10-K – 2026-02-27 – mpwr20251231_10k.htm

changes in the estimation of the future size and growth rate of our markets;

 
 

•

introduction of new products by us or our competitors;

 
 

•

general economic, industry and market conditions worldwide, including any global economic downturn;

 
 

•
developments generally affecting the semiconductor industry or specific segments of the industry in which we compete;

 
 

•

terrorist acts or acts of war, including ongoing and potential global conflicts;

 
 

•

epidemics and pandemics;

 
 

•

developments with respect to intellectual property rights;

 

•

conditions and trends in technology industries;

 
 

•

changes in market valuation or earnings of our competitors;

 
 

•

government debt default;

 
 

•

changes in corporate tax laws;

 
 

•

government policies and regulations on international trade policies and restrictions, including tariffs on imports of foreign goods;

 
 

•

export controls, trade and economic sanctions and regulations, and other regulatory or contractual limitations on our ability to sell or develop our products or invest in certain foreign markets, particularly in China;

 
 

•

our compliance with regulatory mandates focusing on ESG issues, including climate risks and social initiatives;

 
 

•

our performance against the ESG guidelines set by institutional stockholders and customers, and our ability to meet or exceed their expectations; and

 
 

•
our ability to timely and adequately remediate our material weakness.

 

In addition, the stock market often experiences substantial volatility that may be unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.

 

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

 

Short positions in our stock could have a substantial impact on the trading price of our stock.
 
There are “short” positions in our common stock. The anticipated downward pressure on our stock price due to actual or anticipated sales of our stock by some institutions or individuals who engage in short sales of our common stock could cause our stock price to decline. Such stock price decreases could encourage further short sales and cause additional declines and volatility in our stock price. The volatility of our stock may cause the value of a stockholder’s investment to decline rapidly. Additionally, if our stock price declines, it may be more difficult for us to raise capital and may have other adverse effects on our business.

 

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There can be no assurance that we will continue to declare cash dividends in any particular amounts or at all.
 
We have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock. The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions, and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders. Our dividend payments may change from time to time, and we cannot provide assurance that we will continue to declare dividends in any particular amounts or at all. A reduction in or elimination of our dividend payments could have a negative effect on the price of our common stock and on the return achieved by our stockholders. 

 

We cannot guarantee that our stock repurchase program will enhance long-term stockholder value.

 

In February 2025, our Board of Directors approved a stock repurchase program authorizing the repurchase of up to $500 million of our common stock. The repurchase program will expire in February 2028. The amount, timing and execution of our stock repurchase program may fluctuate based on market conditions and our priorities for the use of our cash. We are not obligated to repurchase a specified number or dollar value of shares, on any particular timetable, or at all. The repurchase program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.

 

If we issue additional shares of stock in the future, it may have a dilutive effect on our stockholders.
 
We may issue additional shares of common stock in the future in order to raise additional capital to fund our global operations or in connection with an acquisition. Any issuance of our common stock may result in immediate dilution to our stockholders. In addition, the issuance of a significant amount of our common stock may require additional regulatory compliance, such as stockholder approval.

 

General Risk Factors

 

Our worldwide operations are subject to economic and geopolitical uncertainty and risks associated with business continuity in the event of natural or other disasters including pandemics, war, climate crises and other natural disasters, which could have a material adverse effect on our business operations.

 

Our offices in California and Washington, the production facilities of our third-party wafer suppliers, our IC testing and manufacturing facilities, a portion of our assembly and research and development activities, and certain other critical business operations are located in or near seismically active regions and are subject to periodic earthquakes. We do not maintain earthquake insurance and could be materially and adversely affected in the event of a major earthquake. Much of our revenue, as well as our manufacturing and assembly partners, are concentrated in Asia, particularly in China. Such concentration increases the risk that earthquakes or other natural disasters, labor strikes, epidemics and pandemics, and/or health advisories could disrupt our operations and have a material adverse impact on our business and results of operations. We cannot guarantee that we will be able to mitigate the operational risks caused by extreme weather conditions or other events.

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

 

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

 

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Item 1B.

Unresolved Staff Comments

 

None.

 

Item 1C.
Cybersecurity

 

Cybersecurity Risk Management and Strategy

 

We recognize it is imperative to diligently manage cybersecurity risks as defined in Item 106(a) of Regulation S-K. Such risks include operational risks of ransomware, phishing, fraud, extortion, harm to employees or customers and violation of data privacy or security laws.

 

We address cybersecurity risks in our business, technical operations, privacy and compliance operations and programs through a diversified approach including threat-monitoring and assessments by third -parties, adopting IT security ISO standards/governance, and proactive risk and compliance reviews. In order to defend against cybersecurity incidents, we carry out real-time cybersecurity threat monitoring of IT assets, perform penetration testing, audit applicable data policies and conduct directed employee training. We also monitor new technologies and existing and emerging laws and regulations related to data protection and information security and implement changes that help to mitigate risk. We maintain an insurance policy that provides certain coverage for losses we incur due to data breaches and other cybersecurity incidents.

 

We implemented incident response and breach management processes consisting of four stages: 1) monitor for and identify cybersecurity incidents, 2) carry out security incident analysis, 3) contain and recover, and 4) improve with post-incident analysis. Such incident responses are governed by the Cybersecurity Steering Committee.

 

We regularly engage external auditors to assess our internal cybersecurity programs and compliance and have been certified to conform to the requirements of ISO/IEC 27001.

 

There are no identified cybersecurity threats that have materially affected or are reasonably likely to materially affect our results of operations, or financial condition as of the date of this Annual Report on Form 10-K. To date, we do not believe we have experienced any material information security breaches and have not incurred significant operating expenses related to information security breaches.

 

See “Risk Factors” for more information on our cybersecurity risks.

 

Cybersecurity Governance

 

As an important part of our risk management processes, cybersecurity is a focus area for our Board and management. Our Nominating and Corporate Governance Committee (the “NCG Committee”), which consists of independent members of the Board of Directors, is responsible for the oversight of risks from cybersecurity threats. The NCG Committee receives quarterly updates from the Cybersecurity Steering Committee. These updates include existing and emerging cybersecurity threats, risks, cybersecurity incident management and key information security initiatives. The NCG Committee also provides updates on our cybersecurity risk management and strategy programs to the Board of Directors on a quarterly basis.

 

The Cybersecurity Steering Committee includes individuals with an average of over 20 years of prior work experience in various roles involving IT governance and management, cybersecurity, auditing, and compliance. The Cybersecurity Steering Committee actively participates in the cybersecurity risk management and strategy processes as described above, and regularly reports to senior management and the NCG Committee.  

 

Item 2.

Properties

 

As of December 31, 2025, our owned and leased facilities in the U.S. and other countries that are individually in excess of 10,000 square feet consisted of:

 

 
 
U.S.

 
Other Countries

 
Total

 
 
(In square feet)

Owned facilities

 
 
216,000
 
 
 
973,000
 
 
 
1,189,000
 

Leased facilities

 
 
23,000
 
 
 
469,000
 
 
 
492,000
 

Total facilities

 
 
239,000
 
 
 
1,442,000
 
 
 
1,681,000
 

 

We also lease other smaller sales and marketing, and research and development offices in Asia, Europe and the U.S. We believe that our existing facilities are suitable for our current operations.

 

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Item 3.

Legal Proceedings

 

We are a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of our intellectual property, claims that our products infringe on the intellectual property rights of others, and employment matters. We are also subject to litigation initiated by our stockholders. These proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend. We defend ourselves vigorously against any such claims. Based on current information and management assessment, we do not believe that a material loss from known matters is probable as of December 31, 2025.

 

On February 4, 2025, a class action lawsuit was filed against us and certain of our executives. The lawsuit is captioned Waterford Twp. Gen. Emps. Ret. Sys. v. Monolithic Power Systems, Inc., et al., No. 25-cv-220 (W.D. Wash.) (the “Securities Action”) and alleges that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, by making material misstatements or omissions relating to our business. We believe the lawsuit is meritless and currently intend to defend against it vigorously. Related to the Securities Action, two shareholder derivative suits were also filed, against current – and one former – director, and certain executives, alleging breaches of their fiduciary duties. The shareholder derivative suits have been consolidated under the caption Miller v. Hsing, et al., No. 25-cv-527 (W.D. Wash.), filed on March 26, 2025 (the “Derivative Litigation”). The Securities Action and Derivative Litigation seek unspecified amounts of damages and/or attorneys’ fees and other relief. The Derivative Litigation is stayed pending developments in the Securities Action.

 

Item 4.

Mine Safety Disclosures

 

Not applicable.

 

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PART II

 

Item 5.

Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Common Stock Information

 

Our common stock is traded on the Nasdaq Global Select Market under the symbol “MPWR”.

 

Holders of Common Stock

 

As of February 20, 2026, there were 91 registered holders of record of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions on their behalf.

 

Issuer Purchases of Equity Securities

 

In February 2025, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028. Shares are retired upon repurchase. We repurchased approximately 8,000 shares of our common stock for an aggregate purchase price of $6.6 million during the year ended December 31, 2025.

 

The following table represents details of our stock repurchase transactions during the three months ended December 31, 2025:

 

Period

 
Total Number of Shares Purchased

 
 
Average Price Paid per Share

 
Total Number of Shares Purchased as Part of Publicly Announced Program

 
 
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program

 
 
(In thousands, except per share amounts)

October 1, 2025 – October 31, 2025

 
 
1
 
 
 
$
1,004.20
 
 
 
1
 
 
 
$
494,629
 

November 1, 2025 – November 30, 2025

 
 
-
 
(a)

 
$
932.64
 
 
 
-
 
(a)

 
$
494,045
 

December 1, 2025 – December 31, 2025

 
 
1
 
 
 
$
952.85
 
 
 
1
 
 
 
$
493,366
 

Total

 
 
2
 
 
 
$
964.61
 
 
 
2
 
 
 
 
 
 

 

(a)

Represents less than one thousand shares.

 

Stock repurchases under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate. The timing and the number of shares of any repurchased common stock will be determined by our management based on the evaluation of market conditions, legal requirements, stock price, and other factors. The repurchase program does not obligate us to purchase any particular number of shares and may be suspended, modified, or discontinued at any time without prior notice.

 

Dividend Policy

 

We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock. Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by our Board of Directors, which are payable to the stockholders in the following month. 

 

The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the stockholders.

 

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Stock Performance Graph

 

The following graph compares the cumulative five-year total return on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the PHLX Semiconductor Sector Index. An investment of $100 is assumed to have been made in our common stock on December 31, 2020, and its performance relative to the performance of the same investment in the two indexes is shown through December 31, 2025, assuming the reinvestment of dividends. Historic stock performance is not indicative of future performance.

 

 

The information contained in this stock performance graph section shall not be deemed to be “ soliciting material, ” or “ filed ” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section   18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.

 

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Item 6.

[Reserved]

 

Item 7.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with the consolidated financial statements and related notes which appear under Item 8 in this Annual Report on Form 10-K. This discussion and analysis contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Part I, Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.

 

Discussions of 2023 results and year-to-year comparisons between 2024 and 2023 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025.

 

Overview

 

We are a fabless global company that provides high-performance, semiconductor-based power electronics solutions. Our mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future. Founded in 1997 by our CEO Michael Hsing, we have three core strengths: deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging. These combined advantages are designed to enable us to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders.

 

We operate in the cyclical semiconductor industry. We are subject to industry downturns, but we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term. 

 

We work with third parties to manufacture, assemble and test our ICs. This has enabled us to limit our capital expenditures and fixed costs, while focusing our engineering and design resources on our core strengths.

 

Following the introduction of a product, our sales cycle generally takes a number of quarters after we receive an initial customer order for a new product to ramp up. Typical supply chain lead times for orders are generally 16 to 26 weeks. These factors, combined with the fact that our customers can cancel or reschedule orders without incurring a significant penalty, make the forecasting of our orders, revenue and expenses difficult.

 

We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. Our revenue from sales to customers in Asia was 92%, 94% and 87% for the years ended December 31, 2025, 2024 and 2023, respectively. We believe our ability to achieve revenue growth will depend, in part, on our ability to develop new products, enter new markets, gain market share, manage litigation risk, diversify our customer base and continue to secure manufacturing capacity.

 

Macroeconomic Conditions and Regulations

 

The semiconductor industry is impacted by various macroeconomic challenges including fluctuations in consumer spending, fluctuations in demand for semiconductors, rising inflation, global tariffs and retaliatory measures and announcements regarding the same, increased interest rates, and fluctuations in currency rates. We remain cautious in light of continued challenging global macroeconomic conditions and will continue to monitor the potential impact on our operations. The extent and duration of the direct and indirect impact of macroeconomic events on our business, results of operations and overall financial position remain uncertain and depend on future developments.

 

We closely monitor changes to export control laws, tariffs, trade regulations and other trade requirements. For the year ended December 31, 2025 and through the date we filed this Annual Report, no restrictions or requirements have had a material impact on our revenue and operations. We believe that our diverse, agile and resilient supply chain is structured in a way to minimize the impact of tariffs; however, such restrictions or requirements can be enacted quickly and unexpectedly and could impact our business in the future. To the extent tariffs, trade regulations or retaliatory measures or announcements regarding the same that affect us are implemented, we will seek to take mitigating actions in the near- and medium-term, as necessary, but there can be no assurance we will be successful. We are committed to complying with all applicable trade laws, regulations and other requirements.

 

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Critical Accounting Estimates

 

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

 

We evaluate our estimates on an on-going basis, including those related to income taxes valuation allowances and stock-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control. These factors include demand for our products, economic conditions and other current and future events, such as macroeconomic factors, global economic uncertainties, current and potential global conflicts and global tariffs, export controls and retaliatory measures and announcements regarding the same. Actual results could differ from these estimates and assumptions, and any such differences may be material to our consolidated financial statements.

 

See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.

 

We believe the following critical accounting estimates reflect our significant judgments used in the preparation of our consolidated financial statements. 

 

Accounting for Income Taxes  

 

Our calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws. Our estimates of current and deferred tax assets and liabilities may change based, in part, on added certainty, finality or uncertainty to an anticipated outcome, changes in accounting or tax laws in the U.S. or foreign jurisdictions where we operate, or changes in other facts or circumstances. In addition, we recognize liabilities for potential U.S. and foreign income tax for uncertain income tax positions taken on our tax returns if it has less than a 50% likelihood of being sustained. If we determine that payment of these amounts is unnecessary or if the recorded tax liability is less than our current assessment, we may be required to recognize an income tax benefit or additional income tax expense in our financial statements in the period such determination is made.  

 

As of both December 31, 2025 and 2024, we had a valuation allowance of $3.6 billion attributable to management’s determination that it is more likely than not that certain deferred tax assets will not be fully realized. In 2024, one of the Company’s foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025. In the event we determine that it is more likely than not that we would be able to realize the deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance for the deferred tax assets would increase income in the period such determination is made. Likewise, should it be determined that additional amounts of the net deferred tax assets will not be realized in the future, an adjustment to increase the deferred tax assets valuation allowance will be charged to income in the period such determination is made. For example, a change in forecasted income could impact the expected utilization of our tax incentive and result in an income tax benefit or additional income tax expense in our financial statements in the period such determination is made.

