Monolithic Power Systems (MPWR) 10-K risk factor changes: FY2023 vs FY2022

[removed: You] [added: This section] should [removed: carefully consider the risks described below, together] [added: be read in conjunction] with all of the other information in this Annual Report on Form 10-K and [added: our] other filings with the [removed: SEC in evaluating our business.][added: SEC.]

If any of [removed: the following] [added: these] risks [removed: actually occur,] [added: materialize from time to time, then] our business, [added: reputation,] financial condition, operating results, and growth prospects [removed: would likely] [added: could] be materially and adversely affected.

Our revenue and expenses are difficult to predict, have varied significantly in the [removed: past] [added: past,] and could fluctuate significantly in the future due to numerous risks and uncertainties, many of which are beyond our control.

| • | our ability to [removed: experience] [added: achieve] growth rates [added: or financial performance] comparable to past years; |

| • | availability of adequate manufacturing capacity from our suppliers, and our ability to increase product sales [removed: and revenue] in spite of capacity issues; |

| • | competition from companies with greater financial and technological [removed: resources] [added: resources,] and customers developing products internally; |

| • | our significant investment of resources in research and [removed: development,] [added: development] that may not result in increased future sales; |

| • | [removed: risks associated with financial reporting, including] the impact of new tax laws on our tax provision and tax planning; |

| • | our failure to comply with various governmental laws and [removed: regulations, including those] [added: regulations] related to environmental, social and governance (“ESG”) [removed: initiatives;] [added: initiatives or our failure to meet our own ESG goals and targets;] |

| • | risks associated with owning our stock, including volatility in our trading price due to our business and financial performance, analyst downgrades, failure to meet our own or analyst expectations, changes to our [added: stock repurchase or] dividend program, and dilution from issuance of additional shares; |

| • | [added: health risks,] climate crises and other natural [removed: disasters, health risks, and economic] [added: disasters;] and [removed: geopolitical uncertainties, including the Russia-Ukraine conflict.] |

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

We derive most of our revenue from customers located in Asia through direct sales or indirect sales [removed: through] [added: under] distribution arrangements and value-added reseller agreements with parties located in Asia.

For the year ended December 31, [removed: 2022, 86%] [added: 2023, 87%] of our revenue was from customers in Asia.

| • | changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S. and in the countries in which we manufacture or sell our products, and [removed: government] [added: governmental] action to restrict our ability to sell to foreign customers where sales of products may require export licenses; |

| • | [removed: the] fluctuations in the value of the U.S. Dollar relative to other foreign currencies, which could affect the competitiveness of our products; |

| • | adverse weather conditions or other natural disasters [removed: such as extreme heatwaves, affecting energy supply in] [added: that may cause work stoppages and affect] our [removed: facilities] [added: operations] in [removed: China and causing work stoppages;] [added: China;] |

| • | longer accounts receivable collection [removed: cycles and difficulties in collecting accounts receivables;] [added: cycles;] |

[removed: _Our] [added: _Our] business has been and may be significantly impacted by worldwide economic conditions, in particular changing economic conditions in [removed: China._][added: China._]

Adverse macroeconomic conditions, including inflation, [removed: slower] [added: slowing] growth, recession, stagflation, new or increased tariffs and other barriers to trade, tighter credit, higher interest rates, [added: currency fluctuations,] higher [removed: unemployment] [added: unemployment, labor shortages, lower capital expenditures by businesses,] and [removed: currency fluctuations can materially adversely affect logistics or] [added: lower consumer confidence and spending, have in the past, and could in the future, have a material adverse effect on logistics,] demand for our [removed: products.][added: products, and our product and operational costs.]

For example, [added: due to economic uncertainties] in [removed: recent months,] [added: 2023,] some of our customers [removed: have] cancelled, decreased or delayed their existing and future orders with [removed: us.][added: us, which impacted our financial results and made our forecasting much more difficult.]

[removed: Volatility] [added: In addition, volatility] in the credit markets could severely diminish [added: our customers’] liquidity and capital [removed: availability.][added: availability, which could materially harm our business.]

Demand for our products is a function of the health of the economies in the [removed: United States,] [added: U.S.,] Europe, China and the rest of Asia.

We cannot predict the timing, strength or duration of any economic disruptions, such as those resulting from the [removed: COVID-19 pandemic, the] global economic [removed: downturn or] [added: downturn,] the Russia-Ukraine conflict, [added: the Middle East conflict] or subsequent economic recovery worldwide, in our industry, or in the different markets that we serve.

[removed: A slowdown in economic growth] [added: The current stagnation] in [removed: China] [added: China’s economy has adversely impacted, and] could [added: further] adversely impact our customers, prospective customers, suppliers, distributors and partners in China, which could have a material adverse effect on our [added: operating] results [removed: of the operations] and financial condition.

