MONOLITHIC POWER SYSTEMS, INC. 10-K

Item 8. Financial Statements and Supplementary Data MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED FINANCIAL STATEMENTS Contents Page Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 42 Consolidated Balance Sheets 44 Consolidated Statements of Operations 45 Consolidated Statements of Comprehensive Income 46 Consolidated Statements of Stockholders ’ Equity 47 Consolidated Statements of Cash Flows 48 Notes to Consolidated Financial Statements 49 41 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Monolithic Power Systems, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Monolithic Power Systems, Inc. (the Company) as of December 31, 2025 and 2024, 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, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. 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, 2025, 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 27, 2026 expressed an adverse opinion thereon. Restatement of 2024 Financial Statements As discussed in Note 2 to the consolidated financial statements, the 2024 consolidated financial statements have been restated to correct a misstatement. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 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 disclosure to which it relates. Income Taxes – Realizability of foreign tax incentive Description of the Matter As discussed in Note 13 to the financial statements, in 2024 the Company was granted a tax incentive with a ten-year life by a foreign jurisdiction, eligible to be utilized beginning in 2025. This tax incentive is recognized as a deferred tax asset of $1.1 billion, net of $0.2 billion of deferred tax liability and $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 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 27, 2026 42 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Monolithic Power Systems, Inc. Opinion on Internal Control Over Financial Reporting We have audited Monolithic Power Systems, Inc.’s internal control over financial reporting as of December 31, 2025, 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, 2025, 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 review of deferred income taxes. 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, 2025 and 2024, 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, 2025, 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 2025 consolidated financial statements, and this report does not affect our report dated February 27, 2026, which expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Jose, California February 27, 2026 43 Table of Contents MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) December 31, 2025 2024 (As Restated) ASSETS Current assets: Cash and cash equivalents $ 1,099,302 $ 691,816 Short-term investments 157,243 171,130 Accounts receivable, net 255,626 172,518 Inventories 564,649 419,611 Other current assets 106,982 109,978 Total current assets 2,183,802 1,565,053 Property and equipment, net 627,689 494,945 Acquisition-related intangible assets, net 8,790 9,938 Goodwill 25,944 25,944 Deferred tax assets, net 1,182,883 1,225,565 Other long-term assets 165,091 194,377 Total assets $ 4,194,199 $ 3,515,822 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 138,272 $ 102,526 Accrued compensation and related benefits 85,963 63,918 Other accrued liabilities 145,130 128,123 Total current liabilities 369,365 294,567 Income tax liabilities 75,022 65,193 Deferred tax liabilities 90,480 93,367 Other long-term liabilities 127,835 111,570 Total liabilities 662,702 564,697 Commitments and contingencies (Note 14) Stockholders’ equity: Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 48,709 and 47,823 , respectively 936,998 706,817 Retained earnings 2,609,651 2,292,819 Accumulated other comprehensive loss ( 15,152 ) ( 48,511 ) Total stockholders’ equity 3,531,497 2,951,125 Total liabilities and stockholders’ equity $ 4,194,199 $ 3,515,822 See accompanying notes to consolidated financial statements. 44 Table of Contents MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended December 31, 2025 2024 (As Restated) 2023 Revenue $ 2,790,459 $ 2,207,100 $ 1,821,072 Cost of revenue 1,250,718 986,230 799,953 Gross profit 1,539,741 1,220,870 1,021,119 Operating expenses: Research and development 382,263 324,748 263,643 Selling, general and administrative 428,842 356,764 275,740 Total operating expenses 811,105 681,512 539,383 Operating income 728,636 539,358 481,736 Other income, net 37,580 33,554 24,105 Income before income taxes 766,216 572,912 505,841 Income tax expense (benefit), net 144,733 ( 1,019,146 ) 78,467 Net income $ 621,483 $ 1,592,058 $ 427,374 Net income per share: Basic $ 12.94 $ 32.76 $ 8.98 Diluted $ 12.86 $ 32.60 $ 8.76 Weighted-average shares outstanding: Basic 48,035 48,599 47,610 Diluted 48,309 48,835 48,771 See accompanying notes to consolidated financial statements. 45 Table of Contents MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended December 31, 2025 2024 (As Restated) 2023 Net income $ 621,483 $ 1,592,058 $ 427,374 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 33,576 ( 22,843 ) ( 9,528 ) Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 285 , $( 153 ) and $ 1,352 , respectively ( 217 ) 1,394 5,543 Other comprehensive income (loss), net of tax 33,359 ( 21,449 ) ( 3,985 ) Comprehensive income $ 654,842 $ 1,570,609 $ 423,389 See accompanying notes to consolidated financial statements. 46 Table of Contents MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY (In thousands, except per share amounts) Accumulated Common Stock and Other Total Additional Paid-in Capital Retained Comprehensive Stockholders’ Shares Amount Earnings Loss Equity Balance as of January 1, 2023 47,107 $ 975,276 $ 716,403 $ ( 23,077 ) $ 1,668,602 Net income - - 427,374 - 427,374 Other comprehensive loss - - - ( 3,985 ) ( 3,985 ) Dividends and dividend equivalents declared ($ 4.00 per share) - - ( 196,713 ) - ( 196,713 ) Common stock issued 928 8,686 - - 8,686 Repurchases of common stock ( 7 ) ( 3,741 ) - - ( 3,741 ) Stock-based compensation expense - 149,716 - - 149,716 Balance as of December 31, 2023 48,028 1,129,937 947,064 ( 27,062 ) 2,049,939 Net income (As Restated) - - 1,592,058 - 1,592,058 Other comprehensive loss - - - ( 21,449 ) ( 21,449 ) Dividends and dividend equivalents declared ($ 5.00 per share) - - ( 246,303 ) - ( 246,303 ) Common stock issued 796 8,727 - - 8,727 Repurchases of common stock ( 1,001 ) ( 637,478 ) - - ( 637,478 ) Stock-based compensation expense - 205,631 - - 205,631 Balance as of December 31, 2024 (As Restated) 47,823 706,817 2,292,819 ( 48,511 ) 2,951,125 Net income - - 621,483 - 621,483 Other comprehensive income - - - 33,359 33,359 Dividends and dividend equivalents declared ($ 6.24 per share) - - ( 304,651 ) - ( 304,651 ) Common stock issued 894 9,220 - - 9,220 Repurchases of common stock ( 8 ) ( 6,483 ) - - ( 6,483 ) Stock-based compensation expense - 227,444 - - 227,444 Balance as of December 31, 2025 48,709 $ 936,998 $ 2,609,651 $ ( 15,152 ) $ 3,531,497 See accompanying notes to consolidated financial statements. 47 Table of Contents MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2025 2024 (As Restated) 2023 Cash flows from operating activities: Net income $ 621,483 $ 1,592,058 $ 427,374 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,513 36,430 40,168 Amortization of discount on available-for-sale securities ( 4,103 ) ( 20,145 ) ( 5,277 ) Gain on deferred compensation plan investments ( 10,033 ) ( 9,400 ) ( 8,505 ) Deferred taxes, net 39,694 ( 1,108,269 ) 5,865 Stock-based compensation expense 227,491 205,640 149,711 Other ( 737 ) 28 ( 1,447 ) Changes in operating assets and liabilities: Accounts receivable ( 83,066 ) 7,325 2,884 Inventories ( 145,077 ) ( 35,215 ) 63,583 Other assets 60,119 54,544 ( 24,310 ) Accounts payable 41,239 23,169 4,797 Accrued compensation and related benefits 19,827 8,743 ( 31,187 ) Income tax liabilities 1,994 13,226 ( 308 ) Other accrued liabilities 16,858 20,276 14,865 Net cash provided by operating activities 838,202 788,410 638,213 Cash flows from investing activities: Purchases of property and equipment ( 172,013 ) ( 146,118 ) ( 57,578 ) Purchases of intangible assets ( 2,928 ) ( 18,175 ) - Purchases of investments ( 397,429 ) ( 1,082,706 ) ( 582,603 ) Maturities and sales of investments 419,578 1,508,135 468,308 Cash paid for acquisition, net of cash acquired - ( 33,283 ) - Contributions to deferred compensation plan ( 4,477 ) ( 4,806 ) ( 6,853 ) Net cash provided by (used in) investing activities ( 157,269 ) 223,047 ( 178,726 ) Cash flows from financing activities: Property and equipment purchased on extended payment terms ( 2,600 ) ( 4,087 ) ( 2,826 ) Proceeds from common stock issued 9,220 8,727 8,686 Repurchases of common stock ( 7,686 ) ( 636,244 ) ( 3,741 ) Dividends and dividend equivalents paid ( 284,797 ) ( 240,623 ) ( 185,844 ) Net cash used in financing activities ( 285,863 ) ( 872,227 ) ( 183,725 ) Effect of change in exchange rates 12,510 ( 8,470 ) ( 3,310 ) Net increase in cash, cash equivalents and restricted cash 407,580 130,760 272,452 Cash, cash equivalents and restricted cash, beginning of period 691,941 561,181 288,729 Cash, cash equivalents and restricted cash, end of period $ 1,099,521 $ 691,941 $ 561,181 Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets: Cash and cash equivalents $ 1,099,302 $ 691,816 $ 527,843 Restricted cash included in other current assets - - 33,204 Restricted cash included in other long-term assets 219 125 134 Total cash, cash equivalents, and restricted cash $ 1,099,521 $ 691,941 $ 561,181 Supplemental disclosures for cash flow information: Cash paid for income taxes, net $ 95,061 $ 79,562 $ 85,128 Non-cash investing and financing activities: Liability accrued for property and equipment purchases $ 14,521 $ 22,292 $ 1,784 Liability accrued for dividends and dividend equivalents $ 80,588 $ 63,409 $ 53,213 See accompanying notes to consolidated financial statements. 