What changed in this filing

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Item 1. Business

2022-09-20 compared with 2021-08-30 · 99 added, 80 removed, 360 unchanged (33% of the section changed)

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We are a designer, developer and global supplier of a broad portfolio of power semiconductors.

Our portfolio of power semiconductors includes approximately 2,400 products, and has grown significantly with the introduction of over 160 new products in the fiscal year ended June 30, 2021, and over 160 and 200 new products in the fiscal year ended June 30, 2020 and 2019, respectively.

Our portfolio of power semiconductors includes approximately 2,500 products, and has grown significantly with the introduction of over 130 new products in the fiscal year ended June 30, 2022, and over 160 new products in each of the fiscal years ended June 30, 2021 and 2020, respectively.

Our teams of scientists and engineers have developed extensive intellectual properties and technical knowledge that encompass major aspects of power semiconductors, which we believe enables us to introduce and develop innovative products to address the increasingly complex power requirements of advanced electronics.

We have an extensive patent portfolio that consists of 888 patents and 62 patent applications in the United States as of June 30, 2022.

We also have a total of 898 foreign patents, which primarily were based on our research and development efforts through June 30, 2021.

We also have a total of 936 foreign patents, which were based primarily on our research and development efforts through June 30, 2022.

We differentiate ourselves by integrating our expertise in technology, design, and advanced packaging to optimize product performance and cost.

Our portfolio of products targets high-volume applications, including portable computers, graphics cards, flat panel TVs, home appliances, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.

Our portfolio of products targets high-volume applications, including portable computers, graphics cards, flat panel TVs, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.

During the fiscal year ended June 30, 2022, we continued our diversification strategy by developing new silicon and packaging platforms to expand our serviceable available market, or SAM, and offer higher performance products.

Our metal-oxide-semiconductor field-effect transistors, or MOSFET, portfolio expanded significantly across a full range of voltage applications.

We also developed new technologies and products designed to penetrate into markets beyond our MOSFET computing base, including the consumer, communications and industrial markets, Insulated Gate Bipolar Transistors, or IGBTs for the home appliance market, as well as power ICs for the next generation computing applications.

Our business model leverages global resources, including research and development and manufacturing in the United States and Asia.

Our sales and technical support teams are localized in several growing markets.

Our sales and technical support teams are localized in several growing markets around the world.

We operate an 8-inch wafer fabrication facility located in Hillsboro, Oregon (the "Oregon fab"), which is critical for us to accelerate proprietary technology development, new product introduction and improve our financial performance.

To meet the market demand for the more mature high volume products, we also utilize the wafer manufacturing capacity of selected third party foundries.

Recently we expanded and upgraded our manufacturing capabilities at the Oregon Fab.

The expansion is expected to be completed in the fiscal quarter ending March 31, 2023.

To meet the market demand for more mature high-volume products, we also utilize the wafer manufacturing capacity of selected third party foundries.

For assembly and test, we primarily rely upon our in-house facilities in China.

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We believe our in-house packaging and testing capability provides us with a competitive advantage in proprietary packaging technology, product quality, costs and sales cycle time.

On March 29, 2016, we entered into a joint venture contract (the “JV Agreement”) with two investment funds affiliated with the municipalities of Chongqing (the “Chongqing Funds”), pursuant to which we and Chongqing Funds formed a joint venture, (the “JV Company”), for the purpose of constructing a power semiconductor assembly and test facility and a 12-inch wafer fabrication facility in the Liangjiang New Area of Chongqing, China (the “JV Transaction”).

As of June 30, 2021, we own 51%, and the Chongqing Funds own 49%, of the equity interest in the JV Company.

During the fiscal year 2021, the

additional capacity at the JV Company contributed significantly to meeting the increasing demand for our products.

The JV Company has reached its targeted production of assembly and testing and is currently ramping up its Phase I of the 12-inch wafer fabrication.

While the JV Company is our consolidated subsidiary for purpose of financial reporting, it operates as an independent and separate legal entity.

