What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-29 · 269 added, 373 removed, 950 unchanged (40% of the section changed)

16 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024 expressed an adverse opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 3, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Inventory Valuation

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In particular, determination of excess and obsolete inventory utilizes assumptions, including estimated demand for the Company’s products, new product launches, expected industry sales growth, and product lifecycle.

How We Addressed the Matter in Our Audit Our audit procedures included, among others, evaluating the significant assumptions stated above and testing the completeness and accuracy of the underlying data used in management’s excess and obsolete inventory valuation assessment.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s excess and obsolete inventory write down process.

This included controls over management’s assessment of inventory valuation, including the determination of forecasted usage of inventories.

Our audit procedures included, among others, evaluating the significant assumptions stated above and testing the completeness and accuracy of the underlying data used in management’s excess and obsolete inventory valuation assessment.

We evaluated inventory levels compared to forecasted product demand, historical sales and specific product considerations.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions.

Income Taxes – Realizability of foreign tax incentive

Description of the Matter

As discussed in Note 12 to the financial statements, the Company was granted a tax incentive of $1.4 billion with a ten-year life by a foreign jurisdiction in the year ended December 31, 2024 that may be utilized beginning in 2025.

This tax incentive resulted in a net deferred tax asset with a corresponding tax benefit of $1.3 billion, due to $0.1 billion valuation allowance to reduce the carrying value of the deferred tax asset to the amount management believes it is more likely than not to realize.

Auditing the realizability of the deferred tax asset for the foreign tax incentive was complex as the assessment process includes forecasting future sources of taxable income, scheduling the use the of the tax incentive, which involves subjective assumptions, and the amounts involved are material to the financial statements as a whole.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s development of the analysis of the realizability of the foreign tax incentive expected to be utilized.

To test the realizability of the deferred tax asset related to the foreign tax incentive, we performed audit procedures that included, among others, testing the significant assumptions used in the forecasted taxable income, including validating the completeness and accuracy of the underlying data supporting the assumptions and estimates.

We compared the more sensitive assumption related to revenue growth to current industry and the Company’s own historical results.

We also assessed the historical accuracy of management’s own forecasts.

In addition, we tested the Company’s scheduling of the utilization of the foreign tax incentive with the assistance of our tax professionals.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2019.

San Jose, California

February 29, 2024

San Mateo, California

March 3, 2025

Report of Independent Registered Public Accounting Firm

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We have audited Monolithic Power Systems, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Monolithic Power Systems, Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

A material weakness was identified in controls related to the company’s inventory demand forecasting process.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 29, 2024, which expressed an unqualified opinion thereon.

In our opinion, Monolithic Power Systems, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated March 3, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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/s/ Ernst & Young LLP

San Jose, California

February 29, 2024

San Mateo, California

March 3, 2025

MONOLITHIC POWER SYSTEMS, INC.

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494,945 368,952

Acquisition-related intangible assets, net

Deferred tax assets, net

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Year Ended December 31,

$ 1,821,072 $ 1,794,148 $ 1,207,798

Cost of revenue

799,953 745,596 522,339

1,021,119 1,048,552 685,459

Operating expenses:

Research and development

263,643 240,171 190,627

Selling, general and administrative

275,740 281,596 232,415

Total operating expenses

539,383 521,767 423,042

Operating income

481,736 526,785 262,417

Other income (expense), net

24,105 ( 1,848 ) 9,802

Income before income taxes

505,841 524,937 272,219

Income tax expense

78,467 87,265 30,196

$ 427,374 $ 437,672 $ 242,023

Income tax expense (benefit), net

Net income per share:

$ 8.98 $ 9.37 $ 5.28

$ 8.76 $ 9.05 $ 5.05

Weighted-average shares outstanding:

47,610 46,727 45,851

48,771 48,358 47,889

See accompanying notes to consolidated financial statements.

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$ 1,786,700 $ 427,374 $ 437,672

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Foreign currency translation adjustments

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1,394 5,543 ( 6,664 )

Other comprehensive income (loss), net of tax

Other comprehensive loss, net of tax

( 21,449 ) ( 3,985 ) ( 38,957 )

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- - 437,672 - 437,672

Other comprehensive income

Other comprehensive loss

- - - ( 38,957 ) ( 38,957 )

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17 7,568 - - 7,568

Repurchases of common stock

( 7 ) ( 3,741 ) - - ( 3,741 )

Stock-based compensation expense

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Common stock issued under the employee equity incentive plan

911 1,118 - - 1,118

Common stock issued under the employee stock purchase plan

18 8,727 - - 8,727

Repurchase of common stock

Repurchases of common stock

( 1,001 ) ( 637,478 ) - - ( 637,478 )

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Cash flows from operating activities:

$ 427,374 $ 437,672 $ 242,023

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

40,168 37,114 28,699

Amortization of premium (discount) on available-for-sale securities

( 5,277 ) 4,375 4,674

Loss (gain) on deferred compensation plan investments

( 8,505 ) 6,600 ( 4,563 )

Deferred taxes, net

5,865 ( 13,220 ) ( 2,772 )

Gain on sale of equity investment

( 1,424 ) - -

Stock-based compensation expense

149,711 160,992 123,479

( 23 ) 97 110

Changes in operating assets and liabilities:

Accounts receivable

2,884 ( 77,903 ) ( 37,976 )

63,583 ( 188,073 ) ( 102,323 )

( 24,310 ) ( 177,284 ) ( 15,311 )

Accounts payable

4,797 ( 11,240 ) 32,926

Accrued compensation and related benefits

( 31,187 ) 28,514 16,536

Income tax liabilities

( 308 ) 16,559 11,771

Other accrued liabilities

14,865 22,471 22,737

Net cash provided by operating activities

638,213 246,674 320,010

Cash flows from investing activities:

Purchases of property and equipment

( 57,578 ) ( 58,843 ) ( 94,420 )

Cash paid for an assumed lease

Purchases of investments

( 582,603 ) ( 65,785 ) ( 394,886 )

Maturities and sales of investments

468,308 128,610 113,755

Cash paid for acquisition, net of cash acquired

Contributions to deferred compensation plan, net

( 6,853 ) ( 16,492 ) ( 2,542 )

Purchases of intangible assets

Net cash used in investing activities

( 178,726 ) ( 12,510 ) ( 378,886 )

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Property and equipment purchased on extended payment terms

( 2,826 ) ( 2,055 ) ( 2,834 )

Proceeds from common stock issued under the employee equity incentive plan

1,118 5,358 17,322

Proceeds from common stock issued under the employee stock purchase plan

7,568 5,877 4,670

Repurchase of common stock

( 3,741 ) - -

Repurchases of common stock

Dividends and dividend equivalents paid

( 185,844 ) ( 137,965 ) ( 109,364 )

Net cash used in financing activities

( 183,725 ) ( 128,785 ) ( 90,206 )

Effect of change in exchange rates

( 3,310 ) ( 6,039 ) 3,400

Net increase (decrease) in cash, cash equivalents and restricted cash

272,452 99,340 ( 145,682 )

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

288,729 189,389 335,071

Cash, cash equivalents and restricted cash, end of period

$ 561,181 $ 288,729 $ 189,389

Supplemental disclosures for cash flow information:

Cash paid for income taxes, net

$ 85,128 $ 85,031 $ 21,148

Non-cash investing and financing activities:

Liability accrued for property and equipment purchases

$ 1,784 $ 5,743 $ 17,877

Liability accrued for dividends and dividend equivalents

$ 53,213 $ 40,939 $ 33,059

See accompanying notes to consolidated financial statements.

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On November 17, 2004, the Company was reincorporated in the State of Delaware.

MPS designs, develops and markets high-performance, semiconductor-based power electronic solutions.

MPS’s mission is to provide innovative power solutions in the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.

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

MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future.

Basis of Presentation

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period.

Significant estimates and assumptions used in these consolidated financial statements primarily include those related to revenue recognition, inventory valuation, valuation of share-based awards, contingencies and income tax valuation allowances.

Significant estimates and assumptions used in these consolidated financial statements primarily include those related to income tax valuation allowances, inventory valuation and stock-based compensation.

Actual results could differ from these estimates and assumptions, and any such differences may be material to the Company’s consolidated financial statements.

Certain Significant Risks and Uncertainties

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term and long-term investments and accounts receivable.

The Company’s cash equivalents include short-term, highly liquid investments purchased with remaining maturities at the date of purchase of three months or less.

The Company’s short-term investments may consist of corporate debt securities, certificates of deposit, commercial paper and government agency bonds and treasuries, and the long-term investments consist of government-backed student loan auction-rate securities.

The Company does not require its customers to provide collateral to support accounts receivable.

The Company assesses the collectability by reviewing accounts receivable on a customer-by-customer basis.

