☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock outstanding as of ~~November 3, 2017~~May 4, 2023 was ~~49,390,130.~~45,720,245.


	September 30,			December 31,			March 31,			December 31,
	2017			2016			2023			2022
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	201,226		$	247,802		$	323,146		$	336,732
Restricted cash								2,761			4,367
Short-term investments		12,737			29,842			8,768			7,059
Accounts receivable, net of allowances of $3,218 and $2,141 at September 30, 2017 and December 31, 2016, respectively		230,460			217,217
Accounts receivable, net of allowances of $5,861 and $5,852 at March 31, 2023 and December 31, 2022, respectively								369,054			369,233
Inventories		211,412			193,483			341,941			360,281
Prepaid expenses and other		45,644			44,438			76,101			83,999
Total current assets		701,479			732,782			1,121,771			1,161,671
Property, plant and equipment, net		446,052			401,988			755,707			736,730
Deferred income tax		64,129			56,047			36,185			35,308
Goodwill		133,538			129,412			145,937			144,757
Intangible assets, net		161,122			174,876			75,398			79,137
Other		34,269			33,447
Other long-term assets								150,563			130,709
Total assets	$	1,540,589		$	1,528,552		$	2,285,561		$	2,288,312

Liabilities
Current liabilities:
Lines of credit							$	34,651		$	36,280
Accounts payable	$	111,689		$	87,600			143,694			160,442
Accrued liabilities and other		94,436			71,562			176,952			214,433
Income tax payable		-			11,855			33,876			19,682
Current portion of long-term debt		19,067			14,356			1,173			1,693
Total current liabilities		225,192			185,373			390,346			432,530
Long-term debt, net of current portion		306,687			413,126			89,636			147,470
Deferred tax liabilities		28,617			28,213			13,012			12,903
Other long-term liabilities		85,209			81,373			126,894			112,490
Total liabilities		645,705			708,085			619,888			705,393

Commitments and contingencies (See Note 8)
Commitments and contingencies (See Note 9)

Stockholders' equity
Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding		-			-
Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; 49091693 and 48,219,376, issued and outstanding at September 30, 2017 and December 31, 2016, respectively		33,501			32,919
Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding								-			-
Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; and 45,706,798 shares and 45,469,722 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively								36,661			36,503
Additional paid-in capital		375,134			354,574			494,598			494,773
Retained earnings		563,338			530,215			1,519,242			1,448,092
Treasury stock, at cost, 1,157,206 shares held at September 30, 2017 and December 31, 2016		(29,023	)		(29,023	)
Treasury stock, at cost, 9,281,581 shares at March 31, 2023 and 9,281,581 shares at December 31, 2022								(337,490	)		(337,490	)
Accumulated other comprehensive loss		(89,707	)		(112,666	)		(117,546	)		(128,233	)
Total stockholders' equity		853,243			776,019			1,595,465			1,513,645
Noncontrolling interest		41,641			44,448			70,208			69,274
Total equity		894,884			820,467			1,665,673			1,582,919
Total liabilities and stockholders' equity	$	1,540,589		$	1,528,552		$	2,285,561		$	2,288,312


The accompanying notes are an integral part of these condensed consolidated financial statements.	The accompanying notes are an integral part of these condensed consolidated financial statements.						The accompanying notes are an integral part of these condensed consolidated financial statements.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Net sales
$
285,247

$
250,694

$
785,774

$
710,077

Cost of goods sold

188,900

170,071

525,377

490,417

Gross profit

96,347

80,623

260,397

219,660

Operating expenses

Selling, general and administrative

43,525

38,321

122,912

119,165

Research and development

20,379

17,088

58,215

52,247

Amortization of acquisition related intangible assets

4,694

5,117

14,098

15,379

Impairment of fixed assets

1,993

-

1,993

-

Restructuring expense

2,039

-

6,108

-

Other operating expenses

-

144

169

184

Total operating expenses

72,630

60,670

203,495

186,975

Income from operations

23,717

19,953

56,902

32,685

Other income (expense)

Interest income

389

321

992

1,075

Interest expense

(3,561
)

(3,684
)

(10,493
)

(9,880
)
Foreign currency loss, net

(1,312
)

(1,439
)

(6,734
)

(2,045
)
Other income

597

480

1,128

551

Total other income (expense)

(3,887
)

(4,322
)

(15,107
)

(10,299
)

Income before income taxes and noncontrolling interest

19,830

15,631

41,795

22,386

Income tax provision

5,052

4,097

11,651

5,941

Net income

14,778

11,534

30,144

16,445

Less net income attributable to noncontrolling interest

(328
)

(886
)

(1,298
)

(1,778
)
Net income attributable to common stockholders
$
14,450

$
10,648

$
28,846

$
14,667

Earnings per share attributable to common stockholders:

Basic
$
0.29

$
0.22

$
0.59

$
0.30

Diluted
$
0.29

$
0.21

$
0.58

$
0.30

Number of shares used in earnings per share computation:

Basic

49,057

48,814

48,633

48,496

Diluted

50,416

49,922

50,061

49,565

The accompanying notes are an integral part of these condensed consolidated financial statements.

Nine Months Ended

September 30,

2017

2016

Cash flows from operating activities
$
106,340

$
74,935

Cash flows from investing activities

Decrease (increase) in restricted cash

555

(311
)
Purchases of property, plant and equipment

(81,877
)

(47,054
)
Purchases of short-term investments

(9,744
)

(17,482
)
Proceeds from maturity of short-term investments

27,891

46,352

Other

(1,238
)

(1,316
)
Net cash and cash equivalents used in investing activities

(64,413
)

(19,811
)

Cash flows from financing activities

Advances on lines of credit and short-term debt

2,383

9,000

Taxes paid related to net share settlement

(277
)

(2,528
)
Repayments on lines of credit and short-term debt

(395
)

(9,000
)
Debt issuance costs

(99
)

(435
)
Proceeds from long-term debt

7,500

23,500

Repayments of long-term debt

(109,607
)

(70,714
)
Net proceeds from issuance of common stock

6,880

5

Repayment of capital lease obligation

(533
)

(19
)
Dividend distribution to noncontrolling interest

(5,754
)

(4,615
)
Other

2,056

518

Net cash and cash equivalents used in financing activities

(97,846
)

(54,288
)

Effect of exchange rate changes on cash and cash equivalents

9,343

1,255

Change in cash and cash equivalents

(46,576
)

2,091

Cash and cash equivalents, beginning of period

247,802

218,435

Cash and cash equivalents, end of period
$
201,226

$
220,526

Supplemental disclosure

Non-cash financing activities:

Decrease (increase) in accounts payable related to the purchase of
property, plant and equipment
$
(10,919
)

$
7,459

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTE 1 – ~~Nature~~Summary of Operations ~~Basis~~and Significant Accounting Policies

Summary of ~~Presentation and Recently Issued Accounting Pronouncements~~Operations

~~Nature of Operations~~

Diodes Incorporated, together with its subsidiaries (collectively the “Company,” “we” or “our”) (Nasdaq: DIOD)), a Standard and Poor's Smallcap 600 and Russell 3000 Index company, is a leading global manufacturer and supplier of high-quality application-specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. ~~We serve~~The Company serves the industrial, automotive, computing, consumer ~~electronics, computing,~~and communications ~~industrial,~~markets.

The Company's diverse product portfolio covers diodes; rectifiers; transistors; MOSFETs; SiC diodes and ~~automotive markets. Our products include diodes, rectifiers, transistors, MOSFETs,~~MOSFETs; protection ~~devices, function-specific arrays, single gate logic,~~devices; logic; voltage translators; amplifiers and ~~comparators, Hall-effect~~comparators; sensors; and ~~temperature sensors,~~ power management devices ~~including LED drivers,~~such as AC-DC converters, ~~and controllers,~~ DC-DC switching, ~~and~~ linear voltage regulators, voltage references, LED drivers, power switches, and voltage ~~references along with special function devices, such as USB power~~supervisors. We also have timing and connectivity solutions including clock ICs, crystal oscillators, PCIe packet switches, ~~load~~multi-protocol switches, ~~voltage supervisors,~~interface products, and ~~motor controllers. Our~~signal integrity solutions for high-speed signals.

The Company's corporate headquarters and Americas’ sales ~~office~~offices are located in Plano, Texas, and Milpitas, ~~California.~~California, respectively. Design, marketing, and engineering centers are located in Plano; Milpitas; Taipei, Taoyuan City, and Zhubei City, Taiwan; ~~Manchester,~~Shanghai and Yangzhou, China; Oldham, England; and Neuhaus, Germany. ~~Our~~The Company's wafer fabrication facilities are located in ~~Manchester, with an additional facility located in~~Oldham, England; Greenock, Scotland; Shanghai ~~China. We are in the process of shutting down our Lee’s Summit, Missouri wafer fabrication facility (“KFAB”)~~ and ~~transferring its wafer fabrication operation to other Company-owned wafer fabrication plants~~Wuxi, China; and ~~external foundries (See Note 11). We have~~Keelung and Hsinchu, Taiwan; and South Portland, Maine, United States. The Company has assembly and test facilities located in Shanghai, Jinan, Chengdu, and ~~Yangzhou, China, as well as in Hong Kong,~~Wuxi, China; Neuhaus, Germany; and ~~Taipei.~~Jhongli and Keelung, Taiwan. Additional engineering, sales, warehouse, and logistics offices are located in ~~Taipei;~~Taipei, Taiwan; Hong Kong; ~~Manchester; Shanghai;~~Oldham, England; Shanghai, Shenzhen, Wuhan, and Yangzhou, China; Seongnam-si, South Korea; and Munich ~~Germany,~~and Frankfurt, Germany; with support offices throughout the world.

•

The Company’s manufacturing facilities have achieved certifications in the internationally recognized standards of ISO 9001:2015, ISO 14001:2015, and, for automotive products, IATF 16949:2016;

•

The Company is also C-TPAT certified; and

•

We believe these quality awards reflect the superior quality-control techniques established at the Company and further enhance our credibility as a vendor-of-choice to original equipment manufacturers ("OEMs") increasingly concerned with quality and consistency.

Our market focus is on high-growth, end-user applications in the following areas:

•

Industrial: embedded systems, precision controls, and Industrial IoT;

•

Automotive: connected driving, comfort/style/safety, and electrification/powertrain;

•

Computing: cloud computing including server, storage, and data center applications;

•

Consumer: IoT, wearables, home automation, and smart infrastructure; and

•

Communications: smartphones, 5G networks, advanced protocols, and charging solutions.

Basis of Presentation

The condensed consolidated financial data at December 31, ~~2016 is~~2022 are derived from audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the Securities and Exchange Commission (“SEC”) on February ~~27, 2017~~10, 2023 (“Form 10-K”). The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. They do not include all information and footnotes necessary for a fair presentation of financial position, operating results and cash flows in conformity with GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in our Form 10-K. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the operating results for the period presented have been included in the interim period. Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, ~~2017.~~2023.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. As permitted under GAAP, interim accounting for certain expenses, including income taxes, are based on full year forecasts. For interim

-9-

financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates taking into consideration discrete items occurring in a quarter.

Dollar amounts and share amounts are presented in thousands, except per share amounts, unless otherwise noted. Certain prior year’s balances may have been reclassified to conform to the current condensed consolidated financial statement presentation.

