product obsolescence;

seasonality and variability in the consumer, computing and storage, industrial, automotive and communications markets;

the availability of adequate manufacturing capacity from our outside suppliers;

increases in prices for finished wafers due to general capacity shortages;

the potential loss of future business resulting from capacity issues;

changes in manufacturing yields;

stock-based compensation charges primarily resulting from performance and market-based equity awards granted to our employees.

our sales, which because of our turns business, are difficult to accurately forecast;

the cancellation or rescheduling of our customers’ orders, which may occur withoutmaterially and adversely affected by significant penalty to our customers;

changespolitical, social and economic developments in general demand for electronic products as a result of worldwide macroeconomic conditions;

changesChina. A slowdown in revenue mix between OEMs, ODMs, distributors and value-added resellers;

changeseconomic growth in product mix, and actual and potential product liability;

changes in revenue mix between end market segments (i.e. consumer, computing and storage, industrial, automotive and communications);

our competition, whichChina could adversely impact our selling pricescustomers, prospective customers, suppliers, distributors and our potential sales;

our manufacturing costs, including our ability to negotiate with our vendors and our ability to efficiently run our test facilitypartners in China;

manufacturing capacity constraints;

level of activity in our legal proceedings,China, which could result in significant legal expenses;

the impact of the 2017 Tax Act on our income tax provision and cash flows; and,

stock-based compensation charges primarily resulting from performance and market-based equity awards granted to our employees;

our operating expenses, including general and administrative expenses, selling and marketing expenses, and research and development expenses relating to products that will not be introduced and will not generate revenue until later periods, if at all.

To the extent that we fail to timely introduce new products or to quickly penetrate new markets, our revenue and financial condition could be materially adversely affected.

We may face competition from customers developing products internally.

Our customers generally have substantial technological capabilities and financial resources. Some customers have traditionally used these resources to develop their own products internally. The future prospects for our products in these markets are dependent in part upon our customers' acceptance of our products as an alternative to their internally developed products. Future sales prospects also are dependent upon acceptance of third-party sourcing for products as an alternative to in-house development. Customers may in the future continue to use internally developed components. They also may decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products. If our customers fail to accept our products as an alternative, if they develop or acquire the technology to develop such components internally rather than purchase our products, or if we are otherwise unable to develop or maintain strong relationships with them, our business, financial condition and results of operations could be materially and adversely affected.

We derive most of our revenue from direct or indirect sales to customers in Asia and have significant operations in Asia, which may expose us to political, cultural, regulatory, economic, foreign exchange, and operational risks.

We derive most of our revenue from customers located in Asia through direct sales or indirect sales through distribution arrangements and value-added reseller agreements with parties located in Asia. As a result, we are subject to increased risks due to this geographic concentration of business and operations. For the year ended December 31, 2017, 89% of our revenue was from customers in Asia. There are risks inherent in doing business in Asia, and internationally in general, including:

If we fail to expand our customer base and significantly reduce the geographic concentration of our customers, we will continue to be subject to the foregoing risks, which could materially and adversely affect our revenue and financial condition.

We depend on a limited number of customers, including distributors, for a significant percentage of our revenue.

Historically, we have generated most of our revenue from a limited number of customers, including distributors. For example, sales to our largest distributor accounted for 17% of our total revenue for the year ended December 31, 2017. We continue to rely on a limited number of customers for a significant portion of our revenue. Because we rely on a limited number of customers for significant percentages of our revenue, a decrease in demand or significant pricing pressure for our products from any of our major customers for any reason (including due to competition, market conditions, catastrophic events or otherwise) could have a materially adverse impact on our financial conditions and results of operations.

We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act, or the FCPA. Our failure to comply with these laws could result in penalties which could harm our reputation and have a material adverse effect on our business, results of operations and financial condition.

We are subject to the FCPA, which generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits, along with various other anti-corruption laws. Although we have implemented policies and procedures designed to ensure that we, our employees and other intermediaries comply with the FCPA and other anti-corruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively all of the time or protect us against liability under the FCPA or other laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire. We have significant operations in Asia, which places us in frequent contact with persons who may be considered “foreign officials” under the FCPA, resulting in an elevated risk of potential FCPA violations. If we are not in compliance with the FCPA and other laws governing the conduct of business with government entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could have a material adverse impact on our business, financial condition, results of operations and liquidity. Any investigation of any potential violations of the FCPA or other anti-corruption laws by the U.S. or foreign authorities could harm our reputation and have an adverse impact on our business, financial condition and results of operations.

We receive a significant portion of our revenue from distribution arrangements, and value-added resellers, and direct customers, and the loss of any one of these distributors, value-added resellers or direct customers or failure to collect a receivable from them could adversely affect our operationsfinancial position and financial position.results of operations.

We market our products through distribution arrangements and value-added resellers, and through our direct sales and applications support organization to customers that include OEMs, ODMs and electronic manufacturing service providers (“EMSs”).EMS providers. Receivables from our customers are generally not secured by any type of collateral and are subject to the risk of being uncollectible. Sales to our largest distributor accounted for 17% of our total revenue for the year ended December 31, 2017. Significant deterioration in the liquidity or financial condition of any of oursuch major customers or any group of our customers could have a material adverse impact on the collectability of our accounts receivable and our future operating results. We primarily conductWhile we could partner with other distributors or value-added resellers to replace any of our salescustomers, the change in business partners could interrupt our operations and have a materially adverse impact on a purchase order basis,our business, financial condition and we do not have any long-term supply commitments. result of operations.

Moreover, we believe a high percentage of our products are eventually sold to a number of OEMs.OEMs and ODMs. Although we communicate with OEMs and/or ODMs in an attempt to achieve “design wins,” which are decisions by OEMs and/or ODMs to incorporate our products, we do not have purchase commitments from these end users. Therefore, there can be no assurance that the OEMs and/or ODMs will continue to incorporate our ICs into their products.products, even if we secure a design win. OEM technical specifications and requirements can change rapidly, and we may not have products that fit new specifications from an end-customerend customer for whom we have had previous design wins. We cannot be certain that we will continue to achieve design wins from large OEMs, that our direct customers will continue to be successful in selling to the OEMs, or that the OEMs will be successful in selling products which incorporate our ICs. The loss of any significant customer, any material reduction in orders by any of our significant customers or by their OEM customers, the cancellation of a significant customer order, or the cancellation or delay of a customer’scustomer’s or an OEM’s significant program or product could reduce our revenue and adversely affect our financial condition and results of operations and financial condition. operations. 

DueOur products must meet specifications, and undetected defects and failures may occur, which may cause customers to return or stop buying our products and may expose us to product liability risk.

Our customers generally establish demanding specifications for quality, performance, energy efficiency and reliability that our products must meet. ICs as complex as ours often encounter development delays and may contain undetected defects or failures when first introduced or after commencement of commercial shipments, which might require product replacement or recall. Further, our third-party manufacturing processes or changes thereto, or changes in the natureraw material used in the manufacturing processes may cause our products to fail. From time to time, we have experienced product quality, performance or reliability problems. Our standard warranty period is generally one to two years, which exposes us to significant risks of claims for defects and failures. If defects and failures occur in our products, we could experience lost revenue, increased costs, including warranty expense and costs associated with customer support, cancellations or rescheduling of orders or shipments, and product returns or discounts, any of which would harm our operating results.

In addition, product liability claims may be asserted by our customers. Although we currently have insurance, there can be no assurance that we have obtained a sufficient amount of insurance coverage or that asserted claims will be within the scope of coverage. Our insurance providers could deny or challenge these claims, and as a result, reimbursement to us is not guaranteed or could be delayed. If coverage is denied, we may not have sufficient resources to pay for these claims. Furthermore, due to recent changes in the insurance industry, we may experience a significant increase in premiums and therefore decide to self-insure, which may not meet the expectations or requirements of certain customers. All of these factors could have a material and adverse impact on our business, as a component supplier, we may have difficulty both in accurately predicting our future revenuefinancial condition and appropriately managing our expenses.results of operations.

Because we provide components for end products and systems, demandof the lengthy sales cycles for our products is influenced byand the fixed nature of a significant portion of our customers’ endexpenses, we may incur substantial expenses before we earn associated revenue and may not ultimately achieve our forecasted sales for our products.

The introduction of new products presents significant business challenges because product demand. development plans and expenditures may be made up to two years or more in advance of any sales. It generally takes us up to 12 months or more to design and manufacture a new product prototype. Only after we have a prototype do we introduce the product to the market and begin selling efforts in an attempt to achieve design wins. This sales process requires us to expend significant sales and marketing resources without any assurance of success. Volume production of products that use our ICs, if any, may not be achieved for an additional period of time after an initial sale. Sales cycles for our products are lengthy for a number of reasons, including:

As a result of our lengthy sales cycles, we may have difficulty in accurately forecastingincur substantial expenses before we earn associated revenue because a significant portion of our revenueoperating expenses is relatively fixed and expenses. Our revenue dependsbased on the timing, size, and speedexpected revenue. The lengthy sales cycles of commercial introductions of end products and systems that incorporate our products allalso make forecasting the volume and timing of which are inherently difficult to forecast, as well as the ongoing demand for previously introduced end products and systems.orders difficult. In addition, demand for our products is influenced by our customers’ abilitythe delays inherent in lengthy sales cycles raise additional risks that customers may cancel or change their orders, particularly as such customers are exposed to manage their inventory.economic risks in connection with the global economic downturn. Our sales are made by purchase orders. Because industry practice allows customers to distributors are subjectreschedule or cancel orders on relatively short notice, backlog is not always a good indicator of our future sales. If customer cancellations or product changes occur, we could lose anticipated sales and not have sufficient time to higher volatility because they service demand from multiple levels of the supply chain which, in itself, is inherently difficult to forecast. Ifreduce our customers, including distributors, do not manage their inventory correctly or misjudge their customers’ demand, our shipments to and orders from our customers may vary significantly on a quarterly basis.operating expenses.   

Risks Associated with Supply and Manufacturing

Our ability to increase product sales and revenuemay beconstrained by the manufacturing capacity of our suppliers.

Although we provide our suppliers with rolling forecasts of our production requirements, their ability to provide wafers to us is limited by the available capacity, particularly capacity in the geometries we require, at the facilities in which they manufacture wafers for us. For example, we believe the strong increase in industry-wide demand for electronic equipment for remote work arrangements as a result of the COVID-19 pandemic has resulted, and will continue to result, in capacity shortages of our suppliers. As a result, this lack of capacity has at times constrained our product sales and revenue growth. In addition, an increased need for capacity to meet internal demands or demands of other customers could cause our suppliers to reduce capacity available to us. Our suppliers may also require us to pay amounts in excess of contracted or anticipated amounts for wafer deliveries or require us to make other concessions in order to acquire the wafer supply necessary to meet our customer requirements. If our suppliers extend lead times, limit supplies or the types of capacity we require, or increase prices due to capacity constraints or other factors, our revenue and gross margin may materially decline. In addition, if we experience supply delays or limitations, our customers may reduce their purchase levels with us and/or seek alternative solutions to meet their demand, which could materially and adversely impact our business and results of operations. Delays in increasing third-party manufacturing capacity may also limit our ability to meet customer demand.

There may be unanticipated costs associated with adding toour third-party suppliers’ manufacturing capacity.

We anticipate that future growth of our business will require increased manufacturing capacity on the part of third-party supply foundries, assembly shops, and testing facilities for our products. In order to facilitate such growth, we may need to enter into strategic transactions, investments and other activities, both with our current suppliers and with new suppliers. Such activities are subject to a number of risks, including:

These and other risks may affect the ultimate cost and timing of any expansion of our third-party supplier capacity. If our manufacturing costs increase, including as a result of inflationary pressure, or we experience supply constraints, we may be required to raise the prices for our products to remain profitable, which could result in a loss of customers.

We currently depend on third-party suppliers to provide us with wafers for our products. If any of our wafer suppliers areacquired, becomeinsolvent or capacity constrained, andor are otherwiseunable and/or fail to provide us sufficient wafers at acceptable yields and at anticipated costs, our revenue and gross margin may decline or we may not be able to fulfill our customer orders.

We have a supply arrangementarrangements with certain suppliers for the production of wafers. Should any of our suppliers be acquired or become insolvent or capacity constrained, we may not be able to fulfill our customer orders, which would likely cause a decline in our revenue.

While certain aspects of our relationshiprelationships with these suppliers are contractual, many important aspects of this relationshipour relationships depend on our suppliers’suppliers’ continued cooperation and our management of the supplier relationships. Our relationships could also be negatively impacted by changes in control or changes in the management team of the suppliers. In addition, the fabrication of ICs is a highly complex and precise process. Problems in the fabrication process can cause a substantial percentage of wafers to be rejected or numerous ICs on each wafer to be non-functional. This could potentially reduce yields.yields and supply of our products. The failure of our suppliers to supply us wafers at acceptable yields could prevent us from fulfilling our customer orders for our products and would likely cause a decline in our revenue.  

In addition, adverse macroeconomic conditions, such as inflationary pressures resulting from worldwide supply chain constraints and other factors, have increased, and may continue to increase the prices we pay to our suppliers. As a result of the increased costs, we have raised, and may be required to further raise the prices of our products in order to remain profitable, which could result in a loss of customers and reduced revenue.

Further, as is common in the semiconductor industry, our customers may reschedule or cancel orders on relatively short notice. If our customers cancel orders after we submit a committed forecast to our suppliers for the corresponding wafers, we may be required to purchase wafers that we may not be able to resell, which would adversely affect our operatingfinancial condition, results financial conditionof operations and cash flows.

We might not be able to deliver our products on a timely basis if our relationships with our assembly and test subcontractors are disrupted or terminated.

We do not have direct control over product delivery schedules or product quality because all of our products are assembled by third-party subcontractors and a portion of our testing is currently performed by third-party subcontractors. Also, due to the amount of time typically required to qualify assembly and test subcontractors, we could experience delays in the shipment of our products if we were forced to find alternate third parties to assemble or test our products. In addition, events such as global economic crisesthe COVID-19 pandemic, the Russia-Ukraine conflict and supply chain disruptions may materially impact our assembly suppliers’ ability to operate. Any future product delivery delays or disruptions in our relationships with our subcontractors could have a material adverse effect on our operatingfinancial condition, results financial conditionof operations and cash flows. 

There may be unanticipated costs associated with adding to or supplementing our third-party suppliers’ manufacturing capacity.

We anticipate that future growth of our business will require increased manufacturing capacity on the part of third-party supply foundries, assembly shops, and testing facilities for our products. In order to facilitate such growth, we may need to enter into strategic transactions, investments and other activities. Such activities are subject to a number of risks, including:

These and other risks may affect the ultimate cost and timing of any expansion of our third-party suppliers’ capacity.

We purchase inventory in advance based on expected demand for our products, and if demand is not as expected, we may have insufficient or excess inventory, which could adversely impact our financial position.

As a fabless semiconductor company, we purchase our inventory from third-party manufacturers in advance of selling our products. We place orders with our manufacturers based on existing and expected orders from our customers for particular products. While most of our contracts with our customers and distributors include lead time requirements and cancellation penalties that are designed to protect us from misalignment between customer orders and inventory levels, we must nonetheless make some predictions when we place orders with our manufacturers. Some of our customers and distributors may nevertheless cancel orders as a result of the impacts of the global economic downturn, their own specific business challenges or for other reasons. In the event that our predictions are inaccurate due to unexpected increases in orders or unavailability of productproducts within the timeframe that is required, we may have insufficient inventory to meet our customers’ demands. In addition, a perceived negative trend in market conditions could lead us to decrease the manufacturing volume of our products to avoid excess inventory. If we inaccurately assess market conditions for our products, we would have insufficient inventory to meet our customer demands.demands resulting in lost potential revenue. In the event that we order products that we are unable to sell due to a decrease in orders, unexpected order cancellations, injunctions due to patent litigation, import/export restrictions or product returns, we may have excess inventory which, if not sold, may need to be written down or would result in a decrease in our revenue in future periods as the excess inventory at our distributors is sold. If any of these situations were to arise, it could have a material impact on our business, financial condition and financial position.results of operations.

The price and availability of commodities (e.g., gold, copper and silicon) may adversely impact our ability to deliver our products in a timely and cost-effective manner, and may adversely affect our business and results of operations.

Our products incorporate commodities such as gold, copper and silicon. An increase in the price or a decrease in the availability of these commodities and similar commodities that we use could negatively impact our business and results of operations.

Risks Associated with Industry Dynamics and Competition

The 2017 Tax Act is expected tohighly cyclical nature of the semiconductor industry, which has resulted in significant and sometimes prolonged downturns, could materially and adversely affect our financial condition and results of operations.

Historically, the semiconductor industry has been highly cyclical and, at various times, has experienced significant downturns and wide fluctuations in supply and demand. These conditions have caused significant effects on our income tax expense,variances in product demand and production capacity, as well as rapid erosion of average selling prices. The industry may again experience severe or prolonged downturns in the future, which could result in downward pressure on the price of our products as well as lower demand for our products. Because significant portions of our expenses are fixed in the short term or incurred in advance of anticipated sales, we may not be able to decrease our expenses in a timely manner to offset any sales shortfall. Any significant or prolonged downturns could have a material adverse impacteffect on our business, financial condition and results of operations.

Industry consolidation may lead to increased competition and may harm our operating results.

In recent years, there has been a trend toward semiconductor industry consolidation. We expect this trend to continue as companies attempt to improve the leverage of growing research and development costs, strengthen or hold their market positions in an evolving industry, or become unable to continue operations unless they find an acquirer or consolidate with another company. In addition, companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that semiconductor industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors of multiple products for customers. This could lead to more variability in our operating results and could have a material adverse effect on our business, financial condition and results of operations.

We compete against many companies with substantially greater financial and other resources, and our market share may be reduced if we are unable to respond to our competitors effectively.

The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit applications and design talent, our ability to introduce new products, and our ability to maintain the rate at which we introduce these new products. We compete with domestic and non-domestic semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products, and, in some cases, may have a broader number of product offerings that enable them to more effectively market and sell to customers and engage sales partners. We are in direct and active competition, with respect to one or more of our product lines, with many manufacturers of such products, of varying size and financial strength. The number of our competitors has grown due to the expansion of the market segments in which we participate.

We cannot assure you that our products will continue to compete favorably, or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering this market, which would materially and adversely affect our results of operations and our financial condition and cash flows.condition.

In December 2017,addition, from time to time, governments may provide subsidies or make other investments that could give competitive advantages to many semiconductor companies. For example, in August 2022, the 2017 TaxU.S. enacted the U.S. CHIPS and Science Act was enactedof 2022 (the “CHIPS Act”), which, among other things, provides funding to increase domestic production and includesresearch and development in the semiconductor industry. Because we operate a broad range of tax reforms, including changes to corporate tax rates,fabless business deductions and international tax provisions.model, we do not believe we will be eligible for such investments from the U.S. government. Many of our competitors will benefit from the investments, which will help increase their production capacity, shorten their lead time and gain market share. These competitive pressures could materially and adversely affect our business, financial condition and results of operations.

We may face competition from customers developing products internally.

Our customers generally have substantial technological capabilities and financial resources. Some customers have traditionally used these provisions significantly differ from prior U.S. tax law, resultingresources to develop their own products internally. The future prospects for our products in material tax accounting implications for us. Some of the significant new requirements include, butthese markets are not limited to, a one-time mandatory deemed repatriation transition tax on previously deferred foreign earnings, a remeasurementdependent in part upon our customers’ acceptance of our deferred taxes dueproducts as an alternative to their internally developed products. Future sales prospects also are dependent upon acceptance of third-party sourcing for products as an alternative to in-house development. Customers may continue to increase their use of internally developed components. They may also decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products. If our customers fail to accept our products as an alternative, if they develop or acquire the changetechnology to develop such components internally rather than purchase our products, or if we are otherwise unable to develop or maintain strong relationships with them, our business, financial condition and results of operations could be materially and adversely affected.

Risks Associated with Information Technology (“IT”) and Cybersecurity

Implementation of enhanced enterprise resource planning (“ERP”) or other IT systems could result in the corporate tax rate, taxation of certain global intangible low-taxed income under the international tax provisions, and limitations on the deductibility of performance-based compensation for officers. Somesignificant disruptions to our operations.

From time to time, we may implement new ERP software solutions or upgrade existing systems. Implementation of these provisions, suchsolutions and systems is highly dependent on coordination of system providers and internal business teams. We may experience difficulties as the deemed repatriationwe transition taxto these new or upgraded systems and remeasurement of deferred tax assets, had immediate accounting implications which resultedprocesses, including system downtime causing interruptions in a significant increase in our tax expenses for the year ended December 31, 2017. As we continue to evaluate the potential implications of the 2017 Tax Act on our financial statements, any increase in our income tax expense in future periods could have a material negative impact on our results ofbusiness operations. In addition, the deemed repatriation transition tax liability, which will be payable over eight years, will adversely impacttransitioning to these new systems requires significant capital investments and personnel resources. Difficulties in implementing new or upgraded information systems or any significant system failures could disrupt our cash flowsoperations and financial condition in future periods. Any changes to our corporate tax planning and strategies as a result of the 2017 Tax Act may not result in a favorable impact on our income tax expense in future periods.

The calculation of the tax impact and exposures under the 2017 Tax Act is complex. It requires the collection of information not regularly produced by us, the use of estimates and the exercise of significant judgment in determining our tax provision. As regulations and guidance evolve with respect to the 2017 Tax Act, and as we gather more information and perform more analysis, our results may differ from previous estimates and may materially affect our financial position. Furthermore, we will need to evaluate whether changes to our existing processes and controls are necessary to address the financial reporting, effects. If we fail to correctly interpret the tax law or implement effective internal controls on gathering, analyzing and reviewing data used in our calculations, our income tax provision could be misstated, which could have a material adverse effect on our capital resources, financial condition or results of operations. 

System security risks, data protection or privacy breaches, cyberattacks and systems integration issues could disrupt our internal operations and/or harm our reputation, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Experienced hackers may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution, financial reporting or other critical functions.

In the ordinary course of business, we store sensitive data on our internal systems, network and servers, such as proprietary business and financial information, and confidential data pertaining to our customers, suppliers and business partners. Maintaining security of sensitive information on our networks and the protection features of our solutions are both critical to our operations and business strategy. We devote significant resources to network security, data encryption, and other security measures to protect our systems and data. However, these security measures cannot provide absolute security. Although we make significant efforts to maintain the security and integrity of our systems and solutions, any destructive or intrusive breach could compromise our networks, creating system disruptions or slowdowns, and the information stored on our networks could be accessed, publicly disclosed, lost or stolen. Remote working arrangements and the Russia-Ukraine conflict have also heightened our potential exposure to cyberattacks, which could put the sensitive proprietary and financial information we store on our internal systems at risk. If any of these types of security breaches were to occur and we were unable to protect sensitive data, our reputation and relationships with our business partners and customers could be materially harmed, and we could be exposed to risks of litigation and possible significant liability.

Portions of our IT infrastructure may also experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and our remediation efforts may be expensive, time consuming, disruptive and resource-intensive. Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed sales or a loss of customers resulting from these disruptions could adversely affect our financial results, stock price and reputation.

Unauthorized use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of our suppliers or vendors by an unauthorized party, or through employee error, theft or misuse, or otherwise, could harm our business. If any such unauthorized use or disclosure of, or access to, such personal information was to occur, our operations could be seriously disrupted, and we could be subject to demands, claims and litigation by private parties, and investigations, related actions, and penalties by regulatory authorities. In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of foreign, federal, state and local laws and regulations relating to the unauthorized access to, or use or disclosure of, personal information. Finally, any perceived or actual unauthorized access to, or use or disclosure of, such information could harm our reputation and substantially impair our ability to attract and retain customers, which could have an adverse impact on our business, financial condition and results of operations.

We are subject to various U.S. and international laws, policies and other regulations regarding data protection.

Privacy, cyber security, and data protection are becoming increasingly significant issues in China and other countries. To address these issues, the Standing Committee of the National People’s Congress promulgated the Cyber Security Law of the People’s Republic of China (the “Cyber Security Law”), which took effect on June 1, 2017. The Cyber Security Law sets forth various requirements relating to the collection, use, storage, disclosure and security of data, among other things. On June 10, 2021, the National People’s Congress passed the Data Security Law of the People’s Republic of China (the “Data Security Law”), which became effective on September 1, 2021. The Data Security Law is the first comprehensive data security legislation in China, which becomes a key supplement to the Cyber Security Law and aims to regulate a wide range of issues in relation to the collection, storage, processing, use, provision, transaction and publication of any kind of data. Various Chinese agencies are expected to issue additional regulations in the future to define these requirements more precisely. For example, the Personal Information Protection Law (“PIPL”), took effect on November 1, 2021. PIPL is aimed at protecting and controlling the use and transfer of personal data in China. Given its recent passage, there is significant uncertainty in how regulators will interpret and enforce the law, but it contains provisions that allow substantial government oversight and include fines for failure to obtain required approval from China’s cyber and data protection regulators for cross-border transfers of personal data.

Effective May 25, 2018, the European Union (“EU”) implemented the General Data Protection Regulation (“GDPR”), a broad data protection framework that expands the scope of current EU data protection law to non-European Union entities that process, or control the processing of, the personal data of EU subjects. The GDPR allows for the imposition of fines and corrective action on entities that improperly use, disclose or secure the personal data of EU subjects, including through a data security breach. In addition, an increasing number of states in the U.S. have enacted laws containing similar requirements to GDPR for businesses collecting or processing personal data. For example, the State of California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which was significantly amended by the California Privacy Rights Act, and sets forth comprehensive privacy and security obligations regarding the collection and processing of personal data of eligible California residents.

These regulatory requirements may increase our costs of compliance. Any failure to fully comply with the Cyber Security Law, the Data Security Law, PIPL, GDPR, CCPA, and other applicable laws and regulations could lead to significant fines and regulatory corrective actions, along with reputational damage or third-party lawsuits, which could adversely affect our business and results of operations. In addition, data security breaches experienced by us could result in the loss of trade secrets or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personal data (including sensitive personal data) of our employees, customers, suppliers and others. Such incidents could subject us to significant monetary damages, regulatory enforcement actions and/or criminal prosecution, and cause us to lose clients and their related revenue in the future.

Risks Associated with Strategic Investments and Initiatives

Our success depends on our investment of significant resources in research and development. We may have to invest more resources in research and development than anticipated, which could increase our operating expenses and negatively impact our operating results.

Our success depends on us investing significant amounts of resources into research and development. We expect to continue investing heavily in research and development in the future in order to continue to innovate and introduce new products in a timely manner and increase our revenue and profitability. Increased investments in research and development will increase our operating expenses, which may negatively impact our operating results, and we may not achieve the return on these investments that we anticipate, or be able to reduce such expenses in a timely manner if we experience a downturn in sales. Also, if we are unable to properly manage and effectively utilize our research and development resources, we could see material adverse effects on our business, financial condition and operating results.

In addition, if new competitors, technological advances by existing competitors, our entry into new markets, or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses would increase further. If we are required to invest significantly greater resources than anticipated in research and development efforts without a corresponding increase in revenue, our operating results could decline. Research and development expenses are likely to fluctuate from time to time to the extent we make periodic incremental investments in research and development and these investments may be independent of our level of revenue, which could negatively impact our financial results. In order to remain competitive, we anticipate that we will continue to devote substantial resources to research and development, and we expect these expenses to increase in absolute dollars in the foreseeable future due to the increased complexity and the greater number of products under development.

We maynot realize the anticipated benefits of any company or business that we acquire. In addition,acquisitionscould result in dilutingthe ownership interests of our stockholders, reduce our cash balances,and cause us to incur debt or to assume contingent liabilities, whichcould adversely affect our business.

As part of our business strategy, from time to time we review acquisition prospects that would complement our current product offerings, enhance our design capability or offer other competitive opportunities. As a result of completing acquisitions, we could use a significant portion of our available cash, cash equivalents and short-term investments, issue equity securities that would dilute current stockholders’ percentage ownership, or incur substantial debt or contingent liabilities. Such actions could impact our operating results and the price of our common stock. 

In addition, we may be unable to identify or complete prospective acquisitions for various reasons, including competition from other companies in the semiconductor industry, the valuation expectations of acquisition candidates and applicable antitrust or other policies, laws or regulations. If we are unable to identify and complete acquisitions, we may not be able to successfully expand our business and product offerings.

We cannot guarantee that any future acquisitions will improve our results of operations or that we will otherwise realize the anticipated benefits of any acquisitions. In addition, if we are unsuccessful in integrating any acquired company or business into our operations or if integration is more difficult than anticipated, we may experience disruptions that could harm our business and financial condition.result in our failure to realize the anticipated benefits of the acquisitions. Some of the risks that may adversely affect our ability to integrate or realize any anticipated benefits from the acquired companies, businesses or assets include those associated with:

Alternatively, third parties may be interested in acquiring us. We will continue to consider, evaluate and negotiate any such transactions as our board of directors deems appropriate and in the best interest of our stockholders. Such potential transactions may divert the attention of management, and cause us to incur various costs and expenses in investigating, evaluating and negotiating such transactions, whether or not they are consummated.

Risks Associated with Financial Reporting

The complexity of calculating our tax provision may result in errors that could result in restatements of our financial statements.

Due to the complexity associated with the calculation of our tax provision, including the effects of the 2017 Tax Act,enactment of new tax laws, we engage third-party tax advisors to assist us in the calculation. If we or our tax advisors fail to resolve or fully understand certain issues that we may have had in the past and issues that may arise in the future, we could be subject to errors, which, if material, would result in us having to restate our financial statements. Restatements are generally costly and could adversely impact our results of operations, damage our reputation, and/or have a negative impact on the trading price of our common stock.  

Changes in effective tax rates or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.results of operations.

Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets, and liabilities, or by changes in tax laws, such as the 2017 Tax Act, regulations, accounting principles or interpretations thereof and discrete items such as future exercises or dispositions of stock options and restricted stock releases.items. In addition, we are subject to potential future examinations of our income tax returns by the Internal Revenue Service (“IRS”(the “IRS”) and other tax authorities. For example, our U.S. federal income tax returns for the years ended December 31, 2005 through December 31, 2007 were examined by the IRS. We reached a resolution with the IRSauthorities in April 2015 and recorded a one-time net charge of $2.7 million to our income tax provision in the second quarter of 2015.various jurisdictions where we have business operations. We assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from any examinations will not have an adverse effect on our operatingfinancial condition and results and financial condition.of operations.

ImplementationOur international operations subject us to potentially significanttax consequences, which couldadversely affect our results of an enterprise resource planning (“ERP”)operations.

We conduct our international operations through wholly-owned subsidiaries, branches and representative offices and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Such corporate structures are subject to complex transfer pricing, permanent establishment challenges and other local regulations administered by taxing authorities in various jurisdictions. The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our positions were not sustained, we could be required to pay additional taxes, interest and penalties, resulting in higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Additionally, our future worldwide tax rate and financial position may be affected by changes in the relevant tax laws, interpretation of such tax laws or the influence of certain tax policy efforts, including in the EU and the Organization for Economic Cooperation and Development.

We face risks in connection with our internal control over financial reporting.

Effective internal control over financial reporting is necessary for us to provide reliable and accurate financial reports. If we cannot provide reliable financial reports or prevent fraud or other information technology systemsfinancial misconduct, our business and operating results could be harmed. Our failure to implement and maintain effective internal control over financial reporting could result in significant disruptionsa material misstatement of our financial statements or otherwise cause us to fail to meet our operations.financial reporting obligations. This, in turn, could result in a loss of investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our results of operations and/or have a negative impact on our reputation and the trading price of our common stock, and could subject us to stockholder litigation. In addition, we cannot assure you that we will not in the future identify material weaknesses in our internal control over financial reporting, which may impact the reliability of our financial reporting and financial statements. 

From timeRisks Associated with Regulatory Compliance, Intellectual Property Protection and Litigation

We are subject to time,anti-corruption laws in the jurisdictions in which we may implement new ERP software solutions or upgrade existing systems. Implementation ofoperate, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) and the U.K. Bribery Act. Our failure to comply with these solutions and systems is highly dependent on coordination of system providers and internal business teams. We may experience difficulties as we transition to these new or upgraded systems and processes, including loss or corruption of financial, business or customer data. In addition, transitioning to these new systems requires significant capital investments and personnel resources. Difficultieslaws could result in implementing new or upgraded information systems or significant system failures could disrupt our operations,penalties which could harm our reputation and have a material adverse effect on our capital resources,business, financial condition and results of operations.

We are subject to the FCPA, the U.K. Bribery Act and various anti-corruption laws of other jurisdictions, which generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. Although we have implemented policies and procedures designed to ensure that we, our employees and other intermediaries comply with the FCPA, the U.K. Bribery Act and other anti-corruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively all of the time or protect us against liability under these laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire. We have significant operations in Asia, which place us in frequent contact with persons who may be considered “foreign officials” under the FCPA or other anti-corruption laws, resulting in an elevated risk of potential violations. If we are not in compliance with the FCPA and other laws governing the conduct of business with government entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, including restatements of our financial reports, which could have a material adverse impact on our business, financial condition, results of operations and liquidity. Any investigation or allegations of any potential violations of the FCPA or other anti-corruption laws by the U.S. or foreign authorities could harm our reputation and have an adverse impact on our business, financial condition and results of operations.

Our business is subject to various governmental laws and regulations, and compliance withthese regulations may impact our revenue and cause us to incur significant expense. If we fail to maintaincompliance with applicable regulations or obtain government licenses and approvals for our desired international trading activities or technology transfers, we may be forced to recall products and ceasetheir distribution, and we could be subject to civil or criminalpenalties.