[removed: _There] [added: _There] are inherent risks associated with the operation of our manufacturing and testing facilities in China, which could increase product costs or cause a delay in product [removed: shipments._][added: shipments._]

| • | natural disasters such as [added: earthquakes, flooding,] severe heatwaves or droughts, which could result in [removed: prolonged] power shortages or water restrictions in our facilities; |

| • | higher than anticipated overhead and other [removed: costs of operation.] [added: operational costs.] |

If we are unable to maintain our facilities in China at [removed: fully] [added: full] operational status with qualified workers, appropriate manufacturing controls and reasonable cost levels, we may incur [removed: higher] costs [added: higher] than our current expense levels, which would affect our gross [removed: margins.][added: margins and operating expenses.]

In addition, if capacity restraints result in significant delays in product shipments, our business and results of operations would be [added: materially and] adversely affected.

[removed: _We] [added: _We] and [added: many of] our manufacturing partners and suppliers are [removed: or will be] subject to extensive Chinese government regulations, and the benefit of various incentives from Chinese governments that we and [added: many of] our manufacturing partners and [removed: suppliers_ _receive] [added: suppliers receive] may be reduced or eliminated, which could increase our costs or limit our ability to sell products and conduct activities in [removed: China._][added: China._]

Additionally, the Chinese government has implemented policies from time to time to regulate economic [removed: expansion] [added: activities] in China.

It exercises significant control over China’s [removed: economic growth] [added: economy] through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

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

The Chinese government and provincial and local governments [removed: also] have [added: also] provided, and [added: may] continue to provide, various incentives to encourage the development of the semiconductor industry in China.

Such incentives include cash awards, tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to our manufacturing partners, suppliers and [removed: us with respect to our facilities in China.][added: us.]

Any of these incentives could be reduced or eliminated by governmental authorities at any time, which could [added: materially and] adversely affect our business and operating results.

[removed: _Uncertainties] [added: _Uncertainties] with respect to [removed: China_’_s] [added: China’s] legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in policies, laws and regulations in China could [added: materially and] adversely affect our [removed: operations._][added: operations._]

In addition, any new or amended laws and regulations related to, among other things, foreign [removed: investment] [added: investments] and manufacturing could have a material adverse effect on our business and our ability to operate [removed: our] business in China.

Furthermore, China’s legal system is based in part on government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive [removed: effect.][added: effects.]

Our business involves numerous risks and uncertainties, including but not limited to the material risks described below.

Additional risks, trends and uncertainties may arise that could also harm our business, reputation, financial condition, operating results, and growth prospects.

| • | fluctuations in the value of the U.S. Dollar relative to other currencies, including the Renminbi; |

| • | our reliance on key suppliers in China, which may expose us to political, cultural, regulatory, economic, foreign currency, operational and capacity shortage risks; |

| • | risks in connection with our internal control over financial reporting and the identified material weakness; |

| • | financial market, economy and geopolitical uncertainties. |

Furthermore, our customers’ end products and systems that incorporate our components could be subject to export laws, trade policies and other sales restrictions, which could indirectly affect our business, financial conditions and results of operations.

For example, the increasing focus on the risks and strategic importance of AI technologies has resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI, and may in the future result in additional restrictions impacting the sales of AI technologies or products.

Any of such regulatory restrictions could, in turn, impact the sales of our products supporting AI applications.

_A significant portion of our manufacturing capacity comes from suppliers in China, which exposes us to political, cultural, regulatory, economic, foreign exchange, and operational risks._

A significant portion of our manufacturing, assembly and packaging capacity comes from key suppliers located in China.

As a result, we are subject to significant political, regulatory, economic, foreign exchange, and operational risks due to this geographic concentration in our business.

Although our management has an established long-term strategy to diversify capacity outside China, there is no guarantee that we will be able to identify, qualify and engage additional foundry partners and assembly and packaging suppliers in other regions in order to mitigate these risks, or that the quality, price or terms of such production will be sufficient or acceptable to us, any of which could negatively and materially harm our business and results of operations.

Our sales to distributors are also subject to higher volatility because they service demand from multiple levels of the supply chain which, in itself, is inherently difficult to forecast.

If we are unable to increase or maintain our manufacturing capacity, we may be unable to meet demand, which would harm our revenue and results of operations and may result in a loss of customers as they seek supply from other sources.

If any of these situations were to occur, our business, financial condition and results of operations could be materially and adversely affected.

_Certain software we use is from open-source code sources, which, under certain circumstances, may lead to unintended consequences and, therefore, could materially adversely affect our business, financial condition, operating results and cash flow._

We use open-source software in connection with certain of our products and services, and we intend to continue to use open-source software in the future.