~~Recently Issued Accounting Pronouncements~~

~~The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standards Updates (“ASU”) which could have potential impact on the Company’s financial statements:~~

~~ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606).~~ This standard is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard sets forth a five-step revenue recognition model which replaces the current revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance. To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:

~~•ASU 2016-08 (Issued March 2016) — Principal versus Agent Consideration (Reporting Revenue Gross versus Net)~~

-7-

~~•ASU 2016-10 (Issued April 2016) — Identifying Performance Obligations and Licensing~~

~~•ASU 2016-12 (Issued May 2016) — Narrow-Scope Improvements and Practical Expedients~~

~~•ASU 2016-20 (Issued December 2016) — Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~

This standard is effective in the first quarter of 2018. We will adopt this standard using the modified retrospective method. We have established a cross-functional coordinated implementation team to implement ASU 2014-09. We have completed our initial diagnostic assessment and are in the process of identifying and implementing changes to our systems and processes to meet the reporting and disclosure requirements. We continue to engage outside consultants to assist us in determining the effect this standard will have on our financial statements, to assist us in making necessary changes in our accounting practices and to assist us in making certain we are capturing the necessary detail to fulfill the disclosure requirements promulgated in this standard.

Based upon our initial assessment we believe the key revenue streams will be distribution and OEM sales, which combined comprise the majority of our business. The Company has not identified any contracts with customers containing multiple performance obligations. The Company has identified a number of variable consideration components within our contracts with customers and is in process of quantifying the overall impact related to the consideration to which the entity is entitled. The Company expects adoption of this new standard will not have a material impact on its income statement and balance sheet.

~~ASU No. 2016-02,~~ ~~Leases (Topic 842) (“ASU 2016-02”) -~~ In February 2016, the FASB issued ASU 2016-02, which amends the accounting treatment for leases. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 may have on its consolidated financial statements and has not elected early adoption as of the period ended September 30, 2017. During the second quarter of 2017 we engaged outside accounting consultants to assist us in the implementation of this new standard. The Company is in the process of assessing its outstanding leases.

~~ASU No. 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting~~ - In March 2016, the FASB issued guidance to simplify the accounting for share-based payment transactions by requiring all excess tax benefits and deficiencies to be recognized in income tax expense or benefit in earnings, thus eliminating the requirement to classify the excess tax benefit and deficiencies as additional paid-in capital. Under the new guidance, an entity makes an accounting policy election to either estimate the expected forfeiture awards or account for forfeitures as they occur. We adopted ASU No. 2016-09 during the first quarter of 2017 and as a result will account for forfeitures as they occur. The effect of the adoption related to the income tax portion was an increase of $4.8 million to retained earnings and to deferred income tax assets. The effect of the adoption related to forfeitures was an increase to additional paid in capital of $0.8 million, an increase to deferred tax assets of $0.3 million and a decrease to retained earnings of $0.5 million.

~~ASU No. 2017-09,~~ ~~Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting~~ - In May 2017, the FASB issued guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for all companies for annual periods beginning on or after December 15, 2017. Early adoption is permitted. We early adopted this standard in the third quarter of 2017. ~~Adoption of this standard had no impact on the Company’s financial statements~~.

~~ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities –~~ In August 2017, the FASB issued guidance that eliminates the requirement to separately measure and report hedge ineffectiveness. The guidance is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted in any interim period or fiscal period before the effective date. The Company adopted ASU No. 2017-12 during the third quarter of 2017. In accordance with ASU 2017-12, the Company recognizes all reclassifications out of other comprehensive income (other than those related to a hedged transaction becoming probable of not occurring) in the same income statement line item in which the earnings effect of the hedged item is being presented, which is consistent with the Company’s current policy. Adoption of this standard had no impact on the Company’s financial statements.

-8-

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Earnings (numerator)

Net income attributable to common stockholders
$
14,450

$
10,648

$
28,846

$
14,667

Shares (denominator)

Weighted average common shares outstanding (basic)

49,057

48,814

48,633

48,496

Dilutive effect of stock options and stock awards outstanding

1,359

1,108

1,428

1,069

Adjusted weighted average common shares outstanding (diluted)

50,416

49,922

50,061

49,565

Earnings per share attributable to common stockholders

Basic
$
0.29

$
0.22

$
0.59

$
0.30

Diluted
$
0.29

$
0.21

$
0.58

$
0.30

The table below sets forth amortization expense related to intangible assets subject to ~~amortization for the three and nine months ended September 30, 2017 and 2016:~~amortization:

The table below sets forth information related to our income tax expense:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,						Three Months Ended
	2017			2016			2017			2016			March 31,
Domestic pre-tax income (loss)	$	(27,783	)	$	(7,274	)	$	(63,026	)	$	(25,520	)
													2023			2022
Domestic pre-tax income													$	54,724		$	63,119
Foreign pre-tax income	$	47,613		$	22,905		$	104,821		$	47,906		$	33,869		$	27,700
Income tax provision	$	5,052		$	4,097		$	11,651		$	5,941		$	16,616		$	16,646
Effective tax rate		25.5	%		26.2	%		27.9	%		26.5	%		18.8	%		18.3	%
Impact of tax holidays on tax expense	$	(733	)	$	(2,992	)	$	(2,553	)	$	(5,099	)	$	(74	)	$	(43	)
Earnings per share impact of tax holidays
Earnings per share impact of tax holidays:
Basic	$	0.01		$	0.06		$	0.05		$	0.10		$	-		$	-
Diluted	$	0.01		$	0.06		$	0.05		$	0.10		$	-		$	-

The ~~decrease~~increase in the effective tax rate for the three months ended ~~September 30, 2017~~March 31, 2023 when compared to the three months ended ~~September 30, 2016,~~March 31, 2022, is primarily attributable to ~~an immaterial expense for various discrete items. The increase in~~ the ~~effective~~geographical mix of pre-tax income and loss across tax ~~rate over the nine months ended September 30, 2017 when compared~~jurisdictions relative to the ~~nine months ended September 30, 2016 is primarily attributable~~Company’s consolidated pre-tax income.

Our undistributed foreign earnings continue to ~~changes~~be indefinitely reinvested in ~~the proportion of income generated in North America, Europe and Asia, and the impact of ASU 2016-09~~foreign operations, with limited exceptions related to ~~the treatment~~earnings of ~~equity based compensation. In both periods the effective~~certain European and Asian subsidiaries. Any future distributions of foreign earnings will not be subject to additional U.S. income tax, ~~rates were lower than the U.S. statutory rate of 35%, principally from the impact of income from lower-taxed jurisdictions.~~

~~Funds repatriated from foreign subsidiaries to the U.S.~~but may be subject to ~~federal and state income~~non-U.S. withholding taxes. The Company intends to permanently reinvest overseas all of its earnings from its foreign subsidiaries, except to the extent such undistributed earnings have previously been subject to US tax; accordingly, deferred U.S. taxes are not recorded on undistributed foreign earnings.

~~The Company files~~We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. ~~The Company is~~We are no longer subject to U.S. federal income tax examinations by tax authorities for tax years before ~~2007,~~2012 or ~~for~~ the ~~2010~~ tax ~~year. The Company is~~years 2015 and 2018. We are no longer subject to China income tax examinations by tax authorities for tax years before ~~2005.~~2012. With respect to state and local jurisdictions and countries outside of the U.S. (other than China), with limited exceptions, ~~the Company is~~we are no longer subject to income tax audits for years before ~~2006.~~2016. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties, if any, have been provided for in ~~the Company’s~~our reserve for any adjustments that may

result from currently pending tax audits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in interest expense. As of ~~September 30, 2017,~~March 31, 2023, the gross amount of unrecognized tax benefits was approximately ~~$31.5~~$49.2 million.

It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions will significantly increase or decrease within the next 12 months.At this time, an estimate of the range of the reasonably possible outcomes cannot be made.

NOTE 6 – Share-Based Compensation

The table below sets forth ~~the line items where~~information related to our share-based compensation ~~expense was recorded for the three~~expense:


	Three Months Ended
	March 31,
	2023		2022
Cost of goods sold	$	452	$	347
Selling, general and administrative		8,362		6,534
Research and development		1,006		1,021
Total share-based compensation expense	$	9,820	$	7,902

Share Grants – Share grants consist of restricted stock awards, restricted stock units and ~~nine months ended September 30, 2017 and 2016:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Cost of goods sold
$
152

$
172

$
462

$
609

Selling, general and administrative

4,050

2,901

11,348

10,237

Research and development

760

684

2,117

1,991

Total share-based compensation expense
$
4,962

$
3,757

$
13,927

$
12,837

~~The table below sets forth share-based compensation expense by type for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Stock options
$
168

$
304

$
767

$
1,212

Share grants

4,794

3,453

13,160

11,625

Total share-based compensation expense
$
4,962

$
3,757

$
13,927

$
12,837

~~Stock Options.~~ ~~Approximately $6.9 million in cash proceeds was received from~~performance stock ~~option exercises during the nine months ended September 30, 2017.~~

As of September 30, 2017, total unrecognized share-based compensation expense related to unvested stock options was approximately $0.4 million, before income taxes, and is expected to be recognized over a weighted average period of less than 1 year.

~~Share Grants.~~units ("PSUs"). Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year ~~period.~~ ~~We also have share grants that~~period and are ~~performance~~measured based ~~that vest upon achievement of certain performance criteria.~~ ~~During~~on the nine months ended September 30, 2017, the Company modified a performance-based award previously granted to our Chief Executive Officer. The effect was to replace a performance-based grant covering 700,000 sharesfair market value of the underlying stock on the date of grant. Compensation expense is recognized on a straight-line basis over the requisite four-year service period. All new grants are granted under the Company’s ~~common~~2022 Equity Incentive Plan.

Performance stock ~~with a performance-based grant covering 62,905 shares~~units (“PSUs”) are measured based on the fair market value of the ~~Company’s common~~underlying stock on the date of grant, and ~~a restricted stock grant covering 62,905 of~~compensation expense is recognized over the ~~Company’s common stock. If certain~~three-year performance ~~criteria are met for~~period, with adjustments made to the ~~performance-based grant, Dr. Lu will receive 200% of that award or 125,810 shares. The incremental~~ expense ~~if Dr. Lu received 200% of~~to recognize the ~~performance-based grant award is approximately $3.3 million. The incremental expense of the restricted stock grant is approximately $1.7 million.~~probable payout percentage.

As of ~~September 30, 2017,~~March 31, 2023, total unrecognized share-based compensation expense related to share grants was approximately ~~$36.9~~$66.5 million, before income taxes, and is expected to be recognized over a weighted average period of approximately ~~2.6~~2.3 years.

Stock Modification. During the three months ended March 31, 2023 we modified previously granted stock awards for two corporate officers who retired. The result of the modification was the acceleration of the vesting of 54,525 stock awards for the corporate officers. The incremental expense recorded for this modification was approximately $2.1 million, which was expensed in SG&A in the three months ended March 31, 2023.

-11-

NOTE 7 – Enterprise Wide Segment Information and ~~Enterprise-Wide Disclosure~~Net Sales

Segment Reporting. For financial reporting purposes, we operate in a single segment, standard semiconductor products, through our various manufacturing and distribution facilities. We aggregate our products because the products are similar and have similar economic characteristics, use similar production processes and share ~~the same~~similar customer type. Our primary operations include operations in Asia, ~~North America~~the Americas and Europe. ~~During~~Two customers each accounted for 10% or greater of our net sales during the three months ended ~~September 30, 2017, one~~March 31, 2023. No customer accounted for ~~10.3% or $29.3 million of our revenue. This customer did not account for 10%~~10% or greater of our ~~revenue for~~net sales during the ~~nine~~three months ended ~~September 30, 2017 or~~March 31, 2022. No customer accounted for 10% or ~~greater~~more of our outstanding accounts receivable at ~~September 30, 2017.~~any point in the periods presented in this Quarterly Report on Form 10-Q. All customers that accounted for 10% or more of our net sales during any period presented in this Quarterly Report on Form 10-Q, are broad-based global distributors that sell to thousands of different end users.