To manage credit risk, management performs ongoing credit evaluations of the customers’ financial condition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables.

For certain high-risk customers, the Company requires standby letters of credit or advance payment prior to shipments of goods.

The Company participates in the dynamic high technology industry and believes that changes in any of the following areas could have a material adverse effect on its future financial position, results of operations or cash flows:

advances and trends in new technologies and industry standards;

competitive pressures in the form of new products or price reductions on current products;

changes in product mix;

changes in the overall demand for products offered by the Company or in specific markets;

changes in third -party manufacturers or the terms of such arrangements;

changes in key suppliers;

changes in certain strategic relationships or customer relationships;

litigation or claims against the Company based on intellectual property, patent, product, regulatory or other factors;

fluctuations in foreign currency exchange rates;

risk associated with changes in government policies and regulations on trade restrictions and corporate taxes;

availability of necessary components or sub-assemblies;

availability of foundry capacity;

ability to integrate acquired companies;

and the Company’s ability to attract and retain employees necessary to support its growth.

Foreign Currency

In general, the functional currency of the Company’s international subsidiaries is the local currency.

The functional currency of the Company’s foreign subsidiaries is the local currency, with the exception of certain subsidiaries which invoice revenues in U.S.

The primary subsidiaries are located in China, Taiwan and Europe, which utilize the Renminbi, the New Taiwan Dollar and the Euro as their currencies, respectively.

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In addition, the Company incurs foreign currency exchange gains or losses related to certain transactions, including intercompany transactions, that are denominated in a currency other than the functional currency.

In connection with the remeasurement and settlement of the balances, the Company recorded foreign currency exchange gain (loss) of $( 0.2 ) million, $ 0.5 million and $( 0.7 ) million for the years ended December 31, 2023, 2022 and 2021 , respectively, which were reported in other income (expense), net, on the Consolidated Statements of Operations.

Foreign currency exchange gains and losses in connection with the remeasurement and settlement of the balances were reported in other income (expense), net, on the Consolidated Statements of Operations and were not material in any of the periods presented.

For intercompany transactions that are of a long-term investment nature, the Company records the foreign currency exchange gains and losses in accumulated other comprehensive loss on the Consolidated Balance Sheets.

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If the Company intends to sell the impaired investments, or more likely than not will be required to sell such investments before recovering the amortized cost basis, the entire impairment amount is recognized in earnings with a corresponding adjustment to the amortized cost basis.

Equity Investments

Equity investments in privately held companies without readily determinable fair values are accounted for under the measurement alternative method, provided that the Company does not have the ability to exercise significant influence or control over the investees.

Under this method, the Company measures the investments at cost, less any impairment, and adjusts the carrying value of the investments to fair value resulting from observable transactions for identical or similar investments of the same issuer.

The Company records the investments in other long-term assets on the Consolidated Balance Sheets, and gains and losses on the investments are recognized in other income (expense), net, on the Consolidated Statements of Operations.

The Company monitors its non-marketable equity investments for impairment indicators, such as negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors.

If indicators exist for a security and the fair value is below the carrying amount, the Company writes down the security to fair value.

Fair Value of Financial Instruments

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Leasehold improvements are amortized over the shorter of the estimated useful lives or the lease period.

Production equipment, lab equipment and software have estimated useful lives of three to eight years.

Lab equipment and production equipment have estimated useful lives of three to ten years.

Software has estimated useful lives of one to seven years.

Transportation equipment has estimated useful lives of 5 to 20 years.

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Land is not depreciated.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets other than goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

An impairment loss would be recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

Such impairment loss would be measured as the difference between the carrying amount of the asset and its fair value based on the present value of estimated future cash flows.

The Company did not record material impairments in any of the periods presented.

Goodwill and Acquisition-Related Intangible Assets

Goodwill represents the excess of the fair value of purchase consideration over the fair value of net tangible and identified intangible assets as of the date of acquisition.

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No impairment of goodwill has been identified in any of the periods presented.

In-process research and development (“IPR&D”) assets represent the fair value of incomplete R&D projects that had not reached technological feasibility as of the date of acquisition.

IPR&D assets are initially capitalized at fair value as intangible assets with indefinite lives.

When IPR&D projects are completed, they are reclassified as amortizable intangible assets and are amortized over their estimated useful lives.

Alternatively, if IPR&D projects are abandoned, they are impaired and expensed as R&D costs.

Acquisition-related intangible assets with finite lives consist of developed technologies, which are amortized on a straight-line basis over their estimated remaining useful lives.

The amortization expense is recorded in cost of revenue in the Consolidated Statements of Operations.

No impairment of acquisition-related intangible assets has been identified in any of the periods presented.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets other than goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Such impairment loss would be measured as the difference between the carrying amount of the asset and its fair value based on the present value of estimated future cash flows.

The Company did not record material impairments in any of the periods presented.

Deferred Compensation Plan

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The Company manages the risk of changes in the fair value of the liabilities by electing to match the liabilities with investments in corporate-owned life insurance policies, mutual funds and money market funds that offset a substantial portion of the exposure.

The investments are recorded at the cash surrender value of the corporate-owned life insurance policies, and at the fair value of the mutual funds and money market funds, which are classified as trading securities.

The investments are recorded at the cash surrender value of the corporate-owned life insurance policies, and at the fair value of the mutual funds and money market funds.

Changes in the cash surrender value of the corporate-owned life insurance policies and the fair value of mutual fund and money market fund investments are included in other income (expense), net, on the Consolidated Statements of Operations.

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Deferred compensation plan liabilities reported in:

Accrued compensation and related benefits (short-term)

Accrued compensation and related benefits

$ 2,323 $ 384

Other long-term liabilities

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As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations.

Warranty reserve requirements are generally based on a specific assessment of the products sold with warranties when a customer asserts a claim for warranty or a product defect.

Warranty reserve requirements are generally based on a specific assessment of the products sold with warranties when a customer asserts a claim for warranty or for a product defect.

The Company determines if an arrangement is a lease at inception.

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For lease arrangements that contain lease and non-lease components, the Company accounts for them as single lease components.

For lease arrangements where the Company is the lessor, the Company recognizes lease income from operating leases on a straight-line basis over the lease term.

Stock-Based Compensation

The Company’s restricted stock units (“RSUs”) include time-based RSUs, RSUs with performance conditions (“PSUs”), RSUs with market conditions (“MSUs”), and RSUs with both market and performance conditions (“MPSUs”).

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

The fair value of RSUs with only service conditions is determined based on the grant date stock price.

The fair value of all other awards is determined based on the following valuation methods:

Type of Awards

Valuation Method

RSUs with performance conditions (“PSUs”) that have a purchase price adjustment

Monte Carlo simulation model

RSUs with market conditions (“MSUs”)

Monte Carlo simulation model

RSUs with both performance and market conditions (“MPSUs”)

Monte Carlo simulation model

Shares issued under the employee stock purchase plan (“ESPP”)

Black-Scholes model

The valuation models consider inputs including stock price, expected volatility, expected term of awards, risk-free interest rate, and expected dividend yield.

Expected volatility used in the models is determined based on historical volatility of the Company’s stock price for the period, which corresponds to the expected term of the awards, immediately preceding the granting of the awards.

The fair value of time-based RSUs is determined based on the grant date stock price.

The fair value of all other awards, including PSUs that have a purchase price adjustment, MSUs and MPSUs is determined based on the Monte Carlo simulation model.

The valuation model considers inputs including stock price, expected volatility, expected term of awards, risk-free interest rate, and expected dividend yield.

Expected volatility used in the model is determined based on historical volatility of the Company’s stock price for the period, which corresponds to the expected term of the awards, immediately preceding the granting of the awards.

Compensation expense related to awards with service conditions is recorded on a straight-line basis over the requisite service period.

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For awards with only performance conditions, as well as awards containing both market and performance conditions, the Company recognizes compensation expense when it becomes probable that the performance goals will be achieved.

Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and the analog industry revenue forecasts, and internal factors, such as the Company’s business and operational objectives and revenue forecasts.

Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and the analog industry revenue forecasts, and internal factors, such as our business and operational objectives and revenue forecasts.

Changes in the probability assessment of achievement of the performance conditions are accounted for in the period of change by recording a cumulative catch-up adjustment as if the new estimate had been applied since the service inception date.

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The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters.

The Company may also be subject to litigation initiated by its stockholders.

The Company has also been subject to litigation initiated by its stockholders.

The pending proceedings involve complex questions of fact and law and will require the expenditure of significant funds and the diversion of other resources to prosecute and defend.

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Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period.

Diluted net income per share reflects the potential dilution that would occur if outstanding securities or other contracts to issue common stock were exercised or converted into shares of common stock, and calculated using the treasury stock method.

Contingently issuable shares, including equity awards with performance conditions or market conditions, are considered outstanding shares of common stock and included in the basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied.