System security risks, data protectionOur business is subject to various significant laws and other legal requirements imposed by the U.S. and other countries we conduct business in, including export control laws such as the Export Administration Act, the Export Administration Regulations and other laws, regulations and requirements governing international trade and technology transfer. These laws and regulations are complex, change frequently and have generally become more stringent over time. We may be required to incur significant expense to comply with these regulations or privacy breaches, cyber attacks and systems integration issuesto remedy violations of these regulations. In addition, if our customers fail to comply with these regulations, we may be required to suspend sales to these customers, which could disrupt our internal operations and/or harm our reputation, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operationoperations. We must conform the manufacture and distribution of our products to various laws and adapt to regulatory requirements in many countries as these requirements change. If we fail to comply with these requirements in the manufacture or otherwisedistribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products commercially until the products are brought into compliance.

Environmental laws and regulations could cause a disruption in our business and operations.

We are subject to various foreign, federal, state and local laws and regulations that govern the environment, including those restricting the presence of certain substances in electronic products and making manufacturers of those products financially responsible for the collection, treatment, recycling and disposal of certain products. Such laws and regulations have been passed in several jurisdictions in which we operate, including various EU member countries and countries in Asia. There can be no assurance that similar laws and regulations will not be implemented in other jurisdictions resulting in additional costs, possible delays in delivering products, and even the discontinuance of existing and planned future products if the costs were to become prohibitive.

We are subject to increasing regulatory and reporting standards related to ESG matters, which could increase our expenses.

Recently, there has been an increase in public awareness from regulators, investors and other key stakeholders focusing on ESG compliance efforts, including those related to environmental sustainability and social responsibility. For example, the SEC has proposed a new rule that would require public companies to provide detailed reporting of their climate-related risks, emissions, and net-zero transition plans, and many of our customers routinely include stringent environmental and other non-standard compliance requirements in their contracts with us. While we are fully committed to making our business sustainable and keeping our stakeholders engaged by maintaining strong ESG strategies, practices, processes, policies and disclosures, there can be no assurance that we will be able to achieve our goals, or that our compliance initiatives will be deemed sufficiently robust by regulators and other key stakeholders. Furthermore, our compliance efforts, including the collection, assessment and reporting of ESG data, are subject to evolving reporting standards and can be costly, complex and time-consuming. In addition, climate change concerns and the potential associated environmental impact could result in the proposal and passage of additional laws and regulations in various jurisdictions that may affect us, our suppliers and customers. Such laws and regulations could cause us to incur additional compliance costs, and failure to comply with the regulatory standards in a timely manner could result in penalties and fines. These operational, legal, compliance and other risks could damage our reputation and materially and adversely affect our stock price.

Experienced computer programmersbusiness, financial condition and hackers may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution or other critical functions.

In the ordinary courseresults of business, we store sensitive data on our internal systems, network and servers, such as proprietary business and financial information, and confidential data pertaining to our customers, suppliers and business partners. The secure maintenance of sensitive information on our networks and the protection features of our solutions are both critical to our operations and business strategy. We devote significant resources to network security, data encryption, and other security measures to protect our systems and data. However, these security measures cannot provide absolute security.  Although we make significant efforts to maintain the security and integrity of our systems and solutions, any destructive or intrusive breach could compromise our networks, creating system disruptions or slowdowns, and the information stored on our networks could be accessed, publicly disclosed, lost or stolen. If any of these types of security breaches were to occur and we were unable to protect sensitive data, our relationships with our business partners and customers could be materially damaged, our reputation could be materially harmed, and we could be exposed to a risk of litigation and possible significant liability.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and our remediation efforts may be expensive, time consuming, disruptive and resource-intensive. Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed sales or lost customers resulting from these disruptions could adversely affect our financial results, stock price and reputation.operations.

If we are unsuccessful in legal proceedings brought against us or any of our customers, we could be prevented from selling many of our products and/or be required to pay substantial damages. An unfavorable outcome or an additional award of damages, attorneys’ fees or an injunction could cause our revenue to decline significantly and could severely harm our business and operating results.

From time to time, we are a party to various legal proceedings. If we are not successful in litigation that could be brought against us or our customers, we could be ordered to pay monetary fines and/or damages. If we are found liable for willful patent infringement, damages could be significant. We and/or our customers could also be prevented from selling some or all of our products. Moreover, our customers and end-usersend users could decide not to use our products, and our products and our customers’customers’ accounts payable to us could be seized. Finally, interim developments in these proceedings could increase the volatility in our stock price as the market assesses the impact of such developments on the likelihood that we will or will not ultimately prevail in these proceedings. Even if resolved favorably, such proceedings can be very expensive and time consuming, and may divert management’s attention from other business operations.

Given our inability to control the timing and nature of significant events in our legal proceedings that either have arisen or may arise, our legal expenses are difficult to forecast and may vary substantially from our publicly disclosed forecasts with respect to any given quarter, which could contribute to increased volatility in our stock price and financial condition.

Historically, we have incurred significant expenses in connection with various legal proceedings that vary with the level of activity in the proceeding. It is difficult for us to forecast our legal expenses for any given quarter, which adversely affects our ability to forecast our expected results of operations in general. We may also be subject to unanticipated legal proceedings, which would result in us incurring unexpected legal expenses. If we fail to meet the expectations of securities or industry analysts as a result of unexpected changes in our legal expenses, our stock price could be materially impacted.and adversely affected.

Future legal proceedings may divert our financial and management resources.

The semiconductor industry is characterized by frequent claims of infringement and litigation regarding patent and other intellectual property rights. Patent infringement is an ongoing risk, in part because other companies in our industry could have patent rights that may not be identifiable when we initiate development efforts. Litigation may be necessary to enforce our intellectual property rights, and we may have to defend ourselves, and in some circumstances our key customers or suppliers, against additional infringement claims. Such litigation is very costly. In the event any third party makes a new infringement claim against us or our customers, we could incur additional ongoing legal expenses. In addition,Further, in connection with these legal proceedings, we may be required to post bonds to defend our intellectual property rights in certain countries for an indefinite period of time, until such dispute is resolved. If our legal expenses materially increase or exceed anticipated amounts, our capital resources and financial condition could be adversely affected. Further, ifIf we are not successful in any of our intellectual property defenses, we may have to cease production of certain products, design around such technologies, or pay royalty payments, any of which could harm our financial condition could be adversely affected and our business could be harmed.business. Our management team may also be required to devote a great deal of time effort and energyeffort to these legal proceedings, which could divert management’smanagement’s attention from focusing on our operations, andwhich could adversely affect our business.

Failure to protect our proprietary technologies or maintain the right to certain technologies may negatively affect our ability to compete.

We rely heavily on our proprietary technologies. Our future success and competitive position depend in part upon our ability to obtain and maintain protection of certain proprietary technologies used in our products. We pursue patents for some of our new products and unique technologies, and we also rely on a combination of nondisclosure agreements and other contractual provisions, as well as our employees’employees’ commitment to confidentiality and loyalty, to protect our technology, know-how and processes. Despite the precautions we take, it may be possible for unauthorized third parties to copy aspects of our current or future technologies or products, or to obtain and use information that we regard as proprietary. We intend to continue to protect our proprietary technologies, including through patents. However, there can be no assurance that the steps we take will be adequate to protect our proprietary rights, that our patent applications will lead to issued patents, that others will not develop or patent similar or superior products or technologies, or that our patents will not be challenged, invalidated or circumvented by others. Furthermore, the laws of the countries in which our products are or may be developed, manufactured or sold may not protect our products and intellectual property rights to the same extent as laws in the United States. Our failure to adequately protect our proprietary technologies could materially harm our business. 

Risks Associated with Human Capital Management

The market for government-backed student loan auction-rate securities has suffered a decline in liquidity which may impact the liquidity and potential value of our investment portfolio.

The market for government-backed student loan auction-rate securities became illiquid in 2008. Since 2008, we have redeemed 87% of the original portfolio of our auction-rate securities at par and continue to hold $5.6 million in principal amount as of December 31, 2017. It is unclear as to when the remaining balance of our auction-rate securities will regain their liquidity. The underlying maturity of these auction-rate securities is up to 30 years. We have historically recorded temporary and other-than-temporary impairment charges on these investments. The valuation is subject to fluctuations in the future, which will depend on many factors, including the quality of underlying collateral, estimated time for liquidity including potential to be called or restructured, underlying final maturity, insurance guaranty and market conditions, among others. Should there be further deterioration in the market for auction-rate securities, the value of our portfolio may decline, which may have an adverse impact on our cash position and our earnings. If the accounting rules for these securities change, there may be an adverse impact on our earnings.  

We face risks in connection with our internal control over financial reporting.

Effective internal control over financial reporting is necessary for us to provide reliable and accurate financial reports. If we cannot provide reliable financial reports or prevent fraud or other financial misconduct, our business and operating results could be harmed. Our failure to implement and maintain effective internal control over financial reporting could result in a material misstatement of our financial statements or otherwise cause us to fail to meet our financial reporting obligations. This, in turn, could result in a loss of investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our results of operations and/or have a negative impact on the trading price of our common stock, and could subject us to stockholder litigation. In addition, we cannot assure you that we will not in the future identify material weaknesses in our internal control over financial reporting that we have not discovered to date, which may impact the reliability of our financial reporting and financial statements. 

Our products must meet specifications, and undetected defects and failures may occur, which may cause customers to return or stop buying our products and may expose us to product liability risk.

Our customers generally establish demanding specifications for quality, performance, and reliability that our products must meet. ICs as complex as ours often encounter development delays and may contain undetected defects or failures when first introduced or after commencement of commercial shipments, which might require product replacement or recall. Further, our third-party manufacturing processes or changes thereof, or raw material used in the manufacturing processes may cause our products to fail. We have from time to time in the past experienced product quality, performance or reliability problems. Our standard warranty period is generally one to two years, which exposes us to significant risks of claims for defects and failures. If defects and failures occur in our products, we could experience lost revenue, increased costs, including warranty expense and costs associated with customer support, cancellations or rescheduling of orders or shipments, and product returns or discounts, any of which would harm our operating results.

In addition, product liability claims may be asserted with respect to our technology or products. Although we currently have insurance, there can be no assurance that we have obtained a sufficient amount of insurance coverage, that asserted claims will be within the scope of coverage of the insurance, or that we will have sufficient resources to satisfy any asserted claims.

The price and availability of commodities (e.g., gold, copper and silicon) may adversely impact our ability to deliver our products in a timely and cost-effective manner, and may adversely affect our business and results of operations.

Our products incorporate commodities such as gold, copper and silicon. An increase in the price or a decrease in the availability of these commodities and similar commodities that we use could negatively impact our business and results of operations.

Fluctuations in the value of the U.S. Dollar relative to other foreign currencies, including the Renminbi, may adversely affect results of operations.

Our manufacturing and packaging suppliers are and will continue to be primarily located in China for the foreseeable future. If the value of the Renminbi rises against the U.S. Dollar, there could be an increase in our manufacturing costs relative to competitors who have manufacturing facilities located in the U.S., which could adversely affect our operations. In addition, our sales are primarily denominated in the U.S. Dollar. If the value of the U.S Dollar rises against other currencies, it may adversely affect the demand for our products in international markets, which could negatively impact our business and results of operations.

We incur foreign currency exchange gains or losses related to the timing of payments for transactions between the U.S. and our foreign subsidiaries, which are reported in interest and other income in the statements of operations. Fluctuations in the value of the U.S. Dollar relative to the foreign currencies could increase the amount of foreign currency exchange losses we record, which could have an adverse impact on our results of operations.

Our business is subject to various governmental laws and regulations, and compliance with these regulations may impact our revenue and cause us to incur significant expense. If we fail to maintain compliance with applicable regulations, we may be forced to recall products and cease their distribution, and we could be subject to civil or criminal penalties.

Our business is subject to various significant laws and other legal requirements imposed by the U.S. and other countries we conduct business with, including export control laws such as the U.S. Export Administration Regulations. These laws and regulations are complex, change frequently and have generally become more stringent over time. We may be required to incur significant expense to comply with these regulations or to remedy violations of these regulations. In addition, if our customers fail to comply with these regulations, we may be required to suspend sales to these customers, which could negatively impact our results of operations. We must conform the manufacture and distribution of our products to various laws and adapt to regulatory requirements in many countries as these requirements change. If we fail to comply with these requirements in the manufacture or distribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products commercially until the products are brought into compliance.

Environmental laws and regulations could cause a disruption in our business and operations.

We are subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products and making manufacturers of those products financially responsible for the collection, treatment, recycling and disposal of certain products. Such laws and regulations have been passed in several jurisdictions in which we operate, including various European Union member countries and countries in Asia. There can be no assurance that similar laws and regulations will not be implemented in other jurisdictions resulting in additional costs, possible delays in delivering products, and even the discontinuance of existing and planned future product replacements if the cost were to become prohibitive.

We and our manufacturing partners are or will be subject to extensive Chinese government regulation, and the benefit of various incentives from Chinese governments that we and our manufacturing partners receive may be reduced or eliminated, which could increase our costs or limit our ability to sell products and conduct activities in China.

We have manufacturing and testing facilities in China and most of our manufacturing partners are located in China. The Chinese government has broad discretion and authority to regulate the technology industry in China. Additionally, China’s government has implemented policies from time to time to regulate economic expansion in China. It exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

Personal privacy, cyber security, and data protection are becoming increasingly significant issues in China. To address these issues, the Standing Committee of the National People’s Congress promulgated the Cyber Security Law of the People’s Republic of China (the “Cyber Security Law”), which took effect on June 1, 2017. The Cyber Security Law sets forth various requirements relating to the collection, use, storage, disclosure and security of data, among other things. Various Chinese agencies are expected to issue additional regulations in the future to define these requirements more precisely. These requirements may increase our costs of compliance. We cannot assure you that we will be able to comply with all of these regulatory requirements.Any failure to comply with the Cyber Security Law and the relevant regulations and policies could result in further cost and liability to us and could adversely affect our business and results of operations. Additionally, increased costs to comply with, and other burdens imposed by, the Cyber Security Law and relevant regulations and policies that are applicable to the businesses of our suppliers, vendors and other service providers, as well as our customers, could adversely affect our business and results of operations.

Any additional new regulations or the amendment or modification of previously implemented regulations could require us and our manufacturing partners to change our business plans, increase our costs, or limit our ability to sell products and conduct activities in China, which could adversely affect our business and operating results.

The Chinese government and provincial and local governments also have provided, and continue to provide, various incentives to encourage the development of the semiconductor industry in China. Such incentives include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to our manufacturing partners and to us with respect to our facilities in China. Any of these incentives could be reduced or eliminated by governmental authorities at any time. Any such reduction or elimination of incentives currently provided to our manufacturing partners could adversely affect our business and operating results. 

There are inherent risks associated with the operation of our manufacturing and testing facilities in China, which could increase product costs or cause a delay in product shipments.

We have manufacturing and testing facilities in China that began operations in 2006. We face the following risks, among others, with respect to our operations in China:

If we are unable to maintain our facilities in China at fully operational status with qualified workers, appropriate manufacturing controls and reasonable cost levels, we may incur higher costs than our current expense levels, which would affect our gross margins. In addition, if capacity restraints result in significant delays in product shipments, our business and results of operations would be adversely affected.

The average selling prices of products in our markets have historically decreased over time and could do so in the future, which could harm our revenue and gross profits.

Average selling prices of semiconductor products in the markets we serve have historically decreased over time. Our gross profits and financial results will suffer if we are unable to offset any reductions in our average selling prices by reducing our costs, developing new or enhanced products on a timely basis with higher selling prices or gross profits, or increasing our sales volumes. Additionally, because we do not operate our own wafer manufacturing or assembly facilities, we may not be able to reduce our costs as rapidly as companies that operate their own facilities, and our costs may even increase, which could also reduce our profit margins.

Because of the lengthy sales cycles for our products and the fixed nature of a significant portion of our expenses, we may incur substantial expenses before we earn associated revenue and may not ultimately achieve our forecasted sales for our products.

The introduction of new products presents significant business challenges because product development plans and expenditures may be made up to two years or more in advance of any sales. It generally takes us up to 12 months or more to design and manufacture a new product prototype. Only after we have a prototype do we introduce the product to the market and begin selling efforts in an attempt to achieve design wins. This sales process requires us to expend significant sales and marketing resources without any assurance of success. Volume production of products that use our ICs, if any, may not be achieved for an additional period of time after an initial sale. Sales cycles for our products are lengthy for a number of reasons, including:

As a result of our lengthy sales cycles, we may incur substantial expenses before we earn associated revenue because a significant portion of our operating expenses is relatively fixed and based on expected revenue. The lengthy sales cycles of our products also make forecasting the volume and timing of orders difficult. In addition, the delays inherent in lengthy sales cycles raise additional risks that customers may cancel or change their orders. Our sales are made by purchase orders. Because industry practice allows customers to reschedule or cancel orders on relatively short notice, backlog is not always a good indicator of our future sales. If customer cancellations or product changes occur, we could lose anticipated sales and not have sufficient time to reduce our inventory and operating expenses.   

Our success depends on our investment of significant resources in research and development. We may have to invest more resources in research and development than anticipated, which could increase our operating expenses and negatively impact our operating results.

Our success depends on us investing significant amounts of resources into research and development. We expect to have to continue to invest heavily in research and development in the future in order to continue to innovate and introduce new products in a timely manner and increase our revenue and profitability. If we have to invest more resources in research and development than we anticipate, we could see an increase in our operating expenses which may negatively impact our operating results. Also, if we are unable to properly manage and effectively utilize our research and development resources, we could see material adverse effects on our business, financial condition and operating results.

In addition, if new competitors, technological advances by existing competitors, our entry into new markets, or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses would increase. If we are required to invest significantly greater resources than anticipated in research and development efforts without a corresponding increase in revenue, our operating results could decline. Research and development expenses are likely to fluctuate from time to time to the extent we make periodic incremental investments in research and development and these investments may be independent of our level of revenue, which could negatively impact our financial results. In order to remain competitive, we anticipate that we will continue to devote substantial resources to research and development, and we expect these expenses to increase in absolute dollars in the foreseeable future due to the increased complexity and the greater number of products under development.

The loss of any of our key personnel or the failure to attract or retain specialized technical and management personnel couldaffect our operations orimpair our ability to grow our business.

Our future success depends upon our ability to attract and retain highly qualified technical and managerial personnel. We are particularly dependent on the continued services of our key executives, including Michael Hsing, our President and Chief Executive Officer, who founded our company and developed our proprietary process technology. In addition, personnel with highly skilled analog and mixed-signal design engineering expertise are scarce and competition for personnel with these skills is intense. There can be no assurance that we will be able to retain existing key employees or that we will be successful in attracting, integrating or retaining other highly qualified personnel with critical capabilities in the future. If we are unable to retain the services of existing key employees or are unsuccessful in attracting new highly qualified employees quickly enough to meet the demands of our business, including design cycles, our business could be harmed. Furthermore, if we lose key personnel, the search for a qualified replacement and the transition could interrupt our operations as the search could take us longer than expected and divert management resources, and the newly hired employee could take longer than expected to effectively integrate into the team.

If we fail to retainkey employees in our sales, applications, finance and legal stafffunctions or to make continued improvements to our internal systems, particularly in the accounting and finance area, our business may suffer.

If we fail to continue to adequately staff our sales, applications, financial and legal staff,positions, maintain or upgrade our business systems and maintain internal control that meet the demands of our business, our ability to operate effectively will suffer. The operation of our business also depends upon our ability to retain these employees, as these employees hold a significant amount of institutional knowledge about us and our products and, if they were to terminate their employment, our sales, operations and internal control over financial reporting could be adversely affected.

We intend to continue to expand our operations, which may strain our resources and increase our operating expenses.

We plan to continue to expand our domestic and foreign operations through internal growth, strategic relationships, and/or acquisitions. We expect that any such expansion will strain our systems and operational and financial controls. In addition, we are likely to incur significantly higher operating costs. To manage our growth effectively, we must continue to improve and expand our systems and controls, as well as hire experienced administrative and financial personnel. If we fail to do so, our growth will be limited. If we fail to effectively manage our planned expansionRisks Associated with Ownership of operations, our business and operating results may be harmed.Our Stock

We may not realize the anticipated benefits of any company or business that we acquire. In addition, acquisitions could result in diluting the ownership interests of our stockholders, reduce our cash balances, and cause us to incur debt or to assume contingent liabilities, which could adversely affect our business. We may also be the target of strategic transactions, which could divert our management’s attention and otherwise disrupt our operations and adversely affect our business.

As a part of our business strategy, from time to time we review acquisition prospects that would complement our current product offerings, enhance our design capability or offer other competitive opportunities. As a result of completing acquisitions, we could use a significant portion of our available cash, cash equivalents and short-term investments, issue equity securities that would dilute current stockholders’ percentage ownership, incur substantial debt or contingent liabilities, or incur impairment charges related to goodwill or other acquisition-related intangibles. Such actions could impact our operating results and theThe future trading price of our common stock. stock could be subject to wide fluctuations in response to a variety of factors.

In addition, we mayThe future trading price of our common stock is likely to be unablehighly volatile and could be subject to identify or complete prospective acquisitions forwide fluctuations in response to various reasons, including competition from other companies in the semiconductor industry, the valuation expectationsfactors, many of acquisition candidates and applicable antitrust laws or related regulations. If wewhich are unable to identify and complete acquisitions, we may not be able to successfully expandbeyond our business and product offerings.control, including:

We cannot guarantee that any future acquisitions will improve our results of operations or that we will otherwise realize the anticipated benefits of any acquisitions. In addition, if we are unsuccessful in integrating any acquired company or business into our operations or if integration is more difficult than anticipated, we may experience disruptions that could harm our business and result in our failure to realize the anticipated benefits of the acquisitions. Some of the risks that may adversely affect our ability to integrate or realize any anticipated benefits from the acquired companies, businesses or assets include those associated with:

In addition, third partiesthe stock market often experiences substantial volatility that may be interested in acquiring us. We will consider and discuss such transactions as we deem appropriate. Such potential transactionsunrelated to the operating performance of particular companies. These broad market fluctuations may diveradversely affect the attention of management, and cause us to incur various costs and expenses in investigating and evaluating such transactions, whether or not they are consummated.

If we issue additional shares of stock in the future, it may have a dilutive effect on our stockholders.

We may issue additional shares of common stock in the future in order to raise additional capital to fund our global operations or in connection with an acquisition. We also issue restricted stock units to employees, which convert into shares of common stock upon vesting. Any issuancetrading price of our common stock may result in immediate dilution of our stockholders. In addition, the issuance of a significant amount of our common stock may result in additional regulatory requirements, such as stockholder approval.

We compete against many companies with substantially greater financial and other resources, and our market share may be reduced if we are unable to respond to our competitors effectively.stock.

The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit applications and design talent, our ability to introduce new products, and our ability to maintain the rate at which we introduce these new products. We compete with domestic and non-domestic semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products. We are in direct and active competition, with respect to one or more of our product lines, with many manufacturers of such products, of varying size and financial strength. The number of our competitors has grown due to the expansion of the market segments in which we participate. 

We cannot assure you that our products will continue to compete favorably, or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering this market, which would materially and adversely affect our results of operations and our financial condition.

If securities or industry analysts downgrade our stock or do not continue to publish research or reports about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend, in part, on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If we fail to meet the expectations of these analysts, or one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Major earthquakesShort positions in our stock could have a substantial impact on the trading price of our stock.

Historically, there have been “short” positions in our common stock. The anticipated downward pressure on our stock price due to actual or anticipated sales of our stock by some institutions or individuals who engage in short sales of our common stock could cause our stock price to decline. Such stock price decreases could encourage further short-sales that could place additional downward pressure on our stock price. This could lead to further increases in the existing short position in our common stock and cause decreases and volatility in our stock price. The volatility of our stock may cause the value of a stockholder’s investment to decline rapidly. Additionally, if our stock price declines, it may be more difficult for us to raise capital and may have other adverse effects on our business.

There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts.

We have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock. The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions, and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders. Our dividend payments may change from time to time, and we cannot provide assurance that we will continue to declare dividends at all or in any particular amounts. A reduction in or elimination of our dividend payments could have a negative effect on the price of our common stock and on the return achieved by our stockholders.

If we issue additional shares of stock in the future, it may have a dilutive effect on our stockholders.

We may issue additional shares of common stock in the future in order to raise additional capital to fund our global operations or in connection with an acquisition. We also issue restricted stock units (“RSUs”) to employees, which convert into shares of common stock upon vesting. Any issuance of our common stock may result in immediate dilution to our stockholders. In addition, the issuance of a significant amount of our common stock may require additional regulatory compliance, such as stockholder approval.

General Risk Factors

The effects of global pandemics such as COVID-19 are highly unpredictable and could adversely affect our business, results of operationsand financial condition.

We face various risks related to epidemics and pandemics, including the global outbreak of COVID-19 first identified in December 2019. Since the World Health Organization declared the COVID-19 outbreak as a pandemic in March 2020, it has resulted in significant disruptions and uncertainties in the global economy and in the financial markets. While the COVID-19 pandemic did not have a material and adverse impact on our business operations and financial condition, the ongoing effect of the pandemic on our future operational and financial performance will depend on numerous evolving developments, including the duration and magnitude of the pandemic and the introduction of new variants, and the impact on our customers, employees, suppliers and other partners, all of which are uncertain and difficult to predict at this time. Furthermore, due to the complexity and variability of COVID-19 policies and regulations imposed by different countries where we operate, we are subject to significant compliance efforts which could require additional resources and result in increased costs, or we may fail to be in compliance on a timely manner. A prolonged outbreak could negatively affect our business, including:

We have worked, and will continue to work, with our stakeholders, including customers, suppliers and employees, to address the continuing impact of this global pandemic. We will continue to monitor the situation to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences. The resumption of normal business operations may be delayed or constrained by lingering effects of the pandemic, including limitations imposed by governmental authorities on our ability to return to normal operating practices. These effects, alone or taken together, could have a material adverse impact on our business, results of operations or financial condition.

Our worldwide operations are subject to economic and geopolitical uncertainty, health risks, climate crises and other natural disasters, and resulting systems outages may cause us significant losses.which could have a material adverse effect on our business operations.

Our corporate headquarters,offices in California and Washington, the production facilities of our third-party wafer suppliers, our IC testing and manufacturing facilities, a portion of our assembly and research and development activities, and certain other critical business operations are located in or near seismically active regions and are subject to periodic earthquakes. We do not maintain earthquake insurance and could be materially and adversely affected in the event of a major earthquake. Much of our revenue, as well as our manufacturers and assemblers, are concentrated in Asia, particularly in China. Such concentration increases the risk that earthquakes or other natural disasters, labor strikes, terrorism, war, political unrest, epidemics and pandemics, and/or health advisories could disrupt our operations and have a material adverse impact on our business and results of operations. For example, in 2022, China experienced a severe heatwave during the summer months in the Sichuan province, which resulted in widespread power shortages, rolling backouts and temporary business shutdowns imposed by the local governments. Although we were able to successfully execute our contingency plan and our operations were not materially and adversely disrupted by the events, we cannot guarantee that we will be able to mitigate the operational risks caused by extreme weather conditions or other events in the future.

In addition, we rely heavily on our internal information and communications systems and on systems or support services from third parties to manage our operations efficiently and effectively. Any of these are subject to failure due to a natural disaster or other disruption.disruptions. System-wide or local failures that affect our information processing could have material adverse effects on our business, financial condition and results of operations.

Furthermore, worldwide political conditions may create uncertainties that could adversely affect our business. The U.S. and other regions where we conduct business in have been and may continue to be affected by conflicts that could, among other things, disrupt our supply chain, and impact customer demands and component prices. For example, the U.S. and other countries have recently imposed economic sanctions and export control measures on Russia due to the conflict in Ukraine. Although such measures have not significantly affected our business or operations, future developments could adversely affect our operating results and cash flows. 

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.financial condition.

ITEMNone.

The following table summarizes our primarysignificant properties as of December 31, 2017:2022:

Approximate Building Location   Approximate Building Square Footage   Primary Use Owned:         United States: Kirkland, Washington 70,000 Principal executive office, research and development, sales and marketing Livonia, Michigan 40,000 Sales and marketing, research and development San Jose, California   106,000   Corporate headquarters, researchResearch and development, sales and marketing, administrative International: Barcelona, Spain 12,000 Research and development, sales and marketing, administrative Chengdu, China   150,000 200,000   Research and development,, administrative offices Chengdu, China   60,000 60,000Manufacturing operations Chengdu, China   451,000 TestingManufacturing operations, research and manufacturing development, administrative Ettenheim, Germany 57,000 Sales and marketing Hangzhou, China   68,000   Research and development Shanghai, China   23,000 16,000   Sales and marketing Shenzhen, China   8,000   SalesSales and marketing Taipei, Taiwan   47,000 47,000   Sales and marketing,marketing, research and development, administrative Leased:         Chengdu, China Leased:   45,000   Inventory storage warehouse Hangzhou, Barcelona, Spain 12,000 Research and development Chengdu, China 235,000 Manufacturing operations, inventory warehouse Hsinchu, Taiwan   34,000   Research and development Seattle, Washington 9,000 Sales and marketing, research and development   We also lease other sales and marketing, and research and development offices in China, India, Japan, Korea, Singapore,Asia, Europe and the United States and Europe.States. We believe that our existing facilities are adequate for our current operations.   ITEM Item 3.    LEGAL PROCEEDINGS Legal Proceedings   We are a party to actions and proceedings in the ordinary course of business, including potential litigation initiated by our shareholders, challenges to the enforceability or validity of our intellectual property, claims that our products infringe on the intellectual property rights of others, and employment matters. We may also be subject to litigation initiated by our stockholders. These proceedings often involve complex questions of fact and law andmay require the expenditure of significant funds and the diversion of other resources to prosecute and defend. We intend to defend ourselves vigorously against any such claims. As of December 31, 2017,2022, there were no material pending legal proceedings to which we were a party.   ITEM Item 4.    MINE SAFETY DISCLOSURES Mine Safety Disclosures   Not applicable.   2629 Table of Contents   PART II   ITEM Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.   Market Price of Our Common Stock Information   Our common stock is traded on the Nasdaq Global Select Market under the symbol “MPWR.” The following table sets forth the high and low sales price per share of our common stock:      High     Low   2017:                 First quarter   $ 94.49     $ 81.84   Second quarter   $ 103.92     $ 88.19   Third quarter   $ 107.87     $ 94.24   Fourth quarter   $ 126.80     $ 105.01                     2016:                 First quarter   $ 63.64     $ 56.21   Second quarter   $ 70.75     $ 60.93   Third quarter   $ 80.50     $ 66.11   Fourth quarter   $ 85.43     $ 76.44     Holders of Our Common Stock   As of February 21, 2018,17, 2023, there were nine58 registered holders of record of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.institutions on their behalf.   Dividend Policy   In June 2014,We currently have a dividend program approved by our Board of Directors, approved a dividend program pursuant to which we intend to pay quarterly cash dividends on our common stock. Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by our Board of Directors, which are payable to the stockholders in the following month. Our Board of Directors declared the following cash dividends:     Dividend Declared     Total       per Share     Amount               (in thousands)   2017:                 First quarter   $ 0.20     $ 8,248   Second quarter   $ 0.20     $ 8,273   Third quarter   $ 0.20     $ 8,301   Fourth quarter   $ 0.20     $ 8,323                     2016:                 First quarter   $ 0.20     $ 8,047   Second quarter   $ 0.20     $ 8,096   Third quarter   $ 0.20     $ 8,132   Fourth quarter   $ 0.20     $ 8,159   In February 2018, our Board of Directors approved an increase in our quarterly cash dividends from $0.20 per share to $0.30 per share, effective for the first quarter of 2018.   The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions statutory requirements of Delaware law, compliance with the terms of future indebtedness and credit facilities and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the stockholders.   27 Table of Contents We anticipate that cash used for future dividend payments will come from our current domestic cash and cash generated from ongoing U.S. operations. In addition, we currently plan to repatriate cash from our Bermuda subsidiary on an ongoing basis to fund future dividends and continue to indefinitely reinvest our earnings from other foreign subsidiaries. See Note 12 of Notes to Consolidated Financial Statements under Item 8 for further discussion. Stock Performance Graph   The following graph compares the cumulative five-year total return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the PHLX Semiconductor Sector Index. An investment of $100 is assumed to have been made in our common stock on December 31, 20122017 and its performance relative to the performance of a similar investment in the two indexes is trackedshown through December 31, 2017,2022, assuming the reinvestment of dividends. Historic stock performance is not indicative of future performance.   The information contained in this stock performance graph section shall not be deemed to be “soliciting“soliciting material,” or “filed”“filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. Purchases of Equity Securities by the Issuer and Affiliated Purchasers In February 2016, the Board of Directors approved a stock repurchase program that authorized us to repurchase up to $50 million in the aggregate of our common stock through December 31, 2016. In December 2016, the Board of Directors approved an extension of the program through December 31, 2017. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934.  For the three months and year ended December 31, 2017, we did not repurchase any shares under the program. The program expired on December 31, 2017 with a remaining unused balance of $50 million.   2830 Table of Contents ITEM 6.    SELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with ''Management's Discussion and Analysis of Financial Condition and Results of Operations'' and the consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K to fully understand factors that may affect the comparability of the information presented below. We derived the selected consolidated balance sheet data as of December 31, 2017 and 2016, and the consolidated statement of operations data for the years ended December 31, 2017, 2016 and 2015 from our audited consolidated financial statements and accompanying notes included in this Annual Report on Form 10-K. The consolidated balance sheet data as of December 31, 2015, 2014 and 2013, and the consolidated statement of operations data for the years ended December 31, 2014 and 2013 are derived from our audited consolidated financial statements which are not included in this report. Operating results for any year are not necessarily indicative of results to be expected for any future periods. Consolidated Statement of Operations Data:     Year Ended December 31,       2017     2016     2015     2014     2013       (in thousands, except per share amounts)   Revenue   $ 470,929     $ 388,665     $ 333,067     $ 282,535     $ 238,091   Cost of revenue     212,646       177,792       152,898       129,917       110,190   Gross profit     258,283       210,873       180,169       152,618       127,901   Operating expenses:                                         Research and development     82,359       73,643       65,787       58,590       49,733   Selling, general and administrative     97,257       83,012       72,312       66,755       54,624   Litigation expense (benefit), net     1,243       (229 )     1,000       (8,027 )     (371 ) Total operating expenses     180,859       156,426       139,099       117,318       103,986   Income from operations     77,424       54,447       41,070       35,300       23,915   Interest and other income, net     5,520       2,817       1,421       1,092       92   Income before income taxes     82,944       57,264       42,491       36,392       24,007   Income tax provision     17,741       4,544       7,319       897       1,109   Net income   $ 65,203     $ 52,720     $ 35,172     $ 35,495     $ 22,898                                             Net income per share:                                         Basic   $ 1.58     $ 1.30     $ 0.89     $ 0.92     $ 0.61   Diluted   $ 1.50     $ 1.26     $ 0.86     $ 0.89     $ 0.59   Weighted-average shares outstanding:                                         Basic     41,350       40,436       39,470       38,686       37,387   Diluted     43,578       41,915       40,869       39,793       38,620                                             Cash dividends declared per common share   $ 0.80     $ 0.80     $ 0.80     $ 0.45     $ -   Consolidated Balance Sheet Data:     December 31,       2017     2016     2015     2014     2013       (in thousands)   Cash and cash equivalents   $ 82,759     $ 112,703     $ 90,860     $ 126,266     $ 101,213   Short-term investments   $ 216,331     $ 155,521     $ 144,103     $ 112,452     $ 125,126   Long-term investments   $ 5,256     $ 5,354     $ 5,361     $ 5,389     $ 9,860   Total assets   $ 652,569     $ 511,126     $ 431,285     $ 399,366     $ 368,908   Common stock and additional paid-in capital   $ 376,586     $ 315,969     $ 265,763     $ 240,500     $ 234,201   Total stockholders' equity   $ 522,007     $ 431,116     $ 368,516     $ 346,425     $ 323,399   Working capital   $ 383,253     $ 330,063     $ 288,645     $ 271,051     $ 253,304   29 Table of Contents   ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Item 6. [Reserved] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations   The following discussion should be read in conjunction with the consolidated financial statements and related notes which appear under Item 8 in this Annual Report on Form 10-K. This discussion and analysis contain, in addition to historical information, forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Part I, Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K. Discussions of 2020 results and year-to-year comparisons between 2021 and 2020 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022.   Overview   We are a leading semiconductorfabless company with a global footprint that designs, develops and marketsprovides high-performance, semiconductor-based power electronic solutions. FoundedIncorporated in 1997, MPS’sour three core strengths include deep system-level and applications knowledge, strong analog designsemiconductor expertise, and an innovative proprietary process technology.technologies in the areas of semiconductor processes, system integration, and packaging. These combined strengthsadvantages enable MPSus to deliver highly integratedreliable, compact, and monolithic products that offer energy efficient, cost-effective, easy-to-use solutions for systems found in storage and computing, enterprise data, automotive, industrial, communications and consumer computing and storage, industrial, automotive and communications applications. Our mission is to reduce total energy and material consumption in our customers' systems with green, practical and compact solutions.to improve all aspects of quality of life. We believe that we differentiate ourselves by offering solutions that are more highly integrated, smaller in size, more energy efficient,energy-efficient, more accurate with respect to performance specifications and, consequently, more cost-effective than many competing solutions. We plan to continue to introduce new products within our existing product families, as well as in new innovative product categories.   We operate in the cyclical semiconductor industry where there is seasonal demand for certain products.industry. We are not immune from current and future industry downturns, but we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term. Historically, our revenue has generally been higher in the second half of the year than in the first half although various factors, such as market conditions and the timing of key product introductions, could impact this trend.   We work with third parties to manufacture and assemble our integrated circuits (“ICs”).ICs. This has enabled us to limit our capital expenditures and fixed costs, while focusing our engineering and design resources on our core strengths.   Following the introduction of a product, our sales cycle generally takes a number of quarters after we receive an initial customer order for a new product to ramp up. Typical supply chain lead timetimes for orders is fewer than 90 days.are generally 16 to 26 weeks. These factors, combined with the fact that orders in the semiconductor industryour customers can typically be cancelledcancel or rescheduledreschedule orders without significant penalty to the customer, make the forecasting of our orders and revenue difficult.   We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. For the years ended December 31, 2017, 2016 and 2015, ourOur revenue from direct or indirect sales to customers in Asia was 89%86%, 91%90% and 91%, for the years ended December 31, 2022, 2021 and 2020, respectively. We derive a majority of our revenue from the sales of our DC to DC converter products which serve the consumer,storage and computing, enterprise data, automotive, industrial, communications and storage, industrial, automotive and communicationsconsumer markets. We believe our ability to achieve revenue growth will depend, in part, on our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and continue to secure manufacturing capacity.   Impact of COVID-19 on Our Business The COVID-19 pandemic has had, and continues to have, a significant impact around the world. Our primary focus is to continue to execute our business plan and mitigate the effect of the COVID-19 pandemic on our financial position and operations, while actively taking all necessary precautions to ensure the safety of our employees, our suppliers and our customers. The pandemic did not have a material adverse impact on our overall operating results or business operations for the year ended December 31, 2022. In 2022, China has continued to experience outbreaks, specifically in Shanghai and Chengdu where we have business operations and where many of our customers and suppliers are located. Local governments have implemented, and may continue to implement, strict measures including quarantines, shutdowns and other business restrictions, which have resulted in logistics challenges throughout China. Although these strict measures and the disruptions, as a result thereof, did not have a material adverse impact on our operations in 2022, we will continue to monitor and evaluate future developments. However, we cannot reasonably estimate the potential effect of these measures on the global economy, the semiconductor industry and our business. We have worked, and are continuing to actively work, with our stakeholders, including customers, suppliers and employees, to address the impact of the pandemic. We will continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences to the extent feasible. A prolonged economic slowdown as a result of the pandemic, or otherwise, could materially and adversely impact our business, results of operations and financial condition for 2023 and beyond. 31 Table of Contents Russia-Ukraine Conflict As the Russia-Ukraine conflict continues to evolve, we are closely monitoring the impact of future developments on our business, supply chain, employees, customers and other business partners. Our total revenue in Russia has historically not been material and we have stopped shipping to customers in Russia. All accounts receivable balances from our customers in Russia have been paid.  Macroeconomic Conditions and Recent Regulations During 2022, the semiconductor industry faced a number of macro-economic challenges including the impact of supply chain capacity constraints, wide swings in customer demand, rising inflation, increased interest rates, and fluctuations in currency rates. We remain cautious in light of changing macroeconomic conditions and will continue to monitor potential impact on our operations. The implications of macroeconomic events on our business, results of operations and overall financial position remain uncertain. There also have been recent changes to export control laws, trade regulations and other trade requirements. As of December 31, 2022 and through the date we filed this Annual Report, there have been a number of additional trade restrictions introduced. To date, those restrictions have had an immaterial impact on our revenue and operations. We will continue to monitor any changes to export control laws, trade regulations and other trade requirements and are committed to complying with all applicable trade laws, regulations and other requirements. Cybersecurity Risk Management We are committed to protecting our IT assets, including computers, systems, corporate networks and sensitive data, from unauthorized access or attack. We have established an internal global IT policy handbook as well as IT security management control procedures designed to: ● Create information security awareness and define responsibilities among our employees and business partners; ● Implement controls to identify IT risks and monitor the use of our systems and information resources; ● Establish key policies and processes to adequately and timely respond to security threats; ● Maintain disaster recovery and business continuity plans; and ● Ensure compliance with applicable laws and regulations regarding the management of information security. We require all new employees to attend an IT security training orientation. In addition, on a regular basis, our IT team updates training materials related to our policies and procedures and shares news and articles related to cybersecurity awareness, both of which are stored on our intranet and available to all employees. We also currently maintain an insurance policy that provides certain coverage for losses we incur due to data breaches and other cybersecurity incidents. Our IT Steering Committee, which consists of our senior management and IT team, meets on a regular basis to review initiatives and projects to improve IT security, as well as resources and budgets for our cybersecurity compliance and education efforts. In 2021, we completed the ISO 27001 certification, a globally recognized information security standard. Our Audit Committee of the Board of Directors, which consists of three independent members, is responsible for the oversight of our cybersecurity risk program. At least quarterly, the Audit Committee reviews reports and updates from our Chief Financial Officer and IT senior management about major risk exposures, their potential impact on our business operations, and management’s strategies to assess, monitor and mitigate those risks. The Audit Committee also provides updates of their oversight and findings to the Board of Directors.   We believe we have adequate resources and sufficient policies, procedures and oversight in place to identify and manage our IT security risks to our business operations. To date, we do not believe we have experienced any material information security breaches and have not incurred significant operating expenses related to information security breaches. 32 Table of Contents Critical Accounting Policies and Estimates   Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S.United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis, including those related to revenue recognition, stock-based compensation, inventories, income taxes valuation of goodwill and intangible assets, and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such asincluding demand for our products, economic conditions and other current and future events, such as macroeconomic factors, including the impact of the COVID-19 pandemic, the global economic conditions.  Accordingly, ourdownturn and the Russia-Ukraine conflict. Actual results could differ from these estimates and judgmentsassumptions, and any such differences may provebe material to our consolidated financial statements. See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.  As of the date of issuance of these consolidated financial statements, we are not aware of any specific event or circumstance that would require our management to update the significant estimates and assumptions used in the preparation of the consolidated financial statements. As new events continue to evolve and additional information becomes available, any changes to these estimates and assumptions will be incorrect and actual results may differ, perhaps significantly, from these estimates.recognized in the consolidated financial statements as soon as they become known.   We believe the following critical accounting policies reflect our more significant judgments used in the preparation of our consolidated financial statements.   Revenue Recognition   Our We account for price adjustments and stock rotation rights as variable consideration that reduces the transaction price, and recognize that reduction in the same period the associated revenue consists primarilyis recognized. Four U.S.-based distributors have price adjustment rights when they sell our products to their end customers at a price that is lower than the distribution price invoiced by us. When we receive claims from the distributors that products have been sold to the end customers at the lower price, we issue the distributors credit memos for the price adjustments. We estimate the price adjustments using the expected value method based on an analysis of historical claims, at both the distributor and product level, as well as an assessment of any known trends of product sales of assembled and tested integrated circuits and dies in wafer form to the consumer, computing and storage, industrial, automotive and communications markets. The remaining revenue has not been significant historically and primarily includes royalties from licensing arrangements and revenue from wafer testing services for third parties.mix.  30 Table of Contents We recognize revenue based on the following four criteria: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) is based on management’s judgment regarding the fixed nature of the fees charged for products delivered and the collectability of those fees. The application of these criteria has resulted in us generally recognizing revenue upon shipment or delivery (when title and risk of loss have transferred to customers), including to most of the distributors, original equipment manufacturers and electronic manufacturing service providers. For each of the years ended December 31, 2017, 2016 and 2015, 88% of our sales, respectively, were made through distribution arrangements with third parties. We generally recognize revenue upon shipment or delivery of products to the distributors based on the following considerations: (1) The price is fixed or determinable at the date of sale. We do not offer special payment terms (our normal payment terms are 30-45 days for our distributors) or price adjustments to distributors when we recognize revenue upon shipment or delivery. (2) The distributors are obligated to pay us and this obligation is not contingent on the resale of our products. (3) The distributors’ obligation is unchanged in the event of theft or physical destruction or damage to the products. (4) The distributors have stand-alone economic substance apart from our relationship. (5) We do not have any obligations for future performance to directly bring about the resale of our products by the distributors. (6) The amount of future returns can be reasonably estimated.   Certain of our large distributors have contracts that include limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases.purchases in accordance with the contract terms. We maintain a sales reserve for stock rotation rights, which is based on historical experience of actualestimate the stock rotation returns using the expected value method based on a per-distributor basisan analysis of historical returns, and information related to productsthe current level of inventory in the distribution channel. This reserve is recorded at the time of sale. As of December 31, 2017 and 2016, our reserve for stock rotation rights was $2.6 million and $1.9 million, respectively.    If we enter into arrangementsOverall, our estimates of adjustments to contract price due to variable consideration have been materially consistent with distributors that have price adjustment or other rights thatactual results; however, these estimates are not fixed or determinable, we recognize revenue under such arrangements only after the distributors have sold the products to end customers, at which time the price is no longer subject to adjustmentmanagement’s judgment and is fixed. Three ofactual provisions could be different from our U.S.-based distributors have such price adjustment rightsestimates and accordingly, we defercurrent provisions, resulting in future adjustments to our revenue recognition on these shipments until the products are sold to the end customers by the distributors. As of December 31, 2017 and 2016, our deferred revenue balance before the price adjustments from these distributors was $1.9 million and $3.7 million, and the deferred costs were $0.2 million and $0.3 million, respectively.operating results.   On January 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09,Inventory ValuationRevenue from Contracts with Customers (Topic 606). The primary effects of the new standard for us related to the timing of revenue recognition with the three U.S.-based distributors with price adjustment rights. See “Recent Accounting Pronouncements Not Yet Adopted as of December 31, 2017” in Note 1 to our consolidated financial statements for further discussion.   Inventory Valuation We value our inventoryInventories are stated at the lower of the standard cost (which approximates actual cost determined on a first-in first-out basis) or its currentand estimated net realizable value. We write down inventory for obsolescence or lack of demand,excess and obsolete inventories based on assumptions about futuretheir age and forecasted demand, which includes estimates taking into consideration our revenue forecast, outlook on market and market conditions.economic conditions, technology changes, new product introductions and changes in strategic direction. If actual demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Conversely, if actual demand or market conditions are more favorable, inventoryinventories may be sold that waswere previously reserved. written down.    Valuation of Goodwill and Acquisition-Related Intangible Assets We evaluate intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that an impairment may exist. We perform an annual impairment assessment for goodwill in the fourth quarter, or more frequently if indicators of potential impairment exist. Impairment of intangible assets is recognized based on the difference between the fair value of the assets and their carrying value. Impairment for goodwill occurs if the fair value of a reporting unit including goodwill is less than its carrying value and is recognized based on the difference between the implied fair value of the reporting unit’s goodwill and the carrying value of the goodwill. The assumptions and estimates used to determine the fair value of goodwill and intangible assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and revenue forecasts. If there is a significant adverse change in our business in the future, including macroeconomic and market conditions, we may be required to record impairment charges on our goodwill and acquisition-related intangible assets. 31 Table of Contents Accounting for Income Taxes We recognize federal, state and foreign current tax liabilities or assets based on our estimate of taxes payable or refundable in the current fiscal year by tax jurisdiction. We also recognize federal, state and foreign deferred tax assets or liabilities for our estimate of future tax effects attributable to temporary differences and carryforwards. We record 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.   Our 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. Our estimates of current and deferred tax assets and liabilities may change based, in part, on added certainty, or finality or uncertainty to an anticipated outcome, changes in accounting or tax laws in the U.S. or foreign jurisdictions where we operate, or changes in other facts or circumstances. In addition, we recognize liabilities for potential U.S. and foreign income tax for uncertain income tax positions taken on our tax returns if it has less than a 50% likelihood of being sustained. If we determine that payment of these amounts is unnecessary or if the recorded tax liability is less than our current assessment, we may be required to recognize an income tax benefit or additional income tax expense in our financial statements in the period such determination is made.  We have calculated our uncertain tax positions which were attributable to certain estimates and judgments primarily related to transfer pricing, cost sharing and our international tax structure exposure. On December 22, 2017, the tax legislation commonly known as the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted, which significantly changed U.S. corporate income tax law. The 2017 Tax Act made the following material changes:(1) reduction of the corporate income tax rate effective January 1, 2018; (2) replacement of the worldwide tax system with a territorial tax regime, with a one-time mandatory tax on previously deferred foreign earnings; (3) amendment on the deductibility of executive performance-based compensation, and (4) creation of new taxes on certain foreign-sourced earnings.   As of December 31, 20172022 and 2016,2021, we had a valuation allowance of $12.6$20.3 million and $27.4$19.5 million, respectively, attributable to management’s determination that it is more likely than not that thecertain deferred tax assets will not be fully realized. In the fourth quarter of 2017, management assessed the realizability of the deferred tax assets and concluded that a full valuation allowance would no longer be needed on the federal deferred tax assets, due principally to the enactment of the 2017 Tax Act. As a result, we released $21.6 million of valuation allowance which was recorded as a benefit in the income tax provision. In the event we determine that it is more likely than not that we would be able to realize otherthe deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance for the deferred tax assetassets would increase income in the period such determination was made. Likewise, should it be determined that additional amounts of the net deferred tax assetassets will not be realized in the future, an adjustment to increase the deferred tax assetassets valuation allowance will be charged to income in the period such determination is made.   Income tax effects resulting from changes in tax laws are accounted for in the period in which the law is enacted. As 33 Table of December 31, 2017, we have not completed our accounting for the tax effects of the 2017 Tax Act, including the calculation of the deemed repatriation transition tax and the remeasurement of the deferred taxes. As permitted by Staff Accounting Bulletin No. 118 (“SAB 118”) issued by the Securities and Exchange Commission on December 22, 2017, we recorded provisional amounts based on reasonable estimates for the year ended December 31, 2017. These provisional amounts are subject to revisions, possibly materially, as we perform further analysis of the 2017 Tax Act, collect and prepare necessary financial data, continue to assess our tax positions, and interpret any additional guidance issued by the U.S. Treasury Department, Internal Revenue Service (“IRS”), Financial Accounting Standards Board (“FASB”), and other standard-setting and regulatory bodies. Any subsequent adjustment to these amounts will be recorded to the income tax provision in the period when the analysis is complete. We expect to complete the analysis within the one-year measurement period ending December 21, 2018, pursuant to SAB 118.Contents Contingencies Contingencies   We are a party to actions and proceedings in the ordinary course of business, including potential litigation regarding our shareholders and our intellectual property, challenges to the enforceability or validity of our intellectual property, claims that our products infringe on the intellectual property rights of others, and employment matters. 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, we become aware that we are subject to other contingent liabilities. When this occurs, we will evaluate the appropriate accounting for the potential contingent liabilities to determine whetherrecord a contingent liability should be recorded. In making this determination, management may, depending onrelated to pending legal and regulatory proceedings when it is probable that a loss has been incurred and the nature of the matter, consult with internal and external legal counsel and technical experts.amount is reasonably estimable. Based on the facts and circumstances in each matter, we use our judgment to determine whether it is probable that a contingent loss has occurred and whether the amountdetermination of such loss can be estimated. If we determine a loss is probable and estimable, we record a contingent loss.liability requires significant judgment. In determining the amount of a contingent loss, we take 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, we may need to record additional contingent losses that could materially and adversely impact our results of operations. 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 which could result in a favorable impact on our results of operations. 32 Table of Contents Stock-Based Compensation   We measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.Stock-Based Compensation The fair value of restricted stock units (“RSUs”) with service conditions or performance conditions is based on the grant date share price. The fair value of RSUs with only market conditions, as well as RSUs containing both market and performance conditions, is estimated using a Monte Carlo simulation model.  The fair value of stock options, shares issued under the employee stock purchase plan and RSUs with a purchase price feature is estimated using the Black-Scholes model.   Compensation expense related toFor equity awards with service conditions is recorded on a straight-line basis over the requisite service period. Compensation expense related to awards subject to market or performance conditions is recognized over the requisite service period for each separately vesting tranche. For awards with only market conditions, compensation expense is not reversed if the market conditions are not satisfied. For awards with only performance conditions, as well as awards containing both market and performance conditions, we recognize compensation expense when it becomes probable that the performance criteriagoals will be achieved. Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and the analog industry revenue forecasts, and internal factors, such as 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. If the projected achievement was revised upward or if the actual results were higher than the projected achievement, additional compensation expense would be recorded for the awards due to the cumulative catch-up adjustment, which would have an adverse impact on our results of operations. Conversely, if the projected achievement was revised downward or if the actual results were lower than the projected achievement, previously accrued compensation expense would be reversed for the awards, which would have a favorable impact on our results of operations. As a result, our stock-based compensation expense is subject to volatility and may fluctuate significantly each quarter due to changes in our probability assessment of achievement of the performance conditions or actual results being different from projections made by management.   RecentAccounting PronouncementsPronouncements   Refer toSee Note 1 of the Notes to our consolidated financial statementsConsolidated Financial Statements regarding recently adopted accounting pronouncements and recent accounting pronouncements not yet adopted as of December 31, 2017.2022.   Results of Operations   The following table summarizes our results of operations:     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020     (in thousands, except percentages)     (in thousands, except percentages)   Revenue   $ 470,929       100.0 %   $ 388,665       100.0 %   $ 333,067       100.0 %   $ 1,794,148     100.0 %   $ 1,207,798     100.0 %   $ 844,452     100.0 % Cost of revenue     212,646       45.2       177,792       45.7       152,898       45.9       745,596       41.6       522,339       43.2       378,498       44.8   Gross profit     258,283       54.8       210,873       54.3       180,169       54.1       1,048,552       58.4       685,459       56.8       465,954       55.2   Operating expenses:                                                   Research and development     82,359       17.5       73,643       18.9       65,787       19.8     240,171     13.4     190,627     15.8     137,598     16.3   Selling, general and administrative     97,257       20.7       83,012       21.4       72,312       21.7     273,595     15.2     226,190     18.7     161,670     19.1   Litigation expense (benefit), net     1,243       0.2       (229 )     -       1,000       0.3   Litigation expense, net     8,001       0.4       6,225       0.6       7,804       1.0   Total operating expenses     180,859       38.4       156,426       40.3       139,099       41.8       521,767       29.0       423,042       35.1       307,072       36.4   Income from operations     77,424       16.4       54,447       14.0       41,070       12.3   Interest and other income, net     5,520       1.2       2,817       0.7       1,421       0.5   Operating income   526,785     29.4     262,417     21.7     158,882     18.8   Other income (expense), net     (1,848 )     (0.1 )     9,802       0.8       10,460       1.3   Income before income taxes     82,944       17.6       57,264       14.7       42,491       12.8     524,937     29.3     272,219     22.5     169,342     20.1   Income tax provision     17,741       3.8       4,544       1.1       7,319       2.2   Income tax expense     87,265       4.9       30,196       2.5       4,967       0.6   Net income   $ 65,203       13.8 %   $ 52,720       13.6 %   $ 35,172       10.6 %   $ 437,672       24.4 %   $ 242,023       20.0 %   $ 164,375       19.5 %   33 34 Table of Contents   Revenue   The following table summarizes our revenue by end market, based on management’s assessment of available end market data:market:     Year Ended December 31,     Change                             From   From     Year Ended December 31,     Change         % of       % of       % of   2021 to   2020 to   End Market   2017     % of Revenue     2016     % of Revenue     2015     % of Revenue     From 2016 to 2017     From 2015 to 2016     2022     Revenue     2021     Revenue     2020     Revenue     2022     2021     (in thousands, except percentages)     (in thousands, except percentages)   Storage and Computing   $ 452,594     25.3 %   $ 255,933     21.2 %   $ 180,293     21.4 %   76.8 %   42.0 % Enterprise Data   251,415     14.0     116,345     9.6     72,884     8.6     116.1 %   59.6 % Automotive   300,016     16.7     204,335     16.9     108,966     12.9     46.8 %   87.5 % Industrial   219,179     12.2     184,784     15.3     119,603     14.2     18.6 %   54.5 % Communications   251,452     14.0     164,091     13.6     142,326     16.8     53.2 %   15.3 % Consumer   $ 189,757       40.3 %   $ 153,732       39.5 %   $ 145,090       43.6 %     23.4 %     6.0 %     319,492       17.8       282,310       23.4       220,380       26.1       13.2 %     28.1 % Computing and storage     100,782       21.4       80,562       20.7       56,568       17.0       25.1 %     42.4 % Industrial     62,896       13.4       55,685       14.4       45,933       13.8       12.9 %     21.2 % Automotive     53,888       11.4       33,954       8.7       20,410       6.1       58.7 %     66.4 % Communications     63,606       13.5       64,732       16.7       65,066       19.5       (1.7 )%     (0.5 )% Total   $ 470,929       100.0 %   $ 388,665       100.0 %   $ 333,067       100.0 %     21.2 %     16.7 %   $ 1,794,148       100.0 %   $ 1,207,798       100.0 %   $ 844,452       100.0 %   48.5 %   43.0 %   Revenue for the year ended December 31, 2017 was $470.9 million, an increase of $82.2 million, or 21.2%, from $388.7 million for the year ended December 31, 2016. This increase was driven by higher sales in all of our end markets except for communications. Overall unit shipments increased by 9% due to higher market demand with current customers and design wins with new customers, and average sales prices increased by 12%.  Revenue from the consumer market for the year ended December 31, 2017 increased $36.0 million, or 23.4%, from the same period in 2016. This increase was primarily driven by higher demand in gaming and home appliance products. Revenue from the computing and storage market increased $20.2 million, or 25.1%, from the same period in 2016. This increase was primarily driven by strength in the solid-state drive storage, cloud computing and high-performance notebook markets. Revenue from the industrial market increased $7.2 million, or 12.9%, from the same period in 2016. This increase was primarily driven by higher sales in power source products. Revenue from the automotive market increased $19.9 million, or 58.7%, from the same period in 2016. This increase was primarily driven by higher sales of products for infotainment, safety and connectivity applications. Revenue from the communications market decreased $1.1 million, or 1.7%, from the same period in 2016. This decrease was primarily driven by lower demand in wireless applications.   Revenue for the year ended December 31, 20162022 was $388.7$1,794.1 million, an increase of $55.6$586.3 million, or 16.7%48.5%, from $333.1$1,207.8 million for the year ended December 31, 2015. This2021. The increase in revenue was driven by higher sales in all of our end markets except for communications. Overall unit shipments increased by 19%primarily due to increases in the average selling prices resulting primarily from the sale of higher market demand with current customersvalue products and design wins with new customers, which was partially offset by a 2% decreaseincreases in average sales prices. shipment volume.   