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What changed in SYNAPTICS Inc's 10-K — 2023 vs 2024

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

+378 added−312 removedSource: 10-K (2024-08-23) vs 10-K (2023-08-18)

Top changes in SYNAPTICS Inc's 2024 10-K

378 paragraphs added · 312 removed · 226 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

79 edited+22 added−51 removed57 unchanged
Biggest changeDVF enables development of low-power enterprise IP, analog terminal adapters, or ATAs, and home VoIP phones that offer superb acoustic echo cancellation, high-quality HD voice, multi-line capabilities, and an enhanced user interface. Built on an open platform with multi-ARM processors running on Linux OS, DVF includes IPfonePro™, an extensive software development kit for IP phones and ATAs.
Biggest changeBuilt on an open platform with multi-ARM processors running on Linux OS, DVF includes IPfonePro™, software development kit for IP phones and ATAs. 3 AudioSmart® AudioSmart products bring forward optimum analog, mixed-signal and digital signal processor, or DSP, technologies for high-fidelity voice and audio processing.
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.
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.
This technology allows us to create a family of SoC integrated circuits and software for printers, video cameras, fax machines and modems. Key functional blocks include: • Image processing hardware accelerators; • Printer imaging pipeline; • Inkjet, laser, and thermal print engine and motor control; • Scan/camera and peripheral control; and • Data and fax modem hardware and firmware.
This technology allows us to create a family of SoC integrated circuits and software for printers, video cameras, fax machines and modems. Key functional blocks include: 6 • Image processing hardware accelerators; • Printer imaging pipeline; • Inkjet, laser, and thermal print engine and motor control; • Scan/camera and peripheral control; and • Data and fax modem hardware and firmware.
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.
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.
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.
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; 7 • 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.
We expect suppliers and vendors to uphold the highest standards of human rights including anti-discrimination and humane treatment, freedom of association and collective bargaining, prevention of child labor, limits on working hours, minimum fair and living wage, worker feedback and grievance systems.
We expect suppliers and vendors to uphold the highest standards of human rights including anti-discrimination and humane treatment, freedom of association and 10 collective bargaining, prevention of child labor, limits on working hours, minimum fair and living wage, worker feedback and grievance systems.
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 strive to 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 video interface solutions include our ConnectSmart and DisplayLink portfolios, offering a full range of interface solutions that connect devices to external displays and support the latest versions of the most widely used protocols, connectors, and operating systems.
Video Compression Technology . Our video interface solutions include our ConnectSmart and DisplayLink portfolios, offering a full range of interface solutions that connect devices to external displays and support the latest versions of the most widely used protocols, connectors, and operating systems.
Our third-party contract manufacturers and semiconductor fabricators are predominately Asia-based organizations. We generally provide our contract manufacturers with six-month rolling forecasts of our production requirements. As a result of recent supply constraints and capacity shortages affecting the global semiconductor industry, we have entered into long-term capacity and pricing agreements with some suppliers.
Our third-party contract manufacturers and semiconductor fabricators are predominately Asia-based organizations. We generally provide our contract manufacturers with six-month rolling forecasts of our production requirements. As a result of past supply constraints and capacity shortages affecting the global semiconductor industry, we entered into long-term capacity and pricing agreements with some suppliers.
We also intend to evaluate the potential acquisitions of companies and assets in order to expand our technological expertise and to establish or strengthen our presence in selected target markets. Fabless Semiconductor Manufacturing We plan to selectively partner with foundries and backend processors to solidify our longstanding key supply chain relationships.
We also intend to evaluate the potential acquisitions of companies and assets in order to expand our technological expertise and to establish or strengthen our presence and product offerings in selected target markets. Fabless Semiconductor Manufacturing We selectively partner with foundries and backend processors to solidify our longstanding key supply chain relationships.
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.
International sales constituted nearly all of our revenue for each of fiscal 2024, 2023, and 2022. Approximately 66%, 63% and 66% of our sales in fiscal 2024, 2023 and 2022, 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.
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 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. 5 Pattern Recognition Technology.
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.
As of the end of fiscal 2024, we employed 1,248 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.
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.
Our broad line of semiconductor product solutions is currently based upon the following key technologies: • Proprietary vector co-processor technology; • Multimedia processing technology; 4 • 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; • Human presence detection technology; • Multi-touch technology; and • Display systems and circuit technology.
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.
As of the end of fiscal 2024, we employed 216 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.
Our Strategy Our objective is to continue to enhance our position as a leading supplier of premium semiconductor product solutions for each of the target markets in which we operate, including the IoT applications market, the PC product applications market, and the mobile product applications markets, with a key focus on expanding our market share.
Our Strategy Our objective is to continue to enhance our position as a leading supplier of premium semiconductor product solutions for each of the target markets in which we operate, including the core IoT applications market, the enterprise and automotive product applications market, and the mobile product applications markets, with a key focus on expanding our market share.
In addition to these technologies, we develop firmware and device driver software that we incorporate into our products, which provide unique and advanced features. In addition, our ability to integrate all our products to interface with major operating systems provides us with a competitive advantage. Proprietary Microcontroller Technology .
In addition to these technologies, we develop firmware and device driver software that we incorporate into our products, which provide unique and advanced features. In addition, our ability to integrate all our products to interface with major operating systems provides us with a competitive advantage. Proprietary Vector Co-Processor Technology.
Our deep investment in far-field voice technology, our intellectual property portfolio for video, vision, audio and security, and our significant experience enabling Android-based platforms for service providers, coupled with our focus on enabling high performance, low power, and highly secure SoC solutions enable us to effectively serve our existing customers and position us to grow within the addressable market of consumer IoT devices.
Our deep investment in far-field voice technology, our intellectual property portfolio for video, vision, audio and security, and our significant experience enabling Android-based platforms for service providers, coupled with our focus on enabling high performance, low power, and highly secure SoC solutions enable us to effectively serve our existing customers and position us to grow our addressable market.
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.
The Nominations and Corporate Governance Committee has oversight of ESG strategy and receives regular updates from management on our ESG performance. The Audit Committee provides oversight of business risks and our company’s Code of Conduct. Our Board of Directors receives periodic updates from Nominations and Corporate Governance Committee and management on our ESG performance.
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.
We continue to develop technology in these areas. 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 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.
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 2024, we held 2,603 active patents and 555 pending patent applications worldwide that expire between 2024 and 2044.
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.
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. We consider environment, social, and governance, or ESG, matters in our business goals, strategies and risk management.
Hurlston held senior marketing and engineering positions at Oren Semiconductor, Inc., Avasem, Integrated Circuit Systems, Micro Power Systems, Exar and IC Works from 1991 until 2001. Mr. Hurlston is a member of the board of directors of Flex Ltd. Mr.
Hurlston held senior marketing and engineering positions at Oren Semiconductor, Inc., Avasem, Integrated Circuit Systems, Micro Power Systems, Exar and IC Works from 1991 until 2001. Mr. Hurlston is a member of the board of directors and audit committee of Flex Ltd. He is also a member of the board of directors and compensation committee at Astera Labs. Mr.
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.
Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. The fiscal years presented in this report are the 53-week period ended June 29, 2024 and 52-week periods ended June 24, 2023, and June 25, 2022.
In those circumstances in which our customer has cancelled its order and we purchase inventory from our contract manufacturers, we consider a write-down to reduce the carrying value of the inventory purchased to its net realizable value.
Periodically, we purchase inventory from our contract manufacturers when a customer delays its delivery schedule or cancels its order. In those circumstances in which our customer has cancelled its order and we purchase inventory from our contract manufacturers, we consider a write-down to reduce the carrying value of the inventory purchased to its net realizable value.
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 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.
Gupta navigated a progressive tenure with Broadcom, advancing in leadership and responsibility across both engineering and business. Earlier in his career he was a co-founder of Zeevo, a developer of system-on-chip solutions for Bluetooth and other wireless communications applications, which was ultimately purchased by Broadcom.
Prior to Cypress Semiconductor, Mr. Gupta navigated a progressive tenure with Broadcom, advancing in leadership and responsibility across both engineering and business. Earlier in his career he was a co-founder of Zeevo, a developer of SOC solutions for Bluetooth and other wireless communications applications, which was ultimately purchased by Broadcom.
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.
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.
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.
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.
PC and Mobile Our touch, display and fingerprint-based semiconductor products are sold into markets for PC product applications, mobile product applications, and other electronic devices. The markets for touchscreen products are characterized by rapidly changing technology and intense competition.
Enterprise and Automotive and Mobile Our touch, display and fingerprint-based semiconductor products are sold into markets for PC product applications, mobile product applications, and other electronic devices. The markets for touchscreen products are characterized by rapidly changing technology and intense competition. Our automotive products include touch, display driver, SmartBridge, and TDDI solutions for major automotive OEMs.