Diluted net income per share reflects the potential dilution from contingently issuable shares and calculated using the treasury stock method.

Contingently issuable shares, including all types of equity awards, are considered outstanding shares of common stock and included in the basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied.

Prior to the end of the contingency period, the number of contingently issuable shares included in the diluted net income per share is based on the number of shares, if any, that would be issuable under the terms of the arrangement at the end of the reporting period.

4 unchanged sentences

Comprehensive income represents the change in the Company’s net assets during the period from non-owner sources.

Accumulated other comprehensive loss presented on the Consolidated Balance Sheets primarily consists of unrealized gains or losses related to available-for-sale investments and foreign currency translation adjustments.

Accumulated other comprehensive loss presented on the Consolidated Balance Sheets primarily consists of unrealized gains and losses related to available-for-sale investments and foreign currency translation adjustments.

Recently Adopted Accounting Pronouncement

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021 - 08, Business Combinations (Topic 805 ):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The guidance requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers , as if it had originated the contracts.

The Company adopted this guidance at the beginning of fiscal year 2023 prospectively and it did not impact the consolidated financial statements for the year ended December 31, 2023.

The Company is evaluating the impact of this guidance on its recent acquisition but does not expect a material impact on its consolidated financial statements.

See Note 17 for additional information regarding this acquisition.

New Accounting Pronouncements Not Yet Adopted as of December 31, 2023

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which aims to improve disclosures regarding a public entity’s reportable segments, primarily through more comprehensive disclosures around significant segment expenses.

The guidance will be effective for the annual reporting for fiscal year 2024 and interim reporting for the first quarter in 2025, and should be applied retroactively to all prior periods presented.

The Company is evaluating the impact of adoption on its consolidated financial statements.

The Company adopted the guidance during the three months ended December 31, 2024 and the adoption did not have a significant impact on the related Note 16 to the consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted as of December 31, 2024

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which aims to provide more detailed information about the types of expenses in commonly presented expense captions.

The guidance will be effective for annual reporting for fiscal year 2027 and interim reporting for the first quarter in 2028.

The standard can be applied prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the impact of adoption on its consolidated financial statements.

REVENUE RECOGNITION

Revenue from Product Sales

The Company generates revenue primarily from product sales, which include assembled and tested ICs, as well as dies in wafer form.

These product sales accounted for 99 %, 98 % and 97 % of the Company’s total revenue for the years ended December 31, 2023, 2022 and 2021 , respectively.

The remaining revenue primarily includes royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties, which have not been significant for the periods presented.

See Note 15 for the disaggregation of the Company’s revenue by geographic region and by product family.

The Company sells its products primarily through third -party distributors, value-added resellers, OEMs, ODMs and EMS providers.

The Company generates revenue primarily from product sales, which include assembled and tested ICs, power modules as well as dies in wafer form.

The remaining revenue, which primarily consists of royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties, was not significant in any of the periods presented.

See Note 16 for the disaggregation of the Company’s revenue by geographic region.

The Company sells its products primarily through third-party distributors and value-added resellers.

In addition, the Company sells directly to certain OEMs, ODMs and end customers.

For the years ended December 31, 2024, 2023 and 2022 , 90 %, 80 % and 83 %, respectively, of the Company’s product sales were made through distribution arrangements.

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In accordance with the shipping terms specified in the contracts, these criteria are generally met when the products are shipped from the Company’s facilities (such as the “Ex Works” shipping term) or delivered to the customers’ locations (such as the “Delivered Duty Paid” shipping term).

Under certain consignment agreements, revenue is not recognized when the products are shipped and delivered to be held at customers’ designated locations because the Company continues to control the products and retain ownership, and the customers do not have an unconditional obligation to pay.

The Company recognizes revenue when the customers consume the products from the consigned inventory locations or at which time control transfers to the customers and the Company invoices them for payment.

Under certain consignment agreements, the Company recognizes revenue when the customers consume the products from the consigned inventory locations, at which time control transfers to the customers and the Company issues invoices.

Variable Consideration

The Company accounts for price adjustments and stock rotation rights as variable consideration that reduces the transaction price and recognizes that reduction in the same period the associated revenue is recognized.

Certain U.S.-based distributors have price adjustment rights when they sell the Company’s products to their end customers at a price that is lower than the distribution price invoiced by the Company.

Certain U.S.-based distributors have price adjustment rights when they sell the Company’s products to their customers at a price that is lower than the distribution price invoiced by the Company.

When the Company receives claims from the distributors that products have been sold to the end customers at the lower prices, the Company issues the distributors credit memos for the price adjustments.

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The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied.

As of December 31, 2023 and 2022 , accounts receivable totaled $ 179.9 million and $ 182.7 million, respectively.

The Company’s accounts receivable are short-term, with standard payment terms generally ranging from 30 to 90 days.

The Company’s accounts receivables are short-term, with standard payment terms generally ranging from 30 to 90 days.

The Company does not require its customers to provide collateral to support accounts receivable.

The Company assesses collectability by reviewing accounts receivable on a customer-by-customer basis.

For certain customers, the Company requires standby letters of credit or advance payments prior to shipments of goods.

The Company did not recognize any write-offs of accounts receivable or record any allowance for credit losses for the periods presented.

Contract Liabilities:

For certain customers located in Asia, the Company requires cash payments two weeks before the products are scheduled to be shipped to the customers.

The Company records these payments received in advance of performance as customer prepayments within current accrued liabilities.

For customers without credit terms, the Company requires cash payments two weeks before the products are scheduled to be shipped to the customers.

The Company records these payments received in advance of performance as customer prepayments within other accrued liabilities.

As of December 31, 2024 and 2023, customer prepayments totaled $ 6.9 million and $ 2.8 million, respectively.

The decrease in the customer prepayment balance for the year ended December 31, 2023 resulted from a decrease in unfulfilled customer orders for which the Company had received payments.

For the year ended December 31, 2023 , the Company recognized substantially all of the revenue that was included in the customer prepayment balance as of December 31, 2022 .

The increase in the customer prepayment balance for the year ended December 31, 2024 resulted from an increase in unfulfilled customer orders for which the Company had received payments.

Practical Expedients

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Because the Company expects to fulfill these performance obligations within one year, the Company has elected not to disclose the amount of these remaining performance obligations.

On January 3, 2024 (the “Acquisition Date”), the Company acquired 100 % of the outstanding capital stock of Axign, a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems.

Commencing on the Acquisition Date, Axign became a wholly-owned subsidiary of the Company and its results of operations have been included in the Company’s consolidated financial statements.

Purchase Consideration

The purchase consideration was $ 33.4 million in cash.

In connection with the acquisition, the Company incurred $ 0.4 million in transaction costs that were expensed as incurred and included in selling, general and administrative expenses in the Consolidated Statements of Operations.

Purchase Price Allocation

The purchase price allocation for Axign was as follows (in thousands):

Other tangible assets acquired, net of liabilities assumed

Intangible assets:

Developed technology

Total identifiable net assets acquired

Total net assets acquired

The intangible asset acquired with a finite life includes the core developed technology with an estimated remaining useful life of eight years.

The acquired intangible asset with an indefinite life includes an incomplete R&D project that had not reached technological feasibility as of the Acquisition Date.

The fair values of the developed technology and the IPR&D were determined using the income approach.

The goodwill arising from the acquisition was primarily attributed to the assembled workforce and synergies that are anticipated to enable the Company to develop solutions with lower power consumption in the consumer and automotive end markets using Axign’s digital feedback technology.

The goodwill is not expected to be deductible for tax purposes.

CASH, CASH EQUIVALENTS, INVESTMENTS AND RESTRICTED CASH

6 unchanged sentences

Corporate debt securities

95,101 292,586

Commercial paper

treasuries and government agency bonds

358,409 8,285

Auction-rate securities backed by student-loan notes

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Due in 1 - 5 years

183,266 182,749

Due in greater than 5 years

12 unchanged sentences

6,779 - ( 67 ) 6,712

treasuries and government agency bonds

358,177 327 (95 ) 358,409

Auction-rate securities backed by student-loan notes

11 unchanged sentences

96,636 4 ( 1,539 ) 95,101

Commercial paper

17,928 - - 17,928

treasuries and government agency bonds

13 unchanged sentences

treasuries and government agency bonds

97,599 ( 95 ) - - 97,599 ( 95 )

Auction-rate securities backed by student-loan notes

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When evaluating a debt security for impairment, management reviews factors such as the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized cost basis, the extent to which the fair value of the security is less than its cost, the financial condition of the issuer and the credit quality of the investment.

Non-Marketable Equity Investment

In November 2020, the Company made an equity investment in a privately held Swiss company (the “Investee”) that is accounted for under the measurement alternative.

