Item 1. Business
Item 1.
Business.
Overview
We
are a fabless semiconductor company focused on the development and sale of: i) millimeter wavelength wireless technology, or mmWave,
semiconductor devices and antenna modules based on our proprietary semiconductor devices and ii) performance of non-recurring engineering,
or NRE, services and licensing of intellectual property, or IP. Our primary focus is the development of mmWave technology for wireless
communications. mmWave is generally described as the frequency band from 24 Gigahertz, or GHz, to 300 GHz. Our mmWave products, which
primarily operate in the spectrum from 24 GHz to 71 GHz, enable a range of applications including: multi-gigabit point-to-point, or PtP,
wireless links with a range of up to 25 kilometers and operating in the 60 GHz frequency band; multi-gigabit point-to-multi-point, or
PtMP, links in the 60 GHz frequency band used to provide fixed wireless access, or FWA, services; FWA in the 5G operating bands from
24 GHz to 43 GHz to provide multi-gigabit capability and low latency connections; military communications; and consumer applications,
such as high performance wireless video streaming and untethered augmented reality and virtual reality. We also have a line of memory-denominated
integrated circuits, or ICs, for high-speed cloud networking, communications, security appliance, video, monitor and test, data center
and computing markets that deliver time-to-market, performance, power, area and economic benefits for system original equipment manufacturers,
or OEMs. As discussed below, we initiated an end-of-life of these products in 2023 and expect to complete final shipments in March 2025.
Business
Combination
We
were formerly known as MoSys, Inc., or MoSys. On September 14, 2021, we and our subsidiaries, 2864552 Ontario Inc. and 2864555 Ontario
Inc., entered into an Arrangement Agreement, or the Arrangement Agreement, with Peraso Technologies Inc., or Peraso Tech, a privately-held
corporation existing under the laws of the province of Ontario, to acquire all of the issued and outstanding common shares of Peraso
Tech, or the Peraso Shares, including those Peraso Shares to be issued in connection with the conversion or exchange of secured convertible
debentures and common share purchase warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement, or the Arrangement,
under the Business Corporations Act (Ontario). On December 17, 2021, following the satisfaction of the closing conditions set forth in
the Arrangement Agreement, the Arrangement was completed, and we changed our name from MoSys to “Peraso Inc.” and began trading
on The Nasdaq Stock Market, or the Nasdaq, under the symbol “PRSO.” Certain previous shareholders of Peraso Tech elected
to convert their Peraso Tech common stock into exchangeable shares in 2864555 Ontario Inc., one of our wholly-owned subsidiaries. These
exchangeable shares, which can be converted into our common stock at the option of the holder, are similar in substance to our common
stock .
Industry
Trends and Market Opportunities
mmWave
Historically,
virtually all wireless communications have utilized the frequency spectrum below 6 GHz. Primary examples include cell phone communications,
WiFi, Bluetooth, Internet of Things, and more recently, broadband internet access or FWA. In parallel, a broad array of applications
continues to push the boundaries of available wireless network capacity. These include video streaming services, such as those offered
by Netflix, Apple and Amazon, user-generated video content, such as TikTok and Instagram Reels, and broadly, personal video content generated
by personal mobile devices.
While
the sub-6 GHz band has traditionally been sufficient for these services, with growing demand, the mmWave spectrum is an additional source
of wireless capacity. Wireless spectrum is an extremely valuable commodity and is highly regulated by federal governments around the
world. Spectrum is broadly segmented into either licensed frequencies or unlicensed frequencies, although most frequencies are licensed.
The mmWave frequencies between 24 GHz and 100 GHz include both licensed and unlicensed spectrum. In the case of mmWave, the 3rd Generation
Partnership Project, or 3GPP, has included the spectrum from 24 GHz to 43 GHz in its 5G specification. This is licensed spectrum in most
jurisdictions around the world, and carriers must license this spectrum if they choose to utilize the mmWave frequency bands within that
spectrum. Alternatively, the spectrum from 57 GHz to 71 GHz is generally unlicensed around the world, and, therefore, a license is not
required to operate in this spectrum. To that end, the Institute of Electrical and Electronics Engineers, or IEEE, has established two
standards which utilize this unlicensed mmWave spectrum, IEEE 802.11ad and IEEE 802.11ay. We have developed silicon products that comply
with both the licensed and unlicensed standards.
