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What changed in SYNAPTICS Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SYNAPTICS Inc's 2022 and 2023 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 2023 report.

+303 added−288 removedSource: 10-K (2023-08-18) vs 10-K (2022-08-22)

Top changes in SYNAPTICS Inc's 2023 10-K

303 paragraphs added · 288 removed · 181 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

76 edited+31 added−28 removed80 unchanged
Biggest changeImagingSmart ™ Our ImagingSmart solutions include a product portfolio that spans four distinct product areas including document and photo imaging controllers, digital video, fax, and modem solutions. ImagingSmart products leverage image processing IP, JPEG encoders and DSP technology to deliver a wide range of fax, modem, digital video and printer solutions for home, mobile and imaging applications.
Biggest changeImagingSmart products leverage image processing IP, JPEG encoders and DSP technology to deliver a wide range of fax, modem, digital video and printer solutions for home, mobile and imaging applications. Natural ID ® Our Natural ID family of capacitive-based fingerprint ID products is designed for use in notebook PCs, PC peripherals, automobiles, and other applications.
This technology consists of mobile and large format display semiconductor expertise, including the following functional blocks: • TCONs; • Thin-Film-Transistor, or TFT, gamma references; • Smooth dimming and content adaptive brightness control; • Contrast enhancement; • Color enhancement; • Gamma curve control; • Force, touch, and display synchronization; • Local area active contrast optimization; • Adaptive image compression and decompression; • Sub-pixel rendering; • Demura compensation; • Rounded corner processing; • Frame rate control; • High-speed serial interfaces such as mobile industry processor interface display serial interface, or MIPI DSI, and Qualcomm mobile display digital interface, or MDDI; and • Display power circuits such as inductive switchers, charge pumps, and LDOs.
This technology consists of mobile and large format display semiconductor expertise, including the following functional blocks: • TCONs; • Thin-Film-Transistor, or TFT, gamma references; • Smooth dimming and content adaptive brightness control; • Contrast enhancement; 8 • Color enhancement; • Gamma curve control; • Force, touch, and display synchronization; • Local area active contrast optimization; • Adaptive image compression and decompression; • Sub-pixel rendering; • Demura compensation; • Rounded corner processing; • Frame rate control; • High-speed serial interfaces such as mobile industry processor interface display serial interface, or MIPI DSI, and Qualcomm mobile display digital interface, or MDDI; and • Display power circuits such as inductive switchers, charge pumps, and LDOs.
Our broad line of semiconductor product solutions is currently based upon the following key technologies: • Proprietary microcontroller technology; • Proprietary vector co-processor technology; • Multimedia processing technology; • Voice and audio technology; • Pattern recognition technology; • Deep learning and neural network inferencing technology. • Mixed-signal integrated circuit technology; • Wireless connectivity technology; • Video interface and compression technology; • Imaging and modem technology; • Capacitive position and force sensing technology; • Capacitive active pen technology; 6 • Multi-touch technology; and • Display systems and circuit technology.
Our broad line of semiconductor product solutions is currently based upon the following key technologies: • Proprietary microcontroller technology; • Proprietary vector co-processor technology; • Multimedia processing technology; • Voice and audio technology; • Pattern recognition technology; • Deep learning and neural network inferencing technology. • Mixed-signal integrated circuit technology; • Wireless connectivity technology; • Video interface and compression technology; • Imaging and modem technology; • Capacitive position and force sensing technology; • Capacitive active pen technology; • Multi-touch technology; and • Display systems and circuit technology.
We also record a liability and charge to cost of revenue for estimated losses on inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer delays or order cancellations. In addition, the impact of entering into long-term capacity agreements could create significant inventory write-down if the end customer demand declines.
We also record a liability and charge to cost of revenue for estimated losses on inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer delays or order cancellations. In addition, the impact of entering into long-term capacity agreements could create significant inventory write-down if the end customer demand substantially declines.
These products are part of a broad location platform that enable customer devices to wirelessly communicate and receive precise location and navigational data from satellite constellations for use in various location services applications. As part of our wireless technology, DECT based devices provide worldwide coverage for telephony applications, supporting most RF bands and cordless protocols standardized around the world.
These products are part of a broad location platform that enable customer devices to wirelessly communicate and receive precise location and navigational data from satellite constellations for use in various location services applications. 7 As part of our wireless technology, DECT based devices provide worldwide coverage for telephony applications, supporting most RF bands and cordless protocols standardized around the world.
The technology embodies a broad range of analog and mixed signal circuits expertise and audio signal processing algorithms, including: • Noise suppression; • Acoustic echo cancellation; • Active noise cancellation; • Trigger word detection; • Mid-field and far-field voice processing; • Audio digital signal processor architecture; • Audio codecs; • Audio post processing; • High performance audio analog-to-digital converters, or ADCs, and digital-to-analog converters, or DACs; • Audio amplifiers; • Low power audio processing; • Speaker protection; and • Product acoustic design.
The technology embodies a broad range of analog and mixed signal circuits expertise and audio signal processing algorithms, including: • Noise suppression; • Acoustic echo cancellation; • Active noise cancellation; • Trigger word detection; • Mid-field and far-field voice processing; 6 • Audio digital signal processor architecture; • Audio codecs; • Audio post processing; • High performance audio analog-to-digital converters, or ADCs, and digital-to-analog converters, or DACs; • Audio amplifiers; • Low power audio processing; • Speaker protection; and • Product acoustic design.
The finished assembled product is subsequently shipped directly to our customers or by our contract manufacturers directly to our customers for integration into their products. We believe our third-party manufacturing strategy provides a scalable business model, enables us to concentrate on our core competencies of research and development, technological advances, and product design and engineering, and reduces our capital investment.
The finished assembled product is subsequently shipped directly to our customers or by our contract manufacturers directly to our customers for integration into their products. 10 We believe our third-party manufacturing strategy provides a scalable business model, enables us to concentrate on our core competencies of research and development, technological advances, and product design and engineering, and reduces our capital investment.
Our fabless semiconductor manufacturing strategy allows us to maintain a variable cost model, in which we do not incur most of our manufacturing costs until our product solutions have been shipped and invoiced to our customers. 3 Products Our family of product solutions allows our customers to solve their interface needs and differentiate their products from those of their competitors.
Our fabless semiconductor manufacturing strategy allows us to maintain a variable cost model, in which we do not incur most of our manufacturing costs until our product solutions have been shipped and invoiced to our customers. Products Our family of product solutions allows our customers to solve their interface needs and differentiate their products from those of their competitors.
Our TouchPad solutions also offer various advanced features, including scrolling, customizable tap zones, tapping and dragging of icons, and device interaction. SecurePad TM Our SecurePad integrates our Natural ID fingerprint sensor directly into the TouchPad area, improving usability and simplifying the supply chain for notebook PC manufacturers.
Our TouchPad solutions also offer various advanced features, including scrolling, customizable tap zones, tapping and dragging of icons, and device interaction. 4 SecurePad TM Our SecurePad integrates our Natural ID fingerprint sensor directly into the TouchPad area, improving usability and simplifying the supply chain for notebook PC manufacturers.
Collectively, these patents and patent applications cover various aspects of our key technologies, including those for touch sensing, voice processing, secure biometrics, display drivers, touch and display integration, docks and adapters, video interfaces, wired and wireless connectivity, audio processing, video processing, edge computing, open AI tools, and computer vision.
Collectively, these patents and patent applications cover various aspects of our key technologies, including those 9 for touch sensing, voice processing, secure biometrics, display drivers, touch and display integration, docks and adapters, video interfaces, wired and wireless connectivity, audio processing, video processing, edge computing, open AI tools, and computer vision.
Our principal competitors in the sale of IoT interface products are Parade, Megachips, and Realtek. 12 We also provide fax, modem and image processors and software solutions for printers, fax machines, point of sale terminals, and medical applications. Our principal competitors in these markets are Skyworks, Marvell, and Qbit.
Our principal competitors in the sale of IoT interface products are Parade, Megachips, and Realtek. We also provide fax, modem and image processors and software solutions for printers, fax machines, point of sale terminals, and medical applications. Our principal competitors in these markets are Skyworks, Marvell, and Qbit.
Within the fast-growing consumer IoT market, we continue to expand our footprint in various devices by bringing converged video, vision, audio, and voice technologies coupled with artificial intelligence and wireless connectivity capabilities.
Within the growing consumer IoT market, we continue to expand our footprint in various devices by bringing converged video, vision, audio, and voice technologies coupled with artificial intelligence and wireless connectivity capabilities.
We believe these technologies and the related intellectual property rights create barriers for competitors and allow us to provide high-value human experience semiconductor product solutions in a variety of high-growth markets.
We believe these 5 technologies and the related intellectual property rights create barriers for competitors and allow us to provide high-value human experience semiconductor product solutions in a variety of high-growth markets.
Capacitive Fingerprint Sensing Technology . Our fingerprint sensing technology simplifies the system or application authentication process by substituting the user’s fingerprint for the login name and password. Our capacitive fingerprint sensing technology provides for fingerprint authentication by scanning and matching an image of a user’s fingerprint, as well as initial 8 fingerprint enrollment.
Capacitive Fingerprint Sensing Technology . Our fingerprint sensing technology simplifies the system or application authentication process by substituting the user’s fingerprint for the login name and password. Our capacitive fingerprint sensing technology provides for fingerprint authentication by scanning and matching an image of a user’s fingerprint, as well as initial fingerprint enrollment.
These neural network algorithms improve the quality of the sensed data (for example, reduce the noise, or increase the resolution) as well as interpret the sensed data. 7 Mixed-Signal Integrated Circuit Technology .
These neural network algorithms improve the quality of the sensed data (for example, reduce the noise, or increase the resolution) as well as interpret the sensed data. Mixed-Signal Integrated Circuit Technology .
Butler holds a Bachelor of Business Administration degree in Finance from the University of Minnesota Duluth. Saleel Awsare has been the Senior Vice President and General Manager of our PC and Peripherals unit since July 2020.
Butler holds a Bachelor of Business Administration degree in Finance from the University of Minnesota Duluth. Saleel Awsare has been the Senior Vice President and General Manager of our PC and Peripherals unit since July 2020. Previously, Mr.
Our sales are almost exclusively denominated in U.S. dollars. This information should be read in conjunction with Note 14 Segment, Customers, and Geographic Information to the consolidated financial statements contained elsewhere in this report. 11 Manufacturing We employ a fabless semiconductor manufacturing platform through third-party relationships.
Our sales are almost exclusively denominated in U.S. dollars. This information should be read in conjunction with Note 15 Segment, Customers, and Geographic Information to the consolidated financial statements contained elsewhere in this report. Manufacturing We employ a fabless semiconductor manufacturing platform through third-party relationships.
Voice Over IP Our Digital Voice Family, or DVF, of SoC products is a comprehensive solution for developing affordable, scalable and green Voice over IP, or VoIP, home and office products. DVF facilitates rapid introduction of embedded features into residential devices such as cordless IP and instant messaging phones.
Voice Over IP Our Digital Voice Family, or DVF, of SoC products is a comprehensive solution for developing affordable, scalable and power efficient VoIP, home and office products. DVF facilitates rapid introduction of embedded features into residential devices such as cordless IP and instant messaging phones.
Hurlston holds Bachelor of Science and Master of Science degrees in Electrical Engineering and a Master of Business Administration degree from the University of California, Davis. 14 Dean Butler has been the Chief Financial Officer of our company since October 21, 2019. Prior to joining our company, Mr. Butler served as Vice President of Finance at Marvell Technology Group Ltd.
Hurlston holds Bachelor of Science and Master of Science degrees in Electrical Engineering and a Master of Business Administration degree from the University of California, Davis. Dean Butler has been the Chief Financial Officer of our company since October 21, 2019. Prior to joining our company, Mr. Butler served as Vice President of Finance at Marvell Technology Inc.
Our principal competition in the sale of touchscreen products includes Samsung LSI, Broadcom, ST Micro, Goodix, and various other companies involved in human experience semiconductor product solutions. Our principal competitors in the sale of notebook touch pads are Cirque Corporation, Elan Microelectronics and Goodix.
Our principal competition in the sale of touchscreen products includes Broadcom, Goodix, Focaltech, ST Micro and various other companies involved in human experience semiconductor product solutions. Our principal competitors in the sale of notebook touch pads are Cirque Corporation, Elan Microelectronics and Goodix.
Previously, Saleel was the Senior Vice President and General Manager of our IoT Division from April 2019 to July 2020 and the Senior Vice President of Corporate Marketing & Investor Relations from December 2018 until April 2019.
Awsare was the Senior Vice President and General Manager of our IoT Division from April 2019 to July 2020 and the Senior Vice President of Corporate Marketing & Investor Relations from December 2018 until April 2019.
Our reliance on these parties exposes us to vulnerability owing to our dependence on a few sources of supply. We believe, however, that other sources of supply are available. In some cases, we have alternative sources of suppliers to mitigate supplier risk; however, in the current environment, all of them could be constrained.
Our reliance on these parties exposes us to vulnerability owing to our dependence on a few sources of supply. In some cases, we have alternative sources of suppliers to mitigate supplier risk; however, in the current environment, all of them could be constrained.
ITEM 1. B USINESS Overview We are a leading worldwide developer and fabless supplier of premium mixed signal semiconductor solutions changing the way humans engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in the car and on the go.
ITEM 1. B USINESS Overview We are a leading worldwide developer and fabless supplier of premium mixed signal semiconductor solutions that enable people to engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in the car and on the go.
As of the end of fiscal 2022, we employed 228 sales and marketing professionals. We maintain customer support offices domestically and internationally, which are located in the U.S., Taiwan, China, India, Korea, and Japan. In addition, we utilize value-added resellers and sales distributors that are primarily located in the U.S., China, Korea, Japan, Taiwan and Germany.
As of the end of fiscal 2023, we employed 399 sales and marketing professionals. We maintain customer support offices domestically and internationally, which are located in the U.S., Taiwan, China, India, Korea, Japan, United Kingdom and Switzerland. In addition, we utilize value-added resellers and sales distributors that are primarily located in the U.S., China, Korea, Japan, Taiwan and Germany.