As a result, the JV Company’s assets and liabilities are generally segregated from our company's assets and liabilities.

For example, the JV Company incurs debt through its own financing and bank loan agreements, and we are not parties to these agreements and do not provide any guarantee or security for the JV Company’s debt, nor do we have direct access to any cash proceeds borrowed from such loan agreements.

On March 29, 2016, the Company entered into a joint venture contract (the “JV Agreement”) with two investment funds owned by the Municipality of Chongqing (the “Chongqing Funds”), pursuant to which the Company and the Chongqing Funds formed a joint venture, (the “JV Company”), for the purpose of constructing and operating a power semiconductor packaging, testing and 12-inch wafer fabrication facility (the “Chongqing Fab”) in the LiangJiang New Area of Chongqing, China (the “JV

Transaction”).

The Chongqing Fab is being built in phases.

As of December 1, 2021, the Company owned 50.9%, and the Chongqing Funds owned 49.1% of the equity interest in the JV Company.

The JV Company was accounted under the provisions of the consolidation guidance since the Company had controlling financial interest until December 1, 2021.

Effective December 1, 2021, the Company entered into a share transfer agreement (the “STA”) with a third-party investor (the “Investor”), pursuant to which the Company sold to the Investor approximately 2.1% of outstanding equity interest held by the Company in the JV Company for an aggregate purchase price of RMB 108 million or approximately $16.9 million (the “Transaction”).

The Transaction was closed on December 2, 2021 (the “Closing Date”).

As a result of the Transaction, as of the Closing Date, the Company’s equity interest in the JV Company decreased from 50.9% to 48.8%.

Also, the Company’s right to designate directors on the board of JV Company was reduced to three (3) out of seven (7) directors from four (4) directors prior to the Transaction.

As a result of the Transaction, AOS no longer had a controlling financial interest in the JV Company under generally accepted accounting principles.

Loss of control is deemed to have occurred when, among other things, a parent company owns less than a majority of the outstanding equity interest in the subsidiary, lacks a controlling financial interest in the subsidiary and, is unable to unilaterally control the subsidiary through other means such as having, or the ability to obtain or represent, a majority of the subsidiary’s board of directors.

Because of these factors, as of December 2, 2021, the Company ceased having control over the JV Company.

Therefore, the Company deconsolidated the financial statements of the JV Company as of that date.

Subsequently, the Company has accounted for its investment in the JV Company using the equity method of accounting.

On December 24, 2021, the Company entered into a share transfer agreement with another third-party investor, pursuant to which the Company sold to this investor 1.1% of outstanding equity interest held by the Company in the JV Company for an aggregate purchase price of RMB 60 million, or approximately $9.4 million.

In addition, on December 30, 2021, the JV Company adopted an employee equity incentive plan and issued an equity interest equivalent to 3.99% of the JV Company in exchange for cash.

As a result, the Company owned 45.8% of the equity interest in the JV Company as of December 31, 2021.

On January 26, 2022, the JV Company completed a financing transaction pursuant to a corporate financing agreement (the “Financing Agreement”) between the JV Company and certain third-party investors (the “New Investors”).

Under the Financing Agreement, the New Investors purchased newly issued equity interest of the JV Company for a total purchase price of RMB 509 million (or approximately $80 million based on the currency exchange rate as of January 26, 2022) (the “Investment”).

Immediately following the closing of the Investment, the percentage of outstanding JV Company equity interest beneficially owned by the Company was further reduced to 42.2%.

We were incorporated in Bermuda on September 27, 2000 as an exempted limited liability company.

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office is (408) 830-9742.

We have incorporated various wholly-owned subsidiaries in different jurisdictions, and a subsidiary (the JV Company) in which we have a controlling interest.

We have incorporated various wholly-owned subsidiaries in different jurisdictions, and a subsidiary (the JV Company) in which we have a minority interest.