Disaggregation of Net Sales.We disaggregate net sales with customers into direct sales and distribution sales (“Distributors”) and by geographic area.Direct sales customers consist of those customers using our product in their manufacturing process, and Distributors are those customers who resell our products to third parties. We deliver our products to customers around the world for use in the industrial, automotive, computing, consumer and communications markets. Further, most of our contracts are fixed-price arrangements, and are short term in nature, ranging from days to several months. The tables below set forth net sales based on the location of the subsidiary producing the net ~~sale.~~sale:

Three Months Ended

September 30, 2017

Asia

North America

Europe

Consolidated

Total sales

$
263,088

$
31,320

$
47,307

$
341,715

Intercompany elimination

(37,475
)

(4,061
)

(14,932
)

(56,468
)
Net sales

$
225,613

$
27,259

$
32,375

$
285,247

Three Months Ended

September 30, 2016

Asia

North America

Europe

Consolidated

Total sales

$
239,447

$
30,067

$
38,451

$
307,965

Intercompany elimination

(37,228
)

(5,726
)

(14,317
)

(57,271
)
Net sales

$
202,219

$
24,341

$
24,134

$
250,694

As of and for the Nine Months Ended

September 30, 2017

Asia

North America

Europe

Consolidated

Total sales

$
731,982

$
122,072

$
134,132

$
988,186

Intercompany elimination

(111,963
)

(44,547
)

(45,902
)

(202,412
)
Net sales

$
620,019

$
77,525

$
88,230

$
785,774

Property, plant and equipment, net

$
372,153

$
52,737

$
21,162

$
446,052

Total assets

$
1,017,801

$
301,763

$
221,025

$
1,540,589

As of and for the Nine Months Ended

September 30, 2016

Asia

North America

Europe

Consolidated

Total sales

$
671,252

$
91,176

$
121,501

$
883,929

Intercompany elimination

(107,268
)

(21,390
)

(45,194
)

(173,852
)
Net sales

$
563,984

$
69,786

$
76,307

$
710,077

Property, plant and equipment, net

$
341,320

$
58,408

$
15,890

$
415,618

Total assets

$
956,647

$
422,041

$
173,752

$
1,552,440

-12-


As of and for the
Three Months Ended March 31, 2023	Asia			Americas			Europe			Consolidated
Total sales	$	424,162		$	331,407		$	100,045		$	855,614
Intercompany elimination		(181,465	)		(175,151	)		(31,757	)		(388,373	)
Net sales	$	242,697		$	156,256		$	68,288		$	467,241

Property, plant and equipment, net	$	550,373		$	92,729		$	112,605		$	755,707
Total assets	$	1,590,485		$	442,763		$	252,313		$	2,285,561

As of and for the
Three Months Ended March 31, 2022	Asia			Americas			Europe			Consolidated
Total sales	$	450,885		$	293,770		$	78,057		$	822,712
Intercompany elimination		(157,163	)		(157,577	)		(25,849	)		(340,589	)
Net sales	$	293,722		$	136,193		$	52,208		$	482,123

Property, plant and equipment, net	$	465,262		$	22,413		$	102,240		$	589,915
Total assets	$	1,590,331		$	347,098		$	228,033		$	2,165,462

~~Geographic Information~~

The tables below set forth ~~the amount of~~ net sales for the Company disaggregated into geographic locations based on shipment and by type (direct sales or Distributor):


	Three Months Ended
Net Sales by Region	2023		2022
Asia	$	324,167	$	364,816
Europe		76,990		64,771
Americas		66,084		52,536
Total net sales	$	467,241	$	482,123

Net Sales by Type
Direct sales	$	134,945	$	148,418
Distributor sales		332,296		333,705
Total net sales	$	467,241	$	482,123

Net sales from products shipped to China was $179.7 million and $230.4 million for the three months ended March 31, 2023 and 2022, respectively.

NOTE 8 – Debt

Short-term debt

Our Asia subsidiaries maintain credit facilities with several financial institutions through our foreign entities worldwide totaling $134.5 million. Other than two Taiwanese credit facilities that ~~were derived from (shipped to) customers located~~are collateralized by assets, our foreign credit lines are unsecured, uncommitted and contain no restrictive covenants. These credit facilities bear interest at LIBOR or similar indices plus a specified margin. Interest payments are due monthly on outstanding amounts under the credit lines. The unused and available credit under the various facilities as of March 31, 2023, was approximately $99.4 million, net of $34.7 million advanced under our foreign credit lines and $0.4 million credit used for import and export guarantee.

Long-term debt

The Company maintains a long-term credit facility (“U.S. Credit Agreement”) consisting of a term loan with no current balance and a $200.0 million revolving senior credit facility with nothing drawn as of March 31, 2023. Borrowings outstanding as of March 31, 2023 and December 31, 2022, are set forth in the ~~following countries:~~table below:

-13-

Net Sales for the

Three Months Ended

Percentage of

September 30,

Net Sales

2017

2016

2017

2016

China
$
156,924

$
148,567

55
%

59
%
United States

25,706

21,802

9
%

9
%
Korea

17,422

15,993

6
%

6
%
Germany

21,756

14,737

8
%

6
%
Singapore

17,252

12,497

6
%

5
%
Taiwan

15,966

12,424

6
%

5
%
All others ⁽¹⁾

30,221

24,674

10
%

10
%
Total
$
285,247

$
250,694

100
%

100
%

Net Sales for the

Nine Months Ended

Percentage of

September 30,

Net Sales

2017

2016

2017

2016

China
$
433,145

$
411,512

55
%

58
%
United States

70,361

62,460

9
%

9
%
Korea

50,785

43,452

6
%

6
%
Germany

58,210

47,963

7
%

7
%
Singapore

43,840

35,657

6
%

5
%
Taiwan

49,584

44,413

6
%

6
%
All others ⁽¹⁾

79,849

64,620

11
%

9
%
Total
$
785,774

$
710,077

100
%

100
%


	March 31,			December 31,				Current Amount
Description	2023			2022			Interest Rate	Maturity
Short-term debt	$	34,651		$	36,280		Various indices plus margin	Various during 2023

Long-term debt
Notes payable to Bank of Taiwan		2,037			2,063		2-yr deposit rate floating plus 0.1148%	June-2033
Notes payable to CTBC Bank		13,788			13,840		TAIBOR 3M plus 0.5%	May-2024
Notes payable to CTBC Bank		3,287			3,256		TAIBOR 3M plus 0.5%	December-2024
Notes payable to E Sun Bank		3,287			3,256		1-M deposit rate floating plus 0.08%	December-2024
Notes payable to E Sun Bank		264			276		1-M deposit rate floating plus 0.08%	June-2027
Notes payable to E Sun Bank		1,483			1,516		1-M deposit rate floating plus 0.08%	June-2030
Notes payable to Bank of Taiwan		1,644			1,628		2-yr deposit rate floating plus 0.082%	September-2024
Notes payable to HSBC		66,000			105,000		1M SOFR+Margin	January-2025
Notes payable to HSBC		-			18,558		1M Libor+Margin	January-2025
Notes Payable to E Sun Bank		-			166		2-yr deposit rate plus annual rate floating	"September 2023
Notes Payable to Taishin International Bank		-			43		Annual rate plus cost of capital	April-2023
Notes Payable to Taishin International Bank		-			11		Fixed annual rate	April-2023
Notes Payable to Taishin International Bank		-			217		Fixed annual rate	April-2024
Notes payable to Chang Hwa Bank		-			518		2-yr deposit rate floating plus 1.405% - 1.655%	June-July 2026
Total long-term debt		91,790			150,348
Less: Current portion of long-term debt		(1,173	)		(1,693	)
Less: Unamortized debt costs		(981	)		(1,185	)
Total long-term debt, net of current portion	$	89,636		$	147,470

Purchase commitments – ~~As of September 30, 2017, we had approximately $36.8 million in~~We have entered into non-cancelable purchase contracts ~~related to~~for capital expenditures, primarily ~~related~~for manufacturing equipment, for approximately $71.3 million at March 31, 2023. As of March 31, 2023, we also had a commitment to ~~Asia~~purchase approximately $117.7 million of wafers to be used in our manufacturing ~~facilities.~~process. These wafer purchases will occur through 2025.

Defined Benefit Plan - We have a contributory defined benefit plan that covers certain employees in the United Kingdom. As of ~~September 30, 2017,~~March 31, 2023, the ~~unfunded~~underfunded liability for this defined benefit plan was approximately ~~$32.3~~$5.4 million. We ~~are obligated~~have agreed to ~~make annual~~a revised schedule of contributions ~~each year through December 2029,~~ of ~~approximately~~ GBP 22.0 million (approximately ~~$2.6~~$2.4 million based on a GBP:USD exchange rate of ~~1.3). The trustees are required~~1:1.2 ) to ~~review~~be paid annually with effect from January 1, 2023 to address the ~~funding position every three years, and~~deficit revealed by the ~~most recent review was carried out as~~valuation (with the first payment made by December 31, 2023 through December 31, 2028. A final payment of ~~April 5, 2016. The outcome~~GBP 1.5 million (approximately $1.8 million based on a GBP: USD rate of ~~a review can result in a change in the amount of the payment.~~1:1.2) will be made by December 31, 2029.

Contingencies –From time to time, we are involved in various legal proceedings that arise in the normal course of business. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any ~~current~~ pending legal proceeding will not have any material adverse effect on our consolidated financial position, cash flows or operating results. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, which could impact on our business and operating results for the period in which the ruling occurs or future periods. Based on information available, we evaluate the likelihood of potential ~~outcomes.~~outcomes of all pending disputes. We record ~~the~~an appropriate liability when the amount of any liability associated with a pending dispute is deemed probable and reasonably estimable. In addition, we do not accrue for estimated legal fees and other directly related costs as they are expensed as incurred. The Company is not currently a party to any pending litigation that ~~the Company considers~~we consider material.

NOTE 11 – Leases

The Company leases certain assets used in its business, including land, buildings and ~~$2.3 million accrued~~equipment. These leased assets are used for operational and administrative purposes.

The components of lease expense are set forth in the ~~accumulated~~table below:


	Three Months Ended
	March 31,
	2023		2022

Operating lease expense	$	3,273	$	3,510
Finance lease expense:
Amortization of assets		7		3
Interest on lease liabilities		1		–
Short-term lease expense		178		270
Variable lease expense		1,031		975
Total lease expense	$	4,490	$	4,758

-15-

The table below sets forth supplemental balance sheet information related to leases. In our condensed consolidated balance sheets, right of use (“ROU”) assets are included in other ~~comprehensive income as of September 30, 2017~~long-term assets while lease liabilities are located in accrued liabilities and ~~December 31, 2016, respectively. For~~other for the ~~three~~current portion and ~~nine month ended September 30, 2017, $0.2 million~~other long-term liabilities for the non-current portion:


	March 31, 2023			December 31, 2022
Operating leases:
Operating lease ROU assets	$	56,829		$	43,907

Current operating lease liabilities		9,473			7,390
Noncurrent operating lease liabilities		32,127			20,765
Total operating lease liabilities	$	41,600		$	28,155

Finance leases:
Finance lease ROU assets	$	2,611		$	2,618
Accumulated amortization		(2,541	)		(2,542	)
Finance lease ROU assets, net	$	70		$	76

Current finance lease liabilities	$	30		$	30
Non-current finance lease liabilities	��	41			46
Total finance lease liabilities	$	71		$	76

Weighted average remaining lease term (in years):
Operating leases		7.7			8.2
Finance leases		2.4			2.6

Weighted average discount rate:
Operating leases		4.1	%		4.2	%
Finance leases		3.6	%		3.6	%

The table below sets forth supplemental cash flow and ~~$0.6 million have been recorded~~other information related to ~~the interest expense account, respectively.~~ leases:


	Three Months Ended
	March 31, 2023		March 31, 2022
Cash paid for the amounts included in the measurements of lease liabilities:
Operating cash outflows from operating leases	$	3,871	$	4,575
Operating cash outflows from finance leases		1		–
Financing cash outflow from finance leases		7		61

ROU assets obtained in exchange for lease liabilities incurred:
Operating leases		12,616		1,541

The table below sets forth information about lease liability maturities:


	March 31, 2023
	Operating Leases			Finance Leases
2023	$	8,642		$	24
2024		8,940			29
2025		7,764			19
2026		6,315			2
2027		4,021			-
2028		1,902			-
2029 and thereafter		11,824			-
Total lease payments		49,408			74
Less: imputed interest		(7,808	)		(3	)
Total lease obligations		41,600			71
Less: current obligations		(9,473	)		(30	)
Long-term lease obligations	$	32,127		$	41

We maintain a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) for executive officers, key employees and members of the Board of Directors. The Deferred Compensation Plan allows eligible participants to defer the receipt of eligible compensation, including equity awards, until designated future dates. We offset our obligations under the Deferred Compensation Plan primarily by investing in the actual underlying investments. ~~These investments are classified as trading securities~~At March 31, 2023 and ~~are carried at fair value. At September 30, 2017,~~December 31, 2022, these investments totaled approximately ~~$8.0 million. All gains~~$13.1 million and ~~losses in these investments are materially offset by corresponding gains and losses in the Deferred Compensation Plan liabilities.~~$12.1 million, respectively.