We actively monitor and audit our internal compliance with our Code of Conduct and other corporate social responsibility policies and programs. Human Capital Our company has been built on the collective contributions from people of many countries, religions, and ethnic backgrounds. People are our most critical asset, and our success depends on them.
We actively monitor and evaluate our internal compliance with our Code of Conduct and other corporate social responsibility policies and programs. 12 Human Capital Our company has been built on the collective contributions from people of many countries, religions, and ethnic backgrounds. People are our most critical asset and are the core component behind our success.
PC Product Applications Market We provide custom and semi-custom product solutions for navigation, cursor control, and access to devices or applications through fingerprint authentication, for many of the world’s premier PC OEMs. These functions are offered as both stand-alone and integrated touch pads plus fingerprint biometric solutions.
PC Product Applications Market We provide custom and semi-custom product solutions for navigation, cursor control, access to devices or applications through fingerprint authentication, and human presence detection solutions, for many of the world’s premier PC OEMs. These functions are offered as both stand-alone and integrated touch pads plus fingerprint biometric solutions and as chipsets with integrated visual sensing software algorithms.
We uphold the most ethical standards in our business practices and policies, and we believe that sustainable corporate practices and consistent attention to social and governance priorities will help enhance long-term value for our stockholders. Our Board of Directors is responsible for overseeing our environmental, social, and governance policies and practices.
We uphold the most ethical standards in our business practices and policies, and we believe that sustainable corporate practices and consistent attention to social and governance priorities will help enhance long-term value for our stockholders.
We enable products that power smart assistant speakers, over-the-top multimedia devices, wireless speakers, voice driven intelligent devices including those integrating far-field technology, personal voice and audio products, set top boxes, video interface solutions for docking stations, high-speed connectivity for virtual reality devices, video surveillance, voice over IP SoCs, image processing solutions for use in printers, and fax modems.
Our products enable smart devices at the edge of a network such as smart assistant speakers, over-the-top multimedia devices, wireless speakers, voice driven intelligent devices including those integrating far-field technology, personal voice and audio products, set-top boxes, video interface solutions for docking stations, high-speed connectivity for virtual reality devices, video surveillance, voice over IP SoCs, image processing solutions for use in printers, and fax modems.
AudioSmart also includes personal voice and audio solutions for high-performance headsets that enable active noise cancellation. ConnectSmart ™ Our ConnectSmart video interface IC portfolio offers a full range of high-speed video/audio/data connectivity solutions that are designed for linking CPUs/GPUs and various endpoints for applications including PC docking stations, travel docks, dongles, protocol converters and virtual reality head mounted displays.
ConnectSmart ™ Our ConnectSmart video interface IC portfolio offers a full range of high-speed video/audio/data connectivity solutions that are designed for linking CPUs/GPUs and various endpoints for applications including PC docking stations, travel docks, dongles, protocol converters and virtual reality head mounted displays.
We believe our strong relationship with our OEM customers, many of which are also currently developing product solutions which are focused in several of our target markets, will continue to position us as a source of supply for their product offerings.
We believe our strong relationship with our OEM customers, many of which are also currently developing product solutions which are focused in several of our target markets, will continue to position us as a source of supply for their product offerings. We generally supply our products to OEMs through their contract manufacturers, supply chain or distributors.
Our principal competitors in the sale of display driver products for the PC and mobile product applications markets include Focaltech, Novatek Microelectronics, Samsung LSI, and SiliconWorks. Our principal competitors in the sale of fingerprint authentication solutions for PC product applications markets are Egis Technology, Elan Microelectronics, and Goodix. Corporate Social Responsibility Synaptics strives to be a leading corporate citizen.
Our principal competitors in the sale of display driver products for virtual reality applications market include Novatek Microelectronics and Samsung LSI Our principal competitors in the sale of fingerprint authentication solutions for PC product applications markets are Egis Technology, Elan Microelectronics, and Goodix. 11 Corporate Social Responsibility We strive to be a leading corporate citizen.
Our automotive products include touch, display driver, and TDDI solutions for major automotive OEMs. Our principal competitors for these products include Focaltech, Himax, Novatek Microelectronics, and Microchip. Our IoT video interface products are sold into PC and smartphone docks and wireless adapter market applications.
Our principal competition includes Infineon, Qualcomm, MediaTek, NXP, and Silicon Labs, among others. Our automotive products include touch, display driver, SmartBridge, and TDDI solutions for major automotive OEMs. Our principal competitors for these products include Focaltech, Himax, Novatek Microelectronics and Microchip. Our IoT video interface products are sold into PC and smartphone docks and wireless adapter market applications.
International sales constituted over 98% of our revenue for each of fiscal 2022, 2021, and 2020. Approximately 66%, 68%, and 78% of our sales in fiscal 2022, 2021, and 2020, respectively, were made to companies located in China, Japan, and South Korea that provide design and manufacturing services for major IoT, notebook computer, and mobile product applications OEMs.
International sales constituted nearly all of our revenue for each of fiscal 2023, 2022, and 2021. Approximately 63%, 66% and 68% of our sales in fiscal 2023, 2022 and 2021, respectively, were made to companies located in China and Taiwan that provide design and manufacturing services for major IoT, notebook computer, and mobile product applications OEMs.
Environmental We have implemented internal green programs and initiatives to reinforce our commitment to minimizing natural resource consumption, improving sustainability, disposing of end-of-life products in an environmentally safe manner, reducing waste, and increasing reuse and recycling programs company-wide.
We have implemented internal green programs and initiatives to reinforce our commitment to minimizing natural resource consumption, improving sustainability, disposing of end-of-life products in an environmentally safe manner, reducing waste, and increasing reuse and recycling programs company-wide. In addition, we recently completed a comprehensive review of Scope 3 GHG emissions across our Company.
With guidance from the Board of Directors, our management team applies an integrated methodology to financial matters, corporate governance, and corporate responsibility, leading to increased accountability, better decision making and ultimately creating better long-term value. This focus on the environment, society, and governance influences everything we do.
With guidance from our Board of Directors, our management team applies an integrated methodology to financial matters, corporate governance, and corporate responsibility, leading to increased accountability, better decision making and ultimately enhanced long-term value. This focus on the environment, social, and governance, or ESG, influences the way we consider our business goals and strategies.
Competition IoT Our SoC solutions enable new forms of media consumption and integrate video processing, far-field voice and linguistics processing products are sold into market segments that offer significant potential growth, ranging from home automation applications, smart assistant platforms, surveillance cameras, to set-to-box/over-the-top, or STB/OTT, platforms.
Competition IoT Our diverse SoC solutions integrate artificial intelligence hardware engines, video processing, far-field voice and linguistics processing products and are sold into market segments that offer significant potential growth, ranging from home automation applications, smart assistant platforms, surveillance cameras, to set-top-box/over-the-top, or STB/OTT platforms to a wide variety of embedded products in the broader IoT market.
We want to attract, develop, and retain the world’s best talent. 13 Competition for talent in our industry is extremely intense. Our human resource strategy and programs are focused on attracting, engaging, and retaining this talent. Our Board of Directors and Board committees provide oversight on certain human capital matters.
We want to attract, develop, and retain the world’s best talent. Competition for talent in our industry is extremely intense. Our human resource strategy and programs are focused on attracting, engaging, developing and retaining this talent.
Mobile Product Applications Markets We believe our intellectual property portfolio, engineering know-how, systems engineering experience, technological expertise, and experience in providing human experience product solutions to major OEMs position us to be a key technological enabler for multiple consumer electronic devices targeted to meet the mobile product applications markets.
Based on the strength of our technology and engineering know-how, we believe we are well positioned to continue to take advantage of opportunities in the PC product applications market. 1 Mobile Product Applications Markets We believe our intellectual property portfolio, engineering know-how, systems engineering experience, technological expertise, and experience in providing human experience product solutions to major OEMs position us to be a key technological enabler for multiple consumer electronic devices targeted to meet the mobile product applications markets.
John McFarland has been the Senior Vice President, General Counsel and Secretary of our company since November 2013. Prior to joining our company, Mr. McFarland served for nine years as the Executive Vice President, General Counsel and Secretary of Magnachip Semiconductor. Mr. McFarland spent his early career at law firms in Palo Alto, California, and Seoul, Korea. Mr.
McFarland served for nine years as the Executive Vice President, General Counsel and Secretary of Magnachip Semiconductor. Mr. McFarland spent his early career at law firms in Palo Alto, California, and 14 Seoul, Korea. Mr.
We were initially incorporated in California in 1986 and were re-incorporated in Delaware in 2002. Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. The fiscal years presented in this report were the 52-week periods ended June 25, 2022, June 26, 2021, and June 27, 2020.
Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. The fiscal years presented in this report were the 52-week periods ended June 24, 2023, June 25, 2022, and June 26, 2021.
Wireless Connectivity Our wireless connectivity solutions include state-of-the-art Wi-Fi, Bluetooth, GPS, GNSS, and ULE to address broad IoT market applications including home automation, multimedia streamers, security sensors, surveillance cameras, wireless speakers, games, drones, printers, wearable and fitness devices, in addition to numerous other applications which require a wireless connection.
Wireless Connectivity Our wireless connectivity solutions include state-of-the-art Wi-Fi, Bluetooth, GPS, GNSS, and ULE to address broad IoT market applications including home automation, multimedia streamers, security sensors, surveillance cameras, wireless speakers, games, drones, printers, wearable and fitness devices, in addition to numerous other applications which require a wireless connection. 3 AudioSmart® AudioSmart products bring forward optimum analog, mixed-signal and digital signal processor, or DSP, technologies for high-fidelity voice and audio processing.
Our wireless products for use in IoT application markets include our technologies such as Wi-Fi, Bluetooth, Wi-Fi-Bluetooth combinations, and GPS/GNSS support our customers’ need to develop products which can wirelessly communicate to networks, remote control of edge-devices, machine-to-machine communication, among other purposes. Our principal competition includes Infineon, Qualcomm, MediaTek, NXP, and Silicon Labs, among others.
Our competitors in the sale of audio products include Cirrus Logic, BES Technic, Realtek, and Qualcomm. Our wireless products for use in IoT application markets include our technologies such as Wi-Fi, Bluetooth, Wi-Fi-Bluetooth combinations, and GPS/GNSS support our customers’ need to develop products which can wirelessly communicate to networks, remote control of edge-devices, machine-to-machine communication, among other purposes.
Inclusion & Diversity We believe that diverse teams are more innovative and productive. Our goal is to cultivate an environment that not only allows for, but also encourages, everyone to collaborate and participate equally to foster individual and company growth.
We strongly believe diverse teams are more innovative and productive. Our goal is to cultivate an environment that not only allows for, but also encourages, everyone to collaborate and participate equally to foster individual and company growth. As of June 2023, 20% of global employees and 38% of our board of directors identified as female.
We believe our existing technologies, our range of product solutions, and our emphasis on ease of use, advanced functionality, small size, low power consumption, durability, and reliability enable us to serve multiple aspects of the markets for mobile product applications and other electronic devices. Acquisitions DSP Group, Inc.
We believe our existing technologies, our range of product solutions, and our emphasis on ease of use, advanced functionality, small size, low power consumption, durability, and reliability enable us to serve the markets for mobile product applications and other electronic devices. Acquisitions In February 2023, we completed the acquisition of certain GPS developed technology intangible assets from Broadcom.
The markets for STB/OTT products, surveillance cameras, home automation, and smart assistant solutions require strong technology innovation and deep systems and systems engineering expertise. Our principal competition in these markets include Broadcom, MediaTek, AmLogic, and Ambarella, among others. We provide voice processing silicon and software solutions for voice-enabled devices, consumer and commercial imaging, and next-generation audio applications.
The markets for STB/OTT products, surveillance cameras, home automation, smart assistant solutions and embedded IoT products require strong technology innovation in silicon and software along with deep systems and systems engineering expertise. Our principal competition in these markets include Broadcom, MediaTek, NXP, AmLogic, and Ambarella, among others.
In addition, our automotive solutions include over a decade of mass production experience in mature touch solutions and display drivers adapted from our mobile consumer business to meet automotive-grade quality standards. Net revenue for our IoT product solutions accounted for approximately 63%, 46%, and 25% of our net revenue for fiscal 2022, 2021, and 2020, respectively.
In addition, our automotive solutions include over a decade of mass production experience in mature touch solutions and display drivers adapted from our mobile consumer business to meet automotive-grade quality standards.
Our website also includes corporate governance information, including our Code of Conduct, our Code of Ethics for the Chief Executive Officer and Senior Financial Officers, and our Board Committee Charters. The contents of our website are not incorporated into or deemed to be a part of this report.
Our website also includes corporate governance information, including our Code of Conduct, our Code of Ethics for the Chief Executive Officer and Senior Financial Officers, and our Board Committee Charters.
We support our local communities through charitable causes and events, and we have numerous programs in place around the world that promote our commitments to diversity, equality of opportunity, non-discrimination, and the highest standards of human rights. We are committed to the use of a socially responsible supply chain.
We support our local communities through charitable causes and events, and we have numerous programs in place around the world that promote our commitments to diversity, equality of opportunity, non-discrimination, and the highest standards of human rights. We support and contribute toward educational programs with the intent to help reduce social and economic inequalities.
By detecting the amount of force applied, ForcePad is engineered to enable more intuitive and precise user interactions in operating system controls and applications.
By detecting the amount of force applied, ForcePad is engineered to enable more intuitive and precise user interactions in operating system controls and applications. Designed with thin and light notebooks in mind, ForcePad is 40% thinner than a conventional touch pad.
We offer products which incorporate the latest Wi-Fi standards such as 802.11AX, which is known as Wifi-6. Bluetooth is a low power technology that enables direct connectivity between devices. We offer a family of Bluetooth silicon and software solutions that enable customers to easily and cost-effectively add Bluetooth functionality to virtually any device.
We offer products which incorporate the latest Wi-Fi standards such as 802.11AX, which is known as Wifi-6 and Wifi-6E. Bluetooth is a low power technology that enables direct connectivity between devices.
We place a high value on ethical actions, individual integrity, and fair dealing in every aspect of what we do. Accountability Our Board of Directors and management are strongly committed to our corporate responsibility policies and will continue to regularly evaluate these policies to ensure an effective outcome and strict adherence by our employees, suppliers, vendors, and partners.