48 Table of Contents MONOLITHIC POWER SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Monolithic Power Systems, Inc. (the “Company”) was incorporated in the State of California on August 22, 1997. On November 17, 2004, the Company was reincorporated in the State of Delaware. 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 The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. 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 consolidated 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 income tax valuation allowances 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. Foreign Currency The functional currency of the Company’s foreign subsidiaries is the local currency, with the exception of certain subsidiaries that invoice revenues in U.S. Dollars. Some subsidiaries are located in China, Taiwan and Europe, which utilize the Renminbi, the New Taiwan Dollar and the Euro as their currencies, respectively. Accordingly, assets and liabilities of the foreign subsidiaries are translated using exchange rates in effect at the end of the period. Revenue and costs are translated using average exchange rates for the period. The resulting translation adjustments are recorded in accumulated other comprehensive loss on the Consolidated Balance Sheets. 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. Foreign currency exchange gains and losses in connection with the remeasurement and settlement of the balances were reported in other income, 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. Cash Equivalents and Debt Investments The Company classifies all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents. The Company may classify investments with maturities beyond one year as short-term based on the nature of the investments and their availability for use in current operations. Cash equivalents are stated at cost, which approximates fair market value. The Company’s short-term and long-term debt investments are classified as available-for-sale securities and are stated at their fair market value, with unrealized gains and losses recorded in accumulated other comprehensive loss on the Consolidated Balance Sheets. Premiums and discounts on debt investments are generally amortized or accreted over the life of the related available-for-sale securities. Interest income is recognized when earned. The cost of investments sold is determined on the basis of the specific identification method. 49 Table of Contents Available-for-sale investments are subject to impairment reviews when the fair value is below the amortized cost basis. If the Company determines that the decline in fair value below the amortized cost basis is due to credit-related factors, the impairment is recognized as an allowance on the Consolidated Balance Sheets with a corresponding adjustment to earnings. An impairment that is not credit-related is recognized in accumulated other comprehensive loss on the Consolidated Balance Sheets. 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. Fair Value of Financial Instruments Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value, the Company considers the principal or most advantageous market in which the Company would transact, as well as assumptions that market participants would use when pricing the assets or liabilities. Fair value is estimated by applying the fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. See Note 5 for additional information on the fair value of the Company’s financial instruments. Inventory Valuation Inventories are valued at the lower of standard cost (which approximates actual cost determined on a first-in first-out basis) and estimated net realizable value. The Company writes down excess and obsolete inventories based on their age and forecasted demand, which includes estimates taking into consideration the Company’s revenue forecast, outlook on market and economic conditions, technology changes, new product introductions and changes in strategic direction. Actual demand may differ from forecasted demand, and such a difference may have a material effect on recorded inventory values. When the Company records a write-down on inventory, it establishes a new, lower cost basis for that inventory, and subsequent changes in facts and circumstances will not result in the restoration or increase in that newly established cost basis. Property and Equipment Property and equipment are stated at cost. Depreciation commences when an asset is placed in service and available for its intended use. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Buildings and building improvements have estimated useful lives of 20 to 40 years. Leasehold improvements are amortized over the shorter of the estimated useful lives or the lease period. 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. Furniture and fixtures have estimated useful lives of three to five years. Land is not depreciated. Goodwill 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. Goodwill is not amortized. The Company tests goodwill for impairment at least annually in the fourth quarter of each year, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company has elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative goodwill impairment test is performed to measure the impairment loss. No impairment of goodwill 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. 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. 50 Table of Contents Deferred Compensation Plan The Company has a non-qualified, unfunded deferred compensation plan, which provides certain key employees, including executive officers, with the ability to defer the receipt of compensation in order to accumulate funds for retirement on a tax deferred basis. The Company does not make contributions to the plan or guarantee returns on the investments. The Company is responsible for the plan’s administrative expenses. Participants’ deferrals and investment gains and losses remain as the Company’s liabilities and the underlying assets are subject to claims of general creditors. The liabilities for compensation deferred under the plan are recorded at fair value as of the end of each reporting period. Changes in the fair value of the liabilities are included in cost of revenue and operating expenses on the Consolidated Statements of Operations. 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. 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, net, on the Consolidated Statements of Operations. The following table summarizes the deferred compensation plan balances on the Consolidated Balance Sheets (in thousands): December 31, 2025 2024 Deferred compensation plan asset components: Cash surrender value of corporate-owned life insurance policies $ 31,612 $ 27,249 Fair value of mutual funds and money market funds 75,484 65,337 Total $ 107,096 $ 92,586 Deferred compensation plan assets reported in: Other long-term assets $ 107,096 $ 92,586 Deferred compensation plan liabilities reported in: Accrued compensation and related benefits $ 3,707 $ 2,323 Other long-term liabilities 103,954 93,653 Total $ 107,661 $ 95,976 Revenue Recognition The Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. See Note 3 for further discussion. R&D Costs incurred in R&D are expensed as incurred. Product Warranty Reserve and Rework The Company generally provides either a one - or two -year warranty against defects in materials and workmanship and will repair the products, provide replacements at no charge to customers or issue a refund. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. The Company accrues for warranty and rework costs upon evaluation of customer specific claims. Historically, the Company’s warranty obligations and rework costs associated with product-related claims have not been material. The estimated amount of product warranty and rework liabilities was $ 10.1 million, $ 5.4 million, and $ 16.9 million for the periods ended December 31, 2025, 2024 and 2023. 51 Table of Contents Leases The Company determines if an arrangement is a lease at inception. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term. ROU assets also include any initial direct costs incurred and prepaid lease payments, less lease incentives received. Because the implicit rate in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the remaining lease payment. The Company recognizes operating lease costs on a straight-line basis over the lease term. The Company does not record short-term leases with a term of 12 months or less at the commencement date on the Consolidated Balance Sheets. For lease arrangements that contain lease and non-lease components, the Company accounts for them as single lease components. Stock-Based Compensation The Company’s restricted stock units (“RSUs”) include time-based RSUs, RSUs with performance conditions (“PSUs”), and RSUs with market conditions (“MSUs”). 