Revenue from the consumer market forFor the year ended December 31, 20162022, revenue from the storage and computing market increased $8.6$196.7 million, or 6.0%76.8%, from the same period in 2015.2021. This increase was primarily driven by higher demand in battery management systems, home appliancesstrong sales growth for storage applications and other high value consumer products.enterprise notebooks. Revenue from the computing and storageenterprise data market increased $24.0$135.1 million, or 42.4%116.1%, from the same period in 2015.2021. This increase was primarily due to higher sales of our power management solutions for cloud-based CPU and GPU server applications. Revenue from the automotive market increased $95.7 million, or 46.8%, from the same period in 2021. This increase was primarily due to increased sales of our highly integrated applications supporting automated driver assistance systems, digital cockpits and connectivity. Revenue from the industrial market increased $34.4 million, or 18.6%, from the same period in 2021. This increase was primarily due to higher sales in applications for smart meters and industrial automation. Revenue from the communications market increased $87.4 million, or 53.2%, from the same period in 2021. The increase was primarily due to higher sales of products for both 5G and satellite communications infrastructure applications. Revenue from the consumer market increased $37.2 million, or 13.2%, from the same period in 2021. This increase was primarily driven by strength in the cloud computing, high-performance notebookincreased sales for home appliances, gaming consoles and solid-state drive storage markets. Revenue from the industrial market increased $9.8 million, or 21.2%, from the same period in 2015. This increase was primarily driven by higher sales in security, smart meter and power source products. Revenue from the automotive market increased $13.5 million, or 66.4%, from the same period in 2015. This increase was primarily driven by higher sales of products for infotainment, safety and connectivity applications. Revenue from the communications market was essentially flat compared to the same period in 2015.TVs.   Cost of Revenue and Gross Margin    Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses. In addition, cost of revenue includes amortization for acquisition-related intangible assets.     Year Ended December 31,     Change     Year Ended December 31,     Change                 From 2021 to   From 2020 to     2017     2016     2015     From 2016 to 2017     From 2015 to 2016     2022     2021     2020     2022     2021     (in thousands, except percentages)     (in thousands, except percentages)   Cost of revenue   $ 212,646     $ 177,792       152,898       19.6 %     16.3 %   $ 745,596     $ 522,339     $ 378,498     42.7 %   38.0 % As a percentage of revenue     45.2 %     45.7 %     45.9 %                   41.6 %   43.2 %   44.8 %           Gross profit   $ 258,283     $ 210,873       180,169       22.5 %     17.0 %   $ 1,048,552     $ 685,459     $ 465,954     53.0 %   47.1 % Gross margin     54.8 %     54.3 %     54.1 %                   58.4 %   56.8 %   55.2 %             Cost of revenue was $212.6$745.6 million, or 45.2%41.6% of revenue, for the year ended December 31, 2017,2022, and $177.8$522.3 million, or 45.7%43.2% of revenue, for the year ended December 31, 2016.2021. The $34.8$223.3 million increase in cost of revenue was primarily due to a 9% increaseincreased shipment volume, product mix, increases in overall unit shipments, coupled with a 13% increase in the average direct cost of units shipped. The increase in cost of revenue was also driven by a $3.5 million increase in inventory write-downsmanufacturing overhead costs and warranty expenses.increased input cost.  34 Table of Contents   Gross margin was 54.8%58.4% for the year ended December 31, 2017,2022, compared with 54.3%56.8% for the year ended December 31, 2016.2021. The increase in gross margin was primarily due tomainly driven by lower labor and manufacturing overhead costswarranty expenses as a percentage of revenue partially offset by higher inventory write-downs.and a favorable product mix.    Cost of revenue was $177.8 million, or 45.7% of revenue, for the year ended December 31, 2016,Research and $152.9 million, or 45.9% of revenue, for the year ended December 31, 2015. The $24.9 million increase in cost of revenue was primarily due to a 19% increase in overall unit shipments, which was partially offset by a 2% decrease in the average direct cost of units shipped. The increase in cost of revenue was also driven by a $1.0 million increase in warranty expenses and inventory write-downs.Development(“R&D”)   Gross margin was 54.3% for the year ended December 31, 2016, compared with 54.1% for the year ended December 31, 2015. The increase in gross margin was primarily due to lower labor and manufacturing overhead costs as a percentage of revenue, partially offset by the impact of certain manufacturing cost variances. Research and Development  Research and development (“R&D”)&D expenses primarily consist of salary and benefit expenses, bonuses, stock-based compensation and deferred compensation expenses for design and product engineers, expenses related to new product development and supplies, and facility costs.        Year Ended December 31,     Change     Year Ended December 31,     Change                 From 2021 to   From 2020 to     2017     2016     2015     From 2016 to 2017     From 2015 to 2016     2022     2021     2020     2022     2021     (in thousands, except percentages)     (in thousands, except percentages)   R&D expenses   $ 82,359     $ 73,643     $ 65,787       11.8 %     11.9 %   $ 240,171     $ 190,627     $ 137,598     26.0 %   38.5 % As a percentage of revenue     17.5 %     18.9 %     19.8 %                   13.4 %   15.8 %   16.3 %             R&D expenses were $82.4$240.2 million, or 17.5%13.4% of revenue, for the year ended December 31, 2017,2022, and $73.6$190.6 million, or 18.9%15.8% of revenue, for the year ended December 31, 2016.2021. The $8.8$49.6 million increase in R&D expenses was primarily due to an increase of $3.8 million in compensation expenses, which include salary, benefits and bonuses, an increase of $1.9 million in laboratory supplies, an increase of $1.6 million in new product development expenses, an increase of $0.8 million in stock-based compensation expenses mainly associated with the performance-based equity awards, and an increase of $0.7 million in expenses related to changes in the value of the deferred compensation plan liabilities. Our R&D headcount was 629 employees as of December 31, 2017, compared with 578 employees as of December 31, 2016. R&D expenses were $73.6 million, or 18.9% of revenue, for the year ended December 31, 2016, and $65.8 million, or 19.8% of revenue, for the year ended December 31, 2015. The $7.8 million increase in R&D expenses was primarily due to an increase of $2.9 million in stock-based compensation expenses mainly associated with the performance and market-based equity awards, an increase of $2.2$40.1 million in cash compensation expenses, which include salary, benefits and bonuses, an increase of $1.6 million in new product development expenses, and an increase of $0.5$9.3 million in stock-based compensation expenses, which were mainly associated with performance-based equity awards. The increase was partially offset by a $4.7 million benefit related to changes in the value of the deferred compensation plan liabilities. Our R&D headcount was 5781,328 employees as of December 31, 2016,2022, compared with 5061,087 employees as of December 31, 2015.2021.  35 Table of Contents Selling, General and Administrative (“SG&A”) Selling, general and administrative (“SG&A”)&A expenses primarily include salary andand benefit expenses, bonuses, stock-based compensation and deferred compensation expenses for sales, marketing and administrative personnel, sales commissions, travel expenses, facilities costs, and professional service fees.        Year Ended December 31,     Change       2017     2016     2015     From 2016 to 2017     From 2015 to 2016       (in thousands, except percentages)   SG&A expenses   $ 97,257     $ 83,012     $ 72,312       17.2 %     14.8 % As a percentage of revenue     20.7 %     21.4 %     21.7 %                 35 Table of Contents     Year Ended December 31,     Change                         From 2021 to     From 2020 to       2022     2021     2020     2022     2021       (in thousands, except percentages)   SG&A expenses   $ 273,595     $ 226,190     $ 161,670       21.0 %     39.9 % As a percentage of revenue     15.2 %     18.7 %     19.1 %                   SG&A expenses were $97.3$273.6 million, or 20.7%15.2% of revenue, for the year ended December 31, 2017,2022, and $83.0$226.2 million, or 21.4%18.7% of revenue, for the year ended December 31, 2016.2021. The $14.3$47.4 million increase in SG&A expenses was primarily due to an increase of $3.9$27.0 million in stock-based compensation expenses, which were mainly associated with the performance-based equity awards, an increase of $3.7 million in compensation expenses, which include salary, benefits and bonuses, an increase of $1.3 million in depreciation expense, an increase of $1.0 million in expenses related to changes in the value of the deferred compensation plan liabilities, and an increase of $0.4 million in commission expenses due to higher revenue. In addition, contributing to the increase in SG&A expenses in 2017 was a stock-based compensation credit of $2.9 million which reduced SG&A expenses in 2016 due to the retirement of our then Chief Financial Officer. As the service or performance conditions for her outstanding restricted stock units had not been satisfied at the time of her departure, we reversed previously accrued stock-based compensation expenses of $2.9 million associated with the unvested restricted stock units and the credit was reflected in SG&A expenses for year ended December 31, 2016.  Our SG&A headcount was 389 employees as of December 31, 2017, compared with 355 employees as of December 31, 2016. SG&A expenses were $83.0 million, or 21.4% of revenue, for the year ended December 31, 2016, and $72.3 million, or 21.7% of revenue, for the year ended December 31, 2015. The $10.7 million increase in SG&A expenses was primarily due to an increase of $3.0 million in stock-based compensation expenses mainly associated with the performance and market-based equity awards, an increase of $2.9$20.7 million in cash compensation expenses, which include salary, benefits and bonuses, anbonuses. The increase of $2.1was partially offset by a $7.2 million in commission expenses due to higher revenue, and an increase of $0.8 million in expensesbenefit related to changes in the value of the deferred compensation plan liabilities. In addition, contributing to the increase in SG&A expenses in 2016 was a credit of $2.5 million related to the release of a contingent consideration liability which reduced SG&A expenses in 2015 (see below). These increases were partially offset by the stock-based compensation credit of $2.9 million recorded in 2016 due to the retirement of our then Chief Financial Officer. Our SG&A headcount was 355780 employees as of December 31, 2016,2022, compared with 306688 employees as of December 31, 2015.   2021.    Our acquisition of Sensima Technology SA (“Sensima”) in July 2014 included a contingent consideration arrangement which required us to pay up to an additional $8.9 million to former Sensima shareholders if Sensima achieved a new product introduction as well as certain product revenue and direct margin targets in 2016. The fair value of the contingent consideration at the acquisition date was $2.5 million, which was estimated based on a probability-weighted analysis of possible future revenue outcomes. The fair value of the contingent consideration was initially recorded in other long-term liabilities in the Consolidated Balance Sheets and was remeasured at the end of each reporting period, with any changes in fair value recorded in operating expense in the Consolidated Statements of Operations. As part of the quarterly assessment in the fourth quarter of 2015, management reviewed the sales forecast for the products and determined that the projected product revenue in 2016 would likely not meet the minimum target required to earn the contingent consideration, primarily because the product adoption process by customers would take longer than we had originally anticipated. Accordingly, the fair value of the contingent consideration was deemed to be $0 as of December 31, 2015. The Company released the liability of $2.5 million and recorded the credit in SG&A expenses for the year ended December 31, 2015. Litigation Expense, (NetBenefit), Net   Litigation expense was $1.2$8.0 million for the year ended December 31, 2017,2022, compared with a litigation benefit,expense, net, of $0.2$6.2 million for the year ended December 31, 2016.2021. The increase inexpense for both periods was attributable to litigation expense was primarily dueactivity related to an ongoing litigation. In addition, we recognized $0.7 million of benefit in connection with two litigation settlements for the year ended December 31, 2016.patent infringement and other matters.   Litigation benefit,Other Income (Expense), Net Other expense, net, was $0.2$1.8 million for the year ended December 31, 2016,2022, compared with litigation expenseother income, net, of $1.0$9.8 million for the year ended December 31, 2015.2021. The net litigation benefitincrease in 2016 was attributable to the recognition of $0.7 million of benefit in connection with two litigation settlements, partially offset by $0.5 million of litigation expenses. Interest and Other Income, Net Interest and other income, net, was $5.5 million for the year ended December 31, 2017, compared with $2.8 million for the year ended December 31, 2016. The increaseexpense was primarily due to an increase of $2.9$11.2 million in interest income as a result of higher investment balances and higher yields, and an increase of $1.3 million in incomeexpense related to changes in the value of the deferred compensation plan investments, partially offset by an increase of $1.0 million in amortization of premium on available-for-sale investments and an increase of $0.6 million in foreign currency exchange loss. Interest and other income, net, was $2.8 million for the year ended December 31, 2016, compared with $1.4 million for the year ended December 31, 2015. The increase was primarily due to an increase of $1.6 million in income related to changes in the value of the deferred compensation plan investments and an increase of $0.9$4.4 million in interest income as a result of higher yields and higher investment balances,charitable contributions, which was partially offset by an increase of $0.6$3.0 million in amortization of premium on available-for-sale investments and a decrease of $0.5 million in foreign currency exchange gains.net interest income. Income Tax ProvisionExpense   The income tax provision expense for the year ended December 31, 20172022 was $17.7$87.3 million, or 21.4%16.6% of pre-tax income. The effective tax rate differed fromwas lower than the federal statutory rate primarily becausedue to foreign income generated byfrom our subsidiaries in Bermuda and China wasbeing taxed at lower statutory tax rates, and because of theexcess tax benefits from stock-based compensation deductions. In addition,compensation. The decrease in the effective tax rate relative to the federal statutory rate was impactedpartially offset by the effectsinclusion of the 2017 Tax Act and the release of the U.S. valuation allowance as discussed in details below. 36 Table of Contents 2017 U.S. Tax Reform:global intangible low-taxed income (“GILTI”) tax.   Under Accounting Standards Codification (“ASC”) 740, Income Taxes, the effects of a new legislation are recognized upon enactment. Accordingly, we were required to recognize the tax effects of the 2017 Tax Act beginning in the fourth quarter of 2017. On December 22, 2017, the Securities and Exchange Commission issued SAB 118, which addresses the application of ASC 740 in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certainThe income tax effects of the 2017 Tax Act. In accordance with SAB 118, for matters that have not been completed, we would recognize provisional amounts to the extent that they are reasonably estimable. If a reasonable estimate cannot be determined, we would not be required to report provisional amounts and would continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately before the enactment of the 2017 Tax Act. As of December 31, 2017, we have not completed our accounting for the tax effects of the 2017 Tax Act and recorded certain provisional amounts, as discussed below, based on reasonable estimatesexpense for the year ended December 31, 2017. The provisional amounts are subject to revisions, possibly materially, as we perform further analysis of the 2017 Tax Act, collect and prepare necessary financial data, continue to assess our tax positions, and interpret any additional guidance issued by the U.S. Treasury Department, IRS, FASB, and other standard-setting and regulatory bodies. Any subsequent adjustment to these amounts will be recorded to the income tax provision in the period when the analysis is complete. We expect to complete the analysis within the one-year measurement period ending December 21, 2018, pursuant to SAB 118. Corporate Tax Rate and Remeasurement of Deferred Taxes The 2017 Tax Act reduces the corporate tax rate from 35% to 21%, effective January 1, 2018. Because ASC 740 requires the effect of a change in tax laws to be recognized as of the date of enactment, we remeasured our deferred tax balance as of December 22, 2017 and recorded a provisional amount of $9.8 million to the income tax provision as a result of the remeasurement for the year ended December 31, 2017. Deemed Repatriation Transition Tax The 2017 Tax Act mandates a one-time deemed repatriation transition tax of post-1986 undistributed foreign earnings and profits (“E&P”) on which U.S. income taxes were previously deferred. The rate applied varies depending on whether the E&P is held in liquid or non-liquid assets. A proportional deduction on the deemed repatriation results in a transition tax of 15.5% for cash and liquid assets and 8% for non-liquid assets. The transition tax is assessed regardless of whether we repatriate the earnings. The transition tax is determined on the greater of E&P as of two measurement dates (November 2, 2017 or December 31, 2017). The amount of cash and liquid assets is determined based on the greater of the amounts calculated using two alternative measurement periods. For the year ended December 31, 2017, we recorded a provisional amount of $41.9 million related to the transition tax expense. After the utilization of R&D tax credits of $18.0 million, the transition tax payable is $23.9 million. As permitted by the 2017 Tax Act, we have elected to pay the transition tax in installments over eight years. As a result, $1.9 million2021 was recorded in current accrued liabilities and $22.0 million was recorded in long-term income tax liabilities as of December 31, 2017. Undistributed Earnings of Subsidiaries We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. Prior to the transition tax, we had an excess of the amount for financial reporting over the tax basis in our foreign subsidiaries including undistributed foreign earnings of $390.2 million. While the transition tax resulted in the reduction of the excess of the amount for financial reporting over the tax basis in our foreign subsidiaries and subjected a provisional amount of $119.7 million of undistributed foreign earnings to tax, an actual repatriation from our non-U.S. subsidiaries could be subject to additional foreign withholding taxes and U.S. state taxes. We have analyzed our global working capital and cash requirements, and have determined that we plan to repatriate cash from our Bermuda subsidiary on an ongoing basis to fund our future U.S. based expenditures and dividends. For the other foreign subsidiaries, we expect to indefinitely reinvest undistributed earnings to fund foreign operations and their research and development. For those undistributed foreign earnings from which we were not able to make a reasonable estimate of the tax effects of such repatriation, we have not recorded any deferred taxes or accrued for any withholding taxes or state taxes as of December 31, 2017. We will record the tax effects of any change in our prior assertion with respect to those undistributed foreign earnings in the period that we are first able to make a reasonable estimate, no later than the end of the measurement period under SAB 118. Global Intangible Low-Taxed Income The 2017 Tax Act subjects a U.S. parent shareholder to taxation of its global intangible low-taxed income (“GILTI”), effective January 1, 2018. The GILTI inclusions will impact companies that have foreign earnings generated without a large aggregate foreign fixed asset base and whose earnings are being taxed at a low tax rate. GILTI is calculated based on foreign income in excess of a deemed return on tangible assets of foreign corporations. The income inclusion under GILTI is eligible for a deduction that is intended to lower the effective tax rate to 10.5% for taxable years 2018 to 2025, and rise to 13.125% for taxable years after 2025. The enactment of the GILTI tax will result in additional Subpart F income recognition for us in 2018 and onwards.  37 Table of Contents Executive Compensation Deductions The 2017 Tax Act retains the $1 million limitation on deductible compensation to covered employees, which include the Chief Executive Officer and four other highest paid officers, under IRC Section 162(m). However, it eliminates the exception for performance-based cash or stock compensation and expands the definition of covered employees to include the Chief Financial Officer. Accordingly, beginning January 1, 2018, the deductible compensation to covered employees will generally be subject to the $1 million limitation. Release of Valuation Allowance: Management periodically evaluates the realizability of our deferred tax assets based on all available evidence. The realizability of our deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets.  We maintained a full valuation allowance on our U.S. deferred tax assets as of the third quarter of 2017.  In the fourth quarter of 2017, we assessed the realizability of the deferred tax assets and concluded that it was more likely than not that our federal deferred tax assets would be realizable, due principally to the enactment of the 2017 Tax Act. In accordance with ASC 740, management considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax asset was needed. Our conclusion was primarily driven by the following positive evidence: ● We forecast taxable income in the U.S. in future periods.  The enactment of GILTI will result in additional Subpart F income each year. ● Executive performance-based equity awards are now subject to the Section 162(m) deduction limitation. ● We have a history of utilizing all federal tax attributes before expiration. As a result, we released $21.6 million of valuation allowance on federal deferred tax assets, which was recorded as a benefit in the income tax provision in the fourth quarter of 2017. We continue to maintain a full valuation allowance on the deferred tax assets in California, primarily due to a low apportionment factor and the amount of R&D tax credits generated is greater than the amount utilized. The income tax provision for the year ended December 31, 2016 was $4.5$30.2 million, or 7.9%11.1% of pre-tax income. The effective tax rate differed fromwas lower than the federal statutory rate primarily becausedue to foreign income generated by from our subsidiaries in Bermuda and China wasbeing taxed at lower statutory tax rates. In addition,The decrease in the effective tax rate relative to the federal statutory rate was impactedpartially offset by changes in valuation allowance and the stock-based compensation deductions.inclusion of the GILTI tax.   The incomeincrease in the effective tax provisionrate for the year ended December 31, 2015 was $7.3 million, or 17.2% of pre-tax income. We recorded a one-time net charge of $2.7 million2022 compared to the income tax provision relatedprior period was primarily due to an increase in GILTI inclusion due to the resolutioncapitalization of research and experimental expenditures under Section 174 of the incomeInternal Revenue Code (the “IRC”) and lower excess tax audits in the second quarter of 2015. In addition to the impact of this charge, the effective tax rate differedbenefits from the federal statutory rate primarily becausestock-based compensation. The increase was partially offset by higher foreign income generated byfrom our subsidiaries in Bermuda and China was taxed at lower ratesstatutory tax rates. In August 2022, the CHIPS Act and from the releaseInflation Reduction Act of an2022 (the “IRA”) were enacted and signed into law, which did not have a material impact on our income tax reserve whereprovisions, results of operations or financial condition for the statute of limitations expired. In addition,year ending December 31, 2022. We will continue to monitor any new developments related to the effective tax rate was impacted by changes in valuation allowance.CHIPS Act and the IRA and evaluate their impact on our financial statements.   Liquidity and Capital ResourcesSee Note 11 of the Notes to Consolidated Financial Statements for further discussion.     December 31,       2017     2016       (in thousands, except percentages)   Cash and cash equivalents   $ 82,759     $ 112,703   Short-term investments     216,331       155,521   Total cash, cash equivalents and short-term investments   $ 299,090     $ 268,224   Percentage of total assets     45.8 %     52.5 %                   Total current assets   $ 449,170     $ 382,984   Total current liabilities     (65,917 )     (52,921 ) Working capital   $ 383,253     $ 330,063     38 36 Table of Contents Liquidity and Capital Resources     December 31,       2022     2021       (in thousands, except percentages)   Cash and cash equivalents   $ 288,607     $ 189,265   Short-term investments     449,266       535,817   Total cash, cash equivalents and short-term investments   $ 737,873     $ 725,082   Percentage of total assets     35.8 %     45.7 %                   Total current assets   $ 1,410,619     $ 1,124,852   Total current liabilities     (263,400 )     (226,944 ) Working capital   $ 1,147,219     $ 897,908     As of December 31, 2017,2022, we had cashcash and cash equivalents of $82.8$288.6 million and short-term investments of $216.3$449.3 million, compared with cash and cash equivalents of $112.7$189.3 million and short-term investments of $155.5$535.8 million as of December 31, 2016.2021. As of December 31, 2017, $66.42022, $253.8 million of cash and cash equivalents and $113.1$270.4 million of short-term investments were held by our international subsidiaries. After the enactment of the 2017 Tax Act, we currently planWe have and may continue to repatriate cash from our Bermuda subsidiary on an ongoing basis to fund our future expenditures in the U.S. and continue to indefinitely reinvest ourfuture periods. We anticipate that earnings from other foreign subsidiaries. See the "Income Tax Provision" section for further discussion.subsidiaries will continue to be indefinitely reinvested.   The significant components of our working capital are cash and cash equivalents, short-term investments, accounts receivable, inventories and other current assets, reduced by accounts payable, accrued compensation and related benefits, and other accrued liabilities. As of December 31, 2017, we had working capital of $383.3 million, compared with working capital of $330.1 million as of December 31, 2016. The $53.2 million increase in working capital was due to a $66.2 million increase in current assets, partially offset by a $13.0 million increase in current liabilities. The increase in current assets was primarily due to an increase in short-term investments, accounts receivable, inventories and prepaid expenses, partially offset by a decrease in cash and cash equivalents. The increase in current liabilities was primarily due to an increase in accounts payable, accrued compensation and related benefits and other accrued liabilities. Summary of Cash Flows   The following table summarizes our cash flow activities:     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020     (in thousands)     (in thousands)   Net cash provided by operating activities   $ 133,821     $ 107,786     $ 69,736     $ 246,674     $ 320,010     $ 267,803   Net cash used in investing activities     (134,060 )     (55,726 )     (57,197 )   (12,510 )   (378,886 )   (39,177 ) Net cash used in financing activities     (31,325 )     (28,127 )     (46,652 )   (128,785 )   (90,206 )   (71,557 ) Effect of exchange rate changes on cash and cash equivalents     1,620       (2,090 )     (1,293 ) Net increase (decrease) in cash and cash equivalents   $ (29,944 )   $ 21,843     $ (35,406 ) Effect of change in exchange rates     (6,039 )     3,400       4,926   Net increase (decrease) in cash, cash equivalents and restricted cash   $ 99,340     $ (145,682 )   $ 161,995     For the year ended December 31, 2017, net2022, the $73.3 million decrease in cash provided by operating activities was $133.8 million, primarily duecompared to our net income adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation and deferred taxes, and a net increase of $15.7 million from the changes in our operating assets and liabilities. The increase in deferred taxesprior period was primarily due to the release of the U.S. valuation allowance,changes in operating assets and liabilities, in particular, inventories and prepaid wafer purchases, partially offset by the remeasurement of the deferred tax balance as a result of the 2017 Tax Act, in the fourth quarter of 2017. The increase in accounts receivable was primarily driven by higher sales. The increase in inventories was primarily driven by an increase of $195.6 million in strategic wafernet income and die inventories as well as an increase of $37.5 million in finished goods to meet current demand and future growth. The increase in accounts payable was primarily driven by increased inventory and capital asset purchases to meet future demand. The increase in accrued liabilities was primarily driven by an increase in employee contributions to the deferredstock-based compensation plan and warranty expenses. The increase in income tax liabilities was primarily driven by the one-time deemed repatriation transition tax liability recorded in the fourth quarter of 2017.    For the year ended December 31, 2016, net2022, the $366.4 million decrease in cash provided by operatingused in investing activities was $107.8 million, primarily duecompared to our net income adjusted for certain non-cash items, including depreciation and amortization and stock-based compensation, and a net decrease of $2.9 million from the changes in our operating assets and liabilities. The increase in other assetsprior period was primarily due to a prepaid wafer purchase agreement we funded during the year. The increase$331.2 million decrease in inventories was primarily driven by increased purchases to meet current demandof short-term investments and future growth. The increasea $35.6 million decrease in accrued liabilities was primarily driven by an increase in employee contributions to the deferred compensation plan. capital expenditures.   For the year ended December 31, 2015, net2022, the $38.6 million increase in cash provided by operatingused in financing activities compared to the prior period was $69.7 million, primarily due to our net income adjusted for certain non-cash items, including depreciationa $28.6 million increase in dividend and amortization, stock-based compensation, a change in fair value of contingent considerationdividend equivalent payments and a net$12.0 million decrease of $12.6 millionin proceeds from common stock issued under the changes in our operating assets and liabilities. The increase in accounts receivable was primarily driven by increased sales. The increase in inventories was primarily driven by increased purchases to meet current demand and future growth. The increase in accrued liabilities was primarily driven by an increase in employee contributions to the deferred compensationequity incentive plan. For the year ended December 31, 2017, net cash used in investing activities was $134.1 million, primarily due to purchases of property and equipment of $65.8 million, net purchases of short-term investments of $63.0 million, and net contributions to the deferred compensation plan of $5.3 million. For the year ended December 31, 2016, net cash used in investing activities was $55.7 million, primarily due to purchases of property and equipment of $37.1 million, net purchases of investments of $13.6 million, and net contributions to the deferred compensation plan of $5.0 million. For the year ended December 31, 2015, net cash used in investing activities was $57.2 million, primarily due to net purchases of investments of $33.5 million, purchases of property and equipment of $16.0 million, and net contributions to the deferred compensation plan of $8.0 million.   3937 Table of Contents For the year ended December 31, 2017, we funded the purchases of land in Kirkland, Washington, office space in Shanghai and Hangzhou, China, and land and office space in Taipei, Taiwan for $53.8 million. For the year ended December 31, 2016, we funded the purchases of a previously leased manufacturing facility in Chengdu, China, office space in Shenzhen, China, and land and office space in Taipei, Taiwan for $17.5 million. For the year ended December 31, 2015, we spent $5.4 million to purchase office space in Shanghai, China. For the year ended December 31, 2017, net cash used in financing activities was $31.3 million, primarily reflecting $33.9 million used to pay dividends to our stockholders and dividend equivalents to our employees who hold RSUs, partially offset by $2.9 million of cash proceeds from stock option exercises and issuance of shares through our employee stock purchase plan. For the year ended December 31, 2016, net cash used in financing activities was $28.1 million, primarily reflecting $33.1 million used to pay dividends to our stockholders and dividend equivalents to our employees who hold RSUs, partially offset by $3.8 million of cash proceeds from stock option exercises and issuance of shares through our employee stock purchase plan. For the year ended December 31, 2015, net cash used in financing activities was $46.7 million, primarily reflecting $32.3 million used in repurchases of our common stock pursuant to our stock repurchase program and $30.0 million used to pay dividends to our stockholders and dividend equivalents to our employees who hold RSUs, partially offset by $10.0 million of cash proceeds from stock option exercises and issuance of shares through our employee stock purchase plan.  In July 2013, our Board of Directors approved a stock repurchase program that authorized us to repurchase up to $100 million in the aggregate of our common stock. The program expired on December 31, 2015. In February 2016, our Board of Directors approved a new stock repurchase program that authorized us to repurchase up to $50 million in the aggregate of our common stock. The program expired on December 31, 2017. For the years ended December 31, 2017 and 2016, we did not repurchase any shares. For the year ended December 31, 2015, we repurchased a total of 0.6 million shares for $32.3 million, at an average price of $50.05 per share. In June 2014, our Board of Directors approved a dividend program pursuant to which we intend to pay quarterly cash dividends on our common stock. In addition, outstanding RSU awards contain rights to receive 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 when the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill their service requirement and the awards do not vest. For the year ended December 31, 2017, we paid dividends and dividend equivalents totaling $33.9 million.  For the year ended December 31, 2016, we paid dividends and dividend equivalents totaling $33.1 million.  For the year ended December 31, 2015, we paid dividends and dividend equivalents totaling $30.0 million. In February 2018, our Board of Directors approved an increase in our quarterly cash dividends from $0.20 per share to $0.30 per share, effective for the first quarter of 2018. We anticipate that cash used for future dividends and dividend equivalent payments, as well as payments for the one-time deemed repatriation transition tax, will come from our current domestic cash and cash generated from ongoing U.S. operations. As a result of the 2017 Tax Act, we also plan to repatriate cash from our Bermuda subsidiary on an ongoing basis to fund these and other future expenditures in the U.S. and continue to indefinitely reinvest our earnings from other foreign subsidiaries. See the "Income Tax Provision" section for further discussion. Although cash requirements will fluctuate based on the timing and extent of many factors such as those discussed above, we believe that cash generated from operations, together with the liquidity provided by existing cash balances and short-term investments, will be sufficient to satisfy our liquidity requirements for the next 12 months.    In the future, in order to strengthen our financial position, respond to adverse developments, changes in our circumstance or unforeseen events or conditions, or fund our growth, we may need to discontinue paying dividends and dividend equivalents, and may need to raise additional funds by any one or a combination of the following: issuing equity securities, issuing debt or convertible debt securities, incurring indebtedness secured by our assets, or selling certain product lines and/or portions of our business. Accordingly, we cannot ensure that we will continue to pay dividends and dividend equivalents in the future, and thereThere can be no guarantee that we will be able to raise additional funds on terms acceptable to us, or at all.   From time to time, we have engaged in discussions with third parties concerning capital investments and potential acquisitions of product lines, technologies, businesses and companies, and we continue to consider potential investments and acquisition candidates. Any such transactions could involve the issuance of a significant number of new equity securities, assumptions of debt, and/or payment of cash consideration. We may also be required to raise additional funds to complete any such investments or acquisitions, through either the issuance of equity andand/or debt securities or incurring indebtedness secured by our assets. If we raise additional funds or acquire businesses or technologies through the issuance of equity securities or convertible debt securities, our existing stockholders may experience significant dilution.  40 Table of Contents   Contractual ObligationsCash Requirements   The following table summarizesAlthough consequences of economic uncertainty and macroeconomic conditions and other factors could adversely affect our contractual obligations atliquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $737.9 million as of December 31, 2017:2022, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.               Payment Due by Period       Total     Less Than 1 Year     1 - 3 Years     3 - 5 Years     More Than 5 years       (in thousands)   Operating leases   $ 2,145     $ 1,210     $ 829     $ 106     $ -   Outstanding purchase commitments (1)     52,586       49,736       1,000       1,000       850   Transition tax liability (2)     23,934       1,915       3,829       3,829       14,361   Other long-term obligations (3)     31,910       -       6,576       8,749       16,585   Total   $ 110,575     $ 52,861     $ 12,234     $ 13,684     $ 31,796   ______________Our material cash requirements include the following contractual and other obligations: (1) Outstanding purchase commitments primarily consist of wafer and other inventory purchases, assembly services and license arrangements. (2) The transition tax liability represents a one-time, mandatory deemed repatriation tax imposed on previously deferred foreign earnings under the 2017 Tax Act. As permitted by the 2017 Tax Act, we elected to pay the tax liability in installment over eight years: 8% in 2018, 8% in 2019, 8% in 2020, 8% in 2021, 8% in 2022, 15% in 2023, 20% in 2024, and 25% in 2025. See the “Income Tax Provision” section for further discussion. (3) Other long-term obligations include long-term liabilities reflected in our Consolidated Balance Sheets, which primarily consist of the deferred compensation plan liabilities and accrued dividend equivalents. Because of the uncertainty as to the timing of distributions related to a portion of the deferred compensation plan liabilities, we have excluded estimated obligations of $1.1 million from the table above. In addition, because of the uncertainty as to the timing of payments related to our liabilities for unrecognized tax benefits, we have excluded estimated obligations of $9.6 million from the table above.   Off Balance Sheet ArrangementsPurchase Obligations Purchase obligations represent our obligations with our suppliers and other parties that require the purchases of goods or services, which 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. In May 2022, we entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four-year period. As of December 31, 2022, the Company had made prepayments under this agreement of $170.0 million.   As of December 31, 2022, total estimated future unconditional purchase commitments to all suppliers and other parties were $1.1 billion, of which $455.4 million was short-term. Transition Tax Liability The transition tax liability represents the one-time, mandatory deemed repatriation tax imposed on previously deferred foreign earnings under the U.S. Tax Cuts and Jobs Act enacted in December 2017, (“2017 Tax Act”). As permitted by the 2017 Tax Act, we had no off-balance sheet arrangementshave elected to pay the tax liability in installments on an interest-free basis through 2025. As of December 31, 2022, the remaining liability totaled $14.8 million, of which $3.7 million was short-term. Operating Leases Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities and equipment. As of December 31, 2022, these obligations totaled $3.8 million, of which $2.1 million was short-term. Dividends We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock. Based on our historical practice, stockholders of record as defined in Item 303(a)(4) of the Securitieslast business day of the quarter are entitled to receive the quarterly cash dividends when and Exchange Commission’s Regulation S-K.if declared by the Board of Directors, which are payable to the stockholders in the following month. As of December 31, 2022, accrued dividends totaled $35.3 million. The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders.   ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKIn February 2023, our Board of Directors approved an increase in the quarterly cash dividend from $0.75 per share to $1.00 per share, which amount will be paid on April 14, 2023 to all stockholders of record as of the close of business on March 31, 2023.   Other Long-Term Obligations Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents. As of December 31, 2022, these obligations totaled $71.7 million. 38 Table of Contents Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk   Our cash equivalents and short-term investments are subject to market risk, primarily interest rate and credit risk. Our investments are managed by outside professional managers within investment guidelines set by management and approved by ourthe Audit Committee of the Board of Directors. Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting our investments to high quality debt instruments with relatively short-term maturities. A 10% declineBased on our investment positions as of December 31, 2022, the impact of changes in interest rates on our interest income was immaterial. Investments in debt securities are classified as available-for-sale, which are reported at fair value with the unrealized gains or losses being included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. When the fair value of an investment is below its amortized cost basis, unrealized losses due to changes in interest rates (i.e., non-credit loss factors) are not recognized in our results of operations unless we have the intent to sell the securities or it is more likely than not that we will be required to sell the securities before recovery of the entire amortized cost basis. Based on our investment positions as of December 31, 2022, a hypothetical 100 basis point increase in interest rates would impactresult in a $3.2 million decline in the fair value of our results of operations by approximately $0.5 million ininvestments. Any losses resulting from such interest income.rate changes would only be realized if we sold the investments prior to maturity.   