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~~May 3, ~~2017~~2021 was ~~49,390,130.~~44,616,715.

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2021			2020
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	201,226		$	247,802		$	276,253		$	268,065
Restricted cash								54,848			52,464
Short-term investments		12,737			29,842			8,366			6,142
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 $3,442 and $3,806 at March 31, 2021 and December 31, 2020, respectively								332,209			320,061
Inventories		211,412			193,483			289,972			307,062
Prepaid expenses and other		45,644			44,438			88,703			70,193
Total current assets		701,479			732,782			1,050,351			1,023,987
Property, plant and equipment, net		446,052			401,988			510,467			530,815
Deferred income tax		64,129			56,047			51,820			57,841
Goodwill		133,538			129,412			158,583			158,331
Intangible assets, net		161,122			174,876			106,570			110,591
Other		34,269			33,447
Other long-term assets								112,551			97,892
Total assets	$	1,540,589		$	1,528,552		$	1,990,342		$	1,979,457

Liabilities
Current liabilities:
Lines of credit							$	67,624		$	140,563
Accounts payable	$	111,689		$	87,600			172,172			168,045
Accrued liabilities and other		94,436			71,562			159,486			160,117
Income tax payable		-			11,855			15,203			19,177
Current portion of long-term debt		19,067			14,356			18,353			21,860
Total current liabilities		225,192			185,373			432,838			509,762
Long-term debt, net of current portion		306,687			413,126			327,007			288,179
Deferred tax liabilities		28,617			28,213			34,561			34,598
Other long-term liabilities		85,209			81,373			138,956			130,795
Total liabilities		645,705			708,085			933,362			963,334

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; 0 shares issued or outstanding								-			-
Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; 44,600,001 and 44,276,194, issued and outstanding at March 31, 2021 and December 31, 2020, respectively								35,908			35,692
Additional paid-in capital		375,134			354,574			446,697			449,598
Retained earnings		563,338			530,215			927,498			888,046
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, 9,259,858 shares at March 31, 2021 and December 31, 2020								(335,910	)		(335,910	)
Accumulated other comprehensive loss		(89,707	)		(112,666	)		(71,624	)		(73,606	)
Total stockholders' equity		853,243			776,019			1,002,569			963,820
Noncontrolling interest		41,641			44,448			54,411			52,303
Total equity		894,884			820,467			1,056,980			1,016,123
Total liabilities and stockholders' equity	$	1,540,589		$	1,528,552		$	1,990,342		$	1,979,457


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						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2021			2020
Net sales	$	285,247		$	250,694		$	785,774		$	710,077		$	413,121		$	280,717
Cost of goods sold		188,900			170,071			525,377			490,417			274,485			184,875
Gross profit		96,347			80,623			260,397			219,660			138,636			95,842

Operating expenses
Selling, general and administrative		43,525			38,321			122,912			119,165			58,676			42,215
Research and development		20,379			17,088			58,215			52,247			27,659			23,678
Amortization of acquisition related intangible assets		4,694			5,117			14,098			15,379			4,023			4,221
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
Other operating expense (income)														888			(124	)
Total operating expense														91,246			69,990

Income from operations		23,717			19,953			56,902			32,685			47,390			25,852

Other income (expense)
Interest income		389			321			992			1,075			768			273
Interest expense		(3,561	)		(3,684	)		(10,493	)		(9,880	)		(2,864	)		(1,245	)
Foreign currency loss, net		(1,312	)		(1,439	)		(6,734	)		(2,045	)
Foreign currency (loss) gain, net														(1,279	)		75
Unrealized gain on investments														3,655			-
Other income		597			480			1,128			551			2,317			1
Total other income (expense)		(3,887	)		(4,322	)		(15,107	)		(10,299	)		2,597			(896	)

Income before income taxes and noncontrolling interest		19,830			15,631			41,795			22,386			49,987			24,956
Income tax provision		5,052			4,097			11,651			5,941			9,434			4,556
Net income		14,778			11,534			30,144			16,445			40,553			20,400
Less net income attributable to noncontrolling interest		(328	)		(886	)		(1,298	)		(1,778	)		(1,101	)		(232	)
Net income attributable to common stockholders	$	14,450		$	10,648		$	28,846		$	14,667		$	39,452		$	20,168

Earnings per share attributable to common stockholders:
Basic	$	0.29		$	0.22		$	0.59		$	0.30		$	0.89		$	0.39
Diluted	$	0.29		$	0.21		$	0.58		$	0.30		$	0.87		$	0.38
Number of shares used in earnings per share computation:
Basic		49,057			48,814			48,633			48,496			44,408			51,335
Diluted		50,416			49,922			50,061			49,565			45,243			52,422

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 income
$
14,778

$
11,534

$
30,144

$
16,445

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 foreign currency gain (loss), net of tax

8,249

1,187

25,416

(6,588
)
Comprehensive income (loss)

22,072

3,150

53,103

(4,875
)
Less: Comprehensive income attributable to noncontrolling interest

(328
)

(886
)

(1,298
)

(1,778
)
Total comprehensive income attributable to common stockholders
$
21,744

$
2,264

$
51,805

$
(6,653
)

	Three Months Ended
	March 31,
	2021			2020
Net income	$	40,553		$	20,400
Unrealized gain on defined benefit plan, net of tax		1,894			9,719
Unrealized gain (loss) on swaps and collars, net of tax		3,826			(1,438	)
Unrealized foreign currency loss, net of tax		(3,738	)		(9,614	)
Comprehensive income		42,535			19,067
Less: Comprehensive income attributable to noncontrolling interest		(1,101	)		(232	)
Total comprehensive income attributable to common stockholders	$	41,434		$	18,835

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

	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, 2020		53,536	$	35,692		(9,260	)	$	(335,910	)	$	449,598		$	888,046	$	(73,606	)	$	963,820		$	52,303		$	1,016,123
Total comprehensive income		-		-		-			-			-			39,452		1,982			41,434			1,101			42,535
Net changes in noncontrolling interests		-		-		-			-			(4	)		-		-			(4	)		1,007			1,003
Common stock issued for share-based plans		324		216		-			-			538			-		-			754			-			754
Share-based compensation		-		-		-			-			5,858			-		-			5,858			-			5,858
Tax related to net share settlement		-		-		-			-			(9,293	)		-		-			(9,293	)		-			(9,293	)
Balance, March 31, 2021		53,860	$	35,908		(9,260	)	$	(335,910	)	$	446,697		$	927,498	$	(71,624	)	$	1,002,569		$	54,411		$	1,056,980

Balance, December 31, 2019		52,664	$	35,111		(1,457	)	$	(37,768	)	$	427,262		$	789,958	$	(108,139	)	$	1,106,424		$	46,359		$	1,152,783
Total comprehensive income		-		-		-			-			-			20,168		(1,333	)		18,835			232			19,067
Contributions from noncontrolling interests		-		-		-			-			-			-		-			-			10,777			10,777
Dividends to noncontrolling interest		-		-		-			-			-			-		-			-			(108	)		(108	)
Common stock issued for share-based plans		268		178		-			-			(178	)		-		-			-			-			-
Share-based compensation		-		-		-			-			4,237			-		-			4,237			-			4,237
Stock buyback related to deferred compensation plan		-		-		(24	)		(689	)		689			-		-			-
Tax related to net share settlement		-		-		-			-			(4,467	)		-		-			(4,467	)		-			(4,467	)
Balance, March 31, 2020		52,932	$	35,289		(1,481	)	$	(38,457	)	$	427,543		$	810,126	$	(109,472	)	$	1,125,029		$	57,260		$	1,182,289

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

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2021			2020
Cash flows from operating activities	$	106,340		$	74,935
Net income							$	40,553		$	20,400
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions
Depreciation								26,440			22,809
Amortization of intangible assets								4,023			4,221
Share-based compensation expense								6,122			4,693
Deferred income taxes								1,012			17
Investment gain								(3,713	)		-
Other								425			741
Changes in operating assets:
Change in accounts receivable								(12,993	)		16,139
Change in inventory								6,490			2,550
Change in other operating assets								2,899			(1,022	)
Changes in operating liabilities:
Change in accounts payable								11,266			(9,160	)
Change in accrued liabilities								(8,310	)		(12,105	)
Change in income tax payable								(4,100	)		3,853
Change in other operating liabilities								(1,918	)		539
Net cash flows provided by operating activities								68,196			53,675