 

Stock-Based Compensation

For equity awards with performance conditions, we recognize compensation expense when it becomes probable that the performance goals will be achieved. Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and analog industry revenue forecasts, and internal factors, such as our business and operational objectives and revenue forecasts. Changes in the probability assessment of achievement of the performance conditions are accounted for in the period of change by recording a cumulative catch-up adjustment as if the new estimate had been applied since the service inception date. If the projected achievement was revised upward or if the actual results were higher than the projected achievement, additional compensation expense would be recorded for the awards due to the cumulative catch-up adjustment, which would have an adverse impact on our results of operations. Conversely, if the projected achievement was revised downward or if the actual results were lower than the projected achievement, previously accrued compensation expense would be reversed for the awards, which would have a favorable impact on our results of operations. As a result, our stock-based compensation expense is subject to volatility and may fluctuate significantly each quarter due to changes in our probability assessment of achievement of the performance conditions or actual results being different from projections made by management.

 

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Recent Accounting Pronouncements

 

See Note 1 of the Notes to Consolidated Financial Statements regarding a recently adopted accounting pronouncement and a recent accounting pronouncement not yet adopted as of December 31, 2025.

 

Results of Operations

 

The following table summarizes our results of operations for the periods presented:

 

 
 
Year Ended December 31,

 
 
2025

 
2024 (As Restated)
 
2023

 
 
(In thousands, except percentages)

Revenue

 
$
2,790,459
 
 
 
100.0
%
 
$
2,207,100
 
 
 
100.0
%
 
$
1,821,072
 
 
 
100.0
%

Cost of revenue

 
 
1,250,718
 
 
 
44.8
 
 
 
986,230
 
 
 
44.7
 
 
 
799,953
 
 
 
43.9
 

Gross profit

 
 
1,539,741
 
 
 
55.2
 
 
 
1,220,870
 
 
 
55.3
 
 
 
1,021,119
 
 
 
56.1
 

Operating expenses:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Research and development

 
 
382,263
 
 
 
13.7
 
 
 
324,748
 
 
 
14.7
 
 
 
263,643
 
 
 
14.5
 

Selling, general and administrative

 
 
428,842
 
 
 
15.4
 
 
 
356,764
 
 
 
16.2
 
 
 
275,740
 
 
 
15.1
 

Total operating expenses

 
 
811,105
 
 
 
29.1
 
 
 
681,512
 
 
 
30.9
 
 
 
539,383
 
 
 
29.6
 

Operating income

 
 
728,636
 
 
 
26.1
 
 
 
539,358
 
 
 
24.4
 
 
 
481,736
 
 
 
26.5
 

Other income, net

 
 
37,580
 
 
 
1.4
 
 
 
33,554
 
 
 
1.6
 
 
 
24,105
 
 
 
1.3
 

Income before income taxes

 
 
766,216
 
 
 
27.5
 
 
 
572,912
 
 
 
26.0
 
 
 
505,841
 
 
 
27.8
 

Income tax expense (benefit), net

 
 
144,733
 
 
 
5.2
 
 
 
(1,019,146
)
 
 
(46.1
)
 
 
78,467
 
 
 
4.3
 

Net income

 
$
621,483
 
 
 
22.3
%
 
$
1,592,058
 
 
 
72.1
%
 
$
427,374
 
 
 
23.5
%

 

Revenue

 

The following table summarizes our revenue by end market for the periods presented:

 

 
 
Year Ended December 31,

End Market

 
2025

 
% of Revenue

 
2024

 
% of Revenue

 
2023

 
% of Revenue

 
 
(In thousands, except percentages)

Storage and Computing

 
$
732,522
 
 
 
26.3
%
 
$
501,576
 
 
 
22.7
%
 
$
491,139
 
 
 
27.0
%

Enterprise Data

 
 
701,846
 
 
 
25.2
 
 
 
716,264
 
 
 
32.5
 
 
 
322,980
 
 
 
17.7
 

Automotive

 
 
592,518
 
 
 
21.2
 
 
 
413,973
 
 
 
18.8
 
 
 
394,665
 
 
 
21.7
 

Communications

 
 
309,064
 
 
 
11.1
 
 
 
225,905
 
 
 
10.2
 
 
 
204,911
 
 
 
11.3
 

Consumer

 
 
255,155
 
 
 
9.1
 
 
 
202,015
 
 
 
9.1
 
 
 
234,660
 
 
 
12.9
 

Industrial

 
 
199,354
 
 
 
7.1
 
 
 
147,367
 
 
 
6.7
 
 
 
172,717
 
 
 
9.4
 

Total

 
$
2,790,459
 
 
 
100.0
%
 
$
2,207,100
 
 
 
100.0
%
 
$
1,821,072
 
 
 
100.0
%

 

Revenue for the full year ended December 31, 2025 was $2.8 billion, an increase of $583.4 million, or 26.4%, from $2.2 billion for the year ended December 31, 2024. The increase in revenue was primarily due to increases in shipment volume.

 

By end market, full year 2025 revenue for storage and computing of $732.5 million increased $230.9 million, or 46.0%, from the same period in 2024. This increase was primarily driven by increased sales of power solutions for memory, storage, notebooks and graphic cards. Revenue from the enterprise data market decreased $14.4 million, or 2.0%, from the same period in 2024. Full year 2025 automotive revenue of $592.5 million increased $178.5 million, or 43.1%, from the same period in 2024. This increase was broad-based and primarily driven by increased sales of our highly integrated applications supporting advanced driver assistance systems and infotainment. Communications revenue of $309.1 million increased $83.2 million, or 36.8%, from the same period in 2024 due to higher sales of power solutions for optical modules and routers. Full year 2025 consumer revenue of $255.2 million increased $53.2 million, or 26.3%, from the same period in 2024. This increase was a result of higher sales of products for home appliances and gaming. Revenue of $199.4 million from the industrial market increased $52.0 million, or 35.3%, from the same period in 2024 due to higher sales for power sources and instrumentation applications.

 

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Cost of Revenue and Gross Margin  

 

Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses. 

 

 
 
Year Ended December 31,

 
 
2025

 
2024

 
2023

 
 
(In thousands, except percentages)

Cost of revenue

 
$
1,250,718
 
 
$
986,230
 
 
$
799,953
 

As a percentage of revenue

 
 
44.8
%
 
 
44.7
%
 
 
43.9
%

Gross profit

 
$
1,539,741
 
 
$
1,220,870
 
 
$
1,021,119
 

Gross margin

 
 
55.2
%
 
 
55.3
%
 
 
56.1
%

 

Cost of revenue was $1,250.7 million, or 44.8% of revenue, for the year ended December 31, 2025, and $986.2 million, or 44.7% of revenue, for the year ended December 31, 2024. The $264.5 million increase in cost of revenue was primarily driven by higher shipment volume.

 

Gross margin was 55.2% for the year ended December 31, 2025, compared with 55.3% for the year ended December 31, 2024. The decrease in gross margin was mainly driven by higher warranty expenses as a percentage of revenue, partially offset by lower inventory write-downs as a percentage of revenue.

 

Research and Development   ( “ R&D ” )

 

R&D expenses primarily consist of cash-based compensation and benefits, stock-based compensation and deferred compensation for design and product engineers, expenses related to new product development and supplies, and facility costs.   

 

 
 
Year Ended December 31,

 
 
2025

 
2024

 
2023

 
 
(In thousands, except percentages)

R&D expenses

 
$
382,263
 
 
$
324,748
 
 
$
263,643
 

As a percentage of revenue

 
 
13.7
%
 
 
14.7
%
 
 
14.5
%

 

R&D expenses were $382.3 million, or 13.7% of revenue, for the year ended December 31, 2025, and $324.7 million, or 14.7% of revenue, for the year ended December 31, 2024. The $57.6 million increase in R&D expenses was primarily due to a $30.1 million increase in cash-based compensation and benefits, a $9.1 million increase in new product development expenses, a $5.8 million increase in laboratory and other supplies, and a $4.1 million increase in stock-based compensation and related payroll taxes.

 

Selling, General and Administrative ( “ SG&A ” )

 

SG&A expenses primarily include cash-based compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, travel expenses, facilities costs, third-party service fees and legal expenses. 

 

 
 
Year Ended December 31,

 
 
2025

 
2024

 
2023

 
 
(In thousands, except percentages)

SG&A expenses

 
$
428,842
 
 
$
356,764
 
 
$
275,740
 

As a percentage of revenue

 
 
15.4
%
 
 
16.2
%
 
 
15.1
%

 

SG&A expenses were $428.8 million, or 15.4% of revenue, for the year ended December 31, 2025, and $356.8 million, or 16.2% of revenue, for the year ended December 31, 2024. The $72.0 million increase in SG&A expenses was primarily driven by a $37.3 million increase in cash-based compensation and benefits, and a $23.8 million increase in stock-based compensation and related payroll taxes.

 

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Other Income, Net

 

Other income, net, was $37.6 million for the year ended December 31, 2025, compared with $33.6 million for the year ended December 31, 2024. 

 

Income Tax Expense (Benefit), Net

 

The budget reconciliation bill H.R.1 (“H.R.1 Act”) signed into law on July 4, 2025, makes permanent certain expiring provisions of the 2017 Tax Cuts and Jobs Act and makes modifications to the existing tax framework. The primary impact for the current year is the immediate tax expensing of prior year unamortized and current year domestic R&D expenses and accelerated depreciation in the year ended December 31, 2025. Our tax provision for the year ended December 31, 2025 includes the estimated impact of the H.R.1 Act.

 

The income tax expense for the year ended December 31, 2025 was $144.7 million, or 18.9% of pre-tax income. The effective tax rate was lower than the federal statutory rate of 21% primarily due to income generated by our subsidiaries in lower tax jurisdictions and research tax credits. The lower effective tax rate relative to the federal statutory rate was partially offset by the U.S. taxation of foreign earnings and non-deductible stock-based compensation.

 

The income tax benefit for the year ended December 31, 2024 was $1.0 billion, or 177.9% of pre-tax income. The effective tax rate was lower than the federal statutory rate of 21% primarily due to tax benefits associated with a ten-year tax incentive. In 2024, one of our foreign subsidiaries was granted a ten-year tax incentive, beginning in 2025. A deferred tax benefit of $1.1 billion, net of $0.2 billion of deferred tax liability and $0.1 billion of valuation allowance, was recorded during the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive. Furthermore, the effective tax rate for the year ended December 31, 2024 benefited from lower statutory tax rates at certain of our foreign subsidiaries. The effective tax rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax, the addition of a valuation allowance against foreign tax assets, and excess tax benefits from stock-based compensation.

 

In December 2024, we completed an intercompany transaction that resulted in one of our foreign subsidiaries recording a step up in the tax basis of intangible assets of $23.2 billion. This resulted in a deferred tax difference between the U.S. GAAP basis and local tax basis of the specified intangibles. We do not expect to realize the deferred tax asset for U.S. GAAP purposes; therefore, we have recorded a full valuation allowance of $23.2 billion as of December 31, 2024 which remains the same as of December 31, 2025.

 

In January 2025, the OECD released new Administrative Guidance on the application of the Global Anti-Base Erosion Model Rules. We will continue to evaluate the impact of this release and of other future guidance on our future global tax provision.

 

Liquidity and Capital Resources

 

 
 
December 31,

 
 
2025

 
2024 (As Restated)

 
 
(In thousands, except percentages)

Cash and cash equivalents

 
$
1,099,302
 
 
$
691,816
 

Short-term investments

 
 
157,243
 
 
 
171,130
 

Total cash, cash equivalents and short-term investments

 
$
1,256,545
 
 
$
862,946
 

Percentage of total assets

 
 
30.0
%
 
 
24.5
%

 
 
 
 
 
 
 
 
 

Total current assets

 
$
2,183,802
 
 
$
1,565,053
 

Total current liabilities

 
 
(369,365
)
 
 
(294,567
)

Working capital

 
$
1,814,437
 
 
$
1,270,486
 

 

As of December 31, 2025, we had cash and cash equivalents of $1.1 billion and short-term investments of $157.2 million, compared with cash and cash equivalents of $691.8 million and short-term investments of $171.1 million as of December 31, 2024. As of December 31, 2025, $672.9 million of cash and cash equivalents and $157.2 million of short-term investments were held by our foreign subsidiaries. For the years ended December 31, 2025 and 2024, we repatriated $275 million and $642 million, respectively, of cash from certain of our foreign subsidiaries to the U.S. with immaterial tax impact. The proceeds are primarily used to fund our stock repurchase program, dividend program and ongoing business operations. We may repatriate additional cash from certain of our foreign subsidiaries in future periods. We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

 

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Summary of Cash Flows  

 

The following table summarizes our cash flow activities for the periods presented:

 

 
 
Year Ended December 31,

 
 
2025

 
2024

 
2023

 
 
(In thousands)

Net cash provided by operating activities

 
$
838,202
 
 
$
788,410
 
 
$
638,213
 

Net cash provided by (used in) investing activities

 
 
(157,269
)
 
 
223,047
 
 
 
(178,726
)

Net cash used in financing activities

 
 
(285,863
)
 
 
(872,227
)
 
 
(183,725
)

Effect of change in exchange rates

 
 
12,510
 
 
 
(8,470
)
 
 
(3,310
)

Net increase in cash, cash equivalents and restricted cash

 
$
407,580
 
 
$
130,760
 
 
$
272,452
 

 

For the year ended December 31, 2025, the $49.8 million increase in net cash provided by operating activities compared to the prior period was primarily due to increased accounts receivable collections, partially offset by increased inventory purchases and other changes in working capital. 

 

For the year ended December 31, 2025, the $380.3 million decrease in net cash provided by investing activities compared to the prior period was primarily due to $403.3 million in lower net sales of investments.

 

For the year ended December 31, 2025, the $586.4 million decrease in net cash used in financing activities compared to the prior period was primarily due to a $628.6 million decrease in stock repurchases, partially offset by a $44.2 million increase in dividends and dividend equivalent payments.

 

Cash Requirements

 

Although consequences of economic uncertainties and macroeconomic conditions, including tariffs and retaliatory measures and announcements regarding the same, and many other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1.3 billion as of December 31, 2025, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months.

 

Our material cash requirements include the following contractual and other obligations:

 

Purchase Obligations

 

Purchase obligations represent commitments to our suppliers and other parties requiring the purchases of goods or services. Our purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements.

 

As of December 31, 2025, total estimated future unconditional purchase commitments to all suppliers and other parties were $442.2 million, of which $389.8 million was due within a year.

 

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Capital Return to Stockholders

 

In February 2025 ,  our Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028 .  Shares are retired upon repurchase. We repurchased approximately 8,000 shares of our common stock for an aggregate purchase price of $6.6 million during the year ended December 31, 2025. As of December 31, 2025, $493.4 million remained available for future repurchases under the program.

 

We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock. Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month. As of December 31, 2025, accrued dividends totaled $76.0 million. The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders.

 

In February 2026, our Board of Directors approved an increase in the quarterly cash dividend from $1.56 per share to $2.00 per share, which amount will be paid on April 15, 2026 to all stockholders of record as of the close of business on March 31, 2026.

 

Other Long-Term Obligations

 

Other long-term obligations primarily include deferred compensation plan liabilities and accrued dividend equivalents. As of December 31, 2025, these obligations totaled $107.9 million.

 

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

 

Interest Rate Risk

 

Our cash equivalents and short-term investments are subject to market risk, primarily interest rate and credit risk. Our investments are managed by outside professional managers within investment guidelines set by management and approved by the Audit Committee of the Board of Directors. Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting our investments to high quality debt instruments with relatively short-term maturities. Based on our investment positions as of December 31, 2025, the impact of changes in interest rates on our interest income was immaterial.