Gupta was the SVP and GM of IoT Compute and Wireless Business Lines for Infineon Technologies, where he led the integration and transformation efforts for the $1B+ multi-site business with three product lines following Infineon’s acquisition of Cypress Semiconductor, where he served as VP of Engineering of the IoT Business Unit. Prior to Cypress Semiconductor, Mr.
Gupta was the SVP and GM of IoT Compute and Wireless Business Lines for Infineon Technologies, a manufacturer of semiconductor solutions, from April 2020 to November 2022, where he led the integration and transformation efforts for the $1B+ multi-site business with three product lines following Infineon’s acquisition of Cypress Semiconductor, where he served as VP of Engineering of the IoT Business Unit from 2016 to 2019 and SVP and 12 GM of the IoT Business Unit from 2019 to 2020.
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 .
Our currently served markets include IoT, personal computer, or PC, Enterprise and Automotive, and Mobile. Our solutions either contain or consist of our wireless, voice and speech, video processing, 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 .
Our Board of Directors and Board committees provide oversight on certain workforce management matters including, among other aspects, management depth and strength assessment, diversity, equity, inclusion and belonging, and our employee survey results. The Audit Committee’s oversight of business risks and our company’s Code of Business Conduct and Ethics is relevant to human capital management.
Our Board of Directors and its committees provide oversight on certain workforce management matters including, among other aspects, leadership development, management depth and strength assessment, diversity, equity, inclusion and belonging, and our employee experience survey results. The Audit Committee is responsible for monitoring our business risks and our company’s Code of Business Conduct and Ethics.
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.
The Nominations and Corporate Governance Committee oversees our ESG strategy including 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.
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.
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.
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.
AudioSmart also includes personal voice and audio solutions for high-performance headsets that enable active noise cancellation. 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 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.
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 connectivity and processor solutions, AI-native applications, virtual reality, and wearables.
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.
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.
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.
We have implemented internal programs and initiatives to reinforce our commitment to reduce our 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 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.
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 11 growth. As of June 2024, 20% of global employees, 20% senior executive leadership positions and 38% of our Board of Directors identified as female.
Pattern Recognition Technology. This technology is a set of software algorithms and techniques for converting real world data, such as gestures and handwriting, into a digital form that can be recognized and manipulated within a computer.
This technology is a set of software algorithms and techniques for converting real world data, such as gestures and handwriting, into a digital form that can be recognized and manipulated within a computer. Our technology provides reliable gesture decoding and handwriting recognition and can be used in other applications such as signature verification for a richer user experience.
The CIO is responsible for assessing and leading the management of climate-related risks and opportunities, elevating stakeholder concerns and guiding the implementation of climate-related policies, programs and disclosures. As a member of our senior executive team, the CIO is responsible for elevating climate topics to senior leadership and, ultimately, to the Board’s Nominations and Corporate Governance Committee and Audit Committee.
As a member of our senior executive team, our CIO is responsible for elevating climate topics to senior leadership and, ultimately, to the Board’s Nominations and Corporate Governance Committee and Audit Committee.
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.
Wireless Connectivity Our wireless connectivity solutions include state-of-the-art Wi-Fi, Bluetooth, Bluetooth Low Energy, Zigbee, Thread, Matter, 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.
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 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. 1 Mobile Product Applications Markets Mobile product applications include smartphones, tablets, large touchscreen applications, as well as a variety of mobile, handheld, and entertainment devices.
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.
Our sales are almost exclusively denominated in U.S. dollars. See Note 15. Segment, Customers, and Geographic Information in the notes to the consolidated financial statements for additional information on revenue by geographic location and product category. Manufacturing We employ a fabless semiconductor manufacturing platform through third-party relationships.
Ultra-Low Power Edge AI Our ultra-low power edge AI platform includes a highly integrated edge AI SOC designed for battery powered wireless devices equipped with audio or camera capabilities for consumer and industrial IoT applications.
Synaptics also provides the Astra™ Machina™ Foundation Series Modular developer kit for Synaptics SL-Series of high-performance embedded processors. Ultra-Low Power Edge AI Our ultra-low power edge AI platform includes a highly integrated edge AI SoC designed for battery powered wireless devices equipped with audio or camera capabilities for consumer and industrial IoT applications.
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.
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. Ken Rizvi has been the Chief Financial Officer of our company since July 15, 2024. Prior to joining our company, Mr.
He holds a Bachelor’s Degree in Electrical and Electronics Engineering from Birla Institute of Technology & Science in India and a Master’s Degree in Electrical Engineering from the University of Hawaii at Manoa. John McFarland has been the Senior Vice President, General Counsel and Secretary of our company since November 2013. Prior to joining our company, Mr.
He holds a Bachelor’s degree in Electrical and Electronics Engineering from Birla Institute of Technology & Science in India and a Master’s Degree in Electrical Engineering from the University of Hawaii at Manoa. Satish Ganesan has been the Senior Vice President and General Manager of Intelligent Sensing Division since February 2024. Mr.
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.
Our products enable smart devices at the edge of a network such as smart assistant speakers, over-the-top multimedia devices, wireless speakers, appliances, set-top boxes, high-speed connectivity for virtual reality devices, video surveillance and voice over IP SoCs.
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 .
We also have technology that allows us to compress our trained neural networks for more efficient AI-at-the-edge on our hardware. 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 .
Our vendors and suppliers are also required to obtain and maintain all required health and safety permits, provide reasonable working and living conditions, have incident management systems and emergency preparedness and response protocols. Governance We are dedicated to supporting leading corporate governance and board practices to ensure oversight accountability and transparency in our business practices.
Our vendors and suppliers are also required to obtain and maintain all required health and safety permits, provide reasonable working and living conditions, have incident management systems and emergency preparedness and response protocols. Our Board of Directors is responsible for overseeing our ESG policies and practices generally.
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.
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. 8 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.
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.
We provide our customers with sensing, processing, and connecting solutions, which represent the three foundational elements of the Internet of Things, or IoT. We supply connectivity, sensors, and artificial intelligence, or AI, enhanced processor solutions to original equipment manufacturers, or OEMs, that design IoT products and devices for automobiles, enterprise workspace devices, virtual reality, smartphones, tablets, and notebook computers.
This technology allows us to develop human experience and communication products based on voice and audio interaction.
Our products include security and secure encrypt/decrypt technology, including secure boot and hardware root of trust. Voice and Audio Technology. This technology allows us to develop human experience and communication products based on voice and audio interaction.
These solutions are designed for a wide range of power constrained IoT applications used in office buildings, retail, factories, warehouses, robotics, and smart homes and cities.
These solutions are designed for a wide range of power constrained IoT applications used in office buildings, retail, factories, warehouses, robotics, and smart homes and cities. 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.
This includes 1.7GHz -1.9GHz used in Europe, U.S., Korea, Japan and Latin America; and 2.4GHz – used in Japan, China, India and the U.S., along with other proprietary protocols for specific use cases. Video Compression Technology .
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. This includes 1.7GHz -1.9GHz used in Europe, U.S., Korea, Japan and Latin America; and 2.4GHz – used in Japan, China, India and the U.S., along with other proprietary protocols for specific use cases.
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.
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. We provide voice processing silicon and software solutions for voice-enabled devices, consumer and commercial imaging, and next-generation audio applications.
TouchView TM Our TouchView solutions include our TDDI products that combine two functions, a touch controller, and a display driver, into a single chip that incorporates all the features of our ClearView and ClearPad products. TouchView products enable thinner form factors to help customers minimize component count and add flexibility to their industrial designs.
Our virtual reality bridge and virtual reality display driver integrated circuit, or DDIC, chips enable our customers to move to higher resolution and faster response displays TouchView TM Our TouchView solutions include our TDDI products that combine two functions, a touch controller, and a display driver, into a single chip that incorporates all the features of our ClearView and ClearPad products.
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.
Our reliance on these parties exposes us to vulnerability owing to our dependence 9 on a few sources of supply. In some cases, we have alternative sources of supply to mitigate supplier risk. We may establish relationships with other contract manufacturers in order to reduce our dependence on any single source of supply.
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.
We also offer a family of GPS and GNSS semiconductor products, software, and location data services. 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.
The co-processor boosts an ASIC’s computational performance by efficiently processing vectors of data for a range of mathematical operations. This allows us to implement more computationally intensive algorithms within our firmware. Multimedia Processing Technology . This technology allows us to create multimedia SoC products for set-top boxes, soundbars, digital personal assistants, smart displays, virtual reality, OTT, audio, and video.
Our vector co-processor technology is designed for use in our ASICs, accompanying either one of our own proprietary microcontroller cores or a commercially available one. The co-processor boosts an ASIC’s computational performance by efficiently processing vectors of data for a range of mathematical operations. This allows us to implement more computationally intensive algorithms within our firmware. Multimedia Processing Technology .
