reputation, business operations and financial condition We rely on information technology for the effective operation of our business.
These circumstances increase the likelihood of cyber-attacks and/or security breaches. 13 Table of Contents We may be subject to information technology failures that could damage our reputation, business operations and financial condition We rely on information technology for the effective operation of our business.
These and other competitive pressures may prevent us from competing successfully against current or future competitors, and may materially harm our business.
These and other competitive pressures may prevent us from competing successfully against current or future competitors, and may materially harm our business. Competition could decrease our prices, reduce our sales, lower our gross profit and/or decrease our market share.
In recent months, inflation and interest rates have increased significantly. Such pressures could impact demand for our customers’ end products and increase our costs. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs with increased revenues.
Increases in inflation and interest rates can impact demand for our customers’ end products and increase our costs. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs with increased revenues. We cannot predict the timing, strength, or duration of any economic slowdown or economic recovery.
In addition, substantially all of our products that we have sold include technology related to one or more of our issued U.S. patents. If these patents are found to be invalid or unenforceable, our competitors could introduce competitive products that could reduce both the volume and price per unit of our products.
If these patents are found to be invalid or unenforceable, our competitors could introduce competitive products that could reduce both the volume and price per unit of our products.
In May 2018, the European Union’s General Data Protection Regulation (“GDPR”) went into effect, replacing the EU’s 1995 Data Protection Directive. The costs of compliance with the GDPR and the potential for fines and penalties in the event of a breach of the GDPR may have an adverse effect on our operations.
The costs of compliance with the GDPR and the potential for fines and penalties in the event of a breach of the GDPR may have an adverse effect on our operations.
Our inability to manage growth could materially and adversely affect our business Our past growth has placed, and any future growth of our operations will continue to place, a significant strain on our management personnel, systems and resources.
Similarly, a decrease in the value of the U.S. dollar could reduce our buying power with respect to international suppliers. 17 Table of Contents Our inability to manage growth could materially and adversely affect our business Our past growth has placed, and any future growth of our operations will continue to place, a significant strain on our management personnel, systems and resources.
Future acquisitions also could cause us to incur debt or contingent liabilities or cause us to issue equity securities that could negatively impact the ownership percentages of existing shareholders. 19 Table of Contents The average selling prices of our products could decrease rapidly which may negatively impact our revenues and gross profit We may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices.
The average selling prices of our products could decrease rapidly which may negatively impact our revenues and gross profit We may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices.
If we are unsuccessful or delayed in qualifying any of our products with a customer, such failure or delay would preclude or delay sales of such product to the customer, which may impede our growth and cause our business to suffer.
If we are unsuccessful or delayed in qualifying any of our products with a customer, such failure or delay would preclude or delay sales of such product to the customer, which may impede our growth and cause our business to suffer. 21 Table of Contents We are subject to risks relating to product concentration We derive a substantial portion of our revenues from a limited number of products, and we expect these products to continue to account for a large percentage of our revenues in the near term.
Our key technical personnel represent a significant asset and serve as the primary source for our technological and product innovations. We may not be successful in attracting and retaining sufficient numbers of technical personnel to support our anticipated growth.
We may not be successful in attracting and retaining sufficient numbers of technical personnel to support our anticipated growth.
There is currently a shortage of qualified personnel with significant experience in the design, development, manufacturing, marketing and sales of analog and mixed-signal products. In particular, there is a shortage of engineers who are familiar with the intricacies of the design and manufacturability of analog elements, and competition for such personnel is intense.
There is currently a shortage of qualified personnel with significant experience in the design, development, manufacturing, marketing and sales of analog and mixed-signal products, and competition for such personnel is intense. Our key technical personnel represent a significant asset and serve as the primary source for our technological and product innovations.
The loss of any of our key employees or the inability to attract or retain qualified personnel both in the United States and internationally, including engineers, sales, applications and marketing personnel, could delay the development and introduction of, and negatively impact our ability to sell, our products. 18 Table of Contents If we are unable to develop or acquire new and enhanced products that achieve market acceptance in a timely manner, our operating results and competitive position could be harmed Our future success will depend on our ability to develop or acquire new products and product enhancements that achieve market acceptance in a timely and cost-effective manner.
If we are unable to develop or acquire new and enhanced products that achieve market acceptance in a timely manner, our operating results and competitive position could be harmed Our future success will depend on our ability to develop or acquire new products and product enhancements that achieve market acceptance in a timely and cost-effective manner.
Competition could decrease our prices, reduce our sales, lower our gross profit and/or decrease our market share. 15 Table of Contents Competition within the numerous markets we target may reduce sales of our products and reduce our market share The markets for semiconductors in general, and for mixed-signal products in particular, are intensely competitive.
Competition within the numerous markets we target may reduce sales of our products and reduce our market share The markets for semiconductors in general, and for mixed-signal products in particular, are intensely competitive. We expect that the market for our products will continually evolve and will be subject to rapid technological change.
If such a downturn occurs, it could have a material adverse effect on our business and operating results. In addition, the COVID-19 pandemic has caused further global economic uncertainty.
This downturn has negatively affected, and may continue to have an adverse effect, on our business and operating results. 12 Table of Contents In addition, the COVID-19 pandemic has caused further global economic uncertainty.
The impact from the rapidly changing market and economic conditions due to the COVID-19 outbreak is uncertain, disrupting the business of our customers and suppliers, and could impact our business and operating results in the future. 13 Table of Contents We are a global company, which subjects us to additional business risks including logistical and financial complexity, supply disruption, political instability and currency fluctuations We have established international subsidiaries and have opened offices in international markets to support our activities in Asia, the Americas and Europe.
Our customers may also experience closures of their manufacturing facilities or inability to obtain other components, either of which could negatively impact demand for our solutions. 16 Table of Contents We are a global company, which subjects us to additional business risks including logistical and financial complexity, supply disruption, political instability and currency fluctuations We have established international subsidiaries and have opened offices in international markets to support our activities in Asia, the Americas and Europe.
We expect that the market for our products will continually evolve and will be subject to rapid technological change. In addition, as we target and supply products to numerous markets and applications, we face competition from a relatively large number of competitors.
This rapid pace of technological change can create opportunities for our competitors and harm our competitiveness in the market if our products do not evolve or we are unable to effectively keep up with such changes. In addition, as we target and supply products to numerous markets and applications, we face competition from a relatively large number of competitors.
A resulting write-off of unusable or excess inventories would adversely affect our operating results. 20 Table of Contents The COVID-19 pandemic could adversely affect our business, results of operations, and financial condition The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.
The COVID-19 pandemic or other public health crises could adversely affect our business, results of operations, and financial condition The COVID-19 pandemic negatively impacted the global economy, disrupted our operations, global supply chains and the operations of our customers.
Changes in the privacy and data security/protection laws could have an adverse effect on our operations Federal, state and international privacy-related or data protection laws and regulations could have an adverse effect on our operations. Complying with these laws and the possibility of proceedings against us by governmental entities or others in relation to these laws could increase operational costs.
Complying with these laws and the possibility of proceedings against us by governmental entities or others in relation to these laws could increase operational costs. In 2018, the European Union’s General Data Protection Regulation (“GDPR”) went into effect, replacing the EU’s 1995 Data Protection Directive.
In certain products, some of our customers offer their own competitive products. These customers may find it advantageous to support their own offerings in the marketplace in lieu of promoting our products.
In certain products, some of our customers offer their own competitive products.
None of our third-party foundry, assembly or test subcontractors have provided assurances that adequate capacity will be available to us. The semiconductor industry has recently experienced an economic up-cycle. This recent up-cycle could be followed by a downturn, and historically, such down-cycles have resulted in a decline in overall GDP performance and greater overall uncertainty regarding the economy.