 

Investments in debt securities are classified as available-for-sale, which are reported at fair value with the unrealized gains or losses being included in accumulated other comprehensive loss on the Consolidated Balance Sheets. When the fair value of an investment is below its amortized cost basis, unrealized losses due to changes in interest rates (i.e., non-credit loss factors) are not recognized in our results of operations unless we have the intent to sell the securities, or it is more likely than not that we will be required to sell the securities before recovery of the entire amortized cost basis. Based on our investment positions as of December 31, 2025, there was no impact of changes in interest rates on the fair value of our investments. Any losses resulting from such interest rate changes would only be realized if we sold the investments prior to maturity.

 

We do not use derivative financial instruments in our investment portfolio.

 

Foreign Currency Exchange Risk

 

Our worldwide sales are primarily denominated in U.S. dollars. Accordingly, the reporting of our sales is not subject to foreign currency rate changes. The functional currency of our offshore non-sales operations is generally the local currency, primarily the Renminbi, the New Taiwan Dollar and the Euro. We incur foreign currency exchange gains or losses related to certain transactions, including intercompany transactions between the U.S. and our foreign subsidiaries, that are denominated in a currency other than the functional currency. Gains or losses from the remeasurement and settlement of the balances are reported in other income, net, on the Consolidated Statements of Operations. Fluctuations in foreign currency exchange rates have not had a material impact on our results of operations for the periods presented.

 

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Table of Contents

 

Item 8.
Financial Statements and Supplementary Data

 

MONOLITHIC POWER SYSTEMS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

 

Contents

 

  Page

Reports of Independent Registered Public Accounting Firm   (PCAOB ID: 42 )
42

Consolidated Balance Sheets
44

Consolidated Statements of Operations
45

Consolidated Statements of Comprehensive Income
46

Consolidated Statements of Stockholders ’   Equity
47

Consolidated Statements of Cash Flows
48

Notes to Consolidated Financial Statements
49

 

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Report of Independent Registered Public Accounting Firm

 

To the Stockholders and the Board of Directors of Monolithic Power Systems, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Monolithic Power Systems, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2026 expressed an adverse opinion thereon.

 

Restatement of 2024 Financial Statements

As discussed in Note 2 to the consolidated financial statements, the 2024 consolidated financial statements have been restated to correct a misstatement.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Critical Audit Matter

 

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.

 

    Income Taxes – Realizability of foreign tax incentive

     

Description of the Matter
  As discussed in Note 13 to the financial statements, in 2024 the Company was granted a tax incentive with a ten-year life by a foreign jurisdiction, eligible to be utilized beginning in 2025. This tax incentive is recognized as a deferred tax asset of $1.1 billion, net of $0.2 billion of deferred tax liability and $0.1 billion valuation allowance to reduce the carrying value of the deferred tax asset to the amount management believes it is more likely than not to realize. 
 
Auditing the realizability of the deferred tax asset for the foreign tax incentive was complex as the assessment process includes forecasting future sources of taxable income, scheduling the use of the tax incentive, which involves subjective assumptions, and the amounts involved are material to the financial statements as a whole.

     

How We Addressed the Matter in Our Audit   We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s development of the analysis of the realizability of the foreign tax incentive expected to be utilized. 
 
To test the realizability of the deferred tax asset related to the foreign tax incentive, we performed audit procedures that included, among others, testing the significant assumptions used in the forecasted taxable income, including validating the completeness and accuracy of the underlying data supporting the assumptions and estimates. We compared the more sensitive assumption related to revenue growth to current industry and the Company’s own historical results. We also assessed the historical accuracy of management’s own forecasts. In addition, we tested the Company’s scheduling of the utilization of the foreign tax incentive with the assistance of our tax professionals.

 

/s/ Ernst & Young LLP

 

We have served as the Company’s auditor since 2019.

 

San Jose, California   

February 27, 2026

 

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Report of Independent Registered Public Accounting Firm

 

To the Stockholders and the Board of Directors of Monolithic Power Systems, Inc.

 

Opinion on Internal Control Over Financial Reporting

 

We have audited Monolithic Power Systems, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Monolithic Power Systems, Inc. (the Company) has not maintained effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. A material weakness was identified in controls related to the Company’s review of deferred income taxes.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and this report does not affect our report dated February 27, 2026, which expressed an unqualified opinion thereon. 

 

Basis for Opinion

 

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 

Definition and Limitations of Internal Control Over Financial Reporting

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

 

/s/ Ernst & Young LLP

 

San Jose, California

February 27, 2026

 

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Table of Contents

 

MONOLITHIC POWER SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

    December 31,

    2025
  2024 (As Restated)

ASSETS
               

Current assets:
               

Cash and cash equivalents
  $ 1,099,302     $ 691,816  

Short-term investments
    157,243       171,130  

Accounts receivable, net
    255,626       172,518  

Inventories
    564,649       419,611  

Other current assets
    106,982       109,978  

Total current assets
    2,183,802       1,565,053  

Property and equipment, net
    627,689       494,945  

Acquisition-related intangible assets, net
    8,790       9,938  

Goodwill
    25,944       25,944  

Deferred tax assets, net
    1,182,883       1,225,565  

Other long-term assets
    165,091       194,377  

Total assets
  $ 4,194,199     $ 3,515,822  

                 

LIABILITIES AND STOCKHOLDERS’ EQUITY
               

Current liabilities:
               

Accounts payable
  $ 138,272     $ 102,526  

Accrued compensation and related benefits
    85,963       63,918  

Other accrued liabilities
    145,130       128,123  

Total current liabilities
    369,365       294,567  

Income tax liabilities
    75,022       65,193  

Deferred tax liabilities
    90,480       93,367  

Other long-term liabilities
    127,835       111,570  

Total liabilities
    662,702       564,697  

Commitments and contingencies (Note 14)
                   

Stockholders’ equity:
               

Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 48,709 and 47,823 , respectively
    936,998       706,817  

Retained earnings
    2,609,651       2,292,819  

Accumulated other comprehensive loss
    ( 15,152 )     ( 48,511 )

Total stockholders’ equity
    3,531,497       2,951,125  

Total liabilities and stockholders’ equity
  $ 4,194,199     $ 3,515,822  

 

 

 

 

See accompanying notes to consolidated financial statements.

 

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Table of Contents

 

MONOLITHIC POWER SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

    Year Ended December 31,
 

    2025
    2024 (As Restated)     2023
 

Revenue
  $ 2,790,459     $ 2,207,100     $ 1,821,072  

Cost of revenue
    1,250,718       986,230       799,953  

Gross profit
    1,539,741       1,220,870       1,021,119  

Operating expenses:
                       

Research and development
    382,263       324,748       263,643  

Selling, general and administrative
    428,842       356,764       275,740  

Total operating expenses
    811,105       681,512       539,383  

Operating income
    728,636       539,358       481,736  

Other income, net
    37,580       33,554       24,105  

Income before income taxes
    766,216       572,912       505,841  

Income tax expense (benefit), net
    144,733       ( 1,019,146 )     78,467  

Net income
  $ 621,483     $ 1,592,058     $ 427,374  

                         

Net income per share:
                       

Basic
  $ 12.94     $ 32.76     $ 8.98  

Diluted
  $ 12.86     $ 32.60     $ 8.76  

Weighted-average shares outstanding:
                       

Basic
    48,035       48,599       47,610  

Diluted
    48,309       48,835       48,771  

 

 

 

 

See accompanying notes to consolidated financial statements.

 

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Table of Contents

 

MONOLITHIC POWER SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) 

 

    Year Ended December 31,

    2025
  2024 (As Restated)   2023

Net income
  $ 621,483     $ 1,592,058     $ 427,374  

Other comprehensive income (loss), net of tax:
                       

Foreign currency translation adjustments
    33,576       ( 22,843 )     ( 9,528 )

Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 285 , $( 153 ) and $ 1,352 , respectively
    ( 217 )     1,394       5,543  

Other comprehensive income (loss), net of tax
    33,359       ( 21,449 )     ( 3,985 )

Comprehensive income
  $ 654,842     $ 1,570,609     $ 423,389  

 

 

 

 

See accompanying notes to consolidated financial statements.

 

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Table of Contents

 

MONOLITHIC POWER SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

(In thousands, except per share amounts) 

 

                            Accumulated
       

    Common Stock and
          Other
  Total

    Additional Paid-in Capital
  Retained
  Comprehensive
  Stockholders’

    Shares
  Amount
  Earnings
  Loss
  Equity

Balance as of January 1, 2023
    47,107     $ 975,276     $ 716,403     $ ( 23,077 )   $ 1,668,602  

Net income
    -       -       427,374       -       427,374  

Other comprehensive loss
    -       -       -       ( 3,985 )     ( 3,985 )

Dividends and dividend equivalents declared ($ 4.00 per share)
    -       -       ( 196,713 )     -       ( 196,713 )

Common stock issued
    928       8,686       -       -       8,686  

Repurchases of common stock
    ( 7 )     ( 3,741 )     -       -       ( 3,741 )

Stock-based compensation expense
    -       149,716       -       -       149,716  

Balance as of December 31, 2023
    48,028       1,129,937       947,064       ( 27,062 )     2,049,939  

Net income (As Restated)
    -       -       1,592,058       -       1,592,058  

Other comprehensive loss
    -       -       -       ( 21,449 )     ( 21,449 )

Dividends and dividend equivalents declared ($ 5.00 per share)
    -       -       ( 246,303 )     -       ( 246,303 )

Common stock issued
    796       8,727       -       -       8,727  

Repurchases of common stock
    ( 1,001 )     ( 637,478 )     -       -       ( 637,478 )

Stock-based compensation expense
    -       205,631       -       -       205,631  

Balance as of December 31, 2024 (As Restated)
    47,823       706,817       2,292,819       ( 48,511 )     2,951,125  

Net income
    -       -       621,483       -       621,483  

Other comprehensive income
    -       -       -       33,359       33,359  

Dividends and dividend equivalents declared ($ 6.24 per share)
    -       -       ( 304,651 )     -       ( 304,651 )

Common stock issued
    894       9,220       -       -       9,220  

Repurchases of common stock
    ( 8 )     ( 6,483 )     -       -       ( 6,483 )

Stock-based compensation expense
    -       227,444       -       -       227,444  

Balance as of December 31, 2025
    48,709     $ 936,998     $ 2,609,651     $ ( 15,152 )   $ 3,531,497  

 

 

 

 

See accompanying notes to consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

    Year Ended December 31,

    2025
  2024 (As Restated)
  2023

Cash flows from operating activities:
                       

Net income
  $ 621,483     $ 1,592,058     $ 427,374  

Adjustments to reconcile net income to net cash provided by operating activities:
                       

Depreciation and amortization
    52,513       36,430       40,168  

Amortization of discount on available-for-sale securities
    ( 4,103 )     ( 20,145 )     ( 5,277 )

Gain on deferred compensation plan investments
    ( 10,033 )     ( 9,400 )     ( 8,505 )

Deferred taxes, net
    39,694       ( 1,108,269 )     5,865  

Stock-based compensation expense
    227,491       205,640       149,711  

Other
    ( 737 )     28       ( 1,447 )

Changes in operating assets and liabilities:
                       

Accounts receivable
    ( 83,066 )     7,325       2,884  

Inventories
    ( 145,077 )     ( 35,215 )     63,583  

Other assets
    60,119       54,544       ( 24,310 )

Accounts payable
    41,239       23,169       4,797  

Accrued compensation and related benefits
    19,827       8,743       ( 31,187 )

Income tax liabilities
    1,994       13,226       ( 308 )

Other accrued liabilities
    16,858       20,276       14,865  

Net cash provided by operating activities
    838,202       788,410       638,213  

Cash flows from investing activities:
                       

Purchases of property and equipment
    ( 172,013 )     ( 146,118 )     ( 57,578 )

Purchases of intangible assets
    ( 2,928 )     ( 18,175 )     -  

Purchases of investments
    ( 397,429 )     ( 1,082,706 )     ( 582,603 )

Maturities and sales of investments
    419,578       1,508,135       468,308  

Cash paid for acquisition, net of cash acquired
    -       ( 33,283 )     -  

Contributions to deferred compensation plan
    ( 4,477 )     ( 4,806 )     ( 6,853 )

Net cash provided by (used in) investing activities
    ( 157,269 )     223,047       ( 178,726 )

Cash flows from financing activities:
                       

Property and equipment purchased on extended payment terms
    ( 2,600 )     ( 4,087 )     ( 2,826 )

Proceeds from common stock issued
    9,220       8,727       8,686  

Repurchases of common stock
    ( 7,686 )     ( 636,244 )     ( 3,741 )

Dividends and dividend equivalents paid
    ( 284,797 )     ( 240,623 )     ( 185,844 )

Net cash used in financing activities
    ( 285,863 )     ( 872,227 )     ( 183,725 )

Effect of change in exchange rates
    12,510       ( 8,470 )     ( 3,310 )

Net increase in cash, cash equivalents and restricted cash
    407,580       130,760       272,452  

Cash, cash equivalents and restricted cash, beginning of period
    691,941       561,181       288,729  

Cash, cash equivalents and restricted cash, end of period
  $ 1,099,521     $ 691,941     $ 561,181  

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets:
                       

Cash and cash equivalents
  $ 1,099,302     $ 691,816     $ 527,843  

Restricted cash included in other current assets
    -       -       33,204  

Restricted cash included in other long-term assets
    219       125       134  

Total cash, cash equivalents, and restricted cash
  $ 1,099,521     $ 691,941     $ 561,181  

Supplemental disclosures for cash flow information:
                       

Cash paid for income taxes, net
  $ 95,061     $ 79,562     $ 85,128  

Non-cash investing and financing activities:
                       

Liability accrued for property and equipment purchases
  $ 14,521     $ 22,292     $ 1,784  

Liability accrued for dividends and dividend equivalents
  $ 80,588     $ 63,409     $ 53,213  

 

 

 

 

See accompanying notes to consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Business

 

Monolithic Power Systems, Inc. (the “Company”) was incorporated in the State of California on August 22, 1997. On November 17, 2004, the Company was reincorporated in the State of Delaware. MPS is a fabless global company that provides high-performance, semiconductor-based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future.

 

Basis of Presentation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions used in these consolidated financial statements primarily include those related to income tax valuation allowances and stock-based compensation. Actual results could differ from these estimates and assumptions, and any such differences may be material to the Company’s consolidated financial statements.

 

Foreign Currency   

 

The functional currency of the Company’s foreign subsidiaries is the local currency, with the exception of certain subsidiaries that invoice revenues in U.S. Dollars. Some subsidiaries are located in China, Taiwan and Europe, which utilize the Renminbi, the New Taiwan Dollar and the Euro as their currencies, respectively. Accordingly, assets and liabilities of the foreign subsidiaries are translated using exchange rates in effect at the end of the period. Revenue and costs are translated using average exchange rates for the period. The resulting translation adjustments are recorded in accumulated other comprehensive loss on the Consolidated Balance Sheets.

 

In addition, the Company incurs foreign currency exchange gains or losses related to certain transactions, including intercompany transactions, that are denominated in a currency other than the functional currency. Foreign currency exchange gains and losses in connection with the remeasurement and settlement of the balances were reported in other income, net, on the Consolidated Statements of Operations and were not material in any of the periods presented. 

 

For intercompany transactions that are of a long-term investment nature, the Company records the foreign currency exchange gains and losses in accumulated other comprehensive loss on the Consolidated Balance Sheets.