Please refer to Exhibit 21.1 to this Form 10-K for a complete list of our subsidiaries.

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These advances have led to a proliferation of more complex semiconductors being used in a wide variety of consumer, computing, communications and industrial markets and have contributed to the growth of the semiconductor industry.

This has been accelerated by more regulations governing energy efficiency in many end applications.

Analog semiconductors

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In addition, analog semiconductors tend to have a longer product life cycle because original design manufacturers, or ODMs and original equipment manufacturers, or OEMs typically design the analog portions of a system to span multiple generations of their products.

Once designed into an application, the analog portion is rarely modified because even a slight change to the analog portion can cause unexpected interactions with other components, resulting in system instability.

Once designed into an

application, the analog portion is rarely modified because even a slight change to the analog portion can cause unexpected interactions with other components, resulting in system instability.

Power semiconductors

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In the area of AC-DC power supplies for electronic equipment, data centers and servers, the market is characterized by a continuous demand for energy conservation through higher efficiency, which is driving the need for our medium voltage (40V-400V) and high voltage (500V-1000V) MOSFET products.

The increased

application of power semiconductors to control motors in white goods and industrial applications, is driving demand for Insulated Gate Bipolar Transistors, or IGBTs.

The increased application of power semiconductors to control motors in white goods and industrial applications, is driving demand for Insulated Gate Bipolar Transistors, or IGBTs.

IGBTs are also being used in renewable energy and automotive applications.

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Our in-house manufacturing capability allows us to retain a higher level of control over the development and application of our proprietary process technology, thereby reducing certain operational risks and costs associated with utilizing third-party foundries.

We recently commenced a plan to enhance the manufacturing capability and capacity of our Oregon fab by investing in new equipment and expanding our factory facilities, which we expect will have a positive impact on our future new product development and revenue, particularly during the period of global shortage of capacity.

We recently commenced a plan to enhance the manufacturing capability and capacity of our Oregon Fab by investing in new equipment and expanding our factory facilities, which we expect will have a positive impact on our future new

product development and revenue, particularly during the period of global shortage of capacity.

The expansion is expected to be completed in the fiscal quarter ending March 31, 2023.

Although our largest end-market is the personal computing (“PC”) market, we have successfully diversified our business by expanding into other markets, including the consumer, communications, power supply and industrial markets.

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We also believe that engineers with experience and understanding of these multiple disciplines are in great demand but short supply.

Within this context, we believe that we are well positioned to be a leader in providing total power management solutions

because of our extensive pool of experienced scientists and engineers and our strong IP portfolio.

Within this context, we believe that we are well positioned to be a leader in providing total power management solutions because of our extensive pool of experienced scientists and engineers and our strong IP portfolio.

Accordingly, we intend to leverage our expertise to increase the number of power discrete technology platforms and power IC designs, including future digital power controller products that are currently under development, to expand our product offerings and deliver complete power solutions for our targeted applications.

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This will assist us in identifying and defining new technology trends and products and to help us gain additional design wins.

In addition, we have made significant progress in the past fiscal year towards the completion of the manufacturing facilities and commencement of production at the JV Company.

We expect the JV Company will, in the long term, reduce the cost of manufacturing our products and accelerate the development of new products, while allowing us to gain valuable access to new customers in China.

While we no longer retain a controlling interest in the JV Company, we expect to continue our strong relationship with the JV Company to support our manufacturing capacity, and we recently entered into a new agreement with the JV Company pursuant to which the JV Company agrees to provide us with a guaranteed supply of a fixed number of wafers until December 2023.

In addition, we intend to continue to seek potential partners and collaborators to develop new technologies and products, as well as to explore other strategic transactions that will enable us to expand our manufacturing capacity and establish our global footprint.

To serve the large and diverse analog market for power semiconductors, we have created a broad product portfolio consisting of two major categories:

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We introduced several new products based on our proprietary technology platform and continue to expand our product families.

