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Our primary target markets include Mobile (smartphone, gaming and tablet), Home Entertainment (TV, personal video recorder ("PVR"), over-the-air ("OTA") and projector), Content (creation, remastering and delivery), and Business & Education (projector).
−Removed: We were one of the first companies to commercially launch a video System on Chip ("SoC") capable of deinterlacing 1080i HDTV signals and the one of the first companies with a commercial dual-channel 1080i deinterlacer integrated circuit.
+Added: We were one of the first companies to commercially launch a video System on Chip ("SoC") capable of deinterlacing 1080i HDTV signals and one of the first companies with a commercial dual-channel 1080i deinterlacer integrated circuit.
Our Topaz product line was one of the industry’s first single-chip SoC for digital projection.
−Removed: We first introduced our motion estimation / motion compensation technology ("MEMC") for TVs and in recent years introduced a mobile-optimized MEMC solution for smartphones, one of several unique features in the mobile-optimized Iris visual processor.
+Added: We first introduced our motion estimation / motion compensation technology ("MEMC") for TVs and in recent years introduced a mobile-optimized MEMC solution for smartphones, one of several unique features in our mobile-optimized X5 visual processor.
In 2019, we introduced our Hollywood award-winning TrueCut® video platform, the industry’s first motion grading technology that allows fine tuning of motion appearance in cinematic content for a wide range of frame rates, shutter angles and display types.
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Our video coding technology reduces storage requirements, significantly reduces bandwidth constraint issues and converts content between multiple formats to enable seamless delivery of video, including OTA streaming, while also maintaining end-to-end content security.
−Removed: Rapid growth in video consumption, combined with the move towards high frame rate / refresh rate displays, especially in mobile, is increasing the demand for our visual processing and video delivery solutions.
+Added: Rapid growth in video and gaming consumption, combined with the move towards high frame rate / refresh rate displays, especially in mobile, is increasing the demand for our visual processing and video delivery solutions.
Our technologies can be applied to a wide range of devices from large-screen projectors to cinematic big screens, to low-power mobile tablets, smartphones, high-quality video infrastructure equipment and streaming devices.
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Today, TV displays generally have a refresh rate of 120 Hz, while smartphones are now moving from 60 to 90 and 120 Hz.
−Removed: Despite this trend, the vast majority of produced video content exists only in 24-25 frames per second ("FPS"), while most user generated content is at 30 FPS.
+Added: Despite this trend, the vast majority of produced video content exists only in 24-25 frames per second ("FPS"), while most gaming and user generated content is at 30 FPS.
+Added: While frame rates for new game content is on the rise, the rendering, compute and thermal limits of today’s mobile processors often limit the effective frame rates to well below 60 FPS.
The resulting mismatch between low frame rate content and high refresh rate screens creates artifacts, such as judder and strobing, that degrade video quality and destroy creative intent.
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In fact, our TrueCut Motion Grading is the industry’s first solution to give filmmakers the ability to cinematically fine-tune motion blur, judder and frame-rate appearance and is used as part of the creative process to empower filmmakers to shoot at any frame-rate, then deliver a cinematically tuned, broader set of motion and frame rate appearances.
−Removed: While TrueCut technology enables creation of new content or remastering of existing content that preserves artistic intent across screens, from cinema to home TVs to smartphones, our Iris display processors and software bridge the quality gap for all existing content viewed on mobile devices, such as smartphones and tablets.
+Added: While TrueCut technology enables creation of new content or remastering of existing content that preserves artistic intent across screens, from cinema to home TVs to smartphones, our mobile display processors and software bridge the quality gap for all existing content viewed on mobile devices, such as smartphones and tablets.
Display Trends
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Most mobile devices support over 400 nits and sometimes over 600 nits.
+Added: • Color Gamut:
DCI-P3 has a 25% larger color gamut than Rec.709.
+Added: • Frame Rate:
TVs commonly display at 120 frames per second (120 Hz) and up to 240 Hz on more sophisticated higher-end models.
−Removed: Mobile devices are not far behind with displays that run at 60 to 90 frames per second.
−Removed: Some of the newest, flagship smartphones now have displays that run at up to 120 Hz.
+Added: Many premium tier mobile displays were launched in 2020 with 120 Hz screens, which are quickly cascading down to lower price points.
+Added: Some of the gaming smartphones now have displays that run at up to 144 Hz.
+Added: • Resolution:
TVs have achieved 4k resolutions (3840x2160) and mobile devices today can achieve up to 3440x1440 resolution, and while some content is available in 4k resolution, most movies are only available in FHD or HD resolutions, which is typically 1920x1080 and 1280x720 respectively.