Accountability Our Board of Directors and management are strongly committed to our corporate responsibility policies and will continue to regularly evaluate these policies to ensure an effective outcome and strict adherence by our employees, suppliers, vendors, and partners.
DisplayLink ® Our DisplayLink products utilize highly efficient video encode/decode algorithms to deliver a semiconductor-based solution which transmits compressed video frames across low bandwidth connections.
DisplayLink ® Our DisplayLink products utilize highly efficient video encode/decode algorithms to deliver a semiconductor-based solution which transmits compressed video frames across low bandwidth connections. These solutions are used in PC docking applications, conference room video display systems, and video casting applications.
We align executive compensation with our corporate strategies, business objectives and the creation of long-term value for our stockholders without encouraging unnecessary or excessive risk-taking. Engagement and Development We strive to create exceptional employee experiences. Our focus is on creating a space for employees to do their best work and feel valued and engaged.
We have a robust pay for performance philosophy and compensation framework to reward high performance. We align executive compensation with our corporate strategies, business objectives and the creation of long-term value for our stockholders without encouraging unnecessary or excessive risk-taking. Engagement and Development We strive to create exceptional employee experiences.
ClearView TM Our ClearView display driver products offer advanced image processing and low power technology for displays on electronic devices, including smartphones and tablets. ClearView products include adaptive image processing that works in concert with proprietary customization options to enable development of efficient and cost-effective high-performance solutions and faster time to market.
ClearView products include adaptive image processing that works in concert with proprietary customization options to enable development of efficient and cost-effective high-performance solutions and faster time to market.
AudioSmart® AudioSmart products bring forward optimum analog, mixed-signal and digital signal processor, or DSP, technologies for high-fidelity voice and audio processing. Our AudioSmart products include far-field voice technologies that enable accurate voice command recognition from a distance while disregarding other sounds, such as music, in order to activate smart devices such as smart speakers.
Our AudioSmart products include far-field voice technologies that enable accurate voice command recognition from a distance while disregarding other sounds, such as music, in order to activate smart devices such as smart speakers. AudioSmart also includes personal voice and audio solutions for high-performance headsets that enable active noise cancellation.
In addition to our voice solutions, we support the audio headphone and virtual reality head mounted display industry with universal serial bus-c, or USB-C, audio codec solutions for next generation wireless audio devices and wearables. Our competitors in the sale of audio products include Cirrus Logic, BES Technic, Realtek, and Qualcomm.
We provide voice processing silicon and software solutions for voice-enabled devices, consumer and commercial imaging, and next-generation audio applications. In addition to our voice solutions, we support the audio headphone and virtual reality head mounted display industry with universal serial bus-c, or USB-C, audio codec solutions for next generation wireless audio devices and wearables.
Information about our Executive Officers The following table sets forth certain information regarding our executive officers as of August 12, 2022: Name Age Position Michael Hurlston 55 President and Chief Executive Officer Dean Butler 40 Chief Financial Officer Saleel Awsare 57 Senior Vice President and General Manager, PC & Peripherals Division John McFarland 55 Senior Vice President, General Counsel and Secretary Craig Stein 55 Senior Vice President and General Manager, Mobile and IoT Divisions Michael Hurlston has been the President and Chief Executive Officer of our company since August 19, 2019.
Our employees regularly participate in events focused on youth and underrepresented communities. 13 Information about our Executive Officers The following table sets forth certain information regarding our executive officers as of August 11, 2023: Name Age Position Michael Hurlston 56 President and Chief Executive Officer Dean Butler 41 Chief Financial Officer Saleel Awsare 58 Senior Vice President and General Manager, PC & Peripherals Divisions John McFarland 56 Senior Vice President, General Counsel and Secretary Vikram Gupta 54 Senior Vice President and General Manager, IoT Processors and Chief Product Officer Michael Hurlston has been the President and Chief Executive Officer of our company since August 19, 2019.
In addition to notebook applications, other PC product applications for our technology include peripherals, such as high-end keyboards and accessory touchpads.
In addition to notebook applications, other PC product applications for our technology include peripherals, such as high-end keyboards and accessory touchpads. We continue to expand our available product offerings through technology development enabling us to increase our product content within each notebook unit.
McFarland holds a Bachelor of Arts degree in Asian Studies, conferred with highest distinction from the University of Michigan, and a Juris Doctor degree from the University of California, Los Angeles, School of Law. Craig Stein has been the Senior Vice President and General Manager, Mobile & IoT Division since March 2021. Previously, Mr.
McFarland holds a Bachelor of Arts degree in Asian Studies, conferred with highest distinction from the University of Michigan, and a Juris Doctor degree from the University of California, Los Angeles, School of Law. 15
Furthermore, the lengths of our customers’ design cycles and the customizations required within the products we provide to our customers also serve to protect our intellectual property rights. 10 Customers Our customers include many of the world’s largest mobile and PC OEMs, based on unit shipments, as well as many large IoT OEMs, automotive manufacturers and a variety of consumer electronics manufacturers.
Customers Our customers include many of the world’s largest mobile and PC OEMs, based on unit shipments, as well as many large IoT OEMs, automotive manufacturers and a variety of consumer electronics manufacturers.
The Compensation Committee provides oversight of our overall compensation philosophy, policies, and programs, and assesses whether our compensation establishes appropriate incentives for executive officers and employees As of June 25, 2022, we employed 1,775 employees.
The Nominations and Corporate Governance Committee’s oversight of ESG strategy includes talent attraction and retention and inclusion and diversity. The Compensation Committee provides oversight of our overall compensation philosophy, policies, and programs, and assesses whether our compensation establishes appropriate incentives for executive officers and other employees. As of June 24, 2023, we employed 1,891 employees.
FIDO was formed to enhance online authentication by developing open, scalable technical standards to help facilitate the adoption of robust, easy to use authentication that reduces the reliance on passwords. Natural ID products increase the security of automobile and PC products while maintaining ease of use for the customer.
Natural ID products are designed to be compatible with Fast IDentity Online, or FIDO, protocols, enhancing security and interoperability with a broad range of solutions. FIDO was formed to enhance online authentication by developing open, scalable technical standards to help facilitate the adoption of robust, easy to use authentication that reduces the reliance on passwords.
These solutions are used in PC docking applications, conference room video display systems, and video casting applications. 4 VideoSmart™ Our VideoSmart series SoCs include CPUs running at up to 40K Dhrystone Million Instructions per Second, gaming-grade Graphics Processing Unit, or GPUs, voice, and neural network processing units, or NPU.
VideoSmart™ Our VideoSmart series SoCs include CPUs running at up to 40K Dhrystone Million Instructions per Second, gaming-grade Graphics Processing Unit, or GPUs, voice, and neural network processing units, or NPU. These powerful solutions combine a central processing unit, or CPU, NPU, and GPU, into a single software-enriched SoC.
Our latest addition to our automotive portfolio is an automotive-grade TDDI for indium gallium zinc oxide and amorphous silicon gate-in-panel displays and low-temperature polycrystalline panels up to 4K resolution. 9 Research and Development We conduct ongoing research and development programs that focus on advancing our existing technologies, improving our current product solutions, developing new products, improving design and manufacturing processes, enhancing the quality and performance of our product solutions, and expanding our technologies to serve new markets.
Research and Development We conduct ongoing research and development programs that focus on advancing our existing technologies, improving our current product solutions, developing new products, improving design and manufacturing processes, enhancing the quality and performance of our product solutions, and expanding our technologies to serve new markets.
Mobile product applications include smartphones, tablets, large touchscreen applications, as well as a variety of mobile, handheld, and entertainment devices. Net revenue for our mobile product applications accounted for approximately 17%, 28%, and 51% of our net revenue for fiscal 2022, 2021, and 2020, respectively.
Mobile product applications include smartphones, tablets, large touchscreen applications, as well as a variety of mobile, handheld, and entertainment devices.
We believe that these efforts will enable us to meet customer expectations and achieve our goal of supplying, on a timely and cost-effective basis, easy to use, functional human experience semiconductor product solutions to our target markets.
We believe that these efforts will enable us to meet customer expectations and achieve our goal of supplying, on a timely and cost-effective basis, easy to use, functional human experience semiconductor product solutions to our target markets. 2 Focus on and Grow in the IoT Market We intend to capitalize on the growth of the IoT market including solutions for smart home and home automation, video delivery over wired and wireless, voice enabled assistants, virtual reality, video interface docking, and wearables.
Our ClearPad has distinct advantages, including low-profile form factor; high reliability, durability, and accuracy; and low power consumption. We typically sell our ClearPad solution as a chip, together with customer-specific firmware, to sensor manufacturers, OLED manufacturers or LCD manufacturers, to integrate into their touch-enabled products.
We typically sell our ClearPad solution as a chip, together with customer-specific firmware, to sensor manufacturers, OLED manufacturers or LCD manufacturers, to integrate into their touch-enabled products. ClearView TM Our ClearView display driver products offer advanced image processing and low power technology for displays on electronic devices, including smartphones and tablets.
Intellectual Property Rights Our success and ability to compete depend in part on our ability to maintain the proprietary aspects of our technologies and products. We rely on a combination of patents, trademarks, trade secrets, copyrights, confidentiality agreements, and other statutory and contractual provisions to protect our intellectual property, but these measures may provide only limited protection.
We rely on a combination of patents, trademarks, trade secrets, copyrights, confidentiality agreements, and other statutory and contractual provisions to protect our intellectual property, but these measures may provide only limited protection. As of June 2023, we held 2,583 active patents and 569 pending patent applications worldwide that expire between 2023 and 2043.
Our original equipment manufacturer, or OEM, customers include many of the world’s largest OEMs for smart home devices, automotive solutions, notebook computers and peripherals, smartphones and tablets, and many large OEMs for audio and video products. Our current served markets include Internet of Things, or IoT, personal computer, or PC, and Mobile.
We supply connectivity, sensors, and AI-enhanced processor solutions to original equipment manufacturers, or OEMs, that design Internet of Things (IoT) products and devices for automobiles, virtual reality, smartphones, tablets, and notebook computers. Our current served markets include Internet of Things, or IoT, personal computer, or PC, and Mobile.
Our Natural ID family of products spans a range of form factors, colors, and materials suitable for design on the front, back or side of a device. Natural ID products are designed to be compatible with Fast IDentity Online, or FIDO, protocols, enhancing security and interoperability with a broad range of solutions.
Thin form factors provide industrial design flexibility, while robust matching algorithms and anti-spoofing technology provide strong security. Our Natural ID family of products spans a range of form factors, colors, and materials suitable for design on the front, back or side of a device.
These solutions include combination chips that offer integrated Wi-Fi and Bluetooth functionality, which provides significant performance advantages over discrete solutions. We also offer a family of GPS and GNSS semiconductor products, software, and location data services.
We offer a family of Bluetooth silicon and software solutions that enable customers to easily and cost-effectively add Bluetooth functionality to virtually any device, including Bluetooth 6.0 and Bluetooth Enterprise True Wireless Stereo (TWS). These solutions include combination chips that offer integrated Wi-Fi and Bluetooth functionality, which provides significant performance advantages over discrete solutions.
We are also applying our technologies to enable adoption of fingerprint recognition solutions to broaden our market opportunities. Based on the strength of our technology and engineering know-how, we believe we are well positioned to continue to take advantage of opportunities in the PC product applications market.
We are also applying our technologies to enable adoption of fingerprint recognition solutions to broaden our market opportunities.
As of the end of fiscal 2022, we employed 1,314 people in our technology, engineering, and product design functions in the United States, China, Taiwan, Japan, Germany, Israel, the United Kingdom, India, Israel, Poland, and Korea. Our research and development expenses were $367.3 million, $313.4 million, and $302.5 million for fiscal 2022, 2021, and 2020, respectively.
As of the end of fiscal 2023, we employed 1,416 people in our technology, engineering, and product design functions in the United States, China, Taiwan, Japan, Israel, the United Kingdom, India, Germany, Poland, and Korea. Intellectual Property Rights Our success and ability to compete depend in part on our ability to maintain the proprietary aspects of our technologies and products.
Designed with thin and light notebooks in mind, ForcePad is 40% thinner than a conventional touch pad. 5 ClearPad ® Our ClearPad family of products enables the user to interact directly with the display on electronic devices, such as mobile smartphones, tablets, and automobiles.
ClearPad ® Our ClearPad family of products enables the user to interact directly with the display on electronic devices, such as mobile smartphones, tablets, and automobiles. Our ClearPad has distinct advantages, including low-profile form factor; high reliability, durability, and accuracy; and low power consumption.
These powerful solutions combine a central processing unit, or CPU, NPU, and GPU, into a single software-enriched SoC. They enable smart multimedia devices including set-top boxes, or STB, over-the-top, or OTT, streaming devices, soundbars, surveillance cameras and smart displays.
They enable smart multimedia devices including set-top boxes, or STB, over-the-top, or OTT, streaming devices, soundbars, surveillance cameras and smart displays. ImagingSmart ™ Our ImagingSmart solutions include a product portfolio that spans four distinct product areas including document and photo imaging controllers, digital video, fax, and modem solutions.
The Audit Committee provides oversight of business risks and our company’s Code of Business Conduct and Ethics, both of which have relevance for human capital. The Nominations and Corporate Governance Committee has oversight for environment, social, and governance strategy, which includes talent attraction and retention and inclusion and diversity.
The Audit Committee provides oversight of business risks and our company’s Code of Business Conduct and Ethics. Our Board of Directors receives periodic updates from Nominations and Corporate Governance Committee and management on our ESG performance.
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We deliver complete chip, firmware and software semiconductor solutions that allow our customers to seamlessly integrate advanced functions into their end products. Our website is located at www.synaptics.com .
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Our solutions either contain or consist of our wireless, voice and speech, video, fingerprint, authentication, display driver, or touch semiconductor solutions, which include our hardware, and, where applicable, firmware and software. Our website is located at www.synaptics.com .
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Our SoC products are used in human experience solutions for enabling smart devices at the edge of a network.