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 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 and MSUs, 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. Compensation expense related to awards subject to performance or market conditions is recognized over the requisite service period for each separately vesting tranche. For awards with market conditions, compensation expense is not reversed if the market conditions are not satisfied. For awards with 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 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. Any previously recognized compensation expense is reversed if the performance conditions are not expected to be satisfied as a result of management’s assessment. The Company accounts for forfeitures of equity awards when they occur. Accounting for Income Taxes The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable or refundable in the current fiscal year by tax jurisdiction. The Company also recognizes federal, state and foreign deferred tax assets or liabilities for its estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. The Company’s calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws. The Company’s estimates of current and deferred tax assets and liabilities may change based on, in part, added certainty, finality or uncertainty to an anticipated outcome, changes in accounting or tax laws in the U.S. or foreign jurisdictions where the Company operates, or changes in other facts or circumstances. In addition, the Company recognizes liabilities for potential U.S. and foreign income tax for uncertain income tax positions taken on its tax returns if it has less than a 50% likelihood of being sustained. If the Company determines that payment of these amounts is unnecessary or if the recorded tax liability is less than its current assessment, the Company may be required to recognize an income tax benefit or additional income tax expense in its financial statements in the period such determination is made. The Company has calculated its uncertain tax positions which were attributable to certain estimates and judgments. Litigation and Contingencies 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 is 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. In addition, from time to time, the Company becomes aware that it is subject to other contingent liabilities. When this occurs, the Company will evaluate the appropriate accounting for the potential contingent liabilities to determine whether a contingent liability should be recorded. In making this determination, management may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts. Based on the facts and circumstances in each matter, the Company uses its judgment to determine whether it is probable that a contingent loss has occurred and whether the amount of such loss can be estimated. If the Company determines a loss is probable and estimable, the Company records a contingent loss. In determining the amount of a contingent loss, the Company takes into account advice received from experts for each specific matter regarding the status of legal proceedings, settlement negotiations, prior case history and other factors. Should the judgments and estimates made by management need to be adjusted as additional information becomes available, the Company may need to record additional contingent losses. Alternatively, if the judgments and estimates made by management are adjusted, for example, if a particular contingent loss does not occur, the contingent loss recorded would be reversed. 52 Table of Contents Net Income per Share 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 from contingently issuable shares and is 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 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 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 as if the end of the reporting period were the end of the contingency period. Comprehensive Income 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 foreign currency translation adjustments. Recently Adopted Accounting Pronouncement In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which aims to improve an entity’s income tax disclosures around its effective rate reconciliation, income taxes paid, disaggregation of income before income taxes and income tax expense. The Company adopted the guidance during the year ended December 31, 2025 and applied the new disclosure requirements prospectively to its 2025 annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Refer to Note 13 for further information. New Accounting Pronouncement Not Yet Adopted as of December 31, 2025 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 Company will adopt this standard in its Form 10-K for the fiscal year ending December 31, 2027. The Company is evaluating the impact of adoption on its Consolidated Financial Statements. 53 Table of Contents 2. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS In connection with the preparation of the Company’s Consolidated Financial Statements as of and for the fiscal year ended December 31, 2025, the Company discovered that in the prior year it had not appropriately accounted for deferred income taxes associated with a one-time tax incentive granted by a certain foreign jurisdiction. The restatement results in a decrease to income tax benefit, net and deferred income taxes by $ 194.6 million in the consolidated financial statements as of and for the year ended December 31, 2024. The misstatement was material to the previously issued financial statements of the Company and as a result, the Company has restated its Consolidated Balance Sheet, Consolidated Statement of Operations, Consolidated Statement of Comprehensive Income, Consolidated Statement of Stockholders’ Equity, and Consolidated Statement of Cash Flows as of and for the year ended December 31, 2024 presented herein. The restatement includes adjustments to deferred tax assets, net, deferred tax liabilities, retained earnings, income tax benefit, net, net income, and net income per share. The impacts of the restatement are summarized below (in thousands, except per-share amounts): December 31, 2024 RESTATED CONSOLIDATED BALANCE SHEET As Previously Reported Impact of Restatement As Restated Deferred tax assets, net $ 1,326,840 ( 101,275 ) $ 1,225,565 Total assets $ 3,617,097 ( 101,275 ) $ 3,515,822 Deferred tax liabilities $ - 93,367 $ 93,367 Total liabilities $ 471,330 93,367 $ 564,697 Retained earnings $ 2,487,461 ( 194,642 ) $ 2,292,819 Total stockholders’ equity $ 3,145,767 ( 194,642 ) $ 2,951,125 Total liabilities and stockholders’ equity $ 3,617,097 ( 101,275 ) $ 3,515,822 Year Ended December 31, 2024 RESTATED CONSOLIDATED STATEMENT OF OPERATIONS As Previously Reported Impact of Restatement As Restated Income tax benefit, net $ ( 1,213,788 ) 194,642 $ ( 1,019,146 ) Net income $ 1,786,700 ( 194,642 ) $ 1,592,058 Net income per share: Basic $ 36.76 ( 4.00 ) $ 32.76 Diluted $ 36.59 ( 3.99 ) $ 32.60 Retained Earnings RESTATED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY As Previously Reported Impact of Restatement As Restated Net income $ 1,786,700 ( 194,642 ) $ 1,592,058 Balance as of December 31, 2024 $ 2,487,461 ( 194,642 ) $ 2,292,819 Year Ended December 31, 2024 RESTATED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME As Previously Reported Impact of Restatement As Restated Net income $ 1,786,700 ( 194,642 ) $ 1,592,058 Comprehensive income $ 1,765,251 ( 194,642 ) $ 1,570,609 Year Ended December 31, 2024 RESTATED CONSOLIDATED STATEMENT OF CASH FLOWS As Previously Reported Impact of Restatement As Restated Net income $ 1,786,700 ( 194,642 ) $ 1,592,058 Deferred taxes, net $ ( 1,302,911 ) 194,642 $ ( 1,108,269 ) All referenced amounts for prior period in these financial statements and the notes herein reflect the balances and amounts on a restated basis. Refer to Note 17, Restatement of Previously Issued Condensed Consolidated Financial Statements, for restated interim financials for the quarterly periods ended March 31, 2025, June 30, 2025, and September 30, 2025. 54 Table of Contents 3. REVENUE RECOGNITION Revenue from Product Sales 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. 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. The following is a summary of revenue by geographic region for the periods presented (in thousands): Year Ended December 31, Country or Region 2025 2024 2023 China $ 1,544,272 $ 1,178,341 $ 934,768 Taiwan 550,110 577,956 307,499 South Korea 252,737 167,899 169,867 Southeast Asia 148,136 78,765 85,150 Europe 113,533 86,899 132,620 U.S. 96,744 55,235 97,294 Japan 84,443 61,695 93,340 Other 484 310 534 Total $ 2,790,459 $ 2,207,100 $ 1,821,072 The Company sells its products to end customers primarily through third-party distributors and value-added resellers. For the years ended December 31, 2025, 2024 and 2023 , 85 %, 89 % and 86 %, respectively, of the Company’s total sales were made through distribution arrangements. These distribution arrangements contain enforceable rights and obligations specific to those distributors and not the end customers. Purchase orders, which are generally governed by sales agreements or the Company’s standard terms of sale, set the final terms for unit price, quantity, shipping and payment agreed upon between the Company and the customer. The Company considers purchase orders to be contracts with the customers. The unit price as stated on the purchase orders is considered the observable, stand-alone selling price for the arrangements. The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue for the periods presented: Year Ended December 31, Customer 2025 2024 2023 Distributor A 26 % 31 % 26 % Distributor B 18 % 20 % 19 % Distributor C 10 % * 10 % * Represents less than 10%. 