 

Cash Equivalents and Debt Investments  

 

The Company classifies all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents. The Company may classify investments with maturities beyond one year as short-term based on the nature of the investments and their availability for use in current operations.

 

Cash equivalents are stated at cost, which approximates fair market value. The Company’s short-term and long-term debt investments are classified as available-for-sale securities and are stated at their fair market value, with unrealized gains and losses recorded in accumulated other comprehensive loss on the Consolidated Balance Sheets. Premiums and discounts on debt investments are generally amortized or accreted over the life of the related available-for-sale securities. Interest income is recognized when earned. The cost of investments sold is determined on the basis of the specific identification method.

 

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Available-for-sale investments are subject to impairment reviews when the fair value is below the amortized cost basis. If the Company determines that the decline in fair value below the amortized cost basis is due to credit-related factors, the impairment is recognized as an allowance on the Consolidated Balance Sheets with a corresponding adjustment to earnings. An impairment that is not credit-related is recognized in accumulated other comprehensive loss on the Consolidated Balance Sheets. If the Company intends to sell the impaired investments, or more likely than not will be required to sell such investments before recovering the amortized cost basis, the entire impairment amount is recognized in earnings with a corresponding adjustment to the amortized cost basis.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value, the Company considers the principal or most advantageous market in which the Company would transact, as well as assumptions that market participants would use when pricing the assets or liabilities. Fair value is estimated by applying the fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels, and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. See Note 5 for additional information on the fair value of the Company’s financial instruments.

 

Inventory Valuation

 

Inventories are valued at the lower of standard cost (which approximates actual cost determined on a first-in first-out basis) and estimated net realizable value. The Company writes down excess and obsolete inventories based on their age and forecasted demand, which includes estimates taking into consideration the Company’s revenue forecast, outlook on market and economic conditions, technology changes, new product introductions and changes in strategic direction. Actual demand may differ from forecasted demand, and such a difference may have a material effect on recorded inventory values. When the Company records a write-down on inventory, it establishes a new, lower cost basis for that inventory, and subsequent changes in facts and circumstances will not result in the restoration or increase in that newly established cost basis.

 

Property and Equipment

 

Property and equipment are stated at cost. Depreciation commences when an asset is placed in service and available for its intended use. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Buildings and building improvements have estimated useful lives of 20 to 40 years. Leasehold improvements are amortized over the shorter of the estimated useful lives or the lease period. Lab equipment and production equipment have estimated useful lives of three  to ten  years. Software has estimated useful lives of one  to seven  years. Transportation equipment has estimated useful lives of 5 to 20 years. Furniture and fixtures have estimated useful lives of three to five years. Land is not depreciated.

 

Goodwill 

 

Goodwill represents the excess of the fair value of purchase consideration over the fair value of net tangible and identified intangible assets as of the date of acquisition. Goodwill is not amortized. The Company tests goodwill for impairment at least annually in the fourth quarter of each year, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company has elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative goodwill impairment test is performed to measure the impairment loss. No  impairment of goodwill has been identified in any of the periods presented.  

 

Impairment of Long-Lived Assets

 

The Company evaluates its long-lived assets other than goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Such impairment loss would be measured as the difference between the carrying amount of the asset and its fair value based on the present value of estimated future cash flows. The Company did not record material impairments in any of the periods presented.

 

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Deferred Compensation Plan  

 

The Company has a non-qualified, unfunded deferred compensation plan, which provides certain key employees, including executive officers, with the ability to defer the receipt of compensation in order to accumulate funds for retirement on a tax deferred basis. The Company does not make contributions to the plan or guarantee returns on the investments. The Company is responsible for the plan’s administrative expenses. Participants’ deferrals and investment gains and losses remain as the Company’s liabilities and the underlying assets are subject to claims of general creditors.

 

The liabilities for compensation deferred under the plan are recorded at fair value as of the end of each reporting period. Changes in the fair value of the liabilities are included in cost of revenue and operating expenses on the Consolidated Statements of Operations. The Company manages the risk of changes in the fair value of the liabilities by electing to match the liabilities with investments in corporate-owned life insurance policies, mutual funds and money market funds that offset a substantial portion of the exposure. The investments are recorded at the cash surrender value of the corporate-owned life insurance policies, and at the fair value of the mutual funds and money market funds. Changes in the cash surrender value of the corporate-owned life insurance policies and the fair value of mutual fund and money market fund investments are included in other income, net, on the Consolidated Statements of Operations. The following table summarizes the deferred compensation plan balances on the Consolidated Balance Sheets (in thousands): 

 

    December 31,

    2025
  2024

Deferred compensation plan asset components:
               

Cash surrender value of corporate-owned life insurance policies
  $ 31,612     $ 27,249  

Fair value of mutual funds and money market funds
    75,484       65,337  

Total
  $ 107,096     $ 92,586  

                 

Deferred compensation plan assets reported in:
               

Other long-term assets
  $ 107,096     $ 92,586  

                 

Deferred compensation plan liabilities reported in:
               

Accrued compensation and related benefits
  $ 3,707     $ 2,323  

Other long-term liabilities
    103,954       93,653  

Total
  $ 107,661     $ 95,976  

 

Revenue Recognition

 

The Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. See Note 3 for further discussion.

 

R&D

 

Costs incurred in R&D are expensed as incurred.

 

Product Warranty Reserve and Rework

 

The Company generally provides either a one - or two -year warranty against defects in materials and workmanship and will repair the products, provide replacements at no charge to customers or issue a refund. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. The Company accrues for warranty and rework costs upon evaluation of customer specific claims. Historically, the Company’s warranty obligations and rework costs associated with product-related claims have not been material. The estimated amount of product warranty and rework liabilities was $ 10.1  million, $ 5.4  million, and $ 16.9  million for the periods ended December 31, 2025, 2024 and 2023.

 

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Leases

 

The Company determines if an arrangement is a lease at inception. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term. ROU assets also include any initial direct costs incurred and prepaid lease payments, less lease incentives received. Because the implicit rate in each lease is not readily determinable, the Company uses its estimated incremental borrowing rate to determine the present value of the remaining lease payment. The Company recognizes operating lease costs on a straight-line basis over the lease term.

 

The Company does not record short-term leases with a term of 12 months or less at the commencement date on the Consolidated Balance Sheets. For lease arrangements that contain lease and non-lease components, the Company accounts for them as single lease components.

 

Stock-Based Compensation

 

The Company’s restricted stock units (“RSUs”) include time-based RSUs, RSUs with performance conditions (“PSUs”), and RSUs with market conditions (“MSUs”). The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of time-based RSUs is determined based on the grant date stock price. The fair value of all other awards, including PSUs that have a purchase price adjustment and MSUs, is determined based on the Monte Carlo simulation model.

 

The valuation model considers inputs including stock price, expected volatility, expected term of awards, risk-free interest rate, and expected dividend yield. Expected volatility used in the model is determined based on historical volatility of the Company’s stock price for the period, which corresponds to the expected term of the awards, immediately preceding the granting of the awards.

 

Compensation expense related to awards with service conditions is recorded on a straight-line basis over the requisite service period. Compensation expense related to awards subject to performance or market conditions is recognized over the requisite service period for each separately vesting tranche. For awards with market conditions, compensation expense is not reversed if the market conditions are not satisfied. For awards with performance conditions, the Company recognizes compensation expense when it becomes probable that the performance goals will be achieved. Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and analog industry revenue forecasts, and internal factors, such as our business and operational objectives and revenue forecasts. Changes in the probability assessment of achievement of the performance conditions are accounted for in the period of change by recording a cumulative catch-up adjustment as if the new estimate had been applied since the service inception date. Any previously recognized compensation expense is reversed if the performance conditions are not expected to be satisfied as a result of management’s assessment.

 

The Company accounts for forfeitures of equity awards when they occur.

 

Accounting for Income Taxes  

 

The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable or refundable in the current fiscal year by tax jurisdiction. The Company also recognizes federal, state and foreign deferred tax assets or liabilities for its estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized.

 

The Company’s calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws. The Company’s estimates of current and deferred tax assets and liabilities may change based on, in part, added certainty, finality or uncertainty to an anticipated outcome, changes in accounting or tax laws in the U.S. or foreign jurisdictions where the Company operates, or changes in other facts or circumstances. In addition, the Company recognizes liabilities for potential U.S. and foreign income tax for uncertain income tax positions taken on its tax returns if it has less than a 50% likelihood of being sustained. If the Company determines that payment of these amounts is unnecessary or if the recorded tax liability is less than its current assessment, the Company may be required to recognize an income tax benefit or additional income tax expense in its financial statements in the period such determination is made. The Company has calculated its uncertain tax positions which were attributable to certain estimates and judgments.

 

Litigation and Contingencies

 

The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters. The Company is subject to litigation initiated by its stockholders. The pending proceedings involve complex questions of fact and law and will require the expenditure of significant funds and the diversion of other resources to prosecute and defend.

 

In addition, from time to time, the Company becomes aware that it is subject to other contingent liabilities. When this occurs, the Company will evaluate the appropriate accounting for the potential contingent liabilities to determine whether a contingent liability should be recorded. In making this determination, management may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts. Based on the facts and circumstances in each matter, the Company uses its judgment to determine whether it is probable that a contingent loss has occurred and whether the amount of such loss can be estimated. If the Company determines a loss is probable and estimable, the Company records a contingent loss. In determining the amount of a contingent loss, the Company takes into account advice received from experts for each specific matter regarding the status of legal proceedings, settlement negotiations, prior case history and other factors.

 

Should the judgments and estimates made by management need to be adjusted as additional information becomes available, the Company may need to record additional contingent losses. Alternatively, if the judgments and estimates made by management are adjusted, for example, if a particular contingent loss does not occur, the contingent loss recorded would be reversed.

 

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Net Income per Share

 

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share reflects the potential dilution from contingently issuable shares and is calculated using the treasury stock method. Contingently issuable shares, including all types of equity awards, are considered outstanding shares of common stock and included in basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied. Prior to the end of the contingency period, the number of contingently issuable shares included in diluted net income per share is based on the number of shares, if any, that would be issuable under the terms of the arrangement at the end of the reporting period as if the end of the reporting period were the end of the contingency period.

 

Comprehensive Income  

 

Comprehensive income represents the change in the Company’s net assets during the period from non-owner sources. Accumulated other comprehensive loss presented on the Consolidated Balance Sheets primarily consists of foreign currency translation adjustments.

 

Recently Adopted Accounting Pronouncement

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09,  Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which aims to improve an entity’s income tax disclosures around its effective rate reconciliation, income taxes paid, disaggregation of income before income taxes and income tax expense. The Company adopted the guidance during the year ended December 31, 2025 and applied the new disclosure requirements prospectively to its 2025 annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Refer to Note 13 for further information.

 

New Accounting Pronouncement Not Yet Adopted as of December 31, 2025

 

In November 2024, the FASB issued ASU 2024-03,  Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which aims to provide more detailed information about the types of expenses in commonly presented expense captions. The Company will adopt this standard in its Form 10-K for the fiscal year ending December 31, 2027. The Company is evaluating the impact of adoption on its Consolidated Financial Statements.

 

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2.  RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

 

In connection with the preparation of the Company’s Consolidated Financial Statements as of and for the fiscal year ended December 31, 2025, the Company discovered that in the prior year it had not appropriately accounted for deferred income taxes associated with a one-time tax incentive granted by a certain foreign jurisdiction. The restatement results in a decrease to income tax benefit, net and deferred income taxes by $ 194.6 million in the consolidated financial statements as of and for the year ended December 31, 2024.

 

The misstatement was material to the previously issued financial statements of the Company and as a result, the Company has restated its Consolidated Balance Sheet, Consolidated Statement of Operations, Consolidated Statement of Comprehensive Income, Consolidated Statement of Stockholders’ Equity, and Consolidated Statement of Cash Flows as of and for the year ended December 31, 2024 presented herein. The restatement includes adjustments to deferred tax assets, net, deferred tax liabilities, retained earnings, income tax benefit, net, net income, and net income per share.

 

The impacts of the restatement are summarized below (in thousands, except per-share amounts):

 

    December 31, 2024
 

RESTATED CONSOLIDATED BALANCE SHEET
  As Previously Reported
    Impact of Restatement
    As Restated
 

Deferred tax assets, net
  $ 1,326,840       ( 101,275 )   $ 1,225,565  

Total assets
  $ 3,617,097       ( 101,275 )   $ 3,515,822  

Deferred tax liabilities
  $ -       93,367     $ 93,367  

Total liabilities
  $ 471,330       93,367     $ 564,697  

Retained earnings
  $ 2,487,461       ( 194,642 )   $ 2,292,819  

Total stockholders’ equity
  $ 3,145,767       ( 194,642 )   $ 2,951,125  

Total liabilities and stockholders’ equity
  $ 3,617,097       ( 101,275 )   $ 3,515,822  

 

    Year Ended December 31, 2024

RESTATED CONSOLIDATED STATEMENT OF OPERATIONS
  As Previously Reported
  Impact of Restatement   As Restated

Income tax benefit, net
  $ ( 1,213,788 )     194,642     $ ( 1,019,146 )

Net income
  $ 1,786,700       ( 194,642 )   $ 1,592,058  

Net income per share:
                       

Basic
  $ 36.76       ( 4.00 )   $ 32.76  

Diluted
  $ 36.59       ( 3.99 )   $ 32.60  

 

    Retained Earnings

RESTATED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
  As Previously Reported
  Impact of Restatement   As Restated

Net income
  $ 1,786,700       ( 194,642 )   $ 1,592,058  

Balance as of December 31, 2024
  $ 2,487,461       ( 194,642 )   $ 2,292,819  

 

    Year Ended December 31, 2024

RESTATED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  As Previously Reported
  Impact of Restatement   As Restated

Net income
  $ 1,786,700       ( 194,642 )   $ 1,592,058  

Comprehensive income
  $ 1,765,251       ( 194,642 )   $ 1,570,609  

 

    Year Ended December 31, 2024

RESTATED CONSOLIDATED STATEMENT OF CASH FLOWS
  As Previously Reported
  Impact of Restatement   As Restated

Net income
  $ 1,786,700       ( 194,642 )   $ 1,592,058  

Deferred taxes, net
  $ ( 1,302,911 )     194,642     $ ( 1,108,269 )

 

All referenced amounts for prior period in these financial statements and the notes herein reflect the balances and amounts on a restated basis.

 

Refer to Note 17, Restatement of Previously Issued Condensed Consolidated Financial Statements, for restated interim financials for the quarterly periods ended March 31, 2025, June 30, 2025, and September 30, 2025.

 

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3.  REVENUE RECOGNITION

 

Revenue from Product Sales

 

The Company generates revenue primarily from product sales, which include assembled and tested ICs, power modules as well as dies in wafer form. The remaining revenue, which primarily consists of royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties, was not significant in any of the periods presented. 