In
an August 2024 report titled, Millimeter Wave Technology , Allied Market Research valued the global mmWave technology market at
$3.4 billion, and forecasted it to grow at a 20% compound annual growth rate from 2024 to 2032.
1
IEEE
802.11ad/ay: License-Free mmWave Market
A
primary opportunity for our mmWave products in unlicensed-band applications is the FWA market. In this market segment, wireless Internet
service providers, or WISPs, provide their customers with a fixed wireless link to a base station or small cell, thus providing the customer
with high-speed access to the Internet. mmWave can provide both upload and download speeds of over 1 Gbps. In addition, we believe mmWave
is generally a much less expensive alternative to installing underground fiber optic cable and provides FWA carriers with competitive
and cost advantages compared to other access technologies, such as cable broadband. From an equipment perspective, the FWA worldwide
market has historically been serviced by OEMs, such as Ubiquiti Inc., or Ubiquiti, Cambium Networks, Ltd. and SIA MikroTik. Generally,
WISPs address segments of the broadband market either not served or underserved by the traditional carriers, such as rural markets.
The
FWA market has been helped in recent years with the advent of government incentives aimed at closing the so-called ‘digital divide’
between urban and rural broadband access. In 2023, the U.S. government established the Broadband Equity, Access, and Deployment, or BEAD,
program, which allocated $42.45 billion to expand high-speed Internet access by funding planning, infrastructure deployment and adoption
programs in all 50 states. The National Telecommunications and Information Administration, or NTIA, is the agency responsible for administering
the BEAD program. When initially introduced, the NTIA had originally provided guidance that BEAD funding would be prioritized for
primarily fiber deployments, and that alternative technologies such as unlicensed fixed wireless were not eligible for BEAD
program funding. On February 4, 2025, Arielle Roth was nominated to take over leadership of the NTIA. Ms. Roth, speaking at a Federalist
Society event in June, 2024, stated that the NTIA has “imposed extreme tech bias in favor of fiber.” On March 4, 2025,
the Wall Street Journal reported that the U.S. Commerce Secretary, Howard Lutnick, has told staff he plans to make the BEAD program technology
neutral. A shift to a technology-neutral approach would include all forms of FWA, including our 60GHz mmWave wireless technology.
A
related opportunity for us in the license-free FWA space is dense urban markets, many of which have a high saturation of informal settlements.
In a December 2023 report, the International Telecommunications Union, or ITU, reported that an estimated 2.6 billion people, or one-third
of the global population, does not have Internet access. As of August 2023, the World Economic Forum estimated there were over 1.1 billion
people living in informal settlements around the world. Traditional last mile technology, such as WiFi, is not able to handle the congestion
generated by the dense concentration of users in such communities. This is because WiFi radio signals spread out in all directions, much
like a light bulb. Due to the very high population density in informal settlements, numerous WiFi transmitters are required, and as such,
tend to cancel each other out with overlapping signals. Because our mmWave technology utilizes beamforming, the signals are more like
beams from a car headlight, very narrow and controlled. Therefore, in a dense environment, mmWave is much better at handling high congestion,
as the radio signals generally do not overlap. Another advantage our mmWave technology provides in the dense urban environment is reduced
power consumption. The power grid in an informal settlement can often be unreliable. Our technology can operate under 12 watts, which
enables communications networks to continue to operate on a backup battery power supply for several hours.
An
additional market for our 60GHz mmWave products is military applications. Specifically, as a result of our radio frequency, or RF, beamforming
and beamsteering capabilities, militaries and their defense contractors are evaluating the use of mmWave for stealth tactical communications.
Unlike traditional wireless technology that radiates equally in all directions (omni), mmWave technology utilizes phased-array RF beams
to focus the RF energy into a specific intensity and direction. The military views mmWave as an inherently stealthy protocol –
Low Probability of Interception (LPI)/Low Probability of Detection (LPD)/Anti-Jamming (AJ). As the 60GHz spectrum band is generally unlicensed
around the world, these communications will not interfere with locally licensed spectrum, providing additional benefit. Also, as our
devices operate at under 12 watts, a light battery can be used for simple deployment in field deployments and combat settings. Further,
as our mmWave technology can support gigabit speeds, military personnel are able to transmit and receive information in a timely manner.