From time to time, there have been claims challenging the ownership of open-source software against companies that incorporate open-source software into their products or services or alleging that these companies have violated the terms of an open-source license.

As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open-source software or alleging that we have violated the terms of an open-source license.

Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our solutions.

In addition, if we were to combine our proprietary software solutions with open-source software in certain circumstances, we could, under certain open-source licenses, be required to publicly release the source code of our proprietary software solutions, which could harm our business and ability to compete.

If we inappropriately use open-source software, we may be required to re-engineer our solutions, discontinue the sale of our solutions, release the source code of our proprietary software to the public at no cost or take other remedial actions, which could increase our costs, harm our ability to compete and have a material adverse effect on our business, operating results and financial condition.

There is also a risk that open-source licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions, which could adversely affect our business, operating results and financial condition.

As AI capabilities improve, threat actors may quickly develop more sophisticated and convincing attacks.

These attacks could be crafted with an AI tool to directly attack information systems with increased speed and efficiency or create more effective phishing emails.

Our ability to manage and aggregate data may be limited by the effectiveness of our policies, programs, processes, systems and practices that govern how data is acquired, validated, used, stored, protected, processed and shared.

Failure to manage data effectively and to aggregate data in an accurate and timely manner may limit our ability to manage current and emerging risks, as well as to manage changing business needs.

While we restrict the use of third-party and open-source AI tools, such as ChatGPT, our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses additional risks relating to the protection of data, including the potential exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.

Use of AI tools may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information and failure to comply with open-source software requirements.

AI tools may also produce inaccurate responses that could lead to errors in our decision-making, product development or other business activities, which could have a negative impact on our business, operating results and financial condition.

Our ability to mitigate these risks will depend on our continued effective maintaining, training, monitoring and enforcement of appropriate policies and procedures governing the use of AI tools, and the results of any such use, by us or our partners.

Other states have, or are expected to, enact similar or more expansive legislation regarding the collection and processing of personal data.

Many of our competitors have significantly greater resources than we have and are able to invest substantially greater amounts into research and development initiatives than we are, which could harm our ability to innovate and compete.

In January 2024, we completed the acquisition of Axign B.V. (“Axign”), a fabless semiconductor company located in the Netherlands that specializes in the development of consumer audio applications.

Our provision for income taxes and cash tax liabilities in the future could be adversely affected by numerous factors, including changes in the geographic mix of our earnings and corporate tax rates among jurisdictions, challenges by tax authorities to our tax positions and intercompany transfer pricing arrangements, failure to meet performance obligations with respect to tax incentive agreements, expanding our operations in various countries, fluctuations in foreign currency exchange rates, adverse resolution of audits and examinations of previously filed tax returns, and changes in tax laws and regulations.

As more fully disclosed in Item 9A.

Controls and Procedures of this Annual Report, late in the audit process, a material weakness was identified that existed as of December 31, 2023, regarding ineffective design of the controls related to management’s review and documentation of our inventory demand information and other assumptions used to determine the inventory carrying value adjustments necessary to record such quantities at the lower of their cost or net realizable value.

Due to this finding of a material weakness, we concluded that our internal control over financial reporting was not effective as of December 31, 2023.

While we do not believe that this material weakness has impacted the accuracy or reporting of our consolidated financial results, until this material weakness is remediated, or should new material weaknesses arise or be discovered in the future, there is a reasonable possibility that a material misstatement of our interim or annual financial statements will not be prevented or detected on a timely basis.

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Our business involves numerous risks and uncertainties.

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| • | adverse movements in foreign exchange rates, including the Renminbi; |

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| • | the effect of epidemics and pandemics, such as the COVID-19 pandemic, on our business; and |

| • | tariffs imposed by China and the U.S. that may impact our sales; |

| • | epidemics and illnesses, such as the COVID-19 pandemic; |

There is no guarantee that economic downturns, whether actual or perceived, any further decrease in economic growth rates or an otherwise uncertain economic outlook in China will not occur or persist in the future, that they will not be protracted, or that governments will respond adequately to control and reverse such conditions, any of which could materially and adversely affect our business, financial condition and results of operations.

China has continued to experience COVID-19 outbreaks, specifically in Shanghai and Chengdu where we have business operations and where many of our customers and suppliers are located.

In response to the outbreaks, local governments have implemented, and may continue to implement, strict measures including quarantines, shutdowns and other business restrictions, which have resulted in logistics challenges throughout China.

These strict measures, and the disruptions as a result thereof, did not have a material adverse impact on our operations for the year ended December 31, 2022.

However, the impact of any new outbreaks on our business and financial results for 2023 will depend on future developments, which are highly uncertain and cannot be predicted.