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.
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. We want to attract, develop, and retain the world’s best talent. As of June 2024, we employed 1,716 employees.
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.
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. We are committed to proactively caring for the well-being of our employees in an engaging and meaningful way.
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.
Information about our Executive Officers The following table sets forth certain information regarding our executive officers as of August 16, 2024: Name Age Position Michael Hurlston 57 President and Chief Executive Officer Ken Rizvi 49 Senior Vice President and Chief Financial Officer Lisa Bodensteiner 62 Senior Vice President, Chief Legal Officer and Secretary Vikram Gupta 55 Senior Vice President and General Manager, IoT Processors and Chief Product Officer Satish Ganesan 49 Senior Vice President and General Manager of Intelligent Sensing Division and Chief Strategy Officer Michael Hurlston has been the President and Chief Executive Officer of our company since August 19, 2019.
TouchStyk is a self-contained pointing stick module that uses capacitive technology similar to that used in our TouchPad. Technologies We have developed and own an extensive array of technologies, encompassing ASICs, firmware, software, mechanical and electrical designs, display systems, pattern recognition, touch-sensing technologies, fingerprint sensing, voice, audio, imaging, modem, and multimedia technologies. We continue to develop technology in these areas.
TouchView products are used in large screen devices, including notebooks and tablets, and are also certified for automotive display applications. Technologies We have developed and own an extensive array of technologies, encompassing ASICs, firmware, software, mechanical and electrical designs, display systems, pattern recognition, touch-sensing technologies, fingerprint sensing, voice, audio, imaging, modem, and multimedia technologies.
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.
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. 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.
Our workforce is distributed globally across 16 countries with 23% of our employees located in North America, 60% located in Asia Pacific and 17% located in Europe and the Middle East, or EMEA. Competitive Compensation and Benefits We provide competitive benefits related to health, wellness, mental health and family resources designed to meet the needs of our diverse global workforce.
Our workforce is distributed globally across 15 countries with 22% of our employees located in North America, 61% located in Asia Pacific and 17% located in Europe and the Middle East.
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.
Enterprise and Automotive Product Applications Market Our Enterprise product applications include solutions for PCs, a wide range of audio and video products and solutions for enterprise workspaces. We provide custom and semi-custom product solutions for navigation, cursor control, access to devices or applications through fingerprint authentication, and user presence detection solutions, for many of the world’s premier PC OEMs.
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.
DVF facilitates rapid introduction of embedded features into residential devices such as cordless IP and instant messaging phones.
We believe our company attributes differentiate us and, in part, allow us to consistently retain our employees throughout fiscal year 2023, as our attrition rate continues to be lower than benchmark data. Our employee average tenure globally is 7.6 years.
We believe our company attributes differentiate us in the market and have resulted in a lower voluntary attrition rate relative to benchmark data and a higher retention rate in fiscal 2024. Our employee average tenure globally is 5.0 years.
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.
Our TouchPad solutions also offer various advanced features, including scrolling, customizable tap zones, tapping and dragging of icons, and device interaction. 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 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.
Our IoT video interface products are sold into PC and smartphone docks and wireless adapter market applications. We also provide fax, modem and image processors and software solutions for printers, fax machines, point of sale terminals, and medical applications. Corporate Responsibility We strive to be a leading corporate citizen.
Some of our products contain hardware designed to evaluate deep neural networks securely and with low latency. We also have technology that allows us to compress our trained neural networks for more efficient AI-at-the-edge on our hardware.
Deep Learning and Neural Network Inferencing Technology. This technology allows us to create and train deep neural networks for audio, image processing, video processing and computer vision functions. Some of our products contain hardware designed to evaluate deep neural networks securely and with low latency.
Our climate change management currently involves a focus on education, increasing internal awareness of climate change mitigation and impact reduction through on-going training and internal education. Our Chief Information Officer, or CIO, also acts as our Chief Sustainability Officer and has responsibility for our Global Workplace Resources function and executes our climate strategy and related issues.
Our Chief Information Officer, or CIO, also acts as our Chief Sustainability Officer and has responsibility for our Global Workplace Resources function and executes our climate strategy and related issues. Our CIO is responsible for assessing and leading the management of climate-related risks and opportunities, elevating stakeholder concerns and guiding the implementation of climate-related policies, programs and disclosures.
We offer career advancement opportunities to our employees and are focused on leadership development. Investing in our employees and their professional development is a priority for our company. Diversity, Equity, Inclusion and Belonging We embrace diversity and inclusion and strive to provide a rich environment with diverse skills, backgrounds and perspectives.
Diversity, Equity, Inclusion and Belonging We embrace diversity and inclusion and strive to provide a rich environment with diverse skills, backgrounds and perspectives. We strongly believe diverse teams are more innovative and productive.
Vikram Gupta has been the SVP and GM of IoT Processors and Chief Product Officer since January 2023. Prior to joining Synaptics, Mr.
Bodensteiner holds a Juris Doctor degree from Santa Clara University School of Law and a Bachelor of Science in Business Administration in Accounting from the University of Nevada Vikram Gupta has been the Senior Vice President and General Manager of IoT Processors and Chief Product Officer since January 2023. Prior to joining Synaptics, Mr.
Our video processing technology includes hardware and algorithms to reduce analog and digital noise, convert to different video formats, and enhance color and contrast. Our products include security and secure encrypt/decrypt technology, including secure boot and hardware root of trust. Voice and Audio Technology.
This technology allows us to create multimedia SoC products for set-top boxes, soundbars, digital personal assistants, smart displays, virtual reality, OTT, audio, and video. Our video processing technology includes hardware and algorithms to reduce analog and digital noise, convert to different video formats, and enhance color and contrast.
IoT Applications Market Our IoT market solutions broadly consist of wireless connectivity (Wi-Fi, Bluetooth and global positioning system, or GPS) products, System-on-Chip, or SoC, products, display and touch integrated circuits for use in automobiles, and a wide range of audio and video products and solutions.
Our solutions broadly consist of wireless connectivity (Wi-Fi, Bluetooth, Bluetooth Low Energy, Zigbee, Thread, global positioning system, or GPS, and Ultra Low Energy, or ULE) products, System-on-Chip, or SoC, products, and our Astra family of AI-native edge processors.
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.
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. In addition to notebook applications, other PC product applications for our technology include peripherals, such as high-end keyboards and accessory touchpads.
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We are also applying our technologies to enable adoption of fingerprint recognition solutions to broaden our market opportunities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese 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.
Biggest changeThese 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; • power outages • actual or threatened public health emergencies • political, social or economic instability in certain parts of the world; and • geopolitical tensions, including the Israel-Hamas war and the risk of escalation into a wider Middle East crises, as well as deteriorating relations between China and Taiwan • natural disasters, including droughts, floods, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), or tsunamis typhoons or other severe storms.
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.
Our level of indebtedness could have significant 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.
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.
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.
The Senior Notes include a mandatory semi-annual payment of a 4.000% coupon. We are permitted under the indenture governing our Senior Notes and the Credit Agreement to incur additional debt under certain conditions, including additional secured debt. If new debt were to be incurred in the future, the related risks that we now face could intensify.
The Senior Notes include a mandatory semi-annual payment of a 4.000% coupon. We are permitted under the indenture governing our Senior Notes and the Credit Agreement to incur additional debt 28 under certain conditions, including additional secured debt. If new debt were to be incurred in the future, the related risks that we now face could intensify.
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.
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. 19 We place orders with our suppliers based on forecasts of customer demand and, in some instances, may establish buffer inventories to accommodate anticipated demand.
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.
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 Core IoT, may develop slower than anticipated or could utilize competing technologies.
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.
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.
If our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the markets for our technologies and products. We may pursue, and from time-to-time defend, litigation to enforce our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of the proprietary rights of others.
If our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the markets for our technologies and products. 26 We may pursue, and from time-to-time defend, litigation to enforce our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of the proprietary rights of others.
While we believe we have adequately provided for reasonably foreseeable outcomes in connection with the resolution of income tax uncertainties, the resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our consolidated financial position, result of operations, or cash flows.
While we believe we have adequately provided for reasonably 30 foreseeable outcomes in connection with the resolution of income tax uncertainties, the resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our consolidated financial position, result of operations, or cash flows.
Similarly, a softening of demand in any of these markets, or a slowdown of growth in any of these markets because of changes in customer preferences, the emergence of applications not including our solutions, or other factors would cause our business, operating results, and financial position to suffer.
Similarly, a softening of demand in any of these markets, or a slowdown of growth in any of these markets because of changes in customer preferences, the emergence of 15 applications not including our solutions, or other factors would cause our business, operating results, and financial position to suffer.