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 relatively short period following any termination of the agreement with a distributor. 55 Table of Contents The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company excludes taxes assessed by government authorities, such as sales taxes, from revenue. Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue from distributors and direct end customers when the following events have occurred: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. 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, the Company recognizes revenue when customers consume 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 distributors have limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases in accordance with the contract terms. The Company estimates the stock rotation returns using the expected value method based on an analysis of historical returns, and the current level of inventory in the distribution channel. The Company records a liability for the stock rotation reserve, with a corresponding reduction to revenue. In addition, the Company recognizes an asset for product returns which represents the right to recover products from the customers related to stock rotations, with a corresponding reduction to cost of revenue. Contract Balances Accounts Receivable: The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. The Company’s accounts receivable 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. 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 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. The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable: December 31, Customer 2025 2024 Distributor A 35 % 28 % Distributor B 14 % 29 % Distributor C 11 % * * Represents less than 10%. Practical Expedients The Company has elected the practical expedient to expense sales commissions as incurred because the amortization period would have been one year or less. The Company’s standard payment terms generally require customers to pay 30 to 90 days after the Company satisfies the performance obligations. For this reason, the Company has elected not to determine whether contracts with customers contain significant financing components. The Company’s unsatisfied performance obligations primarily include products held in consignment arrangements and customer purchase orders for products that the Company has not yet shipped. 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. 56 Table of Contents 4. CASH, CASH EQUIVALENTS AND INVESTMENTS The following is a summary of the Company’s cash, cash equivalents and debt investments (in thousands): December 31, 2025 2024 Cash $ 969,628 $ 679,949 Money market funds 129,674 11,867 Certificates of deposit 157,243 164,418 Corporate debt securities - 6,712 Auction-rate securities backed by student-loan notes 49 148 Total $ 1,256,594 $ 863,094 December 31, 2025 2024 Reported as: Cash and cash equivalents $ 1,099,302 $ 691,816 Short-term investments 157,243 171,130 Investment within other long-term assets 49 148 Total $ 1,256,594 $ 863,094 The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of December 31, 2025 (in thousands): Amortized Cost Fair Value Due in less than 1 year $ 57,179 $ 57,179 Due in 1 - 5 years 100,064 100,064 Due in greater than 5 years 50 49 Total $ 157,293 $ 157,292 Gross realized gains and losses recognized on the sales of available-for-sale investments were not material for the periods presented. 5. FAIR VALUE MEASUREMENTS Fair Value Hierarchy The Company has estimated the fair value of its financial assets by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: ● Level 1—includes instruments with quoted prices in active markets for identical assets. ● Level 2—includes instruments for which the valuations are based upon quoted market prices in active markets involving similar assets or inputs other than quoted prices that are observable for the assets. The market inputs used to value these instruments generally consist of market yields, recently executed transactions, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third-party sources used to determine a daily market value. ● Level 3—includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement. Financial Assets Measured at Fair Value on a Recurring Basis The following tables detail the fair value of the Company’s financial assets measured on a recurring basis (in thousands): December 31, 2025 Total Level 1 Level 2 Level 3 Money market funds $ 129,674 $ 129,674 $ - $ - Certificates of deposit 157,243 - 157,243 - Auction-rate securities backed by student-loan notes 49 - - 49 Mutual funds and money market funds under deferred compensation plan 75,484 75,484 - - Total $ 362,450 $ 205,158 $ 157,243 $ 49 December 31, 2024 Total Level 1 Level 2 Level 3 Money market funds $ 11,867 $ 11,867 $ - $ - Certificates of deposit 164,418 - 164,418 - Corporate debt securities 6,712 - 6,712 - Auction-rate securities backed by student-loan notes 148 - - 148 Mutual funds and money market funds under deferred compensation plan 65,337 65,337 - - Total $ 248,482 $ 77,204 $ 171,130 $ 148 57 Table of Contents 6. BALANCE SHEET COMPONENTS Inventories Inventories consist of the following (in thousands): December 31, 2025 2024 Raw materials $ 107,801 $ 91,851 Work in process 220,410 169,982 Finished goods 236,438 157,778 Total $ 564,649 $ 419,611 Other Current Assets Other current assets consist of the following (in thousands): December 31, 2025 2024 Other receivables (1) $ 60,000 $ 60,000 Prepaids and other 46,982 49,978 Total $ 106,982 $ 109,978 (1) Other receivables relate to an annually refundable deposit made to a supplier under a long-term wafer supply agreement. Property and Equipment, Net Property and equipment, net, consist of the following (in thousands): December 31, 2025 2024 Land $ 53,151 $ 50,681 Production equipment and software 469,626 340,691 Buildings and improvements 240,691 224,490 Transportation equipment 62,088 72,044 Leasehold improvements 25,798 18,301 Furniture and fixtures 17,279 13,472 Construction in progress 63,767 27,477 Property and equipment, gross 932,400 747,156 Less: accumulated depreciation and amortization ( 304,711 ) ( 252,211 ) Total property and equipment, net $ 627,689 $ 494,945 Depreciation and amortization expense on property and equipment was $ 50.0 million, $ 35.1 million and $ 40.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. Other Long-Term Assets Other long-term assets consist of the following (in thousands): December 31, 2025 2024 Deferred compensation plan assets $ 107,096 $ 92,586 Prepaid wafer purchases (1) - 60,000 Other 57,995 41,791 Total $ 165,091 $ 194,377 (1) Prepaid wafer purchases relate to an annually refundable deposit made to a supplier under a long-term wafer supply agreement. 58 Table of Contents Other Accrued Liabilities Other accrued liabilities consist of the following (in thousands): December 31, 2025 2024 Dividends and dividend equivalents $ 81,510 $ 60,622 Stock rotation and sales returns 17,150 20,799 Other 46,470 46,702 Total $ 145,130 $ 128,123 Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): December 31, 2025 2024 Deferred compensation plan liabilities $ 103,954 $ 93,653 Operating lease liabilities 19,972 12,974 Dividend equivalents 3,909 4,943 Total $ 127,835 $ 111,570 7. LEASES The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, and employee housing units. These leases have remaining lease terms from less than one year to 19 years. Some of these leases include options to renew the lease term for up to five years or on a month-to-month basis. The Company does not have finance lease arrangements. The following table summarizes the balances of operating lease ROU assets and liabilities (in thousands): December 31, Financial Statement Line Item 2025 2024 Operating lease ROU assets Other long-term assets $ 24,886 $ 16,915 Operating lease liabilities Other accrued liabilities $ 4,131 $ 2,819 Other long-term liabilities $ 19,972 $ 12,974 The following tables summarize certain information related to the leases for the periods presented (in thousands, except percentages and years): Year Ended December 31, 2025 2024 2023 Lease costs: Operating lease costs $ 5,213 $ 3,903 $ 3,113 Other 3,556 2,840 2,120 Total lease costs $ 8,769 $ 6,743 $ 5,233 Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 4,832 $ 4,346 $ 2,954 ROU assets obtained $ 11,519 $ 11,940 $ 7,081 December 31, 2025 2024 Weighted-average remaining lease term (in years) 9.3 11.5 Weighted-average discount rate 5.6 % 5.5 % As of December 31, 2025, the maturities of the lease liabilities were as follows (in thousands): 2026 $ 5,309 2027 5,082 2028 3,732 2029 2,957 2030 1,908 Thereafter 13,440 Total remaining lease payments 32,428 Less: imputed interest ( 8,325 ) Total lease liabilities $ 24,103 As of December 31, 2025, the Company had no operating leases that had not yet commenced. 59 Table of Contents 8. STOCK-BASED COMPENSATION 2014 Equity Incentive Plan 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. The amended 2014 Plan became effective on November 13, 2014 and provided for the issuance of up to 5.5 million shares. In April 2020, the Board of Directors further amended and restated the amended 2014 Plan (the “Amended and Restated 2014 Plan”), which the Company’s stockholders approved in June 2020. 