NOTE 10 13 – Related Parties

We conduct business with athe following related party company, Lite-On Semiconductor Corporation and its subsidiaries and affiliates (collectively, “LSC”), and Nuvoton Technology Corporation and its subsidiaries and affiliates (collectively, “Nuvoton”). LSC is our largest stockholder, owning approximately ~~16%~~ofouroutstandingCommonS~~toc~~kasof~~September 30,~~2~~017~~,andisamem~~ber~~oftheL~~ite-On G~~roupofcompan~~ies~~. Raymond Soong, the Chairman of the Board of Directors, is the Chairman of LSC, and is the Chairman of Lite-On Technology Corporation (“LTC”), a significant shareholder of LSC. C.H. Chen, our former President and Chief Executive Officer and currently the Vice Chairman of the Board of Directors, is also Vice Chairman of LSC and a board member of LTC. Dr. Keh-Shew Lu, our President and Chief Executive Officer and a member of our Board of Directors, is a board member of LTC, and a board member of Nuvoton. L.P. Hsu, a former member of our Board of Directors serves as a consultant to LTC, and is a supervisor of the board of Nuvoton. We consider our relationships with LSC and Nuvoton to be mutually beneficial, and we plan to continue our strategic alliance with LSC and Nuvoton. We purchase wafers from Nuvoton for use in our production process.

~~We also conduct business with~~parties: Keylink International (B.V.I.) Inc. and its subsidiaries and affiliates ~~(collectively, “Keylink”~~(“Keylink”), Nuvoton Technology Corporation (“Nuvoton”) and Jiyuan Crystal Photoelectric Frequency Technology Ltd. (“JCP”).

Keylink is ~~our 5%~~a 5% joint venture partner in our Shanghai assembly and test facilities. We sell products to, and purchase inventory from, companies owned by Keylink. In addition, our subsidiaries in China lease their manufacturing facilities in Shanghai from, and subcontract a portion of our manufacturing process (metal plating and environmental services) to Keylink. We also pay a consulting fee to Keylink.

We purchase wafers from Nuvoton for use in our production process and we have an agreement to purchase approximately $29.1 million of wafers from Nuvoton that ends in the fourth quarter of 2025. We consider our relationships Nuvoton to be mutually beneficial and plan to continue our strategic alliance with Nuvoton.

JCP is a frequency control product manufacturing company from which we purchase material and in which we have made an equity investment. We account for this investment using the equity method of accounting.

The ~~aggregate amounts paid to Keylink~~table below set forth the net sales, purchases and expenses with our related parties for the three months ended September 30, 2017 and 2016 were approximately $4.5 million and $4.1 million, respectively. The aggregate amounts for these services for the nine months ended September 30, 2017 and 2016 were approximately $12.4 million and $12.5 million, respectively. Inadd~~itio~~n, ~~Chengdu Ya Guang Electronic Company Limited (“~~YaGua~~ng”)is our 2% joint venture partner in one of our Chengdu assembly and test facilities and i~~sour5%jointvent~~ure~~partnerinour~~other~~Ch~~eng~~du~~asse~~m~~bly~~and~~tes~~t~~facilities~~;h~~owe~~v~~er, we have no material transactions with Ya Guang.~~ March 31:


	Three Months Ended
	March 31,
	2023		2022
Keylink:
Net sales	$	3,407	$	5,766
Purchases	$	356	$	422
Plating, rental and consulting expense	$	4,425	$	4,547
Nuvoton:
Net sales	$	7	$	35
Purchases	$	2,978	$	3,066
JCP:
Purchases	$	99	$	213

~~The Audit~~ C~~ommittee of~~ t~~he Bo~~a~~rd r~~e~~views all related party transactions for pot~~e~~ntial conflict of~~ i~~nterest s~~i~~tuations on~~ a~~n ongoing basis, all in accord~~a~~nce with su~~c~~h procedures as~~ t~~he Audit Committee~~ m~~ay adopt from time to time.~~

~~The table below sets forth sales to, and purchases from, LSC, Nuvoton and Keylink:~~

-14-

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

LSC

Net sales
$
329

$
275

$
1,064

$
552

Purchases
$
6,097

$
4,867

$
19,258

$
16,794

Nuvoton

Purchases
$
3,202

$
2,827

$
9,487

$
8,449

Keylink

Net sales
$
2,690

$
2,712

$
6,925

$
6,689

Purchases
$
1,069

$
1,254

$
3,090

$
4,089

The table below sets forth accounts receivable from, and accounts payable to, ~~LSC, Nuvoton and Keylink:~~related parties:


	March 31, 2023		December 31, 2022
Keylink:
Accounts receivable	$	37,067	$	40,510
Accounts payable	$	33,921	$	33,733
Nuvoton:
Accounts receivable	$	4	$	30
Accounts payable	$	1,874	$	2,859
JCP:
Accounts payable	$	102	$	133

In connection with the asset retirement obligation as of September 30, 2017, we have an asset with a net book value of $0.4 million in property, plant and equipment. During the three months and nine months ended September 30, 2017 amortization of the asset was $0.7 million and $0.9 million, respectively. The remaining balance will be amortized through the end of the lease.

I~~tem~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as identified under the heading “Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995” herein. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed below under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by our management. The Private Securities Litigation Reform Act of 1995 (the ~~“Act”~~“PSLRA”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the ~~Act.~~PSLRA. We undertake no obligation to publicly release the results of any revisions to our forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Unless the context otherwise requires, the words “Diodes,” the “Company,” “we,” “us” and “our” refer to Diodes Incorporated and its subsidiaries. Dollar amounts and share amounts are presented in thousands, except per share amounts, unless otherwise noted.

This management’s discussion should be read in conjunction with the management’s discussion included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2022 (“Form 10-K”), previously filed with Securities and Exchange Commission (“SEC”) on February ~~27, 2017.~~10, 2023.

~~Factors Relevant to Our Results of Operations for the Three Months Ended September 30, 2017~~

We are a leading global manufacturer and supplier of high-quality application-specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. The Company serves the industrial, automotive, computing, communications and consumer markets. For detailed information, see Note 1 – ~~Nature~~Summary of Operations ~~Basis of Presentation~~ and ~~Recently Issued~~Significant Accounting ~~Pronouncements,~~Policies, included in the condensed consolidated financial statements in Item 1 above. Our products are sold primarily throughout Asia, ~~North America~~the Americas and Europe. We believe that our focus on application-specific standard products utilizing innovative, highly efficient packaging and cost-effective process technologies, coupled with our collaborative, customer-focused product development, provides us with a meaningful competitive advantage relative to other semiconductor companies.

We remain focused on the safety and well-being of our stakeholders and on the service to our customers. We will continuously review and assess the rapidly-changing COVID-19 pandemic and its impacts on our customers, our suppliers and our business so that we can seek to address those impacts. COVID-19 has caused disruptions in the supply chain, creating worldwide shortages and delays in receiving goods and products. These shortages and delays have led to increased inflation and could result in a world-wide recession.

As of March 31, 2023, our cash, cash equivalents, and short-term investments were $331.9 million, and we had access to additional borrowing capacity of $200.0 million under the revolving portion of our U.S. Credit Agreement, which we believe assures us adequate liquidity to manage the impacts of the COVID-19 pandemic on our business and to cover cash needs for working capital, capital expenditures and acquisitions for at least the next 12 months.

Results of Operations for the Three Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022

The ~~following~~ table below sets forth the ~~percentage that certain items in the statements~~condensed consolidated statement of operations ~~bear to~~line items as a percentage of net ~~sales.~~sales:

The following table and discussion explains in greater detail our consolidated operating results and financial condition for the three months ended ~~September 30, 2017,~~March 31, 2023, compared to the three months ended ~~September 30, 2016.~~March 31, 2022. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this ~~quarterly report~~ ~~(in thousands)~~.Quarterly Report on Form 10-Q.

Net sales decreased approximately $14.9 million, or 3.1%, for the three months ended March 31, 2023, compared to the same period last year. This decrease was the result of an economic slowdown resulting in less demand for our products, partially off set by improvements in product mix. During the first quarter of 2023, the Company experienced strong margin performance driven by execution on new product initiatives and product mix improvements. During the three months ended March 31, 2023, weighted-average sales price increased 16.8%, when compared to the same period in 2022. A key contributor to the improved product mix has been the Company's success in the automotive and industrial end markets, which together totaled 47% or our total product revenue.

The table below sets forth our product revenue as a percentage of total product revenue by end-user market for the three months ended March 31, 2023 and 2022:

Cost of goods sold decreased approximately ~~$34.6~~$12.6 million for the three months ended ~~September 30, 2017,~~March 31, 2023, compared to the same period last year, due to ~~growth across all regions and end markets, continued growth at Pericom and continued improvements in product mix and utilization across~~ the ~~Company’s facilities.~~

~~Cost of goods sold increased approximately $18.8 million for~~decreased net sales during the three months ended September 30, 2017, compared to the same period last year. A portion of the increase in cost of goods sold was $2.7 million of KFAB inventory that was expensed, as it will not be used in the future, as well as other inventory that was scrapped.March 31, 2023. As a percent of sales, cost of goods sold was ~~66%~~58.4% for the three months ended ~~September 30, 2017~~March 31, 2023, compared to ~~68%~~59.2% for the same period last year. Average unit cost increased ~~11%~~approximately 15.2% for the three months ended ~~September 30, 2017,~~March 31, 2023, compared to the same period last year ~~partially~~ due to ~~inventory write-offs.~~cost increases from various subcontractors and foundries and the improvement in product mix. For the three months ended ~~September 30, 2017,~~March 31, 2023, gross profit ~~increased~~decreased approximately ~~19.5%~~1.1% when compared to the same period last year. Gross profit margin for the three month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 was ~~33.8%~~41.6% and ~~32.2%~~40.8%, respectively. ~~The increase in gross~~

~~profit margin was related to improved utilization and product mix, specifically higher revenue contribution from North America, Europe and Pericom products.~~

Operating expenses for the three months ended ~~September 30, 2017~~March 31, 2023, increased ~~approximately $12.0~~$4.4 million ~~or 19.7%,~~when compared to the ~~same period last year.~~three months ended March 31, 2022. Operating expenses as a percentage of net sales was 23.1% and 21.5% for the three months ended March 31, 2023 and 2022, respectively. Selling, general and administrative expenses (“SG&A”) ~~increased approximately $5.2 million and research and development expenses increased (“R&D”) approximately $3.3 million. Amortization of acquisition related intangibles~~ decreased approximately ~~$0.4~~$0.5 million ~~reflecting the full amortization of a portion of our intangible assets. SG&A,~~ as a percentage of sales, was 15.3% for the three months ended September 30, 2017 and 2016. R&D, as a percentage of sales, was 7.1% and 6.8% for the three months ended September 30, 2017 and 2016, respectively. The three months ended September 30, 2017 included $4.0 million of restructuring and asset impairment related to the shut down and relocation of the KFAB facility.