We depend on our contract manufacturers and semiconductor fabricators to maintain high levels of productivity and satisfactory delivery schedules at manufacturing and assembly facilities located primarily in Asia. We provide our contract manufacturers with six-month rolling forecasts of our production requirements.
We depend on our contract manufacturers and semiconductor fabricators to maintain high levels of productivity and satisfactory delivery schedules at manufacturing and assembly facilities located primarily in Asia. We provide our contract 20 manufacturers with six-month rolling forecasts of our production requirements.
Further, imposition of tariffs could cause a decrease in the sales of our products to customers located in China or to our OEMs selling to customers in China, which could impact our business, revenue, and operating results. International sales and manufacturing risks could adversely affect our operating results.
Further, imposition of tariffs could cause a decrease in the sales of our products to customers located in China or to our OEMs selling to customers in China, which could impact our business, revenue, and operating results. 24 International sales and manufacturing risks could adversely affect our operating results.
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.
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.
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.
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. 23 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.
If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company, our employees and our customers could be disclosed and we may be required to incur substantial costs and liabilities, including the following: liability for stolen assets or information; fines imposed on us by governmental authorities for failure to comply with privacy laws or for disclosure of any personally identifiable information as a part of such attack; costs of repairing damage to our systems; lost revenue and income resulting from any system downtime caused by such breach or attack; loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; increased costs of cyber security protection; costs of incentives we may be required to offer to our customers or business partners to retain their business; damage to our reputation; and expenses to rectify the consequences of the security breach or cyberattack.
If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company, our employees and our customers could be disclosed and we may be required to incur substantial costs and liabilities, including the following: liability for stolen assets or information; fines imposed on us by governmental authorities for failure to comply with privacy laws or for disclosure of any personally identifiable information as a part of such attack; costs of repairing damage to our systems; lost revenue and income resulting from any system downtime caused by such breach or attack; loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; increased costs of cyber security protection; costs of incentives we may be required to offer to our customers or business partners to retain their business; damage to our reputation; increased cyber liability and data breach insurance premiums; and expenses to rectify the consequences of the security breach or cyberattack.
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.
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.
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.
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 manufacturing partners or our suppliers deteriorates; excess inventory, or inventory holding and obsolescence charges.
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).
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 chain constraints).
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.
Due to their inability to predict demand or other reasons during our fiscal 2024, 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.
The failure of any of these target markets to develop as we expect, or our failure to serve these markets to a significant extent, will impede our sales growth and could result in substantially reduced earnings and a restructuring of our operations.
The failure of any of these target markets to develop as we expect, or our failure to serve these markets to a significant extent or in a timely manner, will impede our sales growth and could result in substantially reduced earnings and a restructuring of our operations.
In addition, stocks of technology companies have experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to these companies’ operating performance. Public announcements by technology companies concerning, among other things, their performance, accounting practices, or legal problems could cause the market price of our common stock to decline regardless of our actual operating performance. ITEM 1B.
In addition, stocks of technology companies have experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to these companies’ operating performance. Public announcements by technology companies concerning, among other things, their performance, accounting practices, or legal problems could cause the market price of our common stock to decline regardless of our actual operating performance. 33
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.
For fiscal 2024, approximately 17% 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.
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.
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.
We currently depend on our solutions for the IoT, PC, and mobile product applications markets for a substantial portion of our revenue. Any downturn in sales of our products into any of these markets would adversely affect our business, revenue, operating results, and financial condition.
We currently depend on our solutions for the Core IoT, Enterprise and Automotive and Mobile product applications markets for a substantial portion of our revenue. Any downturn in sales of our products into any of these markets would adversely affect our business, revenue, operating results, and financial condition.
In connection with the expansion and diversification of our product and customer base, we may increase our personnel and make other expenditures to meet demand for our expanding product offerings, including offerings in the IoT market, the PC applications market, and the mobile product applications market.
In connection with the expansion and diversification of our product and customer base, we may increase our personnel and make other expenditures to meet demand for our expanding product offerings, including offerings in the Core IoT market, the Enterprise and Automotive applications market, and the Mobile product applications market.
Risks Related to Our Markets and Customers We currently depend on our solutions for the IoT, PC, and mobile product applications markets for a substantial portion of our revenue, and any downturn in sales of these products would adversely affect our business, revenue, operating results, and financial condition.
Risks Related to Our Industry and Business We currently depend on our solutions for the IoT, Enterprise and Automotive and Mobile product applications markets for a substantial portion of our revenue, and any downturn in sales of these products would adversely affect our business, revenue, operating results, and financial condition.
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.
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.
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.
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 customer accounted for 12% of our net revenue in fiscal 2024.
We transact business predominantly in U.S. dollars, and we invoice and collect our sales in U.S. dollars. A weakening of the U.S. dollar could cause our overseas vendors to require renegotiation of either the prices or currency we pay for their goods and services. In the future, customers may negotiate pricing and make payments in non-U.S. currencies.
A weakening of the U.S. dollar could cause our overseas vendors to require renegotiation of either the prices or currency we pay for their goods and services. In the future, customers may negotiate pricing and make payments in non-U.S. currencies.
Certain strategic alliances may not achieve their intended objectives, and parties to our strategic alliances may not perform as contemplated. The failure of these alliances to achieve their objectives may impede our ability to introduce new products and enter new markets. We may incur material environmental liabilities as a result of prior operations at an acquired company.
The failure of these alliances to achieve their objectives may impede our ability to introduce new products and enter new markets. We may incur material environmental liabilities as a result of prior operations at an acquired company.
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.
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.
The trading price of our common stock has been and may continue to be subject to wide fluctuations in response to various factors, including the following: • variations in our quarterly results; • the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; • changes in financial estimates by industry or securities analysts or our failure to meet such estimates; • various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our suppliers, our competitors, or a potential acquisition of our company; • announcements of technological innovations by us, our competitors, or our customers; • introductions of new products or new pricing policies by us, our competitors, or our customers; • acquisitions or strategic alliances by us, our competitors, or our customers; • recruitment or departure of key personnel; • the gain or loss of significant orders; • the gain or loss of significant customers; • market conditions in our industry, the industries of our customers, and the economy as a whole; • short positions held by investors; • new federal and state laws and regulations affecting our industry; and • general financial market conditions or occurrences, including market volatility resulting from geopolitical risks, and rivalries, acts of war, terrorist attacks, cybersecurity attacks, health pandemics, financial market technological glitches and interruptions of trading activity.
The trading price of our common stock has been and may continue to be subject to wide fluctuations in response to various factors, including the following: • variations in our quarterly results; • the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; • changes in financial estimates by industry or securities analysts or our failure to meet such estimates; • various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our suppliers, our competitors, or a potential acquisition of our company; • announcements of technological innovations by us, our competitors, or our customers; • introductions of new products or new pricing policies by us, our competitors, or our customers; • disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies; • acquisitions or strategic alliances by us, our competitors, or our customers; • recruitment or departure of key personnel; • the gain or loss of significant orders; • the gain or loss of significant customers; • market conditions in our industry, the industries of our customers, and the economy as a whole; • actions by institutional or activist investors, including short positions held by investors; 32 • new federal and state laws and regulations affecting our industry, including export controls and • general financial market conditions or occurrences, including market volatility resulting from geopolitical risks, social and political unrest and rivalries, acts of war, terrorist attacks, natural disasters, cybersecurity attacks, health pandemics, financial market technological glitches and interruptions of trading activity.
The integration of acquired businesses involves numerous risks, including the following: • the potential disruption of our core business; • the potential strain on our financial and managerial controls, reporting systems and procedures; • potential unknown liabilities associated with the acquired business; • costs relating to liabilities which we agree to assume; • unanticipated costs associated with the acquisition; • diversion of management’s attention from our core business; • problems assimilating the purchased operations, technologies, or products; • risks associated with entering markets and businesses in which we have little or no prior experience; • failure of acquired businesses to achieve expected results; • adverse effects on existing business relationships with suppliers and customers; • failure to retain key customers, suppliers, or personnel of acquired businesses; • the risk of impairment charges related to potential write-downs of acquired assets; and • the potential inability to create uniform standards, controls, procedures, policies, and information systems.
The integration of acquired businesses involves numerous risks, including the following: • the potential disruption of our core business; • the potential strain on our financial and managerial controls, reporting systems and procedures; • potential unknown liabilities associated with the acquired business; 27 • costs relating to liabilities which we agree to assume; • unanticipated costs associated with the acquisition; • diversion of management’s attention from our core business; • problems assimilating the purchased operations, technologies, or products; • risks associated with entering markets and businesses in which we have little or no prior experience; • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; • failure of acquired businesses to achieve expected results; • adverse effects on existing business relationships with suppliers and customers; • failure to retain key customers, suppliers, or personnel of acquired businesses; • litigation or other claims and disputes in connection with the acquired businesses; • the risk of impairment charges related to potential write-downs of acquired assets; and • the potential inability to create uniform standards, controls, procedures, policies, and information systems.