We do not use derivative financial instruments in our investment portfolio. Investments in debt securities are classified as available-for-sale. For available-for-sale investments, no gains or losses are recognized in our results of operations due to changes in interest rates unless such securities are sold prior to maturity or are determined to be other-than-temporarily impaired. Available-for-sale investments are reported at fair value with the related unrealized gains or losses being included in accumulated other comprehensive income (loss), a component of stockholders’ equity. Long-Term Investments As of December 31, 2017, our holdings in auction-rate securities, which have a fair value of $5.3 million, have failed to reset as a result of current market conditions. A 10% decline in the fair value could impact our results of operations by approximately $0.5 million if we determined the decline in value to be other-than-temporary. 41 Table of Contents   Foreign Currency Exchange Risk   Our sales outside the United States are primarily transacted in U.S. dollars through our subsidiary in Bermuda. Accordingly, our sales are not generally impacted by foreign currency rate changes. The functional currency of the Company’sour offshore operations is generally the local currency, primarily including the Renminbi, the New Taiwan Dollar and the Euro. In addition, weWe incur foreign currency exchange gains or losses related to certain transactions, including intercompany transactions between the U.S. and our foreign subsidiaries, that are denominated in a currency other than the functional currency. Gains or losses from the settlementremeasurement and remeasurementsettlement of the balances are reported in interest and other income.income (expense), net, on the Consolidated Statements of Operations. Fluctuations in foreign currency exchange rates have not had a material impact on our results of operations in any offor the periods presented.   4239 Table of Contents   ITEM Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements and Supplementary Data   MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED FINANCIAL STATEMENTS   Contents   Page ReportReports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 44 41 Consolidated Balance Sheets 45 43 Consolidated Statements of Operations 46 44 Consolidated Statements of Comprehensive Income 47 45 Consolidated Statements of Stockholders’Stockholders’ Equity 48 46 Consolidated Statements of Cash Flows 49 47 Notes to Consolidated Financial Statements 50 48   4340 Table of Contents   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm   To the StockholdersStockholders 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. and subsidiaries (the "Company")Company) as of December 31, 20172022 and 2016,2021, 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, 2017,2022, and the related notes (collectively referred to as the "financial statements"“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofat December 31, 20172022 and 2016,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2022, in conformity with accounting principlesU.S. generally accepted in the United States of America.accounting principles.   We also have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sCompany’s internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control —- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2018,February 24, 2023 expressed an unqualified opinion on the Company's internal control over financial reporting.thereon.   Basis for Opinion   These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’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 financialfinancial 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 disclosures to which it relates. Inventory Valuation Description of the Matter The Company’s inventories totaled $447.3 million as of December 31, 2022, representing 21.7% of total assets. As explained in Note 1 to the consolidated financial statements, the Company values inventories at the lower of standard cost (which approximates actual cost determined on a first-in first-out basis) and estimated net realizable value in each reporting period. Excess and obsolete inventory is written down to its estimated net realizable value if less than cost.   Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required and the measurement of any excess of cost over net realizable value is judgmental and considers a number of qualitative factors that are affected by market and economic conditions outside the Company’s control. In particular, the excess and obsolete inventory calculations are sensitive to significant assumptions, including demand for the Company’s products, which considers adjustments to sales forecasts for specific product considerations, including but not limited to new product launches and expected industry sales growth.  How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess and obsolete inventory write down process. This included controls over management’s assessment of inventory valuation, including the determination of forecasted usage of inventories.  Our substantive audit procedures included, among others, evaluating the significant assumptions stated above and testing the completeness and accuracy of the underlying data used in management’s excess and obsolete inventory valuation assessment. We evaluated inventory levels compared to forecasted product demand, historical sales and specific product considerations. We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions.   /s/ DELOITTEErnst & TOUCHEYoung LLP San Jose, California   March 1, 2018     We have served as the Company'sCompany's auditor since 1999.2019. San Jose, California   February 24, 2023   4441 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, 2022, 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, Monolithic Power Systems, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, 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, 2022, and the related notes and our report dated February 24, 2023 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 24, 2023   42 Table of Contents MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, exceptexcept par value)     December 31,     December 31,     2017     2016     2022     2021   ASSETS                         Current assets:                   Cash and cash equivalents   $ 82,759     $ 112,703     $ 288,607     $ 189,265   Short-term investments     216,331       155,521     449,266     535,817   Accounts receivable, net     38,037       34,248     182,714     104,813   Inventories     99,281       71,469     447,290     259,417   Other current assets     12,762       9,043       42,742       35,540   Total current assets     449,170       382,984       1,410,619       1,124,852   Property and equipment, net     144,636       85,171     357,157     362,962   Long-term investments     5,256       5,354   Goodwill     6,571       6,571     6,571     6,571   Acquisition-related intangible assets, net     951       3,002   Deferred tax assets, net     15,917       633     35,252     21,917   Other long-term assets     30,068       27,411       249,286       69,523   Total assets   $ 652,569     $ 511,126     $ 2,058,885     $ 1,585,825                     LIABILITIES AND STOCKHOLDERS’ EQUITY                         Current liabilities:                   Accounts payable   $ 22,813     $ 17,427     $ 61,461     $ 83,027   Accrued compensation and related benefits     15,597       12,578     88,260     62,635   Accrued liabilities     27,507       22,916   Other accrued liabilities     113,679       81,282   Total current liabilities     65,917       52,921       263,400       226,944   Income tax liabilities     31,621       3,870     53,509     47,669   Other long-term liabilities     33,024       23,219       73,374       67,227   Total liabilities     130,562       80,010       390,283       341,840   Commitments and contingencies (notes 12, 13 and 14)                 Stockholders' equity:                 Common stock and additional paid-in capital, $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 41,614 and 40,793 as of December 31, 2017 and December 31, 2016, respectively     376,586       315,969   Commitments and contingencies             Stockholders’ equity:   Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 47,107 and 46,256, respectively   975,276     803,226   Retained earnings     143,608       119,362     716,403     424,879   Accumulated other comprehensive income (loss)     1,813       (4,215 )     (23,077 )     15,880   Total stockholders’ equity     522,007       431,116   Total liabilities and stockholders’ equity   $ 652,569     $ 511,126   Total stockholders’ equity     1,668,602       1,243,985   Total liabilities and stockholders’ equity   $ 2,058,885     $ 1,585,825     See accompanying notes to consolidated financial statements.statements.   4543 Table of Contents   MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   Revenue   $ 470,929     $ 388,665     $ 333,067     $ 1,794,148     $ 1,207,798     $ 844,452   Cost of revenue     212,646       177,792       152,898       745,596       522,339       378,498   Gross profit     258,283       210,873       180,169       1,048,552       685,459       465,954   Operating expenses:                           Research and development     82,359       73,643       65,787     240,171     190,627     137,598   Selling, general and administrative     97,257       83,012       72,312     273,595     226,190     161,670   Litigation expense (benefit), net     1,243       (229 )     1,000   Litigation expense, net     8,001       6,225       7,804   Total operating expenses     180,859       156,426       139,099       521,767       423,042       307,072   Income from operations     77,424       54,447       41,070   Interest and other income, net     5,520       2,817       1,421   Operating income   526,785     262,417     158,882   Other income (expense), net     (1,848 )     9,802       10,460   Income before income taxes     82,944       57,264       42,491     524,937     272,219     169,342   Income tax provision     17,741       4,544       7,319   Income tax expense     87,265       30,196       4,967   Net income   $ 65,203     $ 52,720     $ 35,172     $ 437,672     $ 242,023     $ 164,375                             Net income per share:                           Basic   $ 1.58     $ 1.30     $ 0.89     $ 9.37     $ 5.28     $ 3.67   Diluted   $ 1.50     $ 1.26     $ 0.86     $ 9.05     $ 5.05     $ 3.50   Weighted-average shares outstanding:                           Basic     41,350       40,436       39,470     46,727     45,851     44,840   Diluted     43,578       41,915       40,869     48,358     47,889     47,014                           Cash dividends declared per common share   $ 0.80     $ 0.80     $ 0.80     See accompanying notes to consolidated financial statements.statements.   4644 Table of Contents   MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands)      Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   Net income   $ 65,203     $ 52,720     $ 35,172     $ 437,672     $ 242,023     $ 164,375   Other comprehensive income (loss), net of tax:                           Foreign currency translation adjustments, net of $0 tax in 2017, 2016 and 2015     6,369       (5,033 )     (4,166 ) Change in unrealized loss on available-for-sale securities, net of $0 tax in 2017, 2016 and 2015     (341 )     (648 )     (179 ) Total other comprehensive income (loss), net of tax     6,028       (5,681 )     (4,345 ) Foreign currency translation adjustments   (32,293 )   8,404     14,150   Change in unrealized gain (loss) on available-for-sale securities, net of tax of $184, $613 and $(325), respectively     (6,664 )     (2,664 )     1,466   Other comprehensive income (loss), net of tax     (38,957 )     5,740       15,616   Comprehensive income   $ 71,231     $ 47,039     $ 30,827     $ 398,715     $ 247,763     $ 179,991     See accompanying notes to consolidated financial statements.statements.   4745 Table of Contents   MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands)  thousands, except per share amounts)                                Accumulated               Common Stock and             Other     Total       Additional Paid-in Capital     Retained     Comprehensive     Stockholders’       Shares     Amount     Earnings     Income (Loss)     Equity   Balance as of January 1, 2015     38,832     $ 240,500     $ 100,114     $ 5,811     $ 346,425   Net income     -       -       35,172       -       35,172   Other comprehensive loss     -       -       -       (4,345 )     (4,345 ) Dividends and dividend equivalents declared     -       -       (33,999 )     -       (33,999 ) Exercise of stock options     498       7,744       -       -       7,744   Release of restricted stock units     948       -       -       -       -   Repurchase of common shares     (645 )     (32,286 )     -       -       (32,286 ) Shares issued under the employee stock purchase plan     56       2,227       -       -       2,227   Stock-based compensation expense     -       41,650       -       -       41,650   Tax benefits from equity awards     -       5,928       -       -       5,928   Balance as of December 31, 2015     39,689       265,763       101,287       1,466       368,516   Net income     -       -       52,720       -       52,720   Other comprehensive loss     -       -       -       (5,681 )     (5,681 ) Dividends and dividend equivalents declared     -       -       (34,645 )     -       (34,645 ) Exercise of stock options     76       1,344       -       -       1,344   Release of restricted stock units     975       -       -       -       -   Shares issued under the employee stock purchase plan     53       2,463       -       -       2,463   Stock-based compensation expense     -       44,934       -       -       44,934   Tax benefits from equity awards     -       1,465       -       -       1,465   Balance as of December 31, 2016     40,793       315,969       119,362       (4,215 )     431,116   Net income     -       -       65,203       -       65,203   Other comprehensive income     -       -       -       6,028       6,028   Dividends and dividend equivalents declared     -       -       (35,816 )     -       (35,816 ) Exercise of stock options     9       150       -       -       150   Release of restricted stock units     772       -       -       -       -   Shares issued under the employee stock purchase plan     40       2,701       -       -       2,701   Stock-based compensation expense     -       52,625       -       -       52,625   Cumulative-effect adjustment from adoption of ASU No. 2016-09     -       5,141       (5,141 )     -       -   Balance as of December 31, 2017     41,614     $ 376,586     $ 143,608     $ 1,813     $ 522,007                                     Accumulated                 Common Stock and                 Other       Total       Additional Paid-in Capital       Retained       Comprehensive       Stockholders’       Shares       Amount       Earnings       Income (Loss)       Equity   Balance as of January 1, 2020     43,616       $ 549,517       $ 229,450       $ (5,476 )     $ 773,491   Net income     -         -         164,375         -         164,375   Other comprehensive income     -         -         -         15,616         15,616   Dividends and dividend equivalents declared ($2.00 per share)     -         -         (95,079 )       -         (95,079 ) Common stock issued under the employee equity incentive plan     1,623         18,767         -         -         18,767   Common stock issued under the employee stock purchase plan     28         3,819         -         -         3,819   Stock-based compensation expense     -         85,598         -         -         85,598   Balance as of December 31, 2020     45,267         657,701         298,746         10,140         966,587   Net income     -         -         242,023         -         242,023   Other comprehensive income     -         -         -         5,740         5,740   Dividends and dividend equivalents declared ($2.40 per share)     -         -         (115,890 )       -         (115,890 ) Common stock issued under the employee equity incentive plan     972         17,322         -         -         17,322   Common stock issued under the employee stock purchase plan     17         4,670         -         -         4,670   Stock-based compensation expense     -         123,533         -         -         123,533   Balance as of December 31, 2021     46,256         803,226         424,879         15,880         1,243,985   Net income     -         -         437,672         -         437,672   Other comprehensive loss     -         -         -         (38,957 )       (38,957 ) Dividends and dividend equivalents declared ($3.00 per share)     -         -         (146,148 )       -         (146,148 ) Common stock issued under the employee equity incentive plan     837         5,358         -         -         5,358   Common stock issued under the employee stock purchase plan     14         5,877         -         -         5,877   Stock-based compensation expense     -         160,815         -         -         160,815   Balance as of December 31, 2022     47,107       $ 975,276       $ 716,403       $ (23,077 )     $ 1,668,602     See accompanying notes to consolidated financial statements.statements.   4846 Table of Contents   MONOLITHIC POWER SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)     Year Ended December 31,     2017     2016     2015     Year Ended December 31,                             2022     2021     2020   Cash flows from operating activities:                                     Net income   $ 65,203     $ 52,720     $ 35,172     $ 437,672     $ 242,023     $ 164,375   Adjustments to reconcile net income to net cash provided by operating activities:                           Depreciation and amortization of intangible assets     16,101       14,674       13,783   (Gain) loss on sales or write-off of property and equipment     (3 )     57       (339 ) Amortization of premium on available-for-sale investments     1,976       1,019       463   (Gain) loss on deferred compensation plan investments     (2,531 )     (1,257 )     133   Change in fair value of contingent consideration     -       -       (2,507 ) Depreciation and amortization   37,114     28,699     19,186   Amortization of premium on available-for-sale securities   4,375     4,674     2,979   Loss (gain) on deferred compensation plan investments   6,600     (4,563 )   (4,592 ) Deferred taxes, net     (15,238 )     (5 )     42     (13,220 )   (2,772 )   (1,627 ) Excess tax benefits from equity awards     -       (1,465 )     (5,928 ) Stock-based compensation expense     52,617       44,989       41,563     160,992     123,479     85,551   Other   97     110     (1,072 ) Changes in operating assets and liabilities:                           Accounts receivable     (3,785 )     (3,421 )     (5,201 )   (77,903 )   (37,976 )   (14,123 ) Inventories     (27,795 )     (8,323 )     (22,210 )   (188,073 )   (102,323 )   (29,503 ) Other assets     1,603       (11,021 )     (390 )   (177,284 )   (15,311 )   (3,003 ) Accounts payable     3,077       5,483       147     (11,240 )   32,926     10,410   Accrued compensation and related benefits     2,397       3,136       1,068     28,514     16,536     18,524   Accrued liabilities     10,852       8,035       9,942   Income tax liabilities     29,347       3,165       3,998     16,559     11,771     747   Other accrued liabilities     22,471       22,737       19,951   Net cash provided by operating activities     133,821       107,786       69,736       246,674       320,010       267,803   Cash flows from investing activities:                                     Property and equipment purchases     (65,773 )     (37,112 )     (16,024 ) Proceeds from sales of property and equipment     3       -       340   Purchases of property and equipment   (58,843 )   (94,420 )   (55,610 ) Purchases of short-term investments     (140,531 )     (236,912 )     (223,018 )   (63,700 )   (394,886 )   (334,947 ) Proceeds from maturities and sales of short-term investments     77,502       223,344       189,549   Maturities and sales of short-term investments   127,860     113,255     357,092   Purchases of long-term investments   (2,085 )   -     (3,316 ) Sales of long-term investments   750     500     300   Contributions to deferred compensation plan, net     (5,261 )     (5,046 )     (8,044 )   (16,492 )   (2,542 )   (2,696 ) Purchases of intangible assets     -       (793 )     -   Net cash used in investing activities     (134,060 )     (55,726 )     (57,197 )     (12,510 )     (378,886 )     (39,177 ) Cash flows from financing activities:                                     Property and equipment purchased on extended payment terms     (250 )     (300 )     (300 )   (2,055 )   (2,834 )   (5,357 ) Proceeds from exercise of stock options     150       1,344       7,744   Proceeds from shares issued under the employee stock purchase plan     2,701       2,463       2,227   Repurchase of common shares     -       -       (32,286 ) Proceeds from common stock issued under the employee equity incentive plan   5,358     17,322     18,767   Proceeds from common stock issued under the employee stock purchase plan   5,877     4,670     3,819   Dividends and dividend equivalents paid     (33,926 )     (33,099 )     (29,965 )     (137,965 )     (109,364 )     (88,786 ) Excess tax benefits from equity awards     -       1,465       5,928   Net cash used in financing activities     (31,325 )     (28,127 )     (46,652 )     (128,785 )     (90,206 )     (71,557 ) Effect of change in exchange rates     1,620       (2,090 )     (1,293 )     (6,039 )     3,400       4,926   Net increase (decrease) in cash and cash equivalents     (29,944 )     21,843       (35,406 ) Cash and cash equivalents, beginning of period     112,703       90,860       126,266   Cash and cash equivalents, end of period   $ 82,759     $ 112,703     $ 90,860                 Net increase (decrease) in cash, cash equivalents and restricted cash   99,340     (145,682 )   161,995   Cash, cash equivalents and restricted cash, beginning of period     189,389       335,071       173,076   Cash, cash equivalents and restricted cash, end of period   $ 288,729     $ 189,389     $ 335,071   Supplemental disclosures for cash flow information:                           Cash paid for taxes and interest   $ 3,619     $ 1,234     $ 3,322   Supplemental disclosures of non-cash investing and financing activities:                         Cash paid for taxes   $ 85,031     $ 21,148     $ 1,405   Non-cash investing and financing activities:   Liability accrued for property and equipment purchases   $ 3,061     $ 787     $ 2,184     $ 5,743     $ 17,877     $ 7,839   Liability accrued for dividends and dividend equivalents   $ 10,686     $ 10,416     $ 10,109     $ 40,939     $ 33,059     $ 27,507     See accompanying notes to consolidated financial statements.statements.   4947 Table of Contents   MONOLITHIC POWER SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Business   Monolithic Power Systems, Inc. (“MPS” or the(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 designs, develops and markets integratedhigh-performance, semiconductor-based power semiconductor solutions and power delivery architectures. MPS'selectronic solutions. MPS’s mission is to provide innovative power solutions in the storage and computing, enterprise data, automotive, industrial, communications and consumer computing and storage, industrial, automotive and communications markets.markets.   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 accounting principles generally accepted in the United States of America (“GAAP”)GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions used in these consolidated financial statements primarily include those related to revenue recognition, inventory valuation, valuation of share-based awards, valuation of goodwillcontingencies and acquisition-related intangible assets, contingencies andincome tax valuation allowances. Actual results could differ from those estimates. these estimates and assumptions, and any such differences may be material to the Company’s consolidated financial statements.    Certain Significant Risks and Uncertainties   Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term and long-term investments and accounts receivable. The Company’s cash consists of checking and savings accounts. The Company’s cash equivalents include short-term, highly liquid investments purchased with remaining maturities at the date of purchase of three months or less. The Company’s short-term investments may consist of corporate debt securities, certificates of deposit, commercial paper and government agency bonds and treasuries, and the long-term investments consist of government-backed student loan auction-rate securities. securities and non-marketable equity investments. The Company generally does not require its customers to provide collateral or other security to support accounts receivable. The Company assesses the collectability by reviewing accounts receivable on a customer-by-customer basis. To manage credit risk, management performs ongoing credit evaluations of itsthe customers’ financial condition.  Thecondition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables. For certain high-risk customers, the Company requires cash instandby letters of credit or advance for certain customers in additionpayment prior to ongoing credit evaluations. The Company did not record any allowance for doubtful accounts asshipments of December 31, 2017 and 2016.goods.   The Company participates in the dynamic high technology industry and believes that changes in any of the following areas could have a material adverse effect on its future financial position, results of operations or cash flows: advances and trends in new technologies and industry standards; competitive pressures in the form of new products or price reductions on current products; changes in product mix; changes in the overall demand for products offered by the Company; changes in third-party manufacturers;manufacturers or the terms of such arrangements; changes in key suppliers; changes in certain strategic relationships or customer relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory or other factors; fluctuations in foreign currency exchange rates; risk associated with changes in government policies and regulations on trade restrictions and corporate taxes; availability of necessary components or sub-assemblies; availability of foundry capacity; ability to integrate acquired companies; and the Company’sCompany’s ability to attract and retain employees necessary to support its growth.   48 Table of Contents Foreign Currency In general, the functional currency of the Company’sCompany’s international subsidiaries is the local currency. The primary subsidiaries are located in China, Taiwan and Taiwan,Europe, which utilize the Renminbi, and 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 presented as a separate component ofrecorded in accumulated other comprehensive income (loss) in stockholders’ equity inon the Consolidated Balance Sheets. In addition, the Company incurs foreign currency exchange gaingains or losslosses related to certain transactions, including intercompany transactions, between the U.S. and its foreign subsidiaries that are denominated in a currency other than the functional currency. In connection with the settlementremeasurement and remeasurementsettlement of the balances, the Company recorded foreign currency exchange gain (loss) of $(0.6)$0.5 million, $0.1$(0.7) million and $0.6$(1.4) million for the years ended December 31, 2017,2022, 20162021 and 2015,2020, respectively, which were reported in interest and other income (expense), net, inon the Consolidated Statements of Operations. 50 Table of Contents   CashFor intercompany transactions that are of a long-term investment nature, the Company records the foreign currency exchange gains and losses in accumulated other comprehensive income (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 income (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 a specific identification method. 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 income (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. Equity Investments Equity investments in privately held companies without readily determinable fair values are accounted for under the measurement alternative method, provided that the Company does not have the ability to exercise significant influence or control over the investees. Under this method, the Company measures the investments at cost, less any impairment, and adjusts the carrying value of the investments to fair value resulting from observable transactions for identical or similar investments of the same issuer. The Company records the investments in other long-term assets on the Consolidated Balance Sheets, and gains and losses on the investments are recognized in other income (expense), net, on the Consolidated Statements of Operations. The Company monitors its non-marketable equity investments for impairment indicators, such as negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. If indicators exist for a security and the fair value is below the carrying amount, the Company writes down the security to fair value. 49 Table of Contents Fair Value of Financial InstrumentInstrumentss 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 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: Quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly Level 3: Significant unobservable inputs ● Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. ● Level 3 - Significant unobservable inputs to the valuation methodology and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.     The Company’s financial instruments include cash and cash equivalents, and short-term and long-term investments. Cash equivalents are stated at cost, which approximates fair market value. The Company’s short-term and long-term investments are classified as available-for-sale securities and are stated at their fair market value. Premiums and discounts are amortized or accreted over the life of the related available-for-sale securities.  Interest income is recognized when earned.   The Company determines whether an impairment is temporary or other-than temporary. Unrealized gains or losses that are deemed to be temporary are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity in the Consolidated Balance Sheets, and changes in unrealized gains or losses are recorded in the Consolidated Statements of Comprehensive Income. The Company records an impairment charge in interest and other income, net, in the Consolidated Statements of Operations when an available-for-sale investment has experienced a decline in value that is deemed to be other-than-temporary. Other-than-temporary impairment exists when the Company either has the intent to sell the security, it will more likely than not be required to sell the security before anticipated recovery, or it does not expect to recover the entire amortized cost basis of the security. As of December 31, 2017 and 2016, the fair value of the Company’s holdings in auction-rate securities was $5.3 million and $5.4 million, respectively, all of which was classified as long-term available-for-sale investments. The valuation of the auction-rate securities is subject to fluctuations in the future, which will depend on many factors, including the quality of the underlying collateral, estimated time to liquidity including potential to be called or restructured, underlying final maturity, insurance guaranty and market conditions, among others. Inventories   Inventories are stated 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 inventoryinventories based on itstheir 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 differences 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. Production equipment and software have estimated useful lives of three to seveneight years. Transportation equipment has estimated useful lives of 5 to 1520 years. Furniture and fixtures have estimated useful lives of three to five years. Land is not depreciated.   Goodwill and Acquisition-Related Intangible Assets Goodwill represents the excess of the fair value of purchase consideration over the fair value of net tangible and identified intangible assets as of the date of acquisition. In-process research and development (“IPR&D”) assets represent the fair value of incomplete R&D projects that had not reached technological feasibility as of the date of acquisition. The IPR&D assets are initially capitalized at fair value as intangible assets with indefinite lives and assessed for impairment at each reporting period. When the IPR&D projects are completed, they are reclassified as amortizable intangible assets and are amortized over their estimated useful lives. Alternatively, if the IPR&D projects are abandoned, they are impaired and expensed to research and development. 51 Table of Contents Acquisition-related intangible assets with finite lives consist of know-how and developed technologies. These assets are amortized on a straight-line basis over the estimated useful lives ofthree to five years and the amortization expense is recorded in cost of revenue in the Consolidated Statements of Operations. Impairment of Long-Lived Assets   The Company evaluates its long-lived assets other than goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Such impairment loss would be measured as the difference between the carrying amount of the asset and its fair value based on the present value of estimated future cash flows. The Company did not record material impairments in any of the periods presented. Goodwill 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 theeach 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 itsthe fair value of the reporting unit is less than the carrying amount, then the two-stepa quantitative goodwill impairment test is performed. The first step compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step measuresperformed to measure the impairment loss by comparing the implied fair value of the goodwill with the carrying amount. loss. No impairment of goodwill has been identified in any of the periods presented.   Other Long-Term Assets   Other assets primarily consist of investments related to the employee deferred compensation plan, intangible assets for the land use rights in Chengdu, China, and certain prepaid expenses. The Company amortizes the land use rights over 50 years. Deferred Compensation Plan  The Company has a non-qualified, unfunded deferred compensation plan, which provides certain key employees, including executive management,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.   50 Table of Contents The liabilities for compensation deferred under the plan are recorded at fair value in each reporting period. Changes in the fair value of the liabilities are included in operating expense inon 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 mutualmoney market funds that offset a substantial portion of the exposure. The investments are recorded at the cash surrender value of the corporate-owned life insurance policies, and at the fair value of the mutual funds and money market funds, which are classified as trading securities. 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 interest and other income (expense), net, inon the Consolidated Statements of Operations. The following table summarizes the deferred compensation plan balances inon the Consolidated Balance Sheets (in thousands):       December 31,       2017     2016   Deferred compensation plan asset components:                 Cash surrender value of corporate-owned life insurance policies   $ 11,455     $ 8,180   Fair value of mutual funds     16,625       12,108   Total   $ 28,080     $ 20,288                     Deferred compensation plan assets reported in:                 Other long-term assets   $ 28,080     $ 20,288                     Deferred compensation plan liabilities reported in:                 Accrued compensation and related benefits (short-term)   $ 356     $ 479   Other long-term liabilities     28,087       19,836   Total   $ 28,443     $ 20,315   52 Table of Contents     December 31,       2022     2021   Deferred compensation plan asset components:                 Cash surrender value of corporate-owned life insurance policies   $ 19,089     $ 21,386   Fair value of mutual funds and money market funds     43,933       31,786   Total   $ 63,022     $ 53,172                     Deferred compensation plan assets reported in:                 Other long-term assets   $ 63,022     $ 53,172                     Deferred compensation plan liabilities reported in:                 Accrued compensation and related benefits (short-term)   $ 118     $ 282   Other long-term liabilities     64,863       55,489   Total   $ 64,981     $ 55,771     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 to in exchange for those goods or services. See Note 2 for further discussion. R&D Costs incurred in R&D are expensed as incurred. Warranty ReservesReserve   The Company generally provides a one to two-year warrantywarranties against defects in materials and workmanship and will either repair the goods orproducts, provide replacement productsreplacements at no charge to customers or issue a refund. As they are considered assurance-type warranties, the customerCompany does not account for defective products. Reservethem as separate performance obligations. Warranty reserve requirements are recorded in the period of sale and aregenerally based on ana specific assessment of the products sold with warranties when a customer asserts a claim for warranty and historical warranty costs incurred. Historically, the warranty expenses have not been material to the Company’s consolidated financial statements. or a product defect.  Revenue RecognitionLeases   The Company’s revenue consists primarily of product sales of assembled 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 tested integrated circuitsoperating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and dies in wafer form toliabilities are recognized at the consumer, computing and storage, industrial, automotive and communications markets. The remaining revenue has not been significant historically and primarily includes royalties from licensing arrangements and revenue from wafer testing services for third parties. The Company recognizes revenuecommencement date based on the followingpresent 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 fournot criteria: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3)readily determinable, the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) is based on management’s judgment regardingCompany uses its estimated incremental borrowing rate to determine the fixed naturepresent value of the fees charged for products deliveredremaining 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 the collectability of those fees. The application of these criteria has resulted innon-lease components, the Company generally recognizing revenue upon shipment or delivery (when title and risk of loss have transferred to customers), including to most of the distributors, original equipment manufacturers and electronic manufacturing service providers.accounts for them as single lease components.   For each of the years ended December 31, 2017, 2016 and 2015,88% of the Company’s sales, respectively, were made through distribution lease arrangements with third parties. The Company generally recognizes revenue upon shipment or delivery of products to the distributors based on the following considerations: (1) The price is fixed or determinable at the date of sale. The Company does not offer special payment terms (the Company’s normal payment terms are 30-45 days for its distributors) or price adjustments to distributors when the Company recognizes revenue upon shipment or delivery. (2) The distributors are obligated to pay the Company and this obligation is not contingent on the resale of the Company’s products. (3) The distributors’ obligation is unchanged in the event of theft or physical destruction or damage to the products. (4) The distributors has stand-alone economic substance apart from the Company’s relationship. (5) The Company doesnot have any obligations for future performance to directly bring about the resale of its products by the distributors. (6) The amount of future returns can be reasonably estimated. Certain of the Company’s large distributors have contracts that included limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases. The Company maintains a sales reserve for stock rotation rights, which is based on historical experience of actual stock rotation returns on a per-distributor basis and information related to products in the distribution channel. This reserve is recorded at the time of sale. As of December 31, 2017 and 2016, the reserve for stock rotation rights was $2.6 million and $1.9 million, respectively.  Ifwhere the Company enters into arrangements with distributors that have price adjustment or other rights that are not fixed or determinable,is the lessor, the Company recognizes revenue under such arrangements only afterlease income from operating leases on a straight-line basis over the distributors have sold the products to end customers, at which time the price is no longer subject to adjustment and is fixed. Three of the Company’s U.S.-based distributors have such price adjustment rights and accordingly, the Company defers revenue recognition on these shipments until the products are sold to the end customers by the distributors. As of December 31, 2017 and 2016, the deferred revenue balance before the price adjustments from these distributors was $1.9 million and $3.7 million, and the deferred costs were $0.2 million and $0.3 million, respectively.lease term.   On January 1, 2018, 51the Company adopted Accounting Standards Update (“ASU”) No.2014-09,Revenue from Contracts with Customers (Topic 606). The primary effects Table of the new standard for the Company related to the timing of revenue recognition with the three U.S.-based distributors with price adjustment rights. See “Recent Accounting Pronouncements Not Yet Adopted as of December 31, 2017” below for further discussion.Contents Stock-Based Compensation   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 restricted stock units (“RSUs”) with service conditions or performance conditions is based on the grant date share price. The fair value of RSUs with only market conditions, as well as RSUs containing both market and performanceservice conditions is estimated using a Monte Carlo simulation model.determined based on the grant date stock price. The fair value of stock options, shares issued underall other awards is determined based on the employee stock purchase plan and RSUs with a purchase price feature is estimated using the Black-Scholes model.following valuation methods:   53 Table Type of Awards Valuation Method RSUs with performance conditions (“PSUs”) Black-Scholes model RSUs with market conditions (“MSUs”) Monte Carlo simulation model RSUs with both performance and market conditions (“MPSUs”) Monte Carlo simulation model Shares issued under the employee stock purchase plan (“ESPP”) Black-Scholes model The valuation models consider inputs including stock price, expected volatility, expected term of Contents awards, risk-free interest rate, and expected dividend yield. Expected volatility used in the models is determined based on historical volatility of the Company's stock price for the period, which corresponds to the expected term of the awards, immediately preceding the granting of the awards.   Compensation expense related to awards with service conditions is recorded on a straight-line basis over the requisite service period. Compensation expense related to awardsawards subject to marketperformance or performancemarket conditions is recognized over the requisite service period for each separately vesting tranche. For awards with only market conditions, compensation expense is not reversed if the market conditions are not satisfied. For awards with only performance conditions, as well as awards containing both market and performance conditions, the Company recognizes compensation expense when it becomes probable that the performance criteriagoals will be achieved. Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and the analog industry revenue forecasts, and internal factors, such as the Company’s business and operational objectives and revenue forecasts. 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.satisfied as a result of management’s assessment.   Prior to January 1, 2017, theThe Company recognized stock-based compensation expense less an estimate for forfeitures. Upon the adoption of ASU No.2016-09,Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, on January 1, 2017, the Company elected to accountaccounts for forfeitures of equity awards when they occur. See “Recently Adopted Accounting Pronouncement” below for further discussion.   Research and Development Costs incurred in research and development are expensed as incurred. 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’sCompany’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, in part, on added certainty, or 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 primarily related to transfer pricing, cost sharing and its international tax structure exposure.judgments.   On December 22, 2017, the tax legislation commonly known as the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted, which significantly changed U.S. corporate income tax law. The 2017 Tax Act made the following material changes:(1) reduction of the corporate income tax rate effective January 1, 2018; (2) replacement of the worldwide tax system with a territorial tax regime, with a one-time mandatory tax on previously deferred foreign earnings; (3) amendment on the deductibility of executive performance-based compensation, and (4) creation of new taxes on certain foreign-sourced earnings. Income tax effects resulting from changes in tax laws are accounted for by the Company in the period in which the law is enacted. See Note 12 for further discussion. 54 Table of Contents Litigation and ContingenciesContingencies   The Company is a party to actions and proceedings in the ordinary course of business, including potential litigation regarding its shareholders and its intellectual property, challenges to the enforceability or validity of its intellectual property, claims that the Company’sCompany’s products infringe on the intellectual property rights of others, and employment matters. The Company may also be subject to litigation initiated by its stockholders. The 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 Litigation expense, (benefit), net, inrecorded on the Consolidated Statements of Operations includes primarily patent infringement litigation and other business matters. The Company records litigation costs in the period in which they are incurred. Proceeds resulting from settlement of litigation or favorable judgments are recorded as a reduction against litigation expense. Net Income pper Shareer Share Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that would occur if outstanding securities or other contracts to issue common stock were exercisedexercised or converted into common shares, and calculated using the treasury stock method. Contingently issuable shares, including equity awards with performance conditions or market conditions, are considered outstanding common shares and included in the basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied. Prior to the end of the contingency period, the number of contingently issuable shares included in the diluted net income per share is based on the number of shares, if any, that would be issuable under the terms of the arrangement at the end of the reporting period.   The Company’s outstandingCompany’s RSUs contain forfeitable rights to receive cash dividend equivalents, which are accumulated and paid to the employees when the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill theirthe requisite service requirement and, as a result, the awards do not vest. Accordingly, these awards are not treated as participating securities in the net income per share calculation.  Comprehensive Income Comprehensive income represents the change in the Company’sCompany’s net assets during the period from non-owner sources. Accumulated other comprehensive income (loss) presented inon the Consolidated Balance Sheets primarily consists of unrealized gains or losses related to available-for-sale investments and foreign currency translation adjustments.   RecentlyRecent Accounting Pronouncements Not Yet Adopted Accounting Pronouncementas of December 31, 2022 Stock-Based Compensation:   In March 2016,October 2021, the Financial Accounting Standards Board ("FASB") issued ASUAccounting Standards Update No. 20162021-09,08, Compensation—Stock CompensationBusiness Combinations (Topic 718)805): Improvements to Employee Share-Based Payment Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which changed how entities account for certain aspects of share-based payment awards, includingimproves the accounting for excess tax benefitsacquired revenue contracts with customers in a business combination. The standard requires an acquirer to recognize and tax deficiencies, forfeitures, statutory tax withholding requirements, as well as classification of excess tax benefitsmeasure contract assets and contract liabilities acquired in the statements of cash flows. The Company adopted the standard on January 1, 2017 and the primary impact of the adoption was as follows: ● The Company elected to account for forfeitures of equity awards when they occur. The change was applied on a modified retrospective basis and the Company recorded a cumulative-effect adjustment of $5.1 million to retained earnings on January 1, 2017, a business combination in accordance with a corresponding offset to additional paid-in capital.  ● Excess tax benefits are recognized in the income tax provision in the Consolidated Statements of Operations prospectively, rather than in additional paid-in capital in the Consolidated Balance Sheets. The Company applied the modified retrospective method and there was no net impact on retained earnings on January 1, 2017, as the increase in deferred tax assets related to previously unrecognized excess tax benefits was fully offset by a valuation allowance. ● The Company is presenting excess tax benefits as an operating activity in the Consolidated Statements of Cash Flows on a prospective basis. 55 Table of Contents Recent Accounting Pronouncements Not Yet Adopted as of December 31, 2017 Revenue Recognition: In May 2014, the FASB issued ASU No.2014-09, Revenue from Contracts with Customers (Topic 606)(“Topic 606”). The standard is effective for fiscal years beginning after December 15, 2022, including interim period within those fiscal years, and is applied prospectively. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 2. REVENUE RECOGNITION Revenue from Product Sales The Company generates revenue primarily from product sales, which include assembled and tested ICs, as well as dies in wafer form. These product sales accounted for 98%, 97% and 97% of the Company’s total revenue for the years ended December 31, 2022, 2021 and 2020, respectively. The remaining revenue primarily includes royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties, which outlines a single comprehensive modelhave not been significant for entitiesthe periods presented. See Note 15 for the disaggregation of the Company’s revenue by geographic regions and by product families. The Company sells its products primarily through third-party distributors, value-added resellers, OEMs, ODMs and EMS providers. For the years ended December 31, 2022, 2021 and 2020, 83%, 88% and 81%, respectively, of the Company’s product sales were made through distribution arrangements. These distribution arrangements contain enforceable rights and obligations specific to use in accountingthose 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 revenue arising fromunit price, quantity, shipping and payment agreed by both parties. The Company considers purchase orders to be the contracts with customers. The standard’s core principleunit price as stated on the purchase orders is that an entity will recognizeconsidered the observable, stand-alone selling price for the arrangements. 53 Table of Contents The Company recognizes revenue when it transferssatisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration to which the entityCompany expects to be entitled to in exchange for those goods or services. The Company adopted the standard on January 1, 2018 using the modified retrospective method and prior-period results will not be restated. In the first quarter of 2018, the Company will record approximately $0.8 million, before tax, to retained earnings related to the cumulative effect of adopting Topic 606, primarily due to the change in revenue recognition for its U.S.-based distributorsexcludes taxes assessed by government authorities, such as discussed belowsales taxes, from revenue.   Under Topic 606, the Company’s productProduct sales consist of a single performance obligation that is satisfiedthe Company satisfies at a point in time. The Company recognizes product revenue from distributors and otherdirect end customers when the products are shipped or delivered to the customers (based on the terms of the firm purchase orders and sales agreements), primarily becausefollowing events have occurred: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customers havecustomer has legal title to the products, and (d) the customers bearcustomer 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).   The primary change forUnder certain consignment agreements, revenue is not recognized when the products are shipped and delivered to be held at customers’ designated locations because the Company under Topiccontinues to control the products and retain ownership, and the customers do 606not relateshave an unconditional obligation to pay. The Company recognizes revenue when the customers consume the products from the consigned inventory locations or, in some cases, after a 60-day period from the delivery date has passed, at which time control transfers to the timing of revenue recognition with three U.S.-based distributors. Sales to these distributors are transacted undercustomers and the terms of agreements providingCompany invoices them for payment. Variable Consideration The Company accounts for price adjustment and other rights. Priorstock rotation rights as variable consideration that reduces the transaction price and recognizes that reduction in the same period the associated revenue is recognized. Four U.S.-based distributors have price adjustment rights when they sell the Company’s products to their end customers at a price that is lower than the adoption of Topic 606, revenue and costs related to these sales were deferred untildistribution price invoiced by the Company. When the Company received notificationreceives claims from the distributors that products have been sold to the end customers at the lower prices, the Company issues the distributors credit memos for the price adjustments. The Company estimates the price adjustments using the expected value method based on an analysis of historical claims, at both the distributor and product level, as well as an assessment of any known trends of product sales mix. Other U.S. distributors and non-U.S. distributors do not have price adjustment rights. The Company records a credit against accounts receivable for the estimated price adjustments, with a corresponding reduction to revenue. 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 amountcurrent level of price adjustments was fixed and finalized.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. As of December 31, 2017,2022 and 2021, accounts receivable totaled $182.7 million and $104.8 million, respectively. The Company's accounts receivable are short-term, with standard payment terms generally ranging from 30 to 90 days. The Company did not recognize any write-offs of accounts receivable or record any allowance for credit losses for the deferred revenue balanceperiods presented.  Contract Liabilities: For certain customers located in Asia, the Company requires cash payments two weeks before the price adjustments was $1.9 million and the related deferred costs were $0.2 million. Upon adoption of Topic 606, the transaction price takes into consideration the effect of variable consideration such as price adjustments, whichproducts are estimated and recorded at the time the promised goods are transferredscheduled to be shipped to the customers. Accordingly, effective January 1, 2018, the Company recognizes revenue at the time of shipment or delivery to the distributors, adjusted for an estimate of the price adjustments based on management’s review of historical data and other information available at the time. Revenue from other U.S. and non-U.S. distributors, which make up the majority of the Company’s total sales to distributors, was already recognized at the time of shipment or delivery to the distributors prior to the adoption of Topic 606 because these arrangements do not contain price adjustment rights. Accordingly, revenue recognition on arrangements with these distributors remains substantially unchanged upon adoption of Topic 606. Other: In February 2016, the FASB issued ASUNo.2016-02,Leases (Topic 842), which requires entities to recognize a right-of-use asset and a lease liability on the balance sheets for substantially all leases with a lease term greater than 12 months, including leases currently accounted for as operating leases. In addition, the standard applies to leases embedded in service arrangements. The standard requires modified retrospective adoption and will be effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impactrecords these payments received in advance of the adoption on its consolidated financial position, results of operations, cash flows and disclosures. In June 2016, the FASB issued ASU No.2016-13,Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a model based on expected losses to estimate credit losses for most financial assets and certain other instruments. In addition, for available-for-sale debt securities with unrealized losses, the losses will be recognizedperformance as allowances rather than reductions in the amortized cost of the securities. The standard will be effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted for annual reporting periods beginning after December 15, 2018. Entities will apply the standard by recording a cumulative-effect adjustment to retained earnings. The Company is evaluating the impact of the adoption on its consolidated financial position, results of operations, cash flows and disclosures. In January 2017, the FASB issued ASU No.2017-04,Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment, which simplifies the accounting for goodwill impairment. The guidance removes step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The standard will be applied prospectively, and is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of the adoption on its annual goodwill impairment test. 56 Table of Contents 2. ACQUISITION On July 22, 2014 (the “Acquisition Date”), the Company acquired 100% of the outstanding capital stock of Sensima Technology SA (“Sensima”) for total purchase consideration of $14.2 million, which consisted of a cash payment of $11.7 million and the fair value of contingent consideration of $2.5 million. The contingent consideration arrangement required the Company to pay up to an additional $8.9 million to former Sensima shareholders if Sensima achieved a new product introduction as well as certain product revenue and direct margin targets in 2016. The fair value of the contingent consideration at the Acquisition Date was $2.5 million, which was estimated based on a probability-weighted analysis of possible future revenue outcomes. The fair value of the contingent consideration was initially recorded in other long-term liabilities in the Consolidated Balance Sheets and was remeasured at the end of each reporting period, with any changes in fair value recorded in operating expense in the Consolidated Statements of Operations.customer prepayments within current accrued liabilities. As part of the quarterly assessment in the fourth quarter of 2015, management reviewed the sales forecast for the products and determined that the projected product revenue in 2016 would likely not meet the minimum target required to earn the contingent consideration, primarily because the product adoption process by customers would take longer than the Company had originally anticipated. Accordingly, the fair value of the contingent consideration was deemed to be $0 as of December 31, 2015.2022 The Company released the liability ofand $2.52021, customer prepayments totaled $3.6 million and recorded$4.3 million, respectively. The decrease in the credit in selling, general and administrative expensescustomer prepayment balance for the year ended December 31, 2015.2022 resulted from a decrease in unfulfilled customer orders for which the Company has received payments. For the year ended December 31, 2022, the Company recognized $4.3 million of revenue that was included in the customer prepayment balance as of December 31, 2021.   OnPractical Expedients The Company has elected the practical expedient to expense sales commissions as incurred because the amortization period would have been December 31, 2016, oneat year or less.  The Company’s standard payment terms generally require customers to pay 30 to 90 days after the conclusion ofCompany satisfies the performance period, management affirmed that no contingent consideration was earned asobligations. For those customers who are required to pay in advance, the actual product revenue in 2016 didCompany satisfies the performance obligations generally within a quarter. The Company has elected not meet the minimum target.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. 54 Table of Contents   33..  CASH, CASH EQUIVALENTS, INVESTMENTS AND INVESTMENTSRESTRICTED CASH   The following is a summary of the Company’sCompany’s cash, cash equivalents and short-term and long-termdebt investments (in thousands):      December 31,     December 31,     2017     2016     2022     2021   Cash, cash equivalents and investments:                 Cash   $ 75,125     $ 87,747     $ 273,145     $ 174,937   Money market funds     7,134       24,956     15,462     14,328   Certificates of deposit   130,467     141,478   Corporate debt securities     203,807       109,644     292,586     386,883   Commercial paper   17,928     -   U.S. treasuries and government agency bonds     13,024       45,877     8,285     7,456   Auction-rate securities backed by student-loan notes     5,256       5,354       1,711       2,401   Total   $ 304,346     $ 273,578     $ 739,584     $ 727,483         December 31,       2017     2016   Reported as:                 Cash and cash equivalents   $ 82,759     $ 112,703   Short-term investments     216,331       155,521   Long-term investments     5,256       5,354   Total   $ 304,346     $ 273,578       December 31,       2022     2021   Reported as:                 Cash and cash equivalents   $ 288,607     $ 189,265   Short-term investments     449,266       535,817   Investment within other long-term assets     1,711       2,401   Total   $ 739,584     $ 727,483     The following table summarizes the contractual maturities of the Company’s short-term and long-term available-for-sale investments are as follows (inof December 31, 2022 (in thousands):     December 31,     2017     2016     Amortized Cost     Fair Value   Due in less than 1 year   $ 89,399     $ 47,568     $ 355,492     $ 351,915   Due in 1 - 5 years     126,932       107,953     101,919     97,351   Due in greater than 5 years     5,256       5,354       1,770       1,711   Total   $ 221,587     $ 160,875     $ 459,181     $ 450,977     57 Table For the year ended December 31, 2020, the Company recognized gross realized gains of Contents $1.1 million on the sale of investments. Gross realized gains and losses were not material for the other periods presented.   The following tables summarize the unrealized gain and loss positions related to the Company’s available-for sale investments (in thousands):      December 31, 2017       Amortized Cost     Unrealized Gains     Unrealized Losses     Total Fair Value     Fair Value of Investments in Unrealized Loss Position   Money market funds   $ 7,134     $ -     $ -     $ 7,134     $ -   Corporate debt securities     204,789       17       (999 )     203,807       197,564   U.S. treasuries and government agency bonds     13,092       -       (68 )     13,024       13,024   Auction-rate securities backed by student-loan notes     5,570       -       (314 )     5,256       5,256   Total   $ 230,585     $ 17     $ (1,381 )   $ 229,221     $ 215,844           December 31, 2022       Amortized Cost     Unrealized Gains     Unrealized Losses     Fair Value   Money market funds   $ 15,462     $ -     $ -     $ 15,462   Certificates of deposit     130,467       -       -       130,467   Corporate debt securities     300,529       18       (7,961 )     292,586   Commercial paper     17,928       -       -       17,928   U.S. treasuries and government agency bonds     8,487       -       (202 )     8,285   Auction-rate securities backed by student-loan notes     1,770       -       (59 )     1,711   Total   $ 474,643     $ 18     $ (8,222 )   $ 466,439       December 31, 2021       Amortized Cost     Unrealized Gains     Unrealized Losses     Fair Value   Money market funds   $ 14,328     $ -     $ -     $ 14,328   Certificates of deposit     141,478       -       -       141,478   Corporate debt securities     388,081       570       (1,768 )     386,883   U.S. treasuries and government agency bonds     7,495       -       (39 )     7,456   Auction-rate securities backed by student-loan notes     2,520       -       (119 )     2,401   Total   $ 553,902     $ 570     $ (1,926 )   $ 552,546       December 31, 2016       Amortized Cost     Unrealized Gains     Unrealized Losses     Total Fair Value     Fair Value of Investments in Unrealized Loss Position   Money market funds   $ 24,956     $ -     $ -     $ 24,956     $ -   Corporate debt securities     110,429       65       (850 )     109,644       91,938   U.S. treasuries and government agency bonds     45,899       -       (22 )     45,877       39,275   Auction-rate securities backed by student-loan notes     5,570       -       (216 )     5,354       5,354   Total   $ 186,854     $ 65     $ (1,088 )   $ 185,831     $ 136,567   55 Table of Contents The following tables present information about the available-for-sale investments that had been in a continuous unrealized loss position for less than 12 months and for greater than 12 months (in thousands):     December 31, 2022       Less than 12 Months     Greater than 12 Months     Total       Fair Value     Unrealized Losses     Fair Value     Unrealized Losses     Fair Value     Unrealized Losses   Corporate debt securities   $ 72,943     $ (973 )   $ 202,074     $ (6,988 )   $ 275,017     $ (7,961 ) U.S. treasuries and government agency bonds     987       (2 )     7,298       (200 )     8,285       (202 ) Auction-rate securities backed by student-loan notes     -       -       1,711       (59 )     1,711       (59 ) Total   $ 73,930     $ (975 )   $ 211,083     $ (7,247 )   $ 285,013     $ (8,222 )     December 31, 2021       Less than 12 Months     Greater than 12 Months     Total       Fair Value     Unrealized Losses     Fair Value     Unrealized Losses     Fair Value     Unrealized Losses   Corporate debt securities   $ 285,954     $ (1,765 )   $ 4,760     $ (3 )   $ 290,714     $ (1,768 ) U.S. treasuries and government agency bonds     7,456       (39 )     -       -       7,456       (39 ) Auction-rate securities backed by student-loan notes     -       -       2,401       (119 )     2,401       (119 ) Total   $ 293,410     $ (1,804 )   $ 7,161     $ (122 )   $ 300,571     $ (1,926 )     There wereAn impairment exists when the fair value of an investment is less than its amortized cost basis. As of noDecember 31, 2022 and 2021,the Company did not consider the impairment of its investments to be a result of credit losses. The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one redemptionsissuer. When evaluating a debt security for impairment, management reviews factors such as the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized cost basis, the extent to which the fair value of the security is less than its cost, the financial condition of the issuer and the credit quality of the investment. The Company’s auction-rate securities are backed by pools of student loans supported by guarantees by the U.S. Department of Education. The underlying maturities of these securities are up to 23 years. The Company has received all scheduled interest payments on a timely basis pursuant to the terms and conditions of the securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities, before recovery of its amortized cost basis. To date, the Company has redeemed $41.5 million, or 96% of the original portfolio in these auction-rate securities, at par without any realized losses. Non-Marketable Equity Investment In November 2020, the Company made an equity investment in a privately held Swiss company (the “Investee”) that is accounted for under the measurement alternative. In April 2022, the Company made an investment in a convertible loan that will convert into additional shares of the Investee. One member of the Company’s Board of Directors is an executive officer of a company that has a commercial relationship with the Investee. In addition, the Company’s Chief Executive Officer has a personal investment in the Investee and is on the Investee’s board of directors. As of December 31, 2022 and 2021, the Company’s investment in the Investee, which is denominated in Swiss Franc, had a carrying value of $5.4 million and $3.3 million, respectively. The Company did not record any impairment or adjustments resulting from observable price changes for the years ended December 31, 2017,2022 2016and 2015.2021. Restricted Cash The underlying maturitiesfollowing table provides a reconciliation of cash, cash equivalents and restricted cash reported on the outstanding auction-rate securities are upConsolidated Balance Sheets to 30 years. the amounts reported on the Consolidated Statements of Cash Flows (in thousands):        December 31,       2022     2021   Cash and cash equivalents   $ 288,607     $ 189,265   Restricted cash included in other long-term assets     122       124   Total cash, cash equivalents and restricted cash reported on the Consolidated Statements of Cash Flows   $ 288,729     $ 189,389   As of December 31, 20172022 and 2016,2021, restricted cash included a security deposit that is set aside in a bank account and cannot be withdrawn by the impairmentCompany under the terms of $0.3 million and $0.2 million, respectively, was determined to be temporary based ona lease agreement. The restriction will end upon the following management assessment:expiration of the lease.     ● Management possesses both the intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value; ● Management believes that it is more likely than not that the Company will not have to sell these securities before recovery of its cost basis; ● Except for the credit loss of $70,000 recognized in the year ended December 31, 2009, the Company does not believe that there is any additional credit loss associated with these securities because the Company expects to recover the entire amortized cost basis; ● The majority of the securities remain AAA, AA+ or Aaa rated; ● All scheduled interest payments have been made pursuant to the reset terms and conditions; and ● All redemptions of these securities to date, representing 87% of the original portfolio, have been at par. 56 Table of Contents     44.. FAIR VALUE MEASUREMENTMEASUREMENTS   The following table details the fair value measurement of the financial assets measured on a recurring basis (in thousands):     Fair Value Measurement at December 31, 2017     December 31, 2022     Total     Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3   Money market funds   $ 7,134     $ 7,134     $ -     $ -     $ 15,462     $ 15,462     $ -     $ -   Certificates of deposit   130,467     -     130,467     -   Corporate debt securities     203,807       -       203,807       -     292,586     -     292,586     -   Commercial paper   17,928     -     17,928     -   U.S. treasuries and government agency bonds     13,024       -       13,024       -     8,285     -     8,285     -   Auction-rate securities backed by student-loan notes     5,256       -       -       5,256     1,711     -     -     1,711   Mutual funds under deferred compensation plan     16,625       16,625       -       -   Mutual funds and money market funds under deferred compensation plan     43,933       43,933       -       -   Total   $ 245,846     $ 23,759     $ 216,831     $ 5,256     $ 510,372     $ 59,395     $ 449,266     $ 1,711       Fair Value Measurement at December 31, 2016     December 31, 2021     Total     Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3   Money market funds   $ 24,956     $ 24,956     $ -     $ -     $ 14,328     $ 14,328     $ -     $ -   Certificates of deposit   141,478     -     141,478     -   Corporate debt securities     109,644       -       109,644       -     386,883     -     386,883     -   U.S. treasuries and government agency bonds     45,877       -       45,877       -     7,456     -     7,456     -   Auction-rate securities backed by student-loan notes     5,354       -       -       5,354     2,401     -     -     2,401   Mutual funds under deferred compensation plan     12,108       12,108       -       -   Mutual funds and money market funds under deferred compensation plan     31,786       31,786       -       -   Total   $ 197,939     $ 37,064     $ 155,521     $ 5,354     $ 584,332     $ 46,114     $ 535,817     $ 2,401   _________________ ● Level 1—includes —includes instruments with quoted prices in active markets for identical assets. ● Level 2—includes —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 —includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement.   58 Table of Contents The Company’s level 3 assets consist of government-backed student loan auction-rate securities, which became illiquidRedemptions and changes in2008. The following table provides a rollforward of the fair value of the auction-rate securities (in thousands): classified as Level 3 assets were not material for the periods presented.   Balance at January 1, 2016   $ 5,361   Change in unrealized loss included in other comprehensive loss     (7 ) Balance at December 31, 2016     5,354   Change in unrealized loss included in other comprehensive income     (98 ) Balance at December 31, 2017   $ 5,256   57 Table of Contents   The Company determined the fair value of the auction-rate securities using a discounted cash flow model with the following assumptions:     December 31,       2017     2016   Time-to-liquidity (years)     2 - 3         2     Discount rate     4.5% - 9.6%       4.3% - 9.3%     55..BALANCE SHEET COMPONENTS Inventories   Inventories consist of the following (in thousands):     December 31,     December 31,     2017     2016     2022   2021   Raw materials   $ 20,573     $ 14,599     $ 126,760     $ 29,478   Work in process     40,030       26,048     134,071     130,029   Finished goods     38,678       30,822       186,459       99,910   Total   $ 99,281     $ 71,469     $ 447,290     $ 259,417     Other Current Assets Other current assets consist of the following (in thousands):     December 31,       2022     2021   RSU tax withholding proceeds receivable   $ 14,480     $ 16,224   Prepaid expense     11,045       9,526   Accrued interest receivable     8,752       5,440   Other     8,465       4,350   Total   $ 42,742     $ 35,540         December 31,       2017     2016   Prepaid wafer purchase   $ 6,217     $ 5,000   Other prepaid expense     2,742       2,249   Interest receivable     1,352       966   Value-added tax receivable     1,235       263   Other     1,216       565   Total   $ 12,762     $ 9,043   59 Table of Contents PropertyProperty and Equipment, NNetet   Property and equipment,, net, consist of the following (in thousands):     December 31,     December 31,     2017     2016     2022     2021   Land   $ 41,924     $ 38,872   Production equipment and software   $ 110,971     $ 95,565     254,882     233,398   Buildings and improvements     100,990       48,964     195,205     202,901   Transportation equipment     11,443       11,291     28,612     28,608   Land     16,883       8,285   Leasehold improvements   17,389     8,990   Furniture and fixtures     3,641       3,518     11,378     10,738   Leasehold improvements     3,321       2,838   Construction in progress     1,908       11,333   Property and equipment, gross     247,249       170,461     551,298     534,840   Less: accumulated depreciation and amortization     (102,613 )     (85,290 )     (194,141 )     (171,878 ) Total   $ 144,636     $ 85,171     $ 357,157     $ 362,962     Depreciation Depreciation and amortization expense on property and equipment was $14.0$36.8 million, $12.6$28.4 million and $12.0$18.9 million for the years ended December 31, 2017,2022, 20162021 and 2015,2020, respectively.   Other Long-Term Assets   Other long-term assets consist of the following (in thousands):       December 31,       2017     2016   Deferred compensation plan assets   $ 28,080     $ 20,288   Prepaid wafer purchase     -       5,000   Other prepaid expense     897       1,117   Other     1,091       1,006   Total   $ 30,068     $ 27,411       December 31,       2022     2021   Deferred compensation plan assets   $ 63,022     $ 53,172   Prepaid wafer purchase     170,000       -   Other     16,264       16,351   Total   $ 249,286     $ 69,523   Accrued Liabilities   Prepaid wafer purchase of $170.0 million relates to a deposit made to a vendor under a long-term wafer supply agreement. See Note 12 for further details. 58 Table of Contents Other Accrued Liabilities Other accrued liabilities consist of the following (in thousands):       December 31,     December 31,     2017     2016     2022     2021   Dividends and dividend equivalents   $ 9,248     $ 8,946     $ 42,170     $ 32,364   Customer prepayments     4,742       3,246   Warranty   24,082     20,989   Stock rotation and sales returns   14,931     5,748   Income tax payable     2,861       1,239     15,595     4,921   Stock rotation reserve     2,647       1,937   Warranty     2,416       1,030   Deferred income     1,845       3,553   Sales rebate     1,036       441   Commissions     938       1,008   Other     1,774       1,516       16,901       17,260   Total   $ 27,507     $ 22,916     $ 113,679     $ 81,282     As of December 31, 2022, stock rotation and sales returns included a $14.3 million stock rotation reserve, compared with a $5.5 million reserve as of December 31, 2021. The change in the reserve is affected by the level of inventory in the distribution channel.  Other Long-Term Liabilities   Other long-term liabilities consist of the following (in thousands):     December 31,     December 31,     2017     2016     2022     2021   Deferred compensation plan liabilities   $ 28,087     $ 19,836     $ 64,863     $ 55,489   Dividend equivalents     4,881       3,294     6,847     8,470   Other     56       89       1,664       3,268   Total   $ 33,024     $ 23,219     $ 73,374     $ 67,227     6059 Table of Contents     66. LEASES. GOODWILL AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET   There have been no changes in the goodwill balance for the years ended December 31, 2017 and 2016. The Company did not identify any goodwill impairment for the years ended December 31, 2017, 2016 and 2015.Lessee   Acquisition-related intangibleThe Company has operating leases primarily for administrative and sales and marketing offices, manufacturing operations and R&D facilities, employee housing units and certain equipment. These leases have remaining lease terms from less than a year to three years. Some of these leases include options to renew the lease term for up to two 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 consist of the followingand liabilities (in thousands):       December 31, 2017       Gross Amount     Accumulated Amortization     Net Amount   Know-how   $ 1,018     $ (704 )   $ 314   Developed technologies     6,466       (5,829 )     637   Total   $ 7,484     $ (6,533 )   $ 951           December 31,       Financial Statement Line Item   2022     2021   Operating lease ROU assets   Other long-term assets   $ 4,288     $ 6,297                         Operating lease liabilities   Other accrued liabilities   $ 2,133     $ 2,539       Other long-term liabilities   $ 1,664     $ 3,268   The following tables summarize certain information related to the leases (in thousands, except percentages):     Year Ended December 31,       2022     2021     2020   Lease costs:                         Operating lease costs   $ 2,704     $ 2,454     $ 1,488   Other     1,769       740       300   Total lease costs   $ 4,473     $ 3,194     $ 1,788       Year Ended December 31,       2022     2021     2020   Cash paid for amounts included in the measurement of lease liabilities:                         Operating cash flows for operating leases   $ 2,762     $ 2,315     $ 1,526   ROU assets obtained in exchange for new operating lease liabilities   $ 1,175     $ 5,195     $ 2,181       December 31,       2022     2021   Weighted-average remaining lease term (in years)     2.1       2.8   Weighted-average discount rate     2.1 %     2.0 % As of December 31, 2022, the maturities of the lease liabilities were as follows (in thousands): 2023   $ 2,191   2024     1,073   2025     614   2026     8   Total remaining lease payments     3,886   Less: imputed interest     (89 ) Total lease liabilities   $ 3,797   As of December 31, 2022, the Company had no operating leases that have not yet commenced.       December 31, 2016       Gross Amount     Accumulated Amortization     Net Amount   Know-how   $ 1,018     $ (500 )   $ 518   Developed technologies     6,466       (3,982 )     2,484   Total   $ 7,484     $ (4,482 )   $ 3,002   60 Table of Contents Lessor   Amortization expense is recorded in costThe Company owns certain office buildings and leases a portion of revenue inthese properties to third parties under arrangements that are classified as operating leases. These leases have remaining lease terms ranging from less than one year to three years. Some of these leases include options to renew the Consolidated Statements of Operations and totaled $2.1lease term for up to five years. Income related to lease payments was $2.4 million, $2.1$2.2 million and $1.8$1.9 million for the years ended December 31, 2017,2022, 20162021 and 2015,2020, respectively. The estimated future amortization expense as As of December 31, 2017 2022is, future income related to lease payments was as follows (in thousands):   2023   $ 1,566   2024     612   2025     106   2026     20   Total   $ 2,304   2018   $ 841   2019     110   Total   $ 951   61 Table of Contents     77..  STOCK-BASED COMPENSATION   20042014Equity Incentive Plan (the “2004 Plan”)   The Board of Directors adoptedIn April 2013, the2004 Plan in March 2004, and the stockholders approved it in November 2004. The 2004 Plan provided for annual increases in the number of shares available for issuance equal to the least of 5% of the outstanding shares of common stock on the first day of the year, 2.4 million shares, or a number of shares determined by the Board of Directors. The 2004 Plan expired on November 12, 2014, and equity awards can no longer be granted under the 2004 Plan. As of November 12, 2014, 2.9 million shares that were available for issuance expired under the 2004 Plan. 2014 Equity Incentive Plan (the “2014 Plan”) The Board of Directors adopted the 2014 Equity Incentive Plan in(the April 2013, “2014and Plan”), which the Company’s stockholders approved it in June 2013. 2013.In October 2014,the Board of Directors approved certain amendments to the 2014 Plan. The amended 2014 Plan as amended, 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 5.510.5 million shares. The Amended and Restated 2014 Plan will expire on November 13, 2024. June 11, 2030.As of December 31, 2017,2022, 3.24.6 million shares remained available for future issuance under the Amended and Restated 2014 Plan.     Stock-Based Compensation Expense   The Company recognized stock-basedstock-based compensation expense as follows (in thousands):     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   Cost of revenue   $ 1,654     $ 1,575     $ 1,166     $ 4,721     $ 3,543     $ 2,592   Research and development     14,816       14,041       11,156     35,355     26,030     20,033   Selling, general and administrative     36,147       29,373       29,241       120,916       93,906       62,926   Total stock-based compensation expense   $ 52,617     $ 44,989     $ 41,563     $ 160,992     $ 123,479     $ 85,551   Tax benefit related to stock-based compensation (1)   $ 5,054     $ -     $ -     $ 2,498     $ 1,760     $ 1,855       61 Table(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 Contents the IRC.   In the first quarter of 2016, the Company’s then Chief Financial Officer retired. As the service or performance conditions for her outstanding restricted stock units (“RSUs”) had not been satisfied at the time of her departure, the Company reversed previously accrued stock-based compensation expenses of $2.9 million associated with the unvested RSUs and this credit was reflected in selling, general and administrative expenses for the year ended December 31, 2016. RSUs   The Company’s RSUs include time-based RSUs, RSUs with only performance conditions (“PSUs”), RSUs with both marketPSUs, MSUs, and performance conditions (“MPSUs”), and RSUs with only market conditions (“MSUs”).MPSUs. Vesting of all awards requires continued service for the Company. In addition, vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance goals. goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”). All awards include service conditions which require continued employment with the Company. A summary of RSU activity is presented in the table below (in thousands, except per-share amounts):       Time-Based RSUs     Weighted- Average Grant Date Fair Value Per Share     PSUs and MPSUs     Weighted-Average Grant Date Fair Value Per Share     MSUs     Weighted- Average Grant Date Fair Value Per Share     Total     Weighted- Average Grant Date Fair Value Per Share   Outstanding at January 1, 2015     589     $ 28.48       1,659     $ 28.11       1,800     $ 23.57       4,048     $ 26.14   Granted     271     $ 49.82       927  (1)   $ 47.61       -     $ -       1,198     $ 48.11   Released     (319 )   $ 26.56       (629 )   $ 23.40       -     $ -       (948 )   $ 24.47   Forfeited     (42 )   $ 35.60       (24 )   $ 28.68       -     $ -       (66 )   $ 33.06   Outstanding at December 31, 2015     499     $ 40.75       1,933     $ 38.99       1,800     $ 23.57       4,232     $ 32.64   Granted     133     $ 63.00       1,216  (1)   $ 41.12       -     $ -       1,349     $ 43.28   Released     (239 )   $ 36.43       (736 )   $ 29.71       -     $ -       (975 )   $ 31.36   Forfeited     (27 )   $ 45.35       (129 )   $ 36.82       (180 )   $ 23.57       (336 )   $ 30.38   Outstanding at December 31, 2016     366     $ 51.35       2,284     $ 43.24       1,620     $ 23.57       4,270     $ 36.47   Granted     81     $ 94.25       585  (1)   $ 62.72       -     $ -       666     $ 66.56   Released     (175 )   $ 48.35       (597 )   $ 41.94       -     $ -       (772 )   $ 43.39   Forfeited     (14 )   $ 61.80       (6 )   $ 49.82       -     $ -       (20 )   $ 58.46   Outstanding at December 31, 2017     258     $ 66.30       2,266     $ 48.59       1,620     $ 23.57       4,144     $ 39.91       Time-Based RSUs     PSUs and MPSUs     MSUs     Total             Weighted-             Weighted-           Weighted-           Weighted-             Average Grant             Average Grant           Average Grant           Average Grant             Date Fair             Date Fair           Date Fair           Date Fair       Number of     Value Per     Number of       Value Per     Number of     Value Per     Number of     Value Per       Shares     Share     Shares       Share     Shares     Share     Shares     Share   Outstanding at January 1, 2020     180     $ 115.45       1,987       $ 74.50       1,886     $ 37.63       4,053     $ 59.16   Granted     76     $ 189.28       627  (1)     $ 173.40       -     $ -       703     $ 175.12   Vested     (86 )   $ 110.67       (1,213 )     $ 59.03       (324 )   $ 23.57       (1,623 )   $ 54.70   Forfeited     (9 )   $ 138.34       (11 )     $ 84.48       (8 )   $ 68.48       (28 )   $ 96.35   Outstanding at December 31, 2020     161     $ 151.62       1,390       $ 132.60       1,554     $ 40.40       3,105     $ 87.42   Granted     46     $ 384.33       365  (1)     $ 354.12       -     $ -       411     $ 357.49   Vested     (71 )   $ 144.46       (577 )     $ 91.50       (324 )   $ 23.57       (972 )   $ 72.69   Forfeited     (11 )   $ 207.04       (12 )     $ 103.84       (12 )   $ 68.48       (35 )   $ 124.50   Outstanding at December 31, 2021     125     $ 235.82       1,166       $ 222.78       1,218     $ 44.59       2,509     $ 136.87   Granted     49     $ 390.89       35  (1)(2)     $ 385.80       917     $ 199.63       1,001     $ 215.63   Vested     (61 )   $ 193.18       (452 )     $ 147.78       (324 )   $ 23.57       (837 )   $ 103.02   Forfeited     (7 )   $ 316.00       (1 )     $ 377.86       (6 )   $ 216.37       (14 )   $ 275.47   Outstanding at December 31, 2022     106     $ 327.13       748       $ 275.70       1,805     $ 126.57       2,659     $ 176.50   _________________ (1) Amount reflects the number of PSUs and MPSUsawards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period. In addition, MPSUs are subject to (2) Amount includes grants and cancellations of the achievement of market conditions.2022 Executive PSUs as defined under the “2022 PSUs” section.   