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The industry standards body Society of Motion Picture & Television Engineers released a format specification known as "HDR10" that similarly bridges the gap in contrast and color between content and devices.
−Removed: The Ultra-HD Blu-ray disk format and streaming services such as Netflix and Amazon Video now support 4k HDR, aided by improved compression standards such as H.265.
+Added: The Ultra-HD Blu-ray disk format
+Added: and streaming services such as Netflix and Amazon Video now support 4k HDR, aided by improved compression standards such as H.265.
Managing many content formats across a rapidly evolving range of displays is a significant and growing challenge.
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According to Cisco, by 2022 there will be 9.4 billion connected mobile devices across the globe.
−Removed: Video Market for Mobile Devices
+Added: Video and Gaming Market for Mobile Devices
Mobile devices have become the dominant driver of video consumption and growth.
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Video also continues to grow as a share of mobile traffic usage.
−Removed: According to the 2019 Visual Networking Index report by Cisco Systems, Inc., mobile video will grow at a CAGR of 55 percent between 2017 and 2022, higher than the overall average mobile traffic CAGR of 46 percent.
−Removed: By 2022, 79% of all mobile traffic is expected to be from video according to the Cisco report.
+Added: According to the June 2020 Ericsson Mobility Report, video now constitutes 63% of global mobile traffic and will rise to a 76% share by 2025.
+Added: The burgeoning global gaming market is dominated by the smartphone segment, with 2.5 billion users, according to NewZoo1, a leading market intelligence service covering gaming, mobile and eSports.
+Added: In China alone, the number of mobile gamers is expected to reach 637 million with revenue of $32 billion by 2024, compared to $18.5 billion in 2019 – implying 73% growth over five years, according to Niko Partners’ May 2020 report, China Mobile Games Market.
Mobile display systems pose a number of unique challenges.
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Our technology addresses both of these markets.
+Added: • Smartphones.
Smartphones have become a popular choice for many consumers.
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With the display being the salient component of smartphones and tablets, and the rapidly increasing use of these devices for video consumption, we believe that the incorporation of video display processing is the next logical step.
−Removed: As 5G capability finds its way into cellular infrastructure and smartphones starting modestly in the second half of 2019, and more robustly in 2020, this should reinvigorate market growth given the increased speed and lower latency of the wireless connections.
−Removed: Gartner predicts that 5G smartphones will comprise 12% of all phone shipments in 2020, growing to 43% of all smartphones by 2022.
+Added: As 5G network coverage rapidly expands worldwide, the availability of 5G chipsets targeting smartphones priced as low as $200 in 2021, should reinvigorate market growth given the increased speed and lower latency of the wireless connections.
+Added: According to Counterpoint Research, 14% of smartphones sold in the U.S.
+Added: in August 2020 included 5G connectivity.
+Added: In a recent 2020 report, IDC projected the smartphone market to return to a full recovery by 2022 and that 5G smartphones would capture a 50% global share of shipments by 2023.
In addition, service providers in some countries will also utilize 5G networks to provide fixed wireless broadband.
−Removed: We further believe our compelling mobile display processing functionality, combined with 5G capability, will help motivate consumers to replace their 3G and 4G phones at a faster rate than occurred in 2019.
+Added: We further believe our compelling mobile display processing functionality, combined with 5G capability, will help motivate consumers to replace their 3G and 4G phones at a faster rate than occurred in the past two years.
Finally, a new smartphone category has emerged as top vendors have previewed foldable smartphones which serve as a phone, and a mini tablet when unfolded.
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Removing halos dramatically improves image quality and is of particular importance on high-resolution displays where artifacts become more visible.
+Added: • AI Based Display Processing.
+Added: The Pixelworks i6 processor dramatically improves video and image quality and sets a new standard for picture quality on both LCD and OLED mobile displays with a new AI-driven architecture and dynamic refresh rate support for up to 144 Hz.
+Added: Its lightweight AI display inferencing augments the Company’s knowledge base, numerous real time inputs and fuzzy logic IP to adaptively and intelligently optimize overall picture quality for video, games and photos at low power, including real time SDR-to-HDR conversion and AI adaptive display.
• Advanced Scaling.
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Our distributors often have valuable and established relationships with our end customers, and in certain countries it is customary to sell to distributors.
−Removed: While distributor payment to us is not dependent upon the distributor’s ability to resell the product or to collect from the end customer, our distributors may provide longer payment terms to end customers than those we would offer.
+Added: While a distributor's payment to us is not dependent upon the distributor’s ability to resell the product or to collect from the end customer, our distributors may provide longer payment terms to end customers than those we would offer.