Cash flows from investing activities
Decrease (increase) in restricted cash		555			(311	)
Acquisitions, net of cash received								-			591
Purchases of property, plant and equipment		(81,877	)		(47,054	)		(17,179	)		(14,208	)
Proceeds from maturity of short-term investments								2,085			3,467
Purchases of short-term investments		(9,744	)		(17,482	)		(4,364	)		(1,523	)
Proceeds from maturity of short-term investments		27,891			46,352
Purchase of equity securities								-			(6,129	)
Other		(1,238	)		(1,316	)		9,059			244
Net cash and cash equivalents used in investing activities		(64,413	)		(19,811	)		(10,399	)		(17,558	)

Cash flows from financing activities
Advances on lines of credit and short-term debt		2,383			9,000			2,820			3,647
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	)
Repayments of lines of credit and short-term debt								(75,696	)		(3,498	)
Proceeds from long-term debt		7,500			23,500			215,000			82,331
Repayments of long-term debt		(109,607	)		(70,714	)		(179,361	)		(98,884	)
Net proceeds from issuance of common stock		6,880			5			754			-
Repayment of capital lease obligation		(533	)		(19	)
Dividend distribution to noncontrolling interest		(5,754	)		(4,615	)
Repayment of and proceeds from finance lease obligation								(141	)		(223	)
Taxes paid related to net share settlement								(9,293	)		(4,467	)
Dividend distribution to noncontrolling interests								-			(108	)
Capital contribution from noncontrolling interests								1,003			-
Other		2,056			518			(499	)		(195	)
Net cash and cash equivalents used in financing activities		(97,846	)		(54,288	)		(45,413	)		(21,397	)

Effect of exchange rate changes on cash and cash equivalents		9,343			1,255			(1,812	)		(3,315	)
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
Change in cash and cash equivalents, including restricted cash								10,572			11,405
Cash and cash equivalents, beginning of period, including restricted cash								320,529			259,507
Cash and cash equivalents, end of period, including restricted cash							$	331,101		$	270,912

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown above. The Company’s restricted cash primarily consisted of the cash required to be on deposit under our Asia credit facilities to support outstanding loan and import/export guarantees. As of March 31, 2021, restricted cash of $54.8 million was pledged as collateral for issuance of bank loans, bank acceptance notes and letters of credit. During April 2021 $50.0 million of the restricted cash was released from all contractual restrictions, as the applicable loans were repaid in full.

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

NOTE 1 – ~~Nature~~Summary of Operations ~~Basis of Presentation~~ and ~~Recently Issued~~Significant Accounting ~~Pronouncements~~Policies

Diodes Incorporated, together with its subsidiaries (collectively “Diodes”, 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~~application specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. ~~We serve~~The Company serves the consumer electronics, computing, communications, industrial, and automotive markets. ~~Our~~

The Company’s products include diodes, rectifiers, transistors, MOSFETs, GPP bridges, GPP rectifiers, protection devices, function-specific arrays, single gate logic, amplifiers and comparators, Hall-effect and temperature sensors, power management devices, including LED drivers, AC-DC converters and controllers, DC-DC switching and linear voltage regulators, and voltage references along with special function devices, such as USB power switches, load switches, voltage supervisors, and motor controllers. ~~Our~~The Company also has timing, connectivity, switching, and signal integrity solutions for high-speed signals.

The Company’s corporate headquarters and Americas’ sales office are located in Plano, Texas, and Milpitas, California. Design, marketing, and engineering centers are located in Plano; Milpitas; Taipei, Taoyuan City and Zhubei City, Taiwan; ~~Manchester,~~Shanghai, 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, Greenock, Scotland and 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. The Company has assembly and test facilities located in Shanghai, Jinan, Chengdu and ~~Yangzhou,~~Wuxi, China as well as in ~~Hong Kong,~~ 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, UK; Shanghai, Shenzhen, Wuhan and Yangzhou, China; Seongnam-si, South Korea; and Munich, ~~Germany,~~Frankfurt, Germany; with support offices throughout the world.

Our product focus is on high-growth end-user equipment markets such as satellite TV set-top boxes, portable DVD players, datacom devices, ADSL modems, power supplies, medical devices (non-life support devices/systems), PCs and notebooks, flat panel displays, digital cameras, mobile handsets, AC-to-DC and DC-to-DC conversion, Wireless 802.11 LAN access points, brushless DC motor fans, serial connectivity, and automotive applications.

The condensed consolidated financial data at December 31, ~~2016 is~~2020 are derived from audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the Securities and Exchange Commission (“SEC”) on February ~~27, 2017~~22, 2021 (“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, 2021 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, ~~2017.~~2021.

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 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~~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. E

~~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)~~

~~•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.

Earnings per share (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted EPS is calculated similarly but includes potential dilution from the exercise of stock options and stock awards, except when the effect would be anti-dilutive. ~~A total of 0.7 million and 1.7 million stock options and stock awards outstanding during~~During the three months ended ~~September 30, 2017~~March 31, 2021 and 2016, respectively, and 0.7 million and 1.9 million stock options and stock awards outstanding during the nine months ended September 30, 2017 and 2016, respectively, were excluded from the calculation because the effect was anti-dilutive. 2020, we paid 0 dividends on our Common Stock.

The table below sets forth the reconciliation between net income ~~(loss)~~ and the weighted average shares outstanding used for calculating basic and diluted ~~EPS for the three and nine months ended September 30, 2017 and 2016:~~EPS:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2021		2020
Earnings (numerator)
Net income attributable to common stockholders	$	14,450	$	10,648	$	28,846	$	14,667	$	39,452	$	20,168

Shares (denominator)
Weighted average common shares outstanding (basic)		49,057		48,814		48,633		48,496		44,408		51,335
Dilutive effect of stock options and stock awards outstanding		1,359		1,108		1,428		1,069		835		1,087
Adjusted weighted average common shares outstanding (diluted)		50,416		49,922		50,061		49,565		45,243		52,422

Earnings per share attributable to common stockholders
Basic	$	0.29	$	0.22	$	0.59	$	0.30	$	0.89	$	0.39
Diluted	$	0.29	$	0.21	$	0.58	$	0.30	$	0.87	$	0.38

Stock options and stock awards excluded from EPS calculation because the effect would be anti-dilutive										-		58

The table below sets forth inventories which are stated at the lower of cost or ~~market~~net realizable value:

	September 30, 2017		December 31, 2016		March 31, 2021		December 31, 2020
Finished goods	$	59,403	$	66,930	$	81,973	$	85,506
Work-in-progress		50,881		45,408		78,095		73,466
Raw materials		101,128		81,145		129,904		148,090
Total	$	211,412	$	193,483	$	289,972	$	307,062

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2021			2020
Intangible assets subject to amortization:
Gross carrying amount	$	234,533		$	232,747		$	246,687		$	245,176
Accumulated amortization		(83,354	)		(69,247	)		(144,733	)		(140,710	)
Foreign currency translation adjustment		(8,259	)		(8,442	)		(7,799	)		(7,781	)
Total		142,920			155,058			94,155			96,685
Intangible assets with indefinite lives:
Gross carrying amount		19,217			21,003			13,372			14,883
Foreign currency translation adjustment		(1,015	)		(1,185	)		(957	)		(977	)
Total		18,202			19,818			12,415			13,906
Total intangible assets, net	$	161,122		$	174,876		$	106,570		$	110,591

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:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2021			2020
Domestic pre-tax income (loss)	$	(27,783	)	$	(7,274	)	$	(63,026	)	$	(25,520	)
Domestic pre-tax income													$	7,069		$	5,268
Foreign pre-tax income	$	47,613		$	22,905		$	104,821		$	47,906		$	42,918		$	19,688
Income tax provision	$	5,052		$	4,097		$	11,651		$	5,941		$	9,434		$	4,556
Effective tax rate		25.5	%		26.2	%		27.9	%		26.5	%		18.9	%		18.3	%
Impact of tax holidays on tax expense	$	(733	)	$	(2,992	)	$	(2,553	)	$	(5,099	)	$	(582	)	$	(1,074	)
Earnings per share impact of tax holidays
Earnings per share impact of tax holidays:
Basic	$	0.01		$	0.06		$	0.05		$	0.10		$	0.01		$	0.02
Diluted	$	0.01		$	0.06		$	0.05		$	0.10		$	0.01		$	0.02

The ~~decrease~~increase in the effective tax rate for the three months ended ~~September 30, 2017~~March 31, 2021 when compared to the three months ended ~~September 30, 2016,~~March 31, 2020, is primarily attributable to ~~an immaterial expense for various discrete items. The increase~~a change in pre-tax earnings during the ~~effective tax rate over the nine months ended September 30, 2017 when compared~~comparable periods.