None of our third-party foundry, assembly or test subcontractors have provided assurances that adequate capacity will be available to us.
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We typically do not have long-term supply contracts with our third-party vendors which obligate the vendor to perform services and supply products to us for a specific period, in specific quantities, and at specific prices.
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We believe the semiconductor industry is currently suffering a downturn due in large part to adverse macroeconomic conditions, characterized by a slowdown in overall GDP performance and factory activity in certain regions, higher levels of customer inventory, the impact of tariffs on trade relations, and greater overall uncertainty regarding the economy.
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Our customers may also experience closures of their manufacturing facilities or inability to obtain other components, either of which could negatively impact demand for our solutions.
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Any future impacts due to COVID-19 or other public health crises, whether as a result of a resurgence of infection rates or the spread of new variants or viruses, is uncertain and could include disruptions to the business of our customers and suppliers, which could impact our business and operating results in the future.
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Attempted or successful attacks against our products and services could damage our reputation with customers or users and reduce demand for our products and services.
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For example, new products and disruptive technologies are being developed, and companies with which we compete have implemented artificial intelligence strategies for products and service offerings.
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If this occurs, our stock price may drop, perhaps significantly.
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While we have dedicated resources to privacy and security incident response capabilities, our response process may not be adequate, may fail to accurately assess the severity of an incident, may not be fast enough to prevent or limit harm, or may fail to sufficiently remediate an incident.
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The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, severity and spread of the pandemic, related restrictions on travel and transportation and other actions that may be taken by governmental authorities, the impact to the business of our suppliers or customers and other items identified in our risk factors, all of which are uncertain and cannot be predicted.
Added
In addition, the risk of cyber-attacks has increased in connection with the conflict between Russia and Ukraine and in the Middle East.
Removed
We are subject to risks relating to product concentration We derive a substantial portion of our revenues from a limited number of products, and we expect these products to continue to account for a large percentage of our revenues in the near term. Continued market acceptance of these products, is therefore, critical to our future success.
Added
The loss of any of our key employees or the inability to attract or retain qualified personnel both in the United States and internationally, including engineers, sales, applications and marketing personnel, could delay the development and introduction of, and negatively impact our ability to sell, our products.
Removed
If our products fail to achieve market acceptance, our growth prospects, operating results and competitive position could be adversely affected. 23 Table of Contents Intellectual Property Risks Significant litigation over intellectual property in our industry may cause us to become involved in costly and lengthy litigation which could adversely affect our business The semiconductor and software industries have experienced significant litigation involving patents and other intellectual property rights.
Added
Future acquisitions also could cause us to incur debt or contingent liabilities or cause us to issue equity securities that could negatively impact the ownership percentages of existing shareholders.
Removed
From time to time, third parties, including non-practicing entities, allege intellectual property infringement by our products, our customers’ products, or products using technologies or communications standards used in our industry. We also receive communications from customers or suppliers requesting indemnification for allegations brought against them by third parties.
Added
Continued market acceptance of these products, is therefore, critical to our future success. In addition, substantially all of our products that we have sold include technology related to one or more of our issued U.S. patents.
Removed
Some of these allegations have resulted, and may result in the future, in our involvement in litigation. We have certain contractual obligations to defend and indemnify our customers from certain infringement claims. We also have been involved in litigation to protect our intellectual property rights in the past and may become involved in such litigation again in the future.
Added
These customers may find it advantageous to support their own offerings in the marketplace in lieu of promoting our products. 22 Table of Contents Changes in the privacy and data security/protection laws could have an adverse effect on our operations Federal, state and international privacy-related or data protection laws and regulations could have an adverse effect on our operations.
Removed
Given the unpredictable nature of litigation and the complexity of the technology, we may not prevail in any such litigation. Legal proceedings could subject us to significant liability, invalidate our proprietary rights, or harm our businesses and our ability to compete.
Added
We have identified a material weakness in our internal control over financial reporting and if we are unable to implement and maintain effective internal control over financial reporting, or our independent registered public accounting firm is unable to provide an unqualified report thereon, we could be materially adversely effected As more fully disclosed in
Removed
Legal proceedings initiated by us to protect our intellectual property rights could also result in counterclaims or countersuits against us. Any litigation, regardless of its outcome or merit, could be time-consuming and expensive to resolve and could divert our management’s time and attention.
Removed
Intellectual property litigation also could force us to take specific actions, including: ● Cease using, selling or manufacturing certain products, services or processes; ● Attempt to obtain a license, which license may require the payment of substantial royalties or may not be available on reasonable terms or at all; ● Incur significant costs, time delays and lost business opportunities to develop alternative technologies or redesign products; or ● Pursue legal remedies with third parties to enforce our indemnification rights, which may not adequately protect our interests.
Removed
We may be unable to protect our intellectual property, which would negatively affect our ability to compete Our products rely on our proprietary technology, and we expect that future technological advances made by us will be critical to sustain market acceptance of our products.
Removed
Therefore, we believe that the protection of our intellectual property rights is and will continue to be important to the success of our business. We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights.
Removed
We also enter into confidentiality or license agreements with our employees, consultants, intellectual property providers and business partners, and control access to and distribution of our documentation and other proprietary information. Despite these efforts, unauthorized parties may attempt to copy or otherwise obtain and use our proprietary technology.
Removed
Monitoring unauthorized use of our technology is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.
Removed
We cannot be certain that patents will be issued as a result of our pending applications nor can we be certain that any issued patents would protect or benefit us or give us adequate protection from competing products. For example, issued patents may be circumvented or challenged and declared invalid or unenforceable.
Removed
We also cannot be certain that others will not develop effective competing technologies on their own. Our products incorporate technology licensed from third parties We incorporate technology (including software) licensed from third parties in our products. We could be subjected to claims of infringement regardless of our lack of involvement in the development of the licensed technology.
Removed
Although a third-party licensor is typically obligated to indemnify us if the licensed technology infringes on another party’s intellectual property rights, such indemnification is typically limited in amount and may be worthless if the licensor becomes insolvent.
Removed
See Significant litigation over intellectual property in our industry may cause us to become involved in costly and lengthy litigation which could seriously harm our business.
Removed
Furthermore, any failure of third-party technology to perform properly would adversely affect sales of our products incorporating such technology. 24 Table of Contents Liquidity and Credit Risks We are subject to credit risks related to our accounts receivable We do not generally obtain letters of credit or other security for payment from customers, distributors or contract manufacturers.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Information regarding legal proceedings is provided in Note 13, Commitments and Contingencies , to the Consolidated Financial Statements. Such information is incorporated by reference herein. ​ Item 4. Mine Safety Disclosures Not applicable. ​ 27 Table of Contents Part II
Biggest changeItem 3. Legal Proceedings Information regarding legal proceedings is provided in Note 12, Commitments and Contingencies , to the Consolidated Financial Statements. Such information is incorporated by reference herein. ​ Item 4. Mine Safety Disclosures Not applicable. ​ 28 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(2) Stockholder returns over the indicated period should not be considered indicative of future stockholder returns. 28 Table of Contents Issuer Purchases of Equity Securities The following table summarizes repurchases of our common stock during the three months ended December 31, 2022 (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Approximate Dollar ​ ​ Total ​ ​ ​ ​ Shares Purchased as ​ ​ Value of Shares that ​ ​ Number of ​ ​ Average Price ​ Part of Publicly ​ ​ May Yet Be ​ ​ Shares ​ ​ Paid per ​ Announced Plans ​ ​ Purchased Under the Period Purchased ​ Share or Programs ​ Plans or Programs October 2, 2022 – October 29, 2022 830 $ 120.26 830 $ 312,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 30, 2022 – November 26, 2022 480 $ 123.21 480 $ 253,650 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 27, 2022 – December 31, 2022 297 $ 137.07 297 $ 212,977 Total 1,607 $ 124.25 1,607 ​ ​ ​ Our share repurchase program authorizes repurchases up to $500 million through December 2023.
