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We define our primary target markets as Mobile (smartphone and tablet), Home & Enterprise (projectors, personal video recorders ("PVR"), and over-the-air ("OTA") streaming devices), and Cinema (creation, remastering, and delivery of digital video content).
−Removed: Previously we classified our primary target markets as Mobile, Projector, Video Delivery and Cinema, but have since aggregated the Projector and Video Delivery categories into one called "Home & Enterprise".
+Added: Previously we classified our primary target markets as Mobile, Projector, Video Delivery and Cinema, but have since aggregated the Projector and Video Delivery categories into one market called "Home & Enterprise".
Pixelworks has been a pioneer in visual processing technology for over 20 years.
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We were the first company to integrate motion estimation / motion compensation technology ("MEMC") as a mobile-optimized solution for smartphones.
−Removed: 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.
+Added: In 2019, we introduced our Hollywood award-winning TrueCut Motion TM® video platform, the industry’s first motion grading technology that allows fine tuning of motion appearance in cinematic content.
Our core visual processing technology intelligently processes digital images and video from a variety of sources and optimizes the content for a superior viewing experience.
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On occasion, we have also licensed our technology.
−Removed: During the third quarter of 2021, we engaged in a strategic plan to re-align our Mobile and Home & Enterprise businesses to improve their focus on their Asia-centered customers and employee stakeholders.
−Removed: Our subsidiary, Pixelworks Semiconductor Technology (Shanghai) Co., Ltd.
+Added: During 2021, we engaged in a strategic plan to re-align our Mobile and Home & Enterprise businesses to improve their focus on their Asia-centered customers and employee stakeholders.
+Added: One of our Chinese subsidiaries, Pixelworks Semiconductor Technology (Shanghai) Co., Ltd.
(or "PWSH"), now operates these businesses as a full profit-and-loss center underneath Pixelworks.
In connection with this strategic plan, the Company and PWSH closed three separate financing transactions in 2021 and 2022, which are further described in "Note 14:
−Removed: Redeemable Non-Controlling Interest and Equity Interest of PWSH Sold to Employees", "Note 15:
−Removed: Non-Controlling Interest" and "Note 17:
−Removed: Subsequent Events", which are incorporated by reference into this section.
−Removed: PWSH is in the process of preparing to file an application for an initial public offering of PWSH shares on the Shanghai Stock Exchange’s Science Technology Innovation Board, known as the STAR Market (the “Listing”).
+Added: Redeemable Non-Controlling Interest and Equity Interest of PWSH Sold to Employees" and "Note 15:
+Added: Non-Controlling Interest", which are incorporated by reference into this section.
+Added: PWSH has a branch office located in Shenzhen, China (Pixelworks Semiconductor Technology (Shanghai) Co.
+Added: Shenzhen Branch Office No.
+Added: 1), which is primarily for sales and customer support for PWSH, and a subsidiary located in Hong Kong (Pixelworks Hong Kong Limited), which has no employees and is used for distribution of PWSH products.
+Added: Pixelworks has an additional subsidiary in China (Frame Shadow Technology (Shanghai) Co., Ltd.
+Added: (formerly called Mucheng Huai Management Consulting (Shanghai) Co., Ltd)) which is a research and development center for our TrueCut business.
+Added: This subsidiary does not operate under PWSH, but rather is owned by Pixelworks through our Oregon limited liability company, Pixelworks Semiconductor Technology Company, LLC.
+Added: We continue to prepare PWSH to file an application for an initial public offering of PWSH shares on the Shanghai Stock Exchange’s Science Technology Innovation Board, known as the STAR Market (the “Listing”) once market conditions in China are supportive.
We believe that the Listing will have many benefits, including improved access to new capital markets and the funding of PWSH’s growth worldwide.
−Removed: We presently intend to qualify PWSH to apply for the Listing in 2023.
−Removed: The process of going public on the STAR Market is lengthy and includes several periods of review by various government agencies of the People’s Republic of China (“PRC”), such as the Shanghai Stock Exchange and the China Securities Regulatory Commission (“CSRC”).