62 Table of Contents The intrinsic value related to vested RSUs released was $74.0$336.8 million, $62.9$381.2 million and $49.2$326.2 million for the years ended December 31, 2017,2022, 20162021 and 2015,2020, respectively. As of December 31, 2017,2022, the total intrinsic value of all outstanding RSUs was $430.6$939.5 million, based on the closing stock price of $112.36.$353.61. As of December 31, 2017,2022, unamortized compensation expense related to all outstanding RSUs was $75.9$218.8 million with a weighted-average remaining recognition period of approximately threetwo years.    Cash proceeds from vested PSUs with a purchase price totaled $5.4 million, $17.3 million and $18.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.  Time-Based RSUs:RSUs   For the years ended December December 31, 2022, 2017,20162021 and 2015,2020, the Compensation Committee of the Board of Directors (the "Compensation Committee") granted 81,000,133,00049,000, 46,000 and 271,00076,000 RSUs, respectively, with time-based vestingservice conditions to non-executive employees and non-employee directors. The RSUs generally vest over three to four years for employees and one year for directors, subject to continued service with the Company.   PSUs and MPSUs 20172022 PSUs:   In February 2017,2022, the Compensation Committee granted 200,00081,000 PSUs to the executive officers, which represented a target number of shares that could be earned subject to the achievement of two sets of performance goals (“2022 Executive PSUs”). 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 Semiconductor Industry Association. 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. In February 2022, the Compensation Committee granted 14,000 PSUs to certain non-executive employees, which represent a target number of shares that can be earned subject to be awardedthe achievement of the Company’s 2023 revenue goals for certain regions or product line divisions, or based on the achievement of the Company’s average two-year (20172022 and 20182023) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“2022 Non-Executive PSUs”). The maximum number of shares that an employee can earn is either 200% or 300% of the target number of the 2022 Non-Executive PSUs, depending on the job classification of the employee. 50% of the 2022 Non-Executive PSUs will vest in the first quarter of 2024 if the pre-determined goals are met during the performance period. The remaining 2022 Non-Executive PSUs will vest over the following two years on an annual or quarterly basis. Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2022 Non-Executive PSUs is $12.6 million. The 2022 Executive PSUs and the 2022 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 average stock price for 20 consecutive trading days at any time during 2022 and 2023 is $30 higher than the grant date stock price of $393.16. This market condition was achieved in the first quarter of 2022. The Company determined the grant date fair value of the 2022 Executive PSUs for the first goal and the 2022 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $393.16, simulation term of four years, expected volatility of 44.6%, risk-free interest rate of 1.5%, and expected dividend yield of 0.8%. In addition, for the 2022 Executive PSUs related to the second goal, the fair value was determined based on the closing stock price at the end of each reporting period, adjusted for accrued dividends and an illiquidity discount of 10.3% to account for the post-vesting sales restrictions. 2021 PSUs: In February 2021, the Compensation Committee granted 80,000 PSUs to the executive officers, which represented a target number of shares that could be earned subject to the achievement of two sets of performance goals (“2021 Executive PSUs”). For the first goal, the executive officers could earn up to 300% of the target number of the 2021 Executive PSUs based on the achievement of the Company’s average two-year (2021 and 2022) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association. Based on the actual revenue achievement at the end of the performance period, a total of 240,000 shares were awarded to the executive officers. 50% of the 2021 Executive PSUs will vest in the first quarter of 2023. The remaining 2021 Executive PSUs will vest over the following two years on a quarterly basis. For the second goal, the executive officers could earn an additional 100% of the target number of the 2021 Executive PSUs subject to the achievement of three environmental objectives under the Company’s ESG initiatives with a performance period through December 31, 2023. As of December 31, 2022, one environmental objective was achieved and a total of 20,000 shares were awarded to the executive officers. The 2021 Executive PSUs related to the ESG goal will fully vest upon achievement of the objectives, but no earlier than December 31, 2022. All vested shares related to the ESG goal will 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 2021 Executive PSUs is $114.4 million. In February 2021, the Compensation Committee granted 14,000 PSUs to certain non-executive employees, which represented a target number of shares that could be earned subject to the achievement of the Company’s 2022 revenue goals for certain regions or product line divisions, or based on the achievement of the Company’s average two-year (2021 and 2022) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“2021 Non-Executive PSUs”). The maximum number of shares that an employee could earn is either 200% or 300% of the target number of the 2021 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 33,000 shares were awarded to the non-executive employees. 50% of the 2021 Non-Executive PSUs will vest in the first quarter of 2023. The remaining 2021 Non-Executive PSUs will 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 2021 Non-Executive PSUs is $12.2 million. 63 Table of Contents The 2021 Executive PSUs and the 2021 Non-Executive PSUs contained a purchase price feature, which required the employees to pay the Company $30 per share upon vesting of the shares. The $30 purchase price requirement was deemed satisfied and waived if the average stock price for 20 consecutive trading days at any time between the grant date and December 31, 2022 was $30 higher than the grant date stock price of $374.57. This market condition was achieved in the third quarter of 2021. The Company determined the grant date fair value of the 2021 Executive PSUs and the 2021 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $374.57, simulation term of 4.0 years, expected volatility of 41.4%, risk-free interest rate of 0.3%, and expected dividend yield of 0.6%. In addition, the grant date fair value for the 2021 Executive PSUs subject to the ESG goal included an illiquidity discount of 9.8% to account for the post-vesting sales restrictions. 2020 PSUs: In February 2020, the Compensation Committee granted 100,000 PSUs to the executive officers, which represented a target number of shares that could be earned based on the Company’s average two-year (2020 and 2021) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“20172020 Executive PSUs”). The maximum number of shares that an executive officer cancould earn is was 300% of the target number of the 20172020 Executive PSUs.  50%Based on the actual revenue achievement at the end of the performance period, a total of 300,000 shares were awarded to the executive officers. 50% of the 20172020 Executive PSUs will vestvested in the first quarter of 20192022. if the pre-determined performance goals are met during the performance period and approved by the Compensation Committee. The remaining 20172020 Executive PSUs will vest over the following two years on a quarterly basis. Vesting is subject toBased on the employees’ continued employment with the Company. Assuming theactual achievement of the highest level of performance goals, the total stock-based compensation cost for the 20172020 Executive PSUs is $36.3$51.1 million.   In February 2017, 2020,the Compensation Committee granted 48,00030,000 PSUs to certain non-executive employees, which representrepresented a target number of shares tothat could be awardedearned based on the Company’s 20182021 revenue goals for certain regions or product line divisions, or based on the Company’s average two-year (20172020 and 20182021) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“20172020 Non-Executive PSUs”). The maximum number of shares that an employee cancould earn iswas either 200% or 300% of the target number of the 20172020 Non-Executive PSUs, depending on the job classification of the employee. 50%Based on the actual revenue achievement at the end of the performance period, a total of 71,000 shares were awarded to the non-executive employees. 50% of the 20172020 Non-Executive PSUs will vestvested in the first quarter of 20192022. if the pre-determined performance goals are met during the performance period and approved by the Compensation Committee. The remaining 20172020 Non-Executive PSUs will vest over the following two years on an annual or quarterly basis. Vesting is subject toBased on the employees’ continued employment with the Company. Assuming theactual achievement of the highest level of performance goals, the total stock-based compensation cost for the 20172020 Non-Executive PSUs excluding cancelled shares, is $7.1$12.1 million. 62 Table of Contents   The 20172020 Executive PSUs and the 20172020 Non-Executive PSUs containcontained a purchase price feature, which requiresrequired the employees to pay the Company $30$30 per share upon vesting of the shares. Shares that do The not$30 vest will not be subject to the purchase price payment.requirement was deemed satisfied and waived if the average stock price for 20 consecutive trading days at any time during the performance period was $30 higher than the grant date stock price of $182.62. This market condition was achieved in the second quarter of 2020. The Company determined the grant date fair value of the 20172020 Executive PSUs and the 20172020 Non-Executive PSUs using the Black-Scholesa Monte Carlo simulation model with the following assumptions: stock price of $89.37, expected$182.62, simulation term of 2.62.0 years, expected volatility of 28.6% and33.6%, risk-free interest rate of 1.4%, and expected dividend yield of 1.1%.  1.3%.64 Table of Contents 2020 MPSUs:   In 2016July 2020, the Compensation Committee granted 43,000 MPSUs to the executive officers and 2,000 MPSUs to certain key employees, which represented a target number of shares that could be earned based on the achievement of both market and performance conditions (“2020 MPSUs”).  The maximum number of shares that an employee could earn was 500% of the target number of the 2020 MPSUs. The market conditions consisted of five stock price targets ranging from $260 to $300 with a performance period through July 20, 2023, and the performance condition consisted of one business operating goal related to a revenue target for certain customers with a performance period through December 31, 2021. As of December 31, 2020, the Company has achieved all five price targets and the operating goal, and a total of 221,000 shares were awarded to the employees. 75% of the 2020 MPSUs will vest on July 20, 2023 and 25% of the 2020 MPSUs will vest on July 20, 2024. All vested shares will be subject to a post-vesting sales restriction period of one year. Based on the actual achievement of the market and performance goals, the total stock-based compensation cost for the 2020 MPSUs is $42.1 million. The Company determined the grant date fair value of the 2020 MPSUs using a Monte Carlo simulation model with the following assumptions: stock price of $248.71, simulation term of 4.0 years, expected volatility of 38.8%, risk-free interest rate of 0.2%, and expected dividend yield of 0.8%. In addition, the grant date fair value included an illiquidity discount of 8.9% to account for the post-vesting sales restrictions. 2019 PSUs:   In February 2016,2019, the Compensation Committee granted 285,000151,000 PSUs to the executive officers, which represented a target number of shares tothat could be awardedearned based on the Company’s average two-year (20162019 and 20172020) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“20162019 Executive PSUs”). The maximum number of shares that an executive officer could earn was 300% of the target number of the 20162019 Executive PSUs. 50%Based on the actual revenue achievement at the end of the performance period, a total of 454,000 shares were awarded to the executive officers. 50% of the 20162019 Executive PSUs would vestvested in the first quarter of 20182021. if the pre-determined performance goals were met during the performance period and approved by the Compensation Committee. The remaining 20162019 Executive PSUs would vest over the following two years on a quarterly basis. Vesting is subject to the employees’ continued employment with the Company. In July 2016, the Compensation Committee granted 12,0002016 Executive PSUs to the Company’s new Chief Financial Officer. In February 2018, the Compensation Committee approved the revenue achievement for the 2016 Executive PSUs and a total of 651,000 shares were earned by the executive officers. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 20162019 Executive PSUs excluding cancelled shares, is $46.6 million. The $26.12019 million.Executive PSUs contained a purchase price feature, which required the employees to pay the Company $30 per share upon vesting of the shares. Shares that did not vest would not be subject to the purchase price payment. The Company determined the grant date fair value of the 2019 Executive PSUs using the Black-Scholes model with the following assumptions: stock price of $130.67, expected term of 2.6 years, expected volatility of 29.0% and risk-free interest rate of 2.5%.   In February 2016,October 2018, the Compensation Committee granted 64,00053,000 PSUs to certain non-executive employees, which represented a target number of shares tothat could be awardedearned based on the Company’s 20172020 revenue goals for certain regions or product line divisions, or based on the Company’s average two-year (20162019 and 20172020) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“20162019 Non-Executive PSUs”). The maximum number of shares that an employee could earn was either 200% or 300% of the target number of the 20162019 Non-Executive PSUs, depending on the job classification of the employee. 50%Based on the actual revenue achievement at the end of the performance period, a total of 100,000 shares were awarded to the employees. 50% of the 20162019 Non-Executive PSUs would vestvested in the first quarter of 20182021. if the pre-determined performance goals were met during the performance period and approved by the Compensation Committee. The remaining 20162019 Non-Executive PSUs would vest over the following two years on an annual or quarterly basis. Vesting is subject to the employees’ continued employment with the Company. In February 2018, the Compensation Committee approved the revenue achievement for the 2016 Non-Executive PSUs and a total of 128,000 shares were earned by the employees. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 20162019 Non-Executive PSUs excluding cancelled shares, is $5.1$8.1 million.   The 2016 Executive PSUs and the 20162019 Non-Executive PSUs containcontained a purchase price feature, which requiresrequired the employees to pay the Company $20$30 per share upon vesting of the shares. Shares that dodid not vest willwould not be subject to the purchase price payment. The Company determined the grant date fair value of the 2016 Executive PSUs and the 20162019 Non-Executive PSUs granted in February 2016 using the Black-Scholes model with the following assumptions: stock price of $58.98,$108.43, expected term of 2.62.9 years, expected volatility of 31.1%28.7% and risk-free interest rate of 0.9%2.9%. For the 2016 Executive PSUs granted in July 2016, the Company used the following assumptions: stock price of $70.98, expected term of 2.3 years, expected volatility of 29.6% and risk-free interest rate of 0.7%.   201565 Table of Contents MSUs 2022 PSUs:MSUs:   In February 2015,October 2022, the Compensation Committee cancelled the 2022 Executive PSUs and granted 172,000 PSUs159,000 MSUs to the executive officers as replacement awards, which representedrepresent a target number of shares that can be earned subject to be awarded based on the Company’s averageachievement 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 twoOctober 25, 2022 -yearto October 25, 2025 (2015 and 2016) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“20152022 Executive PSUs”MSUs”). The maximum number of shares that an executive officer couldcan earn was 300%is 500% of the target number of the 20152022 Executive PSUs. In MSUs if: (February 2017, 1) the Compensation Committee approvedCompany achieves five stock price targets ranging from $455 to $591 at any time during the revenue achievement forperformance period, and (2) the 2015 Executive PSUs and aCompany’s total of 432,000 shares were earned by the executive officers. 50% of the 2015 Executive PSUs vestedstockholder return ranks in the first50 quarter of 2017. The remaining 2015 Executive PSUs vest over the following two years on a quarterly basis. Vesting is subjectth percentile or above relative to the employees’ continued employment withPeer Group at the Company. Based onend of the actualperformance period. Upon achievement of the performance goals,conditions, the 2022 Executive MSUs will fully vest on October 25, 2025. Under modification accounting, the total stock-based compensation cost foris $119.2 million, which includes the unamortized expense of $102.8 million related to 20152022 Executive PSUs excluding cancelled shares, is $21.0 million. 63 Table of Contents In February 2015, the Compensation Committee granted 58,000 PSUs to certain non-executive employees, which represented a target number of shares to be awarded based on the Company’smodification date and the incremental cost of $16.4 million related to the 20162022 revenue goals for certain regions or product line divisions, or based on the Company’s average two-year (2015 and 2016) revenue growth rate compared against the analog industry’s average two-year revenue growth rateExecutive MSUs as published by the Semiconductor Industry Association (“2015 Non-Executive PSUs”). The maximum number of shares that an employee could earn was either 200% or 300%a result of the target number of the 2015 Non-Executive PSUs, depending on the job classification of the employee. In February 2017, the Compensation Committee approved the revenue achievement for the 2015 Non-Executive PSUs and a total of 118,000 shares were earned by the non-executive employees. 50% of the 2015 Non-Executive PSUs vested in the first quarter of 2017. The remaining 2015 Non-Executive PSUs vest over the following two years on an annual or quarterly basis. Vesting is subject to the employees’ continued employment with the Company. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2015 Non-Executive PSUs, excluding cancelled shares, is $5.7 million. 2015 MPSUs: On December 31, 2015, the Compensation Committee granted 86,000 MPSUs to the executive officers and 41,000 MPSUs to certain non-executive employees, which represent a target number of shares to be awarded upon achievement of both market conditions and performance conditions (“2015 MPSUs”). The maximum number of shares that an employee can earn is 500% of the target number of the 2015 MPSUs. The 2015 MPSUs consist of four separate tranches with various performance periods ending on December 31, 2019. The first tranche contains market conditions only, which require the achievement of five stock price targets ranging from $71.36 to $95.57 with a performance period from January 1, 2016 to December 31, 2019. As of September 30, 2017, all five price targets for the first tranche have been achieved and approved by the Compensation Committee. The second, third and fourth tranches contain both market conditions and performance conditions. Each tranche requires the achievement of five stock price targets measured against a base price equal to the greater of: (1) the average closing stock price during the 20 consecutive trading days immediately before the start of the performance period for that tranche, or (2) the closing stock price immediately before the start of the performance period for that tranche. The stock price targets for the second tranche range from $89.56 to $106.81 with a performance period from January 1, 2017 to December 31, 2019. As of December 31, 2017, all five price targets for the second tranche have been achieved and approved by the Compensation Committee. The stock price targets for the third tranche range from $120.80 to $135.48 with a performance period from January 1, 2018 to December 31, 2019. The stock price targets for the fourth tranche will be determined on December 31, 2018 with a performance period from January 1, 2019 to December 31, 2019. In addition, each of the second, third and fourth tranches requires the achievement of one of following six operating metrics: 1. Successful implementation of full digital solutions for certain power products. 2. Successful implementation, and adoption by a key customer, of an integrated, software-based field-oriented control with sensors to motor drivers. 3. Successful implementation of certain advanced power analog processes. 4. Successful design wins and achievement of a specific level of revenue with a global networking customer. 5. Achievement of a specific level of revenue with a global electronics manufacturer. 6. Achievement of a specific level of market share with certain core power products. As of December 31, 2017, none of the operating metrics have been achieved. Subject to the employees’ continued employment with the Company, the 2015 MPSUs will fully vest on January 1, 2020 if the pre-determined individual market and performance goals in each tranche are met during the performance periods and approved by the Compensation Committee. In addition, the 2015 MPSUs contain sales restrictions on the vested shares by employees for up to two years.modification.   The Company determined the grant date fair value of the 20152022 MPSUsExecutive MSUs using a Monte Carlo simulation model with the following weighted-average assumptions: stock price of $61.35,$342.16, simulation term of three years, expected volatility of 33.2%54.0%, risk-free interest rate of 1.3%4.4%, and an expected dividend yield of 0.9%. There is noilliquidity discount ofbecause the awards do 7.8%not to account for thecontain any post-vesting sales restrictions. Assuming the achievement of all of the required market and performance goals, the total stock-based compensation cost for the 2015 MPSUs, excluding cancelled shares, is $24.6 million ($8.3 million for the first tranche, $4.5 million for the second tranche, $5.2 million for the third tranche, and $6.6 million for the fourth tranche). For the first tranche, stock-based compensation expense is being recognized over the requisite service period. For the second, third and fourth tranches, stock-based compensation expense for each tranche is recognized depending upon the number of the operating metrics management deems probable of being achieved during the performance periods in each reporting period. As of December 31, 2017, based on management’s quarterly assessment, three of the six operating metrics were considered probable of being achieved during the performance periods. Accordingly, stock-based compensation expense is being recognized for the second, third and fourth tranches over the requisite service period. 64 Table of Contents 2014 PSUs:   In February 2014,2022, the Compensation Committee granted 252,000 PSUs24,000 MSUs to the executive officers,certain non-executive employees, which representedrepresent a target number of shares tothat can be awarded based on the Company’s average two-year (2014 and 2015) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Association (“2014 Executive PSUs”). The maximum number of shares that an executive officer could earn was 300% of the target number of the 2014 Executive PSUs. In February 2016, the Compensation Committee approved the revenue achievement for the 2014 Executive PSUs and a total of 694,000 shares were earned by the executive officers. 50% of the 2014 Executive PSUs vested in the first quarter of 2016. The remaining 2014 Executive PSUs vest over the following two years on a quarterly basis. Vesting is subject to the employees’ continued employment with the Company. Based on the actualupon achievement of the performance goals, the total stock-based compensation cost for the 2014 Executive PSUs, excluding cancelled shares, is $20.7 million. In April 2014, the Compensation Committee granted 61,000 PSUs to certain non-executive employees, which represented a target number of shares to be awarded based on the Company’s 2015 revenue goals for certain regions or product line divisions, or based on the Company’s average two-year (2014 and 2015) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the Semiconductor Industry Associationstock price targets (“20142022 Non-Executive PSUs”MSUs”). The maximum number of shares that an employee couldcan earn was either 200% or 300%is 500% of the target number of the 20142022 Non-Executive PSUs, depending onMSUs if the job classification ofCompany achieves five stock price targets ranging from $472 to $590 during a performance period from February 3, 2022 to February 3, 2025. Two stock price targets were achieved during the employee. In February 2016, the Compensation Committee approved the revenue achievement for the 2014 Non-Executive PSUs and a total of 103,000 shares were earned by the non-executive employees. 50% of the 2014 Non-Executive PSUs vested in the secondthird quarter of 2016.2022. The remaining 20142022 Non-Executive PSUsMSUs will vest over the following two yearsin equal amounts on an annual or quarterly basis. Vesting is subject to the employees’ continued employment with the Company. Based on the actual achievementeach of the performance goals, thefirst, second and third anniversaries of February 3, 2025. The total stock-based compensation cost for the 20142022 Non-Executive PSUs, excluding cancelled shares,MSUs is $31.3 million. The Company determined the grant date fair value of the $3.72022 million.Non-Executive MSUs using a Monte Carlo simulation model with the following assumptions: stock price of $393.16, simulation term of six years, expected volatility of 39.0%, risk-free interest rate of 1.7%, and expected dividend yield of 0.8%. 2018 MSUs:   In connection with the acquisition of Sensima in July 2014,October 2018, the Compensation Committee granted $2.0 million of PSUs (or 47,000 shares) to key Sensima employees who became employees of the Company, with the right to earn up to four equal tranches totaling $8.0 million based on the achievement of certain cumulative Sensima product revenue targets during the performance period from the acquisition date to July 2019. 50% of the awards subject to each revenue goal will vest immediately when the revenue goal is met during the performance period and approved by the Compensation Committee. The remaining shares will vest over the following two years. The vesting is subject to the employees’ continued employment with the Company. These equity awards are considered arrangements for post-acquisition services and the compensation cost for the four tranches is recognized over the requisite service period if it is probable that the performance goals will be met.  As of December 31, 2017, stock-based compensation expense of $2.0 million for the first tranche was being recognized over the requisite service period. Stock-based compensation expense for the other tranches was not being recognized as their achievement was deemed not probable as of December 31, 2017. 2013 PSUs: In February 2013, the Compensation Committee granted 220,000 PSUs to the executive officers, which represented a target number of shares to be awarded upon achievement of certain pre-determined revenue targets in 2014 (“2013 Executive PSUs”). The maximum number of shares that an executive officer could earn was 300% of the target number of the 2013 Executive PSUs. In February 2015, the Compensation Committee approved the revenue achievement for the 2013 Executive PSUs and a total of 622,000 shares were earned by the executive officers. 50% of the 2013 Executive PSUs vested in the first quarter of 2015 and the remaining shares vested over the following two years on a quarterly basis. Vesting was subject to the employees’ continued employment with the Company. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2013 Executive PSUs, excluding cancelled shares, was $15.0 million. In February 2013, the Compensation Committee granted 91,000 PSUs to certain non-executive employees, which represented a target number of shares to be awarded upon achievement of certain pre-determined revenue targets for the Company as a whole, certain regions or product-line divisions in 2014 (“2013 Non-Executive PSUs”). The maximum number of shares that an employee could earn was either 200% or 300% of the target number of 2013 Non-Executive PSUs, depending on the job classification of the employee. In February 2015, the Compensation Committee approved the revenue achievement for the 2013 Non-Executive PSUs and a total of 154,000 shares were earned by the non-executive employees. 50% of the 2013 Non-Executive PSUs vested in the first quarter of 2015 and the remaining shares vested over the following two years on an annual or quarterly basis. Vesting was subject to the employees’ continued employment with the Company. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2013 Non-Executive PSUs, excluding cancelled shares, was $3.0 million. 65 Table of Contents 2013 MSUs: In December 2013, the Compensation Committee granted 276,00060,000 MSUs to the executive officers and 84,00060,000 MSUs to certain non-executive employees, which represented a target number of shares that wouldcould be awardedearned upon achievement of stock price targets (“2018 MSUs”). The maximum number of shares that an employee could earn was 500% of the target number of the 2018 MSUs if the Company achieved five stock price targets ranging from $40.00$140 to $56.00$172 during afive-year performance period from January 1, 2014October 26, 2018 to December 31, 2023. As of December 31, 2019, all stock price targets have been achieved and the employees were awarded a total of 600,000 shares. The 2018 MSUs will vest on January 1, 2024, with post-vesting sales restrictions on the vested shares for up to an additional two years. The total stock-based compensation cost for the 2018 MSUs is $39.1 million. The Company determined the grant date fair value of the 2018 MSUs using a Monte Carlo simulation model with the following assumptions: stock price of $108.43, expected volatility of 31.6%, a risk-free interest rate of 3.0%, and an illiquidity discount of 8.7% to account for the post-vesting sales restrictions.  2013 MSUs: In December 2013, the Compensation Committee granted 276,000 MSUs to the executive officers and 84,000 MSUs to certain non-executive employees, which represented a target number of shares that could be earned upon achievement of stock price targets (“2013 MSUs”). The maximum number of shares that an employee could earn was 500% of the target number of the 2013 MSUs. MSUs if the Company achieved five price targets ranging from $40 to $56 during a performance period from January 1, 2014 to December 31, 2018. As of December 31, 2015, all fivestock price targets have been achieved and approved by the Compensation Committee, and the employees earnedwere awarded a total of 1.8 million shares. The 2013 MSUs will vest quarterly from January 1, 2019 to December 31, 2023. VestingThe total stock-based compensation cost for the 2013 MSUs is subject to the employees’ continued employment with the Company.$38.2 million.   The Company determined the grant date fair value of the 2013 MSUs using a Monte Carlo simulation model with the following assumptions: stock price of $31.73,$31.73, expected volatility of 38.7% and risk-freea risk-free interest rate of 1.6%. There was no illiquidity discount because the awards do not The total stock-based compensation cost for the 2013 MSUs, excluding cancelled shares, is $38.2 million. Stock Options No stock options were granted for the years ended December 31, 2017, 2016 and 2015. A summary of stock option activity is presented in the table below:contain any post-vesting sales restrictions.       Shares     Weighted- Average Exercise Price     Weighted- Average Remaining Contractual Term     Aggregate Intrinsic Value       (in thousands)             (in years)     (in thousands)   Outstanding at January 1, 2015     590     $ 15.80       1.2     $ 20,039   Exercised     (498 )   $ 15.55                   Forfeited and expired     (2 )   $ 6.10                   Outstanding at December 31, 2015     90     $ 17.50       1.3     $ 4,134   Exercised     (76 )   $ 17.80                   Outstanding at December 31, 2016     14     $ 15.88       1.0     $ 921   Exercised     (9 )   $ 16.79                   Outstanding at December 31, 2017     5     $ 13.89       0.4     $ 465   Exercisable at December 31, 2017     5     $ 13.89       0.4     $ 465   66 Total intrinsic value Table of options exercised was $0.7 million, $3.7 million and $18.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. Proceeds from stock option exercises were $0.1 million, $1.3 million and $7.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. At December 31, 2017, there was no unamortized compensation expense. Contents 2004ESPPEmployee Stock Purchase Plan (“ESPP”)   Under the ESPP, eligible employees may purchase common stock through payroll deductions. Participants may not purchase more than 2,000 shares in a six-month offering period, or stockpurchase shares having a value greater than $25,000$25,000 in any calendar year as measured at the beginning of the offering period in accordance with the Internal Revenue CodeIRC and applicable Treasury Regulations.treasury regulations. The ESPP provides for an annual increase by an amount equal to the least of 1.0one million shares, 2% of the outstanding shares of common stock on the first day of the year, or a number of shares as determined by the Board of Directors. As of December 31, 2017,2022, 4.64.5 million shares were available for future issuance. The ESPP will expire in November 2024.   For the years ended December 31, 2017,2022, 20162021 and 2015,2020, 40,000,53,00014,000, 17,000 and 56,00028,000 shares respectively, were issued under the ESPP.ESPP, respectively. The intrinsic value of the shares issued was $1.0$1.6 million, $1.0$2.4 million and $0.6$2.5 million for the years ended December 31, 2017,2022, 20162021 and 2015,2020, respectively. The unamortized expense asAs of December 31, 20172022, the unamortized expense was $92,000,$0.4 million, which will be recognized through the first quarter of 2018.2023. The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:      Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   Expected term (years)     0.5       0.5       0.5   Expected term (in years)   0.5     0.5     0.5   Expected volatility     23.5 %     28.6 %     30.3 %   50.6 %   43.2 %   48.9 % Risk-free interest rate     0.9 %     0.4 %     0.2 %   1.9 %   0.1 %   0.8 % Dividend yield     0.9 %     1.2 %     1.4 %   0.6 %   0.6 %   0.9 %   Cash proceeds from the shares issued under the ESPP were $2.7$5.9 million, $2.5$4.7 million and $2.2$3.8 million for the years ended December 31, 2017,2022, 20162021 and 2015,2020, respectively.   66 67 Table of Contents     8. STOCK REPURCHASE PROGRAMS In July 2013, the Board of Directors approved a stock repurchase program (the “20138. Program”) that authorized the Company to repurchase up to $100 million in the aggregate of its common stock through June 30, 2015. In April 2015, the Board of Directors approved an extension of the 2013 Program through December 31, 2015. The 2013 Program expired on December 31, 2015 with a remaining unused balance of $5.9 million. Shares were retired upon repurchase under the 2013 Program. In February 2016, the Board of Directors approved a stock repurchase program (the “2016 Program”) that authorized the Company to repurchase up to $50 million in the aggregate of its common stock through December 31, 2016. In December 2016, the Board of Directors approved an extension of the 2016 Program through December 31, 2017. The 2016 Program expired on December 31, 2017 with a remaining unused balance of $50 million. For the year ended December 31, 2015, the Company repurchased a total of 0.6 million shares for $32.3 million, at an average price of $50.05 per share under the 2013 Program.  No shares were repurchased for the years ended December 31, 2017 and 2016. 9. DIVIDENDS AND DIVIDEND EQUIVALENTS   Cash Dividend Program   In June 2014, The Company has a dividend program approved by the Board of Directors, approved a dividend program pursuant to which the Company intends to pay quarterly cash dividends on its common stock. Based on the Company’s historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month. The Board of Directors declared the following cash dividends (in thousands, except per-share amounts):      Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   Dividend declared per share   $ 0.80     $ 0.80     $ 0.80     $ 3.00     $ 2.40     $ 2.00   Total amount   $ 33,145     $ 32,434     $ 31,618     $ 140,337     $ 110,206     $ 89,832       As of December December 31, 20172022 and 2016,2021, accrued dividends totaled $8.3$35.3 million and $8.2$27.7 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’sCompany’s financial condition, results of operations, capital requirements, business conditions, statutory requirements of Delaware law, compliance with the terms of future indebtedness and credit facilities 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 current domestic cash, and cash generated from ongoing U.S. operations. In addition, the Company currently plans to repatriateoperations, and cash repatriated from its Bermuda subsidiary to fund future dividends and continue to indefinitely reinvest itssubsidiary. The Company also anticipates that earnings from other foreign subsidiaries. See Note 12 for further discussion.subsidiaries will continue to be indefinitely reinvested. Cash Dividend Equivalent Rights   Under the Company’s stock plans, outstandingThe 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 when the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill theirthe requisite service requirement and, as a result, the awards do not vest. As of December 31, 20172022 and 2016,2021, accrued dividend equivalents totaled $5.8$13.8 million and $4.1$13.1 million, respectively.   6768 Table of Contents     109.. INTEREST AND OTHER INCOME (EXPENSE), NET   The components of interest and other income (expense), net, are as follows (in thousands):     Year Ended December 31,       2022     2021     2020   Interest income   $ 14,369     $ 11,637     $ 9,327   Amortization of premium on available-for-sale securities     (4,375 )     (4,674 )     (2,979 ) Gain (loss) on deferred compensation plan investments     (6,600 )     4,563       4,592   Foreign currency exchange gain (loss)     454       (727 )     (1,364 ) Charitable contributions     (5,900 )     (1,500 )     (766 ) Other     204       503       1,650   Total   $ (1,848 )   $ 9,802     $ 10,460         Year Ended December 31,       2017     2016     2015   Interest income   $ 5,353     $ 2,488     $ 1,608   Amortization of premium on available-for-sale investments     (1,976 )     (1,019 )     (463 ) Gain (loss) on deferred compensation plan investments     2,531       1,257       (375 ) Foreign currency exchange gain (loss)     (550 )     65       608   Other     162       26       43   Total   $ 5,520     $ 2,817     $ 1,421   110.1.   NET INCOME PER SHARE   The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   Numerator:                           Net income   $ 65,203     $ 52,720     $ 35,172     $ 437,672     $ 242,023     $ 164,375                             Denominator:                           Weighted-average outstanding shares used to compute basic net income per share     41,350       40,436       39,470   Weighted-average outstanding shares - basic   46,727     45,851     44,840   Effect of dilutive securities     2,228       1,479       1,399       1,631       2,038       2,174   Weighted-average outstanding shares used to compute diluted net income per share     43,578       41,915       40,869   Weighted-average outstanding shares - diluted     48,358       47,889       47,014                             Net income per share:                           Basic   $ 1.58     $ 1.30     $ 0.89     $ 9.37     $ 5.28     $ 3.67   Diluted   $ 1.50     $ 1.26     $ 0.86     $ 9.05     $ 5.05     $ 3.50     Anti-dilutive Anti-dilutive common stock equivalents were not material in any offor the periods presented.   69 Table of Contents   111.2.  