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The contents of our website, including the content contained in any website addresses or links included elsewhere in this report, are not incorporated into or deemed to be a part of this report. We were initially incorporated in California in 1986 and were re-incorporated in Delaware in 2002.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur failure to identify potential growth opportunities in the markets in which we operate, particularly in the IoT market, or our failure to establish and maintain relationships with OEMs in those markets, would prevent our business from growing in those markets.
Biggest changeOur failure to identify potential growth opportunities in the markets in which we operate, particularly in the IoT market, or our failure to establish and maintain relationships with OEMs in those markets, would prevent our business from growing in those markets. 17 Our gross margin and results of operations may be adversely affected in the future by a number of factors, including decreases in our average selling prices of products over time, shifts in our product mix, or price increases of certain components or third-party services due to inflation, supply chain constraints, or other reasons.
These international operations expose us to various economic, political, regulatory, and other risks that could adversely affect our operations and operating results, including the following: • difficulties and costs of staffing and managing a multinational organization; • unexpected changes in regulatory requirements; • differing labor regulations; • differing environmental laws and regulations, including in response to climate change; • potentially adverse tax consequences; • possible employee turnover or labor unrest; • greater difficulty in collecting accounts receivable; • the burdens and costs of compliance with a variety of foreign laws; • the volatility of currency exchange rates; • potentially reduced protection for intellectual property rights; • political or economic instability in certain parts of the world; and • natural disasters, including earthquakes or tsunamis.
These international operations expose us to various economic, political, regulatory, and other risks that could adversely affect our operations and operating results, including the following: • difficulties and costs of staffing and managing a multinational organization; • unexpected changes in regulatory requirements; • differing labor regulations; • differing environmental laws and regulations, including in response to climate change; • potentially adverse tax consequences; • possible employee turnover or labor unrest; • greater difficulty in collecting accounts receivable; • the burdens and costs of compliance with a variety of foreign laws; • the volatility of currency exchange rates; 22 • potentially reduced protection for intellectual property rights; • political or economic instability in certain parts of the world; and • natural disasters, including earthquakes or tsunamis.
Even if we successfully complete a research and development effort with respect to a particular technology, our customers may decide not to introduce or may terminate products utilizing the technology for a variety of reasons, including difficulties with other suppliers of components for the products, superior technologies developed by our competitors and unfavorable comparisons of our solutions with these technologies, price considerations and lack of anticipated or actual market demand for the products.
Even if we successfully complete a research and development effort with respect to a particular technology, our customers may decide not 20 to introduce or may terminate products utilizing the technology for a variety of reasons, including difficulties with other suppliers of components for the products, superior technologies developed by our competitors and unfavorable comparisons of our solutions with these technologies, price considerations and lack of anticipated or actual market demand for the products.
The process of seeking patent protection is lengthy and expensive. Further, there can be no assurance that even if a patent is issued, that it will not be challenged, invalidated, or circumvented, or that the rights granted under the patents will provide us with meaningful protection or any commercial advantage.
The process of seeking patent protection is lengthy and expensive. Further, there can be no assurance that even if a patent is issued, that it will not be challenged, invalidated, or circumvented, or that the rights granted under the patents will provide us with meaningful protection or any commercial 23 advantage.
In our fiscal 2022, we faced manufacturing capacity constraints as a result of the supply constraints and capacity shortages 17 affecting the global semiconductor industry that materially limited our ability to meet our customers’ demand forecasts, thereby limiting our potential revenue growth during the fiscal year.
In our fiscal 2022, we faced manufacturing capacity constraints as a result of the supply constraints and capacity shortages affecting the global semiconductor industry that materially limited our ability to meet our customers’ demand forecasts, thereby limiting our potential revenue growth during the fiscal year.
Delaware law also imposes conditions on 27 certain business combination transactions with “interested stockholders.” Our certificate of incorporation divides our Board of Directors into three classes, with one class to stand for election each year for a three-year term after the election.
Delaware law also imposes conditions on certain business combination transactions with “interested stockholders.” Our certificate of incorporation divides our Board of Directors into three classes, with one class to stand for election each year for a three-year term after the election.
We have never formally recalled a product or had a mass defect that affected an entire product line. Nevertheless, manufacturing errors or product 19 defects could result in a delay in recognition or loss of revenue, loss of market share, or failure to achieve market acceptance.
We have never formally recalled a product or had a mass defect that affected an entire product line. Nevertheless, manufacturing errors or product defects could result in a delay in recognition or loss of revenue, loss of market share, or failure to achieve market acceptance.
Unauthorized parties may attempt to copy or otherwise use aspects of our technologies and 22 products that we regard as proprietary. Other companies, including our competitors, may independently develop technologies that are similar or superior to our technologies, duplicate our technologies, or design around our patents.
Unauthorized parties may attempt to copy or otherwise use aspects of our technologies and products that we regard as proprietary. Other companies, including our competitors, may independently develop technologies that are similar or superior to our technologies, duplicate our technologies, or design around our patents.
Our certificate of incorporation authorizes our Board of Directors to fill vacancies or newly created directorships. A majority of the directors then in office may elect a successor to fill any vacancies or newly created directorships, thereby increasing the difficulty of, or delaying a third-party’s efforts in, replacing a majority of directors.
Our certificate of incorporation authorizes our Board of Directors 28 to fill vacancies or newly created directorships. A majority of the directors then in office may elect a successor to fill any vacancies or newly created directorships, thereby increasing the difficulty of, or delaying a third-party’s efforts in, replacing a majority of directors.
We cannot accurately predict the timing, size, and success of any currently planned or future acquisitions. We may be unable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify.
We cannot accurately predict the timing, size, and success of any currently planned or future acquisitions. We 24 may be unable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify.
In addition, complying with these covenants may also cause us to take actions that may make it more 25 difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.
In addition, complying with these covenants may also cause us to take actions that may make it more 26 difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.
If we cannot manage our growth effectively, our business and operating results could suffer. 26 We face risks associated with security breaches or cyberattacks. We face risks associated with security breaches or cyberattacks of our computer systems or those of our third-party representatives, vendors, and service providers.
If we cannot manage our growth effectively, our business and operating results could suffer. 27 We face risks associated with security breaches or cyberattacks. We face risks associated with security breaches or cyberattacks of our computer systems or those of our third-party representatives, vendors, and service providers.
We develop complex products in an evolving marketplace and generally warrant our products for a period of 12 months from the date of delivery. Despite testing by us and our customers, defects may be found in existing or new products. Synaptics handles product quality matters sustainably by working on a one-on-one basis with our customers.
We develop complex products in an evolving marketplace and generally warrant our products for a period of 12 months from the date of delivery. Despite testing by us and our customers, defects may be found in existing or new products. We handle product quality matters sustainably by working on a one-on-one basis with our customers.
If we fail to manage our growth effectively, our infrastructure, management, and resources could be strained, our ability to effectively manage our business could be diminished, and our operating results could suffer. The failure to manage our planned growth effectively could strain our resources, which would impede our ability to increase revenue.
General Risk Factors If we fail to manage our growth effectively, our infrastructure, management, and resources could be strained, our ability to effectively manage our business could be diminished, and our operating results could suffer. The failure to manage our planned growth effectively could strain our resources, which would impede our ability to increase revenue.
Our level of indebtedness could have important consequences on our future operations, including: • making it more difficult for us to satisfy our payment and other obligations under the Notes, the Credit Agreement, or our other outstanding debt from time to time; • risking an event of default if we fail to comply with the financial and other covenants contained in the Notes indenture or the Credit Agreement, which could result in the Senior Notes or any outstanding bank debt becoming immediately due and payable and could permit the lenders under the Credit Agreement to foreclose on the assets securing such bank debt; • subjecting us to the risk of increased sensitivity to interest rate increases on our debt with variable interest rates, including the debt that we may incur under the Credit Agreement; • the London interbank offered rate, or LIBOR, index is expected to be discontinued at the end of June 2023 and the replacement rate could be more volatile or more costly, resulting in a higher cost of borrowing under our Credit Agreement; • reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and • placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.
Our level of indebtedness could have important consequences on our future operations, including: • making it more difficult for us to satisfy our payment and other obligations under the Notes, the Credit Agreement, or our other outstanding debt from time-to-time; • risking an event of default if we fail to comply with the financial and other covenants contained in the Notes indenture or the Credit Agreement, which could result in the Senior Notes or any outstanding bank debt becoming immediately due and payable and could permit the lenders under the Credit Agreement to foreclose on the assets securing such bank debt; • subjecting us to the risk of increased sensitivity to interest rate increases on our debt with variable interest rates, including the debt that we may incur under the Credit Agreement; • reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and • placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.
If we lost key customers, or if key customers reduced or stopped placing orders for our high-volume products, our financial results could be adversely affected. Sales to two direct customers each accounted for 10% or more of our net revenue in fiscal 2022.
If we lost key customers, or if key customers reduced or stopped placing orders for our high-volume products, our financial results could be adversely affected. Sales to one direct customer accounted for 10% or more of our net revenue in fiscal 2023.
During fiscal 2022, we had four OEM customers that integrated our products into their products representing approximately 34% of our revenue; we sold to these customers primarily indirectly through multiple distributors.
During fiscal 2023, we had five OEM customers that integrated our products into their products representing approximately 37% of our revenue; we sold to these customers primarily indirectly through multiple distributors.
The loss of relationships with our contract manufacturers or assemblers, or their inability to conduct their manufacturing and assembly services for us as anticipated in terms of capacity, cost, quality, and timeliness could adversely affect our ability to fill customer orders in accordance with required delivery, quality, and performance requirements, and adversely affect our operating results.
The loss of relationships with our contract manufacturers or assemblers, or their inability to conduct their manufacturing and assembly services for us as anticipated in terms of capacity, cost, quality, and timeliness could adversely affect our ability to fill customer orders in accordance with required delivery, quality, and performance requirements, and adversely affect our operating results. 19 Shortages of components and materials may delay or reduce our sales and increase our costs, thereby harming our operating results.
If such financing is not available to us on satisfactory terms, we may be unable to expand our business or to develop new business at the rate desired and our operating results may suffer.
We cannot predict the timing or amount of any such requirements at this time. If such financing is not available to us on satisfactory terms, we may be unable to expand our business or to develop new business at the rate desired and our operating results may suffer.
If obtained, the financing itself carries risks including the following: (i) debt financing increases expenses and must be repaid regardless of operating results; and (ii) equity financing, including the issuance of convertible notes or additional shares in connection with acquisitions, could result in dilution to existing stockholders and could adversely affect the price of our common stock.
If obtained, the financing itself carries risks including the following: (i) debt financing increases expenses and must be repaid regardless of operating results; and (ii) equity financing, including the issuance of convertible notes or additional shares in connection with acquisitions, could result in dilution to existing stockholders and could adversely affect the price of our common stock. 21 Risks Related to International Sales and Operations Changes to import, export and economic sanction laws may expose us to liability, increase our costs and adversely affect our operating results.
In addition, currency devaluation could result in a loss to us if we hold deposits of that currency. Hedging foreign currencies can be difficult, especially if the currency is not freely traded. We cannot predict the impact of future exchange rate fluctuations on our operating results.
Hedging foreign currencies can be difficult, especially if the currency is not freely traded. We cannot predict the impact of future exchange rate fluctuations on our operating results.
If we make any future acquisitions, we could issue stock that would dilute existing stockholders' percentage ownership, incur substantial debt, assume contingent liabilities, or experience higher operating expenses. 23 We may be unable to effectively complete an integration of the management, operations, facilities, and accounting and information systems of acquired businesses with our own; efficiently manage, combine or restructure the operations of the acquired businesses with our operations; achieve our operating, growth, and performance goals for acquired businesses; achieve additional revenue as a result of our expanded operations; or achieve operating efficiencies or otherwise realize cost savings as a result of anticipated acquisition synergies.
We may be unable to effectively complete an integration of the management, operations, facilities, and accounting and information systems of acquired businesses with our own; efficiently manage, combine or restructure the operations of the acquired businesses with our operations; achieve our operating, growth, and performance goals for acquired businesses; achieve additional revenue as a result of our expanded operations; or achieve operating efficiencies or otherwise realize cost savings as a result of anticipated acquisition synergies.
Although these restrictions and laws have not materially restricted our operations in the recent past, there is a significant risk that they could do so in the future, which would materially and adversely affect our business and operating results. 20 Changes to international trade policy and rising concerns of international tariffs, including tariffs applied to goods traded between the U.S. and China, could materially and adversely affect our business and results of operations.
Although these restrictions and laws have not materially restricted our operations in the recent past, there is a significant risk that they could do so in the future, which would materially and adversely affect our business and operating results.
In addition, changes in laws, regulations and enforcement policies, the discovery of previously unknown contamination at the Conexant Site, the implementation of new technology at the Conexant Site, or the establishment or imposition of stricter federal, state, or local cleanup standards or requirements with respect to the Conexant Site could require us to incur additional costs in the future that could have a negative effect on our financial condition or results of operations. 24 Risks Factors Related to Our Indebtedness Our indebtedness could adversely affect our financial condition or operating flexibility and prevent us from fulfilling our obligations outstanding under our credit agreement, our 4.000% senior notes due 2029, or the Senior Notes, and other indebtedness we may incur from time to time.
In addition, changes in laws, regulations and enforcement policies, the discovery of previously unknown contamination at the Conexant Site, the 25 implementation of new technology at the Conexant Site, or the establishment or imposition of stricter federal, state, or local cleanup standards or requirements with respect to the Conexant Site could require us to incur additional costs in the future that could have a negative effect on our financial condition or results of operations.
Our product solutions may not be successful in new markets. Various target markets for our product solutions, such as IoT, may develop slower than anticipated or could utilize competing technologies.
We cannot assure you that our product solutions for new markets will be successful or that we will be able to continue to generate significant revenue from these markets. Our product solutions may not be successful in new markets. Various target markets for our product solutions, such as IoT, may develop slower than anticipated or could utilize competing technologies.
To remain competitive, we must continue to make significant investments in research and development, marketing, and business development. Our failure to sufficiently increase our net revenue to offset these increased costs would adversely affect our operating results.
To remain competitive, we must continue to make significant investments in research and development, marketing, and business development. Our failure to sufficiently increase our net revenue to offset these increased costs would adversely affect our operating results. From time-to-time, we may seek additional equity or debt financing to provide for funds required to expand our business, including through acquisitions.