Our undistributed foreign earnings continue to ~~the nine months ended September 30, 2016 is primarily attributable 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~~2015 tax year. ~~The Company is~~We are no longer subject to China income tax examinations by tax authorities for tax years before ~~2005.~~2010. With respect to state and local jurisdictions and countries outside of the U.S. (other than China), with limited exceptions, the Company is no longer subject to income tax audits for years before ~~2006.~~2015. 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 reserve for any adjustments that may

result from currently pending tax audits. The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in interest expense. As of ~~September 30, 2017,~~March 31, 2021, the gross amount of unrecognized tax benefits was approximately ~~$31.5~~$43.9 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.

For the three months ended March 31, 2021, we recognized stock option expense of approximately $0.02 million. This stock option expense is related to stock options granted by Savitech Corporation (“Savitech”) in Savitech stock to their employees. We acquired a controlling interest in Savitech in 2020. The remainder of our share-based compensation expense was related to share grants. Approximately $0.8 million of cash proceeds were received from stock option exercises during the three months ended March 31, 2021. The table below sets forth the line items where share-based compensation expense was ~~recorded for the three and nine months ended September 30, 2017 and 2016:~~recorded:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2021		2020
Cost of goods sold	$	152	$	172	$	462	$	609	$	275	$	273
Selling, general and administrative		4,050		2,901		11,348		10,237		5,033		3,711
Research and development		760		684		2,117		1,991		814		709
Total share-based compensation expense	$	4,962	$	3,757	$	13,927	$	12,837	$	6,122	$	4,693

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

~~Stock Options.~~ ~~Approximately $6.9 million in cash proceeds was received from 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.~~Grants – Restricted stock awards and restricted stock units generally vest in equal annual installments over a four-year period. ~~We also have~~All new grants are granted under the Company’s 2013 Equity Incentive Plan, and there will be 0 additional share grants ~~that~~under the 2001 Omnibus Equity Incentive Plan. Restricted stock grants are measured based on the fair market value of the underlying stock on the date of grant, and compensation expense is recognized on a straight-line basis over the requisite four-year service period.

Performance stock units (“PSUs”) are measured based on the fair market value of the underlying stock on the date of grant, and compensation expense is recognized over the three-year performance ~~based that~~period, with adjustments made to the expense to recognize the probable payout percentage. PSUs will vest upon ~~achievement of certain performance criteria.~~ ~~During the nine months ended September 30, 2017,~~ the Company ~~modified~~achieving a performance-based award previously granted to our Chief Executive Officer. The effect was to replace a performance-based grant covering 700,000 shares of the Company’s common stock with a performance-based grant covering 62,905 shares of the Company’s common stock and a restricted stock grant covering 62,905 of the Company’s common stock. If certain performance criteria are metcumulative 3-year non-GAAP operating income target for 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 the performance-based grant award is approximately $3.3 million. The incremental expense of the restricted stock grant is approximately $1.7 million.applicable periods.

As of ~~September 30, 2017,~~March 31, 2021, total unrecognized share-based compensation expense related to share grants was approximately ~~$36.9~~$52.2 million, before income taxes, and is expected to be recognized over a weighted average period of approximately ~~2.6~~2.2 years.

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 and Europe. ~~During the three months ended September 30, 2017, one~~NaN customer accounted for ~~10.3%~~10% or ~~$29.3 million~~more of our ~~revenue. This customer did not account for 10%~~net sales or ~~greater of our revenue for the nine months ended September 30, 2017 or 10% or greater of our~~ outstanding accounts receivable at ~~September 30, 2017.~~any point in the periods presented in this Quarterly Report.

The tables below set forth net sales based on the location of the subsidiary producing the net 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
As of and for the
Three Months Ended March 31, 2021													Asia			Americas			Europe			Consolidated
Total sales	$	731,982		$	122,072		$	134,132		$	988,186		$	471,069		$	246,827		$	60,174		$	778,070
Intercompany elimination		(111,963	)		(44,547	)		(45,902	)		(202,412	)		(178,950	)		(160,829	)		(25,170	)		(364,949	)
Net sales	$	620,019		$	77,525		$	88,230		$	785,774		$	292,119		$	85,998		$	35,004		$	413,121

Property, plant and equipment, net	$	372,153		$	52,737		$	21,162		$	446,052		$	400,149		$	24,539		$	85,779		$	510,467
Total assets	$	1,017,801		$	301,763		$	221,025		$	1,540,589		$	1,461,428		$	240,063		$	288,851		$	1,990,342

As of and for the Nine Months Ended
September 30, 2016	Asia			North America			Europe			Consolidated
As of and for the
Three Months Ended March 31, 2020													Asia			Americas			Europe			Consolidated
Total sales	$	671,252		$	91,176		$	121,501		$	883,929		$	301,863		$	168,172		$	59,001		$	529,036
Intercompany elimination		(107,268	)		(21,390	)		(45,194	)		(173,852	)		(116,921	)		(104,464	)		(26,934	)		(248,319	)
Net sales	$	563,984		$	69,786		$	76,307		$	710,077		$	184,942		$	63,708		$	32,067		$	280,717

Property, plant and equipment, net	$	341,320		$	58,408		$	15,890		$	415,618		$	364,624		$	24,110		$	67,388		$	456,122
Total assets	$	956,647		$	422,041		$	173,752		$	1,552,440		$	1,208,572		$	197,178		$	214,516		$	1,620,266

~~Geographic Information~~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 consumer electronics, computing, communications, industrial and automotive 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 ~~the amount of~~ net sales ~~that were derived from (shipped to) customers located in~~for the ~~following countries:~~Company disaggregated into geographic locations based on shipment and by type (direct sales or Distributor) for the three months ended March 31, 2021 and 2020:

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
%

	Three Months Ended
	March 31,
Net Sales by Region	2021		2020
Asia	$	334,976	$	210,805
Europe		48,386		46,931
Americas		29,759		22,981
Total net sales	$	413,121	$	280,717

Net Sales by Type
Direct sales	$	147,722	$	99,544
Distributor sales		265,399		181,173
Total net sales	$	413,121	$	280,717

Net sales from products shipped to China was $222.3 million and $138.9 million for the three months ended March 31, 2021 and 2020, respectively.

Our Asia subsidiaries maintain credit facilities with several financial institutions through our foreign entities worldwide totaling $205.5 million. Other than two Taiwanese credit facilities that 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, 2021, was approximately $127.9 million, net of a $67.6 million advanced under our foreign credit lines and $0.5 million credit used for import and export guarantee. In connection with our Asia credit facilities $54.8 million of cash

deposits have been restricted in support of a corresponding loan amount. During April 2021 $50.0 million of the restricted cash was released from all contractual restrictions, as the applicable loans were repaid in full.

The Company maintains a long-term credit facility (“Credit Agreement”) consisting of a term loan with a current balance of $218.0 million and a $150.0 million revolving senior credit facility. The Company used a portion of the proceeds available under the term commitment and the revolving senior credit facility to finance the Company’s acquisition of Lite-On Semiconductor Corporation. The Credit Agreement 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, and restricted payments (including dividends and share repurchases). Furthermore, under the Credit Agreement, restricted payments, including dividends and share repurchases, are permitted in certain circumstances, including while the pro forma Consolidated Leverage Ratio is, both before and after giving effect to any such restricted payment, at least 0.25 to 1.00 less than the maximum permitted under the Credit Agreement. In addition to the credit facilities described above, our 51% owned subsidiary, ERIS Technology Corporation (“ERIS”), has short-term debt of $13.3 million and long-term debt of $30.0 million from local Taiwan banks. The ERIS debt matures in various periods from 2021 through 2033.