~~Interest income was relatively flat for the three months ended September 30, 2017~~ compared to the same period last year. ~~The decrease~~Research and development expenses (“R&D”) increased approximately $4.6 million due to increases in ~~interest expense~~supplies, wages and benefits and depreciation, partially offset by decreases in professional services fees as compared to the same period last year. SG&A, as a percentage of net sales, was 15.2% and 14.8% for the three months ended ~~September 30, 2017~~March 31, 2023 and 2022, respectively. R&D, as a percentage of net sales, was due to lower levels of debt partially offset by higher interest rates on the floating rate portion of the borrowings to effect the Pericom acquisition. Expense related to foreign currency changes decreased $0.1 million reflecting currency hedges partially offset by losses due to stronger European currencies7.1% and ~~the Taiwan dollar, when compared to the U.S. dollar.~~

~~We recognized an income tax expense of approximately $5.1 million and $4.1 million~~5.9% for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. ~~The increase in~~

Interest income ~~taxes for 2017 compared to 2016 is attributable to the increase in pretax net income.~~

~~Results of Operations~~increased $0.9 million, or 114.5% for the ~~Nine months Ended September 30, 2017 and 2016~~

~~The following table sets forth the percentage that certain items in the statements of operations bear to net sales.~~

~~The following table and discussion explains in greater detail our consolidated operating results and financial condition for the nine~~three months ended September 30, 2017, compared to the nine months ended September 30, 2016. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this quarterly report ~~(in thousands)~~.

~~Net sales increased approximately $75.7 million for the nine months ended September 30, 2017,~~March 31, 2023, compared to the same period last year due to ~~growth across all regions~~higher interest rates and ~~end markets, continued growth at Pericom and continued improvements in product mix and utilization across the Company’s facilities.~~

~~Cost of goods sold~~ increased ~~approximately $35.0~~investment levels. Interest expense increased $1.1 million, or 91.4% for the ~~nine~~three months ended September 30, 2017, compared to the same period last year. A portion of the increase in cost of goods sold was $2.7 million of KFAB inventory that was expensed, as it will not be used in the future, and other inventory that was scrapped. Cost of goods was positively impacted in 2017 by receipt of $3.7 million of business interruption insurance and $0.5 million of inventory insurance recovery received related to the fire at KFAB. As a percent of sales, cost of goods sold was 66.9% for the nine months ended September 30, 2017 compared to 69.1% for the same period last year. Average unit cost increased 3% for the nine months ended September 30, 2017,March 31, 2023, compared to the same period last year, ~~partially~~ due to inventory write-off costs at KFAB. For the nine months ended September 30, 2017, gross profit increased approximately 18.5% when compared to the same period last year. Gross profit margin for the nine month periods ended September 30, 2017 and 2016 was 33.1% and 30.9%, respectively.

Operating expenses for the nine months ended September 30, 2017 increased approximately $16.5 million, or 8.8%, compared to the same period last year. SG&A and increased approximately $3.7 million and R&D increased approximately $6.0 million. Amortization of acquisition related intangibles decreased approximately $1.3 million reflecting the full amortization of a portion of our intangible assets. SG&A, as a percentage of sales, was 15.6% and 16.8% for the nine months ended September 30, 2017 and 2016, respectively. R&D, as a percentage of sales, was 7.4% for the nine months ended September 30, 2017 and 2016. The nine months ended September 30, 2017, included $8.1 million of restructuring and asset impairment related to the shut down and relocation of the KFAB facility.

~~Interest income decreased for the nine months ended September 30, 2017 due to a lower amount of invested funds. The~~an increase in ~~interest expense for~~ the ~~nine months ended September 30, 2017 is due to higher~~ interest rates partially offset by lower ~~amounts of borrowed funds. Expense related to foreign currency changes~~debt levels. Unrealized gain on investments increased ~~$4.7million~~from 2022 due to ~~stronger European currencies and the Taiwan dollar, when compared~~mark to ~~the U.S. dollar, partially offset by foreign currency hedges~~.market adjustments on investments.

We recognized an income tax expense of approximately ~~$11.7~~$16.6 million for each of the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~approximately $5.9 million for the nine months ended September 30, 2016. The increase in income taxes for 2017 compared to 2016 is attributable to the increase in pretax net income.~~2022.

Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are cash and cash equivalents, ~~funds from operations~~short-term investments and ~~if necessary, borrowings under~~ our credit facilities. We currently have a U.S. banking credit facility (the “U.S. Credit Facility”) under which we may draw up to $250 million on a revolving basis, in addition to a $250 million term loan included in the U.S. Credit Facility. The U.S. Credit Facility matures October 26, 2021. The term loan portion of the U.S. Credit Facility is repayable in part through quarterly installments that increase over time from $3.1 million per quarter in the current year of the U.S. Credit Facility to $9.4 million per quarter in the final year of the U.S. Credit Facility. We may from time to time request increases in the aggregate commitments under the U.S. Credit Facility of up to $200 million, subject to the lenders electing to increase their commitments or by means of the addition of new lenders,Our cash and subject to at least half of each increase in aggregate commitments being in the form of term loans, with the remaining amount of each increase being an increase in the amount of the revolving portion of the U.S. Credit Facility. The U.S. Credit Facility bears interest at LIBOR or similar indices plus a specified margin. The U.S. Credit Facility contains certain financial and non-financial covenants, including, but not limited to, a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, and restrictions on liens, indebtedness, investments, fundamental changes, dispositions,cash equivalents and restricted ~~payments (including dividends and share repurchases). At September 30, 2017, we owed $326.5~~cash decreased from $341.1 million ~~under the U.S. Credit Facility, $145.0 million of which was drawn under the revolving portion and $181.5 million of which was outstanding under the term loan.~~

In addition to our U.S. Credit Facility, we maintain credit facilities with several financial institutions through our foreign entities worldwide totaling $66.1 million. As of September 30, 2017, in addition to the U.S. Credit Facility, our Asia subsidiaries had unused and available credit lines of up to an aggregate of approximately $63.2 million, with several financial institutions. In some cases, our foreign credit lines are unsecured, uncommitted and may be repayable on demand. Our foreign credit lines include two Taiwanese credit facilities that are collateralized by assets. Our foreign credit lines bear interest at LIBOR or similar indices plus a specified margin. At September 30, 2017, $1.9 million was outstanding on these credit lines. We also have a note payable to a bank located in Taiwan with a variable interest rate maturing July 6, 2021. At September 30, 2017, approximately $1.3 million was outstanding under this loan.

~~Our primary liquidity requirements have been to meet our inventory and capital expenditure needs and to fund on-going operations. At September 30, 2017 and~~ December 31, ~~2016, our working capital was $476.3~~2022 to $325.9 million and $547.4 million, respectively. We expect cash generated by our operations together with existing cash, cash equivalents, short-term investments and available credit facilities to be sufficient to cover cash needs for working capital and capital expenditures for at ~~least the next 12 months.~~

~~Capital expenditures for the nine months ended September 30, 2017 and 2016 were $81.9 million and $47.1 million, respectively. Capital expenditures~~March 31, 2023. This decrease in 2017 relate to capacity expansion in our Shanghai and Chengdu assembly and test facilities as well as the eight inch fabrication equipment upgrade in our wafer fabrication facility in Shanghai. For the first nine months of 2017 capital expenditures were approximately 10.4% of our net sales, which is above our capital spending target range of 5% to 9% of net sales, due to increased capital expenditures in our Asian operations.

We intend to permanently reinvest overseas all of our earnings from our foreign subsidiaries, except to the extent such undistributed earnings have previously been subject to U.S. tax; accordingly, deferred U.S. taxes are not recorded on undistributed foreign earnings. As of September 30, 2017, our foreign subsidiaries held approximately $203.8 million of cash, cash equivalents and ~~investments~~restricted cash reflects normal operations of ~~which approximately $129.6 million would be subject to a potential non-U.S. withholding and/or U.S. income tax if repatriated to~~ the ~~U.S. as dividends.~~

Company. As of ~~September 30, 2017,~~March 31, 2023, we had short-term investments totaling ~~$12.7~~$8.8 million. These investments are highly liquid with maturity dates greater than three months at the date of purchase. We generally can access these investments in a relatively short time frame but in doing so we generally forfeit all earned and future interest income.

~~During 2015,~~At March 31, 2023 and December 31, 2022, our ~~Board of Directors (“Board”) approved a stock repurchase program. The Board authorized the repurchase of up to an aggregate of $100.0~~working capital was $731.4 million ofand $729.1 million, respectively. We expect cash generated by our outstanding Common Stock, $0.66 2/3 par value per share. The share repurchase program is expected to continue through the end of 2019 unless extended or shortened by the Board. Currently there is approximately ~~$71.0 million available for repurchase of outstanding common stock under this publicly announced repurchase program. No shares were repurchased during the three months ended September 30, 2017.~~

~~Our primary source of liquidity is~~operations together with existing cash, ~~flow from operations. Additional sources of liquidity are cash and~~ cash equivalents, short-term investments and available credit facilities to be sufficient to cover cash needs for working capital, capital expenditures and acquisitions for at least the next 12 months.

Our undistributed foreign earnings continue to be indefinitely reinvested in foreign operations, with limited exceptions related to earnings of certain European and Asian subsidiaries. As of March 31, 2023, our foreign subsidiaries held approximately $258.8 million of cash, cash equivalents and investments of which approximately $56.7 million would be subject to a potential non-U.S. withholding tax if distributed outside the country in which the cash is currently held. The $56.7 million is held in Germany, China, Korea, and Taiwan.

Our Asia subsidiaries maintain credit facilities with several financial institutions through our foreign entities worldwide totaling $134.5 million. At March 31, 2023, outstanding borrowings were $34.7 million and outstanding letters of credit were $0.4 million under the Asia credit facilities. ~~Our primary cash~~

The Company maintains a long-term credit facility (“U.S. Credit Agreement”) consisting of a term loan with no balance as of March 31, 2023 and ~~cash equivalents decreased~~a $200.0 million revolving senior credit facility, with no outstanding balance at March 31, 2023. The U.S. Credit Agreement matures in May 2024.

In addition to the liquidity provided by the U.S. Credit Agreement, our 51% owned subsidiary, Eris Technology Company ("ERIS"), borrowed $25.8 million on a long-term basis from ~~$247.8 million at December 31, 2016~~local Taiwan banks. The ERIS debt matures in periods through 2033.

Because some of our outstanding debt is subject to ~~$201.2 million at September 30, 2017.~~ variable interest rates, the recent rise in interest rates will potentially increase our overall debt service cost. If interest rates continue to rise globally, our cost of capital may increase in the future.