Biggest change(2) Stockholder returns over the indicated period should not be considered indicative of future stockholder returns. 29 Table of Contents Issuer Purchases of Equity Securities The following table summarizes repurchases of our common stock during the three months ended December 30, 2023 (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Approximate Dollar ​ ​ Total ​ ​ ​ ​ Shares Purchased as ​ ​ Value of Shares that ​ ​ Number of ​ ​ Average Price ​ Part of Publicly ​ ​ May Yet Be ​ ​ Shares ​ ​ Paid per ​ Announced Plans ​ ​ Purchased Under the Period Purchased ​ Share or Programs ​ Plans or Programs October 1, 2023 – October 28, 2023 — $ — — $ 100,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 29, 2023 – November 25, 2023 — $ — — $ 100,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 26, 2023 – December 30, 2023 — $ — — $ 100,000 Total — $ — — ​ ​ ​ Our previous share repurchase program authorized repurchases up to $600 million through December 2023, of which $500 million was repurchased.
The program allows for repurchases to be made in the open market or in private transactions, including structured or accelerated transactions, subject to applicable legal requirements and market conditions. ​ Item 6. [Reserved] ​ ​ ​ ​ 29 Table of Contents
The program allows for repurchases to be made in the open market or in private transactions, including structured or accelerated transactions, subject to applicable legal requirements and market conditions. ​ Item 6. [Reserved] ​ ​ ​ ​ 30 Table of Contents
Stock Performance Graph The graph depicted below shows a comparison of cumulative total stockholder returns for an investment in Silicon Laboratories Inc. common stock, the NASDAQ Composite Index and the PHLX Semiconductor Index. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company / Index 12/30/17 ​ 12/29/18 ​ 12/28/19 ​ 01/02/21 ​ 01/01/22 ​ 12/31/22 Silicon Laboratories Inc. ​ $ 100.00 ​ $ 88.90 ​ $ 131.96 ​ $ 144.21 ​ $ 233.77 ​ $ 153.65 NASDAQ Composite Index ​ $ 100.00 ​ $ 96.41 ​ $ 133.30 ​ $ 192.47 ​ $ 235.15 ​ $ 158.65 PHLX Semiconductor Index ​ $ 100.00 ​ $ 93.32 ​ $ 154.13 ​ $ 235.71 ​ $ 336.71 ​ $ 219.26 (1) The graph assumes that $100 was invested in our common stock and in each index at the market close on December 30, 2017, and that all dividends were reinvested.
Stock Performance Graph The graph depicted below shows a comparison of cumulative total stockholder returns for an investment in Silicon Laboratories Inc. common stock, the NASDAQ Composite Index and the PHLX Semiconductor Index. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company / Index 12/29/18 ​ 12/28/19 ​ 01/02/21 ​ 01/01/22 ​ 12/31/22 ​ 12/30/23 Silicon Laboratories Inc. ​ $ 100.00 ​ $ 148.43 ​ $ 162.22 ​ $ 262.96 ​ $ 172.83 ​ $ 168.50 NASDAQ Composite Index ​ $ 100.00 ​ $ 138.27 ​ $ 199.64 ​ $ 243.92 ​ $ 164.56 ​ $ 238.01 PHLX Semiconductor Index ​ $ 100.00 ​ $ 165.17 ​ $ 252.58 ​ $ 360.81 ​ $ 234.96 ​ $ 392.39 (1) The graph assumes that $100 was invested in our common stock and in each index at the market close on December 29, 2018, and that all dividends were reinvested.
We currently expect to retain any future earnings to fund the operation and expansion of our business.
Dividend Policy We have never declared or paid any cash dividends on our common stock and we currently do not intend to pay cash dividends. We currently expect to retain any future earnings to fund the operation and expansion of our business.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders Our registration statement (Registration No. 333-94853) under the Securities Act of 1933, as amended, relating to our initial public offering of our common stock became effective on March 23, 2000.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders Our common stock is quoted on the NASDAQ National Market under the symbol “SLAB”. As of February 12, 2024, there were 53 holders of record of our common stock.
Removed
Our common stock is quoted on the NASDAQ National Market (NASDAQ) under the symbol “SLAB”. As of January 24, 2023, there were 60 holders of record of our common stock. Dividend Policy We have never declared or paid any cash dividends on our common stock and we currently do not intend to pay cash dividends.
Added
In January 2024, our Board of Directors authorized a program to repurchase up to $100 million of our common stock through December 2024.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following table sets forth our Consolidated Statements of Income data as a percentage of revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2022 2021 2020 Revenues ​ 100.0 % 100.0 % 100.0 % Cost of revenues ​ 37.3 41.0 42.3 ​ Gross margin ​ 62.7 59.0 57.7 ​ Operating expenses: ​ ​ ​ ​ ​ Research and development ​ 32.5 37.9 46.0 ​ Selling, general and administrative ​ 18.6 25.7 32.7 ​ Operating expenses ​ 51.1 63.6 78.7 ​ Operating income (loss) ​ 11.6 (4.6) (21.0) ​ Other income (expense): ​ ​ ​ ​ ​ Interest income and other, net ​ 1.4 0.8 1.8 ​ Interest expense ​ (0.6) (4.3) (6.7) ​ Income (loss) from continuing operations before income taxes ​ 12.4 (8.1) (25.9) ​ Provision (benefit) for income taxes ​ 3.8 1.9 (2.9) ​ Equity-method earnings ​ 0.3 ​ 1.9 ​ 0.4 ​ Income (loss) from continuing operations ​ 8.9 ​ (8.1) ​ (22.6) ​ Income from discontinued operations, net of income taxes ​ — ​ 301.8 ​ 25.1 ​ Net income ​ 8.9 % 293.7 % 2.5 % ​ 32 Table of Contents Comparison of Fiscal 2022 to Fiscal 2021 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ (in millions) 2022 2021 Change % Change Industrial & Commercial ​ $ 573.7 ​ $ 377.4 ​ $ 196.3 52.0 % Home & Life ​ ​ 450.4 ​ ​ 343.5 ​ ​ 106.9 ​ 31.1 % ​ ​ $ 1,024.1 ​ $ 720.9 ​ $ 303.2 ​ 42.1 % ​ The increase in revenues in fiscal 2022 was due to increased revenues of $196.3 million from our Industrial & Commercial products and $106.9 million from our Home & Life products.