We are engaged with multiple defense contractors, and in 2023, we were awarded a proof-of-concept license and technology development
contract. We received an additional engagement for our mmWave products in 2024, and we expect to commence initial shipments for this
engagement by mid 2025.
Our
60 GHz products can also be applied to consumer applications, as we believe our technology can provide key advantages to this market.
For example, we are targeting the high-performance, video-streaming market, specifically the virtual reality, or VR, market. Uses of
VR are envisioned in a broad variety of markets, including gaming, real estate, healthcare, and transportation. We believe that our mmWave
technology has certain characteristics that are ideal for VR applications. First, mmWave’s high data rate of 3 Gbps supports high-resolution
displays. Second, our proprietary beamforming and beamtracking techniques keep latency to under 5 milliseconds, or ms, so the user does
not experience lags. Third, mmWave technology is less susceptible to interference and, as mentioned above in the context of dense urban
environments, can operate in highly congested environments, which limits interruptions in the VR user’s experience.
Other
market opportunities for 60 GHz mmWave technology include transportation safety, factory automation, and railway communications.
2
3GPP:
Licensed mmWave Market
The
frequency band from 24 GHz to 43 GHz has been designated as the mmWave band in 5G communications. In the United States, this band is
generally licensed to carriers by the FCC for expensive license fees that can reach billions of dollars. Carriers license this spectrum
to ensure there is no interference from other carriers using the same frequencies. We believe that the primary benefit of mmWave to carriers
is the availability of additional spectrum within the licensed band, to provide additional capacity to handle the growth of mobile users.
Our initial target for licensed-band applications is the FWA segment,
as carriers can utilize the additional network capacity offered by mmWave to provide FWA services. According to the Ericsson Mobility
Report , as of November 2023, approximately 80% of mobile service providers have an FWA offering and 121 service providers offer FWA
services over 5G, representing 50% of all FWA service providers. According to Mobile Experts Inc.’s report, 5G Millimeter Wave
2023 , mobile operators that have deployed 5G mmWave include Verizon, T-Mobile, AT&T, NTT DoCoMo, KDDI, Softbank and Rakuten Mobile.
We believe major Chinese mobile carriers have commenced formal collaborations to advance mmWave solutions in the Chinese telecom market.
Regarding U.S. carriers, FWA has become a bright spot for their 5G roll out. While U.S. carriers currently use the sub 6 GHz frequency
band, eventually, as the network gets saturated, we believe the carriers will commence a broad roll out of mmWave technology. In terms
of FWA market potential in the U.S., according to Fierce Wireless, T-Mobile is available to over 50 million homes, and Verizon is available
to over 40 million homes. In addition to being used to provide FWA services, our mmWave antenna modules can be utilized in consumer-premises
equipment or CPE, including hotspots, laptops and tablets. In its report, 5G Millimeter Wave 2023 , Mobile Experts Inc. forecasts
a total volume of approximately 2 million mmWave-enabled CPE units by 2026.
5G
mmWave has support from major industry players, such as Apple, which has incorporated mmWave wireless into substantially all versions
of the iPhone for sale in the U.S. market. The basic premise is the ever-increasing demand for bandwidth. The initial use case for cellular
service providers is to provide their customer base (primarily smart-phone customers) with continuity of network access in highly congested
environments, such as sporting events, public beaches, music festivals or generally any large gathering where thousands of users are
attempting to access the network simultaneously. We believe that mmWave will gain universal acceptance, as users will demand full continuity
in terms of network access, and we are well positioned to address the mobile opportunity for mmWave, which is expected to present an
order of magnitude increase in the total available market.
Our Products
Our
primary focus is the development, marketing and sale of our mmWave products.
mmWave
ICs
Currently,
there are two industry standards that incorporate mmWave technology for wireless communications: (i) license-free: IEEE 802.11ad/ay and
(ii) licensed: 3GPP Release 15-17 (commonly referred to as 5G). We have developed and continue to develop products that conform to these
standards. To date, we have not sold any 5G products, as our primary business focus remains license-free markets.
Our
first mmWave IC product line operates in the license-free 60 GHz band and conforms to the IEEE 802.11ad standard. This product line includes
a baseband IC, several variations of mmWave radio frequency, or RF, ICs, and associated antenna technology.