If governmental restrictions are re-imposed or additional measures are imposed to contain the spread of the virus, we could experience significant disruptions in our operations and reduced capacity available to us at some of our suppliers, all of which could limit our ability to meet customer demand and could have a material adverse effect on our financial condition and results of operations.

We will continue to monitor the situation, assess further possible implications to our business, supply chain and customers, and take actions to mitigate adverse consequences to the extent feasible.

| • | Shutdowns or reduced operations due to COVID-19 outbreaks or government restrictions; |

We have manufacturing and testing facilities in China and most of our manufacturing partners and suppliers are located in China.

Delays in increasing third-party manufacturing capacity may also limit our ability to meet customer demand.

The industry may again experience severe or prolonged downturns in the future, which could result in downward pressure on the price of our products as well as lower demand for our products.

If our customers fail to accept our products as an alternative, if they develop or acquire the technology to develop such components internally rather than purchase our products, or if we are otherwise unable to develop or maintain strong relationships with them, our business, financial condition and results of operations could be materially and adversely affected.

Effective internal control over financial reporting is necessary for us to provide reliable and accurate financial reports.

If we cannot provide reliable financial reports or prevent fraud or other financial misconduct, our business and operating results could be harmed.

Our failure to implement and maintain effective internal control over financial reporting could result in a material misstatement of our financial statements or otherwise cause us to fail to meet our financial reporting obligations.

This, in turn, could result in a loss of investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our results of operations and/or have a negative impact on our reputation and the trading price of our common stock, and could subject us to stockholder litigation.

In addition, we cannot assure you that we will not in the future identify material weaknesses in our internal control over financial reporting, which may impact the reliability of our financial reporting and financial statements.

Our failure to adequately protect our proprietary technologies could materially harm our business.

| • | epidemics and pandemics, such as developments and restrictions with respect to the COVID-19 pandemic; |

We also issue restricted stock units (“RSUs”) to employees, which convert into shares of common stock upon vesting.

_The effects of global pandemics such as COVID-19 are highly unpredictable and could adversely affect our business, results of operations_ _and financial condition._

We face various risks related to epidemics and pandemics, including the global outbreak of COVID-19 first identified in December 2019.

Since the World Health Organization declared the COVID-19 outbreak as a pandemic in March 2020, it has resulted in significant disruptions and uncertainties in the global economy and in the financial markets.

While the COVID-19 pandemic did not have a material and adverse impact on our business operations and financial condition, the ongoing effect of the pandemic on our future operational and financial performance will depend on numerous evolving developments, including the duration and magnitude of the pandemic and the introduction of new variants, and the impact on our customers, employees, suppliers and other partners, all of which are uncertain and difficult to predict at this time.

Furthermore, due to the complexity and variability of COVID-19 policies and regulations imposed by different countries where we operate, we are subject to significant compliance efforts which could require additional resources and result in increased costs, or we may fail to be in compliance on a timely manner.

This discussion and analysis contain, in addition to historical information, forward-looking statements that [removed: include] [added: involve] risks and uncertainties.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of [removed: certain] [added: many] factors, including those set forth under “Part I, Item 1A.

Discussions of [removed: 2020] [added: 2021] results and year-to-year comparisons between [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] 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, [removed: 2021,] [added: 2022,] filed with the SEC on February [removed: 25, 2022.][added: 24, 2023.]

We are a fabless [removed: company with a] global [removed: footprint] [added: company] that provides high-performance, semiconductor-based power [removed: electronic] [added: electronics] solutions.

[removed: Incorporated] [added: Founded] in [removed: 1997,] [added: 1997 by] our [added: CEO Michael Hsing, MPS has] three core [removed: strengths include] [added: strengths:] deep system-level knowledge, strong semiconductor [added: design] expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.

[removed: Our] [added: MPS’s] mission is to reduce energy and material consumption to improve all aspects of quality of [removed: life.][added: life and create a sustainable future.]

We are [removed: not immune from] [added: subject to] industry downturns, but we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.

Our revenue from direct or indirect sales to customers in Asia was [removed: 86%, 90%] [added: 87%, 86%] and [removed: 91%] [added: 90%] for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] respectively.

During [removed: 2022,] [added: 2023,] the semiconductor industry [removed: faced] [added: faced, and continues to face,] a number of macro-economic challenges including [removed: the impact of supply chain capacity constraints, wide swings] [added: reduced consumer spending, fluctuations] in [removed: customer demand,] [added: demand for semiconductors,] rising inflation, increased interest rates, and fluctuations in currency rates.

We remain cautious in light of [removed: changing] [added: continued challenging] macroeconomic conditions and will continue to monitor [added: the] potential impact on our operations.

The [removed: implications] [added: extent and duration] of [added: the direct and indirect impact of] macroeconomic events on our business, results of operations and overall financial position remain [removed: uncertain.][added: uncertain and depend on future developments.]