Borrowings outstanding as of March 31, 2021 and December 31, 2020, are set forth in the table below:

~~(1)~~

~~Represents countries with less than 3% of the total net sales each.~~

	March 31,			December 31,				Current Amount
Description	2021			2020			Interest Rate	Maturity
Short-term debt	$	67,624		$	140,567		Libor plus margin	Various during 2021

Long-term debt
Term loan and revolver	$	217,969		$	282,250		Libor plus margin	May 2024
Notes payable to Bank of Taiwan		4,067			4,154		Variable, 1.3% base	June 2033
Notes payable to Bank of China Trust Company		3,504			3,511		Taibor 3 month rate + 0.5%	December 2021
Notes payable to Bank of China Trust Company		16,678			16,714		Taibor 3 month rate + 0.5%	May 2024
Notes payable to E Sun Bank		3,504			3,511		1-M deposit rate plus 0.08%	December 2022
Notes payable to E Sun Bank		385			386		1-M deposit rate plus 0.08%	June 2027
Notes payable to E Sun Bank		1,717			1,721		1-M deposit rate plus 0.08%	June 2030
Notes payable to HSBC		100,000			-		Libor plus margin	January 2023
Total long-term debt		347,824			312,247
Less: Current portion of long-term debt		(18,353	)		(21,860	)
Less: Unamortized debt costs		(2,464	)		(2,208	)
Total long-term debt, net of current portion	$	327,007		$	288,179

Purchase commitments – As of ~~September 30, 2017,~~March 31, 2021, we had approximately ~~$36.8~~$58.6 million in non-cancelable purchase contracts related to capital expenditures, primarily related to ~~Asia~~our manufacturing ~~facilities.~~

facilities in Asia. As of March 31, 2021, we also had a commitment to purchase approximately $40.4 million of wafers to be used in our manufacturing process during 2021 and 2022.

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, 2021, the ~~unfunded~~underfunded liability for this defined benefit plan was approximately ~~$32.3~~$25.1 million. ~~We are obligated to make annual contributions, each year through December 2029,~~An actuarial valuation was performed as of March 31, 2019, resulting in a deficit of approximately GBP 226.7 million (approximately ~~$2.6~~$37.4 million based on a GBP:USD exchange rate of ~~1.3)~~1.4:1). ~~The trustees~~As a result of this valuation we have agreed to a revised schedule of contributions of GBP 2.0 million (approximately $2.8 million based on a GBP: USD exchange rate of 1.4:1) to be paid in annual installments with effect from April 1, 2020 to address the deficit revealed by the valuation (with the first payment made by March 31, 2021, and payments to be made by December 31 each year thereafter). These contributions, together with the assumed asset outperformance, are ~~required~~expected to ~~review~~

eliminate the ~~funding position every three years, and the most recent review was carried out as of April 5, 2016. The outcome of a review can result~~deficit by December 31, 2028. Further, we will pay GBP 0.2 million (approximately $0.3 million based on GBP: USD exchange rate oat 1.4:1) in ~~a change in the amount of the payment.~~

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 material.

We use derivative instruments to manage risks related to foreign currencies, interest rates and the ~~Company had approximately $40.2 million~~net investment risk in our foreign subsidiaries. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment.

Hedges of Foreign Currency Risk - We are exposed to fluctuations in various foreign currencies against our different functional currencies. We use foreign currency ~~hedges, which~~forward agreements to manage this exposure. At March 31, 2021 and December 31, 2020, we had $268.2 million and $276.2 million, respectively, of outstanding foreign currency forward agreements that are intended to ~~offset approximately 25%~~preserve the economic value of foreign currency denominated monetary assets and liabilities; these instruments are not designated for hedge accounting treatment in accordance with ASC No. 815. We have recorded foreign currency forward agreements with a fair value of $0.2 on million our consolidated balance sheet.

Hedges of Interest Rate and Net Investment Risk -The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps, including interest rate collars, as part of 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 Company making fixed-rate payments over the life of the ~~Company's estimated foreign currency exposure. These foreign currency hedges contributed approximately $0.5 million~~agreements without exchange of the underlying notional amount.

The table below sets forth the fair value of the Company’s interest rate related derivative financial instruments as well as their classification on our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020:

We estimate that $0.4 million of net derivative gains included in accumulated other comprehensive income (“AOCI”) as of March 31, 2021 will be reclassified into expense within the following 12 months. No gains or losses were reclassified from AOCI into earnings as a result of forecasted transactions that failed to occur during three ended ~~September 30,~~March 31, 2021 or 2020.

As of March 31, 2021 and December 31, 2020, the Company had 0t posted any collateral related to these agreements.

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

2017. Currently all of our foreign currency hedges mature at each month end. The Company then has the option to enter into new foreign currency hedges. The Company plans to continue hedging its foreign currency risk.

The Company also has interest rate derivative agreements with a notional amount of $150.0 million and $220.0 million as of December 31, 2016 and September 30, 2017, respectively. During the third quarter of 2017, the Company entered into additional agreementstable below sets forth supplemental balance sheet information related to further hedge against the risk of interest rate volatility. The entire $220.0 million notional amount is accounted for as an effective cash flow hedge, with $2.4 million and $3.1 million recorded as assets in theleases. In our condensed consolidated balance sheets, asright of ~~September 30, 2017~~use (“ROU”) assets are included in other long-term assets while lease liabilities are located in accrued liabilities and ~~December 31, 2016, respectively and$2.4 million~~other for the current portion and ~~$2.3 million accrued in~~other long-term liabilities for the ~~accumulated~~non-current portion:

The table below sets forth supplemental cash flow and other ~~comprehensive income as of September 30, 2017 and December 31, 2016, respectively. For the three and nine month ended September 30, 2017, $0.2 million and $0.6 million have been recorded~~information related to ~~the interest expense account, respectively.~~ leases:

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, 2021 and ~~are carried at fair value. At September 30, 2017,~~December 31, 2020, these investments totaled approximately ~~$8.0 million. All gains~~$13.2 million and ~~losses in these investments are materially offset by corresponding gains and losses in the Deferred Compensation Plan liabilities.~~

We ~~conduct~~historically conducted business with a related party company, Lite-On Semiconductor Corporation (“LSC”), and its subsidiaries and ~~affiliates (collectively, “LSC”), and Nuvoton Technology Corporation and its subsidiaries and affiliates (collectively, “Nuvoton”).~~affiliates. LSC iswas also our largest stockholder, owning approximately ~~16%~~ 15% ofouroutstandingCommonS~~toc~~kas our outstanding Common Stock., prior to the close of~~September 30,~~2~~017~~,andisamem~~ber~~oftheL~~ite-~~ the acquisition by Diodes. On GroupofcompNovember 30, 2020, we acquired LSC and LSC is no longer an~~ies~~. stockholder or related party, but instead it is a wholly owned subsidiary of ours. Raymond Soong, the former Chairman of the Board of ~~Directors, is~~Diodes, was the Chairman of LSC and iswas the Chairman of Lite-On Technology Corporation (“LTC”), which was 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~~Diodes, was also the Vice Chairman of LSC and a board member of LTC. Dr. Keh-Shew Lu, our current Chairman of the Board, 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~~Nuvoton Technology Corporation (“Nuvoton”). We purchase wafers from Nuvoton for use in our ~~Board of Directors serves as a consultant to LTC,~~production process. We also conduct business with Nuvoton and ~~is a supervisor of the board of Nuvoton.~~its subsidiaries and affiliates. We consider our ~~relationships~~relationship 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 Keylink International (B.V.I.) Inc. and its subsidiaries and affiliates ~~(collectively, “Keylink”~~(“Keylink”). Keylink is our 5% joint venture partner in our Shanghai assembly and test facilities. We sell products to, and purchase inventory from, companies owned by Keylink. We sold products to companies owned by Keylink, totaling approximately 1% of our net sales for the three months ended periods ended March 31, 2021 and March 30, 2020. 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. The aggregate amounts paid to Keylink for the three months ended ~~September 30, 2017~~March 31, 2021 and, ~~2016~~2020 were approximately ~~$4.5~~$4.3 million and ~~$4.1~~$3.1 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,In addition, Chengdu Ya Guang Electronic Company Limited (“YaGua~~ng”~~Ya Guang”)is our 2% joint venture partner in one of our Chengdu assembly and test facilities and isourour 5%jointvent~~ure~~partnerinour partner in our otherCh~~eng~~du~~asse~~m~~bly~~and~~tes~~t~~facilities~~;h~~owe~~v~~er,~~ Chengdu assembly and test facilities; however, we have no material transactions with Ya ~~Guang.~~ Guang, other than these joint ventures. We also purchase materials from Jiyuan Crystal Photoelectric Frequency Technology Ltd. (“JCP”) a frequency control product manufacturing company in which we have made an equity investment and account for using the equity method of accounting.