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 cease being available for new awards on June 11, 2030. As of December 31, 2025, 3.6 million shares remained available for future issuance under the Amended and Restated 2014 Plan. Stock-Based Compensation Expense The Company recognized stock-based compensation expense as follows for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 7,204 $ 6,305 $ 4,545 Research and development 49,247 45,626 36,611 Selling, general and administrative 171,040 153,709 108,555 Total stock-based compensation expense $ 227,491 $ 205,640 $ 149,711 Tax benefit related to stock-based compensation (1) $ 2,674 $ 3,040 $ 2,519 (1) Amount reflects the tax benefit related to stock-based compensation recorded for equity awards that are expected to generate tax deductions when they vest in future periods. Equity awards granted to the Company’s executive officers are subject to the tax deduction limitations set by Section 162(m) of the Internal Revenue Code. RSUs The Company’s RSUs include time-based RSUs, PSUs, and MSUs. 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 or service to the Company. A summary of RSU activity is presented in the table below (in thousands, except per share amounts): Total Time-based RSUs, PSUs and MSUs Number of Shares Weighted-Average Grant Date Fair Value Per Share Outstanding at January 1, 2023 2,659 $ 176.50 Granted 363 (1) $ 444.86 Vested ( 911 ) $ 177.54 Forfeited ( 25 ) $ 209.23 Outstanding at December 31, 2023 2,086 $ 222.04 Granted 402 (1) $ 584.49 Vested ( 778 ) $ 133.62 Forfeited ( 6 ) $ 432.32 Outstanding at December 31, 2024 1,704 $ 347.01 Granted 317 (1) $ 576.98 Vested ( 1,226 ) (2) $ 290.55 Forfeited ( 24 ) $ 473.09 Outstanding at December 31, 2025 771 $ 535.78 (1) Amount reflects the number of awards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period. (2) Amount includes shares that had not been issued as of December 31, 2025. 60 Table of Contents The fair value related to vested RSUs, as of their respective vesting dates, was $ 1,254.3 million, $ 513.0 million and $ 461.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, unamortized compensation expense related to all outstanding RSUs was $ 208.0 million with a weighted-average remaining recognition period of approximately two years. Time-Based RSUs For the years ended December 31, 2025, 2024 and 2023, the Compensation Committee granted 40,000 , 33,000 and 51,000 RSUs, respectively, with service conditions to non-executive employees and non-employee directors. The RSUs generally vest over four years for employees and one year for directors, subject to continued service with the Company. PSUs and MSUs 2025 PSUs: In February 2025, 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 two sets of independent performance goals (the “2025 Executive PSUs”). For the first goal, the executive officers can earn up to 300 % of the target number of the 2025 Executive PSUs based on the achievement of the Company’s three-year (2025 through 2027) average revenue growth rate in excess of the analog industry’s three-year average revenue growth rate as published by the Semiconductor Industry Association (the “SIA”). For the second goal, the executive officers can earn up to 200 % of the target number of the 2025 Executive PSUs based on the achievement of the Company’s three-year (2025 through 2027) total stockholder return percentile ranking relative to the constituent entities in the Philadelphia Semiconductor Sector Index (the “PHLX Index”). For both goals, a percentage of the 2025 Executive PSUs will fully vest on December 31, 2027, depending on the degree to which 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 2025 Executive PSUs will be $ 138.5 million. In February 2025, 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 2026 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s two-year (2025 and 2026) average revenue growth rate compared against the analog industry’s two-year average revenue growth rate as published by the SIA (the “2025 Non-Executive PSUs”). The maximum number of shares that an employee can earn is either 200 % or 300 % of the target number of the 2025 Non-Executive PSUs, depending on the job classification of the employee. 50 % of the 2025 Non-Executive PSUs will vest in the first quarter of 2027 depending on the degree to which the pre-determined goals are met during the performance period. The remaining 2025 Non-Executive PSUs will vest over the following two years on a quarterly or annual basis. Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2025 Non-Executive PSUs will be $ 16.5 million. The 2025 Executive PSUs and the 2025 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 applicable performance period is $30 higher than the grant date stock price of $ 656.29 . The Company determined the grant date fair value of the 2025 Executive PSUs and the 2025 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $ 656.29 , simulation term of three years, expected volatility of 54.42 %, risk-free interest rate of 4.20 %, and expected dividend yield of 0.95 %. The Monte Carlo simulation model for the 2025 Executive PSUs further utilized correlation coefficients of peer companies of 0.46 to 0.76 . The correlation coefficients were based on peer companies in the PHLX Index as an aggregate benchmark for determining the market-based total stockholder return component. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions. 61 Table of Contents 2024 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 (the “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 SIA. 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 2024, the Compensation Committee granted 11,000 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 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 (the “2024 Non-Executive PSUs”). The maximum number of shares that an employee could earn is either 200 % or 300 % of the target number of the 2024 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 24,000 shares were awarded to the non-executive employees. 50 % of the 2024 Non-Executive PSUs will vest in the first quarter of 2026 depending on the degree to which the pre-determined goals were met during the performance period. The remaining 2024 Non-Executive PSUs will vest over the following two years on a quarterly or annual basis. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2024 Non-Executive PSUs is $ 15.0 million. 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 . This market condition was achieved for the 2024 Non-Executive PSUs. 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. 2023 PSUs: In February 2023, the Compensation Committee granted 69,000 PSUs to the executive officers, which represented the target number of shares that could be earned based on the degree of achievement of two sets of performance goals (the “2023 Executive PSUs”). For the first goal, the executive officers could 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. Based on the actual revenue achievement at the end of the performance period, a total of 208,000 shares were awarded to the executive officers, which fully vested on December 31, 2025. For the second goal, the executive officers could 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 the three-year performance period. Based on the actual manufacturing capacity outside China at the end of the performance period, a total of 139,000 shares were awarded to the executive officers, which fully vested on December 31, 2025. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2023 Executive PSUs was $ 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 (the “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 vested 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 $ 10.0 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 would be deemed satisfied and waived if the Company’s stock price on the last trading day of the performance period was $30 higher than the grant date stock price of $ 467.62 . This market condition was achieved for the 2023 Executive PSUs and 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: stock price of $ 467.62 , simulation term of four years, expected volatility of 51.0 %, risk-free interest rate of 3.9 %, and expected dividend yield of 0.9 %. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions. 62 Table of Contents 2022 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 (the “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. 50 % of the 2022 Executive PSUs would vest in the first quarter of 2024 if the pre-determined revenue goal was met during the performance period. The remaining 2022 Executive PSUs would vest over the following two years on a quarterly basis. For the second goal, the executive officers could earn up to an additional 200 % of the target number of the 2022 Executive PSUs if the Company secured additional wafer capacity during a three-year performance period. The 2022 Executive PSUs related to the second goal would fully vest in the first quarter of 2025 if the pre-determined goal was met during the performance period. In addition, all vested shares related to the second goal would be subject to a post-vesting sales restriction period of one year. Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2022 Executive PSUs would be $ 142.7 million. The 2022 Executive PSUs were subsequently cancelled by the Board of Directors in October 2022. See the “2022 MSUs” section for further details. MSUs 2022 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 (the “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, 2024, all price targets had been achieved. Based on the Company’s total stockholder return relative to the Peer Group at the end of the performance period, a total of 797,000 shares were awarded to the executive officers, which fully vested on October 25, 2025. Under modification accounting, the total stock-based compensation cost was $ 119.2 million, which was subsequently updated to $ 124.3 million due to a change of application of accounting methodology. The total stock-based compensation cost of $ 124.3 million included the unamortized expense of $ 102.8 million related to the 2022 Executive PSUs on the modification date and the incremental cost of $ 21.5 million related to the 2022 Executive MSUs as a result of the modification. The Company determined the grant date fair value of the 2022 Executive MSUs using a Monte Carlo simulation model with the following assumptions: stock price of $ 342.16 , simulation term of three years, expected volatility of 54.0 %, risk-free interest rate of 4.4 %, and an expected dividend yield of 0.9 %. There was no illiquidity discount because the awards did not contain any post-vesting sales restrictions. 63 Table of Contents 9. STOCKHOLDERS’ EQUITY Cash Dividend Program 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. The Board of Directors declared the following cash dividends for the periods presented (in thousands, except per share amounts): Year Ended December 31, 2025 2024 2023 Dividend declared per share $ 6.24 $ 5.00 $ 4.00 Total amount $ 300,117 $ 242,459 $ 190,642 As of December 31, 2025 and 2024, accrued dividends totaled $ 76.0 million and $ 59.8 million, respectively. The declaration of any future cash dividends is at the discretion of the Board of Directors and will depend on, among other things, the Company’s financial condition, results of operations, capital requirements, business conditions, and other factors that the Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the Company’s stockholders. 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 certain foreign subsidiaries. The Company also anticipates that earnings from other foreign subsidiaries will continue to be indefinitely reinvested. Cash Dividend Equivalent Rights The Company’s RSUs contain rights to receive cash dividend equivalents, which entitle employees who hold RSUs to the same dividend value per share as holders of common stock. The dividend equivalents are accumulated and paid to the employees after the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the underlying RSUs do not vest. As of December 31, 2025 and 2024 , accrued dividend equivalents totaled $ 9.4 million and $ 5.8 million, respectively. Stock Repurchase Programs 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, which was fully utilized as of December 31, 2024. In February 2025, the Board of Directors approved another 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 Company repurchased approximately 8,000 , 1.0 million, and 7,000 shares of its common stock for an aggregate purchase price of $ 6.6 million, $ 636.2 million, and $ 3.7 million during the years ended December 31, 2025, 2024 and 2023, respectively. 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. Excise taxes on the value of certain stock repurchases in excess of stock issued for employee compensation were not material for the Company’s stock repurchase programs for the years ended December 31, 2025, 2024 and 2023, respectively. 64 Table of Contents 10. OTHER INCOME, NET The components of other income, net, were as follows for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Interest income $ 29,151 $ 27,093 $ 23,363 Amortization of discount on available-for-sale securities, net 4,103 20,145 5,277 Gain on deferred compensation plan investments 10,033 9,400 8,505 Charitable commitments ( 6,294 ) ( 23,742 ) ( 14,850 ) Other 587 658 1,810 Total $ 37,580 $ 33,554 $ 24,105 11. NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share for the periods presented (in thousands, except per share amounts): Year Ended December 31, 2025 2024 (As Restated) 2023 Numerator: Net income $ 621,483 $ 1,592,058 $ 427,374 Denominator: Weighted-average outstanding shares—basic 48,035 48,599 47,610 Effect of dilutive securities 274 236 1,161 Weighted-average outstanding shares—diluted 48,309 48,835 48,771 Net income per share: Basic $ 12.94 $ 32.76 $ 8.98 Diluted $ 12.86 $ 32.60 $ 8.76 Anti-dilutive common stock equivalents were not material for the periods presented. 12. ACQUISITION 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): Inventory $ 720 Other tangible assets acquired, net of liabilities assumed 1,623 Intangible assets: Developed technology 9,184 IPR&D 2,147 Total identifiable net assets acquired 13,674 Goodwill 19,724 Total net assets acquired $ 33,398 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. 65 Table of Contents 13. INCOME TAXES The components of income before income taxes were as follows for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 U.S. $ ( 118,484 ) $ ( 46,263 ) $ ( 15,066 ) Foreign 884,700 619,175 520,907 Income before income taxes $ 766,216 $ 572,912 $ 505,841 The components of the income tax expense (benefit), net were as follows for the periods presented (in thousands): Year Ended December 31, 2025 2024 (As Restated) 2023 Current: Federal $ 19,428 $ 72,576 $ 61,064 State 1,345 348 4,257 Foreign 84,284 11,155 5,702 Deferred: Federal ( 314 ) 2,773 ( 1,705 ) State ( 212 ) 160 ( 744 ) Foreign 40,202 ( 1,106,158 ) 9,893 Income tax expense (benefit), net $ 144,733 $ ( 1,019,146 ) $ 78,467 Beginning in 2025 annual reporting, we adopted ASU 2023-09 prospectively. Refer to Note 1, Summary of Significant Accounting Policies for additional details on the adoption of ASU 2023-09. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows (in thousands, except percentages): Year Ended December 31, 2025 Amount Percent U.S. federal statutory income tax rate $ 160,905 21.0 % Domestic federal Tax credits Research credits ( 19,491 ) ( 2.5 ) Nontaxable and nondeductible items, net Share-based payments 39,963 5.2 Other 4,064 0.5 Cross-border tax laws Global intangible low-taxed income 22,514 2.9 Subpart F income 3,541 0.5 Effects of changes in tax laws or rates enacted in the current period - - Changes in valuation allowances - - Other 508 0.1 Domestic state and local income taxes, net of federal effect (a) ( 67 ) - Foreign tax effects Switzerland Statutory income tax rate differential ( 106,770 ) ( 13.9 ) Cantonal taxes, net of federal effect 59,864 7.8 Nontaxable and nondeductible items, net ( 21,381 ) ( 2.8 ) Other 3,499 0.4 Other foreign jurisdictions ( 4,069 ) ( 0.5 ) Worldwide changes in unrecognized tax benefits 1,653 0.2 Effective tax rate $ 144,733 18.9 % (a) State taxes in Arizona, California and Florida make up the majority (greater than 50%) of the tax effect in this category. Year Ended December 31, 2024 (As Restated) 2023 U.S. statutory federal tax rate 21.0 % 21.0 % Foreign income tax at lower rates ( 21.4 ) ( 21.9 ) U.S. tax impact of foreign earnings and losses 15.1 14.5 Changes in valuation allowance 623.8 2.9 Stock-based compensation 1.9 2.2 Return to Provision True Up Adjustment ( 0.1 ) ( 2.0 ) Tax attributes, net of reserves ( 210.4 ) ( 1.3 ) Effects of intercompany transactions ( 608.5 ) - Other adjustments 0.7 0.1 Effective tax rate ( 177.9 )% 15.5 % 66 Table of Contents The amount of cash paid for income taxes (net of refunds) is as follows (in thousands): Year Ended December 31, 2025 U.S. federal $ 16,162 State and local 940 Foreign Switzerland 72,005 Other foreign 5,954 Total foreign 77,959 Total income taxes paid, net $ 95,061 The budget reconciliation bill H.R.1 (“H.R.1 Act”) signed into law on July 4, 2025, makes permanent certain expiring provisions of the 2017 Tax Cuts and Jobs Act and makes modifications to the existing tax framework. The primary impact for the current year is the immediate tax expensing of prior year unamortized and current year domestic R&D expenses and accelerated depreciation in the year ended December 31, 2025. The Company’s tax provision for the year ended December 31, 2025 includes the estimated impact of the H.R.1 Act. 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 $ 1.1 billion, net of $ 0.2 billion of deferred tax liability and $ 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. The deferred tax asset was $ 1.1 billion, net of $ 0.2 billion of deferred tax liability and $ 0.1 billion of valuation allowance, as of December 31, 2025. 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 $ 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 and December 31, 2025. 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. 