The table below sets forth a summary of the condensed consolidated statements of cash flows:

Net cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 was ~~$106.3~~$99.8 million. Net cash flow provided by operating activities resulted from net income of $30.1 million, depreciation and amortization of $70.2 million, share-based compensation of $13.9 million and a decrease in noncash working capital accounts of $7.7 million. ~~Net cash~~flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2016 was $74.9 million. Net cash flow provided by operating activities~~March 31, 2023 resulted from net income of ~~$16.4~~$72.0 million, depreciation and amortization of ~~$74.4~~intangible assets of $33.6 million and share-based compensation of ~~$12.8~~$9.8 million. ~~These cash and cash equivalents provided by operations~~The increases were partially offset by a decrease in ~~working capital.~~ operating asset and liability accounts of $11.7 million and a non-cash investment gain of $3.8 million. Net cash flows provided by operating activities for the three months ended March 31, 2022 was $72.3 million. Net cash flows provided by operating activities for the three months ended March 31, 2022 resulted from net income of $74.2 million, depreciation and amortization of intangible assets of $28.6 million, share-based compensation of $7.9 million and net non-cash investment losses of $5.5 million. The increases were partially offset by a decrease in changes in operating asset and liability accounts of $42.1 million.

Net cash and cash equivalents used in investing activities was ~~$64.4~~$48.1 million for the ~~nine~~three months ended ~~September 30, 2017, compared to net~~March 31, 2023. Net cash and cash equivalents used in investing activities for the three months ended March 31, 2023 was primarily due to purchases of ~~$19.8~~property, plant and equipment of $48.0 million, or 10.3% of net sales, due to the expansion of a wafer fabrication facility located in Hsinchu Science Park in Taiwan. We expect capital expenditures for the twelve months ended December 31, 2023 to be within our target model. Net cash and cash equivalents used in investing activities was $54.9 million for the ~~same period last year.~~three months ended March 31, 2022. Net cash and cash equivalents used in investing activities for the three months ended March 31, 2022 was primarily due to the purchase of property, plant and equipment of ~~$81.9~~$38.5 million, representing approximately 8% of net sales, the acquisition of the remainder of a non-controlling interest of $5.3 million and ~~purchases~~the down payment on the SPFAB acquisition and the net purchase of short-term investments of ~~$9.7~~$3.0 million ~~partially offset~~for the three months ended March 31, 2022.

~~by $27.9 million of proceeds received upon the maturity of short-term investments.~~ Net cash and cash equivalents used in ~~investing~~financing activities ~~during~~was $70.3 million for the ~~nine~~three months ended September 30, 2016, was primarily due to the purchase of property, plant and equipment of $47.1 million and purchases of short-term investments of $17.5 million, partially offset by proceeds received on the maturity of short-term investments of $46.4 million.

March 31, 2023. Net cash used in financing activities in the three months ended March 31, 2023 consisted primarily of $60.8 million of net reductions in our debt and taxes paid on net share settlements of $9.7 million. Net cash and cash equivalents used in financing activities was ~~$97.8~~$75.9 million for the ~~nine~~three months ended ~~September 30, 2017, compared to net~~March 31, 2022. Net cash used in financing activities ~~of $54.3 million~~ in the ~~same period last year. Net cash used in 2017~~three months ended March 31, 2022 consisted primarily of ~~repayments~~$67.6 million of ~~long-term~~net reductions in our debt and taxes paid on net share settlements of ~~$109.6 million~~$8.0 million.

We use interest rate swaps, foreign exchange forward contracts and cross currency swaps to provide a level of ~~dividends~~protection against interest rate risks and foreign exchange exposure.

The Company’s objectives in using interest rate derivatives are to ~~noncontrolling interests~~add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps, including interest rate collars, as part of ~~$5.8 million, partially offset by proceeds~~its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the ~~issuance~~Company making fixed-rate payments over the life of ~~common stock~~the agreements without exchange of ~~$6.9 million.~~ ~~Net cash used~~the underlying notional amount.

We are exposed to fluctuations in ~~2016 consisted primarily~~various foreign currencies against our different functional currencies. We use foreign currency forward agreements to manage this exposure and to preserve the economic value of ~~repayments~~foreign currency denominated monetary assets and liabilities; these instruments are not designated for hedge accounting treatment in accordance with ASC No. 815. The fair value of ~~long-term debt.~~ our foreign exchange hedges approximates zero.

We do not have any transactions, arrangements ~~and~~or other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provide off-balance sheet financing, liquidity or market or credit risk support, nor do we engage in leasing, swap agreements, or outsourcing of research and development services that could expose us to liability that is not reflected on the face of our financial statements.

There have been no material changes in ~~any of~~ our ~~contractual obligations~~Contractual Obligations as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2022, filed with the SEC on February ~~27, 2016.~~ 10, 2023.

~~No material changes were made to the Company’s~~Our critical accounting ~~policies as set forth~~estimates are described in ~~“Item 7.~~Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations,~~” included~~ and in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2022, filed with the SEC on February ~~27, 2016.~~10, 2023. Any new accounting estimates or updates to existing

accounting estimates as a result of new accounting pronouncements have been discussed in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q in Note 1 – Summary of Operations and Significant Accounting Policies. The application of our critical accounting estimates may require management to make judgments and estimates about the amounts reflected in the condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

See Note 1 - ~~Nature~~Summary of Operations ~~Basis of Presentation~~ and ~~Recently Issued~~Significant Accounting ~~Pronouncements~~Policies, of the Notes to Condensed Consolidated Financial Statements, for detailed information regarding the status of recently issued accounting ~~pronouncements.~~pronouncements, if any.

~~Our Internet address is~~ ~~http://www.diodes.com~~. We make available, free of charge through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”). Our website also provides access to investor financial information, including SEC filings and press releases, as well as stock quotes and information on corporate governance compliance.

Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995

Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the ~~Securities~~ Exchange Act of ~~1934, as amended.~~1934. We generally identify forward-looking statements by the use of terminology such as “may,” “will,” “could,” “should,” “potential,” “continue,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or similar phrases or the negatives of such terms. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed under ~~“Risks~~“Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and in other reports we file with the SEC from time to time, that could cause actual results to differ materially from those anticipated by our management. The ~~Private Securities Litigation Reform Act of 1995 (the “Act”)~~PSLRA provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the ~~Act.~~PSLRA.

All forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to, in addition to the other matters described in this Quarterly Report on Form 10-Q, a variety of significant risks and uncertainties. The following discussion

highlights some of these risks and uncertainties. Further, from time to time, information provided by us or statements made by our employees may contain forward-looking information. There can be no assurance that actual results or business conditions will not differ materially from those set forth or suggested in such forward-looking statements as a result of various factors, including those discussed below.

For more detailed discussion of these factors, see the “Risk Factors” discussion in Item 1A of our most recent Annual Report on Form 10-K as filed with the SEC and in Part II, Item 1A of this ~~report.~~Quarterly Report The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this ~~report,~~Quarterly Report, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

The ~~success of our business depends on the strength~~impact of the ~~global economy and the stability of the financial markets, and any weaknesses in these areas~~continuing COVID-19 pandemic may have a material adverse effect on our ~~net sales, operating~~business, financial condition and results ~~and financial condition.~~of operations.

Shanghai, China experienced government imposed lockdowns due to a resurgence of the COVID-19 virus.

During times of difficult market conditions, our fixed costs combined with lower net sales and lower profit margins may have a negative impact on our business, operating results and financial condition.

Downturns in the highly cyclical semiconductor industry or changes in end-market demand could adversely affect our operating results and financial condition.

The semiconductor business is highly competitive, and increased competition may harm our business, operating results and financial condition.

~~One of our external suppliers is also a related party. The loss of this supplier could harm our business, operating results and financial condition.~~

Delays in initiation of production at facilities due to implementing new production techniques or resolving problems associated with technical equipment malfunctions could adversely affect our manufacturing efficiencies, operating results and financial condition.

We are and will continue to be under continuous pressure from our customers and competitors to reduce the price of our products, which could adversely affect our growth and profit margins.

Our customers require our products to undergo a lengthy and expensive qualification process without any assurance of product sales and may demand to audit our operations from time to time. A failure to qualify a product or a negative audit finding could adversely affect our net sales, operating results and financial condition.

Our customer orders are subject to cancellation or modification usually with no penalty. High volumes of order cancellation or reduction in quantities ordered could adversely affect our net sales, operating results and financial condition.

Production at our manufacturing facilities could be disrupted for a variety of reasons, including natural disasters and other extraordinary events, which could prevent us from producing enough of our products to maintain our sales and satisfy our customers’ demands and could adversely affect our operating results and financial condition.

New technologies could result in the development of new products by our competitors and a decrease in demand for our products, and we may not be able to develop new products to satisfy changes in demand, which would adversely affect our net sales, market share, operating results and financial condition.

~~We may be adversely affected by any disruption in our information technology systems, which could adversely affect our cash flows, operating results and financial condition.~~

We may be subject to claims of infringement of third-party intellectual property rights or demands that we license third-party technology, which could result in significant expense, reduction in our intellectual property rights and a negative impact on our business, operating results and financial condition.

We depend on third-party suppliers for timely deliveries of raw materials, manufacturing services, product and process development, parts and equipment, as well as finished products from other manufacturers, and our reputation with customers, operating results and financial condition could be adversely affected if we are unable to obtain adequate supplies in a timely manner.

If we do not succeed in continuing to vertically integrate our business, we will not realize the cost and other efficiencies we anticipate, which could adversely affect our ability to compete, our operating results and financial condition.

~~Part~~A significant part of our growth strategy involves ~~identifying and~~ acquiring companies. We may be unable to identify suitable acquisition candidates or consummate desired acquisitions and, if we do make any acquisitions, we may be unable to successfully integrate any acquired companies with our operations, which could adversely affect our business, operating results and financial condition.

We are subject to litigation risks, including securities class action litigation, which may be costly to defend and the outcome of which is uncertain and could adversely affect our business and financial condition.

We are subject to many environmental laws and regulations that could result in significant expenses and could adversely affect our business, operating results and financial condition.

We may incur additional costs and face emerging risks associated environmental, social and governance (“ESG”) factors impacting our operations.

Our products, or products we purchase from third parties for resale, may be found to be defective and, as a result, warranty claims and product liability claims may be asserted against us and we may not have recourse against our suppliers, which may harm our business, reputation with our customers, operating results and financial condition.

We may fail to attract or retain the qualified technical, sales, marketing, finance and management/executive personnel required to operate our business successfully, which could adversely affect our business, operating results and financial condition.

We may not be able to achieve future growth, and any such growth may place a strain on our management and on our systems and resources, which could adversely affect our business, operating results and financial condition.

Obsolete inventories as a result of changes in demand for our products and change in life cycles of our products could adversely affect our business, operating results and financial condition.

If ~~OEMs~~our direct sales customers or our distributors’ customers do not design our products into their applications, our net sales may be adversely affected.

We are subject to interest rate risk that could have an adverse effect on our cost of working capital and interest expenses, which could adversely affect our business, operating results and financial condition.

Our hedging strategies may not be successful in mitigating our risks associated with interest rates or foreign exchange exposure or our counterparties might not perform as agreed.

We may have a significant amount of debt with various financial institutions worldwide. Any indebtedness could adversely affect our business, operating results, financial condition and our ability to meet payment obligations under such debt.

Restrictions in our credit facilities may limit our business and financial activities, including our ability to obtain additional capital in the future.

Our business benefits from certain Chinese government incentives. Expiration of, or changes to, these incentives could adversely affect our operating results and financial condition.

We operate a global business through numerous foreign subsidiaries, and there is a risk that tax authorities will challenge our transfer pricing methodologies or legal entity structures, which could adversely affect our operating results and financial condition.

~~The value~~Certain of our employees in the U.K. participate in a company-sponsored defined benefit plan ~~assets and liabilities is based on~~which subjects the Company to risks associated with the estimates and assumptions ~~which may prove inaccurate~~used in calculating expense and ~~the actual amount of expenses~~funding requirements recorded in the Company’s consolidated financial ~~statements~~statements. Inaccuracies or changes in these estimates could ~~differ materially from~~require material changes in the ~~assumptions used.~~expense and funding required.