3
Our
60 GHz IEEE802.11ad products have two very important advantages over traditional 2.4 GHz / 5 GHz Wi-Fi products: very high data rates
(up to 3.0 Gbps) and low latency, i.e., less than 5 ms. The first application that had traction was outdoor broadband, including applications
such as PtP backhaul links or FWA using PtMP links. As the spectrum is unlicensed (free), WISPs can provide services without having to
procure expensive wireless spectrum licenses. We believe that our mmWave technology can be deployed quickly and cost effectively in rural
and suburban environments, including in remote and low-income regions where residents often have poor Internet quality. While carriers
can provide fiber access, the cost of fiber deployment can be prohibitive and trenching for fiber is time consuming and can limit the
rate at which new subscribers are added. Our mmWave products enable WISPs to deploy broadband service using low-cost terminals and infrastructure,
while avoiding the costs of deploying cable or fiber.
We
are a leading supplier of semiconductors in the mmWave PtP and PtMP markets. We are currently shipping to leading equipment suppliers
in this space, as well as directly to service providers that are building their own equipment. We believe we bring certain advantages
to the market, including our products supporting the spectrum from 66 GHz to 71 GHz, which is often referred to as channels 5 and 6 in
the 802.11ad/ay specifications. The key advantage in supporting these channels is that the signals are able to propagate much further
than channels 1 through 4; this is a result of significantly lower oxygen absorption at frequencies above 66 GHz. To date, our FWA customers
have achieved links in the range of 25 kilometers, which we believe is industry-leading.
In
the indoor area, the 802.11ad technology is ideal for high-speed, low-latency video applications, and our products can support 3Gbps
links with under 5 ms of latency. Representative applications include:
●
AR/VR links between the
headset and the video console;
●
USB video cameras for corporate
video conferencing;
●
wireless security cameras;
and
●
smart factory safety and
surveillance.
Our
mmWave ICs have been in volume production since 2018. A core competency of the Company is phased-array technology, or beamforming, in
which an array of antenna elements work in unison to create a focused RF beam. Through adjustment of the relative phase of the antenna
signals, the beams can be directed to support robust wireless connection. We are a leader in the production of mmWave devices and have
pioneered a high-volume mmWave production test methodology using standard low-cost production test equipment. It has taken us several
years to refine performance of this production test methodology, and we believe this places us in a leadership position in addressing
the operational challenges of delivering mmWave products into high-volume markets.
Our
second product line addresses the 5G mmWave opportunity. In its 4G-5G FWA Survey 2024 issued in August 2024, the Global Mobile
Supplier Association reported that 5G mmWave FWA was ramping and that shipments of 5G devices with mmWave capability are expected to
grow 22% in 2024, while still representing less than 10% of all 5G device shipments. Given our extensive experience in the development
of mmWave technology, 5G mmWave is a logical adjacent and larger market. We have sampled a highly integrated 5G mmWave beamformer IC,
which operates in the 24 GHz to 43 GHz frequency range. The device supports dual-stream multiple input, multiple output, or MIMO, with
two 16-channel beamforming arrays. In June 2023, we announced a collaboration with pSemi, a Murata company, for the development of a
5G customer premise receiver utilizing our beamformer IC and pSemi’s up-down converter IC. The goals of the collaboration are to
reduce the number of components and cost of each RF module to promote faster time to market for more rapid deployment by prospective
customers.
mmWave
Antenna Modules
We
produce and sell complete mmWave antenna modules for license-free 60 GHz applications. The primary advantage provided by our antenna
modules is that our proprietary mmWave ICs and the antenna are integrated into a single device. A differentiating characteristic of mmWave
technology is that the RF amplifiers must be as close as possible to the antenna to minimize loss. With our module, we can guarantee
the performance of the amplifier/antenna interface and simplify customers’ RF engineering, facilitating more opportunities for
customer prospects that have not provided RF-type systems, as well as shortening the time to market for new products. It is possible
for third parties to provide competitive module products, but, because we utilize our mmWave ICs and incorporate our proprietary mmWave
antenna IP, we can provide a highly-competitive solution based on our internally-owned and developed module components.
4
Our PERSPECTUS family of mmWave antenna modules enable WISPs to offer
high-capacity FWA networks in the unlicensed 60-GHz spectrum. The PERSPECTUS product family includes our integrated 60 GHz mmWave antenna
modules and enhanced software for PtMP FWA applications. Our PERSPECTUS products allow rapid development of low-cost network equipment
utilizing over 14 GHz of spectrum to provide multi-gigabit access services. Leveraging our integrated phased-array antennas and operating
in the upper channels of the band, link ranges from 1.5 kilometers up to extended ranges of 30 kilometers can be achieved using a parabolic
reflector.