Sales to distributors accounted for 49% and 44% of revenue in 2020 and 2019 respectively.
Our largest distributor, Tokyo Electron Device Ltd.
−Removed: represented more than 10% of revenue in each of 2019, 2018 and 2017, and accounted for more than 10% of accounts receivable as of December 31, 2019 and 2018.
−Removed: Another distributor, Upstar Technology Limited accounted for more than 10% of accounts receivable as of December 31, 2019.
+Added: represented more than 10% of revenue in each of 2020 and 2019, and accounted for more than 10% of accounts receivable as of December 31, 2019.
+Added: Another distributor, Upstar Technology Limited accounted for more than 10% of accounts receivable as of December 31, 2020 and 2019.
No other distributor accounted for more than 10% of revenue in 2020 and 2019 or represented more than 10% of accounts receivable as of December 31, 2020 or 2019.
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Sales to Sharp Corporation represented more than 10% of revenue in 2019.
−Removed: Sales to Hitachi Ltd.
−Removed: represented more than 10% of revenue in 2018.
−Removed: No other end customer accounted for more than 10% of revenue in 2019, 2018 or 2017 or represented more than 10% of accounts receivable as of December 31, 2019 or 2018.
+Added: No other end customer accounted for more than 10% of revenue in 2020 and 2019 or represented more than 10% of accounts receivable as of December 31, 2020 or 2019.
Our business is subject to seasonality related to the markets we serve and the location of our customers.
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We also compete with specialized and diversified electronics and semiconductor companies that offer display processors or scaling components including:
−Removed: Actions Microelectronics Co., Ltd., ARM Holdings PLC, Dolby Laboratories, Inc., Hisilicon Technologies Co., Ltd., i-Chips Technologies Inc., Lattice Semiconductor Corporation, MediaTek Inc., Novateck Microelectronics Corp., NVIDIA Corporation, Qualcomm Incorporated, Realtek Semiconductor Corp., Renesas Electronics America Inc., Solomon Systech (International) Ltd., STMicroelectronics N.V., Sunplus Technology Co., Ltd., Synaptics Incorporated, Texas Instruments Incorporated, Unisoc Communications, Inc., and other companies.
+Added: Actions Microelectronics Co., Ltd., ARM Holdings PLC, Dolby Laboratories, Inc., Egis Technology Inc., Hisilicon Technologies Co., Ltd., i-Chips Technology Inc., Lattice Semiconductor Corporation, MediaTek Inc., Novatek Microelectronics Corp., NVIDIA Corporation, Qualcomm Incorporated, Realtek Semiconductor Corp., Renesas Electronics America Inc., Socionext Inc., Solomon Systech (International) Ltd., STMicroelectronics N.V., Sunplus Technology Co., Ltd., Synaptics Incorporated, Texas Instruments Incorporated, Unisoc Communications, Inc., and other companies.
Potential and current competitors may include diversified semiconductor manufacturers and the semiconductor divisions or affiliates of some of our customers, including:
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We have invested, and expect to continue to invest, significant resources in research and development activities.
−Removed: Our research and development expenses were $26.0 million , $22.9 million and $21.4 million in 2019, 2018 and 2017, respectively.
−Removed: During 2018 and 2017, we received reimbursements related to a co-development arrangement with a customer for costs incurred in connection with our development of an integrated circuit ("IC") product.
−Removed: As a result of the reimbursements, our overall research and development expense was reduced by $4.0 million in 2018 and $4.0 million in 2017.
−Removed: There were no reductions to research and development expense related to co-development arrangements in 2019.
+Added: Our research and development expenses were $25.0 million and $26.0 million in 2020 and 2019, respectively.
Manufacturing
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As of December 31, 2020, we held 338 patents and have 9 patent applications pending, compared to 347 patents and 17 patent applications pending as of December 31, 2019.
−Removed: The decrease in patents from December 31, 2018 to December 31, 2019 is due to the abandonment or sale of patents received as part of the acquisition of ViXS in August 2017.
−Removed: The patents that were sold or abandoned were non-strategic or held in geographic regions where we do not do business.
The patents we hold relate generally to improvements in the visual display of digital image data including, but not limited to, improvements in image scaling, image correction, automatic image optimization and video signal processing for digital displays.
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See "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K for information on various environmental risks.
−Removed: As of December 31, 2019, we had a total of 229 employees, all of which were full-time, consistent with 215 employees as of December 31, 2018.
+Added: As of December 31, 2020, we had a total of 197 employees, all of which were full-time, compared to 229 employees as of December 31, 2019.
Corporate Information
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.