67 Table of Contents The components of net deferred tax assets consist of the following (in thousands): December 31, 2025 2024 (As Restated) Deferred tax assets: Tax attributes $ 1,205,863 $ 1,254,928 Depreciation and amortization 3,482,782 3,465,739 Stock-based compensation 3,977 3,432 Deferred compensation 10,920 11,202 Other expenses not currently deductible 11,357 9,505 Deferred tax assets, gross 4,714,899 4,744,806 Valuation allowance ( 3,617,562 ) ( 3,608,471 ) Deferred tax assets, net of valuation allowance 1,097,337 1,136,335 Deferred tax liabilities: Undistributed foreign earnings ( 781 ) ( 953 ) Other expenses currently deductible ( 4,153 ) ( 3,184 ) Deferred tax liabilities ( 4,934 ) ( 4,137 ) Net deferred tax assets $ 1,092,403 $ 1,132,198 Reported as: Deferred tax assets, net $ 1,182,883 $ 1,225,565 Deferred tax liabilities ( 90,480 ) ( 93,367 ) Net deferred tax assets $ 1,092,403 $ 1,132,198 GILTI: The Company accounts for GILTI as a period cost. Valuation Allowance: 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 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, 2025 and 2024, 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 was as follows for the periods presented (in thousands): Period Balance at Beginning of Period Additions Reductions Balance at End of Period Year ended December 31, 2023 $ 20,321 $ 15,405 $ ( 718 ) $ 35,008 Year ended December 31, 2024 (As Restated) $ 35,008 $ 3,575,542 $ ( 2,079 ) $ 3,608,471 Year ended December 31, 2025 $ 3,608,471 $ 21,618 $ ( 12,527 ) $ 3,617,562 The additions in the year ended December 31, 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 a foreign subsidiary on an ongoing basis to fund its future U.S.-based expenditures and dividends. For the years ended December 31, 2025 and 2024, the Company repatriated $ 275.0 million and $ 642.0 million, respectively, with immaterial tax impact, from this foreign subsidiary. For all other foreign subsidiaries, the Company expects to indefinitely reinvest undistributed earnings to fund their operations and research and development. An actual repatriation of the undistributed earnings could be subject to additional foreign withholding taxes and U.S. state taxes. Determination of the unrecognized state and withholding deferred tax liability is not practicable at this time due to the complexities associated with the hypothetical calculation. 68 Table of Contents Other Income Tax Provision Matters As of December 31, 2025, the state net operating loss carryforwards for income tax purposes were $ 4.3 million, which will expire beginning in 2031. As of December 31, 2025, the Company’s foreign net operating loss carryforwards for income tax purposes in non-U.S. jurisdictions were $ 19.2 million, $ 1.8 million of which can be carried forward indefinitely, while $ 17.4 million will begin to expire in 2029. As of December 31, 2025, the Company had no R&D tax credit carryforwards for federal income tax purposes. As of December 31, 2025, the Company had $ 48.2 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. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization. As of December 31, 2025, the Company had $ 81.1 million of unrecognized tax benefits, $ 66.9 million of which would affect its effective tax rate if recognized after considering the valuation allowance. As of December 31, 2024, the Company had $ 74.4 million of unrecognized tax benefits, $ 58.9 million of which would affect its effective tax rate if recognized after considering the valuation allowance. A reconciliation of the gross unrecognized tax benefits was as follows (in thousands): Balance as of January 1, 2023 $ 49,277 Increase for tax position of current year 14,108 Increase for tax position of prior year 2,209 Decrease due to settlement with tax authorities ( 1,926 ) Decrease due to lapse of statute of limitation ( 1,008 ) Balance as of December 31, 2023 62,660 Increase for tax position of current year 18,125 Increase for tax position of prior year 2,180 Decrease due to lapse of statute of limitation ( 8,579 ) Balance as of December 31, 2024 74,386 Increase for tax position of current year 17,411 Decrease for tax position of prior year ( 1,374 ) Decrease due to lapse of statute of limitation ( 9,359 ) Balance as of December 31, 2025 $ 81,064 The Company recognizes interest and penalties, if any, related to uncertain tax positions in its income tax provision. As of December 31, 2025 and 2024, the Company has $ 8.2 million and $ 6.3 million, respectively, of accrued interest related to uncertain tax positions, which were recorded in income tax liabilities on the Consolidated Balance Sheets.   The Company currently has reduced tax rates in its subsidiaries in Chengdu and Hangzhou, China through 2025 for performing R&D activities. Income Tax Examination The Company is subject to examination of its income tax returns by the U.S. IRS and other tax authorities. In general, the tax years for 2022 and forward are open for examination for U.S. federal and state income tax purposes. 69 Table of Contents 14. COMMITMENTS AND CONTINGENCIES Indemnification Provisions The Company provides indemnification agreements to certain direct or indirect customers. The Company agrees to reimburse these parties for any damages, costs and expenses incurred by them as a result of legal actions taken against them by third parties for infringing upon third-party intellectual property rights as a result of using the Company’s products and technologies. These indemnification provisions are varied in scope and are subject to certain terms, conditions, limitations and exclusions. In addition, the Company has entered into indemnification agreements with its directors and officers. It is not possible to predict the maximum potential amount of future payments under these agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. There were no indemnification liabilities incurred for the periods presented. However, there can be no assurances that the Company will not incur financial liabilities in the future as a result of these obligations, which could be material. Purchase Commitments The Company has outstanding purchase obligations with its suppliers and other parties that require the purchases of goods or services. The purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements. Total estimated future unconditional purchase commitments to all suppliers and other parties as of December 31, 2025 were as follows (in thousands): 2026 $ 389,767 2027 51,435 2028 486 2029 486 Total $ 442,174 Litigation 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 is also 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. The Company defends itself vigorously against any such claims. Based on current information, the Company does not believe that a material loss from known matters is probable as of December 31, 2025. 15. 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 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 following is a summary of long-lived assets by geographic region (in thousands): December 31, Country 2025 2024 China $ 332,506 $ 237,649 U.S. 165,107 171,514 Taiwan 65,081 42,388 Other 64,995 43,394 Total $ 627,689 $ 494,945 70 Table of Contents 16. SUBSEQUENT EVENTS Cash Dividend Increase In February 2026, the Board of Directors of the Company approved an increase in quarterly cash dividends from $ 1.56 per share to $ 2.00 per share. 17. RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Restatement of Interim Financial Information (Unaudited) In connection with the preparation of the Company's Consolidated Financial Statements as of and for the fiscal year ended December 31, 2025, the Company discovered that in the prior year it had not appropriately accounted for deferred income taxes associated with a one-time tax incentive granted by a certain foreign jurisdiction. The adjustment results in a decrease to the net income tax expense and the deferred income taxes, and the amounts were also material to the interim financial information. The Company has restated its unaudited Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statement of Comprehensive Income, and Consolidated Statement of Stockholders’ Equity for the quarterly periods ended March 31, 2025, June 30, 2025, and September 30, 2025. The impacts of the restatement are summarized below (in thousands, except per-share amounts): RESTATED CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2025 (UNAUDITED) (in thousands, except par value): March 31, 2025 As Previously Reported Impact of Restatement As Restated ASSETS Current assets: Cash and cash equivalents $ 637,354 $ - $ 637,354 Short-term investments 389,310 - 389,310 Accounts receivable, net 214,866 - 214,866 Inventories 454,793 - 454,793 Other current assets 92,063 - 92,063 Total current assets 1,788,386 - 1,788,386 Property and equipment, net 527,348 - 527,348 Acquisition-related intangible assets, net 9,651 - 9,651 Goodwill 25,944 - 25,944 Deferred tax assets, net 1,318,457 ( 100,617 ) 1,217,840 Other long-term assets 135,974 - 135,974 Total assets $ 3,805,760 $ ( 100,617 ) $ 3,705,143 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 127,310 $ - $ 127,310 Accrued compensation and related benefits 74,785 - 74,785 Other accrued liabilities 161,306 - 161,306 Total current liabilities 363,401 - 363,401 Income tax liabilities 69,535 - 69,535 Deferred tax liabilities - 92,764 92,764 Other long-term liabilities 105,814 - 105,814 Total liabilities 538,750 92,764 631,514 Commitments and contingencies Stockholders’ equity: Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 47,877 and 47,823, respectively 764,959 - 764,959 Retained earnings 2,545,375 ( 193,381 ) 2,351,994 Accumulated other comprehensive loss ( 43,324 ) - ( 43,324 ) Total stockholders’ equity 3,267,010 ( 193,381 ) 3,073,629 Total liabilities and stockholders’ equity $ 3,805,760 $ ( 100,617 ) $ 3,705,143 71 Table of Contents RESTATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2025 (UNAUDITED) (in thousands, except per-share amounts): Three Months Ended March 31, 2025 As Previously Reported Impact of Restatement As Restated Revenue $ 637,554 $ - $ 637,554 Cost of revenue 284,324 - 284,324 Gross profit 353,230 - 353,230 