Additionally,
we have established an innovative user arbitration protocol called DUNE that is specifically designed to optimize network performance
in dense urban environments using our PERSPECTUS antenna modules. DUNE is a result of our decade-long experience in mmWave technology
and in-house development of the intellectual property incorporated in media access control, which controls the hardware, the physical
layer, which controls the physical connection and software drivers, as well as novel antenna designs and beamforming algorithms. DUNE
takes a multi-level approach to reducing contention and interference by incorporating both physical, e.g. antenna and beamforming, and
protocol-level innovations.
Memory
Our
memory products comprise our Bandwidth Engine ICs, which are memory-dominated ICs that were designed to be i) high-performance companion
ICs to packet processors and ii) targeted for high-performance applications where throughput is critical. These products integrate our
proprietary, 1T-SRAM high-density embedded memory and a highly-efficient serial interface protocol resulting in a monolithic memory IC
solution optimized for memory bandwidth and transaction access performance. Taiwan Semiconductor Manufacturing Corporation, or TSMC,
is the sole foundry that manufactures the wafers used to produce our memory IC products. TSMC informed us that it would be discontinuing
the foundry process used to produce wafers, in turn, necessary to manufacture our memory ICs. As a result, in May 2023, we initiated
an end-of-life, or EOL, of our memory IC products, and we commenced initial EOL shipments during the quarter ended September 30, 2023.
As of December 31, 2024, we had remaining EOL purchase orders totaling approximately $2.3 million, and we expect to ship all of these
orders by March 2025. We do not expect any further shipments or to generate any revenue from shipments of our memory IC products
after March 2025.
Research
and Development
Our
ability to compete in the future depends on successfully improving our technology to meet the increasing demand for higher performance
and lower cost solutions. Development of new IC products requires specialized chip design and product engineers, expensive computer-aided
design software licenses, and significant fabrication and testing costs, including mask costs.
We have over 15 years of technical know-how in the design and manufacturing
of mmWave technology. The most important aspect of this knowledge is knowing how mmWave circuits will perform in a real-world environment.
Traditionally, semiconductor design utilizes sophisticated computer-aided design software to simulate the performance of a device that
is manufactured at a specific semiconductor manufacturing plant. However, mmWave is extremely difficult to model precisely. Therefore,
the only path to understand how well a device will perform is to produce the device and test it in a real-world application. Over the
last decade, many companies have attempted to develop mmWave semiconductor devices, however, given that the devices had inconsistent or
weak performance, a number of the companies were unsuccessful and abandoned their design and product development efforts. As an example
of our leadership and expertise in the development of mmWave technology, we were an active participant in the development of the IEEE
802.11ay wireless specification and, to date, have been granted nine essential claims patents with respect to this standard.
At
a system level, there are additional technical challenges presented by mmWave technology that we have overcome and form a key part of
our internal know-how. For example, a key technology of mmWave is the concept of beamforming and beam steering using a phased-array antenna.
This technology is utilized to concentrate the RF energy into a narrow beam to improve the range and coverage of mmWave devices. We have
developed effective beamforming and beam steering technology for phased-array circuits and antennas. While there are many academic examples
of successful phased-array implementations, there is a vast barrier between a “laboratory” version of phased-array technology
and a version that is deployed for commercial use. One such aspect is the implementation of the beamforming procedure, which seeks to
maximize throughput and do so while not impacting latency. While the details of achieving this are complex, it is important-intellectual
property that we have gained through real-world experience.
5
mmWave
is not without challenges, as mmWave signals do not typically travel as far as traditional wireless signals and are more attenuated by
solid objects. Mitigation strategies must be deployed, particularly with regard to the management of signal propagation. Whereas traditional
wireless devices utilize a broad, omni-antenna pattern, mmWave systems rely on phased-array technology, which focusses the radio signal
into a narrow beam to improve propagation characteristics. We consider ourselves to be a global leader in implementing these sophisticated
radio systems and one of the few providers in the market successfully shipping phased-array devices in mass production.