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.
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.
An inability to quickly expand our development, design or production capacity or an inability of our third-party manufacturers to quickly expand development, design, or production capacity to meet this customer demand could result in a decrease to our revenue or operating results.
An inability to quickly expand our development, design or production capacity or an inability of our third-party manufacturers to quickly expand development, design, or production capacity to meet this customer demand could result in a decrease to our revenue or operating results. If we cannot manage our growth effectively, our business and operating results could suffer.
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.
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, which will be phased out over a three-year period concluding at our 2026 annual meeting of stockholders.
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.
During fiscal 2024, we had one OEM customer that integrated our products into their products representing 11% of our revenue; we sold to these customers primarily indirectly through multiple distributors.
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.
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. 22 Our business could be harmed if we are unable to develop and utilize new technologies that address the needs of our customers, or our competitors or customers develop and utilize new technologies more effectively or more quickly than we can.
The competition for qualified management and key personnel, especially engineers, is intense. Although we maintain nondisclosure covenants with most of our key personnel, and our key executives have change of control severance agreements, we do not have employment agreements with many of them.
Although we maintain nondisclosure covenants with most of our key personnel, and our key executives have change of control severance agreements, we do not have employment agreements with many of them.
Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria. Acquisitions may also become more difficult in the future as we or others acquire the most attractive candidates.
Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria.
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.
We must also comply with export restrictions and laws imposed by other countries affecting trade and investments. 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, any compromise of security from a security breach or cyberattack could deter customers or business partners from entering into transactions that involve providing confidential information to us. As a result, any compromise to the security of our systems could have a material adverse effect on our business, reputation, financial condition, and operating results.
Any of the foregoing, or the perception any of them has occurred, could have a material adverse impact on our business, operations and financial results. In addition, any compromise of security from a security breach or cyberattack could deter customers or business partners from entering into transactions that involve providing confidential information to us.
Our manufacturing and assembly operations are primarily conducted in Taiwan, China, and Korea by contract manufacturers and semiconductor fabricators. We have sales and logistics operations in Hong Kong, and sales and engineering design support operations in China, France, Germany, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, and the U.K.
We have sales and logistics operations in Hong Kong, and sales and engineering design support operations in China, France, Germany, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, and the U.K.
If any of these risks associated with international operations materialize, our operations could significantly increase in cost or be disrupted, which would negatively affect our revenue and operating results. Our operating results could be adversely affected by fluctuations in the value of the U.S. dollar against foreign currencies.
If any of these risks associated with international operations materialize, our operations could significantly increase in cost or be disrupted, which would negatively affect our revenue and operating results.
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 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.
Our 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.
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.
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.
In addition, complying with these covenants may also cause us to take actions that may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions. 29 General Risk Factors Our business is dependent upon the proper functioning of our internal business processes and information systems and modification or interruption of such systems may disrupt our business.
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.
Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies. 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.
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.
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.
In addition, the Credit Agreement contains financial covenants that (i) require the ratio of the amount of our consolidated total indebtedness to consolidated EBITDA to be less than certain maximum ratio levels, and (ii) require the ratio of the amount of our consolidated EBITDA to consolidated interest expense to be greater than a certain minimum ratio level.
In addition, the Credit Agreement contains financial covenants that (i) require the ratio of the amount of our consolidated total indebtedness to consolidated EBITDA to be less than certain maximum ratio levels, and (ii) require that we either maintain a minimum of $450.0 million in cash on our balance sheet or maintain the ratio of the amount of our consolidated EBITDA to consolidated interest expense above a certain minimum ratio level, and we currently rely on maintaining this minimum cash balance in order to comply with this covenant.
We provide solutions that are incorporated by OEMs into the products they sell. OEMs make the determination during their product development programs whether to incorporate our solutions or pursue other alternatives.
Risks Related to Product Development We are subject to lengthy development periods and product acceptance cycles, which can result in development and engineering costs without any future revenue. We provide solutions that are incorporated by OEMs into the products they sell. OEMs make the determination during their product development programs whether to incorporate our solutions or pursue other alternatives.
Any interruptions to supply could result in delay or cancellation of our products, which could adversely affect our business and operating results.
Any interruptions to supply could result in delay or cancellation of our products, which could adversely affect our business and operating results. Our business and operating results are substantially dependent on international trade. Many of our customers sell products incorporating our solutions into international markets.
As a result of the supply shortages, we have entered into long-term capacity and pricing agreements with certain of our suppliers. If end customer demand declines, these long-term capacity agreements could result in significant write-downs of inventory. On occasion, customers require rapid increases in production, which can strain our resources and reduce our margins.
We generally do not, however, have long-term agreements with our contract manufacturers that guarantee production capacity, prices, lead times, or delivery schedules. If end customer demand declines, these long-term capacity agreements could result in significant write-downs of inventory. On occasion, customers require rapid increases in production, which can strain our resources and reduce our margins.
If we do not keep pace with technological innovations, our products may not remain competitive and our revenue and operating results may suffer. We operate in rapidly changing, highly competitive markets. Technological advances, the introduction of new products and new design techniques could adversely affect our business unless we are able to adapt to changing conditions.
If we do not keep pace with technological innovations, our products may not remain competitive and our revenue and operating results may suffer. We operate in rapidly changing, highly competitive markets.
The covenants in the Credit Agreement and Senior Notes impose restrictions that may limit our operating and financial flexibility.
Our net income and cash flows, including cash available for servicing indebtedness, will correspondingly decrease. The covenants in the Credit Agreement and Senior Notes impose restrictions that may limit our operating and financial flexibility.
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.
The risk of obsolescence and/or excess inventory is heightened for semiconductor solutions due to the rapidly changing market for these types of products. 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.
Technological advances could render our solutions less competitive or obsolete, and we may not be able to respond effectively to the technological requirements of evolving markets.
Technological advances, including advances in artificial intelligence, the introduction of new products and new design techniques could adversely affect our business unless we are able to adapt to changing conditions. Technological advances could render our solutions less competitive or obsolete, and we may not be able to respond effectively to the technological requirements of evolving markets.
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.
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.
Any investments made to enhance or develop new technologies that are not successful could have an adverse effect on our net revenue and operating results. We may not be able to enhance our existing product solutions and develop new product solutions in a timely manner.
Any investments made to enhance or develop new technologies that are not successful could have an adverse effect on our net revenue and operating results. Conditions in Israel may materially and adversely affect our business. We have employees and facilities located in Israel. As a result, political, economic and military conditions in Israel may directly affect our business.
In addition, compliance with additional export regulations may result in increased costs to the company. Although we have an export compliance program, maintaining and adapting our export controls program to new and shifting regulations is expensive, time-consuming and requires significant management attention.
Although we have an export compliance program, maintaining and adapting our export controls program to new and shifting regulations is expensive, time-consuming and requires significant management attention. Failure to comply with trade or economic sanctions could subject the company to legal liabilities and fines from the U.S. government.
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.
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. 17 Some of our current and potential competitors have greater market recognition, longer operating histories, larger customer bases, and substantially greater financial, technical, marketing, distribution, and other resources than we possess and that afford them greater competitive advantages.
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.
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. We have never formally recalled a product or had a mass defect that affected an entire product line.
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.
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. 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 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.
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.
Future shortages of materials and components, including potential supply constraints of silicon, could cause delayed shipments and customer dissatisfaction, which may result in lower revenue. Risks Related to Product Development We are subject to lengthy development periods and product acceptance cycles, which can result in development and engineering costs without any future revenue.
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. Future shortages of materials and components, including potential supply constraints of silicon, could cause delayed shipments and customer dissatisfaction, which may result in lower revenue.
We face intense competition that could result in our losing or failing to gain market share and suffering reduced revenue. We serve intensely competitive markets that are characterized by price erosion, rapid technological change, and competition from major domestic and international companies. This intense competition could result in pricing pressures, lower sales, reduced margins, and lower market share.
We serve intensely competitive markets that are characterized by price erosion, rapid technological change, and competition from major domestic and international companies. We expect that the market for our products will continually evolve and will be subject to rapid technological change.
Our inability to enhance our existing product solutions and develop new product solutions on a timely basis could harm our operating results and impede our growth. If we become subject to product returns or claims resulting from defects in our products, we may incur significant costs resulting in a decrease in revenue.
If we become subject to product returns or claims resulting from defects in our products, we may incur significant costs resulting in a decrease in revenue. We develop complex products in an evolving marketplace and generally warrant our products for a period of 12 months from the date of delivery.
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.