Biggest changeThe following table sets forth our Consolidated Statements of Operations data as a percentage of revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2023 2022 2021 Revenues ​ 100.0 % 100.0 % 100.0 % Cost of revenues ​ 41.1 37.3 41.0 ​ Gross margin ​ 58.9 ​ 62.7 ​ 59.0 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development ​ 43.2 ​ 32.5 ​ 37.9 ​ Selling, general and administrative ​ 18.8 18.6 25.7 ​ Operating expenses ​ 62.0 51.1 63.6 ​ Operating income (loss) ​ (3.1) 11.6 (4.6) ​ Other income (expense): ​ ​ ​ ​ ​ Interest income and other, net ​ 2.4 1.4 0.8 ​ Interest expense ​ (0.7) (0.6) (4.3) ​ Income (loss) from continuing operations before income taxes ​ (1.3) 12.4 (8.1) ​ Provision for income taxes ​ 1.0 3.8 1.9 ​ Equity-method earnings (loss) ​ (2.0) ​ 0.3 ​ 1.9 ​ Income (loss) from continuing operations ​ (4.4) ​ 8.9 ​ (8.1) ​ Income from discontinued operations, net of income taxes ​ — ​ — ​ 301.8 ​ Net income (loss) ​ (4.4) % 8.9 % 293.7 % ​ 33 Table of Contents Comparison of Fiscal 2023 to Fiscal 2022 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ (in millions) 2023 2022 Change % Change Industrial & Commercial ​ $ 496.6 ​ $ 573.7 ​ $ (77.1) (13.4) % Home & Life ​ ​ 285.7 ​ ​ 450.4 ​ ​ (164.7) ​ (36.6) % ​ ​ $ 782.3 ​ $ 1,024.1 ​ $ (241.8) ​ (23.6) % ​ The decrease in revenues in fiscal 2023 was due to decreased revenues of $77.1 million from our Industrial & Commercial products and $164.7 million from our Home & Life products.
Please see the “Cautionary Statement” and “Risk Factors” above for discussions of the uncertainties, risks and assumptions associated with these statements. Our fiscal year-end financial reporting periods are a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2022 and 2021 had 52 weeks.
Please see the “Cautionary Statement” and “Risk Factors” above for discussions of the uncertainties, risks and assumptions associated with these statements. Our fiscal year-end financial reporting periods are a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2023, 2022, and 2021 had 52 weeks.
In determining net realizable value, we write down inventory that may be slow moving or have some form of obsolescence, including inventory that has aged more than 12 months. We also adjust the valuation of inventory when its manufacturing cost exceeds the estimated selling price less costs of completion, disposal and transportation.
In determining net realizable value, we write down inventory that may be slow moving or have some form of obsolescence, including inventory that has aged more than 24 months. We also adjust the valuation of inventory when its manufacturing cost exceeds the estimated selling price less costs of completion, disposal and transportation.
We assess the potential for any unusual customer returns based on known quality or business issues and write-off inventory losses for scrap or non-saleable material. Inventory not otherwise identified to be written down is compared to an assessment of our 12-month forecasted demand.
We assess the potential for any unusual customer returns based on known quality or business issues and write-off inventory losses for scrap or non-saleable material. Inventory not otherwise identified to be written down is compared to an assessment of our 18-month forecasted demand.
We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the Internet of Things (IoT) including connected home and security, industrial automation and control, smart metering, smart lighting, commercial building automation, consumer electronics, asset tracking and medical instrumentation.
We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the Internet of Things (“IoT”) including connected home and security, industrial automation and control, smart metering, smart lighting, commercial building automation, consumer electronics, asset tracking and medical instrumentation.
If our estimates of variable consideration are inaccurate, we may recognize too much or too little revenue in a period. We may adjust assumptions used to estimate consideration periodically based on analysis of prior estimates. Stock-based compensation – We recognize the fair-value of stock-based compensation transactions in the Consolidated Statements of Income.
If our estimates of variable consideration are inaccurate, we may recognize too much or too little revenue in a period. We may adjust assumptions used to estimate consideration periodically based on analysis of prior estimates. Stock-based compensation – We recognize the fair-value of stock-based compensation transactions in the Consolidated Statements of Operations.
If our actual experience differs significantly from the assumptions used to compute our stock-based compensation cost, or if different assumptions had been used, we may have recorded too much or too little stock-based compensation cost. See Note 16, Stock-Based Compensation , to the Consolidated Financial Statements for additional information.
If our actual experience differs significantly from the assumptions used to compute our stock-based compensation cost, or if different assumptions had been used, we may have recorded too much or too little stock-based compensation cost. See Note 15, Stock-Based Compensation , to the Consolidated Financial Statements for additional information.
Comparison of Fiscal 2021 to Fiscal 2020 ​ A discussion of changes in our results of operations and liquidity and capital resources from fiscal 2020 to fiscal 2021 has been omitted from this Form 10-K, but may be found in “Item 7.
Comparison of Fiscal 2022 to Fiscal 2021 ​ A discussion of changes in our results of operations and liquidity and capital resources from fiscal 2021 to fiscal 2022 has been omitted from this Form 10-K, but may be found in “Item 7.
We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured leverage ratio to exceed 3.25 to 1.00, subject to certain conditions.
We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions.
Interest expense on our convertible senior notes includes contractual interest, amortization of debt issuance costs, and for periods prior to fiscal 2022, amortization of the debt discount. Provision (Benefit) for Income Taxes.
Interest expense on our convertible senior notes included contractual interest, amortization of debt issuance costs, and for periods prior to fiscal 2022, amortization of the debt discount. Provision (Benefit) for Income Taxes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K filed with the Securities and Exchange Commission on February 2, 2022. Critical Accounting Estimates The preparation of financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires that we make estimates and assumptions that affect the amounts reported.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K filed with the Securities and Exchange Commission on February 1, 2023. Critical Accounting Estimates The preparation of financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires that we make estimates and assumptions that affect the amounts reported.
We group our products as Industrial & Commercial or Home & Life based on the target markets they address. As a fabless semiconductor company, we rely on third-party semiconductor fabricators in Asia, and to a lesser extent the United States and Europe, to manufacture the silicon wafers that reflect our IC designs.
We group our products as Industrial & Commercial or Home & Life based on the target markets they address. As a fabless semiconductor company, we rely on third-party semiconductor fabricators in Asia, and to a lesser extent the United States and Europe, to manufacture the silicon wafers that reflect our integrated chip (“IC”) designs.
Unit volumes of our products increased while average selling prices increased substantially compared to fiscal 2021. The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, pricing decisions and other factors. In general, as our products become more mature, we expect to experience decreases in average selling prices.
Unit volumes of our products decreased while average selling prices increased compared to fiscal 2022. The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, pricing decisions and other factors. In general, as our products become more mature, we expect to experience decreases in average selling prices.
For a description of other contractual obligations, see Note 11, Debt , and Note 12, Leases , to the Consolidated Financial Statements.
For a description of other contractual obligations, see Note 10, Debt , and Note 11, Leases , to the Consolidated Financial Statements.
Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, represented 33% and 17% during fiscal 2022, respectively.
Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, represented 34% and 15% of our revenues during fiscal 2023 and 33% and 17% during fiscal 2022, respectively.
Judgment is inherent in this process, and differences between the estimated and actual taxable income could result in a material impact on our Consolidated Financial Statements. 37 Table of Contents We recognize liabilities for uncertain tax positions based on a two-step process.
Judgment is inherent in this process, and differences between the estimated and actual taxable income could result in a material impact on our Consolidated Financial Statements. We recognize liabilities for uncertain tax positions based on a two-step process.
Our revenues are subject to variation from period to period due to the volume of shipments made within a period, the mix of products we sell and the prices we charge for our products. 31 Table of Contents Cost of Revenues.
Our revenues are subject to variation from period to period due to the volume of shipments made within a period, the mix of products we sell and the prices we charge for our products. Cost of Revenues.
The remaining balance was held by our foreign subsidiaries. Our cash equivalents and short-term investments consisted of government debt securities, which include agency bonds, municipal bonds, variable rate demand notes and U.S. government securities; corporate debt securities, which include asset-backed securities, corporate bonds, commercial paper and Yankee bonds; and money market funds.
The remaining balance was held by our foreign subsidiaries. Our cash equivalents and short-term investments consisted of government debt securities, which include agency bonds, municipal bonds, and U.S. government securities; corporate debt securities, which include asset-backed securities, corporate bonds, and Yankee bonds; and money market funds.