+Added: The process of going public on the STAR Market is lengthy and includes several periods of review by various government agencies of the People’s Republic of China (“PRC”), such as the Shanghai Stock Exchange (“SSE”) and the China Securities Regulatory Commission (“CSRC”).
There is no guarantee that PWSH will be approved for a Listing at any point in the future.
−Removed: The listing of PWSH on the STAR Market will not change the status of PXLW as a U.S.
+Added: The CSRC and the SSE have recently tightened the standards for the STAR Market and are currently advising companies that are not yet profitable under China GAAP standards against filing an IPO application in the present environment.
+Added: The Company believes this is in large part due to the current economic conditions in China and the recent performance of companies already listed on the STAR Market that were not profitable at the time of their IPO.
+Added: PWSH is not currently profitable under China GAAP standards.
+Added: The CSRC and the SSE may relax the standards, but there is no guarantee that this will happen in any particular time frame.
+Added: Any listing of PWSH on the STAR Market will not change the status of PXLW as a U.S.
public company.
+Added: More than a majority of our operations are in China, but our executive officers and all of our directors but one are located in the United States (and he resides in Singapore).
We are neither a PRC operating company nor do we conduct our operations in China through the use of variable interest entities.
+Added: Our auditor is Grant Thornton LLP, with headquarters in Chicago, Illinois.
+Added: The Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, and related regulations, therefore do not apply to our Company.
We target three key markets with our products and services:
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Products in this category work with a mobile application processor to enhance the performance or feature set of the overall display solution.
−Removed: Our Visual Processor ICs can be used with many popular mobile application processors (such as from Qualcomm Incorporated and MediaTek Inc.) to help OEMs enhance their smartphone or tablet products.
+Added: Our Visual Processor ICs can be used with many popular mobile application processors (such as from Qualcomm Incorporated and MediaTek Inc.) to help original equipment manufacturers (“OEMs”) enhance their smartphone or tablet products.
In addition, we provide a software development kit to our gaming eco-system partners (including publishers of AAA mobile games) that enables the use of our Rendering Accelerator technology in our visual processors to improve game performance and reduce overall system power while playing high frame rate mobile games.
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Meanwhile, TV manufacturers including Samsung Electronics Co., Ltd.
−Removed: ("Samsung"), TCL Technology, Sony Corporation ("Sony"), and LG Electronics, Inc.
+Added: ("Samsung"), TCL Technology, Sony Group Corporation (“Sony”), and LG Electronics, Inc.
(“LG”) are bringing high contrast, high brightness, or HDR TVs based on organic light emitting diodes (“OLED”) and local-dimming liquid crystal display (“LCD”) panels to the living room.
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Content formats are evolving to take advantage of these display improvements.
−Removed: For example, Dolby Labrotories, Inc.
+Added: For example, Dolby Laboratories, Inc.
(“Dolby”) introduced the “Dolby Vision™” format for movies and devices, in order to allow consumers to realize the benefits of HDR and wide color gamut.
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Our HDR conversion technology can not only convert between SDR (Standard Dynamic Range) and HDR10, it can also convert among HDR10, HLG and HDR10+, solving an interconnectivity problem between content formatted in one HDR format and display devices that support a different HDR format.
−Removed: • Rendering Accelerator.
+Added: • Rendering Accelerator (IRX).
We have developed technology that is enabled via a software development kit used by gaming content makers to allow their games to leverage the resources and features of our most current visual processing technology to improve the user experience with high frame rate, high resolution games while reducing overall system power consumption.
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Marketing efforts are focused on building market-leading brand awareness and preference for our solutions.
−Removed: We utilize direct sales and marketing resources in Japan, China, Europe and Taiwan.
+Added: We utilize direct sales and marketing resources in Japan, China and Taiwan.
In addition to sales and marketing representatives, we have field application engineers who provide technical expertise and assistance to manufacturing customers on final product development.
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Sales to distributors accounted for 66% and 57% of revenue in 2023 and 2022 respectively.