Additionally, it is possible that their customers that are larger and better financed than we are or that have long-term agreements with our main foundries may induce them to reallocate capacity to those customers. As a result, we are subject to increased costs, supply interruptions, and difficulties in obtaining materials.
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.
If we are unable to accurately predict customer demand, we may hold excess or obsolete inventory, which would reduce our gross margin.
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ITEM 1A. RI SK FACTORS You should carefully consider the following factors, together with all the other information included in this report, in evaluating our company and our business.
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ITEM 1A. RI SK FACTORS Investing in our securities involves a high degree of risk.
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We generally do not, however, have long-term agreements with our contract manufacturers that guarantee production capacity, prices, lead times, or delivery schedules.
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You should carefully consider the risks and uncertainties described below, together with all of the other information in this report, including under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and the consolidated financial statements and the related notes included elsewhere in this report, before making an investment decision.
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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.
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The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that materially and adversely affect our business.
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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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If any of the following risks actually occurs, our business operations, financial condition, operating results, and prospects could be materially and adversely affected. The market price of our securities could decline due to the materialization of these or any other risks, and you could lose part or all of your investment.
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Our business could be harmed if we are unable to develop and utilize new technologies that address the needs of our customers, or our competitors or customers develop and utilize new technologies more effectively or more quickly than we can.
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Summary of Risk Factors Risks Related to Our Industry and Business • We currently depend on our solutions for the IoT, Enterprise and Automotive and Mobile product applications markets for a substantial portion of our revenue, and any downturn in sales of these products would adversely affect our business, revenue, operating results, and financial condition. • In many of the markets in which we compete, we depend on winning selection processes, and failure to be selected could adversely affect our business in those market segments. • We rely on OEMs and ODMs to design our products into their end products. • A significant portion of our sales comes from one or more large customers, the loss of which could harm our business, financial condition, and operating results. • We face risks related to recessions, inflation, stagflation and other macroeconomic conditions. • We are exposed to industry downturns and cyclicality in our target markets that may result in fluctuations in our operating results. • We face intense competition that could result in our losing or failing to gain market share and suffering reduced revenue. • 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. • If we fail to maintain and build relationships with our customers, or our customers’ products that utilize our solutions do not gain widespread market acceptance, our revenue may stagnate or decline. • 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. • We are subject to order and shipment uncertainties.
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Our future operating results will depend to a significant extent on our ability to continue to provide new solutions that compare favorably with alternative solutions on the basis of time to introduction, cost, performance, and end user preferences.

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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. 29 For further information regarding current legal proceedings, see Note 10, Indemnifications and Contingencies to the consolidated financial statements contained elsewhere in this report.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are party to various litigation matters and claims arising from time-to-time in the ordinary course of business. While 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.
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ITEM 3. LEGAL PROCEEDINGS We are party to various litigation matters and claims arising from time-to-time in the ordinary course of business.
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For further information regarding current legal proceedings, see Note 10, Indemnifications and Contingencies in the notes to the consolidated financial statements.
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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 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.
Biggest changeDuring the three-month period ended June 29, 2024, there were no repurchases under the stock repurchase program. 36 Performance Graph The following line graph compares cumulative total stockholder returns for the five years ended June 29, 2024 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 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.
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 2024, the remaining amount authorized for repurchase under our stock repurchase program was $893.9 million.
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 graph assumes an investment of $100 on June 30, 2019. 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 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
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 37
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.
Stockholders As of August 16, 2024, there were approximately 110 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 16, 2024, was $76.38. Dividends We have never declared or paid cash dividends on our common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest 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.
Biggest changeIf these conditions continue or worsen, they could adversely impact our future financial and operating results. 43 Results of Operations The following sets forth certain of our consolidated statements of operations data for fiscal 2024 and 2023 along with comparative information regarding the absolute and percentage changes in these amounts (in millions, except percentages): 2024 2023 $ Change % Change Enterprise and Automotive product applications $ 570.0 $ 853.7 $ (283.7 ) (33.2 %) Core IoT product applications 177.6 309.9 (132.3 ) (42.7 %) Mobile product applications 211.8 191.5 20.3 10.6 % Net revenue 959.4 1,355.1 (395.7 ) (29.2 %) Gross margin 439.8 715.9 (276.1 ) (38.6 %) Operating expenses: Research and development 336.3 351.2 (14.9 ) (4.2 %) Selling, general, and administrative 161.3 175.0 (13.7 ) (7.8 %) Acquired intangibles amortization 17.3 35.4 (18.1 ) (51.1 %) Intangible asset impairment charge 16.0 — 16.0 100.0 % Restructuring costs 10.5 — 10.5 100.0 % Operating (loss)/income (101.6 ) 154.3 (255.9 ) (165.8 %) Interest and other income 42.3 27.2 15.1 55.5 % Interest expense (65.3 ) (55.5 ) (9.8 ) (17.7 %) (Loss)/income before provision for income taxes (124.6 ) 126.0 (250.6 ) (198.9 %) (Benefit)/provision for income taxes (250.2 ) 52.4 (302.6 ) (577.5 %) Net income $ 125.6 $ 73.6 $ 52.0 70.7 % The following sets forth certain of our consolidated statements of operations data as a percentage of net revenues for fiscal 2024 and 2023: Percentage Point Increase/ 2024 2023 (Decrease) Enterprise and Automotive product applications 59.4 % 63.0 % (3.6 %) Core IoT product applications 18.5 % 22.9 % (4.4 %) Mobile product applications 22.1 % 14.1 % 8.0 % Net revenue 100.0 % 100.0 % 0.0 % Gross margin 45.8 % 52.8 % (7.0 %) Operating expenses: Research and development 35.1 % 25.9 % 9.2 % Selling, general, and administrative 16.8 % 12.9 % 3.9 % Acquired intangibles amortization 1.8 % 2.6 % (0.8 %) Intangible asset impairment charge 1.7 % 0.0 % 1.7 % Restructuring costs 1.1 % 0.0 % 1.1 % Operating (loss)/income (10.7 %) 11.4 % (22.1 %) Interest and other income 4.4 % 2.0 % 2.4 % Interest expense (6.8 %) (4.1 %) (2.7 %) (Loss)/income before provision for income taxes (13.1 %) 9.3 % (22.4 %) (Benefit)/provision for income taxes (26.1 %) 3.9 % (30.0 %) Net income 13.0 % 5.4 % 7.6 % Fiscal 2024 Compared with Fiscal 2023 Net Revenue.
Any unpaid tax liabilities, including the interest and penalties, are released pursuant to a final settlement with tax authorities, completion of audit or expiration of various statutes of limitation. The material jurisdictions in which we are subject to potential examination by tax authorities throughout the world include Japan, India, Hong Kong, Israel and the United States.
Any unpaid tax liabilities, including the interest and penalties, are released pursuant to a final settlement with tax authorities, completion of audit or expiration of various statutes of limitation. The material jurisdictions in which we are subject to potential examination by tax authorities throughout the world include Japan, India, Hong Kong, United Kingdom, Israel and the United States.
With our expanding global presence, including offices in China, France, Germany, Hong Kong, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, the U.K., and the U.S., we are well positioned to provide local sales, operational, and engineering support services to our existing customers, as well as potential new customers, on a global basis.
With our global presence, including offices in China, France, Germany, Hong Kong, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, the U.K., and the U.S., we are well positioned to provide local sales, operational, and engineering support services to our existing customers, as well as potential new customers, on a global basis.
The overall decrease in our revenues in fiscal 2023 compared to fiscal 2022 is the result of a broad reduction in demand in most of our product applications as many customers and channel partners continued to consume their accumulation of inventories, combined with customer requests to delay orders and downward pressure on product pricing. Gross Margin.
The overall decrease in our revenues in fiscal 2024 compared to fiscal 2023 is the result of a broad reduction in demand in most of our product applications as many customers and channel partners continued to consume their accumulation of inventories, combined with customer requests to delay orders and downward pressure on product pricing. Gross Margin.
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.
As of the end of fiscal 2024, 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.
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.
Common stock purchased under this program is held as treasury stock. From April 2005 through the end of fiscal 2024, 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.
Further equity or debt financing may not be available to us on acceptable terms or at all. If sufficient funds are not available or are not available on acceptable terms, our ability to fund our future long-term working capital needs, take advantage of business opportunities or to respond to competitive pressures could be limited or severely constrained.
Further equity or debt financing may not be available to us on acceptable terms. If sufficient funds are not available or are not available on acceptable terms, our ability to fund our future long-term working capital needs, take advantage of business opportunities or to respond to competitive pressures could be limited or severely constrained.
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.
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. 40 Our pricing terms are negotiated independently, on a stand-alone basis.
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.
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 41 discount rates.