TheAuditCommitteeoftheBoardreviewsallrelatedpartytransactionsfor potentialconflictofinterestsituationsonanongoingbasis,allinaccordancewithsuchproceduresastheAuditCommitteemayadopt fromtime totime.

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

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2021		2020
LSC
Net sales	$	329	$	275	$	1,064	$	552	$	-	$	128
Purchases	$	6,097	$	4,867	$	19,258	$	16,794	$	-	$	2,748

Nuvoton
Purchases	$	3,202	$	2,827	$	9,487	$	8,449	$	1,407	$	1,644

Keylink
Net sales	$	2,690	$	2,712	$	6,925	$	6,689	$	5,566	$	3,985
Purchases	$	1,069	$	1,254	$	3,090	$	4,089	$	479	$	405
JCP
Purchases									$	359	$	156

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

	September 30,		December 31,		March 31,		December 31,
	2017		2016		2021		2020
LSC
Nuvoton
Accounts receivable	$	381	$	301	$	-	$	10
Accounts payable	$	4,645	$	4,333	$	793	$	796
Keylink
Accounts receivable	$	5,176	$	5,394	$	38,049	$	35,365
Accounts payable	$	5,172	$	4,295	$	33,877	$	31,247
Nuvoton
JCP
Accounts payable	$	542	$	950	$	408	$	357

In ~~February 2017,~~March 2021 Diodes entered into an agreement to sell a manufacturing subsidiary in China for total consideration of approximately $18.0 million, which includes a combination of cash and equity. The transaction is expected to close within the ~~Company announced its plan~~next twelve months and is subject to ~~transfer its wafer fabrication operation at~~ ~~KFAB~~ customary closing conditions and working capital adjustments.

Management determined that the disposal group met the held-for-sale criteria and reclassified the carrying value of the disposal group to assets held-for-sale, which is included in prepaid expenses and other ~~Company-owned wafer fabrication plants and external foundries.~~ in the consolidated balance sheet. The Company ~~ceased production operations at KFAB late in third quarter 2017 and plans to vacate~~recognized 0 gain or loss on the premises no later than November 15, 2017. Employees have been offered retention and standard severance packages. During the quarter ended March 2017, the Company received $6.0 million of insurance proceeds as a resultreclassification of the ~~fires sustained at~~disposal group to held-for-sale.A final determination of the ~~KFAB facility during 2016~~value of ~~which $4.2 million~~the assets and liabilities divested has not been completed and the table below is recorded in Cost of Goods Sold and $1.8 million is recorded in Other Income. During the third quarter of 2017, the Company recorded $2.0 million of asset impairment related to the shut-down of KFAB.

~~Total KFAB shutdown costs are expected to be approximately $10 million to $12 million, on a pretax basis, which will be expensed and paid throughout 2017.~~ considered preliminary. The table below sets forth the ~~restructuring costs, recorded in restructuring expense in~~major classes of assets and liabilities that have been classified as held-for-sale on the ~~Condensed Consolidated Statements of Operations,~~ ~~incurred during the three months and nine months ended September 30, 2017:~~

On November 30, 2020, the Company closed on its previously announced acquisition of LSC, a Taiwan-based supplier of “green” power-related discrete and analog semiconductor devices. The Company purchased LSC in order to include LSC’s “green” power-related semiconductor devices that are designed for power saving and low power dissipation to serve the power supply market, and to reacquire the 7,765,778 of the Company’s common shares owned by LSC, which was approximately 15% of our outstanding shares prior to the close of such acquisition. The reacquired shares were treated as a settlement of a pre-existing relationship and as a transaction separate and apart from the business combination along with the settlement of payables and receivables between the Company and LSC. The reacquired shares are included in treasury stock on the Company’s balance sheet. There was 0 gain or loss on the settlement of the payables and receivables between the Company and LSC.

The Company recorded the purchase of LSC as a business combination, with the Company owning 100% of LSC. LSC has been consolidated into the operations of the Company. The purchase price per the Share Swap Agreement was 42.50 TWD per outstanding LSC share. On November 30, 2020, the Company acquired the 307,371,139 outstanding shares of LSC for a total aggregate purchase price of approximately $453.4 million and total consideration of $154.0 million after adjustments for the settlement of pre-existing relationships.A portion of the LSC purchase price was funded by borrowings under the Company’s Credit Agreement.

The table below sets forth the ~~costs~~fair value of the LSC assets acquired and liabilities assumed based on relative fair value at the date of acquisition and the corresponding line item in the Company’s consolidated balance sheet at the date of acquisition. During the period from January 1, 2021 and March 31, 2021, measurement period adjustments were made to inventories, property, plant and equipment, and accrued ~~related~~liabilities and other. The adjustments represented a decrease to total assets acquired and a decrease to total liabilities assumed of $0.1 million. U.S. GAAP permits companies to complete the final determination of the fair values during the measurement period following the acquisition date. The size and breadth of the LSC acquisition will necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date including (i) changes in fair values of property, plant and equipment and inventories, (ii) changes in fair value of certain liabilities assumed and (iii) tax impact associated with any other changes in fair value. Any potential adjustments made could be material in relation to the ~~KFAB restructuring:~~preliminary values. A final determination of the LSC assets acquired and liabilities assumed has not been completed and the table below is considered preliminary. The Company engaged a third party valuation specialist to assist with

~~Based on continued negotiations with~~ the ~~landlord, we recorded an additional $1.4 million~~assessment of ~~asset retirement obligations related~~any intangibles assets acquired as part of the ~~KFAB restructuring. This asset retirement obligation is for~~LSC acquisition, and it was determined that there were 0 intangible assets as a result of the ~~estimated amounts to be paid to contractors to remediate the KFAB facility upon vacating the property. The table below sets forth the asset retirement obligation related to the KFAB restructuring:~~

~~In connection with~~On February 5, 2020, the ~~asset retirement obligation as~~Company entered into an agreement to invest up to approximately $14.2 million to acquire at least 51% of ~~September 30, 2017, we have an asset~~Savitech Corporation (“Savitech”), a fabless semiconductor design company located in Zhubei City, Taiwan. The Company will make the investment in 2 tranches. The first tranche of $5.6 million, which provided the Company with a ~~net book~~33.6% ownership of Savitech, was made on March 4, 2020. The initial tranche was funded with cash on hand. The second tranche, currently recorded in accrued liabilities and other, as shown in the table below, and currently valued at $8.5 million will increase the Company’s ownership to at least 51% of Savitech. The second tranche will be paid on June 30, 2021, provided Savitech achieves previously agreed-to revenue levels. If revenue levels are not achieved the Company will pay less than the maximum $8.6 million, but regardless of the amount paid for the second tranche, the Company will still acquire at least 51% of Savitech.

