What changed in this filing

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Item 1. Business

2025-03-03 compared with 2024-02-29 · 62 added, 62 removed, 166 unchanged (43% of the section changed)

Monolithic Power Systems, Inc.

(“MPS”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions.

(“MPS,” “we,” or “us”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions.

Incorporated in 1997, our three core strengths include deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.

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Our principal executive office is located in Kirkland, Washington.

We have over 3,500 employees worldwide, with locations in Asia (primarily in China, India, Japan, Singapore, South Korea and Taiwan), Europe (primarily in France, Germany, Hungary, Italy, Portugal, Spain, Switzerland and the United Kingdom) and the United States.

We have over 4,000 employees worldwide, with various locations in Asia, Europe and the U.S.

Industry Overview

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In addition, analog ICs also perform power management functions, such as regulating or converting voltages, for electronic devices.

Mixed-signal ICs combine digital and analog functions onto a single chip and play an important role in bridging real world to digital systems.

Analog and Mixed-Signal Markets.

Mixed-signal ICs combine digital and analog functions onto a single chip and play an important role in bridging real world applications to digital systems.

We focus on the market for high performance analog and mixed-signal ICs.

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These factors include longer product life cycles, numerous market segments, technology that is difficult to replicate, relative complexity of design and process technologies, importance of experienced design engineers, lower capital requirements and diversity of end markets.

We have targeted product and market areas that we believe have the ability to offer above-average growth over the long term compared to the semiconductor industry as a whole.

We have targeted product and market areas that we believe allow us to operate at above-average growth over the long term compared to the semiconductor industry as a whole.

End Markets and Applications

We design and develop our products for the storage and computing, enterprise data, automotive, industrial, communications and consumer markets, with the storage and computing market representing the largest portion of our revenue in 2023.

The following table is a summary of the various end market applications for our products, and those markets’ contribution as a percentage of our total revenue:

We design and develop our products for the enterprise data, storage and computing, automotive, communications, consumer, and industrial end markets.

Enterprise data was our largest end market in 2024.

The following table is a summary of the various key end market applications for our products, and those markets’ contribution as a percentage of our total revenue:

Percentage of Total Revenue

Storage and computing

Storage applications, commercial notebooks, and graphics cards

Advanced driver assistance systems, infotainment, digital cockpit, USB connectors, body electronics, and lighting applications

Enterprise Data

Cloud-based CPU server applications, and server artificial intelligence (“AI”) applications

Home appliances, gaming, smart TVs, lighting, monitors, and stereos

Cloud-based and on-premises CPU server and workstation applications, and server artificial intelligence (“AI”) applications

Storage and computing

Storage applications, notebooks, and graphics cards

Advanced driver assistance systems, infotainment, USB connectors, body electronics, motion control and lighting systems

Communications

4G and 5G infrastructure, satellite communications, and other wireless applications

Network infrastructure, satellite communications, optical modules, and other wireless applications

Home appliances, gaming, smart TVs, lighting, monitors, and stereos

Power sources, industrial meter, security applications, and other industrial equipment

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Our proprietary process and packaging technologies enable us to design and deliver smaller, single-chip power management ICs.

These technologies simplify the design process and are applicable across a wide range of analog applications within the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.

Our key product families include, but not limited to, the Direct Current (“DC”) to DC, Alternating Current (“AC”) to DC, driver metal-oxide-semiconductor field-effect transistor, power management IC, current limit switch and lighting control products.

Our product families are differentiated from those of our competitors with respect to their high degree of integration and strong levels of accuracy, power efficiency, quality and longevity, making them cost-effective and more sustainable relative to many competing solutions.

Our key product families include the following:

Direct Current ( “ DC ” ) to DC Products.

DC to DC ICs are used to convert and control voltages within a broad range of electronic systems, such as cloud-based CPU servers, server AI applications, storage applications, commercial notebooks, digital cockpit, power sources, home appliances, 4G and 5G infrastructure and satellite communications applications.

We believe that our DC to DC products are differentiated in the market, particularly with respect to their high degree of integration, high voltage operation, high load current, high switching speed, small footprint, and high energy efficiency.

For example, DC to DC ICs are used to convert and control voltages within a broad range of electronic systems, such as cloud-based and on-premises CPU servers and workstation applications, server AI applications, storage applications, notebooks, infotainment, power sources, home appliances, network infrastructure and satellite communications applications.

We believe our DC to DC products are differentiated in the market, particularly with respect to their high degree of integration, high voltage operation, high load current, high switching speed, small footprint, and high energy efficiency.