For fiscal 2022, approximately 13% of our costs were denominated in non-U.S. currencies, including British pounds, Canadian dollars, European Union euro, Hong Kong dollars, Indian rupee, New Taiwan dollars, Japanese yen, Korean won, Chinese yuan, Polish zloty, Israeli New Shekel, and Swiss francs. 21 If our overseas vendors or customers require us to transact business in non-U.S. currencies, fluctuations in foreign currency exchange rates could affect our cost of goods, operating expenses, and operating margins, and could result in exchange losses.
For fiscal 2023, approximately 13% of our costs were denominated in non-U.S. currencies, including British pounds, Canadian dollars, European Union euro, Hong Kong dollars, Indian rupee, New Taiwan dollars, Japanese yen, Korean won, Chinese yuan, Polish zloty, Israeli New Shekel, and Swiss francs.
Depressed economic conditions, a slowdown in the markets in which we operate, the emergence of new products not including our product solutions, rapid changes in the markets in which we operate, and competitive pressures may result in lower demand for our product solutions and reduced unit margins. 18 Some of our competitors have greater market recognition, larger customer bases, and substantially greater financial, technical, marketing, distribution, and other resources than we possess and that afford them greater competitive advantages.
Depressed economic conditions, a slowdown in the markets in which we operate, the emergence of new products not including our product solutions, rapid changes in the markets in which we operate, and competitive pressures may result in lower demand for our product solutions and reduced unit margins.
These downturns are characterized by diminished product demand, accelerated erosion of average selling prices, production overcapacity, and increased inventory and credit risk. In addition, the consumer electronics industry is cyclical in nature. We seek to reduce our exposure to industry downturns and cyclicality by providing design and production services for leading companies in rapidly expanding industry segments.
The consumer electronics industry has experienced significant economic downturns at various times. These downturns are characterized by diminished product demand, accelerated erosion of average selling prices, production overcapacity, and increased inventory and credit risk. In addition, the consumer electronics industry is cyclical in nature.
Risks Related to International Sales and Operations Changes to import, export and economic sanction laws may expose us to liability, increase our costs and adversely affect our operating results. As a global company headquartered in the U.S., we are subject to U.S. laws and regulations, including import, export, and economic sanction laws.
As a global company headquartered in the U.S., we are subject to U.S. laws and regulations, including import, export, and economic sanction laws.
Many of the materials used in the production of our products are available only from a limited number of foreign suppliers, particularly suppliers located in Asia. In most cases, neither we nor our contract manufacturers have long-term supply contracts with these suppliers. As a result, we are subject to increased costs, supply interruptions, and difficulties in obtaining materials.
In most cases, neither we nor our contract manufacturers have long-term supply contracts with these suppliers. As a result, we are subject to increased costs, supply interruptions, and difficulties in obtaining materials. Our customers also may encounter difficulties or increased costs in obtaining the materials necessary to produce their products into which our product solutions are incorporated.
Many of the materials used in the production of our products are available only from a limited number of foreign suppliers, particularly suppliers located in Asia.
The inability to obtain sufficient quantities of components and other materials necessary for the production of our products could result in reduced or delayed sales or lost orders. Many of the materials used in the production of our products are available only from a limited number of foreign suppliers, particularly suppliers located in Asia.
Unforeseen expenses, difficulties, and delays frequently encountered in connection with rapid expansion through acquisitions could inhibit our growth and negatively impact our operating results.
Unforeseen expenses, difficulties, and delays frequently encountered in connection with rapid expansion through acquisitions could inhibit our growth and negatively impact our operating results. If we make any future acquisitions, we could issue stock that would dilute existing stockholders' percentage ownership, incur substantial debt, assume contingent liabilities, or experience higher operating expenses.
Concentration in our customer base may make fluctuations in revenue and earnings more severe and make business planning more difficult. We are exposed to industry downturns and cyclicality in our target markets that may result in fluctuations in our operating results. The consumer electronics industry has experienced significant economic downturns at various times.
Concentration in our customer base may make fluctuations in revenue and earnings more severe and make business planning more difficult.
We may, however, experience substantial period-to-period fluctuations in future operating results because of general industry conditions or events occurring in the general economy. 16 We cannot assure you that our product solutions for new markets will be successful or that we will be able to continue to generate significant revenue from these markets.
We seek to reduce our exposure to industry downturns and cyclicality by providing design and production services for leading companies in rapidly expanding industry segments. We may, however, experience substantial period-to-period fluctuations in future operating results because of general industry conditions or events occurring in the general economy.
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Shortages of components and materials may delay or reduce our sales and increase our costs, thereby harming our operating results. The inability to obtain sufficient quantities of components and other materials necessary for the production of our products could result in reduced or delayed sales or lost orders.
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We face risks related to recessions, inflation, stagflation and other macroeconomic conditions Customer demand for our products may be impacted by weak macroeconomic conditions, inflation, stagflation, recessionary or lower-growth environments, rising interest rates, equity market volatility or other negative economic factors in the U.S. or other nations.
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Our customers also may encounter difficulties or increased costs in obtaining the materials necessary to produce their products into which our product solutions are incorporated. Supply shortages in our fiscal 2022 have resulted in increased product costs, not all of which we passed on to our customers.
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For example, under these conditions or expectation of such conditions, our customers may cancel orders, delay purchasing decisions or reduce their use of our services. In addition, these economic conditions could result in higher inventory levels and the possibility of resulting excess capacity charges from our manufacturing partners if we need to slow production to reduce inventory levels.
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From time to time, we may seek additional equity or debt financing to provide for funds required to expand our business, including through acquisitions. We cannot predict the timing or amount of any such requirements at this time.
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Further, in the event of a recession or threat of a recession, our manufacturing partners, suppliers, distributors, and other third-party partners may suffer their own financial and economic challenges, and as a result they may demand pricing accommodations, delay payment, or become insolvent, which could harm our ability to meet our customer demands or collect revenue or otherwise harm our business.
Removed
General Risk Factors Our business, results of operations and financial condition (including liquidity) and prospects may be materially and adversely affected by health epidemics, including the COVID-19 pandemic.
Added
Similarly, disruptions in financial and/or credit markets may impact our ability to manage normal commercial relationships with our manufacturing partners, customers, suppliers and creditors and might prevent us from accessing preferred sources of liquidity, and causing our borrowing costs to potentially increase.
Removed
Public health threats, such as COVID-19, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate could adversely impact our operations, as well as the operations of our suppliers and customers.
Added
Thus, if general macroeconomic conditions, conditions in the semiconductor industry, or conditions in our customer end markets continue to deteriorate or experience a sustained period of weakness or slower growth, our business and financial results could be materially and adversely affected.
Removed
Any of these public health threats and related consequences could adversely affect our operating results and financial condition. COVID-19 has spread rapidly and enveloped most of the world, causing a global public health crisis . In March 2020, the World Health Organization characterized the COVID-19 outbreak as a pandemic.
Added
In addition, we are subject to risk from inflation and increasing market prices of certain components and supplies, which are incorporated into our end products or used by our manufacturing partners or suppliers to manufacture our end products. These components and supplies have, from time-to-time, become restricted.
Removed
Governments in affected countries continue to periodically impose travel bans, quarantines, and other emergency public health measures. In response to the virus, national and local governments in numerous countries around the world have implemented substantial lockdown measures.
Added
Additionally, general market factors and conditions have in the past, and may in the future, affect pricing of such components and supplies (such as inflation or supply 16 chain constraints).
Removed
These restrictions, and prevention and mitigation measures, have had an adverse impact on global economic conditions, which could materially adversely affect our future operations. Uncertainties regarding the economic impact of the COVID-19 outbreak have resulted in market turmoil, which could also negatively impact our business, financial condition, and cash flows.
Added
See also, “Our gross margin and results of operations may be adversely affected in the future by a number of factors, including decreases in our average selling prices of products over time, shifts in our product mix, or price increases of certain components or third-party services due to inflation, supply chain constraints, or for other reasons.” We are exposed to industry downturns and cyclicality in our target markets that may result in fluctuations in our operating results.
Removed
These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners.
Added
We expect that the average unit selling prices of our products will continue to be subject to significant pricing pressures. In addition, our more recently introduced products tend to have higher associated costs because of initial overall development and production expenses. Therefore, over time, we may not be able to maintain or improve our gross margins.
Removed
The disruptions to our operations caused by the COVID-19 outbreak may result in inefficiencies, delays and additional costs in our product development, sales, marketing, and customer service efforts that we cannot fully mitigate through remote or other alternative work arrangements.
Added
Our financial results could suffer if we are unable to offset any reductions in our average selling prices by other cost reductions through efficiencies, introduction of higher margin products and other means.
Removed
Also, some suppliers of materials used in the production of our products may be located in areas more severely or repeatedly impacted by COVID-19 and its variants, which could limit our ability to obtain sufficient materials for our products.
Added
To attract new customers or retain existing customers, we may offer certain price concessions to certain customers, which could cause our average selling prices and gross margins to decline.
Removed
In addition, the severe global economic disruption caused by COVID-19 may cause our customers and end-users of our products to suffer significant economic hardship, which could result in decreased demand for our products in the future and materially adversely affect our business, operating results, financial condition (including liquidity) and prospects.
Added
In the past, we have reduced the average selling prices of our products in anticipation of future competitive pricing pressures, new product introductions by us or by our competitors and other factors. We expect to continue to have to reduce prices of existing products in the future.
Added
Moreover, because of the wide price differences across the markets we serve, the mix and types of performance capabilities of our products sold may affect the average selling prices of our products and have a substantial impact on our revenue and gross margin.
Added
We may enter new markets in which a significant amount of competition exists, and this may require us to sell our products with lower gross margins than we earn in our established businesses. If we are successful in growing revenue in these markets, our overall gross margin may decline.
Added
Fluctuations in the mix and types of our products may also affect the extent to which we are able to recover the fixed costs and investments associated with a particular product, and as a result may harm our financial results.
Added
Additionally, because we do not operate our own manufacturing, assembly, testing or packaging facilities, we are not able to reduce our costs as rapidly as companies that operate their own facilities and our costs may even increase, which could also reduce our gross margins.
Added
Our gross margin could also be impacted, for example, by the following factors: increased costs (including increased costs caused by tariffs, inflation, higher interest rates, or supply chain constraints); loss of cost savings if parts ordering does not correctly anticipate product demand or if the financial health of either our manufacturers partners or our suppliers deteriorates; excess inventory, or inventory holding and obsolescence charges.
Added
In addition, we are subject to risks from fluctuating market prices of certain components, which are incorporated into our products or used by our suppliers to manufacture our products.
Added
Supplies of these components may from time-to-time become restricted, or general market factors and conditions such as inflation or supply chain constraints have in the past affected and may in the future affect pricing of such commodities. Any increase in the price of components used in our products will adversely affect our gross margins.
Added
We are subject to order and shipment uncertainties. If we are unable to accurately predict customer demand, we may hold excess or obsolete inventory, which would reduce our gross margin.
Added
Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet that demand, which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships. We typically sell products pursuant to purchase orders rather than long-term purchase commitments.
Added
Some of our customers have, and others may in the future, cancel or defer purchase orders on short notice without incurring a significant penalty. In addition, customers who have purchase commitments may not honor those commitments.
Added
Due to their inability to predict demand or other reasons during our fiscal 2023, some of our customers have accumulated excess inventories and, as a consequence, they either have deferred or they may defer future purchases of our products. We cannot accurately predict what or how many products our customers will need in the future.
Added
Anticipating demand is difficult because our customers face unpredictable demand for their own products and are increasingly focused more on cash preservation and tighter inventory management. We place orders with our suppliers based on forecasts of customer demand and, in some instances, may establish buffer inventories to accommodate anticipated demand.
Added
Our forecasts are based on multiple assumptions, each of which may introduce error into our estimates. For example, our ability to accurately forecast customer demand may be impaired by the delays inherent in our customer’s product development processes, which may include extensive qualification and testing of components included in their products, including ours.
Added
In many cases, they design their products to use components from multiple suppliers. This creates the risk that our customers may decide to cancel or change product plans for products incorporating our semiconductor solutions prior to completion, which makes it even more difficult to forecast customer demand.
Added
In addition, while many of our customers are subject to purchase orders or other agreements that do not allow for cancellation, there can be no assurance that these customers will honor these contract terms and cancellation of these orders may adversely affect our business operations and demand forecast which is the basis for us to have products made. 18 Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies.
Added
Due to cross dependencies, supply chain disruptions have in the past, and may in the future, negatively impact the demand for our products. We have a limited ability to predict the timing of a supply chain correction. If we cannot predict future customer demand or supply chain disruptions, then we may hold excess or obsolete inventory.
Added
Moreover, significant supply chain disruption may negatively impact the timing of our product shipments and revenue shipment linearity, which may impact and extend our cash conversion cycle. In addition, the market share of our customers could be adversely impacted on a long-term basis due to any continued supply chain disruption, which could negatively affect our results of operations.
Added
If we overestimate customer demand, our excess or obsolete inventory may increase significantly, which would reduce our gross margin and adversely affect our financial results. The risk of obsolescence and/or excess inventory is heightened for semiconductor solutions due to the rapidly changing market for these types of products.
Added
Conversely, if we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our customer relationships.
Added
In addition, any future significant cancellations or deferrals of product orders, or the return of previously sold products, could materially and adversely affect our profit margins, increase product obsolescence and restrict our ability to fund our operations.
Added
Some of our competitors have greater market recognition, larger customer bases, and substantially greater financial, technical, marketing, distribution, and other resources than we possess and that afford them greater competitive advantages.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have leased facilities with logistics operations in Hong Kong and Taiwan, leased facilities with sales and support operations in China, Hong Kong, Japan, Korea, Switzerland, and Taiwan, and leased facilities with engineering design support operations in China, France, Germany, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, the U.K. and California, U.S. 28
Biggest changeWe have a leased facility with logistics operations in Taiwan, leased facilities with sales and support operations in China, Hong Kong, Japan, Korea, Switzerland, and Taiwan, and leased facilities with engineering design support operations in China, France, Germany, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, the U.K. and California, U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the results of such matters cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows.