The Company recorded the purchase of Savitech as a business acquisition and now consolidates Savitech into its operations, based on the voting model, with a non-controlling interest related to the interest the Company does not own in Savitech. The Company made its investment in Savitech in order to increase the Company’s integrated circuit business. Total purchase consideration recorded was $13.9 million. The goodwill will not be tax deductible. The Company also incurred acquisition costs of approximately $0.1 million that were recognized in selling, general and administrative expense. The table below sets forth the fair value of ~~$0.4 million~~the assets and liabilities recorded in ~~property, plant~~the acquisition and ~~equipment. During~~ the ~~three months and nine months ended September 30, 2017 amortization~~corresponding line item in which the item is recorded in our condensed consolidated balance sheet at the date of ~~the asset was $0.7 million and $0.9 million, respectively. The remaining balance will be amortized through the end of the lease.~~acquisition.

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~~2020 (“Form 10-K”), previously filed with Securities and Exchange Commission (“SEC”) on February ~~27, 2017.~~22, 2021.

~~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. 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 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.

Factors Relevant to Our Results of Operations for the Three Months Ended March 31, 2021

On November 30, 2020, the Company closed the acquisition of Lite-On Semiconductor Corporation (“LSC”), a Taiwan-based supplier of “green” power-related discrete analog semiconductor devices. Since the close of the acquisition the Company has focused on the integration of LSC into its operations. The Company believes that the integration of LSC is progressing well as we have already begun to realize some of the benefits of manufacturing synergies from improved factory loading with both LSC and Diodes’ products. Our global manufacturing footprint is serving as a key advantage at a time when the broader semiconductor industry is challenged by supply and capacity constraints.

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. We previously temporarily closed a manufacturing facility due to COVID-19 and no assurances can be provided that we will not be required to close or reduce our manufacturing production in the future in response to the COVID-19 pandemic or other events beyond our control.

As of March 31, 2021, our cash, cash equivalents, and short-term investments were $339.5 million, and we had access to additional borrowing capacity of $150.0 million under the revolving portion our 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.

See “Risk Factors -The ultimate impact of the COVID-19 pandemic outbreak cannot be estimated at this time, but it may have a material adverse effect on our business, financial condition and results of operations.”in Item 1A of this Quarterly Report on Form 10-Q for an additional discussion of risks and potential risks of the COVID-19 pandemic on our business, financial condition and results of operations.

Results of Operations for the Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~

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.

	Percent of Net Sales						Percent of Net Sales
	Three Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2021			2020
Net sales		100	%		100	%		100	%		100	%
Cost of goods sold		(66	)		(68	)		(66	)		(66	)
Gross profit		34			32			34			34
Total operating expenses		26			24
Total operating expense								22			25
Income from operations		8			8			11			9
Total other expense		(1	)		(2	)		1			-
Income before income taxes and noncontrolling interest		7			6			12			9
Income tax provision		(2	)		(2	)		(2	)		(2	)
Net income		5			4			10			7
Net income attributable to common stockholders		5			4			10			7

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, 2021, compared to the three months ended ~~September 30, 2016.~~March 31, 2020. 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.

	Three Months Ended												Three Months Ended
	September 30,												March 31,
	2017			2016			Increase/(Decrease)			% Change			2021			2020			Increase/(Decrease)		% Change
Net sales	$	285,247		$	250,694		$	34,553			13.8	%	$	413,121		$	280,717		$	132,404		47.2	%
Cost of goods sold		188,900			170,071			18,829			11.1	%		274,485			184,875			89,610		48.5	%
Gross profit		96,347			80,623			15,724			19.5	%		138,636			95,842			42,794		44.7	%
Total operating expenses		72,630			60,670			11,960			19.7	%
Total operating expense														91,246			69,990			21,256		30.4	%
Interest income		389			321			68			21.2	%		768			273			495		181.3	%
Interest expense		(3,561	)		(3,684	)		(123	)		(3.3	%)		(2,864	)		(1,245	)		1,619		130.0	%
Foreign currency loss, net		(1,312	)		(1,439	)		(127	)		(8.8	%)		(1,279	)		75			1,354		N/A
Unrealized gain on investments														3,655			-			3,655		N/A
Other income		597			480			117			24.3	%		2,317			1			2,316		N/A
Income tax provision		5,052			4,097			955			23.3	%		9,434			4,556			4,878		107.1	%

Net sales increased approximately ~~$34.6~~$132.4 million for the three months ended ~~September 30, 2017,~~March 31, 2021, compared to the same period last year, setting a record both organically and on a consolidated basis. This increase in net sales was driven by growth in Asia and Europe. The Company also achieved growth in our computing end market, driven by increases in serial-connectivity products, and the automotive market due to strong organic growth in the automotive business.

The table below sets forth our revenue as a percentage of total revenue by end-user market for the three months ended March 31, 2021 and 2020:

Cost of goods sold increased approximately $89.6 million for the three months ended March 31, 2021, 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~~increased net sales during the first quarter of goods sold increased approximately $18.8 million for 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.2021. As a percent of sales, cost of goods sold was ~~66%~~66.4% for the three months ended ~~September 30, 2017~~March 31, 2021, compared to ~~68%~~65.9% for the same period last year. Average unit cost increased ~~11%~~approximately 1.9% for the three months ended ~~September 30, 2017,~~March 31, 2021, compared to the same period last ~~year, partially due to inventory write-offs.~~year. For the three months ended ~~September 30, 2017,~~March 31, 2021, gross profit increased approximately ~~19.5%~~44.7% when compared to the same period last year. Gross profit margin for the three month periods ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 was ~~33.8%~~33.6% and ~~32.2%~~34.1%, 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, 2021, increased ~~approximately $12.0~~$21.3 million ~~or 19.7%,~~when compared to the ~~same period last year.~~three months ended March 31, 2020. Operating expenses as a percentage of net sales was 22.1% and 24.9% for the three months ended March 31, 2021 and 2020, respectively. Selling, general and administrative expenses (“SG&A”) increased approximately ~~$5.2~~$16.5 million, due to higher selling costs and ~~research~~wages and salaries. Research and development expenses ~~increased~~ (“R&D”) increased approximately ~~$3.3 million.~~$4.0 million due to higher wages and benefits as compared to the same period last year. Amortization of acquisition related intangibles decreased ~~approximately $0.4~~$0.2 million, ~~reflecting~~compared to the ~~full amortization of a portion of our intangible assets.~~same period last year. SG&A, as a percentage of net sales, was ~~15.3%~~14.2% and 15.0% for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020, respectively. R&D, as a percentage of net sales, was ~~7.1%~~6.7% and ~~6.8%~~8.4% for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, 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~~increased 181.3% for the three months ended ~~September 30, 2017~~March 31, 2021, compared to the same period last year, due to increased revenue related to cross currency swaps. Interest expense increased 130.0% for the three months ended March 31, 2021, compared to the same period last year. The ~~decrease~~increase in interest expense for the three months ended ~~September 30, 2017~~March 31, 2021 was due to ~~lower levels of~~the increased debt ~~partially offset by higher~~related to the LSC acquisition and an increase in 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~~our debt. Unrealized gain on investments increased from 2020 due to ~~stronger European currencies and~~investment income from an investment the ~~Taiwan dollar, when compared to~~Company acquired in the ~~U.S. dollar.~~

We recognized an income tax expense of approximately ~~$5.1~~$9.4 million and ~~$4.1~~$4.6 million for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. The increase in income taxes for ~~2017~~2021 compared to ~~2016 is~~2020 was primarily attributable to ~~the~~an increase in pretax ~~net~~book income.

~~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 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, 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 $35.0 million for the nine 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, 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 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 increased $4.7~~million due to stronger European currencies and the Taiwan dollar, when compared to the U.S. dollar, partially offset by foreign currency hedges~~.

We recognized an income tax expense of approximately $11.7 million for the nine months ended September 30, 2017 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.

Our primary sources of liquidity are cash and cash equivalents, funds from operations 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, 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, and restricted payments (including dividends and share repurchases). At September 30, 2017, we owed $326.5 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~~Our Asia subsidiaries maintain credit facilities with several financial institutions through our foreign entities worldwide totaling ~~$66.1~~$205.5 million. AsAt March 31, 2021, outstanding borrowings were $67.6 million and outstanding letters of ~~September 30, 2017,~~credit were $0.5 million under the Asia credit facilities. In connection with our Asia credit facilities, $54.8 million of cash deposits have been restricted in support of a corresponding loan amount. During April 2021 $50.0 million of the restricted cash was released from all contractual restrictions, as the applicable loans were repaid in full.