[removed: There also have been recent] [added: We closely monitor] changes to export control laws, trade regulations and other trade requirements.

We will continue to monitor any changes [added: or developments] to export control laws, trade regulations and other trade [removed: requirements] [added: requirements, or interpretations thereof] and are committed to complying with all applicable trade laws, regulations and other requirements.

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, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, including the impact of the [removed: COVID-19 pandemic, the] [added: 2023 banking crisis,] global economic [removed: downturn] [added: downturn, Russia-Ukraine conflict] and the [removed: Russia-Ukraine] [added: Middle East] conflict.

We account for price adjustments and stock rotation rights as variable consideration that reduces the transaction [removed: price,] [added: price] and recognize that reduction in the same period the associated revenue is recognized.

[removed: Four] [added: Certain] U.S.-based distributors have price adjustment rights when they sell our products to their end customers at a price that is lower than the distribution price invoiced by us.

As of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] we had a valuation allowance of [removed: $20.3] [added: $35.0] million and [removed: $19.5] [added: $20.3] million, respectively, attributable to management’s determination that it is more likely than not that certain deferred tax assets will not be fully realized.

See Note 1 of the Notes to Consolidated Financial Statements regarding [added: a recently adopted] accounting [added: pronouncement and recent accounting] pronouncements not yet adopted as of December 31, [removed: 2022.][added: 2023.]

| | | [removed: Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | | | | |

| | | [removed: 2022] [added: 2023] | | | | | | | | [removed: 2021] [added: 2022] | | | | | | | | [removed: 2020] [added: 2021] | | | | | | |

| Revenue | | $ | [removed: 1,794,148] [added: 1,821,072] | | | | 100.0 | % | | $ | [removed: 1,207,798] [added: 1,794,148] | | | | 100.0 | % | | $ | [removed: 844,452] [added: 1,207,798] | | | | 100.0 | % |

| Cost of revenue | | | [removed: 745,596] [added: 799,953] | | | | [removed: 41.6] [added: 43.9] | | | | [removed: 522,339] [added: 745,596] | | | | [removed: 43.2] [added: 41.6] | | | | [removed: 378,498] [added: 522,339] | | | | [removed: 44.8] [added: 43.2] | |

| Gross profit | | | [removed: 1,048,552] [added: 1,021,119] | | | | [removed: 58.4] [added: 56.1] | | | | [removed: 685,459] [added: 1,048,552] | | | | [removed: 56.8] [added: 58.4] | | | | [removed: 465,954] [added: 685,459] | | | | [removed: 55.2] [added: 56.8] | |

| Research and development | | | [removed: 240,171] [added: 263,643] | | | | [removed: 13.4] [added: 14.5] | | | | [removed: 190,627] [added: 240,171] | | | | [removed: 15.8] [added: 13.4] | | | | [removed: 137,598] [added: 190,627] | | | | [removed: 16.3] [added: 15.8] | |

| Total operating expenses | | | [removed: 521,767] [added: 539,383] | | | | [removed: 29.0] [added: 29.6] | | | | [removed: 423,042] [added: 521,767] | | | | [removed: 35.1] [added: 29.0] | | | | [removed: 307,072] [added: 423,042] | | | | [removed: 36.4] [added: 35.1] | |

| Operating income | | | [removed: 526,785] [added: 481,736] | | | | [removed: 29.4] [added: 26.5] | | | | [removed: 262,417] [added: 526,785] | | | | [removed: 21.7] [added: 29.4] | | | | [removed: 158,882] [added: 262,417] | | | | [removed: 18.8] [added: 21.7] | |

| Other income (expense), net | | | [removed: (1,848] [added: 24,105] | [removed: )] | | | [removed: (0.1] [added: 1.3] | [removed: )] | | | [removed: 9,802] [added: (1,848] | [added: )] | | | [removed: 0.8] [added: (0.1] | [added: )] | | | [removed: 10,460] [added: 9,802] | | | | [removed: 1.3] [added: 0.8] | |

| Income before income taxes | | | [removed: 524,937] [added: 505,841] | | | | [removed: 29.3] [added: 27.8] | | | | [removed: 272,219] [added: 524,937] | | | | [removed: 22.5] [added: 29.3] | | | | [removed: 169,342] [added: 272,219] | | | | [removed: 20.1] [added: 22.5] | |

| Income tax expense | | | [removed: 87,265] [added: 78,467] | | | | [removed: 4.9] [added: 4.3] | | | | [removed: 30,196] [added: 87,265] | | | | [removed: 2.5] [added: 4.9] | | | | [removed: 4,967] [added: 30,196] | | | | [removed: 0.6] [added: 2.5] | |