Provision (benefit) for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Equity-method Earnings. Equity-method earnings represents income or loss on our equity-method investment. Income from discontinued operations, net of income taxes.
Provision (benefit) for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits, global intangible low-taxed income, Subpart F income inclusions, and other permanent differences. Equity-method Earnings (Loss). Equity-method earnings (loss) represents income or loss on our equity-method investment. Income from discontinued operations, net of income taxes.
Our gross margin fluctuates depending on product mix, manufacturing yields, inventory valuation adjustments, average selling prices and other factors. Research and Development.
Our gross margin fluctuates depending on product mix, manufacturing yields, inventory valuation adjustments, average selling prices and other factors. 32 Table of Contents Research and Development.
We may enter into acquisitions or strategic arrangements in the future which also could require us to seek additional equity or debt financing. Contractual Obligations Our purchase obligations primarily include contractual arrangements in the form of purchase orders and purchase commitments with suppliers. As of December 31, 2022, such purchase obligations were $134.2 million.
We may enter into acquisitions or strategic arrangements in the future which also could require us to seek additional equity or debt financing. Contractual Obligations Our purchase obligations primarily include contractual arrangements in the form of purchase orders and purchase commitments with suppliers. As of December 30, 2023, such purchase obligations were $37.0 million.
Interest Income and Other, Net Interest income and other, net in fiscal 2022 was $13.9 million compared to $5.7 million in fiscal 2021. The increase in interest income and other, net in fiscal 2022 was primarily due to increased interest income earned as a result of higher market interest rates.
The increase in interest income and other, net in fiscal 2023 was primarily due to increased interest income earned as a result of higher market interest rates. Interest Expense Interest expense in fiscal 2023 was $5.6 million compared to $6.7 million in fiscal 2022.
All of our revenues to date have been denominated in U.S. dollars. We believe that a majority of our revenues will continue to be derived from customers outside of the United States. Results of Operations The following describes the line items set forth in our Consolidated Statements of Income: Revenues. Revenues are generated predominately by sales of our products.
We believe that a majority of our revenues will continue to be derived from customers outside of the United States. Results of Operations The following describes the line items set forth in our Consolidated Statements of Operations: Revenues. Revenues are generated predominately by sales of our products.
In order to achieve this core principle, we apply a five-step process. As part of this process, we analyze the performance obligations in a customer contract and estimate the variable consideration we expect to receive. The evaluation of performance obligations requires that we identify the promised goods and services in the contract.
As part of this process, we analyze the performance obligations in a customer contract and estimate the variable consideration we expect to receive. The evaluation of performance obligations requires that we identify the promised goods and services in the contract.
Inventory increased to $100.4 million at December 31, 2022 from $49.3 million at January 1, 2022. Our inventory levels will vary based on the availability of supply, and to a lesser extent, the impact of variations between forecasted demand used for purchasing inventory and actual demand.
Inventory increased to $194.3 million at December 30, 2023 from $100.4 million at December 31, 2022. Our inventory levels will vary based on the availability of supply and the impact of variations between forecasted demand used for purchasing inventory and actual demand.
We may experience variations in the average selling prices of certain of our products. Increases in average selling prices may occur during periods of increased demand, but such demand may be short-lived and could be accompanied by higher product costs.
Gross margin decreased primarily due to an increase in cost related to product mix. We may experience variations in the average selling prices of certain of our products. Increases in average selling prices may occur during periods of increased demand, but such demand may be short-lived and could be accompanied by higher product costs.
Operating cash flows during fiscal 2022 reflect our net income of $91.4 million, adjustments of $97.5 million for depreciation, amortization, stock-based compensation, equity-method earnings and deferred income taxes, and a net cash outflow of $47.6 million due to changes in our operating assets and liabilities.
Operating cash flows during fiscal 2023 reflect our net loss of $34.5 million, adjustments of $104.4 million for depreciation, amortization, stock-based compensation, equity-method losses and deferred income taxes, and a net cash outflow of $100.3 million due to changes in our operating assets and liabilities.
Three of our distributors, Arrow Electronics, Edom Technology and Sekorm, represented 28%, 18% and 12% of our revenues during fiscal 2021, and 28%, 19% and 14% of our revenues during fiscal 2020, respectively. The percentage of our revenues derived from outside of the United States was 83% in fiscal 2022, 86% in fiscal 2021 and 88% in fiscal 2020.
Three of our distributors, Arrow Electronics, Edom Technology and Sekorm, represented 28%, 18% and 12% of our revenues during fiscal 2021, respectively. The percentage of our revenues derived from outside of the United States was 88% in fiscal 2023, 83% in fiscal 2022 and 86% in fiscal 2021. All of our revenues to date have been denominated in U.S. dollars.
Operating Activities Net cash provided by operating activities was $141.3 million during fiscal 2022, compared to net cash provided of $91.2 million during fiscal 2021.
Operating Activities Net cash used in operating activities was $30.3 million during fiscal 2023, compared to net cash provided by operating activities of $141.3 million during fiscal 2022.
In fiscal 2022, we acquired 6.9 million shares of our common stock for $887.6 million. Through acquisitions and internal development efforts, we have continued to diversify our product portfolio and introduce new products and solutions with added functionality and integration.
In fiscal 2023, we acquired 1.5 million shares of our common stock for $212.9 million. We have continued to diversify our product portfolio and introduce new products and solutions with added functionality and integration.
Gross margin increased to 62.7% in fiscal 2022 compared to 59.0% in fiscal 2021 primarily due to increases in the price of our products and variations in product mix.
Gross margin decreased to 58.9% in fiscal 2023 compared to 62.7% in fiscal 2022 primarily due to variations in the price and costs of our products and variations in product mix.
Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ (in millions) 2022 2021 Change % Change Research and development ​ $ 332.3 ​ $ 273.2 ​ $ 59.1 21.6 % Percent of revenue ​ 32.5 % 37.9 % ​ ​ ​ ​ The increase in research and development expense in fiscal 2022 was primarily due to increases of $48.6 million for personnel-related expenses, $2.6 million for new product introduction costs and $2.3 million for depreciation expense.
Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ (in millions) 2023 2022 Change % Change Research and development ​ $ 337.7 ​ $ 332.3 ​ $ 5.4 1.6 % Percent of revenue ​ 43.2 % 32.5 % ​ ​ ​ ​ The increase in research and development expense in fiscal 2023 was primarily due to an increase of $6.3 million for personnel-related expenses and an increase of $5.9 million for IT-related costs.
We plan to continue introducing products that increase the content we provide for existing applications, thereby enabling us to serve markets we do not currently address and expand our total available market opportunity. During fiscal 2022, 2021 and 2020, we had no customer that represented more than 10% of our revenues.
We plan to continue introducing products that expand the capabilities we offer in order to serve both current and emerging applications, enabling us to address new markets and expand our total available market opportunity. During fiscal 2023, 2022 and 2021, we had no customer that represented more than 10% of our revenues.
The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, severity and spread of the pandemic, related restrictions on travel and transportation and other actions that may be taken by governmental authorities, the impact to the business of our suppliers or customers, and other items identified under “Risk Factors” above, all of which are uncertain and cannot be predicted.
The extent of the impact of these macroeconomic conditions on our operational and financial performance will depend on future developments, including the duration and severity of any economic downturn, the impact to the business of our suppliers and/or customers, and other items identified under “Risk Factors” above, all of which are uncertain and cannot be predicted.