In April 2022, the Company made an additional investment in the form of a convertible loan.

One member of the Board of Directors was an executive officer of a company that has a commercial relationship with the Investee.

In addition, the Company’s Chief Executive Officer had a personal investment in the Investee and was on the Investee’s Board of Directors.

As of December 31, 2022, the Company’s investment in the Investee, which is denominated in Swiss Franc, had a carrying value of $ 5.4 million.

May 2023, the Company sold all its investments in the Investee for

$ 7.4 million and recorded a gain of

$ 1.4 million, which was included as a component of other income (expense), net, in the Consolidated Statements of Operations for the year ended

December 31, 2023 .

Restricted Cash

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$ 691,941 $ 561,181

As of December 31, 2023 , restricted cash included in other current assets was related to preliminary purchase consideration held in a trust account in connection with the Company’s recent acquisition.

See Note 17 for additional information.

As of December 31, 2023 and 2022 , restricted cash included in other long-term assets was related to a security deposit that is set aside in a bank account and cannot be withdrawn by the Company under the terms of a lease agreement.

The restriction will end upon the expiration of the lease.

As of December 31, 2023, restricted cash included in other current assets was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign.

FAIR VALUE MEASUREMENTS

10 unchanged sentences

Money market funds

$ 11,867 $ 11,867 $ - $ -

Certificates of deposit

164,418 - 164,418 -

Corporate debt securities

treasuries and government agency bonds

6,712 - 6,712 -

Auction-rate securities backed by student-loan notes

Mutual funds and money market funds under deferred compensation plan

65,337 65,337 - -

$ 248,482 $ 77,204 $ 171,130 $ 148

December 31, 2023

Money market funds

$ 135,514 $ 135,514 $ - $ -

Certificates of deposit

127,123 - 127,123 -

Corporate debt securities

Commercial paper

95,101 - 95,101 -

treasuries and government agency bonds

358,409 - 358,409 -

Auction-rate securities backed by student-loan notes

Mutual funds and money market funds under deferred compensation plan

Redemptions and changes in the fair value of the auction-rate securities classified as Level

3 assets were

not material for the periods presented.

54,836 54,836 - -

$ 771,550 $ 190,350 $ 580,633 $ 567

Redemptions and changes in the fair value of the auction-rate securities classified as Level 3 assets were not material for the periods presented.

BALANCE SHEET COMPONENTS

10 unchanged sentences

Other receivables (1)

RSU tax withholding proceeds receivable

$ 60,000 $ 50,000

1 unchanged sentence

36,083 28,964

RSU tax withholding proceeds receivable

Restricted cash (2)

2 unchanged sentences

Other receivables relate to a deposit made to a supplier under a long-term wafer supply agreement.

12 for further details.

See Note 13 for details about the supply agreement.

The restricted cash as of December 31, 2023 was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign.

Property and Equipment, Net

12 unchanged sentences

Construction in progress

27,477 16,980

Property and equipment, gross

10 unchanged sentences

60,000 120,000

12,896 16,264

Operating lease ROU and related assets (2)

$ 194,377 $ 211,277

Prepaid wafer purchases relate to a deposit made to a supplier under a long-term wafer supply agreement.

See Note 12 for further details.

See Note 13 for details about the supply agreement.

(2) The operating lease ROU and related assets as of December 31, 2024 includes a fair value measurement related to favorable market terms on a facility lease.

Other Accrued Liabilities

2 unchanged sentences

$ 60,622 $ 57,697

16,906 24,082

Stock rotation and sales returns

20,799 18,843

Income tax payable

46,702 39,251

8 unchanged sentences

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, employee housing units and certain equipment.

These leases have remaining lease terms from less than one year to seven years.

These leases have remaining lease terms from less than one year to 20 years.

Some of these leases include options to renew the lease term for up to five years or on a month-to-month basis.

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Total lease liabilities

As of December 31, 2023 , the operating lease that has not yet commenced is not material.

The Company owns certain office buildings and leases a portion of these properties to third parties under arrangements that are classified as operating leases.

These leases have remaining lease terms ranging from less than one year to three years.

Some of these leases include options to renew the lease term for up to five years.

Income related to lease payments was $ 1.5 million, $ 2.4 million and $ 2.2 million for the years ended December 31, 2023, 2022 and 2021 , respectively.

As of December 31, 2023 , future income related to lease payments was as follows (in thousands):

As of December 31, 2024, the operating leases that had not yet commenced were not material.

STOCK-BASED COMPENSATION

2014 Equity Incentive Plan

In April 2013 , the Board of Directors adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013 .

In April 2013, the Board of Directors adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013.

In October 2014, the Board of Directors approved certain amendments to the 2014 Plan.

2 unchanged sentences

The Amended and Restated 2014 Plan became effective on June 11, 2020 and provides for the issuance of up to 10.5 million shares.

The Amended and Restated 2014 Plan will expire on June 11, 2030 .

The Amended and Restated 2014 Plan will cease being available for new awards on June 11, 2030.

As of December 31, 2024, 3.8 million shares remained available for future issuance under the Amended and Restated 2014 Plan.

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Vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance or market goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”).

All awards include service conditions which require continued employment with the Company.

All awards include service conditions which require continued employment with or service to the Company.

A summary of RSU activity is presented in the table below (in thousands, except per share amounts):

14 unchanged sentences

( 7 ) $ 316.00 ( 1 ) $ 377.86 ( 6 ) $ 216.37 ( 14 ) $ 275.47

( 11 ) $ 207.04 ( 12 ) $ 103.84 ( 12 ) $ 68.48 ( 35 ) $ 124.50

Outstanding at December 31, 2022

3 unchanged sentences

( 6 ) $ 387.61 ( 4 ) $ 315.19 ( 15 ) $ 110.65 ( 25 ) $ 209.23

( 7 ) $ 316.00 ( 1 ) $ 377.86 ( 6 ) $ 216.37 ( 14 ) $ 275.47

Outstanding at December 31, 2023

3 unchanged sentences

( 4 ) $ 482.83 ( 1 ) $ 409.27 ( 1 ) $ 270.15 ( 6 ) $ 432.32

( 6 ) $ 387.61 ( 4 ) $ 315.19 ( 15 ) $ 110.65 ( 25 ) $ 209.23

Outstanding at December 31, 2024

3 unchanged sentences

The intrinsic value related to vested RSUs was $ 513.0 million, $ 461.3 million and $ 336.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2023 , the total intrinsic value of all outstanding RSUs was $ 1.3 billion, based on the closing stock price of $ 630.78 .

As of December 31, 2024, the total intrinsic value of all outstanding RSUs was $ 990.0 million, based on the closing stock price of $ 591.70 .

As of December 31, 2024, unamortized compensation expense related to all outstanding RSUs was $ 261.0 million with a weighted-average remaining recognition period of approximately two years.

Cash proceeds from vested PSUs with a purchase price totaled $ 1.1 million, $ 5.4 million and $ 17.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

There were no cash proceeds from vested PSUs with a purchase price for the year ended December 31, 2024.

Cash proceeds from vested PSUs with a purchase price totaled $ 1.1 million and $ 5.4 million for the years ended December 31, 2023, and 2022, respectively.

Time-Based RSUs

2 unchanged sentences

PSUs and MPSUs

In February 2023, the Compensation Committee granted 69,000 PSUs to the executive officers, which represent a target number of shares that can be earned based on the degree of achievement of two sets of performance goals ( “2023 Executive PSUs”).

In February 2024, the Compensation Committee granted 50,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of three sets of independent performance goals (“2024 Executive PSUs”).

For the first goal, the executive officers can earn up to 300 % of the target number of the 2024 Executive PSUs based on the achievement of the Company’s average three-year (2024 through 2026) revenue growth rate in excess of the analog industry’s average three-year revenue growth rate as published by the Semiconductor Industry Association (the “SIA”).

For the second goal, the executive officers can earn up to an additional 200 % of the target number of the 2023 Executive PSUs if the Company secures additional manufacturing capacity outside China during a three -year performance period.

For both goals, a percentage of the 2023 Executive PSUs will fully vest on December 31, 2025, depending on the degree to which the pre-determined goals are met during the performance periods.

For the second goal, the executive officers can earn 100 % of the target number of the 2024 Executive PSUs if the Company achieves a reduction in 2026 of 25% global combined Scope 1 and Scope 2 greenhouse gas emissions against the 2022 baseline.

For the third goal, the executive officers can earn 50 % of the target number of the 2024 Executive PSUs if more than one-third of the Company’s total 2026 revenue in the automotive end market is generated from Electronic Vehicle (“EV”) automakers.

In addition, for the third goal, the executive officers can earn 50 % of the target number of the 2024 Executive PSUs if total 2026 revenue from products enabling EV powertrains and EV 48V systems grows to 200% of the 2023 baseline.