 

The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’ ship-to locations. The following is a summary of revenue by geographic region for the periods presented (in thousands):

 

    Year Ended December 31,

Country or Region
  2025
  2024
  2023

China
  $ 1,544,272     $ 1,178,341     $ 934,768  

Taiwan
    550,110       577,956       307,499  

South Korea
    252,737       167,899       169,867  

Southeast Asia
    148,136       78,765       85,150  

Europe
    113,533       86,899       132,620  

U.S.
    96,744       55,235       97,294  

Japan
    84,443       61,695       93,340  

Other
    484       310       534  

Total
  $ 2,790,459     $ 2,207,100     $ 1,821,072  

 

The Company sells its products to end customers primarily through third-party distributors and value-added resellers. For the years ended December 31, 2025, 2024 and 2023 ,   85 %, 89 % and  86 %, respectively, of the Company’s total sales were made through distribution arrangements. These distribution arrangements contain enforceable rights and obligations specific to those distributors and not the end customers. Purchase orders, which are generally governed by sales agreements or the Company’s standard terms of sale, set the final terms for unit price, quantity, shipping and payment agreed upon between the Company and the customer. The Company considers purchase orders to be contracts with the customers. The unit price as stated on the purchase orders is considered the observable, stand-alone selling price for the arrangements.

 

The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue for the periods presented: 

 

    Year Ended December 31,

Customer
  2025
  2024
  2023

Distributor A
    26 %     31 %     26 %

Distributor B
    18 %     20 %     19 %

Distributor C
    10 %     *       10 %

 

* Represents less than 10%.

 

The Company’s agreements with these third-party distributors were made in the ordinary course of business and may be terminated with or without cause by these distributors with advance notice. Although the Company may experience a short-term disruption in the distribution of its products and a short-term decline in revenue if its agreement with any of the distributors were terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a relatively short period following any termination of the agreement with a distributor.

 

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The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company excludes taxes assessed by government authorities, such as sales taxes, from revenue.

 

Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue from distributors and direct end customers when the following events have occurred: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. In accordance with the shipping terms specified in the contracts, these criteria are generally met when the products are shipped from the Company’s facilities (such as the “Ex Works” shipping term) or delivered to the customers’ locations (such as the “Delivered Duty Paid” shipping term).

 

Under certain consignment agreements, the Company recognizes revenue when customers consume products from the consigned inventory locations, at which time control transfers to the customers and the Company issues invoices.

 

Variable Consideration

 

The Company accounts for price adjustments and stock rotation rights as variable consideration that reduces the transaction price and recognizes that reduction in the same period the associated revenue is recognized. Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases in accordance with the contract terms. The Company estimates the stock rotation returns using the expected value method based on an analysis of historical returns, and the current level of inventory in the distribution channel. The Company records a liability for the stock rotation reserve, with a corresponding reduction to revenue. In addition, the Company recognizes an asset for product returns which represents the right to recover products from the customers related to stock rotations, with a corresponding reduction to cost of revenue.

 

Contract Balances

 

Accounts Receivable:

 

The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. The Company’s accounts receivable are short-term, with standard payment terms generally ranging from 30 to 90 days. The Company does not require its customers to provide collateral to support accounts receivable. The Company assesses collectability by reviewing accounts receivable on a customer-by-customer basis. To manage credit risk, management performs ongoing credit evaluations of the customers’ financial condition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables. For certain customers, the Company requires standby letters of credit or advance payments prior to shipments of goods. The Company did not recognize any write-offs of accounts receivable or record any allowance for credit losses for the periods presented.

 

The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable:  

 

    December 31,

Customer
  2025   2024

Distributor A
    35 %     28 %

Distributor B
    14 %     29 %

Distributor C
    11 %     *  

 

* Represents less than 10%.

 

Practical Expedients

 

The Company has elected the practical expedient to expense sales commissions as incurred because the amortization period would have been one year or less. 

 

The Company’s standard payment terms generally require customers to pay  30  to 90  days after the Company satisfies the performance obligations. For this reason, the Company has elected not to determine whether contracts with customers contain significant financing components.

 

The Company’s unsatisfied performance obligations primarily include products held in consignment arrangements and customer purchase orders for products that the Company has not yet shipped. Because the Company expects to fulfill these performance obligations within one year, the Company has elected not to disclose the amount of these remaining performance obligations.

 

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4.    CASH, CASH EQUIVALENTS AND INVESTMENTS 

 

The following is a summary of the Company’s cash, cash equivalents and debt investments (in thousands): 

 

    December 31,

    2025
  2024

Cash
  $ 969,628     $ 679,949  

Money market funds
    129,674       11,867  

Certificates of deposit
    157,243       164,418  

Corporate debt securities
    -       6,712  

Auction-rate securities backed by student-loan notes
    49       148  

Total
  $ 1,256,594     $ 863,094  

 

    December 31,

    2025
  2024

Reported as:
               

Cash and cash equivalents
  $ 1,099,302     $ 691,816  

Short-term investments
    157,243       171,130  

Investment within other long-term assets
    49       148  

Total
  $ 1,256,594     $ 863,094  

 

The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of December 31, 2025 (in thousands): 

 

    Amortized Cost
  Fair Value

Due in less than 1 year
  $ 57,179     $ 57,179  

Due in 1 - 5 years
    100,064       100,064  

Due in greater than 5 years
    50       49  

Total
  $ 157,293     $ 157,292  

 

Gross realized gains and losses recognized on the sales of available-for-sale investments were not material for the periods presented.

 

 

5.  FAIR VALUE MEASUREMENTS

 

Fair Value Hierarchy

 

The Company has estimated the fair value of its financial assets by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

●
Level 1—includes instruments with quoted prices in active markets for identical assets.

●
Level 2—includes instruments for which the valuations are based upon quoted market prices in active markets involving similar assets or inputs other than quoted prices that are observable for the assets. The market inputs used to value these instruments generally consist of market yields, recently executed transactions, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third-party sources used to determine a daily market value.

●
Level 3—includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

 

Financial Assets Measured at Fair Value on a Recurring Basis

The following tables detail the fair value of the Company’s financial assets measured on a recurring basis (in thousands):

 

    December 31, 2025

    Total
  Level 1
  Level 2
  Level 3

Money market funds
  $ 129,674     $ 129,674     $ -     $ -  

Certificates of deposit
    157,243       -       157,243       -  

Auction-rate securities backed by student-loan notes
    49       -       -       49  

Mutual funds and money market funds under deferred compensation plan
    75,484       75,484       -       -  

Total
  $ 362,450     $ 205,158     $ 157,243     $ 49  

 

    December 31, 2024

    Total
  Level 1
  Level 2
  Level 3

Money market funds
  $ 11,867     $ 11,867     $ -     $ -  

Certificates of deposit
    164,418       -       164,418       -  

Corporate debt securities
    6,712       -       6,712       -  

Auction-rate securities backed by student-loan notes
    148       -       -       148  

Mutual funds and money market funds under deferred compensation plan
    65,337       65,337       -       -  

Total
  $ 248,482     $ 77,204     $ 171,130     $ 148  

 

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6.  BALANCE SHEET COMPONENTS

 

Inventories  

 

Inventories consist of the following (in thousands):

 

    December 31,

    2025
  2024

Raw materials
  $ 107,801     $ 91,851  

Work in process
    220,410       169,982  

Finished goods
    236,438       157,778  

Total
  $ 564,649     $ 419,611  

 

Other Current Assets

 

Other current assets consist of the following (in thousands):

 

    December 31,

    2025
  2024

Other receivables (1)
  $ 60,000     $ 60,000  

Prepaids and other
    46,982       49,978  

Total
  $ 106,982     $ 109,978  

 

(1)
Other receivables relate to an annually refundable deposit made to a supplier under a long-term wafer supply agreement. 

 

Property and Equipment, Net

 

Property and equipment, net, consist of the following (in thousands):

 

    December 31,

    2025
  2024

Land
  $ 53,151     $ 50,681  

Production equipment and software
    469,626       340,691  

Buildings and improvements
    240,691       224,490  

Transportation equipment
    62,088       72,044  

Leasehold improvements
    25,798       18,301  

Furniture and fixtures
    17,279       13,472  

Construction in progress
    63,767       27,477  

Property and equipment, gross
    932,400       747,156  

Less: accumulated depreciation and amortization
    ( 304,711 )     ( 252,211 )

Total property and equipment, net
  $ 627,689     $ 494,945  

 

Depreciation and amortization expense on property and equipment was $ 50.0  million, $ 35.1  million and $ 40.0  million for the years ended December 31, 2025, 2024 and 2023, respectively.

 

Other Long-Term Assets

 

Other long-term assets consist of the following (in thousands):

 

    December 31,

    2025
  2024

Deferred compensation plan assets
  $ 107,096     $ 92,586  

Prepaid wafer purchases (1)
    -       60,000  

Other
    57,995       41,791  

Total
  $ 165,091     $ 194,377  

 

(1)
Prepaid wafer purchases relate to an annually refundable deposit made to a supplier under a long-term wafer supply agreement. 

 

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Other Accrued Liabilities

 

Other accrued liabilities consist of the following (in thousands):

 

    December 31,

    2025
  2024

Dividends and dividend equivalents
  $ 81,510     $ 60,622  

Stock rotation and sales returns
    17,150       20,799  

Other
    46,470       46,702  

Total
  $ 145,130     $ 128,123  

 

Other Long-Term Liabilities

 

Other long-term liabilities consist of the following (in thousands):

 

    December 31,

    2025
  2024

Deferred compensation plan liabilities
  $ 103,954     $ 93,653  

Operating lease liabilities
    19,972       12,974  

Dividend equivalents
    3,909       4,943  

Total
  $ 127,835     $ 111,570  

 

 

7.  LEASES

 

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, and employee housing units. These leases have remaining lease terms from less than one year to 19  years. Some of these leases include options to renew the lease term for up to  five  years or on a month-to-month basis. The Company does not have finance lease arrangements.

 

The following table summarizes the balances of operating lease ROU assets and liabilities (in thousands):

 

      December 31,

  Financial Statement Line Item
  2025
  2024

Operating lease ROU assets
Other long-term assets
  $ 24,886     $ 16,915  

                   

Operating lease liabilities
Other accrued liabilities
  $ 4,131     $ 2,819  

  Other long-term liabilities
  $ 19,972     $ 12,974  

 

The following tables summarize certain information related to the leases for the periods presented (in thousands, except percentages and years):

 

    Year Ended December 31,

    2025
  2024
  2023

Lease costs:
                       

Operating lease costs
  $ 5,213     $ 3,903     $ 3,113  

Other
    3,556       2,840       2,120  

Total lease costs
  $ 8,769     $ 6,743     $ 5,233  

 

    Year Ended December 31,

    2025
  2024
  2023

Cash paid for amounts included in the measurement of lease liabilities:
                       

Operating cash flows for operating leases
  $ 4,832     $ 4,346     $ 2,954  

ROU assets obtained
  $ 11,519     $ 11,940     $ 7,081  

 

    December 31,

    2025
  2024

Weighted-average remaining lease term (in years)
    9.3       11.5  

Weighted-average discount rate
    5.6 %     5.5 %

 

As of December 31, 2025, the maturities of the lease liabilities were as follows (in thousands):

 

2026
  $ 5,309  

2027
    5,082  

2028
    3,732  

2029
    2,957  

2030
    1,908  

Thereafter
    13,440  

Total remaining lease payments
    32,428  

Less: imputed interest
    ( 8,325 )

Total lease liabilities
  $ 24,103  

 

As of December 31, 2025, the Company had no operating leases that had not yet commenced.

 

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8.    STOCK-BASED COMPENSATION

 

2014   Equity Incentive Plan  

 

In April 2013, the Board of Directors adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013. In October 2014, the Board of Directors approved certain amendments to the 2014 Plan. The amended 2014 Plan became effective on November 13, 2014 and provided for the issuance of up to 5.5 million shares. In April 2020, the Board of Directors further amended and restated the amended 2014 Plan (the “Amended and Restated 2014 Plan”), which the Company’s stockholders approved in June 2020. The Amended and Restated 2014 Plan became effective on June 11, 2020 and provides for the issuance of up to 10.5 million shares. The Amended and Restated 2014 Plan will cease being available for new awards on June 11, 2030. As of December 31, 2025, 3.6  million shares remained available for future issuance under the Amended and Restated 2014 Plan.  

 

Stock-Based Compensation Expense

 

The Company recognized stock-based compensation expense as follows for the periods presented (in thousands):

 

    Year Ended December 31,

    2025
  2024
  2023

Cost of revenue
  $ 7,204     $ 6,305     $ 4,545  

Research and development
    49,247       45,626       36,611  

Selling, general and administrative
    171,040       153,709       108,555  

Total stock-based compensation expense
  $ 227,491     $ 205,640     $ 149,711  

Tax benefit related to stock-based compensation (1)
  $ 2,674     $ 3,040     $ 2,519  

 

(1)
Amount reflects the tax benefit related to stock-based compensation recorded for equity awards that are expected to generate tax deductions when they vest in future periods. Equity awards granted to the Company’s executive officers are subject to the tax deduction limitations set by Section 162(m) of the Internal Revenue Code.

 

RSUs

 

The Company’s RSUs include time-based RSUs, PSUs, and MSUs. Vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance or market goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”). All awards include service conditions which require continued employment with or service to the Company.

 

A summary of RSU activity is presented in the table below (in thousands, except per share amounts):

 

    Total Time-based RSUs, PSUs and MSUs

    Number of Shares
    Weighted-Average Grant Date Fair Value Per Share

Outstanding at January 1, 2023
    2,659       $ 176.50  

Granted
    363   (1)
  $ 444.86  

Vested
    ( 911 )     $ 177.54  

Forfeited
    ( 25 )     $ 209.23  

Outstanding at December 31, 2023
    2,086       $ 222.04  

Granted
    402   (1)
  $ 584.49  

Vested
    ( 778 )     $ 133.62  

Forfeited
    ( 6 )     $ 432.32  

Outstanding at December 31, 2024
    1,704       $ 347.01  

Granted
    317   (1)
  $ 576.98  

Vested
    ( 1,226 ) (2)
  $ 290.55  

Forfeited
    ( 24 )     $ 473.09  

Outstanding at December 31, 2025
    771       $ 535.78  

 

(1)
Amount reflects the number of awards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period.

(2)
Amount includes shares that had not been issued as of December 31, 2025.

 

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The fair value related to vested RSUs, as of their respective vesting dates, was $ 1,254.3  million, $ 513.0  million and $ 461.3  million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, unamortized compensation expense related to all outstanding RSUs was $ 208.0  million with a weighted-average remaining recognition period of approximately two  years. 

 

Time-Based RSUs

 

For the years ended December 31, 2025, 2024 and 2023, the Compensation Committee granted 40,000 , 33,000 and 51,000 RSUs, respectively, with service conditions to non-executive employees and non-employee directors. The RSUs generally vest over four years for employees and one year for directors, subject to continued service with the Company.

 

PSUs and MSUs

 

2025 PSUs:

 

In February 2025, the Compensation Committee granted 50,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of two sets of independent performance goals (the “2025 Executive PSUs”). For the first goal, the executive officers can earn up to 300 % of the target number of the 2025 Executive PSUs based on the achievement of the Company’s three-year (2025 through 2027) average revenue growth rate in excess of the analog industry’s three-year average revenue growth rate as published by the Semiconductor Industry Association (the “SIA”). For the second goal, the executive officers can earn up to 200 % of the target number of the 2025 Executive PSUs based on the achievement of the Company’s three-year (2025 through 2027) total stockholder return percentile ranking relative to the constituent entities in the Philadelphia Semiconductor Sector Index (the “PHLX Index”). For both goals, a percentage of the 2025 Executive PSUs will fully vest on December 31, 2027, depending on the degree to which the pre-determined goals are met during the performance period. Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2025 Executive PSUs will be $ 138.5 million. 
 