In addition to the ~~U.S.~~liquidity provided by the Credit ~~Facility,~~Agreement, our ~~Asia subsidiaries had unused~~51% owned subsidiary, ERIS Technology Corporation (“ERIS”), borrowed $13.3 million through a short term loan and ~~available credit lines of up to an aggregate of approximately $63.2~~$30.0 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.~~ long-term basis from local Taiwan banks. The ERIS debt matures in periods from 2021 through 2033.

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~~March 31, 2021 and December 31, ~~2016,~~2020, our working capital was ~~$476.3~~$617.5 million and ~~$547.4~~$514.2 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 and acquisitions for at least the next 12 months.

Capital expenditures (including accrued capital expenditures) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 were ~~$81.9~~$25.1 million and ~~$47.1~~$12.6 million, respectively. Capital expenditures 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~~three months of ~~2017~~2021 capital expenditures were approximately ~~10.4%~~11.5% of our net ~~sales, which~~sales. While capital expenditures for the three months ended March 31, 2021, is ~~above~~greater than our capital spending target range of 5% to 9% of net sales, ~~due~~we expect our capital expenditure for the twelve months ending December 31, 2021 to ~~increased capital expenditures~~be in our ~~Asian operations.~~target range.

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 onOur undistributed foreign ~~earnings.~~earnings continue to be indefinitely reinvested in foreign operations, with limited exceptions related to earnings of certain European and Asian subsidiaries. As of ~~September 30, 2017,~~March 31, 2021, our foreign subsidiaries held approximately ~~$203.8~~$222.6 million of cash, cash equivalents and investments of which approximately ~~$129.6~~$17.8 million would be subject to a potential non-U.S. withholding ~~and/or U.S. income~~ tax if ~~repatriated to~~distributed outside the ~~U.S. as dividends.~~country in which the cash is currently held. All of this $17.8 million is held in Germany, China, Korea and Taiwan.

As of ~~September 30, 2017,~~March 31, 2021, we had short-term investments totaling ~~$12.7~~$8.4 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, our Board of Directors (“Board”) approved a stock repurchase program. The Board authorized the repurchase of up to an aggregate of $100.0 million of 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 cash flow from operations. Additional sources of liquidity are cash and cash equivalents, short-term investments and our credit facilities. Our ~~primary~~ cash, ~~and~~ cash equivalents ~~decreased~~and restricted cash increased from ~~$247.8~~$326.7 million at December 31, ~~2016~~2020 to ~~$201.2~~$339.5 million at ~~September 30, 2017.~~March 31, 2021.

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

	Nine Months Ended September 30,			Three Months Ended March 31,
	2017	2016	Change	2021			2020
Cash flows from operating activities	$ 106,340	$ 74,935	$ 31,405
Net cash flows provided by operating activities				$	68,196		$	53,675
Net cash and cash equivalents used in investing activities	(64,413)	(19,811)	(44,602)		(10,399	)		(17,558	)
Net cash and cash equivalents used in financing activities	(97,846)	(54,288)	(43,558)		(45,413	)		(21,397	)
Effect of exchange rate changes on cash and cash equivalents	9,343	1,255	8,088		(1,812	)		(3,315	)
Net increase (decrease) in cash and cash equivalents	$ (46,576)	$ 2,091	$ (48,667)
Net increase in cash and cash equivalents, including restricted cash				$	10,572		$	11,405

Net cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was ~~$106.3~~$68.2 million. Net cash ~~flow~~flows provided by operating activities for the three months ended March 31, 2021 resulted from net income of ~~$30.1~~$40.6 million, depreciation and amortization of ~~$70.2~~intangible assets of $30.5 million, share-based compensation of ~~$13.9~~$6.1 million and an increase in deferred taxes of $1.0 million. The increases were partially offset by a decrease in noncash working capital accounts of ~~$7.7~~$6.7 million. Net cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2020 was ~~$74.9~~$53.7 million. Net cash ~~flow~~flows provided by operating activities for the three months ended March 31, 2020 resulted from net income of ~~$16.4~~$20.4 million, depreciation and amortization of ~~$74.4~~intangible assets of $27.0 million, ~~and~~ share-based compensation of ~~$12.8~~$4.7 million and an increase in noncash working capital accounts of $0.8 million. ~~These~~

Net cash and cash equivalents ~~provided by operations were partially offset by a decrease in working capital.~~

~~Net cash~~ used in investing activities was ~~$64.4~~$10.4 million for the ~~nine~~three months ended ~~September 30, 2017, compared to net~~March 31, 2021. Net cash and cash equivalents used in investing activities for the three months ended March 31, 2021 was primarily due to the purchase of ~~$19.8~~property, plant and equipment of $17.2 million, partially offset by net proceeds from the maturity of short-term investments of $2.1 million and other investing cash inflows of $9.1 million for the ~~same period last year.~~three months ended March 31, 2021. Net cash and cash equivalents used in investing activities was $17.6 million for the three months ended March 31, 2020. Net cash and cash equivalents used in investing activities was primarily due to the purchase of property, plant and equipment of ~~$81.9~~$14.2 million and ~~purchases~~the additional investment by the Company’s subsidiary ERIS in Yea-Shin Technology Co., Ltd. (“Yea-Shin”) of ~~short-term investments~~$6.1 million, bringing ERIS’ ownership of ~~$9.7 million, partially offset~~

~~by $27.9 million~~Yea-Shin to approximately 99.5%. These outflows of ~~proceeds received upon the maturity of short-term investments.~~ ~~Net~~ cash used in investing activities during the nine 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,were partially offset by net proceeds ~~received on~~from the maturity of short-term investments of ~~$46.4 million.~~

Net cash and cash equivalents used in financing activities was $45.4 million for the three months ended March 31, 2021. Net cash used in financing activities in the three months ended March 31, 2021 consisted primarily of $37.2 million of net reductions in our debt and taxes paid on net share settlements of $9.3 million. Net cash and cash equivalents used in financing activities was ~~$97.8~~$21.4 million for the ~~nine~~three months ended ~~September 30, 2017, compared to net~~March 31, 2020. 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, 2020 consisted primarily of $16.6 million of net repayments of long-term debt and taxes paid on net share settlement of ~~$109.6 million~~$4.5 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.~~

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,~~2020, filed with the SEC on February ~~27, 2016.~~

~~No material changes were made to the Company’s~~Our critical accounting policies ~~as set forth~~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,~~2020, filed with the SEC on February ~~27, 2016.~~

22, 2021. Any new accounting policies or updates to existing accounting policies 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 policies 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.~~

Our Internet address is http://www.diodes.com. Information included on, or accessible through, our website shall not be deemed to form a part of the Quarterly Report on Form 10-Q. 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”).~~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

~~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~~ultimate impact of the ~~global economy and the stability of the financial markets, and any weaknesses in these areas~~COVID-19 pandemic outbreak cannot be estimated at this time, but it may have a material adverse effect on our ~~net sales, operating~~business, financial condition and results ~~and financial condition.~~

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 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 and intellectual property 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 of our benefit plan assets and liabilities is based on estimates and assumptions, which may prove inaccurate and the actual amount of expenses recorded in the consolidated financial statements could differ materially from the assumptions used.

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.

Tariffs or other restrictions imposed by the United States Trade Representative may affect our operations in the U.S., may disrupt our activities in the U.S., may have an adverse impact on our profitability and results of operations and may encourage the independent development in China of products and electronic components that will compete with ours or displace our products and components, resulting in an adverse impact on our Chinese business.

The U.K.’s exit from the European Union will continue to have uncertain effects and could adversely impact our business, results of operations and financial condition.

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.

Certificate of Incorporation and Bylaw Provisions may deter a take-over attempt.

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 have a 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.

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,~~2020, filed with the SEC on February ~~27, 2017.~~22, 2021.

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, 2021, 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, 2021, 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.