During the fourth quarter of fiscal year of 2021, we introduced a series of single-channel Transient Voltage Suppressor (TVS) for high-speed line protection using the best-in-class low capacitance TVS platform.

The new products are well suited for Electrostatic Discharge (ESD) protection of Type-C connectors in mobiles, laptops, televisions, and other electronic devices.

We also announced a new series of Smart Power Stages (SPS) targeting multiphase VR regulators powering high-performance GPU and CPU in desktop Add-In Graphics Cards (AICs), gaming laptops, servers, data storage, artificial intelligence, and networking equipment.

In addition, we introduced a new family of application-specific EZBuck™ regulators.

The AOZ2263VQI-01 and AOZ2263VQI-02 are offered in a QFN 4 x 4 package and offer the industry’s most compact footprint to support VCCIO rails in Intel Rocket Lake platforms used in desktop computing systems.

During the third quarter of fiscal year of 2021, we released a new family of active AC-DC bridge rectifiers.

Aptly trademarked AlphaZBL™ for “zero bridge loss,” this new family of products virtually eliminates the bridge rectifier losses in AC-DC power supplies and adaptors.

Typical end applications include high power 100W and above adaptors used for high-end laptops and televisions as well as power supplies for Desktops, Game consoles, Servers, and Telecom.

We also released the new AEC-Q101 qualified 1200V silicon carbide (SiC) αSiC MOSFETs in optimized TO-247-4L package.

Ideal for the high efficiency and reliability requirements of electric vehicle (EV) on-board chargers, motor drive inverters, and off-board charging stations, these 1200V SiC MOSFETs provide the industry-leading lowest on-resistance available for an automotive qualified TO-247-4L with a standard gate drive of 15V.

We introduced a new family of application-specific EZBuck™ regulators.

The AOZ2264VQI and AOZ2369VQI are offered in a QFN 4 x 4 and QFN 5 x 5 package, respectively, and offer the industry’s most compact footprint to support VCCIN_AUX rails in Intel Tiger Lake platforms used in notebook and desktop computing systems.

Moreover, we announced a new Type-C Power Delivery (PD) high voltage source protection switch capable up to 28V absolute maximum voltage.

The AOZ1374 is a smart protection switch in a small thermally enhanced 3mm x 3mm DFN package.

AOS’s prowess in high-performance ICs combined with AOS’s state of the art high SOA MOSFETs using advanced co-packaging techniques.

AOZ1374 supports a slew of protection features, including true reverse blocking in a small solution footprint with an industry-leading on-resistance of 36mOhm.

During the second quarter of fiscal year of 2021, we released AOTL66518 and AOB66518L, a 150V MOSFET with low on-resistance and a high Safe Operating Area (SOA) capability designed for demanding applications in Telcom Hot Swap.

Also, we announced the release of a Fast Switching 600V αMOS5™ Super Junction MOSFETs in SMD-type TOLL Package.

During the fourth quarter of fiscal year of 2022, we introduced compact, 30V, 3A Buck Regulator Module.

This device offers a simple, compact solution suited to a wide variety of applications such as industrial, factory automation, networking, and general-purpose point of load.

We also introduced 2-in-1 super low capacitance TVS for USB4.0 & thunderbolt 4.0 & HDMI2.1 protection.

This device provides the best solution for an ideal pin-out for differential signal, space saving of super high-speed interface application, and reduces the part counts on circuit board.

We believe this new approach benefits customers to accomplish the best design and logistics management.

During the third quarter of fiscal year of 2022, we introduced the AOZ71026QI, a 2 rail, 6 phase controller for notebook Vcore power delivery.

This new device features the world’s lowest quiescent power for a multiphase controller designed to meet Intel IMVP 8, 9, 9.1, and 9.2 specifications.

We released the 600V 110mOhm and 140mOhm αMOS5™ Super Junction MOSFETs in DFN8x8 Package.

αMOS5 is AOS’s latest generation of high voltage MOSFET, designed to meet the high efficiency and high-density needs for Quick Charger, Adapter, PC Power, Server, Industrial Power, Telecom, and Hyperscale Datacenter applications.