In February 2025, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represent the target number of shares that can be earned based on the degree of achievement of the Company’s 2026 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s two-year (2025 and 2026) average revenue growth rate compared against the analog industry’s two-year average revenue growth rate as published by the SIA (the “2025 Non-Executive PSUs”). The maximum number of shares that an employee can earn is either 200 % or 300 % of the target number of the 2025 Non-Executive PSUs, depending on the job classification of the employee. 50 % of the 2025 Non-Executive PSUs will vest in the first quarter of 2027 depending on the degree to which the pre-determined goals are met during the performance period. The remaining 2025 Non-Executive PSUs will vest over the following two years on a quarterly or annual basis. Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2025 Non-Executive PSUs will be $ 16.5  million. 
 

The 2025 Executive PSUs and the 2025 Non-Executive PSUs contain a purchase price feature, which requires the employees to pay the Company $ 30 per share upon vesting of the shares. The $ 30 purchase price requirement is deemed satisfied and waived if the Company’s stock price on the last trading day of the applicable performance period is $30 higher than the grant date stock price of $ 656.29 . The Company determined the grant date fair value of the 2025 Executive PSUs and the 2025 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $ 656.29 , simulation term of three years, expected volatility of 54.42 %, risk-free interest rate of 4.20 %, and expected dividend yield of 0.95 %. The Monte Carlo simulation model for the 2025 Executive PSUs further utilized correlation coefficients of peer companies of 0.46 to 0.76 . The correlation coefficients were based on peer companies in the PHLX Index as an aggregate benchmark for determining the market-based total stockholder return component. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

 

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2024 PSUs:

 

In February 2024, the Compensation Committee granted  50,000  PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of three sets of independent performance goals (the “2024 Executive PSUs”). For the first goal, the executive officers can earn up to  300 % of the target number of the 2024 Executive PSUs based on the achievement of the Company’s average three-year (2024 through 2026) revenue growth rate in excess of the analog industry’s average three-year revenue growth rate as published by the SIA. For the second goal, the executive officers can earn  100 % of the target number of the 2024 Executive PSUs if the Company achieves a reduction in 2026 of 25% global combined Scope 1 and Scope 2 greenhouse gas emissions against the 2022 baseline. For the third goal, the executive officers can earn  50 % of the target number of the 2024 Executive PSUs if more than one-third of the Company’s total 2026 revenue in the automotive end market is generated from Electronic Vehicle (“EV”) automakers. In addition, for the third goal, the executive officers can earn  50 % of the target number of the 2024 Executive PSUs if total 2026 revenue from products enabling EV powertrains and EV 48V systems grows to 200% of the 2023 baseline. For the first goal, a percentage of the 2024 Executive PSUs will fully vest on December 31, 2026, depending on the degree to which the pre-determined goal is met during the performance period. The 2024 Executive PSUs related to the second and the third goal will fully vest on December 31, 2026 if the pre-determined goals are met during the performance period. Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2024 Executive PSUs is $ 154.3  million. 
 

In February 2024, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represented the target number of shares that could be earned based on the degree of achievement of the Company’s 2025 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two-year (2024 and 2025) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA (the “2024 Non-Executive PSUs”). The maximum number of shares that an employee could earn is either 200 % or 300 % of the target number of the 2024 Non-Executive PSUs, depending on the job classification of the employee. Based on the actual revenue achievement at the end of the performance period, a total of 24,000 shares were awarded to the non-executive employees. 50 % of the 2024 Non-Executive PSUs will vest in the first quarter of 2026 depending on the degree to which the pre-determined goals were met during the performance period. The remaining 2024 Non-Executive PSUs will vest over the following two years on a quarterly or annual basis. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2024 Non-Executive PSUs is $ 15.0  million.
 

The 2024 Executive PSUs and the 2024 Non-Executive PSUs contain a purchase price feature, which requires the employees to pay the Company $ 30 per share upon vesting of the shares. The $30 purchase price requirement is deemed satisfied and waived if the Company’s stock price on the last trading day of the associated performance period is $30 higher than the grant date stock price of $ 632.98 . This market condition was achieved for the 2024 Non-Executive PSUs. The Company determined the grant date fair value of the 2024 Executive PSUs and the 2024 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $ 632.98 , simulation term of three years, expected volatility of 49.4 %, risk-free interest rate of 4.1 %, and expected dividend yield of 0.8 %. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions. 

 

2023 PSUs:

 

In February 2023, the Compensation Committee granted 69,000 PSUs to the executive officers, which represented the target number of shares that could be earned based on the degree of achievement of two sets of performance goals (the “2023 Executive PSUs”). For the first goal, the executive officers could earn up to 300 % of the target number of the 2023 Executive PSUs based on the achievement of the Company’s average three-year (2023 through 2025) revenue growth rate in excess of the analog industry’s average three-year revenue growth rate as published by the SIA. Based on the actual revenue achievement at the end of the performance period, a total of 208,000 shares were awarded to the executive officers, which fully vested on December 31, 2025. For the second goal, the executive officers could earn up to an additional 200 % of the target number of the 2023 Executive PSUs if the Company secures additional manufacturing capacity outside China during the three-year performance period. Based on the actual manufacturing capacity outside China at the end of the performance period, a total of 139,000 shares were awarded to the executive officers, which fully vested on December 31, 2025. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2023 Executive PSUs was $ 156.2 million.
 
In February 2023, the Compensation Committee granted 13,000 PSUs to certain non-executive employees, which represented the target number of shares that could be earned based on the degree of achievement of the Company’s 2024 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two-year (2023 and 2024) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA (the “2023 Non-Executive PSUs”). The maximum number of shares that an employee could earn was either 200 % or 300 % of the target number of the 2023 Non-Executive PSUs, depending on the job classification of the employee. Based on the actual revenue achievement at the end of the performance period, a total of 23,000 shares were awarded to the non-executive employees. 50 % of the 2023 Non-Executive PSUs vested in the first quarter of 2025. The remaining 2023 Non-Executive PSUs vest over the following two years on an annual or quarterly basis. Based on the actual achievement of the performance goals, the total stock-based compensation cost for the 2023 Non-Executive PSUs is $ 10.0 million.
 
The 2023 Executive PSUs and the 2023 Non-Executive PSUs contained a purchase price feature, which required the employees to pay the Company $ 30 per share upon vesting of the shares. The $30 purchase price requirement would be deemed satisfied and waived if the Company’s stock price on the last trading day of the performance period was $30 higher than the grant date stock price of $ 467.62 . This market condition was achieved for the 2023 Executive PSUs and 2023 Non-Executive PSUs. The Company determined the grant date fair value of the 2023 Executive PSUs and the 2023 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $ 467.62 , simulation term of four years, expected volatility of 51.0 %, risk-free interest rate of 3.9 %, and expected dividend yield of 0.9 %. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

 

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2022 PSUs:

 

In February 2022, the Compensation Committee granted 81,000 PSUs to the executive officers, which represented the target number of shares that could be earned subject to the achievement of two sets of performance goals (the “2022 Executive PSUs”). For the first goal, the executive officers could earn up to 300 % of the target number of the 2022 Executive PSUs based on the achievement of the Company’s average two-year (2022 and 2023) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA. 50 % of the 2022 Executive PSUs would vest in the first quarter of 2024 if the pre-determined revenue goal was met during the performance period. The remaining 2022 Executive PSUs would vest over the following two years on a quarterly basis. For the second goal, the executive officers could earn up to an additional 200 % of the target number of the 2022 Executive PSUs if the Company secured additional wafer capacity during a three-year performance period. The 2022 Executive PSUs related to the second goal would fully vest in the first quarter of 2025 if the pre-determined goal was met during the performance period. In addition, all vested shares related to the second goal would be subject to a post-vesting sales restriction period of one year. Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2022 Executive PSUs would be $ 142.7 million. The 2022 Executive PSUs were subsequently cancelled by the Board of Directors in October 2022. See the “2022 MSUs” section for further details.

 

MSUs

 

2022 MSUs:

 

In October 2022, the Compensation Committee cancelled the 2022 Executive PSUs and granted 159,000 MSUs to the executive officers as replacement awards, which represented the target number of shares that could be earned subject to the achievement of both stock price targets and stock performance compared to the companies comprising the Philadelphia Semiconductor Sector Index (“Peer Group”) over a three -year performance period from October 25, 2022 to October 25, 2025 (the “2022 Executive MSUs”). The maximum number of shares that an executive officer could earn was 500 % of the target number of the 2022 Executive MSUs if: (1) the Company achieved five stock price targets ranging from $ 455 to $ 591 at any time during the performance period, and (2) the Company’s total stockholder return ranked in the 50th percentile or above relative to the Peer Group at the end of the performance period. As of December 31, 2024, all price targets had been achieved. Based on the Company’s total stockholder return relative to the Peer Group at the end of the performance period, a total of 797,000 shares were awarded to the executive officers, which fully vested on October 25, 2025. Under modification accounting, the total stock-based compensation cost was $ 119.2 million, which was subsequently updated to $ 124.3 million due to a change of application of accounting methodology. The total stock-based compensation cost of $ 124.3 million included the unamortized expense of $ 102.8 million related to the 2022 Executive PSUs on the modification date and the incremental cost of $ 21.5 million related to the 2022 Executive MSUs as a result of the modification. 

 

The Company determined the grant date fair value of the 2022 Executive MSUs using a Monte Carlo simulation model with the following assumptions: stock price of $ 342.16 , simulation term of three years, expected volatility of 54.0 %, risk-free interest rate of 4.4 %, and an expected dividend yield of 0.9 %. There was no illiquidity discount because the awards did not contain any post-vesting sales restrictions.

 

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9.  STOCKHOLDERS’ EQUITY

 

Cash Dividend Program

 

The Company has a dividend program approved by its Board of Directors, pursuant to which the Company intends to pay quarterly cash dividends on its common stock. The Board of Directors declared the following cash dividends for the periods presented (in thousands, except per share amounts): 

 

    Year Ended December 31,

    2025
  2024
  2023

Dividend declared per share
  $ 6.24     $ 5.00     $ 4.00  

Total amount
  $ 300,117     $ 242,459     $ 190,642  

 

As of December 31, 2025 and 2024, accrued dividends totaled $ 76.0  million and $ 59.8  million, respectively.

 

The declaration of any future cash dividends is at the discretion of the Board of Directors and will depend on, among other things, the Company’s financial condition, results of operations, capital requirements, business conditions, and other factors that the Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the Company’s stockholders.

 

The Company anticipates that cash used for future dividend payments will come from its domestic cash, cash generated from ongoing U.S. operations, and cash repatriated from certain foreign subsidiaries. The Company also anticipates that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

 

Cash Dividend Equivalent Rights

 

The Company’s RSUs contain rights to receive cash dividend equivalents, which entitle employees who hold RSUs to the same dividend value per share as holders of common stock. The dividend equivalents are accumulated and paid to the employees after the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the underlying RSUs do not vest. As of December 31, 2025 and 2024 ,  accrued dividend equivalents totaled $ 9.4  million and $ 5.8  million, respectively.

 

Stock Repurchase Programs

 

In October 2023, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $ 640.0 million of its common stock, which was fully utilized as of December 31, 2024. In February 2025, the Board of Directors approved another stock repurchase program authorizing the Company to repurchase up to $ 500.0 million of its common stock through February 2028. Shares are retired upon repurchase. The Company repurchased approximately 8,000 ,  1.0  million, and 7,000  shares of its common stock for an aggregate purchase price of $ 6.6  million, $ 636.2  million, and $ 3.7 million during the years ended December 31, 2025, 2024 and 2023, respectively. 

 

Stock repurchased under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate. The timing and the number of any repurchased common stock will be determined by the Company’s management based on its evaluation of market conditions, legal requirements, share price, and other factors. The repurchase program does not obligate the Company to purchase any particular number of shares, and may be suspended, modified, or discontinued at any time without prior notice.

 

Excise taxes on the value of certain stock repurchases in excess of stock issued for employee compensation were not material for the Company’s stock repurchase programs for the years ended December 31, 2025, 2024 and 2023, respectively.

 

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10.  OTHER INCOME, NET

 

The components of other income, net, were as follows for the periods presented (in thousands):

 

    Year Ended December 31,

    2025
  2024
  2023

Interest income
  $ 29,151     $ 27,093     $ 23,363  

Amortization of discount on available-for-sale securities, net
    4,103       20,145       5,277  

Gain on deferred compensation plan investments
    10,033       9,400       8,505  

Charitable commitments
    ( 6,294 )     ( 23,742 )     ( 14,850 )

Other
    587       658       1,810  

Total
  $ 37,580     $ 33,554     $ 24,105  

 

 

11.    NET INCOME PER SHARE

 

The following table sets forth the computation of basic and diluted net income per share for the periods presented (in thousands, except per share amounts):

 

    Year Ended December 31,

    2025
  2024 (As Restated)   2023

Numerator:
                       

Net income
  $ 621,483     $ 1,592,058     $ 427,374  

                         

Denominator:
                       

Weighted-average outstanding shares—basic
    48,035       48,599       47,610  

Effect of dilutive securities
    274       236       1,161  

Weighted-average outstanding shares—diluted
    48,309       48,835       48,771  

                         

Net income per share:
                       

Basic
  $ 12.94     $ 32.76     $ 8.98  

Diluted
  $ 12.86     $ 32.60     $ 8.76  

 

 

Anti-dilutive common stock equivalents were not material for the periods presented.

 

 

12.  ACQUISITION
 
On January 3, 2024 (the “Acquisition Date”), the Company acquired  100 % of the outstanding capital stock of Axign, a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems. Commencing on the Acquisition Date, Axign became a wholly-owned subsidiary of the Company and its results of operations have been included in the Company’s consolidated financial statements.
 
Purchase Consideration
 
The purchase consideration was $ 33.4  million in cash. 
 
In connection with the acquisition, the Company incurred $ 0.4  million in transaction costs that were expensed as incurred and included in selling, general and administrative expenses in the Consolidated Statements of Operations.
 
Purchase Price Allocation
 
The purchase price allocation for Axign was as follows (in thousands):

 

Inventory
  $ 720  

Other tangible assets acquired, net of liabilities assumed
    1,623  

Intangible assets:
       

Developed technology
    9,184  

IPR&D
    2,147  

Total identifiable net assets acquired
    13,674  

Goodwill
    19,724  

Total net assets acquired
  $ 33,398  

 

The intangible asset acquired with a finite life includes the core developed technology with an estimated remaining useful life of eight years. The acquired intangible asset with an indefinite life includes an incomplete R&D project that had not reached technological feasibility as of the Acquisition Date. The fair values of the developed technology and the IPR&D were determined using the income approach.
 
The goodwill arising from the acquisition was primarily attributed to the assembled workforce and synergies that are anticipated to enable the Company to develop solutions with lower power consumption in the consumer and automotive end markets using Axign’s digital feedback technology. The goodwill is not expected to be deductible for tax purposes.