| Net income | | $ | [removed: 437,672] [added: 427,374] | | | | [removed: 24.4] [added: 23.5] | % | | $ | [removed: 242,023] [added: 437,672] | | | | [removed: 20.0] [added: 24.4] | % | | $ | [removed: 164,375] [added: 242,023] | | | | [removed: 19.5] [added: 20.0] | % |

| | | [removed: Year] [added: Year] Ended December [removed: 31, | | | | | | | |] [added: 31,] | | | | | | | | | | | | | | | | [removed: Change] | | | | | | |

| End Market | | [removed: 2022 | | | | Revenue | | | | 2021] [added: 2023] | | | | [removed: Revenue] [added: % of Revenue] | | | | [removed: 2020] [added: 2022] | | | | [removed: Revenue] [added: % of Revenue] | | | | [removed: 2022] [added: 2021] | | | | [removed: 2021] [added: % of Revenue] | | |

| | | (in thousands, except percentages) | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | |]

| Storage and Computing | | $ | [removed: 452,594] [added: 491,139] | | | | [removed: 25.3] [added: 27.0] | % | | $ | [removed: 255,933] [added: 452,594] | | | | [removed: 21.2] [added: 25.3] | % | | $ | [removed: 180,293 | | | | 21.4 | % | | | 76.8] [added: 255,933] | [removed: %] | | | [removed: 42.0] [added: 21.2] | % |

| Enterprise Data | | | [removed: 251,415 | | | | 14.0 | | | | 116,345] [added: 322,980] | | | | [removed: 9.6] [added: 17.7] | | | | [removed: 72,884] [added: 251,415] | | | | [removed: 8.6] [added: 14.0] | | | | [removed: 116.1] [added: 116,345] | [removed: %] | | | [removed: 59.6] [added: 9.6] | [removed: %] |

| Automotive | | | [removed: 300,016 | | | | 16.7 | | | | 204,335] [added: 394,665] | | | | [removed: 16.9] [added: 21.7] | | | | [removed: 108,966] [added: 300,016] | | | | [removed: 12.9] [added: 16.7] | | | | [removed: 46.8] [added: 204,335] | [removed: %] | | | [removed: 87.5] [added: 16.9] | [removed: %] |

| Industrial | | | [removed: 219,179 | | | | 12.2 | | | | 184,784] [added: 172,717] | | | | [removed: 15.3] [added: 9.4] | | | | [removed: 119,603] [added: 219,179] | | | | [removed: 14.2] [added: 12.2] | | | | [removed: 18.6] [added: 184,784] | [removed: %] | | | [removed: 54.5] [added: 15.3] | [removed: %] |

| Communications | | | [removed: 251,452 | | | | 14.0 | | | | 164,091] [added: 204,911] | | | | [removed: 13.6] [added: 11.3] | | | | [removed: 142,326] [added: 251,452] | | | | [removed: 16.8] [added: 14.0] | | | | [removed: 53.2] [added: 164,091] | [removed: %] | | | [removed: 15.3] [added: 13.6] | [removed: %] |

| Consumer | | | [removed: 319,492 | | | | 17.8 | | | | 282,310] [added: 234,660] | | | | [removed: 23.4] [added: 12.9] | | | | [removed: 220,380] [added: 319,492] | | | | [removed: 26.1] [added: 17.8] | | | | [removed: 13.2] [added: 282,310] | [removed: %] | | | [removed: 28.1] [added: 23.4] | [removed: %] |

| Total | | $ | [removed: 1,794,148] [added: 1,821,072] | | | | 100.0 | % | | $ | [removed: 1,207,798] [added: 1,794,148] | | | | 100.0 | % | | $ | [removed: 844,452] [added: 1,207,798] | | | | 100.0 | % | [removed: | | 48.5 | % | | | 43.0 | % |]

These combined advantages are designed to enable MPS 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.

As of December 31, 2023 and through the date we filed this Annual Report, no existing or newly introduced restrictions have had a material impact on our revenue and operations.

| Selling, general and administrative | | | 275,740 | | | | 15.1 | | | | 281,596 | | | | 15.6 | | | | 232,415 | | | | 19.3 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

This decrease primarily reflected lower sales in applications for industrial automation, security and power sources.

The decrease was a result of lower 4G and 5G infrastructure sales.

This decrease was a result of broad market weakness across all segments.

The $54.4 million increase in cost of revenue was primarily driven by product mix, partially offset by lower inventory write-downs and warranty expenses.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The $23.5 million increase in R&D expenses was primarily due to a $20.9 million increase in new product development expenses, a $5.6 million increase in expenses related to changes in the value of deferred compensation plan liabilities and a $1.8 million increase in depreciation.