During the first quarter of fiscal year of 2021, we introduced a series of Transient Voltage Suppressors for high-speed line protection using the best-in-class low capacitance TVS platform.

The new products are well suited for Electrostatic Discharge (ESD) protection for laptops, televisions, and other electronic devices.

In addition, we announced a new series of DrMOS targeting multiphase VR regulators powering high-performance GPU and memory in desktop Add-In Graphics Cards (AICs) and gaming notebooks.

The AOZ531xQI series uses AOS latest generation of Gen Alpha MOSFET technology to provide benchmark performance in a 5mm x 5mm QFN package.

The series comprises of three DC current levels for multiphase voltage regulator optimization.

Also, we announced the release of, AONS32310, a 30V MOSFET with low on-resistance and a high Safe Operating Area (SOA) capability which is ideally suited for demanding applications such as hot swap and effuse.

Moreover, we announced the release of RigidCSP™ for battery management.

The new package technology is ideal for applications such as smartphones, tablets, and ultra-thin notebooks.

We also released AOZ32034AQV, a new product in the family of coil drivers for wireless charging transmitter circuits of up to 50W.

Packaged in a thermally enhanced QFN 4 x 4 package, the device is designed for wireless charging applications in charging stations, cordless power tools, vacuum cleaners, drones, and other consumer electronic equipment.

In addition, we released our initial eFuse product for sub-power rails in server applications.

The new devices offer low RDS(ON) (20mohm) back-to-back MOSFETs to isolate the load from the input bus when the eFuse is off.

During the second quarter of fiscal year of 2022, we released 600V Low Ohmic and Fast Body Diode αMOS5™ Super Junction MOSFETs Family.

αMOS5 is our latest generation of high voltage MOSFET, designed to meet the high efficiency and high-density needs for Quick Charger, Adapter, PC Power, Server, Industrial Power, Telecom, and Hyperscale Datacenter applications.

We also released our latest 80V Power MOSFET using patented Shield Gate Technology which is optimized for higher switching frequencies used in telecom and server power supply to achieve higher efficiency.

The 80V MOSFET family of devices offers the highest levels of power density and energy efficiency, which are essential in solar, power supplies, and battery power applications such as in eScooters.

During the first quarter of fiscal year of 2022, we announced a new family of Coil Drivers.

The device is ideally suited to the design of Wireless Charging TX circuits used in cordless power tools, vacuum cleaners, drones, and other consumers’ electronic equipment composed of full-bridge topology with a resonant tank circuit to get the best power conversion efficiency.

We also announced a new Type-C Power Delivery high voltage sink protection switch using ideal diode methodology for reverse current protection.

The new devices offer low RDS(ON) (20mohm) back-to-back MOSFETs to block any reverse current under fault conditions and are capable of up to 28V absolute maximum voltage.

In addition, we introduced the first product of the AOS Digital Controller product portfolio.

The AOZ97774QE is offered in a QFN 5mm x 5mm package and provides the industry’s most flexible DC/DC controller supporting 5G Wireless, Networking, Optical Communication, and General-Purpose DC/DC applications.

Distributors and customers

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FAEs work with our end customers to understand their requirements and resolve technical problems.

FAEs also strive

to anticipate future customer needs and facilitate the design-in of our products into the end products of our customers.

FAEs also strive to anticipate future customer needs and facilitate the design-in of our products into the end products of our customers.

We believe this strategy increases our share of revenue opportunities within the applications we currently serve, as well as in new end-market applications.

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Some of our competitors have longer operating histories, more brand recognition, and significantly greater financial, technical, research and development, sales and marketing, manufacturing and other resources.

However, we believe that we can compete effectively through our integrated and innovative technology platform and design capabilities, including our strong

and extensive patent portfolio, strategic global business model, expanding suites of new products, diversified and broad customer base, and excellent on-the-ground support and quick time to market for our products.