 

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13.    INCOME TAXES

 

The components of income before income taxes were as follows for the periods presented (in thousands):

 

    Year Ended December 31,

    2025
  2024
  2023

U.S.
  $ ( 118,484 )   $ ( 46,263 )   $ ( 15,066 )

Foreign
    884,700       619,175       520,907  

Income before income taxes
  $ 766,216     $ 572,912     $ 505,841  

 

The components of the income tax expense (benefit), net were as follows for the periods presented (in thousands):

 

    Year Ended December 31,

    2025
  2024 (As Restated)   2023

Current:
                       

Federal
  $ 19,428     $ 72,576     $ 61,064  

State
    1,345       348       4,257  

Foreign
    84,284       11,155       5,702  

Deferred:
                       

Federal
    ( 314 )     2,773       ( 1,705 )

State
    ( 212 )     160       ( 744 )

Foreign
    40,202       ( 1,106,158 )     9,893  

Income tax expense (benefit), net
  $ 144,733     $ ( 1,019,146 )   $ 78,467  

 

Beginning in 2025 annual reporting, we adopted ASU 2023-09 prospectively. Refer to Note 1, Summary of Significant Accounting Policies for additional details on the adoption of ASU 2023-09. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows (in thousands, except percentages):

 

    Year Ended December 31, 2025

    Amount
  Percent

U.S. federal statutory income tax rate
  $ 160,905       21.0 %

Domestic federal
               

Tax credits
               

Research credits
    ( 19,491 )     ( 2.5 )

Nontaxable and nondeductible items, net
               

Share-based payments
    39,963       5.2  

Other
    4,064       0.5  

Cross-border tax laws
               

Global intangible low-taxed income
    22,514       2.9  

Subpart F income
    3,541       0.5  

Effects of changes in tax laws or rates enacted in the current period
    -       -  

Changes in valuation allowances
    -       -  

Other
    508       0.1  

Domestic state and local income taxes, net of federal effect (a)
    ( 67 )     -  

Foreign tax effects
               

Switzerland
               

Statutory income tax rate differential
    ( 106,770 )     ( 13.9 )

Cantonal taxes, net of federal effect
    59,864       7.8  

Nontaxable and nondeductible items, net
    ( 21,381 )     ( 2.8 )

Other
    3,499       0.4  

Other foreign jurisdictions
    ( 4,069 )     ( 0.5 )

Worldwide changes in unrecognized tax benefits
    1,653       0.2  

Effective tax rate
  $ 144,733       18.9 %

 

(a)
State taxes in Arizona, California and Florida make up the majority (greater than 50%) of the tax effect in this category.

 

    Year Ended December 31,

    2024 (As Restated)
  2023

U.S. statutory federal tax rate
    21.0 %     21.0 %

Foreign income tax at lower rates
    ( 21.4 )     ( 21.9 )

U.S. tax impact of foreign earnings and losses
    15.1       14.5  

Changes in valuation allowance
    623.8       2.9  

Stock-based compensation
    1.9       2.2  

Return to Provision True Up Adjustment
    ( 0.1 )     ( 2.0 )

Tax attributes, net of reserves
    ( 210.4 )     ( 1.3 )

Effects of intercompany transactions
    ( 608.5 )     -  

Other adjustments
    0.7       0.1  

Effective tax rate
    ( 177.9 )%     15.5 %

 

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The amount of cash paid for income taxes (net of refunds) is as follows (in thousands):

 

    Year Ended December 31,

    2025

U.S. federal
  $ 16,162  

State and local
    940  

Foreign
       

Switzerland
    72,005  

Other foreign
    5,954  

Total foreign
    77,959  

Total income taxes paid, net
  $ 95,061  

 

The budget reconciliation bill H.R.1 (“H.R.1 Act”) signed into law on July 4, 2025, makes permanent certain expiring provisions of the 2017 Tax Cuts and Jobs Act and makes modifications to the existing tax framework. The primary impact for the current year is the immediate tax expensing of prior year unamortized and current year domestic R&D expenses and accelerated depreciation in the year ended December 31, 2025. The Company’s tax provision for the year ended December 31, 2025 includes the estimated impact of the H.R.1 Act.  

 

In 2024, one of the Company’s foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025. A deferred tax benefit of $ 1.1  billion, net of $ 0.2 billion of deferred tax liability and $ 0.1 billion of valuation allowance, was recorded during the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive. The deferred tax asset was $ 1.1  billion, net of $ 0.2 billion of deferred tax liability and $ 0.1 billion of valuation allowance, as of December 31, 2025.

 

In December 2024, the Company completed an intercompany transaction that resulted in one of its foreign subsidiaries recording a step up in the tax basis of intangible assets of $ 23.2 billion. This resulted in a deferred tax difference between the U.S. GAAP basis and local tax basis of the specified intangibles. The Company does not expect to realize the deferred tax asset for U.S. GAAP purposes; therefore, the Company has recorded a full valuation allowance as of December 31, 2024 and December 31, 2025.

 

In January 2025, the OECD released new Administrative Guidance on the application of the Global Anti-Base Erosion (“GloBE”) Model Rules. The Company will continue to evaluate the impact of this release or of other prospective guidance on its future global tax provision. 

 

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The components of net deferred tax assets consist of the following (in thousands):

 

    December 31,

    2025
  2024 (As Restated)

Deferred tax assets:
               

Tax attributes
  $ 1,205,863     $ 1,254,928  

Depreciation and amortization
    3,482,782       3,465,739  

Stock-based compensation
    3,977       3,432  

Deferred compensation
    10,920       11,202  

Other expenses not currently deductible
    11,357       9,505  

Deferred tax assets, gross
    4,714,899       4,744,806  

Valuation allowance
    ( 3,617,562 )     ( 3,608,471 )

Deferred tax assets, net of valuation allowance
    1,097,337       1,136,335  

Deferred tax liabilities:
               

Undistributed foreign earnings
    ( 781 )     ( 953 )

Other expenses currently deductible
    ( 4,153 )     ( 3,184 )

Deferred tax liabilities
    ( 4,934 )     ( 4,137 )

Net deferred tax assets
  $ 1,092,403     $ 1,132,198  

                 

Reported as:
               

Deferred tax assets, net
  $ 1,182,883     $ 1,225,565  

Deferred tax liabilities
    ( 90,480 )     ( 93,367 )

Net deferred tax assets
  $ 1,092,403     $ 1,132,198  

 

GILTI:

 

The Company accounts for GILTI as a period cost. 

 

Valuation Allowance:

 

The Company periodically evaluates its deferred tax assets, including a determination of whether a valuation allowance is necessary, based upon its ability to utilize the assets using a more likely than not analysis. The realizability of the Company’s most significant deferred tax asset is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. As of December 31, 2025 and 2024, the Company has evaluated the realization of its deferred tax assets and recorded a valuation allowance for assets that do not meet the more-likely-than-not recognition threshold.

 

A reconciliation of the beginning and ending balance of valuation allowances was as follows for the periods presented (in thousands):

 

Period
  Balance at Beginning of Period
  Additions
  Reductions
  Balance at End of Period

Year ended December 31, 2023
  $ 20,321     $ 15,405     $ ( 718 )   $ 35,008  

Year ended December 31, 2024 (As Restated)
  $ 35,008     $ 3,575,542     $ ( 2,079 )   $ 3,608,471  

Year ended December 31, 2025
  $ 3,608,471     $ 21,618     $ ( 12,527 )   $ 3,617,562  

 

The additions in the year ended December 31, 2024 were primarily the result of the step up in tax basis of intangible assets and a tax incentive received by one of our foreign subsidiaries. The Company has evaluated the deferred tax assets generated by each of these events and recorded a valuation allowance for any deferred tax assets that are not realizable on a more-likely-than-not basis.

 

Undistributed Earnings of Subsidiaries:

 

The Company has analyzed its global working capital and cash requirements, and has determined that it plans to repatriate cash from a foreign subsidiary on an ongoing basis to fund its future U.S.-based expenditures and dividends. For the years ended December 31, 2025 and 2024, the Company repatriated $ 275.0 million and $ 642.0 million, respectively, with immaterial tax impact, from this foreign subsidiary. 

 

For all other foreign subsidiaries, the Company expects to indefinitely reinvest undistributed earnings to fund their operations and research and development. An actual repatriation of the undistributed earnings could be subject to additional foreign withholding taxes and U.S. state taxes. Determination of the unrecognized state and withholding deferred tax liability is not practicable at this time due to the complexities associated with the hypothetical calculation.

 

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Other Income Tax Provision Matters

 

As of December 31, 2025, the state net operating loss carryforwards for income tax purposes were $ 4.3  million, which will expire beginning in 2031. As of December 31, 2025, the Company’s foreign net operating loss carryforwards for income tax purposes in non-U.S. jurisdictions were $ 19.2  million, $ 1.8  million of which can be carried forward indefinitely, while $ 17.4  million will begin to expire in 2029. 

 

As of December 31, 2025, the Company had no R&D tax credit carryforwards for federal income tax purposes. As of December 31, 2025, the Company had $ 48.2  million for state income tax purposes, which can be carried forward indefinitely.

 

In the event of a change in ownership, as defined under federal and state tax laws, the Company’s net operating loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization.

 

As of December 31, 2025, the Company had $ 81.1  million of unrecognized tax benefits, $ 66.9  million of which would affect its effective tax rate if recognized after considering the valuation allowance. As of December 31, 2024, the Company had $ 74.4  million of unrecognized tax benefits, $ 58.9  million of which would affect its effective tax rate if recognized after considering the valuation allowance. 

 

A reconciliation of the gross unrecognized tax benefits was as follows (in thousands): 

 

Balance as of January 1, 2023
  $ 49,277  

Increase for tax position of current year
    14,108  

Increase for tax position of prior year
    2,209  

Decrease due to settlement with tax authorities
    ( 1,926 )

Decrease due to lapse of statute of limitation
    ( 1,008 )

Balance as of December 31, 2023
    62,660  

Increase for tax position of current year
    18,125  

Increase for tax position of prior year
    2,180  

Decrease due to lapse of statute of limitation
    ( 8,579 )

Balance as of December 31, 2024
    74,386  

Increase for tax position of current year
    17,411  

Decrease for tax position of prior year
    ( 1,374 )

Decrease due to lapse of statute of limitation
    ( 9,359 )

Balance as of December 31, 2025
  $ 81,064  

 

The Company recognizes interest and penalties, if any, related to uncertain tax positions in its income tax provision. As of December 31, 2025 and 2024, the Company has $ 8.2  million and $ 6.3  million, respectively, of accrued interest related to uncertain tax positions, which were recorded in income tax liabilities on the Consolidated Balance Sheets.

  

The Company currently has reduced tax rates in its subsidiaries in Chengdu and Hangzhou, China through 2025 for performing R&D activities.

 

Income Tax Examination

 

The Company is subject to examination of its income tax returns by the U.S. IRS and other tax authorities. In general, the tax years for 2022 and forward are open for examination for U.S. federal and state income tax purposes.

 

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14.    COMMITMENTS AND CONTINGENCIES

 

Indemnification Provisions

 

The Company provides indemnification agreements to certain direct or indirect customers. The Company agrees to reimburse these parties for any damages, costs and expenses incurred by them as a result of legal actions taken against them by third parties for infringing upon third-party intellectual property rights as a result of using the Company’s products and technologies. These indemnification provisions are varied in scope and are subject to certain terms, conditions, limitations and exclusions. In addition, the Company has entered into indemnification agreements with its directors and officers.

 

It is not possible to predict the maximum potential amount of future payments under these agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. There were no indemnification liabilities incurred for the periods presented. However, there can be no assurances that the Company will not incur financial liabilities in the future as a result of these obligations, which could be material.

 

Purchase Commitments

 

The Company has outstanding purchase obligations with its suppliers and other parties that require the purchases of goods or services. The purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements.

 

Total estimated future unconditional purchase commitments to all suppliers and other parties as of December 31, 2025 were as follows (in thousands):

 

2026
  $ 389,767  

2027
    51,435  

2028
    486  

2029
    486  

Total
  $ 442,174  

 

Litigation

 

The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters. The Company is also subject to litigation initiated by its stockholders. These proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend. The Company defends itself vigorously against any such claims. Based on current information, the Company does not believe that a material loss from known matters is probable as of December 31, 2025.

 

 

15.    SEGMENT AND GEOGRAPHIC INFORMATION

 

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronics solutions for the storage and computing, enterprise data, automotive, industrial, communications and consumer end markets. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance. Specifically, the CODM uses net income that is reported on the Consolidated Statements of Operations, and cash provided by operating activities reported in the Consolidated Statements of Cash Flows, to decide whether and how much to reinvest profits into core business operations or to return to stockholders in the form of stock repurchases and dividends.

 

All significant segment expenses have been captured on the face of the Consolidated Statements of Operations.

 

The following is a summary of long-lived assets by geographic region (in thousands): 

 

    December 31,

Country
  2025
  2024

China
  $ 332,506     $ 237,649  

U.S.
    165,107       171,514  

Taiwan
    65,081       42,388  

Other
    64,995       43,394  

Total
  $ 627,689     $ 494,945  

 

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16.  SUBSEQUENT EVENTS

 

Cash Dividend Increase

 

In February 2026, the Board of Directors of the Company approved an increase in quarterly cash dividends from $ 1.56  per share to $ 2.00  per share.

 

 

17.  RESTATEMENT OF PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

Restatement of Interim Financial Information (Unaudited)

 

In connection with the preparation of the Company's Consolidated Financial Statements as of and for the fiscal year ended December 31, 2025, the Company discovered that in the prior year it had not appropriately accounted for deferred income taxes associated with a one-time tax incentive granted by a certain foreign jurisdiction. The adjustment results in a decrease to the net income tax expense and the deferred income taxes, and the amounts were also material to the interim financial information. The Company has restated its unaudited Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statement of Comprehensive Income, and Consolidated Statement of Stockholders’ Equity for the quarterly periods ended March 31, 2025, June 30, 2025, and September 30, 2025.