Operating expenses: Research and development 92,227 - 92,227 Selling, general and administrative 92,244 - 92,244 Total operating expenses 184,471 - 184,471 Operating income 168,759 - 168,759 Other income, net 5,131 - 5,131 Income before income taxes 173,890 - 173,890 Income tax expense 40,099 ( 1,261 ) 38,838 Net income $ 133,791 $ 1,261 $ 135,052 Net income per share: Basic $ 2.80 $ 0.02 $ 2.82 Diluted $ 2.79 $ 0.02 $ 2.81 Weighted-average shares outstanding: Basic 47,851 - 47,851 Diluted 48,006 - 48,006 RESTATED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE MONTHS ENDED MARCH 31, 2025 (UNAUDITED) (in thousands): Three Months Ended March 31, 2025 As Previously Reported Impact of Restatement As Restated Net income $ 133,791 $ 1,261 $ 135,052 Other comprehensive income, net of tax: Foreign currency translation adjustments 5,139 - 5,139 Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 0 and $(248), respectively 48 - 48 Other comprehensive income, net of tax 5,187 - 5,187 Comprehensive income $ 138,978 $ 1,261 $ 140,239 72 Table of Contents RESTATED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2025 (UNAUDITED) (in thousands, except par value): June 30, 2025 As Previously Reported Impact of Restatement As Restated ASSETS Current assets: Cash and cash equivalents $ 787,382 $ - $ 787,382 Short-term investments 358,695 - 358,695 Accounts receivable, net 194,821 - 194,821 Inventories 490,642 - 490,642 Other current assets 87,217 - 87,217 Total current assets 1,918,757 - 1,918,757 Property and equipment, net 563,885 - 563,885 Acquisition-related intangible assets, net 9,364 - 9,364 Goodwill 25,944 - 25,944 Deferred tax assets, net 1,309,981 ( 99,948 ) 1,210,033 Other long-term assets 144,279 - 144,279 Total assets $ 3,972,210 $ ( 99,948 ) $ 3,872,262 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 129,919 $ - $ 129,919 Accrued compensation and related benefits 81,296 - 81,296 Other accrued liabilities 172,293 - 172,293 Total current liabilities 383,508 - 383,508 Income tax liabilities 73,185 - 73,185 Deferred tax liabilities - 92,150 92,150 Other long-term liabilities 113,449 - 113,449 Total liabilities 570,142 92,150 662,292 Commitments and contingencies Stockholders’ equity: Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 47,892 and 47,823, respectively 822,582 - 822,582 Retained earnings 2,603,177 ( 192,098 ) 2,411,079 Accumulated other comprehensive loss ( 23,691 ) - ( 23,691 ) Total stockholders’ equity 3,402,068 ( 192,098 ) 3,209,970 Total liabilities and stockholders’ equity $ 3,972,210 $ ( 99,948 ) $ 3,872,262 RESTATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDITED) (in thousands, except per-share amounts): Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 As Previously Reported Impact of Restatement As Restated As Previously Reported Impact of Restatement As Restated Revenue $ 664,574 $ - $ 664,574 $ 1,302,128 $ - $ 1,302,128 Cost of revenue 298,558 - 298,558 582,882 - 582,882 Gross profit 366,016 - 366,016 719,246 - 719,246 Operating expenses: Research and development 96,266 - 96,266 188,493 - 188,493 Selling, general and administrative 104,992 - 104,992 197,236 - 197,236 Total operating expenses 201,258 - 201,258 385,729 - 385,729 Operating income 164,758 - 164,758 333,517 - 333,517 Other income, net 12,220 - 12,220 17,351 - 17,351 Income before income taxes 176,978 - 176,978 350,868 - 350,868 Income tax expense 43,252 ( 1,283 ) 41,969 83,351 ( 2,544 ) 80,807 Net income $ 133,726 $ 1,283 $ 135,009 $ 267,517 $ 2,544 $ 270,061 Net income per share: Basic $ 2.79 $ 0.03 $ 2.82 $ 5.59 $ 0.05 $ 5.64 Diluted $ 2.78 $ 0.03 $ 2.81 $ 5.57 $ 0.05 $ 5.62 Weighted-average shares outstanding: Basic 47,887 - 47,887 47,869 - 47,869 Diluted 48,019 - 48,019 48,012 - 48,012 73 Table of Contents RESTATED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDITED) (in thousands): Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 As Previously Reported Impact of Restatement As Restated As Previously Reported Impact of Restatement As Restated Net income $ 133,726 $ 1,283 $ 135,009 $ 267,517 $ 2,544 $ 270,061 Other comprehensive income, net of tax: Foreign currency translation adjustments 19,634 - 19,634 24,773 - 24,773 Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 0 , $50, $ 0 and $(198), respectively ( 1 ) - ( 1 ) 47 - 47 Other comprehensive income, net of tax 19,633 - 19,633 24,820 - 24,820 Comprehensive income $ 153,359 $ 1,283 $ 154,642 $ 292,337 $ 2,544 $ 294,881 RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2025 (UNAUDITED) (in thousands, except par value): September 30, 2025 As Previously Reported Impact of Restatement As Restated ASSETS Current assets: Cash and cash equivalents $ 1,081,251 $ - $ 1,081,251 Short-term investments 188,233 - 188,233 Accounts receivable, net 241,560 - 241,560 Inventories 505,680 - 505,680 Other current assets 96,021 - 96,021 Total current assets 2,112,745 - 2,112,745 Property and equipment, net 597,311 - 597,311 Acquisition-related intangible assets, net 9,077 - 9,077 Goodwill 25,944 - 25,944 Deferred tax assets, net 1,300,260 ( 99,170 ) 1,201,090 Other long-term assets 161,055 - 161,055 Total assets $ 4,206,392 $ ( 99,170 ) $ 4,107,222 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 141,689 $ - $ 141,689 Accrued compensation and related benefits 99,602 - 99,602 Other accrued liabilities 201,513 - 201,513 Total current liabilities 442,804 - 442,804 Income tax liabilities 78,261 - 78,261 Deferred tax liabilities - 91,436 91,436 Other long-term liabilities 117,380 - 117,380 Total liabilities 638,445 91,436 729,881 Commitments and contingencies Stockholders’ equity: Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 47,905 and 47,823, respectively 885,123 - 885,123 Retained earnings 2,705,527 ( 190,606 ) 2,514,921 Accumulated other comprehensive loss ( 22,703 ) - ( 22,703 ) Total stockholders’ equity 3,567,947 ( 190,606 ) 3,377,341 Total liabilities and stockholders’ equity $ 4,206,392 $ ( 99,170 ) $ 4,107,222 74 Table of Contents RESTATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 (UNAUDITED) (in thousands, except per-share amounts): Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 As Previously Reported Impact of Restatement As Restated As Previously Reported Impact of Restatement As Restated Revenue $ 737,176 $ - $ 737,176 $ 2,039,304 $ - $ 2,039,304 Cost of revenue 330,948 - 330,948 913,830 - 913,830 Gross profit 406,228 - 406,228 1,125,474 - 1,125,474 Operating expenses: Research and development 98,173 - 98,173 286,666 - 286,666 Selling, general and administrative 112,872 - 112,872 310,108 - 310,108 Total operating expenses 211,045 - 211,045 596,774 - 596,774 Operating income 195,183 - 195,183 528,700 - 528,700 Other income, net 10,392 - 10,392 27,743 - 27,743 Income before income taxes 205,575 - 205,575 556,443 - 556,443 Income tax expense 27,301 ( 1,492 ) 25,809 110,652 ( 4,036 ) 106,616 Net income $ 178,274 $ 1,492 $ 179,766 $ 445,791 $ 4,036 $ 449,827 Net income per share: Basic $ 3.72 $ 0.03 $ 3.75 $ 9.31 $ 0.09 $ 9.40 Diluted $ 3.71 $ 0.03 $ 3.74 $ 9.28 $ 0.09 $ 9.37 Weighted-average shares outstanding: Basic 47,898 - 47,898 47,879 - 47,879 Diluted 48,042 - 48,042 48,022 - 48,022 RESTATED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 (UNAUDITED) (in thousands): Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 As Previously Reported Impact of Restatement As Restated As Previously Reported Impact of Restatement As Restated Net income $ 178,274 $ 1,492 $ 179,766 $ 445,791 $ 4,036 $ 449,827 Other comprehensive income, net of tax: Foreign currency translation adjustments 919 - 919 25,692 - 25,692 Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 17 , $37, $ 17 and $(161), respectively 69 - 69 116 - 116 Other comprehensive income, net of tax 988 - 988 25,808 - 25,808 Comprehensive income $ 179,262 $ 1,492 $ 180,754 $ 471,599 $ 4,036 $ 475,635 75 Table of Contents RESTATED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS ’ EQUITY (UNAUDITED) (in thousands, except per-share amounts): Accumulated Common Stock and Other Total Additional Paid-in Capital Retained Comprehensive Stockholders’ Shares Amount Earnings Loss Equity Balance as of January 1, 2025 (As Restated) 47,823 $ 706,817 $ 2,292,819 $ ( 48,511 ) $ 2,951,125 Net income (As Restated) - - 135,052 - 135,052 Other comprehensive income - - - 5,187 5,187 Dividends and dividend equivalents declared ($ 1.56 per share) - - ( 75,877 ) - ( 75,877 ) Common stock issued 54 5,335 - - 5,335 Stock-based compensation expense - 52,807 - - 52,807 Balance as of March 31, 2025 (As Restated) 47,877 764,959 2,351,994 ( 43,324 ) 3,073,629 Net income (As Restated) - - 135,009 - 135,009 Other comprehensive income - - - 19,633 19,633 Dividends and dividend equivalents declared ($ 1.56 per share) - - ( 75,924 ) - ( 75,924 ) Common stock issued 19 - - - - Repurchases of common stock ( 4 ) ( 2,484 ) - - ( 2,484 ) Stock-based compensation expense - 60,107 - - 60,107 Balance as of June 30, 2025 (As Restated) 47,892 822,582 2,411,079 ( 23,691 ) 3,209,970 Net income (As Restated) - - 179,766 - 179,766 Other comprehensive income - - - 988 988 Dividends and dividend equivalents declared ($ 1.56 per share) - - ( 75,924 ) - ( 75,924 ) Common stock issued 15 3,885 - - 3,885 Repurchases of common stock ( 2 ) ( 2,017 ) - - ( 2,017 ) Stock-based compensation expense - 60,673 - - 60,673 Balance as of September 30, 2025 (As Restated) 47,905 $ 885,123 $ 2,514,921 $ ( 22,703 ) $ 3,377,341 76 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.