For the first goal, a percentage of the 2024 Executive PSUs will fully vest on December 31, 2026, depending on the degree to which the pre-determined goal is met during the performance period.

The 2024 Executive PSUs related to the second and the third goal will fully vest on December 31, 2026 if the pre-determined goals are met during the performance period.

Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2024 Executive PSUs is $ 154.3 million.

In February 2023, the Compensation Committee granted 13,000 PSUs to certain non-executive employees, which represent a target number of shares that can be earned based on the degree of achievement of the Company’s 2024 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two -year ( 2023 and 2024 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2023 Non-Executive PSUs”).

In February 2024, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represent the target number of shares that can be earned based on the degree of achievement of the Company’s 2025 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two-year (2024 and 2025) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA (“2024 Non-Executive PSUs”).

The maximum number of shares that an employee can earn is either 200 % or 300 % of the target number of the 2024 Non-Executive PSUs, depending on the job classification of the employee.

3 unchanged sentences

The 2024 Executive PSUs and the 2024 Non-Executive PSUs contain a purchase price feature, which requires the employees to pay the Company $ 30 per share upon vesting of the shares.

The $30 purchase price requirement is deemed satisfied and waived if the Company’s stock price on the last trading day of the associated performance period is $30 higher than the grant date stock price of $ 632.98 .

The Company determined the grant date fair value of the 2024 Executive PSUs and the 2024 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions:

stock price of $ 632.98 , simulation term of three years, expected volatility of 49.4 %, risk-free interest rate of 4.1 %, and expected dividend yield of 0.8 %.

There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

In February 2023, the Compensation Committee granted 69,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of two sets of performance goals (“2023 Executive PSUs”).

For the first goal, the executive officers can earn up to 300 % of the target number of the 2023 Executive PSUs based on the achievement of the Company’s average three-year (2023 through 2025) revenue growth rate in excess of the analog industry’s average three-year revenue growth rate as published by the SIA.

For both goals, a percentage of the 2023 Executive PSUs will fully vest on December 31, 2025, depending on the degree to which the pre-determined goals are met during the performance periods.

Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2023 Executive PSUs is $ 156.2 million.

In February 2023, the Compensation Committee granted 13,000 PSUs to certain non-executive employees, which represented the target number of shares that could be earned based on the degree of achievement of the Company’s 2024 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two-year (2023 and 2024) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA (“2023 Non-Executive PSUs”).

The maximum number of shares that an employee could earn was either 200 % or 300 % of the target number of the 2023 Non-Executive PSUs, depending on the job classification of the employee.

Based on the actual revenue achievement at the end of the performance period, a total of 23,000 shares were awarded to the non-executive employees.

50 % of the 2023 Non-Executive PSUs will vest in the first quarter of 2025.

The remaining 2023 Non-Executive PSUs vest over the following two years on an annual or quarterly basis.

Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2023 Non-Executive PSUs is $ 10.4 million.

The 2023 Executive PSUs and the 2023 Non-Executive PSUs contained a purchase price feature, which required the employees to pay the Company $ 30 per share upon vesting of the shares.

The $30 purchase price requirement is deemed satisfied and waived if the Company’s stock price on the last trading day of the performance period is $30 higher than the grant date stock price of $ 467.62 .

This market condition was achieved for the 2023 Non-Executive PSUs.

The Company determined the grant date fair value of the 2023 Executive PSUs and the 2023 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions:

1 unchanged sentence

There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

In February 2022, the Compensation Committee granted 81,000 PSUs to the executive officers, which represented a target number of shares that could be earned subject to the achievement of two sets of performance goals ( “2022 Executive PSUs”).

In February 2022, the Compensation Committee granted 81,000 PSUs to the executive officers, which represented the target number of shares that could be earned subject to the achievement of two sets of performance goals (“2022 Executive PSUs”).

For the first goal, the executive officers could earn up to 300 % of the target number of the 2022 Executive PSUs based on the achievement of the Company’s average two-year (2022 and 2023) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA.

7 unchanged sentences

See the “2022 MSUs” section for further details.

In February 2022, the Compensation Committee granted 14,000 PSUs to certain non-executive employees, which represented a target number of shares that could be earned subject to the achievement of the Company’s 2023 revenue goals for certain regions or product line divisions, or based on the achievement of the Company’s average two -year ( 2022 and 2023 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2022 Non-Executive PSUs”).

In February 2022, the Compensation Committee granted 14,000 PSUs to certain non-executive employees, which represented the target number of shares that could be earned subject to the achievement of the Company’s 2023 revenue goals for certain regions or product line divisions, or based on the achievement of the Company’s average two-year (2022 and 2023) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA (“2022 Non-Executive PSUs”).

The maximum number of shares that an employee could earn was either 200 % or 300 % of the target number of the 2022 Non-Executive PSUs, depending on the job classification of the employee.

Based on the actual revenue achievement at the end of the performance period, a total of 29,000 shares were awarded to the non-executive employees.

50 % of the 2022 Non-Executive PSUs will vest in the first quarter of 2024.

The remaining 2022 Non-Executive PSUs will vest over the following two years on an annual or quarterly basis.

50 % of the 2022 Non-Executive PSUs vested in the first quarter of 2024.

The remaining 2022 Non-Executive PSUs vest over the following two years on an annual or quarterly basis.

Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2022 Non-Executive PSUs is $ 10.9 million.

5 unchanged sentences

In addition, for the 2022 Executive PSUs related to the second goal, the fair value was determined based on the closing stock price at the end of each reporting period, adjusted for accrued dividends and an illiquidity discount of 10.3 % to account for the post-vesting sales restrictions.

In February 2021, the Compensation Committee granted 80,000 PSUs to the executive officers, which represented a target number of shares that could be earned subject to the achievement of two sets of performance goals ( “2021 Executive PSUs”).

In February 2021, the Compensation Committee granted 80,000 PSUs to the executive officers, which represented the target number of shares that could be earned subject to the achievement of two sets of performance goals (“2021 Executive PSUs”).

For the first goal, the executive officers could earn up to 300 % of the target number of the 2021 Executive PSUs based on the achievement of the Company’s average two -year (2021 and 2022) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA.

5 unchanged sentences

The 2021 Executive PSUs related to the ESG goal fully vested upon achievement of the objectives.

All vested shares related to the ESG goal are subject to a post-vesting sales restriction period of one year.

All vested shares related to the ESG goal were subject to a post-vesting sales restriction period of one year.

Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2021 Executive PSUs is $ 114.4 million.

In February 2021, the Compensation Committee granted 14,000 PSUs to certain non-executive employees, which represented a target number of shares that could be earned subject to the achievement of the Company’s 2022 revenue goals for certain regions or product line divisions, or based on the achievement of the Company’s average two -year ( 2021 and 2022 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2021 Non-Executive PSUs”).

In February 2021, the Compensation Committee granted 14,000 PSUs to certain non-executive employees, which represented the target number of shares that could be earned subject to the achievement of the Company’s 2022 revenue goals for certain regions or product line divisions, or based on the achievement of the Company’s average two-year (2021 and 2022) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA (“2021 Non-Executive PSUs”).

The maximum number of shares that an employee could earn was either 200 % or 300 % of the target number of the 2021 Non-Executive PSUs, depending on the job classification of the employee.

9 unchanged sentences

In addition, the grant date fair value for the 2021 Executive PSUs subject to the ESG goal included an illiquidity discount of 9.8 % to account for the post-vesting sales restrictions.

In February 2020 , the Compensation Committee granted 100,000 PSUs to the executive officers, which represented a target number of shares that could be earned based on the Company’s average two -year ( 2020 and 2021 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2020 Executive PSUs”).

The maximum number of shares that an executive officer could earn was 300 % of the target number of the 2020 Executive PSUs.

Based on the actual revenue achievement at the end of the performance period, a total of 300,000 shares were awarded to the executive officers.

50 % of the 2020 Executive PSUs vested in the first quarter of 2022.

The remaining 2020 Executive PSUs vest over the following two years on a quarterly basis.

Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2020 Executive PSUs is $ 51.1 million.

In February 2020 , the Compensation Committee granted 30,000 PSUs to certain non-executive employees, which represented a target number of shares that could be earned based on the Company’s 2021 revenue goals for certain regions or product line divisions, or based on the Company’s average two -year ( 2020 and 2021 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2020 Non-Executive PSUs”).

The maximum number of shares that an employee could earn was either 200 % or 300 % of the target number of the 2020 Non-Executive PSUs, depending on the job classification of the employee.

Based on the actual revenue achievement at the end of the performance period, a total of 71,000 shares were awarded to the non-executive employees.

50 % of the 2020 Non-Executive PSUs vested in the first quarter of 2022.

The remaining 2020 Non-Executive PSUs vest over the following two years on an annual or quarterly basis.

Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2020 Non-Executive PSUs is $ 11.8 million.

The 2020 Executive PSUs and the 2020 Non-Executive PSUs contained a purchase price feature, which required the employees to pay the Company $ 30 per share upon vesting of the shares.

The $30 purchase price requirement was deemed satisfied and waived if the average stock price for 20 consecutive trading days at any time during the performance period was $30 higher than the grant date stock price of $ 182.62 .

This market condition was achieved in the second quarter of 2020.

The Company determined the grant date fair value of the 2020 Executive PSUs and the 2020 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions:

stock price of $ 182.62 , simulation term of 2.0 years, expected volatility of 33.6 %, risk-free interest rate of 1.4 %, and expected dividend yield of 1.1 %.

In July 2020 , the Compensation Committee granted 43,000 MPSUs to the executive officers and 2,000 MPSUs to certain key employees, which represented a target number of shares that could be earned based on the achievement of both market and performance conditions ( “2020 MPSUs”).

The maximum number of shares that an employee could earn was 500 % of the target number of the 2020 MPSUs.

The market conditions consisted of five stock price targets ranging from $ 260 to $ 300 with a performance period through July 20, 2023 , and the performance condition consisted of one business operating goal related to a revenue target for certain customers with a performance period through December 31, 2021 .

As of December 31, 2020, the Company had achieved all five price targets and the operating goal, and a total of 221,000 shares were awarded to the employees.

75 % of the 2020 MPSUs vested on July 20, 2023, and 25 % of the 2020 MPSUs will vest on July 20, 2024 .

All vested shares are subject to a post-vesting sales restriction period of one year.

Based on the actual achievement of the market and performance goals, the total stock-based compensation cost for the 2020 MPSUs is $ 42.1 million.

The Company determined the grant date fair value of the 2020 MPSUs using a Monte Carlo simulation model with the following assumptions:

stock price of $ 248.71 , simulation term of 4.0 years, expected volatility of 38.8 %, risk-free interest rate of 0.2 %, and expected dividend yield of 0.8 %.

In addition, the grant date fair value included an illiquidity discount of 8.9 % to account for the post-vesting sales restrictions.

In October 2022, the Compensation Committee cancelled the 2022 Executive PSUs and granted 159,000 MSUs to the executive officers as replacement awards, which represented a target number of shares that could be earned subject to the achievement of both stock price targets and stock performance compared to the companies comprising the Philadelphia Semiconductor Sector Index (“Peer Group”) over a three -year performance period from October 25, 2022 to October 25, 2025 ( “2022 Executive MSUs”).

In October 2022, the Compensation Committee cancelled the 2022 Executive PSUs and granted 159,000 MSUs to the executive officers as replacement awards, which represented the target number of shares that could be earned subject to the achievement of both stock price targets and stock performance compared to the companies comprising the Philadelphia Semiconductor Sector Index (“Peer Group”) over a three -year performance period from October 25, 2022 to October 25, 2025 (“2022 Executive MSUs”).

The maximum number of shares that an executive officer could earn was 500 % of the target number of the 2022 Executive MSUs if:

(1) the Company achieved five stock price targets ranging from $ 455 to $ 591 at any time during the performance period, and (2) the Company’s total stockholder return ranked in the 50th percentile or above relative to the Peer Group at the end of the performance period.

As of December 31, 2023, price targets one and two have been achieved.

As of December 31, 2024, all price targets have been achieved.

Upon achievement of the performance conditions, the 2022 Executive MSUs will fully vest on October 25, 2025.

4 unchanged sentences

There was no illiquidity discount because the awards did not contain any post-vesting sales restrictions.

In February 2022, the Compensation Committee granted 24,000 MSUs to certain non-executive employees, which represented a target number of shares that could be earned upon achievement of stock price targets ( “2022 Non-Executive MSUs”).

In February 2022, the Compensation Committee granted 24,000 MSUs to certain non-executive employees, which represented the target number of shares that could be earned upon achievement of stock price targets (“2022 Non-Executive MSUs”).

The maximum number of shares that an employee could earn was 500 % of the target number of the 2022 Non-Executive MSUs if the Company achieved five stock price targets ranging from $ 472 to $ 590 during a performance period from February 3, 2022 to February 3, 2025.

As of December 31, 2023, the Company has achieved all stock price targets.

As of December 31, 2023, the Company had achieved all stock price targets.

Accordingly, the non-executive employees were awarded a total of 113,000 shares.

The 2022 Non-Executive MSUs will vest in equal amounts on each of the first, second and third anniversaries of February 3, 2025.

2 unchanged sentences

stock price of $ 393.16 , simulation term of six years, expected volatility of 39.0 %, risk-free interest rate of 1.7 %, and expected dividend yield of 0.8 %.

In October 2018, the Compensation Committee granted 60,000 MSUs to the executive officers and 60,000 MSUs to certain non-executive employees, which represented a target number of shares that could be earned upon achievement of stock price targets ( “2018 MSUs”).

The maximum number of shares that an employee could earn was 500 % of the target number of the 2018 MSUs if the Company achieved five stock price targets ranging from $ 140 to $ 172 during a performance period from October 26, 2018 to December 31, 2023.

As of December 31, 2019, all stock price targets had been achieved and the employees were awarded a total of 600,000 shares.

The 2018 MSUs vested on January 1, 2024, with post-vesting sales restrictions on the vested shares for up to an additional two years.

The total stock-based compensation cost for the 2018 MSUs is $ 38.5 million.

The Company determined the grant date fair value of the 2018 MSUs using a Monte Carlo simulation model with the following assumptions:

stock price of $ 108.43 , expected volatility of 31.6 %, a risk-free interest rate of 3.0 %, and an illiquidity discount of 8.7 % to account for the post-vesting sales restrictions.

In December 2013, the Compensation Committee granted 276,000 MSUs to the executive officers and 84,000 MSUs to certain non-executive employees, which represented a target number of shares that could be earned upon achievement of stock price targets ( “2013 MSUs”).

The maximum number of shares that an employee could earn was 500 % of the target number of the 2013 MSUs if the Company achieved five price targets ranging from $ 40 to $ 56 during a performance period from January 1, 2014 to December 31, 2018.

As of December 31, 2015, all stock price targets had been achieved and the employees were awarded a total of 1.8 million shares.

The 2013 MSUs vested quarterly from January 1, 2019 to December 31, 2023.

The total stock-based compensation cost for the 2013 MSUs is $ 38.1 million.

The Company determined the grant date fair value of the 2013 MSUs using a Monte Carlo simulation model with the following assumptions:

stock price of $ 31.73 , expected volatility of 38.7 % and a risk-free interest rate of 1.6 %.

There was no illiquidity discount because the awards did not contain any post-vesting sales restrictions.

In April 2023, the Board of Directors approved, subject to stockholder approval, the amendment and restatement of the Monolithic Power Systems, Inc.

2004 Employee Stock Purchase Plan (the “Amended 2004 ESPP”).

The Amended 2004 ESPP, which was subsequently approved by the Company’s stockholders on June 15, 2023, became effective on August 16, 2023, after the final purchase period of the Monolithic Power Systems, Inc.

2004 Employee Stock Purchase Plan (the “2004 ESPP”).

The 2004 ESPP provided for an annual increase by an amount equal to the least of one million shares, 2 % of the outstanding shares of common stock on the first day of the year, or a number of shares as determined by the Board of Directors.

This evergreen provision was removed in the Amended 2004 ESPP.

The Amended 2004 ESPP further provides for the issuance of up to 4.4 million shares of the Company’s common stock and will expire on August 16, 2038.

Under both ESPPs, eligible employees may purchase common stock through payroll deductions.

Participants may not purchase more than 2,000 shares in a six -month offering period, or purchase shares having a value greater than $ 25,000 in any calendar year as measured at the beginning of the offering period in accordance with the IRC and applicable treasury regulations.

As of December 31, 2023, 4.4 million shares were available for future issuance under the Amended 2004 ESPP.

For the years ended December 31, 2023, 2022 and 2021 , 17,000 , 14,000 and 17,000 shares, respectively, were issued under the 2004 ESPP and the Amended 2004 ESPP.

The intrinsic value of the shares issued was $ 1.4 million, $ 1.6 million and $ 2.4 million for the years ended December 31, 2023, 2022 and 2021 , respectively.

As of December 31, 2023 , the unamortized expense was $ 0.4 million, which will be recognized through the first quarter of 2024.

The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:

Year Ended December 31,

Expected term (in years)

Expected volatility

53.3 % 50.6 % 43.2 %

Risk-free interest rate

5.3 % 1.9 % 0.1 %

Dividend yield

0.8 % 0.6 % 0.6 %

Cash proceeds from the shares issued under the 2004 ESPP and the Amended 2004 ESPP were $ 7.6 million, $ 5.9 million and $ 4.7 million for the years ended December 31, 2023, 2022 and 2021 , respectively.