Biggest changeWhile the results of such matters cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. 29 For further information regarding current legal proceedings, see Note 10, Indemnifications and Contingencies to the consolidated financial statements contained elsewhere in this report.
Removed
For further information regarding current legal proceedings, see Note 9 Leases, Commitments and Contingencies to the consolidated financial statements contained elsewhere in this report. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. PART II
Added
ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring fiscal 2022, there were no repurchases under our stock repurchase program. 29 Performance Graph The following line graph compares cumulative total stockholder returns for the five years ended June 25, 2022 for (i) our common stock, (ii) the Nasdaq Composite Index and (iii) the Russell 2000 Index. The graph assumes an investment of $100 on June 30, 2017.
Biggest changeDuring the three-month period ended June 24, 2023, repurchases under the stock repurchase program were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program March 26, 2023 - April 22, 2023 — — — — April 23, 2023 - May 20, 2023 — — — — May 21, 2023 - June 24, 2023 998,942 $ 83.50 998,942 $ 893,922,447 Total 998,942 30 Performance Graph The following line graph compares cumulative total stockholder returns for the five years ended June 24, 2023 for (i) our common stock, (ii) the Nasdaq Composite Index and (iii) the Russell 2000 Index.
Issuer Purchases of Equity Securities From April 2005 through July 2021, our Board of Directors cumulatively authorized the repurchase of up to $1.8 billion for our common stock under our stock repurchase program, which expires in July 2025. As of the end of fiscal 2022, the remaining amount authorized for repurchase under our stock repurchase program was $577.4 million.
Issuer Purchases of Equity Securities From April 2005 through April 2023, our Board of Directors cumulatively authorized the repurchase of up to $2.3 billion for our common stock under our stock repurchase program, which expires in July 2025. As of the end of fiscal 2023, the remaining amount authorized for repurchase under our stock repurchase program was $893.9 million.
Stockholders As of August 12, 2022, there were approximately 120 holders of record of our common stock. The closing price of our common stock as quoted on the Nasdaq Global Select Market as of August 12, 2022 was $146.75. Dividends We have never declared or paid cash dividends on our common stock.
Stockholders As of August 11, 2023, there were approximately 115 holders of record of our common stock. The closing price of our common stock as quoted on the Nasdaq Global Select Market as of August 11, 2023 was $89.20. Dividends We have never declared or paid cash dividends on our common stock.
The calculations of cumulative stockholder return on the Nasdaq Composite Index and the Russell 2000 Index include reinvestment of dividends. The calculation of cumulative stockholder return on our common stock does not include reinvestment of dividends because we did not pay any dividends during the measurement period. The historical performance shown is not necessarily indicative of future performance.
The graph assumes an investment of $100 on June 30, 2018. The calculations of cumulative stockholder return on the Nasdaq Composite Index and the Russell 2000 Index include reinvestment of dividends. The calculation of cumulative stockholder return on our common stock does not include reinvestment of dividends because we did not pay any dividends during the measurement period.
The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. The performance graph above will not be deemed incorporated by reference into any filing of our company under the Exchange Act or the Securities Act. ITEM 6. RESERVED 30
The performance graph above will not be deemed incorporated by reference into any filing of our company under the Exchange Act or the Securities Act. ITEM 6. RESERVED 31
Added
The historical performance shown is not necessarily indicative of future performance. The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section.

Item 7. Management's Discussion & Analysis

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

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Biggest changeAcquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. 35 Results of Operations The following sets forth certain of our consolidated statements of income data for fiscal 2022 and 2021 along with comparative information regarding the absolute and percentage changes in these amounts (in millions, except percentages): 2022 2021 $ Change % Change IoT product applications $ 1,100.9 $ 612.9 $ 488.0 79.6 % PC product applications 343.0 354.7 (11.7 ) (3.3 %) Mobile product applications 295.8 372.0 (76.2 ) (20.5 %) Net revenue 1,739.7 1,339.6 400.1 29.9 % Gross margin 943.1 611.2 331.9 54.3 % Operating expenses: Research and development 367.3 313.4 53.9 17.2 % Selling, general, and administrative 168.4 144.9 23.5 16.2 % Acquired intangibles amortization 38.7 32.7 6 18.3 % Restructuring costs 18.3 7.4 10.9 147.3 % Gain on sale of audio technology assets - (34.2 ) 34.2 (100.0 %) Operating income 350.4 147.0 203.4 138.4 % Interest and other income, net 3.0 2.9 0.1 3.4 % Interest expense (30.2 ) (29.5 ) (0.7 ) 2.4 % Loss on extinguishment of debt (8.1 ) (0.3 ) (7.8 ) 2600.0 % Gain from sale and leaseback transaction 5.4 - 5.4 (100.0 %) Income before provision for income taxes 320.5 120.1 200.4 166.9 % Provision for income taxes 64.6 31.4 33.2 105.7 % Equity investment loss 1.6 (9.1 ) 10.7 (117.6 %) Net income $ 257.5 $ 79.6 $ 177.9 223.5 % The following sets forth certain of our consolidated statements of operations data as a percentage of net revenues for fiscal 2022 and 2021: Percentage Point Increase 2022 2021 (Decrease) IoT product applications 63.3 % 45.7 % 17.6 % PC product applications 19.7 % 26.5 % (6.8 %) Mobile product applications 17.0 % 27.8 % (10.8 %) Net revenue 100.0 % 100.0 % Gross margin 54.2 % 45.6 % 8.6 % Operating expenses: Research and development 21.1 % 23.4 % (2.3 %) Selling, general, and administrative 9.7 % 10.8 % (1.1 %) Acquired intangibles amortization 2.2 % 2.4 % (0.2 %) Restructuring costs 1.1 % 0.6 % 0.5 % Gain on sale of audio technology assets 0.0 % (2.6 %) 2.6 % Operating income 20.1 % 11.0 % 9.1 % Interest and other income, net 0.2 % 0.2 % 0.0 % Interest expense (1.7 %) (2.2 %) 0.5 % Loss on extinguishment of debt (0.5 %) 0.0 % (0.5 %) Gain from sale and leaseback transaction 0.3 % 0.0 % 0.3 % Income before provision for income taxes 18.4 % 9.0 % 9.4 % Provision for income taxes 3.7 % 2.3 % 1.4 % Equity investment loss 0.1 % (0.7 %) 0.8 % Net income 14.8 % 5.9 % 8.9 % 36 Fiscal 2022 Compared with Fiscal 2021 Net Revenue.
Biggest changeFurther, rising interest rates have increased our borrowing costs on our variable rate Term Loan Facility, which will continue to drive an increase in interest costs in future accounting periods and potentially limit our borrowing capacity if a future acquisition opportunity requiring financing presents itself. 37 Results of Operations The following sets forth certain of our consolidated statements of operations data for fiscal 2023 and 2022 along with comparative information regarding the absolute and percentage changes in these amounts (in millions, except percentages): 2023 2022 $ Change % Change IoT product applications $ 946.3 $ 1,100.9 $ (154.6 ) (14.0 %) PC product applications 217.3 343.0 (125.7 ) (36.6 %) Mobile product applications 191.5 295.8 (104.3 ) (35.3 %) Net revenue 1,355.1 1,739.7 (384.6 ) (22.1 %) Gross margin 715.9 943.1 (227.2 ) (24.1 %) Operating expenses: Research and development 351.2 367.3 (16.1 ) (4.4 %) Selling, general, and administrative 175.0 168.4 6.6 3.9 % Acquired intangibles amortization 35.4 38.7 (3.3 ) (8.5 %) Restructuring costs - 18.3 (18.3 ) (100.0 %) Operating income 154.3 350.4 (196.1 ) (56.0 %) Interest and other income, net 27.2 3.0 24.2 806.7 % Interest expense (55.5 ) (30.2 ) (25.3 ) 83.8 % Loss on extinguishment of debt - (8.1 ) 8.1 (100.0 %) Gain from sale and leaseback transaction - 5.4 (5.4 ) (100.0 %) Income before provision for income taxes 126.0 320.5 (194.5 ) (60.7 %) Provision for income taxes 52.4 64.6 (12.2 ) (18.9 %) Equity investment loss - 1.6 (1.6 ) (100.0 %) Net income $ 73.6 $ 257.5 $ (183.9 ) (71.4 %) The following sets forth certain of our consolidated statements of operations data as a percentage of net revenues for fiscal 2023 and 2022: Percentage Point Increase 2023 2022 (Decrease) IoT product applications 69.8 % 63.3 % 6.5 % PC product applications 16.0 % 19.7 % (3.7 %) Mobile product applications 14.2 % 17.0 % (2.8 %) Net revenue 100.0 % 100.0 % Gross margin 52.8 % 54.2 % (1.4 %) Operating expenses: Research and development 25.9 % 21.1 % 4.8 % Selling, general, and administrative 12.9 % 9.7 % 3.2 % Acquired intangibles amortization 2.6 % 2.2 % 0.4 % Restructuring costs 0.0 % 1.1 % (1.1 %) Operating income 11.4 % 20.1 % (8.7 %) Interest and other income, net 2.0 % 0.2 % 1.8 % Interest expense (4.1 %) (1.7 %) (2.4 %) Loss on extinguishment of debt 0.0 % (0.5 %) 0.5 % Gain from sale and leaseback transaction 0.0 % 0.3 % (0.3 %) Income before provision for income taxes 9.3 % 18.4 % (9.1 %) Provision for income taxes 3.9 % 3.7 % 0.2 % Equity investment loss 0.0 % 0.1 % (0.1 %) Net income 5.4 % 14.8 % (9.4 %) 38 Fiscal 2023 Compared with Fiscal 2022 Net Revenue.
Our net cash provided by financing activities for fiscal 2022 was primarily attributable to $600.0 million in proceeds from issuance of debt and $15.2 million in proceeds from issuance of shares, partially offset by $3.0 million of payment on debt, $67.3 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, and $505.6 million used for payment for redemption of convertible notes.
Our net cash provided by financing activities for fiscal 2022 was $14.3 million and was primarily attributable to $600.0 million in proceeds from issuance of debt and $15.2 million in proceeds from issuance of shares, partially offset by $3.0 million of payment on debt, $67.3 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, and $505.6 million used for payment for redemption of convertible notes.
Inventory We state our inventories at the lower of cost or net realizable value. We base our assessment of the ultimate realization of inventories on our projections of future demand and market conditions. Sudden declines in demand, rapid product improvements, or technological changes, or any combination of these factors can cause us to have excess or obsolete inventories.
Inventory Valuation We state our inventories at the lower of cost or net realizable value. We base our assessment of the ultimate realization of inventories on our projections of future demand and market conditions. Sudden declines in demand, rapid product improvements, or technological changes, or any combination of these factors can cause us to have excess or obsolete inventories.
We generally warrant our products for a period of 12 months from the date of sale and estimate probable product warranty costs at the time we recognize revenue as the warranty is considered an assurance warranty and not a performance 33 obligation. Non-product revenue is recognized over the same period of time such performance obligations are satisfied.
We generally warrant our products for a period of 12 months from the date of sale and estimate probable product warranty costs at the time we recognize revenue as the warranty is considered an assurance warranty and not a performance obligation. Non-product revenue is recognized over the same period of time such performance obligations are satisfied.
The valuation of intangible assets requires that we use valuation techniques such as the income approach that includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires the following significant estimates: future expected revenue, expenses, capital expenditures and other costs, and discount rates.
The valuation of intangible assets requires that we use valuation techniques such as the income approach that includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires the following significant estimates: future expected revenue, expenses, capital expenditures and other costs, and 35 discount rates.
We use third-party wafer manufacturers to supply wafers and third-party packaging manufacturers to package our proprietary ASICs. In certain cases, we rely on a single source or a limited number of suppliers to provide other key components 31 of our products.
We use third-party wafer manufacturers to supply wafers and third-party packaging manufacturers to package our proprietary ASICs. In certain cases, we rely on a single source or a limited number of suppliers to provide other key components of our products.
The net change in operating assets and liabilities related primarily to an $81.1 million increase in accounts receivable, an increase of $65.1 million in inventories, an increase of $23.2 million in accounts payable, an increase of $48.6 million in income taxes payable and an increase of $17.4 million in other accrued liabilities.
The net change in operating assets and liabilities related primarily to an $81.1 million increase in accounts receivable, an increase of $54.2 million in inventories, an increase of $23.2 million in accounts payable, an increase of $48.6 million in income taxes payable and an increase of $17.4 million in other accrued liabilities.
As of the end of fiscal 2022, we were unable to make a reasonably reliable estimate of when cash settlement with a taxing authority may occur in connection with our gross unrecognized tax benefit.
As of the end of fiscal 2023, we were unable to make a reasonably reliable estimate of when cash settlement with a taxing authority may occur in connection with our gross unrecognized tax benefit.
Net cash used in investing activities for fiscal 2022 consisted primarily of $501.1 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $31.1 million used for the purchases of property and equipment; partially offset by proceeds from sale and leaseback transaction of $55.9 million and $24.4 million in proceeds from sales of investments.
Net cash used in investing activities for fiscal 2022 was $482.7 million and consisted primarily of $501.1 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $31.1 million used for the purchases of property and equipment; partially offset by proceeds from sale and leaseback transaction of $55.9 million and $24.4 million in proceeds from sales of investments.
Off-Balance Sheet Arrangements We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to materially affect our financial condition, revenues or expenses, results of operations, liquidity, or capital resources.
We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to materially affect our financial condition, revenues or expenses, results of operations, liquidity, or capital resources.
For discussion related to the statement of cash flows for fiscal 2020, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2020 Form 10-K, which was filed with the SEC on August 21, 2020. Common Stock Repurchase Program.
For discussion related to the statement of cash flows for fiscal 2021, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2021 Form 10-K, which was filed with the SEC on August 23, 2021. Common Stock Repurchase Program.
For discussion related to the results of operations and changes in financial condition for fiscal 2021 compared to fiscal 2020, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2021 Form 10-K, which was filed with the SEC on August 23, 2021.
For discussion related to the results of operations and changes in financial condition for fiscal 2022 compared to fiscal 2021, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2022 Form 10-K, which was filed with the SEC on August 22, 2022.