In the event that actual demand is lower or market conditions are worse than originally projected, additional inventory write-downs may be required. 36 Table of Contents Impairment of goodwill and other long-lived assets – We review long-lived assets which are held and used, including fixed assets and purchased intangible assets, for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Impairment of goodwill and other long-lived assets – We review long-lived assets which are held and used, including fixed assets and purchased intangible assets, for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Income from discontinued operations in fiscal 2021 was $2.2 billion, including a gain on sale of $2.1 billion, net of tax. 34 Table of Contents Business Outlook The following represents our business outlook for the first quarter of fiscal 2023. ​ ​ ​ ​ Income Statement Item Estimate ​ ​ ​ Revenues ​ $242 million to $252 million ​ ​ ​ Gross margin ​ 63% ​ ​ ​ Operating expenses ​ $139 million ​ ​ ​ Effective tax rate ​ 31% ​ ​ ​ Diluted earnings per share ​ $0.36 to $0.46 ​ Liquidity and Capital Resources Our principal sources of liquidity as of December 31, 2022 consisted of $1.2 billion in cash, cash equivalents and short-term investments, of which $0.9 billion was held by our U.S. entities.
Business Outlook The following represents our business outlook for the first quarter of fiscal 2024. ​ ​ ​ ​ Income Statement Item Estimate ​ ​ ​ Revenues ​ $100 million to $110 million ​ ​ ​ Gross margin ​ 52% ​ ​ ​ Operating expenses ​ $118 million ​ ​ ​ Diluted loss per share ​ $(1.89) to $(2.05) ​ 35 Table of Contents Liquidity and Capital Resources Our principal sources of liquidity as of December 30, 2023 consisted of $439.2 million in cash, cash equivalents and short-term investments, of which $226.9 million was held by our U.S. entities.
Capital Requirements Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities.
In June 2023, we paid $535.0 million in cash and issued 0.9 million shares of common stock in connection with the settlement of our 2025 convertible senior notes. 36 Table of Contents Capital Requirements Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities.
Accounts receivable decreased to $71.4 million at December 31, 2022 from $98.3 million at January 1, 2022. The decrease in accounts receivable resulted primarily from normal variations in the timing of collections and billings. Our DSO was 25 days at December 31, 2022 and 42 days at January 1, 2022.
Accounts receivable decreased to $29.3 million at December 30, 2023 from $71.4 million at December 31, 2022. The decrease in accounts receivable resulted primarily from a decrease in shipments during the last quarter of fiscal 2023 compared to the last quarter of fiscal 2022. Our DSO was 30 days at December 30, 2023 and 25 days at December 31, 2022.
Incorrect estimates could result in future impairment charges, and those charges could be material to our results of operations. Revenue recognition – We recognize revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Revenue recognition – We recognize revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. In order to achieve this core principle, we apply a five-step process.
Equity-method Earnings Equity-method earnings in fiscal 2022 were $3.4 million compared to $13.7 million in fiscal 2021. The decrease in equity-method earnings in fiscal 2022 was due to a decrease in the unrealized gains on an equity-method investment.
Equity-method Earnings (Loss) Equity-method loss in fiscal 2023 was $16.0 million compared to earnings of $3.4 million in fiscal 2022. The decrease in equity-method earnings in fiscal 2023 was due primarily to the loss recognized on the sale of an equity-method investment.
These audits can involve complex issues which may require an extended period of time to resolve and could result in additional assessments of income tax. We believe adequate provisions for income taxes have been made for all periods. Recent Accounting Pronouncements Information regarding recent accounting pronouncements is provided in Note 2, Significant Accounting Policies , to the Consolidated Financial Statements.
We believe adequate provisions for income taxes have been made for all periods. 38 Table of Contents Recent Accounting Pronouncements Information regarding recent accounting pronouncements is provided in Note 2, Significant Accounting Policies , to the Consolidated Financial Statements. Such information is incorporated by reference herein. ​
Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ (in millions) 2022 2021 Change Gross profit ​ $ 642.6 ​ $ 425.4 ​ $ 217.2 ​ Gross margin ​ 62.7 % 59.0 % 3.7 % ​ Gross profit increased in fiscal 2022 due primarily to increased product sales.
Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ (in millions) 2023 2022 Change Gross profit ​ $ 460.6 ​ $ 642.6 ​ $ (182.0) ​ Gross margin ​ 58.9 % 62.7 % (3.8) % ​ Gross profit decreased in fiscal 2023 due primarily to decreased product sales across both of our product groups.
The decrease in selling, general and administrative expense as a percent of revenues in fiscal 2022 was due to our increased revenues. We expect that selling, general and administrative expense will remain relatively stable in absolute dollars in the first quarter of 2023 compared to the fourth quarter of 2022.
We expect that selling, general and administrative expense will increase in absolute dollars in the first quarter of 2024 compared to the fourth quarter of 2023. Interest Income and Other, Net Interest income and other, net in fiscal 2023 was $19.2 million compared to $13.9 million in fiscal 2022.
The increase in cash inflows was principally due to a decrease in cash outflows of $714.0 million from net purchases, sales and maturities of marketable securities in 2022. Financing Activities Net cash used in financing activities was $887.1 million during fiscal 2022, compared to cash used of $1.3 billion during fiscal 2021.
Investing Activities Net cash provided by investing activities was $469.8 million during fiscal 2023, compared to $240.5 million during fiscal 2022. The increase in cash inflows was principally due to cash provided by net purchases, sales, and maturities of marketable securities of $492.6 million in fiscal 2023.
In determining fair value, several valuation methodologies are allowed, although quoted market prices are the best evidence of fair value. If the fair value of the reporting unit is less than its carrying amount, we recognize an impairment loss equal to that excess amount.
In determining fair value, several valuation methodologies are allowed, although quoted market prices are the best evidence of fair value.
We amortize intangible assets with finite lives over their expected useful lives. Our estimates are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur.
Fair value of these assets is determined primarily using the income approach, which requires us to project future cash flows and apply an appropriate discount rate. We amortize intangible assets with finite lives over their expected useful lives. Our estimates are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable.
We expect that research and development expense will increase in absolute dollars in the first quarter of 2023 compared to the fourth quarter of 2022. 33 Table of Contents Selling, General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ (in millions) 2022 2021 Change % Change Selling, general and administrative ​ $ 191.0 ​ $ 185.0 ​ $ 6.0 3.2 % Percent of revenue ​ 18.6 % 25.7 % ​ ​ ​ ​ The increase in selling, general and administrative expense in fiscal 2022 was primarily due to increases of $5.1 million for personnel-related expenses, $4.0 million for outside services, and $1.3 million for sales commissions offset in part by a decrease of $7.1 million for the amortization of intangible assets.
We expect that research and development expense will remain relatively stable in absolute dollars in the first quarter of 2024 compared to the fourth quarter of 2023. 34 Table of Contents Selling, General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ (in millions) 2023 2022 Change % Change Selling, general and administrative ​ $ 147.0 ​ $ 191.0 ​ $ (44.0) (23.0) % Percent of revenue ​ 18.8 % 18.6 % ​ ​ ​ ​ The decrease in selling, general and administrative expense in fiscal 2023 was primarily due to a $35.4 million decrease to personnel-related costs, which included a $20.7 million decrease in certain bonus and variable compensation as a result of the cost containment efforts in the third and fourth quarters and a $14.7 million reduction in stock compensation driven by a decline in expected achievement for certain performance-based awards.
Acquired intangible assets – When we acquire a business, a portion of the purchase price is typically allocated to identifiable intangible assets, such as acquired technology and customer relationships. Fair value of these assets is determined primarily using the income approach, which requires us to project future cash flows and apply an appropriate discount rate.