These features are important to our customers as they are designed to result in fewer components that need to be produced and consumed, a smaller form factor, more accurate regulation of voltages, lower power consumption and, ultimately, lower system cost, increased reliability and lower carbon emissions through the elimination of many discrete components and power devices.

The DC to DC product family accounted for 94% of our total revenue in 2023 and 95% of our total revenue in both 2022 and 2021.

Lighting Control Products.

Lighting control ICs are used in backlighting and general illumination products.

Lighting control ICs for backlighting are used in systems that provide the light source for LCD panels typically found in computers and notebooks, monitors, car navigation systems and televisions.

Backlighting solutions are typically either white light emitting diode lighting sources or cold cathode fluorescent lamps.

The Lighting Control product family accounted for 6% of our total revenue in 2023 and 5% of our total revenue in both 2022 and 2021.

In the future, we plan to continue to introduce new products within our existing product families, as well as in new innovative product categories.

Our ability to achieve revenue growth will depend in part upon our ability to continue to innovate while fulfilling our customers’ evolving needs, enter new market segments, obtain design wins, grow our sales to customers in regions outside China, Taiwan and other Asian markets, expand our customer base and continue to secure manufacturing capacity.

Our ability to achieve revenue growth will depend, in part, upon our ability to continue to innovate while fulfilling our customers’ evolving needs, enter new market segments, obtain design wins, grow our sales in a diversified way across regions, expand our customer base and continue to secure manufacturing capacity.

Customers, Sales and Marketing

We have sales offices in China, India, Japan, Singapore, South Korea, Taiwan, the United States and throughout Europe.

We have sales offices in various locations in Asia, Europe and the U.S.

Our products typically require a highly technical sales and applications engineering effort where we assist our customers in the design and use of our products in their application.

We maintain a staff of applications engineers who work directly with our customers’ engineers in the development of their systems’ electronics containing our products.

Once we secure our product positioning through our technical sales and applications engineers’ efforts, we then sell our products through third-party distributors, value-added resellers and directly to original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”), electronic manufacturing service (“EMS”) providers and other end customers.

Our third-party distributors are subject to distribution agreements with us, which allow the distributors to sell our products to end customers and other resellers, including OEMs, ODMs or EMS providers.

Our value-added resellers may second source our products and provide other services to customers.

ODMs typically design and manufacture electronic products on behalf of OEMs, and EMS providers typically provide manufacturing services for OEMs and other electronic product suppliers.

In 2023, our three largest distributors accounted for 26%, 19% and 10% of our total revenue.

Once we secure our product positioning through our technical sales and applications engineers’ efforts, we then sell our products through third-party distributors and value-added resellers.

In addition, we sell directly to certain original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”) and end customers.

Our third-party distributors are subject to distribution agreements with us, which allow the distributors to sell our products to end customers and other resellers, including OEMs and ODMs.

Our value-added resellers may second source other products and provide other services to customers.

ODMs typically design and manufacture electronic products on behalf of OEMs.

In 2024, our two largest distributors accounted for 31% and 20% of our total revenue.

In 2023, our three largest distributors accounted for 26%, 19% and 10% of our total revenue.

No other distributors or end customers accounted for more than 10% of our full-year, total revenue in any of the periods presented.

Current distribution agreements with several of our major distributors provide that each distributor has the non-exclusive right to sell and shall use its best efforts to promote and develop a market for our products.

In 2022, our two largest distributors accounted for 24% and 19% of our total revenue.

No other direct customers accounted for more than 10% of our full-year, total revenue in any of the periods presented.

Our revenue from indirect sales to one customer, which primarily comprised power management solutions for AI applications, was 17% of our total revenue in 2024.

Our revenue from indirect sales to this customer was below 10% in both 2023 and 2022.

These agreements provide that payment for purchases from us will generally occur within 30 to 90 days from the date of invoice.

In addition, we allow for limited stock rotation in certain agreements.

Because our sales are primarily billed and payable in United States dollars, our sales are generally not subject to fluctuating currency exchange rates.

Because our sales are primarily billed and payable in U.S.

dollars, our sales are generally not subject to fluctuating currency exchange rates.

However, because a majority of our revenue is attributable to sales to customers in Asia, changes in the relative value of the dollar may create pricing pressures for our products.

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Research and Development

We have assembled a qualified team of engineers primarily in China, the United States, Taiwan, Spain, Switzerland, Hungary, Portugal and Germany with core competencies in analog and mixed-signal design.