(2) Purchase obligations and other commitments include payments due for inventory purchase obligations with contract manufacturers, long-term software tool licenses, and other licenses. The amounts in the table above exclude gross unrecognized tax benefits related to uncertain tax positions of $29.8 million.
(2) Purchase obligations and other commitments include payments due for inventory purchase obligations with contract manufacturers, long-term software tool licenses, and other licenses. The amounts in the table above exclude gross unrecognized tax benefits related to uncertain tax positions of $43.7 million.
We consider almost all earnings of our foreign subsidiaries as not indefinitely reinvested overseas and have made appropriate provisions for income or withholding taxes, that may result from a future repatriation of those earnings. As of the end of fiscal 2022, $624.0 million of cash and cash equivalents was held by our foreign subsidiaries.
We consider almost all earnings of our foreign subsidiaries as not indefinitely reinvested overseas and have made appropriate provisions for income or withholding taxes, that may result from a future repatriation of those earnings. As of the end of fiscal 2023, $824.4 million of cash and cash equivalents was held by our foreign subsidiaries.
Working Capital Needs. We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, and available credit under our revolving credit facility will be sufficient to meet our working capital and other cash requirements and our debt service obligations, for at least the next 12 months.
Working Capital Needs. We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, anticipated cash flows from financing activities, and available credit under our revolving credit facility, will be sufficient to meet our working capital and other cash requirements, including small tuck-in acquisitions, and our debt service obligations for at least the next 12 months.
Our future capital requirements will depend on many factors, including our revenue, the effectiveness of vaccines on COVID-19 variants, including the deployment of those vaccines to help reduce the length, duration and severity of the COVID-19 pandemic, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program, and the amount and timing of our investments in, or acquisitions of, other technologies or companies.
Our future capital requirements will depend on many factors, including our revenue, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program, and the amount and timing of our investments in, or acquisitions of, other technologies or companies.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue Recognition Our revenue is primarily generated from the sale of ASIC chips, either directly to a customer or to a distributor.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: • Revenue Recognition • Inventory Valuation • Business Combinations • Income Taxes • Goodwill Revenue Recognition Our revenue is primarily generated from the sale of ASIC chips, either directly to a customer or to a distributor.
Our days sales outstanding was 61 days in fiscal 2022 as compared to 63 days in fiscal 2021. Our inventory turns decreased to four times in fiscal 2022 from seven times from fiscal 2021.
Our days sales outstanding was 61 days in fiscal 2022 as compared to 63 days in fiscal 2021. Our inventory turns decreased to four times in fiscal 2022 from seven times from fiscal 2021. Cash Flows from Investing Activities.
See “Note 13 Income Taxes” to the consolidated financial statements contained elsewhere in this report for the table reconciling the provision for income taxes from the federal statutory rate for fiscal 2022, 2021, and 2020.
See “Note 14 Income Taxes” to the consolidated financial statements contained elsewhere in this report for the table reconciling the provision for income taxes from the federal statutory rate for fiscal 2023, 2022 and 2021. Fiscal 2022 Compared with Fiscal 2021.
As of the end of fiscal 2022, our Board of Directors had cumulatively authorized the purchase of up to an aggregate of $1.8 billion of our common stock pursuant to our common stock repurchase program through July 2025.
As of the end of fiscal 2023, our Board of Directors had cumulatively authorized the purchase of up to an aggregate of $2.3 billion of our common stock pursuant to our common stock repurchase program through July 2025.
When an IPR&D project is completed, IPR&D is reclassified as an amortizable intangible asset and amortized over the asset’s estimated useful life. Our valuation of acquired assets and assumed liabilities requires significant estimates, especially with respect to intangible assets.
IPR&D is initially recorded at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, IPR&D is reclassified as an amortizable intangible asset and amortized over the asset’s estimated useful life. Our valuation of acquired assets and assumed liabilities requires significant estimates, especially with respect to intangible assets.
We charge losses on inventory purchase obligations and write-downs to reduce the carrying value of obsolete, slow moving, and non-usable inventory to net realizable value (including warranty costs) to cost of revenue. Operating Expenses. Research and Development Expenses. Research and development expenses increased $53.9 million, to $367.3 million, for fiscal 2022 compared with fiscal 2021.
We charge losses on inventory purchase obligations and write-downs to reduce the carrying value of obsolete, slow moving, and non-usable inventory to net realizable value (including warranty costs) to cost of revenue. Operating Expenses. Research and Development Expenses. Research and development expenses decreased $16.1 million, to $351.2 million, for fiscal 2023 compared with fiscal 2022.
Because we sell our technology solutions in designs that are generally unique or specific to an OEM customer’s application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product specific designs. As a fabless manufacturer, our gross margin percentage is generally not materially impacted by our shipment volume.
Because we sell our technology solutions in designs that are generally unique or specific to an OEM customer’s application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product specific designs.
Our research and development expenses include costs for supplies and materials related to product development, as well as the engineering costs incurred to design ASICs and human experience solutions for OEM customers prior to and after our OEMs’ commitment to incorporate those solutions into their products.
As a result, new product introductions may initially negatively impact our gross margin. 32 Our research and development expenses include costs for supplies and materials related to product development, as well as the engineering costs incurred to design ASICs and human experience solutions for OEM customers prior to and after our OEMs’ commitment to incorporate those solutions into their products.
For fiscal 2022, the $462.7 million in net cash provided by operating activities was primarily attributable to net income of $257.5 million plus adjustments for non-cash charges, including acquired intangibles 38 amortization of $123.5 million, share-based compensation costs of $100.8 million, depreciation and amortization of $24.0 million, as well as other non-cash adjustments of $24.1 million, and a net change in operating assets and liabilities of $19.0 million.
Our inventory turns decreased to three times in fiscal 2023 from four times in fiscal 2022. 40 For fiscal 2022, the $462.7 million in net cash provided by operating activities was primarily attributable to net income of $257.5 million plus adjustments for non-cash charges, including acquired intangibles amortization of $123.5 million, share-based compensation costs of $100.8 million, depreciation and amortization of $24.0 million, as well as other non-cash adjustments of $24.2 million, and a net change in operating assets and liabilities of $18.9 million.
In December 2021, we entered into that certain First Amendment and Lender Joinder Agreement to the Credit Agreement, to, among other things, establish a new $600.0 million incremental term loan facility, or the Term Loan Facility.
In December 2021, we entered into that certain First Amendment and Lender Joinder Agreement to the Credit Agreement, to, among other things, establish a new $600.0 million incremental term loan facility, or the Term Loan Facility. The Term Loan Facility was advanced under the Credit Agreement to finance our DSPG acquisition. The Term Loan Facility matures on December 2, 2028.
Gain from sale and leaseback transaction represents the gain from the sale of our headquarters buildings and properties located at 1109-1251 McKay Drive and 1140-1150 Ringwood Court, San Jose, California in the third quarter of fiscal 2022. The gain from the sale and leaseback transaction for fiscal 2022 was $5.4 million. Provision for Income Taxes.
Gain from sale and leaseback transaction represents the gain from the sale of our headquarters buildings and properties located San Jose, California in fiscal 2022. The gain from the sale and leaseback transaction for fiscal 2022 was $5.4 million. Provision for Income Taxes.
Principal on the Term Loan Facility is payable in equal quarterly installments on the last day of each March, June, September and December of each year, beginning December 31, 2021, at a rate of 1.00% per annum.
Principal on the Term Loan Facility is payable in equal quarterly installments on the last day of each March, June, September and December of each year, beginning December 31, 2021, at a rate of 1.00% per annum, plus an applicable margin. For the year-ended June 2023, we repaid $6.0 million of the principal outstanding on the Term Loan Facility.
Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities.
For further discussion of the Emza acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report. 33 Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities.
These headcount related costs were in cost of revenue, research and development, and selling, general and administrative expenses. See Note 15 Restructuring Activities to the consolidated financial statements contained elsewhere in this report. Gain on sale of audio technology assets includes the sale of limited audio technology intangible assets. See below under “Divestiture”.
These headcount related costs were in cost of revenue, research and development, and selling, general and administrative expenses. See Note 16 Restructuring Activities to the consolidated financial statements contained elsewhere in this report.
The increase in net revenue from IoT product applications was primarily driven by a 45% increase in the units sold as well as a 23.9% increase in average selling prices. The decrease in net revenue from PC product applications was driven by a 17.0% decrease in the units sold, partially offset by a 16.4% increase in average selling prices.
The decrease in net revenue from IoT product applications was primarily driven by a 11.6% decrease in the units sold as well as a 2.7% decrease in average selling prices. The decrease in net revenue from PC product applications was driven by a 38.3% decrease in the units sold, partially offset by a 2.7% increase in average selling prices.
Our newly introduced products may have lower margins than our more mature products, which have realized greater benefits associated with our ongoing cost-improvement programs. As a result, new product introductions may initially negatively impact our gross margin.
Our newly introduced products may have lower margins than our more mature products, which have realized greater benefits associated with our ongoing cost-improvement programs.
For fiscal 2022, revenue from the IoT product applications market accounted for 63.3% of our net revenue, revenue from the PC product applications market accounted for 19.7% of our net revenue, and revenue from the mobile product applications market accounted for 17.0% of our net revenue.
For fiscal 2023, revenue from the IoT product applications market accounted for 70.0% of our net revenue, revenue from the PC product applications market accounted for 16.0% of our net revenue, and revenue from the mobile product applications market accounted for 14.0% of our net revenue.
We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services.
We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. Most of our revenue is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions.
For fiscal 2021, the $319.2 million in net cash provided by operating activities was primarily attributable to net income of $79.6 million plus adjustments for non-cash charges, including acquired intangibles amortization of $110.1 million, share-based compensation costs of $66.1 million, depreciation and amortization of $21.6 million, and a reduction of $34.2 million for gain on sale of audio technology assets, as well as other non-cash adjustments of $30.4 million, and a net change in operating assets and liabilities of $45.6 million.
For fiscal 2023, the $331.5 million in net cash provided by operating activities was primarily attributable to net income of $73.6 million plus adjustments for non-cash charges, including acquired intangibles amortization of $130.4 million, share-based compensation costs of $122.0 million, depreciation and amortization of $27.4 million, as well as other non-cash adjustments of $1.5 million, and a net change in operating assets and liabilities of $23.4 million.
On March 11, 2021, we completed an offering of $400.0 million aggregate principal amount of 4.0% senior notes due 2029, or the Senior Notes, in a private offering.
As of the end of fiscal 2023, the remaining available authorization under our common stock repurchase program was $893.9 million. Senior Notes. On March 11, 2021, we completed an offering of $400.0 million aggregate principal amount of 4.0% senior notes due 2029, or the Senior Notes, in a private offering.
The loss on redemption of convertible notes for fiscal years 2022 and 2021 was $8.1 million and $0.3 million, respectively. Gain from sale and leaseback transaction .
Loss on redemption of convertible notes represents the difference between fair value and the carrying value as of the redemption date of the convertible notes. The loss on redemption of convertible notes for fiscal 2022 was $8.1 million. Gain from sale and leaseback transaction .
The following table sets forth a summary of our material contractual obligations and commercial commitments as of the end of fiscal 2022 (in millions): Payments due by period Contractual Obligations Total Less than 1 year 1-3 Years 3-5 Years Thereafter Long-term debt (1) $ 1,282.5 $ 45.5 $ 95.0 $ 94.0 $ 1,048.0 Leases 71.6 6.3 19.5 17.3 28.5 Purchase obligations and other commitments (2) 247.3 121.4 106.9 19.0 — Total $ 1,601.4 $ 173.2 $ 221.4 $ 130.3 $ 1,076.5 (1) Represents the principal and interest payable through the maturity date of the underlying contractual obligation.
The following table sets forth a summary of our material contractual obligations and commercial commitments as of the end of fiscal 2023 (in millions): Payments due by period Contractual Obligations Total Less than 1 year 1-3 Years 3-5 Years Thereafter Long-term debt (1) $ 1,339.0 $ 67.2 $ 133.8 $ 131.9 $ 1,006.1 Leases 62.0 10.3 18.3 13.3 20.1 Purchase obligations and other commitments (2) 142.7 71.2 71.5 — — Total $ 1,543.7 $ 148.7 $ 223.6 $ 145.2 $ 1,026.2 (1) Represents the principal and interest payable through the maturity date of the underlying contractual obligation.
We also record a liability and charge to cost of revenue for estimated losses on inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer delays, order cancellations, or other factors. 34 Business Combinations We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values.
We also record a liability and charge to cost of revenue for estimated losses on inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer delays, order cancellations, or other factors.
Net cash used in investing activities for fiscal 2021 consisted primarily of $626.5 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $21.1 million used for the purchases of capital assets; partially offset by $95.8 million in proceeds from sales of investments and $34.2 million in proceeds from sale of audio technology assets.
Net cash used in investing activities for fiscal 2023 was $6.0 million and consisted primarily of $15.5 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $34.2 million used for the purchases of property and equipment; partially offset by $43.6 in proceeds from maturities and sales of our short-term investments.
Our net cash provided by financing activities for fiscal 2021 was primarily attributable to $400.0 million in proceeds from issuance of debt and $27.8 million in proceeds from issuance of shares, partially offset by $100.0 million of payment on the line-of-credit borrowings, $28.2 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, and $19.4 million used for payment for redemption of convertible notes.
Net cash used in financing activities for fiscal 2023 was $221.3 million and was primarily attributable to $183.5 million in repurchases of our common stock, $6.0 in debt repayments and $54.5 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, partially offset by $17.6 million in proceeds from issuance of shares.
To date, we have not incurred significant disruptions to our business or a materially negative impact on our consolidated results of operations and financial condition from the COVID-19 outbreak and continue to believe our business will not be severely impacted as steps continue to be taken globally to mitigate the spread and vaccinate large portions of the population.
We did not incur significant disruptions to our business or a materially negative impact on our consolidated results of operations and financial condition from the COVID-19 pandemic and our business was not severely impacted.
In the absence of a master sales agreement, we consider a customer's purchase order or our standard terms and conditions to be the contract with the customer. Our pricing terms are negotiated independently, on a stand-alone basis.