If the fair value of the reporting unit is less than its carrying amount, we recognize an impairment loss equal to that excess amount. 37 Table of Contents Acquired intangible assets – When we acquire a business, a portion of the purchase price is typically allocated to identifiable intangible assets, such as acquired technology and customer relationships.
The decrease in cash outflows was principally due to a decrease of $266.6 million for repurchases of our common stock and a decrease of $140.6 million in payments on debt in fiscal 2022. 35 Table of Contents Discontinued Operations Net cash used in discontinued operations was $69.5 million during fiscal 2022 related to income tax payments, compared to net cash provided of $2.6 billion during fiscal 2021.
Financing Activities Net cash used in financing activities was $711.9 million during fiscal 2023, compared to $887.1 million during fiscal 2022. The decrease in cash outflows was principally due to a decrease of $666.3 million for repurchases of our common stock, partially offset by an increase of $571.1 million in payments on debt in fiscal 2023.
Current Period Highlights of Continuing Operations Revenues increased $303.2 million in fiscal 2022 compared to fiscal 2021 due to increased revenues from both our Industrial & Commercial products and Home & Life products.
However, rapid changes in our markets and across our product areas make it difficult for us to accurately estimate the impact of seasonal factors on our business. 31 Table of Contents Current Period Highlights of Continuing Operations Revenues decreased $241.8 million in fiscal 2023 compared to fiscal 2022 due to decreased revenues from both our Industrial & Commercial products and Home & Life products.
The decrease in research and development expense as a percent of revenues in fiscal 2022 was due to our increased revenues.
Other decreases to research and development expense in fiscal 2023 were $4.5 million for new product introduction costs and $3.7 million for the amortization of intangible assets. The increase in research and development expense as a percent of revenues in fiscal 2023 was due to our decreased revenues.
Operating expenses increased $65.1 million in fiscal 2022 compared to fiscal 2021 due primarily to increased personnel-related expenses, outside services, new product introduction costs, depreciation expense, and sales commissions offset in part by a decrease in the amortization of intangible assets. Operating income (loss) in fiscal 2022 was $119.3 million compared to $(32.8) million in fiscal 2021.
Additionally, amortization of intangible assets decreased by $5.0 million and outside services decreased by $5.1 million, partially offset by an increase in IT-related costs of $1.3 million. The increase in selling, general and administrative expense as a percent of revenues in fiscal 2023 was due to our decreased revenues.
Removed
Fiscal 2020 had 53 weeks with the extra week occurring in the first quarter of the year. Fiscal 2022, 2021 and 2020 ended on December 31, 2022, January 1, 2022 and January 2, 2021, respectively. Impact of COVID-19 The COVID-19 pandemic has impacted the global economy, disrupting our operations, global supply chains and the operations of our customers.
Added
Fiscal 2023, 2022 and 2021 ended on December 30, 2023, December 31, 2022 and January 1, 2022, respectively. Impact of Macroeconomic Conditions The current global economic environment is experiencing inflationary pressure, relatively high interest rates, and geopolitical tension. We have experienced a decline in revenues, as our customers have slowed purchases to reduce existing inventories in a softening market.
Removed
We implemented a response plan and continued operations while largely transitioning our global workforce to a remote work model. We have reopened offices in all of our locations, subject to local regulations. The third parties that perform our semiconductor manufacturing, assembly, packaging and testing have generally remained operational.
Added
Operating expenses decreased $38.6 million in fiscal 2023 compared to fiscal 2022 due primarily to temporary cost containment measures taken in the third and fourth quarters of fiscal 2023, including the elimination of certain bonuses and certain other variable compensation, a reduction in the use of contract employees, and the suspension of all non-essential travel.
Removed
However, rapid changes in our markets and across our product areas make it difficult for us to accurately estimate the impact of seasonal factors on our business. 30 Table of Contents Discontinued Operations On July 26, 2021, we sold our infrastructure and automotive business to Skyworks Solutions, Inc. for $2.75 billion in cash.
Added
Operating expenses also decreased due to reduced stock-based compensation from the expense reversal to adjust the estimated levels of achievement related to unvested performance stock units. In the fourth quarter of fiscal 2023, we implemented a workforce reduction of approximately 10% of our employees. We incurred total employee separation costs of $9.1 million.
Removed
The prior year comparable period results of operations of the sold component have been presented in the accompanying Consolidated Financial Statements as discontinued operations and, therefore, are excluded from the following discussion of the results of our continuing operations.
Added
Operating loss in fiscal 2023 was $24.2 million compared to operating income of $119.3 million in fiscal 2022. Refer to “Results of Operations” below for further discussion. We ended fiscal 2023 with $439.2 million in cash, cash equivalents and short-term investments. Net cash used in operating activities was $30.3 million during fiscal 2023.
Removed
We ended fiscal 2022 with $1.2 billion in cash, cash equivalents and short-term investments. Net cash provided by operating activities was $141.3 million during fiscal 2022. Accounts receivable were $71.4 million at December 31, 2022, representing 25 days sales outstanding (DSO). Inventory was $100.4 million at December 31, 2022, representing 90 days of inventory (DOI).
Added
Accounts receivable were $29.3 million at December 30, 2023, representing 30 days sales outstanding (“DSO”). Inventory was $194.3 million at December 30, 2023, representing 407 days of inventory (“DOI”).
Removed
In fiscal 2022, we introduced a portfolio of Matter development solutions providing support for Matter over Wi-Fi, Matter over Thread, Bluetooth Low Energy (LE) commissioning, and Matter bridges to Zigbee and Z-Wave; an end-to-end development platform with complete connectivity support for Amazon Sidewalk; a new flagship SoC and power amplifier for Wi-SUN®, the FG25 SoC and EFF01 Front End Module designed to provide a sub-gigahertz transmission range of up to 3 kilometers in dense urban environments with no data loss; our first Wi-Fi 6 and Bluetooth LE SoC family ideal for battery-powered or energy-efficient IoT devices with always-on cloud connectivity; a Bluetooth Location Services solution using accurate, low-power Bluetooth devices to simplify Angle of Arrival (AoA) and Angle of Departure (AoD) location services; and a family of 2.4 GHz wireless SoCs for Bluetooth and multi-protocol operations with a built-in AI and Machine Learning (ML) accelerator, improving performance for AI and ML applications on battery-powered edge devices.
Added
During the second quarter of 2023, we paid $535.0 million in cash and issued 0.9 million shares of common stock in connection with the extinguishment of the remaining principal of our 2025 convertible senior notes. In the third quarter of 2023, we repaid $35.0 million in borrowings under our revolving credit facility.
Removed
The increase in gross profit in fiscal 2022 was due to increases in gross profit for both of our product groups. Gross margin increased primarily due to increases in the price of our products and variations in product mix.
Added
In fiscal 2023, we introduced a new BB5 family of 8-bit microcontroller units optimized for price and performance, a dual-band SoC designed for long-range networks and protocols like Amazon Sidewalk, Wi-SUN®, and other proprietary protocols, and new integrated Bluetooth® SoC and MCU families that offer IoT device designers energy efficiency, high performance and trusted security for the smallest form factor IoT devices.
Removed
Increased product demand and production capacity constraints have increased the selling price and costs of our products, and has resulted in period-to-period fluctuations in our gross margin. We expect the prices we pay for inventory to continue to increase in future periods and that this will reduce our gross margins.
Added
The overall demand environment for our customers’ products is generally weak. Customers are also seeking to reduce inventory levels relative to the amounts they held during the recent period of widespread supply chain disruptions.
Removed
Interest Expense Interest expense in fiscal 2022 was $6.7 million compared to $31.0 million in fiscal 2021.