 

The impacts of the restatement are summarized below (in thousands, except per-share amounts):

 

RESTATED CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2025 (UNAUDITED)  (in thousands, except par value):

 

    March 31, 2025

    As Previously Reported
  Impact of Restatement   As Restated

ASSETS
                       

Current assets:
                       

Cash and cash equivalents
  $ 637,354     $ -     $ 637,354  

Short-term investments
    389,310       -       389,310  

Accounts receivable, net
    214,866       -       214,866  

Inventories
    454,793       -       454,793  

Other current assets
    92,063       -       92,063  

Total current assets
    1,788,386       -       1,788,386  

Property and equipment, net
    527,348       -       527,348  

Acquisition-related intangible assets, net
    9,651       -       9,651  

Goodwill
    25,944       -       25,944  

Deferred tax assets, net
    1,318,457       ( 100,617 )     1,217,840  

Other long-term assets
    135,974       -       135,974  

Total assets
  $ 3,805,760     $ ( 100,617 )   $ 3,705,143  

                         

LIABILITIES AND STOCKHOLDERS’ EQUITY
                       

Current liabilities:
                       

Accounts payable
  $ 127,310     $ -     $ 127,310  

Accrued compensation and related benefits
    74,785       -       74,785  

Other accrued liabilities
    161,306       -       161,306  

Total current liabilities
    363,401       -       363,401  

Income tax liabilities
    69,535       -       69,535  

Deferred tax liabilities
    -       92,764       92,764  

Other long-term liabilities
    105,814       -       105,814  

Total liabilities
    538,750       92,764       631,514  

Commitments and contingencies
                       

Stockholders’ equity:
                       

Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 47,877 and 47,823, respectively
    764,959       -       764,959  

Retained earnings
    2,545,375       ( 193,381 )     2,351,994  

Accumulated other comprehensive loss
    ( 43,324 )     -       ( 43,324 )

Total stockholders’ equity
    3,267,010       ( 193,381 )     3,073,629  

Total liabilities and stockholders’ equity
  $ 3,805,760     $ ( 100,617 )   $ 3,705,143  

 

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RESTATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2025 (UNAUDITED)  (in thousands, except per-share amounts):

 

    Three Months Ended March 31, 2025

    As Previously Reported
  Impact of Restatement   As Restated

Revenue
  $ 637,554     $ -     $ 637,554  

Cost of revenue
    284,324       -       284,324  

Gross profit
    353,230       -       353,230  

Operating expenses:
                       

Research and development
    92,227       -       92,227  

Selling, general and administrative
    92,244       -       92,244  

Total operating expenses
    184,471       -       184,471  

Operating income
    168,759       -       168,759  

Other income, net
    5,131       -       5,131  

Income before income taxes
    173,890       -       173,890  

Income tax expense
    40,099       ( 1,261 )     38,838  

Net income
  $ 133,791     $ 1,261     $ 135,052  

                         

Net income per share:
                       

Basic
  $ 2.80     $ 0.02     $ 2.82  

Diluted
  $ 2.79     $ 0.02     $ 2.81  

Weighted-average shares outstanding:
                       

Basic
    47,851       -       47,851  

Diluted
    48,006       -       48,006  

 

RESTATED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE MONTHS ENDED MARCH 31, 2025 (UNAUDITED)  (in thousands):

 

    Three Months Ended March 31, 2025

    As Previously Reported
  Impact of Restatement   As Restated

Net income
  $ 133,791     $ 1,261     $ 135,052  

Other comprehensive income, net of tax:
                       

Foreign currency translation adjustments
    5,139       -       5,139  

Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 0 and $(248), respectively
    48       -       48  

Other comprehensive income, net of tax
    5,187       -       5,187  

Comprehensive income
  $ 138,978     $ 1,261     $ 140,239  

 

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RESTATED CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2025 (UNAUDITED)  (in thousands, except par value):

 

    June 30, 2025

    As Previously Reported
  Impact of Restatement   As Restated

ASSETS
                       

Current assets:
                       

Cash and cash equivalents
  $ 787,382     $ -     $ 787,382  

Short-term investments
    358,695       -       358,695  

Accounts receivable, net
    194,821       -       194,821  

Inventories
    490,642       -       490,642  

Other current assets
    87,217       -       87,217  

Total current assets
    1,918,757       -       1,918,757  

Property and equipment, net
    563,885       -       563,885  

Acquisition-related intangible assets, net
    9,364       -       9,364  

Goodwill
    25,944       -       25,944  

Deferred tax assets, net
    1,309,981       ( 99,948 )     1,210,033  

Other long-term assets
    144,279       -       144,279  

Total assets
  $ 3,972,210     $ ( 99,948 )   $ 3,872,262  

                         

LIABILITIES AND STOCKHOLDERS’ EQUITY
                       

Current liabilities:
                       

Accounts payable
  $ 129,919     $ -     $ 129,919  

Accrued compensation and related benefits
    81,296       -       81,296  

Other accrued liabilities
    172,293       -       172,293  

Total current liabilities
    383,508       -       383,508  

Income tax liabilities
    73,185       -       73,185  

Deferred tax liabilities
    -       92,150       92,150  

Other long-term liabilities
    113,449       -       113,449  

Total liabilities
    570,142       92,150       662,292  

Commitments and contingencies
                        

Stockholders’ equity:
                       

Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 47,892 and 47,823, respectively
    822,582       -       822,582  

Retained earnings
    2,603,177       ( 192,098 )     2,411,079  

Accumulated other comprehensive loss
    ( 23,691 )     -       ( 23,691 )

Total stockholders’ equity
    3,402,068       ( 192,098 )     3,209,970  

Total liabilities and stockholders’ equity
  $ 3,972,210     $ ( 99,948 )   $ 3,872,262  

 

RESTATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDITED)  (in thousands, except per-share amounts):

 

    Three Months Ended June 30, 2025
  Six Months Ended June 30, 2025

    As Previously Reported
  Impact of Restatement   As Restated
  As Previously Reported
  Impact of Restatement   As Restated

Revenue
  $ 664,574     $ -     $ 664,574     $ 1,302,128     $ -     $ 1,302,128  

Cost of revenue
    298,558       -       298,558       582,882       -       582,882  

Gross profit
    366,016       -       366,016       719,246       -       719,246  

Operating expenses:
                                               

Research and development
    96,266       -       96,266       188,493       -       188,493  

Selling, general and administrative
    104,992       -       104,992       197,236       -       197,236  

Total operating expenses
    201,258       -       201,258       385,729       -       385,729  

Operating income
    164,758       -       164,758       333,517       -       333,517  

Other income, net
    12,220       -       12,220       17,351       -       17,351  

Income before income taxes
    176,978       -       176,978       350,868       -       350,868  

Income tax expense
    43,252       ( 1,283 )     41,969       83,351       ( 2,544 )     80,807  

Net income
  $ 133,726     $ 1,283     $ 135,009     $ 267,517     $ 2,544     $ 270,061  

                                                 

Net income per share:
                                               

Basic
  $ 2.79     $ 0.03     $ 2.82     $ 5.59     $ 0.05     $ 5.64  

Diluted
  $ 2.78     $ 0.03     $ 2.81     $ 5.57     $ 0.05     $ 5.62  

Weighted-average shares outstanding:
                                               

Basic
    47,887       -       47,887       47,869       -       47,869  

Diluted
    48,019       -       48,019       48,012       -       48,012  

 

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RESTATED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDITED)  (in thousands):

 

    Three Months Ended June 30, 2025
  Six Months Ended June 30, 2025

    As Previously Reported
  Impact of Restatement
  As Restated
  As Previously Reported
  Impact of Restatement
  As Restated

Net income
  $ 133,726     $ 1,283     $ 135,009     $ 267,517     $ 2,544     $ 270,061  

Other comprehensive income, net of tax:
                                               

Foreign currency translation adjustments
    19,634       -       19,634       24,773       -       24,773  

Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 0 , $50, $ 0 and $(198), respectively
    ( 1 )     -       ( 1 )     47       -       47  

Other comprehensive income, net of tax
    19,633       -       19,633       24,820       -       24,820  

Comprehensive income
  $ 153,359     $ 1,283     $ 154,642     $ 292,337     $ 2,544     $ 294,881  

 

RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2025 (UNAUDITED)  (in thousands, except par value):

 

    September 30, 2025

    As Previously Reported
  Impact of Restatement   As Restated

ASSETS
                       

Current assets:
                       

Cash and cash equivalents
  $ 1,081,251     $ -     $ 1,081,251  

Short-term investments
    188,233       -       188,233  

Accounts receivable, net
    241,560       -       241,560  

Inventories
    505,680       -       505,680  

Other current assets
    96,021       -       96,021  

Total current assets
    2,112,745       -       2,112,745  

Property and equipment, net
    597,311       -       597,311  

Acquisition-related intangible assets, net
    9,077       -       9,077  

Goodwill
    25,944       -       25,944  

Deferred tax assets, net
    1,300,260       ( 99,170 )     1,201,090  

Other long-term assets
    161,055       -       161,055  

Total assets
  $ 4,206,392     $ ( 99,170 )   $ 4,107,222  

                         

LIABILITIES AND STOCKHOLDERS’ EQUITY
                       

Current liabilities:
                       

Accounts payable
  $ 141,689     $ -     $ 141,689  

Accrued compensation and related benefits
    99,602       -       99,602  

Other accrued liabilities
    201,513       -       201,513  

Total current liabilities
    442,804       -       442,804  

Income tax liabilities
    78,261       -       78,261  

Deferred tax liabilities
    -       91,436       91,436  

Other long-term liabilities
    117,380       -       117,380  

Total liabilities
    638,445       91,436       729,881  

Commitments and contingencies
                         

Stockholders’ equity:
                       

Common stock and additional paid-in capital: $ 0.001 par value; shares authorized: 150,000 ; shares issued and outstanding: 47,905 and 47,823, respectively
    885,123       -       885,123  

Retained earnings
    2,705,527       ( 190,606 )     2,514,921  

Accumulated other comprehensive loss
    ( 22,703 )     -       ( 22,703 )

Total stockholders’ equity
    3,567,947       ( 190,606 )     3,377,341  

Total liabilities and stockholders’ equity
  $ 4,206,392     $ ( 99,170 )   $ 4,107,222  

 

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RESTATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 (UNAUDITED)  (in thousands, except per-share amounts):

 

    Three Months Ended September 30, 2025
  Nine Months Ended September 30, 2025

    As Previously Reported
  Impact of Restatement   As Restated
  As Previously Reported
  Impact of Restatement   As Restated

Revenue
  $ 737,176     $ -     $ 737,176     $ 2,039,304     $ -     $ 2,039,304  

Cost of revenue
    330,948       -       330,948       913,830       -       913,830  

Gross profit
    406,228       -       406,228       1,125,474       -       1,125,474  

Operating expenses:
                                               

Research and development
    98,173       -       98,173       286,666       -       286,666  

Selling, general and administrative
    112,872       -       112,872       310,108       -       310,108  

Total operating expenses
    211,045       -       211,045       596,774       -       596,774  

Operating income
    195,183       -       195,183       528,700       -       528,700  

Other income, net
    10,392       -       10,392       27,743       -       27,743  

Income before income taxes
    205,575       -       205,575       556,443       -       556,443  

Income tax expense
    27,301       ( 1,492 )     25,809       110,652       ( 4,036 )     106,616  

Net income
  $ 178,274     $ 1,492     $ 179,766     $ 445,791     $ 4,036     $ 449,827  

                                                 

Net income per share:
                                               

Basic
  $ 3.72     $ 0.03     $ 3.75     $ 9.31     $ 0.09     $ 9.40  

Diluted
  $ 3.71     $ 0.03     $ 3.74     $ 9.28     $ 0.09     $ 9.37  

Weighted-average shares outstanding:
                                               

Basic
    47,898       -       47,898       47,879       -       47,879  

Diluted
    48,042       -       48,042       48,022       -       48,022  

 

RESTATED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 (UNAUDITED)  (in thousands):

 

    Three Months Ended September 30, 2025
  Nine Months Ended September 30, 2025

    As Previously Reported
  Impact of Restatement   As Restated
  As Previously Reported
  Impact of Restatement   As Restated

Net income
  $ 178,274     $ 1,492     $ 179,766     $ 445,791     $ 4,036     $ 449,827  

Other comprehensive income, net of tax:
                                               

Foreign currency translation adjustments
    919       -       919       25,692       -       25,692  

Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 17 , $37, $ 17 and $(161), respectively
    69       -       69       116       -       116  

Other comprehensive income, net of tax
    988       -       988       25,808       -       25,808  

Comprehensive income
  $ 179,262     $ 1,492     $ 180,754     $ 471,599     $ 4,036     $ 475,635  

 

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RESTATED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS ’ EQUITY (UNAUDITED)  (in thousands, except per-share amounts):

 

                            Accumulated
         

    Common Stock and
            Other
    Total
 

    Additional Paid-in Capital
    Retained
    Comprehensive
    Stockholders’
 

    Shares
    Amount
    Earnings
    Loss
    Equity
 

Balance as of January 1, 2025 (As Restated)
    47,823     $ 706,817     $ 2,292,819     $ ( 48,511 )   $ 2,951,125  

Net income (As Restated)
    -       -       135,052       -       135,052  

Other comprehensive income
    -       -       -       5,187       5,187  

Dividends and dividend equivalents declared ($ 1.56 per share)
    -       -       ( 75,877 )     -       ( 75,877 )

Common stock issued
    54       5,335       -       -       5,335  

Stock-based compensation expense
    -       52,807       -       -       52,807  

Balance as of March 31, 2025 (As Restated)
    47,877       764,959       2,351,994       ( 43,324 )     3,073,629  

Net income (As Restated)
    -       -       135,009       -       135,009  

Other comprehensive income
    -       -       -       19,633       19,633  

Dividends and dividend equivalents declared ($ 1.56 per share)
    -       -       ( 75,924 )     -       ( 75,924 )

Common stock issued
    19       -       -       -       -  

Repurchases of common stock
    ( 4 )     ( 2,484 )     -       -       ( 2,484 )

Stock-based compensation expense
    -       60,107       -       -       60,107  

Balance as of June 30, 2025 (As Restated)
    47,892       822,582       2,411,079       ( 23,691 )     3,209,970  

Net income (As Restated)
    -       -       179,766       -       179,766  

Other comprehensive income
    -       -       -       988       988  

Dividends and dividend equivalents declared ($ 1.56 per share)
    -       -       ( 75,924 )     -       ( 75,924 )

Common stock issued
    15       3,885       -       -       3,885  

Repurchases of common stock
    ( 2 )     ( 2,017 )     -       -       ( 2,017 )

Stock-based compensation expense
    -       60,673       -       -       60,673  

Balance as of September 30, 2025 (As Restated)
    47,905     $ 885,123     $ 2,514,921     $ ( 22,703 )   $ 3,377,341  

 

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Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Item 9A.

Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, and due to the finding of the material weakness described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

 

Notwithstanding the material weakness in internal control over financial reporting and the resulting restatement described below, management believes and has concluded that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

 

Management ’ s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

 

As of December 31, 2025, we identified a material weakness in our internal control over financial reporting. During the year-end financial reporting process for fiscal year 2025, the material weakness was identified in internal control over financial reporting related to the accounting for deferred income taxes. We engaged third-party tax service providers in connection with the original determination of the accounting for deferred income taxes associated with a one-time tax incentive granted by a certain foreign jurisdiction. Nevertheless, the internal controls in place with respect to the review of the calculation of deferred income taxes and the related income tax expense (benefit) were not designed appropriately or operating effectively as of December 31, 2025 and 2024.

 

We have developed a remediation plan for this material weakness, which is described below.

 

As further described in Note 2 and Note 17 to the Consolidated Financial Statements, the identified material weakness resulted in the misstatement of deferred income taxes and income tax benefit, net for the fiscal year ended December 31, 2024. Ernst & Young LLP independently assessed the effectiveness of our internal control over financial reporting, as stated in the firm’s attestation report, which appears in Part II, Item 8 of this Annual Report on Form 10-K.

 

Remediation

 

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. These remediation actions are ongoing and include or are expected to include:

 

 
•

incorporation of a comprehensive local tax computation process, for material subsidiaries, into the worldwide tax computation process;

 
 
 

 
•
incorporation of documentation to monitor ongoing international tax developments, inclusive of involving the correct level of technical expertise; and

 
 
 

 
•
improved documentation of the deferred tax review checklist including key aspects of local taxation.

As we continue to evaluate and work to improve our internal control over financial reporting, we may decide to take additional measures to address this identified deficiency or modify the remediation plans described above. We believe that these actions will remediate the material weakness, however, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. 

Management believes the foregoing plans will effectively remediate the deficiency constituting the material weakness and believes that the remediation of this material weakness (including necessary testing) will be completed during 2026. However, there can be no assurance as to when such remediation will be completed. As the remediation plan is implemented, management may take additional measures or modify the remediation plan elements described above.

 

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Changes in Internal Control over Financial Reporting

 

Except for the remediation measures related to the material weakness described above, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2025, that would have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting. 

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Item 9B.
Other Information

 

10b5-1 Trading Plans

 

Certain of our executive officers and directors have entered into trading plans pursuant to Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended. A trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of our common stock, including the sale of shares acquired pursuant to the Monolithic Power Systems, Inc. 2004 Employee Stock Purchase Plan, amended and restated, and upon vesting of RSUs.