In the absence of a master sales agreement, we consider a customer's purchase order or our standard terms and conditions to be the contract with the customer. Rights to our intellectual property, or IP, are either sold or licensed to customers. Revenue recognition from the licensing of our IP is dependent on the nature and terms of each agreement.
Net revenue was $1,739.7 million for fiscal 2022 compared with $1,339.6 million for fiscal 2021, an increase of $400.1 million, or 29.9%.
Net revenue was $1,355.1 million for fiscal 2023 compared with $1,739.7 for fiscal 2022, a decrease of $384.6 million, or 22.1%.
We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support; engage in leasing, hedging, or research and development services; or have other relationships that expose us to liability that is not reflected in our financial statements.
We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support; engage in leasing, hedging, or research and development services; or have other relationships that expose us to liability that is not reflected in our financial statements. 42 Recent Accounting Pronouncements Please see "Note 1 - Organization and Summary of Significant Accounting Policies - Accounting Pronouncements Issued But Not Yet Adopted” in our Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K. 43
Common stock purchased under this program is held as treasury stock. From April 2005 through the end of fiscal 2022, we purchased 31,749,195 shares of our common stock in the open market for an aggregate cost of $1.2 billion. As of the end of fiscal 2022, we had $577.4 million, respectively, remaining under our common stock repurchase program. Senior Debt.
Common stock purchased under this program is held as treasury stock. From April 2005 through the end of fiscal 2023, we purchased, net of issuances for settlement of our convertible notes, 30,116,439 shares of our common stock in the open market for an aggregate cost of $878.0 million.
Of our fiscal 2022 net revenue, $1,100.9 million, or 63.3% of net revenue was from the IoT product applications market, $343.0 million, or 19.7%, of net revenue was from the PC product applications market, and $295.8 million, or 17.0%, of net revenue was from the mobile product applications market.
Of our fiscal 2023 net revenue, $946.3 million, or 69.8%, of net revenue was from the IoT product applications market, $217.3 million, or 16.0%, of net revenue was from the PC product applications market, and $191.5 million, or 14.2%, of net revenue was from the mobile product applications market.
While we have accrued taxes on almost all of our undistributed earnings of our foreign subsidiaries, if we did remit such earnings, we may be required to pay certain state and foreign taxes to repatriate these funds, which would impact our operating cash flows. Contractual Obligations and Commercial Commitments.
The undistributed earnings of our foreign subsidiaries are not currently required to meet our United States working capital and other cash requirements, but should we repatriate a portion of these earnings, we may be required to pay certain previously accrued state and foreign taxes, which would impact our cash flows. Contractual Obligations and Commercial Commitments.
The decrease in mobile product applications was driven by a 21.4% decrease in the units sold, partially offset by a 1.2% increase in average selling prices. Gross Margin. Gross margin as a percentage of net revenue was 54.2%, or $943.1 million, for fiscal 2022 compared with 45.6%, or $611.2 million, for fiscal 2021.
Gross margin as a percentage of net revenue was 52.8%, or $715.9 million, for fiscal 2023 compared with 54.2%, or $943.1 million, for fiscal 2022. The 140 basis point decrease in gross margin was primarily due to a decrease in units sold as well as an overall decline in average selling prices in all our product applications.
The Senior Notes were issued pursuant to an Indenture, dated as of March 11, 2021, or the Indenture, by and among our company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee. 39 The Indenture provides that the Senior Notes will bear interest at a rate of 4.000% per annum, payable in cash semi-annually in arrears on December 15 and June 15 of each year, commencing on June 15, 2021.
The Senior Notes were issued pursuant to an Indenture, dated as of March 11, 2021, or the Indenture, by and among our company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee. The Senior Notes requires bi-annual interest only payments. In fiscal 2023, we paid interest expense of $16.0 million on the Senior Notes. Bank Credit Facility.
Impact of COVID-19 Although many of these restrictions and other containment measures implemented by governmental authorities in response to the COVID-19 pandemic have since been lifted or scaled back, ongoing surges of COVID-19 and its variants have resulted in a variety of responses in the many geographic locations in which we do business, from no actions taken to and up to and including the re-imposition of lockdowns and containment measures designed to mitigate or reduce the rapid spread of COVID-19 and its variants.
Impact of COVID-19 Many of the restrictions and other containment measures implemented by governmental authorities in response to the COVID-19 pandemic have since been lifted or scaled back.
The increase in selling, general and administrative expenses primarily reflected a $14.7 million increase in share-based compensation primarily due to a substantial increase in our stock price during the first three quarters of fiscal 2022, which also increased the share-based compensation associated with our phantom stock plan.
Selling, general, and administrative expenses increased $6.6 million, to $175.0 million, for fiscal 2023 compared with fiscal 2022. The increase in selling, general, and administrative expenses primarily reflected a net increase of $6.8 million in share-based compensation costs.
Liquidity and Capital Resources Our cash and cash equivalents were $824.0 million as of the end of fiscal 2022 compared with $836.3 million as of the end of fiscal 2021, a decrease of $12.3 million.
Liquidity and Capital Resources Our cash and cash equivalents were $924.7 million as of the end of fiscal 2023 compared with $824.0 million as of the end of fiscal 2022, an increase of $100.7 million. The increase primarily reflected cash flows provided by operating activities of $331.5 million, offset by $221.3 million of cash used by financing activities.
See Note 7 Goodwill and Acquired Intangible Assets to the consolidated financial statements contained elsewhere in this report. 37 Restructuring Costs. Restructuring costs primarily reflect employee severance costs and facilities consolidation costs related to the restructuring of operations, improve efficiencies in our operational activities and gain synergies from acquisitions.
Restructuring costs primarily reflect employee severance costs and facilities consolidation costs related to the restructuring of operations, improve efficiencies in our operational activities and gain synergies from acquisitions. These headcount-related costs included personnel in operations, research and development, and selling, general and administrative functions. There were no restructuring costs incurred during fiscal 2023.
These headcount-related costs included personnel in operations, research and development, and selling, general and administrative functions. Restructuring costs incurred in fiscal 2022 and 2021 were $18.3 million and $7.4 million, respectively. See Note 15 Restructuring Activities to the consolidated financial statements contained elsewhere in this report. Gain on Sale of Audio Technology Assets.
Restructuring costs incurred in fiscal 2022 were $18.3 million. See Note 16 Restructuring Activities to the consolidated financial statements contained elsewhere in this report. Non-Operating Income. Interest and Other Income, Net. Interest and other income, net increased $24.2 million, to $27.2 million for fiscal 2023 compared with fiscal 2022.
Future proceeds under the revolving credit facility are available for 40 working capital and general corporate purposes. In March 2021 we used a portion of the proceeds from the Senior Notes described above to repay the $100.0 million outstanding borrowings on this revolving credit facility.
Future proceeds under the revolving credit facility are available for working capital and general corporate purposes. As of June 2023, there was no balance outstanding under the revolving credit facility. 41 Term Loan Facility .
The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially recorded at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter.
Business Combinations We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.
Removed
The health and wellbeing of our workforce is our highest priority, and a large number of our workforce has been vaccinated. Many of our employees that worked from home at the onset of COVID-19, or during subsequent lockdowns, have returned full-time or on a hybrid basis to our office environment.
Added
We also generate revenue from license-based arrangements. We license the rights to certain of our intellectual properties to customers granting them the right to manufacture and sell licensed products.
Removed
For those employees that have returned to the office, we continue to adhere to return to work protocols, based on guidance from local and global health organizations and applicable laws and regulations.
Added
Acquisitions Broadcom In February 2023, we completed the acquisition of certain GPS developed technology intangible assets from Broadcom for an aggregate consideration of $30.0 million, which was paid in cash in the previous fiscal year. Emza On October 2022, we completed the acquisition of Emza Visual Sense, Ltd., or Emza, for total purchase consideration of $15.8 million.
Removed
However, if more infectious COVID-19 variants become resistant to the existing vaccines, we, our customer, and our suppliers could experience renewed and sustained business disruption. We will continue to evaluate the impact to our business, consolidated results of operations, and financial condition and may take actions that we deem necessary or appropriate to respond to the ongoing pandemic.
Added
Emza is a developer of ultra-low-power artificial intelligence visual sensing solutions. Emza's technology extends our position in Edge AI and allows us to serve the personal computing market with a solution for human presence detection, or HPD.
Removed
Gain from sale of equity investment relates to our sale of our equity method investment in OXi Technology Ltd. See Note 1 Organization and Summary of Significant Accounting Policies to the consolidated financial statements contained elsewhere in this report. Acquisitions DSP Group, Inc.
Added
We recognize revenue from the licensing of our IP upon delivery of the IP if there are no substantive future obligations to perform under the arrangement.
Removed
On August 30, 2021, we entered into an agreement and plan of merger with DSPG to acquire all of the equity of DSPG for $22.00 per share of common stock. The transaction closed on December 2, 2021, for an aggregate purchase consideration of $543.3 million.
Added
Sales-based or usage-based royalties from the license of IP are recognized at the later of the period the sale or usage occurs, or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated. 34 Our pricing terms are negotiated independently, on a stand-alone basis.
Removed
We financed the transaction through a combination of cash on hand and the Term Loan Facility. The results of DSPG are included in our consolidated financial statements for the period from December 3, 2021 through June 25, 2022.
Added
Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. Income Taxes We estimate our income taxes in each of the jurisdictions in which we operate.
Removed
For further discussion of the DSPG acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report. 32 DisplayLink On July 17, 2020, we entered into a definitive agreement to acquire all of the equity interests in DisplayLink Corporation, or DisplayLink, a leader in high-performance video compression technology.
Added
This process involves estimating our actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We recognize income taxes using an asset and liability approach.
Removed
The acquisition closed on July 31, 2020 for an aggregate purchase consideration of $444.0 million. For further discussion of the DisplayLink acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report.
Added
This approach requires the recognition of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.
Removed
Broadcom On July 2, 2020, we entered into definitive agreements with Broadcom to acquire certain assets and assume certain liabilities of, and obtain non-exclusive licenses relating to, Broadcom’s existing Wi-Fi, Bluetooth and GPS/global navigation satellite system, or GNSS, products and business in the IoT market, or the Broadcom Business Acquisition, for an aggregate purchase consideration of $250.0 million in cash that closed on July 23, 2020.
Added
The measurement of current and deferred taxes is based on the provisions of enacted tax law and the effects of future changes in tax laws or rates are not anticipated. Taxes payable on Global Intangible Low-Taxed Income, or GILTI, inclusions in the U.S. are recognized as a current period expense when incurred.
Removed
We also entered into certain transition agreements with Broadcom for a period of three years. For further discussion of the Broadcom Business Acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report.
Added
Evaluating the need for a valuation allowance for deferred tax assets requires judgment and analysis of all positive and negative evidence available, including recent earnings history and taxable income in recent years, reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies to determine whether all or some portion of the deferred tax assets will not be realized.
Removed
Divestitures In December 2020, we completed the sale of limited audio technology intangible assets, received a fully-paid up perpetual license back from the buyer and, as an element of the transaction, licensed other audio technology intangible assets to the buyer under a fully-paid up perpetual license arrangement.
Added
Using available evidence and judgment, we establish a valuation allowance for deferred tax assets when it is determined that it is more likely than not that they will not be realized. Valuation allowances have been provided primarily against state research and development credits and certain capital losses of foreign subsidiaries.
Removed
Under the asset purchase agreement and the intellectual property license agreement, we received $35.0 million in cash. The gain on the sale of the audio technology assets was $34.2 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Risk on Debt With our outstanding debt, we are exposed to various forms of market risk, including the potential losses arising from adverse changes in interest rates on our outstanding Term Loan, including changes that may result from implementation of new benchmark rates that replace LIBOR. See “Note 8. Debt” for further information.
Biggest changeThere have been no significant changes in the maturity dates and average interest rates for our cash equivalents subsequent to fiscal 2023. Interest Rate Risk on Debt With our outstanding debt, we are exposed to various forms of market risk, including the potential losses arising from adverse changes in interest rates on our outstanding Term Loan. See “Note 8.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks in the ordinary course of our business. These risks primarily include: Foreign Currency Exchange Risk Our total net revenue for fiscal 2022 and 2021 was denominated in U.S. dollars.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks in the ordinary course of our business. These risks primarily include: Foreign Currency Exchange Risk Our total net revenue for fiscal 2023 and 2022 was denominated in U.S. dollars.
Costs denominated in foreign currencies were approximately 13% of our total costs in each of fiscal 2022 and 2021. We face the risk that our accounts payable and acquisition-related liabilities denominated in foreign currencies will increase if such foreign currencies strengthen quickly and significantly against the U.S. dollar.
Costs denominated in foreign currencies were approximately 13% of our total costs in each of fiscal years 2023 and 2022. We face the risk that our accounts payable and acquisition-related liabilities denominated in foreign currencies will increase if such foreign currencies strengthen quickly and significantly against the U.S. dollar.
A hypothetical weighted-average change of 10% in currency exchange rates would have changed our operating income before taxes by approximately $17.4 million and our net income by approximately $24.3 million for fiscal 2022, assuming no offsetting hedge positions. However, this quantitative measure has inherent limitations.
A hypothetical weighted-average change of 10% in currency exchange rates would have changed our operating income before taxes by approximately $15.5 million and our net income by approximately $19.3 million for fiscal 2023, assuming no offsetting hedge positions. However, this quantitative measure has inherent limitations.
Approximately 2% of our accounts payable were denominated in foreign currencies at June 25, 2022 and June 26, 2021.
Approximately 12% and 2% of our accounts payable were denominated in foreign currencies in June 2023 and June 2022, respectively.
A hypothetical increase in the interest rate by 1% would result in an increase in annual interest expense by approximately $1.6 million. We currently carry debt that relies on the six-month LIBOR as the benchmark rate. The six-month LIBOR is expected to cease publication after June 30, 2023.
Debt” for further information. A hypothetical increase in the interest rate by 1% would result in an increase in annual interest expense by approximately $6.0 million.
Removed
There have been no significant changes in the maturity dates and average interest rates for our cash equivalents subsequent to fiscal 2022.
Removed
To the extent the six-month LIBOR ceases to exist, the Term Loan agreement contemplates an alternative benchmark rate without the need for any amendment thereto.

Other SYNA 10-K year-over-year comparisons