STOCKHOLDER’ EQUITY

STOCKHOLDERS’ EQUITY

Cash Dividend Program

The Company has a dividend program approved by the Board of Directors, pursuant to which the Company intends to pay quarterly cash dividends on its common stock.

The Company has a dividend program approved by its Board of Directors, pursuant to which the Company intends to pay quarterly cash dividends on its common stock.

Based on the Company’s historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month.

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The Company anticipates that cash used for future dividend payments will come from its domestic cash, cash generated from ongoing U.S.

operations, and cash repatriated from its Bermuda subsidiary.

operations, and cash repatriated from certain foreign subsidiaries.

The Company also anticipates that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

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Stock Repurchase Program

In October 2023, the Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $ 640.0 million in the aggregate of its common stock through October 29, 2026.

Shares are retired upon repurchase.

The Company repurchased approximately 7,000 shares of its common stock for an aggregate purchase price of $ 3.7 million during the year ended December 31, 2023.

Stock repurchased under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate.

The timing and the number of any repurchased common stock will be determined by the Company’s management based on its evaluation of market conditions, legal requirements, share price, and other factors.

The repurchase program does not obligate the Company to purchase any particular number of shares and may be suspended, modified, or discontinued at any time without prior notice.

IRA requires a

1% excise tax of the value of certain stock repurchases in excess of stock issued for employee compensation made after

December 31, 2022.

This provision did

not have an impact on the Company’s consolidated financial statements.

In October 2023, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $ 640.0 million of its common stock through October 29, 2026.

Shares were retired upon repurchase.

The Company repurchased approximately 1.0 million and 7,000 shares of its common stock for an aggregate purchase price of $ 636.2 million and $ 3.7 million during the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the authorized amount under this program was utilized.

Inflation Reduction Act of 2022 (the “IRA”) requires a 1% excise tax of the value of certain stock repurchases in excess of stock issued for employee compensation made after December 31, 2022, which was not material for the years ended December 31, 2024 and 2023, respectively.

OTHER INCOME (EXPENSE), NET

The components of other income (expense), net, are as follows (in thousands):

The components of other income (expense), net, were as follows (in thousands):

Year Ended December 31,

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$ 33,554 $ 24,105 $ ( 1,848 )

$ 24,105 $ ( 1,848 ) $ 9,802

NET INCOME PER SHARE

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Year Ended December 31,

$ 1,786,700 $ 427,374 $ 437,672

Weighted-average outstanding shares—basic

48,599 47,610 46,727

Effect of dilutive securities

236 1,161 1,631

Weighted-average outstanding shares—diluted

48,835 48,771 48,358

Net income per share:

$ 36.76 $ 8.98 $ 9.37

$ 36.59 $ 8.76 $ 9.05

Anti-dilutive common stock equivalents were not material for the periods presented.

The components of income before income taxes are as follows (in thousands):

The components of income before income taxes were as follows (in thousands):

Year Ended December 31,

United States

$ ( 46,263 ) $ ( 15,066 ) $ ( 30,190 )

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$ 572,912 $ 505,841 $ 524,937

The components of the income tax expense are as follows (in thousands):

The components of the income tax expense (benefit), net were as follows (in thousands):

Year Ended December 31,

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160 ( 744 ) -

Income tax expense

( 1,300,800 ) 9,893 ( 4,419 )

The effective tax rate differs from the applicable U.S.

Income tax expense (benefit), net

$ ( 1,213,788 ) $ 78,467 $ 87,265

The effective tax rate differed from the applicable U.S.

statutory federal income tax rate as follows:

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statutory federal tax rate

21.0 % 21.0 % 21.0 %

Foreign income at lower rates

( 21.4 ) ( 21.9 ) ( 22.8 )

tax impact of foreign earnings and losses

15.1 14.5 16.3

Changes in valuation allowance

626.6 2.9 0.2

Stock-based compensation

1 unchanged sentence

( 0.1 ) ( 2.0 ) -

Tax credits, net of reserves

Tax attributes, net of reserves

( 247.2 ) ( 1.3 ) ( 1.0 )

State income taxes

Effects of intercompany transactions

( 608.5 ) - -

Other adjustments

0.9 0.8 ( 0.2 )

Effective tax rate

The prior years’ return to provision true-up adjustment has been disaggregated to conform with the current-year presentation.

( 211.9 )% 15.5 % 16.6 %

The prior years’ tax attributes, net of reserves and other adjustments has been disaggregated to conform with the current-year presentation.

In 2024, one of the Company’s foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025.

A deferred tax benefit of approximately $ 1.3 billion, net of $ 0.1 billion of valuation allowance, was recorded during the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive.

In December 2024, the Company completed an intercompany transaction that resulted in one of its foreign subsidiaries recording a step up in the tax basis of intangible assets of approximately $ 23.2 billion.

This resulted in a deferred tax difference between the U.S.

GAAP basis and local tax basis of the specified intangibles.

The Company does not expect to realize the deferred tax asset for U.S.

GAAP purposes;

therefore, the Company has recorded a full valuation allowance as of December 31, 2024.

In January 2025, the OECD released new Administrative Guidance on the application of the Global Anti-Base Erosion (“GloBE”) Model Rules.

The Company will continue to evaluate the impact of this release or of other prospective guidance on its future global tax provision.

The components of net deferred tax assets consist of the following (in thousands):

Deferred tax assets:

Tax attributes

$ 1,465,666 $ 49,633

Depreciation and amortization

Stock-based compensation

Deferred compensation

Net operating losses

11,202 11,126

Other expenses not currently deductible

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Depreciation and amortization

( 6,420 ) ( 5,927 )

Undistributed foreign earnings

6 unchanged sentences

$ 1,326,840 $ 28,054

The prior years’ tax credits and net operating loss components of deferred tax assets have been aggregated within the tax attributes line to conform with the current-year presentation.

The Company accounts for GILTI as a period cost.

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The Company periodically evaluates its deferred tax assets, including a determination of whether a valuation allowance is necessary, based upon its ability to utilize the assets using a more likely than not analysis.

The realizability of the Company’s net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

The realizability of the Company’s most significant deferred tax asset is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.

As of December 31, 2024 and 2023, the Company has evaluated the realization of its deferred tax assets and recorded a valuation allowance for assets that do not meet the more-likely-than-not recognition threshold.

A reconciliation of the beginning and ending balance of valuation allowances is as follows (in thousands):

A reconciliation of the beginning and ending balance of valuation allowances was as follows (in thousands):

Balance at Beginning of Period

6 unchanged sentences

$ 35,008 $ 3,591,638 $ ( 2,079 ) $ 3,624,567

The additions in 2023 were primarily the result of a change in foreign tax law in 2023 that negatively impacted the realizability of foreign deferred tax assets.

The additions in 2024 were primarily the result of the step up in tax basis of intangible assets and a tax incentive received by one of our foreign subsidiaries.

The Company has evaluated the deferred tax assets generated by each of these events and recorded a valuation allowance for any deferred tax assets that are not realizable on a more-likely-than-not basis.

Undistributed Earnings of Subsidiaries:

The Company has analyzed its global working capital and cash requirements, and has determined that it plans to repatriate cash from its Bermuda subsidiary on an ongoing basis to fund its future U.S.-based expenditures and dividends.

For the years ended December 31, 2023 and 2021, the Company repatriated $ 140.0 million and $ 70.0 million from its Bermuda subsidiary, respectively.

The Company has analyzed its global working capital and cash requirements, and has determined that it plans to repatriate cash from a foreign subsidiary on an ongoing basis to fund its future U.S.-based expenditures, stock repurchases and dividends.

For the years ended December 31, 2024 and 2023, the Company repatriated $ 642.0 million and $ 140.0 million from a foreign subsidiary, respectively.

No cash was repatriated from the subsidiary during the year ended December 31, 2022.

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As of December 31, 2024, the state net operating loss carryforwards for income tax purposes were $ 4.3 million, which will expire beginning in 2030.

As of December 31, 2023 , the Company has foreign net operating loss carryforwards for income tax purposes of $ 92.7 million, which will expire beginning in 2029.

As of December 31, 2023 , the Company had no R&D tax credit carryforwards for federal income tax purposes, and $ 40.6 million for state income tax purposes, which can be carried forward indefinitely.

As of December 31, 2024, the Company has foreign net operating loss carryforwards for income tax purposes of $ 170.0 million, $ 3.7 million of which can be carried forward indefinitely, while $ 166.3 million will expire beginning in 2029.

As of December 31, 2024, the Company had no R&D tax credit carryforwards for federal income tax purposes.

As of December 31, 2024, the Company has $ 44.7 million for state income tax purposes, which can be carried forward indefinitely.