We have assembled a qualified team of engineers in various locations in Asia, Europe and the U.S.

with core competencies in analog and mixed-signal design.

Through our research and development efforts, we have developed a collection of intellectual property and know-how that we are able to leverage across our products and markets.

These include the development of high efficiency power devices, the design of precision analog circuits and systems, expertise in mixed-signal design, and integration and the development of proprietary semiconductor process technologies.

These include the development of high efficiency power devices, the design of precision analog circuits and systems, expertise in mixed-signal design, packaging and solution development, integration and the development of proprietary semiconductor process technologies.

Our research and development efforts are generally targeted at three areas:

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In general, we have elected to pursue patent protection for aspects of our circuit and device designs that we believe are patentable and to protect our manufacturing process technologies by maintaining those process technologies as trade secrets.

As of December 31, 2023, we had 1,701 patents/applications issued or pending, of which 585 patents have been issued in the United States.

As of December 31, 2024, we had 1,917 patents/applications issued or pending, of which 608 patents have been issued in the U.S.

Our issued patents are scheduled to expire at various times through December 2044.

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There can be no assurance that the steps we take are adequate to protect our proprietary rights, that our patent applications will lead to issued patents, that others will not develop or patent similar or superior products or technologies, or that our patents will not be challenged, invalidated or circumvented by others.

Furthermore, the laws of the countries in which our products are or may be developed, manufactured or sold may not protect our products and intellectual property rights to the same extent as laws in the United States.

Our failure to adequately protect our proprietary technologies could materially harm our business.

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The assembled ICs are then sent for final testing to the facilities in China, Taiwan and Malaysia that we and our partners utilize prior to shipping to our customers.

Our strategy is to maintain a diversified supply chain.

The manufacturing facilities we utilize in Asia enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs.

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The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue.

Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit both applications engineering and design engineering personnel, our ability to introduce new products, and our ability to maintain the rate at which we introduce these new products, and our ability to meet our and customers’ energy efficiency goals.

Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit both applications engineering and design engineering personnel, our ability to introduce new products, our ability to maintain the rate at which we introduce these new products, and our ability to meet our end customers’ energy efficiency goals.

Our industry is characterized by decreasing average selling prices over the life of a product.

We compete with domestic and international semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products and, in some cases, have a broader number of product offerings that may enable them to more effectively market and sell to customers and engage sales partners.

We are in direct and active competition, with respect to one or more of our product lines, with several manufacturers of such products, of varying size and financial strength.

In some cases, our competitors have a broader number of product offerings that may enable them to more effectively market and sell to customers and engage sales partners.

We are in direct and active competition, with respect to one or more of our product lines, with several manufacturers of such products.

We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, Semtech, STMicroelectronics and Texas Instruments.

We expect continued competition from existing competitors as well as competition from new entrants into the semiconductor market.

We believe that we are competitive in the markets in which we sell and on the basis of key competitive factors in our industry, particularly because our ICs typically are smaller in size, are highly integrated with lower energy consumption, possess higher levels of power management functionalities and achieve high performance specifications at lower price points than most of our competitors.

However, there is no assurance that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering our markets.

In addition, there has recently been a high level of consolidation in the semiconductor industry.

If these or future acquisitions are successful, competition may intensify and our competitors may have additional resources to compete against us.

We believe that we are competitive in the markets in which we sell, because our ICs typically are smaller in size, are highly integrated with lower energy consumption, and achieve higher performance specifications than most of our competitors.

However, there is no assurance that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products introduced by existing competitors or new companies entering our markets.

In addition, there has historically been a high level of consolidation in the semiconductor industry.

If these or future acquisitions are successful, competition may intensify, as our competitors add resources with which to compete against us.

We operate in the cyclical semiconductor industry.

While we are subject to industry downturns, we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.

While we are subject to industry downturns, we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term.

Historically, our revenue has generally been higher in the second half of the year than in the first half although various factors, such as market conditions and the timing of key product introductions, could impact this trend.

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We believe that our operations and facilities comply in all material respects with applicable environmental laws and worker health and safety laws.

We are also subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we have operations or otherwise do business.

Government regulations and import/export controls can be complex and are subject to change in the future, and accordingly, we are unable to assess the possible effect of compliance with future requirements.

Our efforts to comply with these government regulations could have material impacts on our capital expenditures and operating expenses, revenue, resource allocation, operations, competitive position, or financial condition, though the magnitude and duration of such impacts are uncertain and difficult to quantify.

We and our supply chain, including the end products which contain our products, are also subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we, our supply chain or the providers of such end products, have operations or otherwise do business.