Interest and other expense, net, primarily reflects interest expense on our Senior Notes, Term Loan Facility and revolving line of credit as well as the amortization of debt issuance costs and discount on our debt, partially offset by interest income earned on our cash, cash equivalents and short-term investments.
Interest and other expense, net, primarily reflects interest expense on our Senior Notes (as defined herein), Term Loan Facility (as defined herein) and revolving line of credit as well as the amortization of debt issuance costs and discount on our debt, partially offset by interest income earned on our cash, cash equivalents and short-term investments.
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.
As of the end of fiscal 2024, 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 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.
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. 46 Cash Flows from Financing Activities.
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.
As of the end of fiscal 2024, 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.
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 statement of cash flows for fiscal 2022, 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. Common Stock Repurchase Program.
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.
For discussion related to the results of operations and changes in financial condition for fiscal 2023 compared to fiscal 2022, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2023 Form 10-K, which was filed with the SEC on August 18, 2023.
(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.
(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 $46.5 million.
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 .
Future proceeds under the revolving credit facility are available for working capital and general corporate purposes. As of June 2024, there was no balance outstanding under the revolving credit facility. Term Loan Facility .
These adjustments and incentives are accounted for as variable consideration, classified as other current liabilities under the new revenue standard and are shown as customer obligations within Other Accrued Liabilities as disclosed in Note 1 Organization and Summary of Significant Accounting Policies to the consolidated financial statements contained elsewhere in this report.
These adjustments and incentives are accounted for as variable consideration, classified as other current liabilities under the new revenue standard and are shown as customer obligations within Other Accrued Liabilities as disclosed in Note 1 Organization and Summary of Significant Accounting Policies in the notes to the consolidated financial statements.
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.
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 2024, we repaid $7.5 million of the principal outstanding on the Term Loan Facility.
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.
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 2024, $274.0 million of cash and cash equivalents was held by our foreign subsidiaries.
In addition, we expense in-process research and development projects acquired as part of a business acquisition, which have not yet reached technological feasibility, and which have no foreseeable alternative future use.
In addition, we expense in-process research and development projects acquired as part of an asset acquisition, which have not yet reached technological feasibility, and which have no foreseeable alternative future use.
See “Note 8. Debt” in the Notes to the Condensed Consolidated Financial Statements for additional information on our outstanding debt obligations. $100 Million Shelf Registration.
See Note 8. Debt in the notes to the consolidated financial statements for additional information on our outstanding debt obligations. 47 $100 Million Shelf Registration.
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.
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, partially offset by a deferred tax benefit of $25.9 million, and a net change in operating assets and liabilities of $23.4 million.
The overall decrease in net revenue for fiscal 2023 was due to demand and inventory corrections in our market areas resulting in a decrease in revenues in all our product applications.
The overall decrease in net revenue for fiscal 2024 was due to demand and inventory corrections in our market areas resulting in a decrease in revenues in most of our product 44 applications.
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.
Our days sales outstanding was 65 days in fiscal 2023 as compared to 61 days in fiscal 2022. Our inventory turns decreased to three times in fiscal 2023 from four times in fiscal 2022. Cash Flows from Investing Activities.
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.
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.
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.
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.
Our goodwill is contained within two reporting units: IoT, and Mobile/PC. 36 We perform our goodwill impairment analysis in the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis.
Our goodwill is contained within three product categories: Core IoT, Enterprise and Automotive and Mobile. 42 We perform our goodwill impairment analysis in the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis.
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.
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.
Goodwill Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations. Our reporting units are at the operating segment level.
Goodwill Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations.
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.
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 June and December of each year.
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.
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 the underlying shares for share-based awards, partially offset by $17.6 million in proceeds from the issuance of shares primarily under the employee stock purchase plan.
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.
The following table sets forth a summary of our material contractual obligations and commercial commitments as of the end of fiscal 2024 (in millions): Payments due by period Contractual Obligations Total Less than 1 year 1-3 Years 3-5 Years Thereafter Long-term debt (1) $ 1,261.7 $ 67.6 $ 133.9 $ 1,060.2 $ — Leases 58.3 13.3 18.4 11.6 15.0 Purchase obligations and other commitments (2) 110.1 75.8 34.3 — — Total $ 1,430.1 $ 156.7 $ 186.6 $ 1,071.8 $ 15.0 (1) Represents the principal and interest payable through the maturity date of the underlying contractual obligation.
The provision for income taxes was $52.4 million and $64.6 million in fiscal 2023 and 2022, respectively, represented estimated federal, foreign, and state income taxes.
The (benefit)/provision for income taxes of ($250.2) million and $52.4 million in fiscal 2024 and 2023, respectively, represented estimated federal, foreign, and state income taxes.
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.
In certain cases, we rely on a single source, or a limited number of suppliers, to provide other key components of our products.
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.
The results of Emza are included in our consolidated financial statements for the periods from October 25, 2022. 39 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.
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
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. Recent Accounting Pronouncements Please see Note 1.
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.
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.
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.
The decrease in net revenue from Core IoT product applications was primarily driven by a 40.1% decrease in the units sold as well as a 4.4% decrease in average selling prices.
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%.
Net revenue was $959.4 million for fiscal 2024 compared with $1,355.1 for fiscal 2023, a decrease of $395.7 million, or 29.2%.
The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment, which occurs when the carrying value of a reporting unit exceeds its fair value.
The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment, which occurs when the carrying value of a reporting unit exceeds its fair value. Our qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors.
If these funds are needed for our operations in the U.S., we will be able to repatriate these funds without any further impact on our tax provision. Cash Flows from Operating Activities.
If these funds are needed for our operations in the U.S., we will be able to repatriate these funds without a material impact on our provision for income taxes. Cash Flows from Operating Activities. Operating activities during fiscal 2024 generated $135.9 million compared with $331.5 million net cash generated in fiscal 2023.
On July 28, 2023, we entered into the Third Amendment to our Credit Agreement, which provides that the consolidated interest coverage ratio financial covenant will only apply if, as of the last day of any fiscal quarter, our aggregate cash and cash equivalents are less than $450 million.
The Second Amendment replaces the LIBOR-based interest rate applicable to borrowings under the Credit Agreement with SOFR-based interest rate. The Third Amendment provides that the consolidated interest coverage ratio financial covenant only applies if, as of the last day of any fiscal quarter, our aggregate cash and cash equivalents balance is less than $450 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.
Liquidity and Capital Resources Our cash and cash equivalents were $876.9 million as of the end of fiscal 2024 compared with $924.7 million as of the end of fiscal 2023, a decrease of $47.8 million. The decrease primarily reflected cash flows provided by operating activities of $135.9 million, offset by $157.7 million of cash used in investing activities.
Our gross margin generally reflects the combination of the added value we bring to our OEM customers’ products by meeting their custom design requirements and the impact of our ongoing cost-improvement programs. These cost-improvement programs include reducing materials and component costs and implementing design and process improvements.
Additionally, we charge all warranty costs, losses on inventory purchase obligations, and the provision for excess and obsolete inventories to cost of revenue. Our gross margin generally reflects the combination of the added value we bring to our OEM customers’ products by meeting their custom design requirements and the impact of our ongoing cost-improvement programs.
Selling, general, and administrative expenses include expenses related to sales, marketing, and administrative personnel; internal sales and outside sales representatives’ commissions; market and usability research; outside legal, accounting, and consulting costs; and other marketing and sales activities.
We continue to commit to the technological and design innovation required to maintain our position in our existing markets, and to adapt our existing technologies or develop new technologies for new markets. 38 Selling, general, and administrative expenses include expenses related to sales, marketing, and administrative personnel; internal sales and outside sales representatives’ commissions; market and usability research; outside legal, accounting, and consulting costs; and other marketing and sales activities.
The decrease in mobile product applications was driven by a 29.3% decrease in the units sold as well as a 8.4% decrease in average selling prices.
The decrease in net revenue from Enterprise and Automotive product applications was driven by a 22.2% decrease in the units sold as well as a decrease of 14.2% in average selling prices. The increase in mobile product applications was driven by a 57.5% increase in the units sold, partially offset by a 29.8% decrease in average selling prices.
Our days sales outstanding was 65 days in fiscal 2023 as compared to 61 days in fiscal 2022.
Our days sales outstanding was 52 days in fiscal 2024 as compared to 65 days in fiscal 2023. Our inventory turns increased to four times in fiscal 2024 from three times in fiscal 2023.
The increase is due to higher interest rates on our cash, cash equivalents and short-term investments. Interest Expense. Interest expense and amortization of debt issuance costs increased $25.3 million to $55.5 million during fiscal 2023 as compared to $30.2 million during fiscal 2022.
Interest and other income increased $15.1 million, to $42.3 million for fiscal 2024 compared with fiscal 2023. The increase is due to higher interest rates on our cash, cash equivalents and short-term investments during fiscal 2024 compared to the same period a year ago. Interest Expense .