In the event of a change in ownership, as defined under federal and state tax laws, the Company’s net operating loss and tax credit carryforwards could be subject to annual limitations.

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As of December 31, 2023, the Company had $ 62.7 million of unrecognized tax benefits, $ 48.9 million of which would affect its effective tax rate if recognized after considering the valuation allowance.

A reconciliation of the gross unrecognized tax benefits is as follows (in thousands):

A reconciliation of the gross unrecognized tax benefits was as follows (in thousands):

Balance as of January 1, 2022

Increase for tax position of current year

Decrease for tax position of prior year

Increase for tax position of prior year

Decrease due to settlement with tax authorities

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Decrease due to lapse of statute of limitation

Decrease for tax positions of prior year

Balance as of December 31, 2024

1 unchanged sentence

As of December 31, 2024 and 2023, the Company has $ 6.3 million and $ 5.7 million, respectively, of accrued interest related to uncertain tax positions, which were recorded in income tax liabilities on the Consolidated Balance Sheets.

Uncertain tax positions relate to the allocation of income and deductions among the Company’s global entities and to the determination of the R&D tax credit.

It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months.

However, it is not possible to determine either the magnitude or the range of increases or decreases at this time.

The Company is not aware of any facts that would materially change the balance of gross unrecognized tax benefits in the next 12 months.

The Company currently has reduced tax rates in its subsidiaries in Chengdu and Hangzhou, China through 2025 and 2024, respectively, for performing R&D activities.

On December 27, 2023, the Bermuda CIT Act was enacted and signed into law.

It includes a 15% CIT applicable to Bermuda businesses that are MNE with annual revenue of €750M or more beginning in 2025.

The Bermuda CIT Act also includes an ETA that requires MNE’s to revalue their assets and liabilities, excluding goodwill, at their fair value as of September 30, 2023.

There is an election to opt out of the ETA.

As the Bermuda CIT Act is not effective until January 1, 2025, the Company is evaluating whether or not to adopt this ETA.

Based on the information available, the Company has not recorded any changes to income tax expense related to the Bermuda CIT Act as of December 31, 2023 .

On August 9, 2022, the U.S.

government enacted the CHIPS Act to provide certain financial and tax incentives to the semiconductor industry, primarily for manufacturing activities within the United States.

On August 16, 2022, the IRA was enacted and signed into law.

The IRA, among other things, introduces a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations, and imposes a 1% excise tax on certain stock repurchases.

This excise tax is effective January 1, 2023.

The CHIPS Act and the IRA had no material impact on the income tax provisions, results of operations or financial condition of the Company for the year ended December 31, 2023 and 2022.

In December 2023, the Bermuda CIT Act was enacted and signed into law.

The Bermuda CIT Act includes a 15% CIT applicable to Bermuda businesses that are MNE groups with annual revenue of €750M or more beginning in 2025.

As the Bermuda CIT Act is not effective until January 1, 2025, and the Company does not expect to realize material taxable income in Bermuda in 2025, no changes to income tax expense related to the Bermuda CIT Act have been recorded as of December 31, 2024.

Income Tax Examination

4 unchanged sentences

Warranty and Indemnification Provisions

The changes in warranty reserves are as follows (in thousands):

The changes in warranty reserves were as follows (in thousands):

Year Ended December 31,

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In May 2022, the Company entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four-year period.

As of December 31, 2023 , the Company had remaining prepayments under this agreement of $ 120.0 million reported in other long-term assets on the Consolidated Balance Sheet.

As of December 31, 2024, the Company had remaining prepayments under this agreement of $ 60.0 million reported in other long-term assets on the Consolidated Balance Sheets.

Total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $60.0 million prepayment, as of December 31, 2024 were as follows (in thousands):

The Company may also be subject to litigation initiated by its stockholders.

The Company has also been subject to litigation initiated by its stockholders.

These proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend.

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Participants may contribute up to the amount allowable as a deduction for federal income tax purposes.

The Company is not required to contribute and did not contribute to the plan for the years ended December 31, 2023, 2022 and 2021 .

The Company was not required to contribute, and did not contribute, to the plan for the years ended December 31, 2024, 2023 and 2022.

SIGNIFICANT CUSTOMERS

The Company sells its products primarily through third -party distributors and value-added resellers, and directly to OEMs, ODMs and EMS providers.

The Company sells its products primarily through third-party distributors and value-added resellers.

In addition, the Company sells directly to OEMs, ODMs and end customers.

The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue:

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* Represents less than 10%.

The Company’s agreements with these third -party customers were made in the ordinary course of business and may be terminated with or without cause by these customers with advance notice.

The Company’s agreements with these third-party distributors were made in the ordinary course of business and may be terminated with or without cause by these distributors with advance notice.

Although the Company may experience a short-term disruption in the distribution of its products and a short-term decline in revenue if its agreement with any of the distributors were terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a short period following any termination of the agreement with a distributor.

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SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronic solutions for the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.

The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance.

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronics solutions for the storage and computing, enterprise data, automotive, industrial, communications and consumer end markets.

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance.

Specifically, the CODM uses net income that is reported on the Consolidated Statements of Operations and cash provided by operating activities reported in the Consolidated Statements of Cash Flows to decide whether and how much to reinvest profits into core business operations or to return to stockholders in the form of stock repurchases and dividends.

All significant segment expenses have been captured on the face of the Consolidated Statements of Operations.

The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’ ship-to locations.

6 unchanged sentences

86,899 132,620 145,584

United States

97,294 99,804 35,770

93,340 91,048 68,720

Southeast Asia

1 unchanged sentence

61,695 93,340 91,048

The following is a summary of revenue by major product family (in thousands):

Year Ended December 31,

Product Family

55,235 97,294 99,804

Lighting Control

$ 2,207,100 $ 1,821,072 $ 1,794,148

$ 1,821,072 $ 1,794,148 $ 1,207,798

The following is a summary of long-lived assets by geographic region (in thousands):

$ 237,649 $ 184,685

United States

171,514 119,430

2 unchanged sentences

$ 494,945 $ 368,952

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) (in thousands):

Unrealized Losses on Available-for-Sale Securities

Foreign Currency Translation Adjustments

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in accumulated other comprehensive loss (in thousands):

Unrealized Losses on Available-for-Sale Securities Foreign Currency Translation Adjustments

Balance as of January 1, 2023

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss

Net current period other comprehensive loss

$ ( 7,727 ) $ ( 15,350 ) $ ( 23,077 )

Other comprehensive income (loss) before reclassifications

6,896 ( 9,528 ) ( 2,632 )

Amounts reclassified from accumulated other comprehensive income

( 1 ) - ( 1 )

( 1,352 ) - ( 1,352 )

Net current period other comprehensive income (loss)

5,543 ( 9,528 ) ( 3,985 )

Balance as of December 31, 2023

( 2,184 ) ( 24,878 ) ( 27,062 )

Other comprehensive income (loss) before reclassifications

1,160 ( 22,843 ) ( 21,683 )

Amounts reclassified from accumulated other comprehensive income

Net current period other comprehensive income (loss)

1,394 ( 22,843 ) ( 21,449 )

Balance as of December 31, 2024

The amounts reclassified from accumulated other comprehensive income (loss) were recorded in other income (expense), net, on the Consolidated Statements of Operations.

$ ( 790 ) $ ( 47,721 ) $ ( 48,511 )

The amounts reclassified from accumulated other comprehensive income were recorded in other income (expense), net, on the Consolidated Statements of Operations.

SUBSEQUENT EVENTS

In January 2024, the Company completed the acquisition of Axign in a cash transaction in exchange for all outstanding Axign shares.

Axign is a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems.

The preliminary total purchase consideration was approximately $ 33.8 million.

The initial accounting for the acquisition, including the valuation of assets acquired and liabilities assumed, is still ongoing as of the date this Annual Report on Form 10 -K is issued.

OECD Developments

In January 2025, the OECD released new Administrative Guidance on the application of the GloBE Model Rules.

The Company will continue to evaluate the impact of this release or of other prospective guidance on its future global tax provision.

Cash Dividend Increase

In February 2025, the Board of Directors approved an increase in quarterly cash dividends from $ 1.25 per share to $ 1.56 per share.

Stock Repurchase Program

In February 2025 , the Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $ 500.0 million of its common stock through February 2028 .

Shares are retired upon repurchase.

The repurchases, if any, will be funded from available working capital and cash repatriation from its subsidiaries.

Stock repurchases under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate.

The timing and the number of any repurchased common stock will be determined by the Company’s management based on the evaluation of market conditions, legal requirements, stock price, and other factors.

The repurchase program does not obligate the Company to purchase any particular number of shares and may be suspended, modified, or discontinued at any time without prior notice.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data