However, we believe that we can compete effectively through our integrated and innovative technology platform and design capabilities, including our strong and extensive patent portfolio, strategic global business model, expanding suites of new products, diversified and broad customer base, and excellent on-the-ground support and quick time to market for our products.

As we provide power semiconductors used in consumer electronic products, our business is subject to seasonality.

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We also evaluate appropriate investment levels and stay focused on new product introductions to improve our competitiveness.

We have research and development teams in Silicon Valley (Sunnyvale, California), Oregon, Taipei, Taiwan, and China.

We have research and development teams in Silicon Valley (Sunnyvale, California), Oregon, Taiwan, and China.

We believe that these diverse research and development teams enable us to develop leading edge technology platforms and new products.

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We focus on specialized process technology in the manufacturing of our products, including vertical DMOS, Shielded Gate Trench, Trench field stop IGBTs, charge-balance high voltage MOSFETs, Schottky Diode and BCDMOS processes.

Our process engineers work closely with our design team to deploy and implement our proprietary manufacturing processes at our Oregon fab, and more recently, at the 12 inch fab at the JV Company as well as the third-party foundries that fabricate our wafers.

Our process engineers work closely with our design team to deploy and implement our proprietary manufacturing processes at our Oregon Fab, and more recently, at the Chongqing Fab as well as the third-party foundries that fabricate our wafers.

To improve our process technology, we continue to develop and enhance our expertise in device physics in order to better understand the physical characteristics of materials and the interactions among these materials during the manufacturing process.

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Our Oregon Fab allows us to accelerate the development of our technology and products, as well as to provide better service to our customers.

We allocate our wafer production between our in-house facility and third-party foundries, although in the past three years, we have gradually reduced our reliance on third-party foundries and increased allocation of capacity to our Oregon fab and at our JV Company.

We allocate our wafer production between our in-house facility and third-party foundries.

During the past three years, we have gradually reduced our reliance on third-party foundries and increased allocation of capacity to our Oregon Fab and Chongqing Fab.

We recently entered into a new agreement with the JV Company pursuant to which the JV Company agrees to provide us with a guaranteed supply of a fixed number of wafers until December 2023.

Currently our main third-party foundry is Shanghai Hua Hong Grace Electronic Company Limited, ("HHGrace"), or formerly HHNEC, located in Shanghai.

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HHGrace manufactured 10.3%, 11.5% and 12.7% of the wafers used in our products for the fiscal years ended June 30, 2022, 2021 and 2020, respectively.

On March 29, 2016, we entered into the JV agreement with two investment funds affiliated with the municipalities of Chongqing for the purpose of constructing a power semiconductor packaging, testing and 12-inch wafer fabrication facility in the Liangjiang New Area of Chongqing.

During the fiscal year 2021, the additional capacity at the JV Company contributed significantly to meeting the increasing demand for our products.

The JV Company has reached its targeted production of assembly and testing.

We believe the JV Company will increase and diversify our customer base, particularly in China, and accelerate the development of proprietary process technology.

Packaging and testing

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Notwithstanding our global footprint and various geographical locations, we have created an integrated workforce where employees worldwide work and collaborate as a team to advance our common business objectives, while retaining local and regional practices and cultures.

We are committed to provide a working environment in which our employees can realize fully their talents and develop successful careers.

We are committed to providing a work environment in which our employees can realize fully their talents and develop successful careers.

As our strength is in our people, we invest significantly in our employees by providing a wide range of training and development opportunities, including mentoring, coaching, attendance at external seminars and professional conferences, and regular in-house training sessions on specific topics.

We train our managers to become good stewards for our employees, balancing the need of quality of life and performance results.

We believe that these efforts contributed to the growth of our employee, as more than 50% of our managerial positions are promotions of existing employees within our companies.

We believe that these efforts contribute to the growth of our employees, as more than 50% of our managerial positions are filled through promotions of existing employees.