Changes in actuarial assumptions for our defined benefit plan could increase the volatility of the plan’s asset value, require us to increase cash contributions to the plan and have a negative impact on our cash flows, operating results and financial condition.

Certain of our customers and suppliers require us to comply with their codes of conduct, which may include certain restrictions that may substantially increase our cost of doing business as well as have an adverse effect on our operating efficiencies, operating results and financial condition.

Compliance with government regulations and customer demands regarding the use of “~~conflict minerals~~” “conflict minerals” may result in increased costs and may have a negative impact on our business, operating results and financial condition.

~~There are risks associated with previous and future acquisitions. We may ultimately not be successful in overcoming these risks or any other problems encountered in connection with acquisitions.~~

If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal control over financial reporting, we may not be able to report our financial results accurately or detect fraud, which could harm our business and the trading price of our Common Stock.

Terrorist attacks, or threats or occurrences of other terrorist activities, whether in the U.S. or internationally, may affect the markets in which our Common Stock trades, the markets in which we operate and our operating results and financial condition.

System security risks, data protection breaches, cyber-attacks and other related cybersecurity issues could disrupt our internal operations, and any such disruption could reduce our expected net sales, increase our expenses, damage our reputation and adversely affect our stock price.

Our international operations subject us to risks that could adversely affect our operations.

We have significant operations and assets in China, the U.K., Germany, Hong Kong and Taiwan and, as a result, will be subject to risks inherent in doing business in those jurisdictions, which may adversely affect our financial performance and operating results.

Significant uncertainties related to changes in governmental policies and participation in international trading partnerships or economic unions currently exist, and, depending upon how such uncertainties are resolved, the changes could have a material adverse effect on us.

A slowdown in the Chinese economy could limit the growth in demand for electronic devices containing our products, which would have a material adverse effect on our business, operating results and prospects.

Economic regulation in China could materially and adversely affect our business, operating results and prospects.

We could be adversely affected by violations of the United States’ Foreign Corrupt Practices Act, the U.K.’s Bribery Act 2010, China’s anti-corruption campaign and similar worldwide anti-bribery laws.

We are subject to foreign currency risk as a result of our international operations.

China is experiencing rapid social, political and economic change, which has increased labor costs and other related costs that could make doing business in China less advantageous than in prior years. Increased labor costs in China could adversely affect our business, operating results and financial condition.

We may not continue to receive preferential tax treatment in Asia, thereby increasing our income tax expense and reducing our net income.

The distribution of any earnings of ~~our~~certain foreign subsidiaries ~~to the U.S.~~ may be subject to ~~U.S. federal and state~~foreign income taxes, thus reducing our net income.

We could be adversely affected by the compromise or theft of our technology, know-how, data or intellectual property or a requirement that we yield rights in technology, know-how, data stored in foreign jurisdictions or intellectual property that we use in such foreign jurisdictions.

Variations in our quarterly operating results may cause our stock price to be volatile.

We may enter into future acquisitions and take certain actions in connection with such acquisitions that could adversely affect the price of our Common Stock.

Our directors, executive officers and significant stockholders hold a substantial portion of our Common Stock, which may lead to conflicts with other stockholders over corporate transactions and other corporate matters.

We were formed in 1959, and our early corporate records are incomplete. As a result, we may have difficulty in assessing and defending against claims relating to rights to our Common Stock purporting to arise during periods for which our records are incomplete.

Non-cash tender offers, debt equity swaps or equity exchanges to consummate our business activities are likely to have the effect of diluting the ownership interest of existing stockholders, including qualified stockholders who receive shares of our Common Stock in such business activities.

Anti-takeover effects of certain provisions of Delaware law and our Certificate of Incorporation and Bylaws, may hinder a take-over attempt.

~~Section 203~~The invasion of ~~Delaware General Corporation Law~~Ukraine by Russia could negatively impact our business.

The success of our business depends on the strength of the global economy and the stability of the financial markets, and any weaknesses in these areas may ~~deter~~have a ~~take-over attempt.~~material adverse effect on our net sales, operating results and financial condition.

We may be adversely affected by any disruption in our information technology systems, which could adversely affect our cash flows, operating results and financial condition.

~~Certificate~~Terrorist attacks, or threats or occurrences of ~~Incorporation~~other terrorist activities, whether in the U.S. or internationally, may affect the markets in which our Common Stock trades, the markets in which we operate and ~~Bylaw Provisions may deter a take-over attempt.~~our operating results and financial condition.

There have been no material changes to our market risks as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2022, filed with the SEC on February ~~27, 2017.~~10, 2023.

Our Chief Executive Officer, Keh-Shew Lu, and Chief Financial Officer, ~~Richard D. White,~~Brett R. Whitmire, with the participation of our management, carried out an evaluation, as of ~~September 30, 2017,~~March 31, 2023, of the effectiveness of our disclosure controls and procedures (as defined

in Exchange Act Rules 13a-15(e) and 15d-15(e)).) Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer believe that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be included in this ~~report~~Quarterly Report is:

Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors, mistakes or intentional circumvention of the established processes.

There was no change in our internal control over financial reporting, known to our Chief Executive Officer or Chief Financial Officer, that occurred in the three months ended ~~September 30, 2017, which~~March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The Company is not ~~currently~~ a party to any pending litigation that we consider material.

From timetime to ti~~me,~~time, we are i~~nvolv~~edare involved in va~~rious~~various legal proceedings that arise in t~~he nor~~malthe normal course of ~~bus~~i~~ness~~. ~~Whil~~e we ~~inten~~d t~~o defen~~d any ~~laws~~ui~~t v~~igorously, w~~e prese~~ntl~~y belie~~ve that t~~he ulti~~mat~~e ou~~tcome of any cu~~rrent p~~ending lega~~l p~~ro~~cee~~ding ~~wil~~lbusiness. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any pending legal proceeding will not have any ma~~teria~~l adverse ~~effec~~thave any material adverse effect on our financia~~l positio~~n, ~~cas~~h fl~~ows~~ or op~~eratin~~g ~~res~~ults. However, ~~liti~~g~~ati~~on is subject to inher~~ent~~ ~~unc~~er~~tai~~n~~tie~~s,our financial position, cash flows or operating results. However, litigation is subject to inherent uncertainties, and unfavorable ru~~lings c~~ould occur.unfavorable rulings could occur. An u~~nfa~~vorabl~~e ruling c~~ould include m~~one~~ta~~ry d~~ama~~ges,~~ whic~~h cou~~ld im~~pact o~~ur busi~~ness~~ and o~~perating r~~esult~~s f~~or t~~he p~~eriod in which the ruli~~ng oc~~cursunfavorable ruling could include monetary damages, which could impact our business and operating results for the period in which the ruling occurs or fut~~ure per~~iods. future periods.

There have been no material changes ~~from the~~to our risk factors from those disclosed in the ~~“Risk Factors”~~Risk Factors section of our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2016,~~2022, filed with the ~~SEC~~Securities and Exchange Commission on February ~~27, 2017, other than the modification of the following risk factor to reflect the use of foreign currency hedges intended to mitigate our exposures to foreign currency fluctuations.~~10, 2023.

~~We are subject to foreign currency risk as a result of our international operations.~~

We face exposure to adverse movements in foreign currency exchange rates, principally the Chinese Yuan, the Taiwanese dollar, the Euro and the British Pound Sterling and, to a lesser extent, the Japanese Yen and the Hong Kong dollar. Our income and expenses are based on a mix of currencies and a decline in one currency relative to the other currencies could adversely affect our operating results. Furthermore, our operating results are reported in U.S. dollars, which is our reporting currency. In the event the U.S. dollar weakens against a foreign currency, we will experience a currency transaction loss, which could adversely affect our operating results. Also, fluctuations in foreign currency exchange rates may have an adverse impact and be increasingly influential to our overall sales, profits and operating results as amounts that are measured in foreign currency are translated back to U.S. dollars for reporting purposes. Our foreign currency risk may change over time as the level of activity in foreign markets grows and could have an adverse impact upon our financial results, especially if the portion of our sales attributable to Europe increases. We have taken, and plan to continue to take, efforts to mitigate some of our foreign currency exposure by entering into foreign exchange hedging agreements with financial institutions to reduce exposures to some of the principal currencies in countries in which we conduct sales, acquire raw materials, build products and make capital investments but these efforts may not be successful. In this regard, these hedging agreements do not cover all currencies in which we do business, do not eliminate foreign currency risk entirely for the currencies that they do cover, and involve costs and risks of their own in the form of transaction costs, credit requirements and counterparty risk.

Number

Description

Form

Date of First Filing

Exhibit
Number

Filed
Herewith

3.1

Certificate of Incorporation, as amended


10-Q

May 10, 2013

3.1

3.2

Amended By-laws of the Company as of January 6, 2016


8-K

January 11, 2016

3.1

4.1

Form of Certificate for Common Stock, par value $0.66 2/3 per share


S-3

August 25, 2005

4.1

10.1*

2013 Equity Incentive Plan (As Amended and Restated on May 3, 2017)

S-8

August 12, 2017

99.1

31.1

Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


X

31.2

Certification Pursuant to Rule 13a-14(a) /15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


X

32.1**

Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


X

32.2**

Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


X

101.INS

XBRL Instance Document


X

101.SCH

XBRL Taxonomy Extension Schema


X

101.CAL

XBRL Taxonomy Extension Calculation Linkbase


X

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document


X

101.LAB

XBRL Taxonomy Extension Labels Linkbase


X

101.PRE

XBRL Taxonomy Extension Presentation Linkbase


X

* A certification furnished pursuant to Item 601(b)(32) of the Regulation S-K will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

PLEASE NOTE: It is inappropriate for investors to assume the accuracy of any covenants, representations or warranties that may be contained in agreements or other documents filed as exhibits to this Quarterly Report on Form 10-Q. In certain instances the disclosure schedules to such agreements or documents contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants. Moreover, some of the representations and warranties may not be complete or accurate as of a particular date because they are subject to a contractual standard of materiality that is different from those generally applicable to stockholders and/or were used for the purpose of allocating risk among the parties rather than establishing certain matters as facts. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts at the time they were made or otherwise.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this ~~report~~Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.66 2/3	DIOD	The NASDAQ Stock Market LLC


		Page
Part I – Financial Information		3
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1719
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2725
Item 4. Controls and Procedures		2725
Part II – Other Information		28
Item 1. Legal Proceedings		2827
Item 1A. Risk Factors		2827
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2827
Item 3. Defaults Upon Senior Securities		2827
Item 4. Mine Safety Disclosures		2827
Item 5. Other Information		2827
Item 6. Exhibits		2928
Signatures		3029


	Three Months Ended
	March 31,
	2023			2022
Net sales	$	467,241		$	482,123
Cost of goods sold		272,787			285,426
Gross profit		194,454			196,697

Operating expenses
Selling, general and administrative		70,991			71,443
Research and development		33,232			28,677
Amortization of acquisition related intangible assets		3,852			3,862
Other operating expense (income)		(48	)		(343	)
Total operating expense		108,027			103,639

Income from operations		86,427			93,058

Other income (expense)
Interest income		1,772			826
Interest expense		(2,132	)		(1,114	)
Foreign currency (loss) gain, net		(1,893	)		1,721
Unrealized gain (loss) on investments		3,889			(5,548	)
Other income		530			1,876
Total other income (expense)		2,166			(2,239	)

Income before income taxes and noncontrolling interest		88,593			90,819
Income tax provision		16,616			16,646
Net income		71,977			74,173
Less net income attributable to noncontrolling interest		(827	)		(1,482	)
Net income attributable to common stockholders	$	71,150		$	72,691