This increase was partially offset by an $8.1 million decrease in cash compensation expenses, which was driven by decreased bonuses.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| SG&A expenses | | $ | 275,740 | | | $ | 281,596 | | | $ | 232,415 | |

| As a percentage of revenue | | | 15.1 | % | | | 15.6 | % | | | 19.3 | % |

The $5.9 million decrease in SG&A expenses was driven by a $12.4 million decrease in stock-based compensation expenses, an $8.8 million decrease in cash compensation expenses driven by decreased bonuses, and a $3.1 million decrease in litigation expenses.

This decrease was partially offset by a $10.1 million increase in expenses related to changes in the value of the deferred compensation plan liabilities, and an $8.2 million increase consisting mostly of travel related expenses, third party service expenses and software licensing fees.

In December 2023, the Bermuda Corporate Income Tax Act of 2023 (the “Bermuda CIT Act”) was enacted and signed into law.

The Bermuda CIT Act includes a 15% corporate income tax (“CIT”) applicable to Bermuda businesses that are multinational enterprise (“MNE”) groups with annual revenue of €750M or more beginning in 2025.

The Bermuda CIT Act also includes an Economic Transition Adjustment (“ETA”) that requires MNE’s to revalue their assets and liabilities, excluding goodwill, at their fair value as of September 30, 2023.

There is an election to opt out of the ETA.

As the Bermuda CIT Act is not effective until January 1, 2025, we are evaluating whether or not to adopt this ETA.

Based on information available, we have not recorded any changes to income tax expense related to the Bermuda CIT Act as of December 31, 2023.

| | | 2023 | | | | 2022 | | |

For the year ended December 31, 2023, we repatriated $140 million of cash from our Bermuda subsidiary to the U.S. with minimal tax impact.

The proceeds are primarily used to fund our ongoing business operations.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Purchase obligations represent commitments to our suppliers and other parties requiring the purchases of goods or services.

As of December 31, 2023, we had remaining prepayments under this agreement of $120.0 million reported in other long-term assets on the Consolidated Balance Sheet.

_Capital Return to Stockholders_

In October 2023, our Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026.

Shares are retired upon repurchase.

We repurchased approximately 7,000 shares of our common stock for an aggregate purchase price of $3.7 million during the year ended December 31, 2023.

As of December 31, 2023, $636.3 million remained available for future repurchases under the program.

_Acquisition_

On January 3, 2024, we acquired Axign, a Dutch company for $33.8 million in cash.

See Note 17 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.

| --- | --- |

These combined advantages enable us to deliver reliable, compact, and monolithic solutions found in storage and computing, enterprise data, automotive, industrial, communications and consumer applications.

We believe that we differentiate ourselves by offering solutions that are more highly integrated, smaller in size, more energy-efficient, more accurate with respect to performance specifications and, consequently, more cost-effective than many competing solutions.

We plan to continue to introduce new products within our existing product families, as well as in new innovative product categories.

Impact of COVID-19 on Our Business

The COVID-19 pandemic has had, and continues to have, a significant impact around the world.

Our primary focus is to continue to execute our business plan and mitigate the effect of the COVID-19 pandemic on our financial position and operations, while actively taking all necessary precautions to ensure the safety of our employees, our suppliers and our customers.

The pandemic did not have a material adverse impact on our overall operating results or business operations for the year ended December 31, 2022.

In 2022, China has continued to experience outbreaks, specifically in Shanghai and Chengdu where we have business operations and where many of our customers and suppliers are located.

Local governments have implemented, and may continue to implement, strict measures including quarantines, shutdowns and other business restrictions, which have resulted in logistics challenges throughout China.

Although these strict measures and the disruptions, as a result thereof, did not have a material adverse impact on our operations in 2022, we will continue to monitor and evaluate future developments.

However, we cannot reasonably estimate the potential effect of these measures on the global economy, the semiconductor industry and our business.

We have worked, and are continuing to actively work, with our stakeholders, including customers, suppliers and employees, to address the impact of the pandemic.

We will continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences to the extent feasible.

A prolonged economic slowdown as a result of the pandemic, or otherwise, could materially and adversely impact our business, results of operations and financial condition for 2023 and beyond.

Russia-Ukraine Conflict

As the Russia-Ukraine conflict continues to evolve, we are closely monitoring the impact of future developments on our business, supply chain, employees, customers and other business partners.

Our total revenue in Russia has historically not been material and we have stopped shipping to customers in Russia.

All accounts receivable balances from our customers in Russia have been paid.

As of December 31, 2022 and through the date we filed this Annual Report, there have been a number of additional trade restrictions introduced.

To date, those restrictions have had an immaterial impact on our revenue and operations.

Cybersecurity Risk Management

We are committed to protecting our IT assets, including computers, systems, corporate networks and sensitive data, from unauthorized access or attack.