INCOME TAXES   The components of income before income taxes are as follows (in thousands):     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   United States   $ (19,115 )   $ (14,431 )   $ (247 )   $ (30,190 )   $ (15,542 )   $ 39,286   Foreign     102,059       71,695       42,738       555,127       287,761       130,056   Total income before income taxes   $ 82,944     $ 57,264     $ 42,491   Income before income taxes   $ 524,937     $ 272,219     $ 169,342     The components of the income tax provisionexpense are as follows (in thousands):       Year Ended December 31,       2017     2016     2015   Current:                         Federal   $ 31,025     $ 2,527     $ 6,042   State     2       -       2   Foreign     1,967       2,013       1,213   Deferred:                         Federal     (15,426 )     -       -   Foreign     173       4       62   Total income tax provision   $ 17,741     $ 4,544     $ 7,319   68 Table of Contents     Year Ended December 31,       2022     2021     2020   Current:                         Federal   $ 95,176     $ 24,955     $ 2,842   State     12       35       (1 ) Foreign     5,019       3,801       3,814   Deferred:                         Federal     (8,523 )     4,929       (1,221 ) Foreign     (4,419 )     (3,524 )     (467 ) Income tax expense   $ 87,265     $ 30,196     $ 4,967     The effective tax rate differs from the applicable U.S. statutory federal income tax rate as follows:     Year Ended December 31,     Year Ended December 31,     2017     2016     2015     2022     2021     2020   U.S. statutory federal tax rate     35.0 %     34.0 %     34.0 %   21.0 %   21.0 %   21.0 % Settlement with tax authorities     -       -       6.2   Foreign income at lower rates     (41.2 )     (41.1 )     (43.1 )   (22.8 )   (23.2 )   (15.2 ) Impact of the 2017 Tax Act:                         One-time deemed repatriation transition tax     50.5       -       -   Remeasurement of deferred taxes     11.8       -       -   GILTI   16.0     11.4     11.1   Changes in valuation allowance     (36.2 )     11.0       17.6     0.2     0.5     1.6   Stock-based compensation     2.2       2.2       -     2.8     1.6     (11.2 ) Tax credits, net of reserves   (1.2 )   (1.1 )   (3.8 ) State income taxes   (0.2 )   (0.5 )   (1.6 ) Other adjustments     (0.7 )     1.8       2.5       0.8       1.4       1.0   Effective tax rate     21.4 %     7.9 %     17.2 %     16.6 %     11.1 %     2.9 %   The components of net deferred tax assets consist of the following (in thousands):       December 31,       2017     2016   Deferred tax assets:                 R&D tax credits   $ 10,331     $ 9,817   Stock-based compensation     9,157       7,283   Deferred compensation     5,505       6,752   Depreciation and amortization     191       161   Net operating losses     1,377       -   Other expenses not currently deductible     1,924       3,974   Total deferred tax assets     28,485       27,987   Valuation allowance     (12,568 )     (27,354 ) Net deferred tax assets   $ 15,917     $ 633   2017 U.S. Tax Reform Under Accounting Standards Codification (“ASC”) 740,Income Taxes, the effects of a new legislation are recognized upon enactment. Accordingly, the Company was required to recognize the tax effects of the 2017 Tax Act beginning in the fourth quarter of 2017. On December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No.118 ("SAB 118"), which addresses the application of ASC 740 in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. In accordance with SAB 118,for matters that have not been completed, the Company would recognize provisional amounts to the extent that they are reasonably estimable. If a reasonable estimate cannot be determined, the Company would not be required to report provisional amounts and would continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately before the enactment of the 2017 Tax Act. As of December 31, 2017, the Company has not completed its accounting for the tax effects of the 2017 Tax Act and recorded certain provisional amounts, as discussed below, based on reasonable estimates for the year ended December 31, 2017. The provisional amounts are subject to revisions, possibly materially, as the Company performs further analysis of the 2017 Tax Act, collects and prepares necessary financial data, continues to assess its tax positions, and interprets any additional guidance issued by the U.S. Treasury Department, Internal Revenue Service (“IRS”), FASB, and other standard-setting and regulatory bodies. Any subsequent adjustment to these amounts will be recorded to the income tax provision in the period when the analysis is complete. The Company expects to complete the analysis within the one-year measurement period ending December 21, 2018, pursuant to SAB 118. Corporate Tax Rate and Remeasurement of Deferred Taxes: The 2017 Tax Act reduces the corporate tax rate from 35% to 21%, effective January 1, 2018. Because ASC 740 requires the effect of a change in tax laws to be recognized as of the date of enactment, the Company remeasured its deferred tax balance as of December 22, 2017 and recorded a provisional amount of $9.8 million to the income tax provision as a result of the remeasurement for the year ended December 31, 2017.     December 31,       2022     2021   Deferred tax assets:                 Tax credits   $ 32,037     $ 26,302   Stock-based compensation     2,900       2,027   Deferred compensation     9,844       8,526   Net operating losses     9,000       5,818   Other expenses not currently deductible     8,891       5,151   Deferred tax assets, gross     62,672       47,824   Valuation allowance     (20,321 )     (19,520 ) Deferred tax assets, net of valuation allowance     42,351       28,304   Deferred tax liabilities:                 Depreciation and amortization     (5,927 )     (5,067 ) Undistributed foreign earnings     (358 )     (375 ) Other expenses currently deductible     (814 )     (945 ) Deferred tax liabilities     (7,099 )     (6,387 ) Net deferred tax assets   $ 35,252     $ 21,917     6970 Table of Contents Deemed Repatriation Transition Tax: The 2017 Tax Act mandates a one-time deemed repatriation transition tax of post-1986 undistributed foreign earnings and profits (“E&P”) on which U.S. income taxes were previously deferred. The rate applied varies depending on whether the E&P is held in liquid or non-liquid assets. A proportional deduction on the deemed repatriation results in a transition tax of 15.5% for cash and liquid assets and 8% for non-liquid assets. The transition tax is assessed regardless of whether the Company repatriates the earnings. The transition tax is determined on the greater of E&P as of two measurement dates ( November 2, 2017 or December 31, 2017). The amount of cash and liquid assets is determined based on the greater of the amounts calculated using two alternative measurement periods. For the year ended December 31, 2017, the Company recorded a provisional amount of $41.9 million related to the transition tax expense. After the utilization of R&D tax credits of $18.0 million, the transition tax payable is $23.9 million. As permitted by the 2017 Tax Act, the Company has elected to pay the transition tax in installments over eight years. As a result, $1.9 million was recorded in current accrued liabilities and $22.0 million was recorded in long-term income tax liabilities as of December 31, 2017. Undistributed Earnings of Subsidiaries:GILTI:   The Company previously considered the earnings in its non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. Prior to the transition tax, the Company had an excess of the amountaccounts for financial reporting over the tax basis in its foreign subsidiaries including undistributed foreign earnings of $390.2 million. While the transition tax resulted in the reduction of the excess of the amount for financial reporting over the tax basis in its foreign subsidiaries and subjectedGILTI as a provisional amount of $119.7 million of undistributed foreign earnings to tax, an actual repatriation from its non-U.S. subsidiaries could be subject to additional foreign withholding taxes and U.S. state taxes.period cost.  Valuation Allowance:   The Company has analyzedperiodically evaluates its global working capital and cash requirements, and has determined that it plans to repatriate cash from its Bermuda subsidiary on an ongoing basis to fund its future U.S. based expenditures and dividends. For the other foreign subsidiaries, the Company expects to indefinitely reinvest undistributed earnings to fund foreign operations and their research and development. For those undistributed foreign earnings from which the Company was not able to make a reasonable estimate of the tax effects of such repatriation, the Company has not recorded any deferred taxes or accrued for any withholding taxes or state taxes as of December 31, 2017. The Company will record the tax effects of any change in its prior assertion with respect to those undistributed foreign earnings in the period that it is first able to make a reasonable estimate, no later than the end of the measurement period under SAB 118. Global Intangible Low-Taxed Income: The 2017 Tax Act subjects a U.S. parent shareholder to taxation of its global intangible low-taxed income (“GILTI”), effective January 1, 2018. The GILTI inclusions will impact companies that have foreign earnings generated without a large aggregate foreign fixed asset base and whose earnings are being taxed at a low tax rate. GILTI is calculated based on foreign income in excess of a deemed return on tangible assets of foreign corporations. The income inclusion under GILTI is eligible for a deduction that is intended to lower the effective tax rate to 10.5% for taxable years 2018 to 2025, and rise to 13.125% for taxable years after 2025.The enactment of the GILTI tax will result in additional Subpart F income recognition for the Company in 2018 and onwards.  Executive Compensation Deductions: The 2017 Tax Act retains the $1 million limitation on deductible compensation to covered employees, which include the Chief Executive Officer and four other highest paid officers, under IRC Section 162(m). However, it eliminates the exception for performance-based cash or stock compensation and expands the definition of covered employees to include the Chief Financial Officer. Accordingly, beginning January 1, 2018, the deductible compensation to covered employees will generally be subject to the $1 million limitation. Release of Valuation Allowance Management periodically evaluates the realizability of the Company’s deferred tax assets, including a determination of whether a valuation allowance is necessary, based on all available evidence.upon its ability to utilize the assets using a more likely than not analysis. The realizability of the Company’s net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. The Company maintained a full valuation allowance on its U.S. deferred tax assets asAs of the thirdDecember 31, 2022 quarter ofand 2017.In the fourth quarter of 2017,2021, the Company assessedhas evaluated the realizabilityrealization of theits deferred tax assets and concluded that it was more likely than not that its federal deferred tax assets would be realizable, due principally to the enactment of the 2017 Tax Act. 70 Table of Contents In accordance with ASC 740, management considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence,recorded a valuation allowance for deferred tax asset was needed. The Company’s conclusion was primarily driven byassets that do not meet the following positive evidence: ● The Company forecasts taxable income in the U.S. in future periods.  The enactment of GILTI will result in additional Subpart F income each year. ● Executive performance-based equity awards are now subject to the Section 162(m) deduction limitation. ● The Company has a history of utilizing all federal tax attributes before expiration. As a result, the Company released more-likely-than-$21.6not million of valuation allowance on federal deferred tax assets, which was recorded as a benefit in the income tax provision in the fourth quarter of 2017. The Company continues to maintain a full valuation allowance on the deferred tax assets in California, primarily due to a low apportionment factor and the amount of R&D tax credits generated is greater than the amount utilized.recognition threshold.    Undistributed Earnings of Subsidiaries: The Company has analyzed its global working capital and cash requirements, and has determined that it plans to repatriate cash from its Bermuda subsidiary on an ongoing basis to fund its future U.S.-based expenditures and dividends.  No cash was repatriated from the subsidiary during the year ended December 31, 2022. For the years ended December 31, 2021 and 2020, the Company repatriated $70.0 million and $30.0 million from its Bermuda subsidiary, respectively.  For all other foreign subsidiaries, the Company expects to indefinitely reinvest undistributed earnings to fund their operations and R&D. As of December 31, 2022 and 2021, the undistributed earnings were approximately $67.4 million and $46.2 million, respectively. An actual repatriation of the undistributed earnings could be subject to additional foreign withholding taxes and U.S. state taxes. The Company expects to be able to take a dividend received deduction to offset any U.S. federal income tax liability on the undistributed earnings. 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. Other Income Tax Provision MattersMatters   As of December 31, 20172022, , the Company did not have federal net operating loss carryforwards. As of December 31, 2017,2022, the state net operating loss carryforwards for income tax purposes were $19.7$6.0 million, which will expire beginning in 2028. As of December 31, 2022, the Company has foreign net operating loss carryforwards for income tax purposes of $67.2 million, which will expire beginning in 2029.   As of December 31, 20172022, , the Company had no R&D tax credit carryforwards of $0.8 million for federal income tax purposes, which will begin to expire in 2037,and $21.0$36.7 million for state income tax purposes, which can be carried forward indefinitely. Upon adoption of ASUNo.2016-09,Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, on January 1, 2017, all excess tax benefits and deficiencies related to equity awards are recognized in the income tax provision in the Consolidated Statements of Operations prospectively, rather than in additional paid-in-capital in the Consolidated Balance Sheets. In addition, the standard eliminates the requirement to defer recognition of excess tax benefits until they are realized through a reduction to income taxes payable. The Company applied the modified retrospective method and there was no net adjustment to retained earnings as of January 1, 2017, as the deferred tax assets related to the previously unrecognized excess tax benefits were fully offset by a valuation allowance. The Company expects increased volatility to the income tax provision in future periods dependent upon, among other variables, the price of its common stock and the timing and volume of equity award vesting.   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.    On July 27, 2015, inAltera Corp. v. Commissioner, the U.S. Tax Court issued an opinion related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was issued in December 2015, and the IRS appealed the decision in February 2016. At this time, the U.S. Department of the Treasury has not withdrawn the requirement from its regulations to include stock-based compensation in the cost pool to be shared under a cost-sharing arrangement. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits, and the risk of the Tax Court’s decision being overturned upon appeal, the Company has not recorded any adjustments asAs of December 31, 2017. The Company will continue to monitor developments related to this opinion and the potential impact on its financial statements. At December 31, 2017,2022, the Company had $16.3$49.3 million of unrecognized tax benefits, $9.1$38.3 million of which would affect its effective tax rate if recognized after considering the valuation allowance. AtAs of December 31, 2016,2021, the Company had $14.4$41.5 million of unrecognized tax benefits, $3.5$31.5 million of which would affect its effective tax rate if recognized after considering the valuation allowance.  71 Table of Contents   A reconciliation of the gross unrecognized tax benefits is as follows (in thousands):    Balance as of January 1, 2015   $ 16,406   Balance as of January 1, 2020   $ 25,407   Increase for tax position of current year     1,964     9,782   Decrease related to settlement with tax authorities     (4,162 ) Decrease for tax position of prior year   (907 ) Decrease due to settlement with tax authorities   (560 ) Decrease due to lapse of statute of limitation     (669 )     (223 ) Balance as of December 31, 2020   33,499   Increase for tax position of current year   9,191   Decrease for tax position of prior year     (1,446 )   (657 ) Balance as of December 31, 2015     12,093   Decrease due to settlement with tax authorities   (54 ) Decrease due to lapse of statute of limitation     (458 ) Balance as of December 31, 2021   41,521   Increase for tax position of current year   10,965   Increase for tax position of prior year     243     247   Increase for tax position of current year     2,095   Balance as of December 31, 2016     14,431   Increase for tax position of prior year     169   Increase for tax position of current year     2,360   Decrease due to settlement with tax authorities   (970 ) Decrease due to lapse of statute of limitation     (688 )     (2,486 ) Balance as of December 31, 2017   $ 16,272   Balance as of December 31, 2022   $ 49,277       The Company recognizes interest and penalties, if any, related to uncertain tax positions in its income tax provision. As of December 31, 2022 2017and 2016,2021, the Company has $0.5$4.3 million and $0.3$3.3 million, respectively, of accrued interest related to uncertain tax positions, which were recorded in long-term income tax liabilities inon the Consolidated Balance Sheets.    Uncertain tax positions relate to the allocation of income and deductions among the Company’sCompany’s global entities and to the determination of the research and developmentR&D tax credit. It is reasonably possible that overthe balance of gross unrecognized tax benefits could significantly change in the next twelve12-month period, the Company may experience increases or decreases in its unrecognized tax benefits. months. However, it is not possible to determine either the magnitude or the range of increases or decreases at this time. 71 Table of Contents   The Company currently has reduced tax rates in its subsidiaries in Chengdu and Hangzhou, China for performing research and development activities through 20202023 and 2019,2030, respectively. In addition, respectively, for performing R&D activities. On August 9, 2022, the Company currently has a tax holiday in Switzerland, which allows for tax-free operations through 2018.  The tax holidayU.S. government enacted the CHIPS Act to provide certain financial and tax incentives to the semiconductor industry, primarily for manufacturing activities within the United States. On August 16, 2022, the IRA was enacted and signed into law. The IRA, among other things, introduces a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations, and imposes a 1% surcharge on stock repurchases. This excise tax is effective January 1, 2023. The Company does not believe the CHIPS Act or the IRA had an insignificanta material impact on earnings per shareits income tax provisions, results of operations or financial condition for the periods presented.year ended December 31, 2022.   Income Tax ExaminationsExamination   The Company is subject to examination of its income tax returns by the IRS and other tax authorities. The Company’s U.S. Federal incomeIn general, the tax returnyears for the year ended December 31, 2014 was under examination by the IRS in 2016. In January 2017, the IRS completed its examination with no adjustments. The Company’s U.S. Federal income tax returns for the years ended December 31, 2005 through December 31, 2007 were under examination by the IRS. In April 2011, the Company received from the IRS a Notice of Proposed Adjustment ("NOPA") relating to a cost-sharing agreement entered into by the Company and its international subsidiaries on January 1, 2004. In the NOPA, the IRS objected to the Company’s allocation of certain litigation expenses between the Company and its international subsidiaries and the amount of "buy-in payments" made by the international subsidiaries to the Company in connection with the cost-sharing agreement, and proposed to increase the Company’s U.S. taxable income according to a few alternative methodologies. In February 2012, the Company received a revised NOPA from the IRS (“Revised NOPA”). In this Revised NOPA, the IRS raised the same issues as in the NOPA issued in April 2011 but under a different methodology. Under the Revised NOPA, the largest potential federal income tax payment, if the IRS were to prevail on all matters in dispute, was $10.5 million, plus interest and penalties, if any. The Company responded to the Revised NOPA in May 2012. In June 2013, the IRS responded and continued to disagree with the Company’s rebuttal. The Company met with the IRS Office of Appeals in 2014 and both parties engaged in continuous discussions for a resolution of the matter in the first quarter of 2015. Meanwhile, the Company granted the IRS an extension of the statute of limitations for taxable years 2005 through 2007 to September 30, 2015.  The IRS also audited the research and development credits carried forward into year 2005 and the credits generated in the years 2005 through 2007. The Company received a NOPA from the IRS in February 2011, proposing to reduce the research and development credits generated in years 2005 through 2007 and the carryforwards, which would then reduce the value of such credits carried forward to subsequent tax years. In April 2015, the Company reached a final resolution with the IRS in connection with theare open for examination for U.S. federal and state income tax audits for the years 2005 through 2007. Under the agreement, the Company made a one-time buy-in payment of $1.2 million for taxes related primarily to the revaluation of a license for certain intellectual property rights of the Company to one of its international subsidiaries.  This buy-in payment was final and no additional payment would be required with respect to the intellectual property license for the years under examination or for a previous or subsequent tax year. In addition, the Company made an interest payment of $1.0 million as well as a tax payment of $0.1 million for the tax years 2008 to 2013 in 2015.  There were no penalties assessed on the Company as a result of the audits.purposes.   72 Table of Contents For the second quarter of 2015, the Company's income tax provision included a one-time net charge of $2.7 million reflecting the taxes and interest, partially offset by the reversal of previously accrued tax liabilities and valuation allowances. Of the $2.7 million charge, $1.6 million was related to taxes and $1.1 million was related to interest. 112.3.  COMMITMENTS AND CONTINGENCIES   Lease Obligations As of December 31, 2017, future minimum payments under the non-cancelable operating leases were as follows (in thousands): 2018   $ 1,210   2019     636   2020     193   2021     55   2022     51   Total   $ 2,145   The Company leases warehouse space, sales and marketing, and research and development offices in China, India, Japan, Korea, the United States and Europe. Certain of the Company’s facility leases provide for periodic rent increases. Rent expense for the years ended December 31, 2017, 2016 and 2015 was $1.5 million, $1.7 million and $1.8 million, respectively. Warranty and Indemnification Provisions   The changes in warranty reserves are as follows (in thousands):       Year Ended December 31,       2017     2016     2015   Balance at beginning of period   $ 1,030     $ 289     $ 240   Warranty provision for product sales     1,912       1,102       333   Settlements made     (40 )     (68 )     (158 ) Unused warranty provision     (486 )     (293 )     (126 ) Balance at end of period   $ 2,416     $ 1,030     $ 289       Year Ended December 31,       2022     2021     2020   Balance at beginning of period   $ 20,989     $ 6,895     $ 1,139   Warranty issued     3,092       10,558       6,395   Repairs, replacement and refund     (2,357 )     (1,770 )     (843 ) Changes in liability for pre-existing warranties, including expirations     2,358       5,306       204   Balance at end of period   $ 24,082     $ 20,989     $ 6,895     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 their intellectual property rights as a result of using the Company’sCompany’s products and technologies. These indemnification provisions are varied in their 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 in any offor the periods presented. However, there can be no assurances that the Company will not incur any financial liabilities in the future as a result of these obligations.   Purchase Commitments The Company has outstanding purchase obligations with its suppliers and other parties that require the purchases of goods or services, which 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. In 1May 2022, the Company entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four-year period. As of December 31, 2022, the Company had made prepayments under this agreement of $170.0 million, which were reported in other long-term assets on the Consolidated Balance Sheet. Total estimated future unconditional purchase commitments to all suppliers and other parties as of December 31, 2022 were as follows (in thousands): 2023   $ 455,383   2024     291,528   2025     349,765   Total   $ 1,096,676   Litigation4.  LITIGATION   The Company is a party to actions and proceedings in the ordinary course of business, including potential litigation initiated by its shareholders, challenges to the enforceability or validity of its intellectual property, claims that the Company’sCompany’s products infringe on the intellectual property rights of others, and employment matters. The Company may also be subject to litigation initiated by its stockholders. 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. As of December 31, 2017, 2022,there were no material pending legal proceedings to which the Company was a party.   73 Table of Contents 113.5.  EMPLOYEE 401(k) PLAN   The CompanyCompany sponsors a 401(k) retirement savings plan for all employees in the United StatesU.S. who meet certain eligibility requirements. Participants may contribute up to the amount allowable as a deduction for federal income tax purposes. The Company is not required to contribute and did not contribute to the plan for the years ended December 31, 2017,2022, 20162021 and 2015.2020.   72 Table of Contents   114.6.  SIGNIFICANT CUSTOMERS   The Company sells its products primarily through third-party distributors and value-added resellers, and directly to original equipment manufacturers, original design manufacturersOEMs, ODMs and electronic manufacturing serviceEMS providers. The following table summarizes those customers with sales equal to or greater than 10% or more of the Company's total revenue or with accounts receivable balances greater than 10% of the Company’s total accounts receivable:revenue:        Revenue     Accounts Receivable       Year Ended December 31,     December 31,   Customer   2017     2016     2015     2017     2016   A (distributor)     17 %     22 %     24 %     16 %     19 % B (distributor)     *       *       *       *       17 % C (distributor)     10 %     *       *       *       *   D (value-added reseller)     *       *       *       15 %     *   ________     Year Ended December 31,   Customer   2022   2021   2020   Distributor A     24 %   26 %   24 % Distributor B     19 %   15 %   11 % Distributor C     *     10 %   *   * Represents less than 10%.   The Company’sCompany’s agreements with these third-party distributors and value-added resellercustomers were made in the ordinary course of business and may be terminated with or without cause by these customers 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 these customersthe distributors was terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a short period following the termination of the agreement with the customer. distributor.   The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable:       December 31,       2022     2021   Distributor A     29 %     26 % Distributor B     23 %     17 % Value-added reseller A     *       12 % * Represents less than 10%. 73 Table of Contents   115.7.  SEGMENT AND GEOGRAHPICGEOGRAPHIC INFORMATION    The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, analogsemiconductor-based power electronic solutions for the consumer,storage and computing, enterprise data, automotive, industrial, communications and storage, industrial, automotive and communicationsconsumer markets. The Company’sCompany’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. 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 regions (in thousands):       Year Ended December 31,   Country or Region   2017     2016     2015   China   $ 257,787     $ 245,169     $ 213,119   Taiwan     83,357       45,414       41,521   Europe     38,140       27,554       22,603   Korea     34,155       27,710       20,519   Southeast Asia     25,755       19,645       18,592   Japan     20,187       14,318       9,727   United States     11,113       8,567       6,732   Other     435       288       254   Total   $ 470,929     $ 388,665     $ 333,067       Year Ended December 31,   Country or Region   2022     2021     2020   China   $ 938,946     $ 700,985     $ 516,519   Taiwan     233,040       169,130       109,256   Europe     145,584       85,201       56,329   South Korea     189,478       93,027       64,093   Southeast Asia     95,739       54,611       42,403   Japan     91,048       68,720       35,461   United States     99,804       35,770       20,098   Other     509       354       293   Total   $ 1,794,148     $ 1,207,798     $ 844,452     The following is a summary of revenue by major product families (in thousands):     Year Ended December 31,     Year Ended December 31,   Product Family   2017     2016     2015     2022     2021     2020   DC to DC   $ 431,861     $ 350,930     $ 299,726     $ 1,696,594     $ 1,147,329     $ 800,478   Lighting Control     39,068       37,735       33,341       97,554       60,469       43,974   Total   $ 470,929     $ 388,665     $ 333,067     $ 1,794,148     $ 1,207,798     $ 844,452     74 Table of Contents   The following is a summary of long-lived assets by geographic regions (in thousands):     December 31,   Country   2022     2021     2020   China   $ 200,508     $ 211,973     $ 151,752   United States     113,996       113,805       101,768   Taiwan     20,074       19,607       18,797   Other     22,579       17,577       9,211   Total   $ 357,157     $ 362,962     $ 281,528         December 31,   Country   2017     2016     2015   China   $ 89,472     $ 45,728     $ 40,738   United States     65,618       50,242       40,405   Taiwan     17,238       8,919       126   Bermuda     7,522       9,573       11,624   Other     388       571       431   Total   $ 180,238     $ 115,033     $ 93,324   116.8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)   The following table summarizes the changes in accumulated other comprehensive income (loss) (in thousands):       Unrealized Losses on Available-for- Sale Securities     Foreign Currency Translation Adjustments     Total   Balance as of January 1, 2016   $ (375 )   $ 1,841     $ 1,466   Other comprehensive loss before reclassifications     (623 )     (5,033 )     (5,656 ) Amounts reclassified from accumulated other comprehensive income (loss)     (25 )     -       (25 ) Net current period other comprehensive loss     (648 )     (5,033 )     (5,681 ) Balance as of December 31, 2016     (1,023 )     (3,192 )     (4,215 ) Other comprehensive income (loss) before reclassifications     (343 )     6,369       6,026   Amounts reclassified from accumulated other comprehensive income (loss)     2       -       2   Net current period other comprehensive income (loss)     (341 )     6,369       6,028   Balance as of December 31, 2017   $ (1,364 )   $ 3,177     $ 1,813       Unrealized Gains                   (Losses) on     Foreign Currency             Available-for-Sale     Translation             Securities     Adjustments     Total   Balance as of January 1, 2021   $ 1,601     $ 8,539     $ 10,140   Other comprehensive income (loss) before reclassifications     (3,244 )     8,404       5,160   Amounts reclassified from accumulated other comprehensive income     (33 )     -       (33 ) Tax effect     613       -       613   Net current period other comprehensive income (loss)     (2,664 )     8,404       5,740   Balance as of December 31, 2021     (1,063 )     16,943       15,880   Other comprehensive loss before reclassifications     (6,944 )     (32,293 )     (39,237 ) Amounts reclassified from accumulated other comprehensive loss     96       -       96   Tax effect     184       -       184   Net current period other comprehensive loss     (6,664 )     (32,293 )     (38,957 ) Balance as of December 31, 2022   $ (7,727 )   $ (15,350 )   $ (23,077 )   The amountsamounts reclassified from accumulated other comprehensive income (loss) were recorded in interest and other income (expense), net, inon the Consolidated Statements of Operations.   74 Table of Contents   19.17. SUBSEQUENT EVENT   Cash Dividend Increase In February 2018,2023, the Company’sCompany’s Board of Directors approved an increase in its quarterly cash dividenddividends from $0.20$0.75 per share to $0.30$1.00 per share, effective for the first quarter of 2018.share. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.   75 Table of Contents Item 9A. Controls and Procedures   20. QUARTERLY FINANCIAL DATA (UNAUDITED)     Three Months Ended       December 31, 2017     September 30, 2017     June 30, 2017     March 31, 2017       (in thousands, except per share amounts)   Revenue   $ 129,430     $ 128,939     $ 112,198     $ 100,362   Cost of revenue     58,269       58,083       50,773       45,520   Gross profit     71,161       70,856       61,425       54,842   Operating expenses:                                 Research and development     21,730       21,442       20,292       18,894   Selling, general and administrative     24,038       25,255       25,873       22,092   Litigation expense, net     340       327       290       286   Total operating expenses     46,108       47,024       46,455       41,272   Income from operations     25,053       23,832       14,970       13,570   Interest and other income, net     1,647       1,255       1,237       1,381   Income before income taxes     26,700       25,087       16,207       14,951   Income tax provision     14,629       1,445       1,193       474   Net income   $ 12,071     $ 23,642     $ 15,014     $ 14,477                                     Net income per share:                                 Basic   $ 0.29     $ 0.57     $ 0.36     $ 0.35   Diluted   $ 0.27     $ 0.54     $ 0.35     $ 0.33   Weighted-average shares outstanding:                                 Basic     41,574       41,458       41,323       41,047   Diluted     44,610       43,486       43,397       43,268                                     Cash dividends declared per common share   $ 0.20     $ 0.20     $ 0.20     $ 0.20       Three Months Ended       December 31, 2016     September 30, 2016     June 30, 2016     March 31, 2016       (in thousands, except per share amounts)   Revenue   $ 103,618     $ 106,456     $ 94,079     $ 84,512   Cost of revenue     47,107       48,531       43,153       39,002   Gross profit     56,511       57,925       50,926       45,510   Operating expenses:                                 Research and development     17,974       20,472       17,876       17,321   Selling, general and administrative     21,316       22,397       21,531       17,768   Litigation expense (benefit), net     (321 )     55       (8 )     45   Total operating expenses     38,969       42,924       39,399       35,134   Income from operations     17,542       15,001       11,527       10,376   Interest and other income, net     897       780       597       543   Income before income taxes     18,439       15,781       12,124       10,919   Income tax provision     1,866       1,408       926       344   Net income   $ 16,573     $ 14,373     $ 11,198     $ 10,575                                     Net income per share:                                 Basic   $ 0.41     $ 0.35     $ 0.28     $ 0.26   Diluted   $ 0.39     $ 0.34     $ 0.27     $ 0.25   Weighted-average shares outstanding:                                 Basic     40,739       40,590       40,387       40,028   Diluted     42,404       41,895       41,716       41,646                                     Cash dividends declared per common share   $ 0.20     $ 0.20     $ 0.20     $ 0.20   76 Table of Contents ITEM 9.    CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A.    CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures   Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this Annual Report on Form 10-K.    Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017,2022, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s’s Report on Internal Control over Financial Reporting   Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Control—Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2017.2022. Management reviewed the results of its assessment with our Audit Committee.   Our independent registered public accounting firm, DeloitteErnst & ToucheYoung LLP, which audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report onindependently assessed the effectiveness of our internal control over financial reporting. reporting, as stated in the firm’s attestation report, which appears in Part II, Item 8 of this Annual Report on Form 10-K.   Changes in Internal Control over Financial Reporting   There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 20172022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.   Limitations on Effectiveness of Controls and Procedures   In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable.   7775 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 the internal control over financial reporting of Monolithic Power Systems, Inc. and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Company and our report dated March 1, 2018, expressed an unqualified opinion on those financial statements. 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/ DELOITTE & TOUCHE LLP San Jose, California   March 1, 2018   78 Table of Contents ITEM 9B.   OTHER INFORMATION None.   PART III   ITEM Item 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors, Executive Officers and Corporate Governance   Reference is made to the information regarding directors and nominees, code of ethics, corporate governance matters and disclosure relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing under the captions “Election of Directors” and “Compliance with“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance”Reports” in the Company’sCompany’s Proxy Statement for its 20182023 Annual Meeting of Stockholders (the “2018“2023 Annual Meeting”), which information is incorporated in this Annual Report on Form 10-K by reference. Information regarding executive officers is set forth under the caption “Executive Officers of the Registrant”“Information about Executive Officers” in Part I of this Annual Report on Form 10-K.   ITEM Item 11.    EXECUTIVE COMPENSATION Executive Compensation   The information required by this item will be set forth under ���Executivethe caption “Executive Officer Compensation” in the Company’sCompany’s Proxy Statement for the 20182023 Annual Meeting, and is incorporated herein by reference.   ITEM Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   The information required by this item will be set forth under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Company’sCompany’s Proxy Statement for the 20182023 Annual Meeting, and is incorporated herein by reference.   ITEM Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Certain Relationships and Related Transactions, and Director Independence   The information required by this item will be set forth under the captions “Certain Relationships and Related Transactions” and “Election of Directors” in the Company’sCompany’s Proxy Statement for the 20182023 Annual Meeting, and is incorporated herein by reference.   ITEM Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES Principal AccountantFees and Services   The information required by this item will be set forth under the caption “Audit and Other Fees” in the Company’sCompany’s Proxy Statement for the 20182023 Annual Meeting, and is incorporated herein by reference.   7976 Table of Contents   PART IV   ITEM Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. Exhibits and Financial Statement Schedules   (a) Documents filed as part of this report   (1) All financial statements   Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Page Reports of Independent Registered Public Accounting Firm 41 Consolidated Balance Sheets 43 Consolidated Statements of Operations 44 Consolidated Statements of Comprehensive Income 45 Consolidated Statements of Stockholders’ Equity 46 Consolidated Statements of Cash Flows 47 Notes to Consolidated Financial Statements 48   (2) Financial Statement Schedules   All schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of the schedules, or because the information required is included in the consolidated financial statements or notes thereto.   (3) Exhibits   Exhibit Number Description   3.1 (1) Amended and Restated Certificate of Incorporation.   3.2 (2) Amended and Restated Bylaws.Bylaws of Monolithic Power Systems, Inc., effective April 26, 2022.   10.1+4.1 (3) Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.   10.1+ (4) Registrant’sRegistrant’s 2004 Employee Stock Purchase Plan and form of subscription agreement.   10.2+ (4)10.2+ (5) Form of Directors’Directors’ and Officers’ Indemnification Agreement.   10.3+ (5)10.3+ (6) Employment Agreement with Michael Hsing, and Amendment thereof.thereof.   10.4+ (6)10.4+ (7) Employment Agreement with Maurice Sciammas, and Amendment thereof. 10.5+ (7) Employment Agreement with Jim Moyer.thereof.   10.6+10.5+ (8) Employment Agreement with Deming Xiao, and Amendment thereof.Jim Moyer.   10.7+10.6+(9) LetterEmployment Agreement with Victor Lee.Deming Xiao, and Amendment thereof.   10.8+10.7+(10) Letter Agreement with Karen A. Smith Bogart.Victor Lee.   10.9+10.8+(11) Letter Agreement with Jeff Zhou.Zhou.   10.10+10.9+(12) Employment Agreement with Meera P. Rao and Saria Tseng and Amendment thereof. 80 Table of Contents 10.11+(13) Monolithic Power Systems, Inc. Master Cash Performance Bonus Plan.     10.12+(14)10.10+(13)   Letter Agreement with Eugen Elmiger.     10.13+(15)10.11+(14) Monolithic Power Systems, Inc. 2004 Equity Incentive Plan, as Amended, and Form of Grant Agreement.     10.14+(16)10.12+(15) Monolithic Power Systems, Inc. 2014 Equity Incentive Plan, as Amended, and Form of Grant Agreement.   77 Table of Contents 10.15+(17)10.13+(16)   Employment Agreement with Bernie Blegen. 10.14+(17) Employment Agreement with Saria Tseng and Amendment thereof. 10.15+(18) Monolithic Power Systems, Inc. Amended and Restated 2014 Equity Incentive Plan. 10.16+(19) Forms of Grant Agreements under the Monolithic Power Systems, Inc. Amended and Restated 2014 Equity Incentive Plan. 10.17+(20) Letter Agreement with Carintia Martinez. 10.18+(21) Indemnification Agreement with Carintia Martinez. 10.19+(22) Letter Agreement with Eileen Wynne. 10.20+(23) Indemnification Agreement with Eileen Wynne. 21.1   Subsidiaries of Monolithic Power Systems, Inc.     23.1   Consent of Independent Registered Public Accounting Firm.     24.1   Power of Attorney (included on Signature page to this Form 10-K).     31.1   Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.     31.2   Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.     32.1*   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     101.INS   Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document     101.SCH   Inline XBRL Taxonomy Extension Schema Document     101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document     101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document     101.LAB   Inline XBRL Taxonomy Extension LabelsLabel Linkbase Document     101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)   + Management contract or compensatory plan or arrangement. * This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. (1) Incorporated by reference to Exhibit 3.2 of the Registrant’sRegistrant’s Registration Statement on Form S-1/A (Registration No. 333-117327), filed with the Securities and Exchange Commission on November 15, 2004. (2) Incorporated by reference to Exhibit 3.43.1 of the Registrant’sRegistrant’s current report on Form 8-K (File No. 000-51026), filed with the Securities and Exchange Commission on April 27, 2022. (3) Incorporated by reference to Exhibit 4.1 of the Registrant’s annual report on Form 10-K (File No. 000-51026), filed with the Securities and Exchange Commission on February 28, 2020. (4) Incorporated by reference to Exhibit 10.3 of the Registrant’s Registration Statement on Form S-1/A (Registration No. 333-117327), filed with the Securities and Exchange Commission on November 15, 2004. 78 Table of Contents