We also keep our employees engaged and informed by providing periodic all-staff communications, and semi-annual performance reviews to ensure that efforts and results are aligned with our business and strategic corporate objectives.

We value feedback from our employees and have an open door policy in our engagement with employees, and we encourage

employees to have regular conversations with their managers to share feedback and express concerns.

We value feedback from our employees and have an open-door policy in our engagement with employees, and we encourage employees to have regular conversations with their managers to share feedback and express concerns.

We also solicit employee feedback informally through regular employee interactions.

In addition, we conduct employee satisfaction surveys at certain locations to help management identify areas that may require improvement.

As part of AOS tradition, we also organize social events, including annual appreciation picnics, when possible given Covid-19 conditions, and holiday parties, inviting both employees and their families to join.

As part of the AOS tradition, we also organize social events, including annual appreciation picnics (when possible given COVID-19 conditions), and holiday parties, inviting both employees and their families to join.

We believe these efforts enable us to build a strong and solid group of loyal employees who form the core of our human capital resource.

We are committed to provide an environment where employees from all walks of life are treated with respect, care and dignity.

To recruit new talent, we reach out to a broad range of sources, including employee referrals, on-line advertising, recruitment agencies, and other social medias to seek out the best qualified candidates regardless of their backgrounds.

We are committed to providing an environment where employees from all walks of life are treated with respect, care and dignity.

To recruit new talent, we reach out to a broad range of sources, including employee referrals, on-line advertising, recruitment agencies, and other social media platforms to seek out the best qualified candidates regardless of their backgrounds.

We are also focused on ensuring a diverse workforce, including our management team.

Our Nominating and Corporate Governance Committee leads the effort in recruiting qualified directors to serve on our Board, and we are in compliance with California’s gender diversity laws, as well as recent laws requiring a minimum number of directors from underrepresented communities.

Our Nominating and Corporate Governance Committee leads the effort in recruiting qualified directors to serve on our Board, and we are in compliance with applicable diversity laws.

Our employees appreciate and value the strength of our people-oriented culture and the benefits the workplace diversity brings.

We offer competitive compensation and benefits packages for our employees that include a combination of base salary, annual bonus, discretionary bonus for outstanding achievements, employee share purchase plan, time-based and performance based long term equity compensation.

We commit to a fair and living wage for all employees.

We offer competitive compensation and benefits packages for our employees that include a combination of base salary, annual bonus, discretionary bonus for outstanding achievements, an employee share purchase plan, time-based and performance-based long-term equity compensation.

Our equity related compensation programs are designed to motivate and incentivize our employees and align their rewards to financial and other business performance goals, while increasing our shareholder value.

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In addition, we have engaged nationally-recognized outside compensation consulting firms to independently evaluate the appropriateness and effectiveness of compensation for our executives and other officers and to provide benchmarks for executive compensation as compared to peer companies.

The health and safety of our employees are paramount to our companies.

The health and safety of our employees are paramount to our company.

At each of our major locations, we have formed site safety committees that conduct regular meetings to assess and improve effectiveness of our safety policies and guidelines, to monitor safety incidents and to oversee the implementation of corrective actions.

During the pandemic in 2020 and 2021, our COVID-19 prevention committees at factory sites in China took swift and decisive actions to prevent work-place contagion and to ensure the health and safety of our employees.

These actions included providing employees with Personal Protective Equipment ("PPE"), strict visitor controls, frequent sanitization of shuttle buses, temperature checking prior to boarding the shuttles, and temperature checking at the factory entrances, and regular self-audits.

As a result of these plans, we had zero COVID-19 cases at our facilities in China.

facilities, the COVID-19 prevention committees met regularly to update and enhance prevention measures in accordance to federal, state and county health orders, which allowed us to continue our operations without significant disruptions.

In addition, to support remote-working arrangements, we provided office workers with technology resources and in some cases a monthly stipend to set up home offices.