Inflation in the costs of goods and services has not had a material impact on our results of operations, but rising inflation could increase our operating expenses and reduce our net income.
In addition, although we currently do not believe inflation in the costs of goods will have a material impact on our results of operations, it is possible that elevated inflation could increase our cost of goods sold and/or operating expenses and reduce our gross profit and net income.
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.
These cost-improvement programs include reducing materials and component costs and implementing design and process improvements. 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.
Acquired intangibles amortization, included in operating expenses, consists primarily of amortization of customer relationship and tradenames intangible assets recognized under the purchase method for business combinations. Restructuring costs primarily reflect severance costs related to the restructuring of our operations to reduce operating expenses and gain efficiencies from our recent acquisitions.
Acquired intangibles amortization, included in operating expenses, consists primarily of amortization of customer relationship and tradename intangible assets recognized under the purchase method for business combinations. Intangible asset impairment charges during fiscal 2024 were $16.0 million.
This approach requires us to work closely with our contract manufacturers and semiconductor fabricators to ensure adequate production capacity to meet our forecasted volume requirements. As a result of recent supply constraints and capacity shortages affecting the global semiconductor industry, we have entered into long-term capacity and pricing agreements with some suppliers.
This approach requires us to work closely with our contract manufacturers and semiconductor fabricators to ensure adequate production capacity to meet our forecasted volume requirements. We use third-party wafer manufacturers to supply wafers and third-party packaging manufacturers to package our proprietary ASICs.
Interest expense on the $600 million incremental Term Loan Facility increased by $26.0 million during fiscal 2023 compared to the same period a year ago, as the interest rate on the Term Loan Facility increased by approximately 340 basis points period-over-period.
The increase in interest expense is primarily driven by the rise in interest rates on our $600 million incremental Term Loan Facility during fiscal 2024 compared to the same period a year ago. 45 (Benefit)/Provision for Income Taxes.
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.
Of our fiscal 2024 net revenue, $177.6 million, or 18.5%, of net revenue was from Core IoT product applications market, $570.0 million, or 59.4%, of net revenue was from Enterprise and Automotive product applications, and $211.8 million, or 22.1%, of net revenue was from Mobile product applications market.
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.
Goodwill and Acquired Intangible Assets in the notes to the consolidated financial statements for additional information on intangible asset impairment charge. 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.
Net revenue from IoT product applications decreased $154.6 million, or 14.0%, net revenue from PC product applications decreased $125.7 million, or 36.6%, and net revenue from mobile product applications decreased $104.3 million, or 35.3%.
Net revenue from Core IoT product applications decreased $132.3 million, or 42.7%, net revenue from Enterprise and Automotive product applications decreased $283.7 million, or 33.2%, and net revenue from mobile product applications increased $20.3 million, or 10.6%.
On March 16, 2023, we entered into the Second Amendment to our Credit Agreement, dated March 11, 2021. The Second Amendment replaces the LIBOR-based interest rate applicable to borrowings under the Credit Agreement with SOFR-based interest rate .
In fiscal 2024, we paid interest expense of $16.0 million on the Senior Notes. Bank Credit Facility. On March 16, 2023, we entered into the Second Amendment, and on July 28, 2023, we entered into the Third Amendment to our Credit Agreement, dated March 11, 2021.
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.
Selling, general, and administrative expenses decreased by $13.7 million, to $161.3 million, for fiscal 2024 compared with fiscal 2023. The decrease in selling, general, and administrative expenses primarily reflected a $12.2 million decrease in stock-based compensation charges primarily driven by the resignation of certain members of our executive team during fiscal 2024 and a $3.0 million decrease in variable compensation.
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.
These headcount-related costs included personnel in operations, research and development, and selling, general and administrative functions. Restructuring costs incurred in fiscal 2024 were $10.5 million. There were no restructuring costs incurred during fiscal 2023. See Note 16. Restructuring Activities in the notes to the consolidated financial statements for additional information on restructuring costs. Non-Operating Income. Interest and Other Income.
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.
Gross margin as a percentage of net revenue was 45.8%, or $439.8 million, for fiscal 2024 compared with 52.8%, or $715.9 million, for fiscal 2023.
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.
Tax Cuts and Jobs Act of 2017, and non-deductible officer compensation. See Note 14. Income Taxes in the notes to the consolidated financial statements for additional information on our provision for income taxes. Fiscal 2023 Compared with Fiscal 2022.
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.
Net cash used by financing activities for fiscal 2024 consisted of $36.9 million used for payroll taxes on the delivery of the underlying shares for share-based awards and $7.5 million in debt repayments, partially offset by $15.9 million proceeds from the issuance of shares primarily under the employee stock purchase plan.
The increase in selling, general and administrative expense was partially offset by a decrease of $11.2 million in variable compensation costs. Acquired Intangibles Amortization. Acquired intangibles amortization reflects the amortization of intangibles acquired through recent acquisitions. See Note 7 Goodwill and Acquired Intangible Assets to the consolidated financial statements contained elsewhere in this report. 39 Restructuring Costs.
Acquired Intangibles Amortization. Acquired intangibles amortization reflects the amortization of intangibles acquired through recent acquisitions. See Note 7. Goodwill and Acquired Intangible Assets in the notes to the consolidated financial for additional information on acquired intangibles amortization. Intangible asset impairment charge. Intangible asset impairment reflects the impairment of certain indefinite-lived intangible assets. See Note 7.
The effective tax rate for fiscal 2023 diverged from the combined U.S. federal and state statutory tax rate primarily due to tax law changes becoming effective in our fiscal 2023, including non-creditable foreign withholding taxes resulting from the final foreign tax credit regulations published in January 2022 and the research and development capitalization rules increasing our GILTI, resulting from the U.S.
The effective tax rate for fiscal 2024 diverged from the combined U.S. federal and state statutory tax rate primarily due to a one-time deferred tax benefit of $263.0 million arising from the domestication of certain foreign subsidiaries and the onshoring of certain intellectual property during the fourth quarter of fiscal 2024, partially offset by foreign income taxed at higher rates, the research and development capitalization rules increasing our global intangible low-taxed income, or GILTI, resulting from the U.S.
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 fiscal 2024, net cash provided by operating activities was primarily attributable to net income of $125.6 million plus a $30.1 million net change in operating assets and liabilities, partially offset by net adjustments for non-cash items of $19.8 million.
Removed
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.
Added
Nearly all of our revenue, except an inconsequential amount, is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions. Revenue recognition from the licensing of our IP is dependent on the nature and terms of each agreement.
Removed
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.
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.
Removed
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.
Added
During fiscal 2024, we recorded an indefinite-lived intangible asset impairment charge of $16 million on our in-process research and development, or IPR&D, from our December 2021 acquisition of DSPG. See Note 7. Goodwill and Acquired Intangible Assets in the notes to the consolidated financial statements for additional information.
Removed
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.
Added
Restructuring costs primarily reflect severance costs related to the restructuring of our operations to reduce operating expenses and gain efficiencies from our recent acquisitions. See Note 16. Restructuring Activities in the notes to the consolidated financial statements for additional information.
Removed
Additionally, we charge all warranty costs, 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, to cost of revenue.
Added
In July 2023, we entered into a transaction with Broadcom to extend the exclusivity period of certain developed technologies and to license certain technology assets for an aggregate consideration of $130.0 million, which was paid in cash in the first quarter of fiscal 2024.
Removed
We continue to commit to the technological and design innovation required to maintain our position in our existing markets, and to adapt our existing technologies or develop new technologies for new markets.
Added
Emza On October 25, 2022, we acquired all of the outstanding shares of Emza for total purchase consideration of $15.8 million, which was paid in cash.
Removed
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.
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.

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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 changeCosts 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.
Biggest changeCosts denominated in foreign currencies were approximately 17% and 13% of our total costs in fiscal 2024 and 2023, respectively. 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.
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.
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 2024 and 2023 was denominated in U.S. dollars.
There 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.
There have been no significant changes in the maturity dates and average interest rates for our cash equivalents subsequent to fiscal 2024. 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.
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.
A hypothetical weighted-average change of 10% in currency exchange rates would have changed our operating income before taxes by approximately $18.1 million and our net income by approximately $22.1 million for fiscal 2024, assuming no offsetting hedge positions. However, this quantitative measure has inherent limitations.
Approximately 12% and 2% of our accounts payable were denominated in foreign currencies in June 2023 and June 2022, respectively.
Approximately 5% and 12% of our accounts payable were denominated in foreign currencies in June 2024 and June 2023, respectively.
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.
Debt for further information. A hypothetical increase in the interest rate by 1% would result in an increase in annual interest expense by approximately $5.8 million.

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