Fromtimetotime,weareinvolvedinvariouslegalproceedingsthatariseinthenormalcourseofbusiness.Whileweintendto defendanylawsuitvigorously,wepresentlybelievethattheultimateoutcomeofanypendinglegalproceedingwillnothave anymaterialadverseeffectonourfinancialposition,cashflowsoroperatingresults.However,litigationissubjecttoinherent uncertainties,andunfat the vorableru~~lti~~lingscouldoccur.Anunfavorablerulingcouldincludemonetarydamat~~e ou~~tcges,whichcouldimpactom~~e of~~ any cu~~rrent p~~ending lega~~l p~~ro~~cee~~ding ~~will not h~~ave any ma~~teria~~l adverse ~~effect on~~ our financia~~l positio~~n, ~~cas~~h fl~~ows~~ or op~~eratin~~g ~~res~~ults. However, ~~liti~~g~~ati~~on busis subject to inher~~ent~~ ~~unc~~er~~tai~~n~~ties, and~~ unfavorable ru~~lings c~~ould occu~~r. An unfa~~vorabl~~e ruling c~~ould include m~~one~~ta~~ry d~~ama~~ges,~~ whic~~h cou~~ld im~~pact o~~ur business and operating results for theperiodinwhich the period in which the ulingoccuruli~~ng oc~~curs orfutureperiods.

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,~~2020, 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.~~22, 2021.

~~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

Description

Form

Date of First Filing

Exhibit
Number

Filed
Herewith

3.1

Certificate of Incorporation, as amended

10-Q

May 10, 2013

3.1

Certificate of Incorporation, as amended

10-K

February 20, 2018

3.1

3.2

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

8-K

January 11, 2016

3.1

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

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

10.1

Facility Agreement, dated January 22, 2021, by and among Diodes Hong Kong Limited, The Hongkong and Shanghai Banking Corporation Limited, as Arranger, the financial institutions listed in Schedule 1 thereto, The Hongkong and Shanghai Banking Corporation Limited, as Agent, and The Hongkong and Shanghai Banking Corporation Limited, as Security Agent. Portions of this Exhibit have been omitted.

8-K

January 26, 2021

10.1

10.2

Hong Kong Debenture, dated January 22, 2021, by and between Diodes Hong Kong Limited and The Hongkong and Shanghai Banking Corporation Limited, as Security Agent.

8-K

January 26, 2021

10.2

10.3

Letter, dated January 22, 2021, from Diodes Incorporated to The Hongkong and Shanghai Banking Corporation.

8-K

January 26, 2021

10.3

10.4

Amendment No. 3 to Second Amended and Restated Credit Agreement, dated as of March 4, 2021, by and among Diodes Incorporated, Diodes Holdings UK Limited, certain subsidiaries of Diodes Incorporated identified therein, the Lenders identified therein, and Bank of America, N.A.

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

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.

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

32.1**

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

32.2**

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

32.1*

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

32.2*

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

101.INS

XBRL Instance Document

Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema

Inline XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Labels Linkbase

Inline XBRL Taxonomy Extension Labels Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

Inline XBRL Taxonomy Extension Presentation Linkbase

104

Cover Page Interactive Data File, formatted in Inline XBRL

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
Item 1. Financial Statements		3
~~Item 1. Financial Statements~~		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1722
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		31
Part II – Other Information		27
Item ~~4. Controls and Procedures~~1. Legal Proceedings		2732
~~Part II – Other Information~~Item 1A. Risk Factors		2832
~~Item 1. Legal Proceedings~~		28
~~Item 1A. Risk Factors~~		28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2832
Item 3. Defaults Upon Senior Securities		2832
Item 4. Mine Safety Disclosures		2832
Item 5. Other Information		2832
Item 6. Exhibits		2933
Signatures		3035

Supplemental Cash Flow Information
Interest paid during the period	$	2,704	$	1,068
Taxes paid during the period	$	12,284	$	6,091

Non-cash investing and financing activities:
Accounts payable balance related to the purchase of property, plant and equipment	$	7,960	$	8,447

	Other Current Liabilities
	2021		2020
Interest rate swaps and collars	$	1,130	$	1,626

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

Balance at December 31, 2020	$	158,331
Foreign currency translation adjustment		252
Balance at March 31, 2021	$	158,583

Amortization expense	2017		2016
Three months ended September 30,	$	4,694	$	5,117
Nine months ended September 30, 2017	$	14,098	$	15,379

	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	%

	Amount of Gain or (Loss) Recognized in OCI on Derivative						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Net Income						Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Derivative Instruments Designated as Hedging Instruments	Amount of Gain or (Loss) Recognized in OCI on Derivative
	March 31,							March 31,							March 31,
	2021			2020				2021			2020				2021		2020
Three Months Ended
Interest rate swaps and collars	$	(5	)	$	(1,390	)	Interest expense	$	(161	)	$	(71	)	N/A	$	-	$	-
Cross currency swaps	$	3,163		$	-		N/A	$	-		$	-		Interest income	$	610	$	-

	Amount of Gain or (Loss) Recognized in Net Income						Location of Gain or (Loss) Recognized in Net Income
Derivative Instruments Not Designated as Hedging Instruments	Amount of Gain or (Loss) Recognized in Net Income
	March 31,
	2021			2020
Three Months Ended
Foreign currency forward contracts	$	(2,806	)	$	(2,147	)	Foreign currency loss, net

	March 31, 2021	December 31, 2020
Operating leases:
Operating lease ROU assets	$63,305	$54,457

Current operating lease liabilities	13,891	10,663
Noncurrent operating lease liabilities	32,722	27,041
Total operating lease liabilities	$46,613	$37,704

Finance leases:
Finance lease ROU assets	$2,545	$2,507
Accumulated amortization	(2,515)	(2,298)
Finance lease ROU assets, net	$30	$209

Current finance lease liabilities	$10	$149
Non-current finance lease liabilities	21	24
Total finance lease liabilities	$31	$173

Weighted average remaining lease term (in years):
Operating leases	6.7	7.6
Finance leases	3.0	0.6

Weighted average discount rate:
Operating leases	4.0%	4.0%
Finance leases	3.7%	3.1%

	Three Months Ended
	March 31, 2021	March 31, 2020
Cash paid for the amounts included in the measurements of lease liabilities:
Operating cash outflows from operating leases	$5,570	$4,018
Operating cash outflows from finance leases	1	7
Financing cash outflow from finance leases	141	223

ROU assets obtained in exchange for lease liabilities incurred:
Operating leases	11,640	127

	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

Assets
Cash and cash equivalents	$	4,172
Accounts receivable		219
Inventories, net		7,982
Property, plant and equipment		8,282
Deferred income tax		4,870
Other long-term assets		540
Assets classified as held for sale		26,065

Liabilities
Accounts payable		6,646
Accrued liabilities and other		1,792
Other long-term liabilities		29
Liabilities classified as held for sale		8,467

Net assets classified as held for sale (included in prepaid expenses and other)	$	17,598

	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

~~Asset retirement obligation, January 1, 2017~~Cash and cash equivalents	$		131,046
Accounts receivable			44,896	~~$ 486~~
~~Accrual of additional asset retirement obligation~~Inventories			55,710	~~1,403~~
~~Amount paid~~Prepaid expenses and other current assets			11,447	~~(1,125)~~
~~Asset retirement obligation, September 30, 2017~~Property, plant and equipment			67,952
Deferred income tax			15,732
Other long-term assets			26,037
Total assets acquired			352,820
Line of credit			88,508
Accounts payable			35,245
Accrued liabilities and other			48,992
Income tax payable			6,264
Deferred tax liabilities			8,941
Other long-term liabilities			10,783
Total liabilities assumed			198,733
Non-controlling interest		54
Net assets acquired	$ ~~764~~		154,033

	DIODES INCORPORATED
	(Registrant)

~~November 7, 2017~~ May 6, 2021	By: /s/ Keh-Shew Lu
Date	~~KEH SHEW~~KEH-SHEW LU
	President and Chief Executive Officer
	(Principal Executive Officer)



~~November 7, 2017~~May 6, 2021	By: /s/ ~~Richard D. White~~ Brett R. Whitmire
Date	~~RICHARD D. WHITE~~BRETT R. WHITMIRE
	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)~~

Large accelerated filer

Accelerated filer

Non-accelerated filer

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

Smaller reporting company

Emerging growth company