Government regulations and import/export controls can be complex and are subject to change in the future, and in some cases unexpectedly, and accordingly, we are unable to assess the possible effect of compliance with future requirements.

Our efforts to comply with these government regulations could have material impacts on our capital expenditures, operating expenses, revenue, resource allocation, operations, competitive position, or financial condition, and the magnitude and duration of such impacts are uncertain and difficult to quantify.

Refer to “Item 1A.

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Our future success depends, in part, on our ability to attract, train, retain, and motivate highly qualified technical and managerial personnel, and there can be no assurance we will be successful.

As of December 31, 2023, we employed 3,564 employees primarily in Asia, Europe, South America and the United States, compared with 3,247 employees as of December 31, 2022.

Certain employees are subject to collective bargaining agreements and we believe that we have good relations with these employees.

As of December 31, 2024, we employed 4,017 employees in various locations in Asia, Europe and the U.S., compared with 3,564 employees as of December 31, 2023.

Certain employees are subject to collective bargaining agreements.

We have never experienced an employee-based work stoppage or strike.

We strive to maintain a culture that encourages innovation and create a workplace that values diverse backgrounds, a healthy and safe environment, and professional growth opportunities.

We strive to maintain a culture that encourages innovation and create a workplace that values diverse skill sets and experience, a healthy and safe environment, and professional growth opportunities.

We continue to recruit new talent from a diverse candidate pool through various university recruitment programs and employment websites targeting underrepresented groups.

We provide unconscious bias training to promote an environment of inclusivity.

We do not tolerate discrimination of any kind and have adopted policies for reporting concerns or violations.

We do not tolerate discrimination of any kind and have policies for reporting concerns or violations.

We are an equal-opportunity employer, and we make employment decisions based on merit and business needs.

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We have occupational health and safety management systems and environmental management plans in place.

They include our standards for chemical and hazardous waste management, rules on use of personal protective equipment, and safety training plans.

They include our standards for chemical and hazardous waste management, rules on the use of personal protective equipment, and safety training plans.

Our largest testing facilities in Chengdu, China are ISO 14001 and ISO 45001 certified.

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They may be obtained from our website at www.monolithicpower.com under “Investor Relations” as soon as reasonably practicable after we electronically file such documents with, or furnish them to, the SEC, or at the SEC website at www.sec.gov.

We also make available on our website the charters for our audit committee, compensation committee, and nominating and corporate governance committee, our code of ethics, our director voting policy and our code of social responsibility.

We also make available on our website certain corporate documents and policies, including the charters for our audit committee, compensation committee, and nominating and corporate governance committee, our code of ethics, our director voting policy and our code of social responsibility.

In addition, we will disclose on our website any amendments to, or waivers from, our code of ethics.

We also disclose on our website our report on environment, social responsibility and governance.

We also disclose on our website our report on the environment, social responsibility and governance.

Information contained on our website is not a part of this Annual Report on Form 10-K.

Information About Executive Officers

Information regarding our executive officers as of February 29, 2024 is as follows:

Information regarding our executive officers as of March 3, 2025 is as follows:

Michael Hsing

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Executive Vice President and Chief Financial Officer

Executive Vice President and President of Asia Operations

Executive Vice President, Global Operations

Maurice Sciammas

Executive Vice President and Senior Vice President of Worldwide Sales and Marketing

Executive Vice President, Worldwide Sales and Marketing

Executive Vice President, Strategic Corporate Development, General Counsel and Corporate Secretary

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from the University of California, Santa Barbara.

Deming Xiao has served as our President of Asia Operations since January 2008.

Deming Xiao previously served as our President of Asia Operations since January 2008.

Since joining us in May 2001, Mr.

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from Wayne State University.

Maurice Sciammas has served as our Senior Vice President of Worldwide Sales and Marketing since 2007.

Maurice Sciammas previously served as our Senior Vice President of Worldwide Sales and Marketing since 2007.

Sciammas joined MPS in July 1999 and served as Vice President of Products and Vice President of Sales (excluding greater China) until he was appointed to his current position.

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degree from San Jose State University.

Saria Tseng has served as our Vice President, General Counsel and Corporate Secretary since 2004 and additionally as our Vice President, Strategic Corporate Development since 2009.

Saria Tseng previously served as our Vice President, General Counsel and Corporate Secretary since 2004 and additionally as our Vice President, Strategic Corporate Development since 2009.

Tseng joined the Company from MaXXan Systems, Inc., where she was Vice President and General Counsel from 2001 to 2004.

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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