While
we have developed products for the 60 GHz and 5G mmWave markets, we believe there are other market opportunities that could utilize mmWave
technology. For example, in the WiFi Alliance there is a pending proposal to utilize mmWave technology in WiFi 8, which is the next generation
of WiFi technology. We believe this proposal is primarily driven by the anticipated use of mmWave to support VR applications, which require
very high data rates, and to reduce congestion in multi-dwelling units. In the mobile carrier market, there is some early research in
the use of terahertz technology to make even more spectrum available for network capacity. While the proposed frequencies are higher
than mmWave (above 100 GHz), we believe that many of our technological developments, particularly our beamforming and beamsteering concepts,
can be applied to terahertz technology.
With
regard to our memory products, we have ceased and do not intend to expend any development efforts or funds to develop new memory products.
We believe our Bandwidth Engine IC products will provide us with meaningful revenue and gross margin contributions through March 31,
2025, as we complete the EOL of these products. We intend to continue to devote substantially all of our research and development efforts
toward further expanding our mmWave technology portfolio and expanding our product offerings.
Sales
and Marketing
In
addition to our direct sales personnel, we sell through sales representatives and distributors in the United States, Asia and Europe.
Our distributors have a global presence with offices and technical selling and applications engineering capabilities, which we believe
will enable us to reach new potential customers for our products.
We
also have applications engineers who support our customer engagements and engage with the customers’ system architects and designers
to propose and implement our products and solutions to address system design challenges and improve performance.
In
the markets we serve, the time from a design win to production volume shipments of our IC products can range from 12 to 36 months. We
believe that our customer systems can have a product life from a few years to up to 10 years once products like ours have been designed
into the system. Historically, our revenue has been highly concentrated, with a few customers accounting for a significant percentage
of our total revenue.
In
the FWA market, our primary customer base is OEMs, but we also have multiple WISP customers in the U.S. and Canada. Our OEM customers
in the fixed wireless space include Ubiquiti, WeLink, which prior to 2024 operated as both an OEM and a WISP, Tachyon Networks, or Tachyon,
and China Unicom. Ubiquiti, an OEM in the unlicensed fixed wireless space, relies on us as its sole source mmWave IC supplier for its
Wave products, which Ubiquiti introduced in 2022. Ubiquiti introduced three new Wave models in 2023. Historically, WeLink relied
on us as its sole source supplier for WeLink-designed equipment used to deliver WISP residential service since 2022; however, in 2024,
WeLink’s hardware business was launched as a separate entity, Ketsen Networks, or Ketsen. WeLink currently deploys 60 GHz technology
in multiple U.S. cities, including Las Vegas, Dallas and Los Angeles. We expect to continue to supply our antenna modules to both WeLink
and Ketsen. Tachyon utilizes our mmWave antenna modules in its TNA-30X family of PtP and PtMP solutions for 60 GHz unlicensed FWA networks.
Peraso and Tachyon jointly announced production readiness of the TNA-30X product family in June 2023. Finally, China Unicom is a Chinese
mobile carrier that uses our 60 GHz technology for 5G PtP backhaul. In addition to OEMs, we have partnered with several WISPs in the
U.S. and Canada that have deployed our 60 GHz technology, including WeLink. We continue to focus on securing new OEM and WISP customers.
During
the year ended December 31, 2024, two customers accounted for 10% or more of our net revenues, including Nokia Corporation at 25% and
F5/Flextronics at 61%. During the year ended December 31, 2023, three customers accounted for 10% or more of our net revenues, including
Nokia Corporation at 35%, F5/Flextronics at 22% and Alltek Technology Corp at 18%.
6
Intellectual
Property
We
regard our patents, copyrights, trademarks, trade secrets and similar intellectual property as critical to our success and rely on a
combination of patent, trademark, copyright, and trade secret laws to protect our proprietary rights.
As of March 1, 2025, we held 87 United States patents and 27 foreign
patents on various aspects of our mmWave, antenna, memory and other technology, with expiration dates ranging from 2025 to 2041. We also
held 11 pending patent applications in the United States and abroad. There can be no assurance that others will not independently develop
or patent similar or competing technology or design around any patents that may be issued to us, or that we will be able to successfully
enforce our patents against infringement by others.
We
were also an active participant in the development of the IEEE 802.11ay wireless specification and, to date, have been granted nine essential
claims patents with respect to this standard. Essential claims patents are of particular value as a specification cannot be implemented
without obtaining a license to the patents from us.