−Removed: One of our distributors, Tokyo Electron Device Ltd.
−Removed: represented more than 10% of revenue in each of 2022 and 2021, and accounted for more than 10% of accounts receivable as of December 31, 2022.
−Removed: Another distributor, Upstar Technology Limited accounted for more than 10% of revenue in 2022 and 2021 and accounted for more than 10% of accounts receivable as of December 31, 2022 and 2021.
+Added: One of our distributors, Upstar Technology Limited represented more than 10% of revenue in each of 2023 and 2022, and accounted for more than 10% of accounts receivable as of December 31, 2023 and December 31, 2022.
+Added: Another distributor, Tokyo Electron Device Ltd.
+Added: accounted for more than 10% of revenue in 2022 and more than 10% of accounts receivable as of December 31, 2022.
No other distributor accounted for more than 10% of revenue in 2023 and 2022 or represented more than 10% of accounts receivable as of December 31, 2023 or 2022.
Direct Distribution Channels
−Removed: We have direct distributor relationships in Japan, China, Europe and Taiwan.
+Added: We have direct distributor relationships in Japan, China and Taiwan.
• We have established direct relationships with companies that manufacture high-end display systems.
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End Customers
−Removed: Revenue attributable to our top five end customers together represented 76% of revenue in both 2022 and 2021.
+Added: Revenue attributable to our top five end customers together represented 87% and 76% of revenue in 2023 and 2022, respectively.
End customers include customers who purchase directly from us as well as customers who purchase products indirectly through distributors.
Sales to Seiko Epson Corporation represented more than 10% of revenue in each of 2023 and 2022, and accounted for more than 10% of accounts receivable as of December 31, 2023 and 2022.
−Removed: Sales to vivo Communication Technology Co.
−Removed: represented more than 10% of revenue in each of 2022 and 2021.
Sales to Guangdong OPPO Mobile Telecommunications Corporation, Ltd.
−Removed: accounted for more than 10% of revenue in 2022.
+Added: accounted for more than 10% of revenue in each of 2023 and 2022.
+Added: Sales to Vivo Communication Technology Co.
+Added: represented more than 10% of revenue in 2022.
+Added: Vecima Networks represented more than 10% of accounts receivable as of December 31, 2022.
No other end customer accounted for more than 10% of revenue in 2023 or 2022 or represented more than 10% of accounts receivable as of December 31, 2023 or 2022.
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Our business is subject to seasonality related to the markets we serve and the location of our customers.
−Removed: For example, we have historically experienced higher revenue from the digital projector component of the Home & Enterprise market in the third quarter of the year, and lower revenue in the first quarter of the year, as our Japanese customers reduce inventories in anticipation of their March 31 fiscal year end.
+Added: We have typically experienced higher revenue from the digital projector component of the Home & Enterprise market in the third quarter, and lower revenue in the first quarter, as our Japanese customers reduce inventories in anticipation of their March 31 fiscal year end.
+Added: We have typically experienced higher revenue from the mobile market in the fourth quarter, and lower revenue in the first quarter, as mobile phone OEMs ramp production in advance of Chinese New Year.
Geographic Distribution of Sales
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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., 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.
+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., 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:
−Removed: Apple Inc., Broadcom Inc., LG Electronics, Inc., MegaChips Corporation, Mitsubishi Digital Electronics America, Inc., NEC Corporation, Panasonic Corporation, Samsung Electronics Co., Ltd., Socionext Inc., ON Semiconductor Corporation, Seiko Epson Corporation, Sharp Electronics Corporation, Sony Corporation, and Toshiba America, Inc.
+Added: Apple Inc., Broadcom Inc., LG Electronics, Inc., MegaChips Corporation, Mitsubishi Digital Electronics America, Inc., NEC Corporation, Panasonic Corporation, Samsung Electronics Co., Ltd., Socionext Inc., ON Semiconductor Corporation, Seiko Epson Corporation, Sharp Corporation, Sony Group Corporation, and Toshiba America, Inc.
In addition, start-up companies may seek to compete in our markets.
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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.