Added
As a result, the current demand environment for our products is experiencing high volatility and general weakness, with customers more frequently requesting cancellations, changes to delivery dates, and price and payment term concessions.
Removed
The decrease in interest expense in fiscal 2022 was primarily due to a decrease of $20.9 million in amortization of debt discount in fiscal 2022 and a loss of $3.4 million recorded on the early extinguishment of our remaining 2022 convertible senior notes in fiscal 2021. See Note 11, Debt , to the Consolidated Financial Statements for additional information.
Added
Within personnel-related expenses, increases of $15.0 million in salary expense, $2.4 million in stock compensation, and $7.2 million in termination benefits primarily from the workforce reduction in the fourth quarter were partially offset by a $21.8 million decrease in bonus and variable compensation from lower attainment and the cost containment efforts in the third and fourth quarters.
Removed
Provision (Benefit) for Income Taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ (in millions) 2022 2021 Change Provision (benefit) for income taxes ​ $ 38.5 ​ $ 13.4 ​ $ 25.1 Effective tax rate ​ 29.6 % ​ (30.2) % ​ ​ The increase in the effective tax rate for fiscal 2022 was primarily due to the recognition of certain tax benefits for fiscal 2021 in discontinued operations under the FASB ASU 2019-12, Simplifying the Accounting for Income Taxes, and the required adoption of new U.S. tax rules regarding the capitalization of research and experimental costs in fiscal 2022.
Added
Provision for Income Taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ (in millions) 2023 2022 Change Provision for income taxes ​ $ 7.9 ​ $ 38.5 ​ $ (30.6) Effective tax rate ​ (29.9) % 29.6 % ​ ​ The decrease in the provision for income taxes for fiscal 2023 was primarily due to decreases in pre-tax book income and global intangible low-taxed income inclusions as compared to fiscal 2022.
Removed
Income from discontinued operations, net of income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ (in millions) 2022 2021 Change Income from discontinued operations, net of income taxes ​ $ — ​ $ 2,175.3 ​ $ (2,175.3) ​ There was no income from prior year discontinued operations in fiscal 2022.
Added
Inventory has increased in part due to us investing in building inventory to minimize potential supply disruptions and meet forecasted future demand.
Removed
Increased product demand and higher product costs have increased the value of the inventory we hold. Our DOI was 90 days at December 31, 2022 and 55 days at January 1, 2022. Investing Activities Net cash provided by investing activities was $240.5 million during fiscal 2022, compared to net cash used of $476.7 million during fiscal 2021.
Added
Our DOI was 407 days at December 30, 2023 and 90 days at December 31, 2022; the increase is in part due to the lower cost of sales combined with higher inventory levels during the last quarter of fiscal 2023 compared to the last quarter of fiscal 2022.
Removed
The decrease in cash inflows was principally due to $2.75 billion in proceeds from the sale of our infrastructure and automotive business in fiscal 2021, offset by a decrease of $183.3 million for incomes tax payments on the gain on sale.
Added
Discontinued Operations Net cash used in discontinued operations was zero during fiscal 2023, compared to net cash used of $69.5 million during fiscal 2022 related to income tax payments. Debt As of December 30, 2023, we had a $400 million revolving credit facility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+12 added−0 removed1 unchanged
Biggest changeInterest Expense We are exposed to interest rate fluctuations in the normal course of our business, including through our credit facility. The interest rate on the credit facility consists of a variable-rate of interest and an applicable margin. While we have drawn from the credit facility in the past, we have no borrowings as of December 31, 2022.
Biggest changeThe interest rate on the credit facility consists of a variable-rate of interest and an applicable margin. As of December 30, 2023, we had $45.0 million outstanding under our credit facility. A 100 basis point increase in interest rates would increase our future annual interest rate expense by approximately $0.5 million.
Our foreign subsidiaries are considered to be extensions of the U.S. parent. The functional currency of the foreign subsidiaries is the U.S. dollar. Accordingly, gains and losses resulting from remeasuring transactions denominated in currencies other than U.S. dollars are recorded in the Consolidated Statements of Income. We use foreign currency forward contracts to manage exposure to foreign exchange risk.
Accordingly, gains and losses resulting from remeasuring transactions denominated in currencies other than U.S. dollars are recorded in the Consolidated Statements of Operations. We use foreign currency forward contracts to manage exposure to foreign exchange risk.
A 100 basis point decline in yield on our investment portfolio holdings as of December 31, 2022 would decrease our future annual interest income by approximately $11.0 million. Our investment portfolio holdings as January 1, 2022 yielded less than 100 basis points.
A 100 basis point decline in yield on our investment portfolio holdings as of December 30, 2023 would decrease our future annual interest income by approximately $3.6 million. A 100 basis point decline in yield on our investment portfolio holdings as of December 31, 2022 would decrease our future annual interest income by approximately $11.0 million.
If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations. Foreign currency exchange rate risk We are exposed to foreign currency exchange rate risk primarily through assets, liabilities and operating expenses of our subsidiaries denominated in currencies other than the U.S. dollar.
Foreign currency exchange rate risk We are exposed to foreign currency exchange rate risk primarily through assets, liabilities and operating expenses of our subsidiaries denominated in currencies other than the U.S. dollar. Our foreign subsidiaries are considered to be extensions of the U.S. parent. The functional currency of the foreign subsidiaries is the U.S. dollar.
Gains and losses on foreign currency forward contracts are recognized in earnings in the same period during which the hedged transaction is recognized. ​
Gains and losses on foreign currency forward contracts are recognized in earnings in the same period during which the hedged transaction is recognized. ​ Item 8. Financial Statements and Supplementary Data The Financial Statements and supplementary data required by this item are included in Part IV, Item 15 of this Form 10-K and are presented beginning on page F-1.
A decline in yield to zero basis points on our investment portfolio holdings as of January 1, 2022 would decrease our future annual interest income by approximately $3.6 million. We believe that our investment policy, which defines the duration, concentration, and minimum credit quality of the allowable investments, meets our investment objectives.
We believe that our investment policy, which defines the duration, concentration, and minimum credit quality of the allowable investments, meets our investment objectives. Interest Expense We are exposed to interest rate fluctuations in the normal course of our business, including through our credit facility.
Added
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ​ Item 9A.
Added
Controls and Procedures Evaluation of Disclosure Controls and Procedures We have performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act).
Added
Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of December 30, 2023 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, as a result of the material weakness in our internal control over financial reporting described below. 39 Table of Contents Notwithstanding the material weakness in internal control over financial reporting described below, management believes and has concluded that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.
Added
Changes in Internal Control over Financial Reporting There was no change in our internal controls during the fiscal quarter ended December 30, 2023 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Added
Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.
Added
Our management assessed the effectiveness of our internal control over financial reporting as of December 30, 2023. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework).
Added
Based on our assessment we concluded that, as of December 30, 2023, the material weakness described below existed. During the year-end financial reporting process of fiscal 2023, management identified a material weakness in internal control over financial reporting.
Added
The material weakness resulted from undue reliance on forecasted inventory demand information used in determining inventory carrying value adjustments without effectively designed controls over the evaluation of demand assumptions. These forecasts are used to determine inventory carrying value adjustments necessary to record such quantities at the lower of their cost or net realizable value.
Added
A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. This material weakness did not result in any material errors.
Added
With respect to the material weakness above, management, under the oversight of the Audit Committee, is in the process of designing appropriate controls and the remediation plan specific to the inventory valuation process.
Added
The material weakness will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective. We will monitor the effectiveness of the remediation plan and refine the remediation plan as appropriate.
Added
Our independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on our internal control over financial reporting. This report appears on page F-3.

Other SLAB 10-K year-over-year comparisons