The
semiconductor industry is characterized by frequent litigation regarding patent and other intellectual property rights. Our IC customers,
licensees or we might, from time to time, receive notice of claims that we have infringed patents or other intellectual property rights
owned by others. Our successful protection of our patents and other intellectual property rights and our ability to make, use, import,
offer to sell, and sell products free from the intellectual property rights of others are subject to a number of factors, particularly
those described in Part I, Item 1A, “Risk Factors.”
Competition
mmWave
mmWave
circuit and system design is a highly specialized engineering skill, as mmWave is a challenging technology to ship in mass production.
At frequencies above 24 GHz, circuits are extremely vulnerable to small variances in the semiconductor manufacturing process. Designing
circuits that minimize susceptibility to these variances takes years of development, and we believe we are one of the few companies in
the world that is skilled in mmWave design. Further, we have shipped mmWave devices in volume, and ensuring all devices sold adhere to
strict performance standards is a core competency we have developed. In addition, we have developed our own mmWave phased-array antenna
technology, which allows us to be highly competitive in terms of overall system cost. Our customers do not need to engage with third-party
antenna suppliers, thus eliminating the additional cost for a third-party antenna.
Unlicensed
IEEE 802.11ad/ay Market:
Historically,
our primary competitor in the IEEE802.11ad/ay market has been Qualcomm. The primary benefit that we provide to the market is the support
of the higher frequency bands from 66 GHz to 71 GHz. The advantage at these frequencies is that oxygen attenuation is significantly reduced,
and signals can travel much further.
We
also have key points of differentiation compared to Qualcomm for wireless video devices. We are well positioned in this market, as we
have USB 3.0 built into our devices, so our products generally support USB architectures. A prime example is the replacement of the USB
cable with a wireless version using our technology. There are many applications where this can be of use, including USB web cams, wireless
displays, and AR/VR headsets. We have invested significant software resources into providing the market with wireless USB solutions,
and we believe there is no other mmWave vendor in the world that can offer multi-gigabit solutions as a replacement for wired USB.
7
Licensed
5G Market:
With
5G, our efforts are focused on the mmWave RF front-end phased-array component of the system. The 5G product instantiation is an RF module
utilizing our proprietary intellectual property. Key elements of our mmWave intellectual property include:
●
RF circuits;
●
phased-array antenna; and
●
in-system circuit calibration,
beam forming, and real-time system monitoring.
From
a competitive perspective, we believe we are currently the only pure-play, 5G vendor to offer a dual-band (28/39 GHz) RF solution for
the FWA market. Qualcomm does offer a 5G RF solution for the FWA market, however its solution is based on aggregating its mobile RF solution,
which we believe requires several compromises in terms of cost, performance, and power consumption. With an initial focus on FWA, we
can derive advantages by optimizing our silicon for that specific market. Furthermore, we have achieved traction in the unlicensed, 60
GHz, FWA market, and we believe we will be able to transfer all of our knowledge gained from the 60 GHz market to the 5G market. However,
this market opportunity is more competitive, and potential competitors, in addition to Qualcomm, include MediaTek Inc. and Samsung Electronics
Co., Ltd.
Manufacturing
We
depend on third-party vendors to manufacture, package, assemble and test our IC and module products, as we do not own or operate a semiconductor
fabrication, packaging or production testing facility. By outsourcing manufacturing, we can avoid the high cost associated with owning
and operating our own facilities, allowing us to focus our efforts on the design and marketing of our products.
We
perform an ongoing review of our product manufacturing and testing processes. Our IC products are subjected to extensive testing to assess
whether their performance meets design specifications. Our test vendors provide us with immediate test data and the ability to generate
characterization reports that are made available to our customers.
Employees
As
of December 31, 2024, we had 42 employees, including 12 located in the United States and 30 located in Canada. Our headcount comprised
29 in research and development and manufacturing-related operations and 13 in sales, marketing and general and administrative functions.
We believe our current headcount is adequate to conduct our business.
Available
Information
We
were founded in 1991 and reincorporated in Delaware in 2000. Our website address is www.perasoinc.com. The information in our website
is not incorporated by reference into this report. Through a link on the Investor section of our website, we make available our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after they are filed with, or furnished to,
the SEC. You can also read any materials submitted electronically by us to the SEC on its website (www.sec.gov), which contains reports,
proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
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