Earnings per share attributable to common stockholders:
Basic	$	1.56		$	1.61
Diluted	$	1.54		$	1.59
Number of shares used in earnings per share computation:
Basic		45,600			45,104
Diluted		46,161			45,844


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2023			2022
Net income	$	14,778		$	11,534		$	30,144		$	16,445		$	71,977		$	74,173
Unrealized (loss) on defined benefit plan, net of tax		(1,135	)		(9,571	)		(2,517	)		(14,732	)
Unrealized gain on interest rate swap, net of tax		180			-			60			-
Unrealized gain (loss) on defined benefit plan, net of tax														2,706			(1,533	)
Unrealized (loss) gain on derivative instruments, net of tax														(3,342	)		2,831
Unrealized foreign currency gain (loss), net of tax		8,249			1,187			25,416			(6,588	)		11,323			(12,585	)
Comprehensive income (loss)		22,072			3,150			53,103			(4,875	)
Comprehensive income														82,664			62,886
Less: Comprehensive income attributable to noncontrolling interest		(328	)		(886	)		(1,298	)		(1,778	)		(827	)		(1,482	)
Total comprehensive income attributable to common stockholders	$	21,744		$	2,264		$	51,805		$	(6,653	)	$	81,837		$	61,404


	Common stock				Treasury stock						Additional paid-in			Retained		Accumulated other comprehensive			Total Diodes Incorporated stockholders'			Noncontrolling			Total
	Shares		Amount		Shares			Amount			capital			earnings		loss			equity			interest			equity
Balance, December 31, 2022		54,751	$	36,503		(9,282	)	$	(337,490	)	$	494,773		$	1,448,092	$	(128,233	)	$	1,513,645		$	69,274		$	1,582,919
Total comprehensive income		-		-		-			-			-			71,150		10,687			81,837			827			82,664
Net changes in noncontrolling interest		-		-		-			-			-			-		-			-			107			107
Common stock issued for share-based plans		237		158		-			-			(158	)		-		-			-			-			-
Share-based compensation		-		-		-			-			9,652			-		-			9,652			-			9,652
Tax related to net share settlement		-		-		-			-			(9,669	)		-		-			(9,669	)		-			(9,669	)
Balance, March 31, 2023		54,988	$	36,661		(9,282	)	$	(337,490	)	$	494,598		$	1,519,242	$	(117,546	)	$	1,595,465		$	70,208		$	1,665,673

	Common stock				Treasury stock						Additional paid-in			Retained		Accumulated other comprehensive			Total Diodes Incorporated stockholders'			Noncontrolling			Total
	Shares		Amount		Shares			Amount			capital			earnings		loss			equity			interest			equity
Balance, December 31, 2021		54,290	$	36,195		(9,273	)	$	(336,894	)	$	471,649		$	1,116,809	$	(50,517	)	$	1,237,242		$	65,482		$	1,302,724
Total comprehensive income (loss)		-		-		-			-			-			72,691		(11,287	)		61,404			1,482			62,886
Net changes in noncontrolling interest		-		-		-			-			(1,013	)		-					(1,013	)		(4,451	)		(5,464	)
Common stock issued for share-based plans		214		143		-			-			(59	)		-		-			84			3			87
Share-based compensation		-		-		-			-			7,818			-		-			7,818			-			7,818
Tax related to net share settlement		-		-		-			-			(8,032	)		-		-			(8,032	)		-			(8,032	)
Balance, March 31, 2022		54,504	$	36,338		(9,273	)	$	(336,894	)	$	470,363		$	1,189,500	$	(61,804	)	$	1,297,503		$	62,516		$	1,360,019


	Three Months
	March 31,
	2023			2022
Cash flows from operating activities
Net income	$	71,977		$	74,173
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions
Depreciation		29,793			24,729
Amortization of intangible assets		3,852			3,862
Share-based compensation expense		9,820			7,902
Deferred income taxes		(404	)		(347	)
Investment (gain) loss		(3,829	)		5,518
Other		299			(1,383	)
Changes in operating assets:
Change in accounts receivable		1,544			(6,626	)
Change in inventory		20,759			(25,074	)
Change in other operating assets		4,964			(2,282	)
Changes in operating liabilities:
Change in accounts payable		(17,718	)		(8,549	)
Change in accrued liabilities		(36,289	)		(13,751	)
Change in income tax payable		13,932			16,461
Change in other operating liabilities		1,111			(2,316	)
Net cash flows provided by operating activities		99,811			72,317

Cash flows from investing activities
Acquisitions, net of cash received		-			(13,269	)
Purchases of property, plant and equipment		(48,003	)		(38,542	)
Proceeds from sale of property, plant and equipment		99			188
Proceeds from short-term investments		807			3,046
Purchases of short-term investments		(2,469	)		(5,998	)
Proceeds from sale of securities		417			-
Other		1,018			(311	)
Net cash and cash equivalents used in investing activities		(48,131	)		(54,886	)

Cash flows from financing activities
Advances on lines of credit and short-term debt		8,173			37,782
Repayments of lines of credit and short-term debt		(10,139	)		(26,883	)
Proceeds from long-term debt		263			45,000
Repayments of long-term debt		(59,061	)		(123,545	)
Net proceeds from issuance of common stock		-			84
Repayment of and proceeds from finance lease obligation		(7	)		(61	)
Taxes paid related to net share settlement		(9,669	)		(8,032	)
Net changes in noncontrolling interest		107			3
Other		15			(207	)
Net cash and cash equivalents used in financing activities		(70,318	)		(75,859	)

Effect of exchange rate changes on cash and cash equivalents		3,446			(2,385	)
Change in cash and cash equivalents, including restricted cash		(15,192	)		(60,813	)
Cash and cash equivalents, beginning of period, including restricted cash		341,099			366,818
Cash and cash equivalents, end of period, including restricted cash	$	325,907		$	306,005


Supplemental Cash Flow Information
Interest paid during the period	$	1,941	$	878
Taxes paid during the period	$	5,388	$	476

Non-cash investing and financing activities:
Accounts payable balance related to the purchase of property, plant and equipment	$	27,113	$	22,904


	March 31, 2023		December 31, 2022
Finished goods	$	93,527	$	96,659
Work-in-progress		79,152		80,616
Raw materials		169,262		183,006
Total	$	341,941	$	360,281

	September 30, 2017		December 31, 2016
Finished goods	$	59,403	$	66,930
Work-in-progress		50,881		45,408
Raw materials		101,128		81,145
Total	$	211,412	$	193,483


Balance at December 31, 2022	$	144,757
Acquisition		-
Foreign currency translation adjustment		1,180
Balance at March 31, 2023	$	145,937

Balance at December 31, 2016	$	129,412
Foreign currency translation adjustment		4,126
Balance at September 30, 2017	$	133,538


Amortization expense	2023		2022
Three Months Ended March 31,	$	3,852	$	3,862

	Net Sales for the
	Three Months Ended				Percentage of
	September 30,				Net Sales
	2017		2016		2017			2016
China	$	156,924	$	148,567		55	%		59	%
United States		25,706		21,802		9	%		9	%
Korea		17,422		15,993		6	%		6	%
Germany		21,756		14,737		8	%		6	%
Singapore		17,252		12,497		6	%		5	%
Taiwan		15,966		12,424		6	%		5	%
All others ⁽¹⁾		30,221		24,674		10	%		10	%
Total	$	285,247	$	250,694		100	%		100	%

	Net Sales for the
	Nine Months Ended				Percentage of
	September 30,				Net Sales
	2017		2016		2017			2016
China	$	433,145	$	411,512		55	%		58	%
United States		70,361		62,460		9	%		9	%
Korea		50,785		43,452		6	%		6	%
Germany		58,210		47,963		7	%		7	%
Singapore		43,840		35,657		6	%		5	%
Taiwan		49,584		44,413		6	%		6	%
All others ⁽¹⁾		79,849		64,620		11	%		9	%
Total	$	785,774	$	710,077		100	%		100	%


	Fair Value
		Other Assets				Other Liabilities
		2023		2022		2023		2022
Cross-currency swaps		$	2,815	$	1,427	$	8,486	$	6,314

	Three Months Ended	Nine Months Ended
Early supply contract termination	$ -	$ 1,985
Cost of equipment relocation	429	501
Asset retirement obligation	701	935
Retention costs	909	2,687
	$ 2,039	$ 6,108

	Early Contract Termination	Retention Costs	Equipment Relocation	Total
Beginning balance, January 1, 2017	$ -	$ -	$ -	$ -
Costs accrued	1,985	2,687	501	5,173
Restructuring costs paid	(1,985)	(14)	(501)	(2,500)
Balance at September 30, 2017	$ -	$ 2,673	$ -	$ 2,673


Assets
Spare parts and inventories	$	1,257
Prepaid expenses		257
Property, plant and equipment		77,115
Goodwill		1,779
Total assets purchased	$	80,408

~~Asset retirement obligation, January 1, 2017~~					~~$ 486~~
~~Accrual of additional asset retirement obligation~~					~~1,403~~
~~Amount paid~~					~~(1,125)~~
~~Asset retirement obligation, September 30, 2017~~					~~$ 764~~


	Percent of Net Sales
	Three Months Ended March 31,
	2023			2022
Net sales		100	%		100	%
Cost of goods sold		(58	)		(59	)
Gross profit		42			41
Total operating expense		23			22
Income from operations		19			19
Total other income (expense)		-			-
Income before income taxes and noncontrolling interest		19			19
Income tax provision		(4	)		(3	)
Net income		15			15
Net income attributable to common stockholders		15			15

	Percent of Net Sales
	Three Months Ended September 30,
	2017			2016
Net sales		100	%		100	%
Cost of goods sold		(66	)		(68	)
Gross profit		34			32
Total operating expenses		26			24
Income from operations		8			8
Total other expense		(1	)		(2	)
Income before income taxes and noncontrolling interest		7			6
Income tax provision		(2	)		(2	)
Net income		5			4
Net income attributable to common stockholders		5			4

	Percent of Net Sales
	Nine Months Ended September 30,
	2017	2016
Net sales	100%	100%
Cost of goods sold	(67)	(69)
Gross profit	33	31
Total operating expenses	26	26
Income from operations	7	5
Total other income (expense)	(2)	(2)
Income before income taxes and noncontrolling interest	5	3
Income tax provision	(1)	(1)
Net income	4	2
Net income attributable to common stockholders	4	2

Number	Description	Form	Date of First Filing	Exhibit Number	Filed Herewith
3.1	Certificate of Incorporation, as amended	10-Q	May 10, 2013	3.1
3.2	Amended By-laws of the Company as of January 6, 2016	8-K	January 11, 2016	3.1
4.1	Form of Certificate for Common Stock, par value $0.66 2/3 per share	S-3	August 25, 2005	4.1
10.1*	2013 Equity Incentive Plan (As Amended and Restated on May 3, 2017)	S-8	August 12, 2017	99.1
31.1	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification Pursuant to Rule 13a-14(a) /15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1**	Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
32.2**	Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Labels Linkbase				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase				X


	DIODES INCORPORATED
	(Registrant)

~~November 7, 2017~~ May 9, 2023	By: /s/ Keh-Shew Lu
Date	~~KEH SHEW~~KEH-SHEW LU
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)



~~November 7, 2017~~May 9, 2023	~~By: /s/ Richard D. White~~
~~Date~~	~~RICHARD D. WHITE~~
	~~Chief Financial Officer and Secretary~~
	~~(Principal Financial Officer)~~



~~November 7, 2017~~	By: /s/ Brett R. Whitmire
Date	BRETT R. WHITMIRE ~~Corporate Controller~~
	~~(Principal Accounting Officer)~~Chief Financial Officer
	(Principal Financial Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ ~~(Do not check if a smaller reporting company)~~

Smaller reporting company

Emerging growth company