To protect our employees and their families against COVID-19 virus, we also implemented and sponsored bi-weekly on-site COVID-19 testing since January 2021 for essential employees who were authorized to work in our Sunnyvale lab facilities.

To protect our employees and their families against the COVID-19 virus, we also implemented and sponsored bi-weekly on-site COVID-19 testing beginning in January 2021 for essential employees who were authorized to work in our Sunnyvale lab facilities.

Our COVID-19 prevention committees at factory sites in China took swift and decisive actions to prevent work-place contagion and to ensure the health and safety of our employees.

These actions included providing employees with Personal Protective Equipments, strict visitor controls, frequent sanitization of shuttle buses, temperature checking prior to boarding the shuttles and at the factory entrances, and regular self-audits.

As a result of these actions, we had zero COVID-19 cases at our facilities in China.

From March 28, 2022 to June 1, 2022, our Songjiang factory was locked down in compliance with the local government’s COVID-19 prevention order.

The site was locked down with 885 employees who were not allowed to leave the factory.

No one from outside of the factory was permitted to enter, including cleaning crews.

A steering committee chaired by the General Manager of the factory and with certain management members from production, facilities and administration was formed on-site immediately to direct the logistics and measures necessary to ensure the safety and wellbeing of our employees onsite, and to provide adequate electricity, water supplies, food, bedding and sanitary supplies.

In addition, the committee also ensured that needs were met regarding government contacts, COVID-19 testing, isolation and transfer of sick employees, cleaning and disinfection of public places and restrooms, and trash disposal.

All of these requirements were facilitated internally by volunteers within the facilities due to the lock-down.

Many of our employees devoted themselves to meet these challenges.

The quick actions of the steering committee and our dedicated volunteers with their selfless and heroic acts were indispensable for our on-site employees’ survival during the lock-down.

The Company endeavored to provide all support necessary, ranging from material, monetary to psychological assistance.

All personnel on-site received special allowances in addition to their regular compensation to compensate for their hardship.

Employees who volunteered also received special appreciation bonuses to recognize their self-less and critical contributions.

Thanks to our on-site employees and the Company’s combined efforts, when our Songjiang factory received a green light to resume production, despite the on-going city-wide lock-down in Shanghai where most citizens were still restricted in their residences, we were able to resume partial production to deliver products critical to our customers.

Environmental matters

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Our products sold in worldwide are subject to RoHS in Electrical and Electronic Equipment, which requires that the products do not contain more than agreed levels of lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl and polybrominated diphenyl ether flame retardants.

Our manufacturing facilities in China also obtained QC080000 certification, which is an IECQ Certificate of Conformity Hazardous Substance Process Management for European Directive

2002/95/EC requirements and a Certificate of Green Partner for Sony Green Partner Program.

Our manufacturing facilities in China also obtained QC080000 certification, which is an IECQ Certificate of Conformity Hazardous Substance Process Management for European Directive 2002/95/EC requirements and a Certificate of Green Partner for Sony Green Partner Program.

We avoid using these restricted materials to the extent possible when we design our products.

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Prior to joining us, Mr.

Liang held various positions at PricewaterhouseCoopers LLP, or PwC, from 1995 to 2004, including Audit Manager in PwC's San Jose office.

Liang held various positions at

PricewaterhouseCoopers LLP, or PwC, from 1995 to 2004, including Audit Manager in PwC’s San Jose office.

Liang received his B.S.

1 unchanged sentence

in finance and accounting from the University of Alabama.

Li, Ph.D ., has served as our Chief Operating Officer since August 2021.

Li, Ph.D ., has been serving as our Chief Operating Officer since August 2021.

Prior to that, Dr.

2 unchanged sentences

in Chemistry and a M.S.

in Chemical Engineering from Taiyuan

University of Technology, and a Ph.D.

in Chemical Engineering from Taiyuan University of Technology, and a Ph.D.

in Microelectronics & Solid-State Electronics from the Research Institute of Micro-Nanometer Technology at Shanghai Jiao Tong University.

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business