We have established an internal global IT policy handbook as well as IT security management control procedures designed to:

| ● | Create information security awareness and define responsibilities among our employees and business partners; |

| ● | Implement controls to identify IT risks and monitor the use of our systems and information resources; |

| ● | Establish key policies and processes to adequately and timely respond to security threats; |

| ● | Maintain disaster recovery and business continuity plans; and |

| ● | Ensure compliance with applicable laws and regulations regarding the management of information security. |

We require all new employees to attend an IT security training orientation.

In addition, on a regular basis, our IT team updates training materials related to our policies and procedures and shares news and articles related to cybersecurity awareness, both of which are stored on our intranet and available to all employees.

We also currently maintain an insurance policy that provides certain coverage for losses we incur due to data breaches and other cybersecurity incidents.

Our IT Steering Committee, which consists of our senior management and IT team, meets on a regular basis to review initiatives and projects to improve IT security, as well as resources and budgets for our cybersecurity compliance and education efforts.

In 2021, we completed the ISO 27001 certification, a globally recognized information security standard.

Our Audit Committee of the Board of Directors, which consists of three independent members, is responsible for the oversight of our cybersecurity risk program.

At least quarterly, the Audit Committee reviews reports and updates from our Chief Financial Officer and IT senior management about major risk exposures, their potential impact on our business operations, and management’s strategies to assess, monitor and mitigate those risks.

The Audit Committee also provides updates of their oversight and findings to the Board of Directors.

We believe we have adequate resources and sufficient policies, procedures and oversight in place to identify and manage our IT security risks to our business operations.

To date, we do not believe we have experienced any material information security breaches and have not incurred significant operating expenses related to information security breaches.

As of the date of issuance of these consolidated financial statements, we are not aware of any specific event or circumstance that would require our management to update the significant estimates and assumptions used in the preparation of the consolidated financial statements_._ As new events continue to evolve and additional information becomes available, any changes to these estimates and assumptions will be recognized in the consolidated financial statements as soon as they become known.

Based on our investment positions as of December 31, [removed: 2022,] [added: 2023,] 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 [removed: income (loss)] [added: loss] on the Consolidated Balance Sheets.

Based on our investment positions as of December 31, [removed: 2022,] [added: 2023,] a hypothetical 100 basis point increase in interest rates would result in a [removed: $3.2] [added: $4.5] million decline in the fair value of our investments.

Monolithic Power Systems, Inc. (“MPS”) is a fabless [removed: company with a] global [removed: footprint] [added: company] that provides high-performance, semiconductor-based power [removed: electronic] [added: electronics] solutions.

Incorporated in 1997, our three core strengths include deep system-level knowledge, strong semiconductor [added: design] expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.

Our mission is to reduce energy and material consumption to improve all aspects of quality of [removed: life.][added: life and create a sustainable future.]

We have over [removed: 3,200] [added: 3,500] employees worldwide, with locations in Asia (primarily in China, India, Japan, [added: Singapore,] South [removed: Korea, Singapore] [added: Korea] and Taiwan), Europe (primarily in France, Germany, Hungary, Italy, [added: Portugal,] Spain, Switzerland and the United Kingdom) and the United States.

We design and develop our products for the storage and computing, enterprise data, automotive, industrial, communications and consumer markets, with the storage and computing market representing the largest portion of our revenue in [removed: 2022.][added: 2023.]

| | | | | [removed: Percentage] [added: Percentage] of Total [removed: Revenue] [added: Revenue] | | | | | | | | | | |

| End Markets | | Applications | | [removed: 2022] [added: 2023] | | | | [removed: 2021] [added: 2022] | | | | [removed: 2020] [added: 2021] | | |

| Storage and computing | | Storage applications, [removed: enterprise] [added: commercial] notebooks, [removed: computers] and [removed: printers] [added: graphics cards] | | | [removed: 25.3] [added: 27.0] | % | | | [removed: 21.2] [added: 25.3] | % | | | [removed: 21.4] [added: 21.2] | % |

| Industrial | | Power sources, [removed: smart meters,] [added: industrial meter,] security [removed: applications] [added: applications,] and [added: other] industrial [removed: automation] [added: equipment] | | | [removed: 12.2] [added: 9.4] | % | | | [removed: 15.3] [added: 12.2] | % | | | [removed: 14.2] [added: 15.3] | % |

| Communications | | [removed: 5G] [added: 4G] and [added: 5G infrastructure,] satellite [removed: communications infrastructure] [added: communications, and other wireless] applications | | | [removed: 14.0] [added: 11.3] | % | | | [removed: 13.6] [added: 14.0] | % | | | [removed: 16.8] [added: 13.6] | % |

| Consumer | | Home appliances, [removed: gaming consoles,] [added: gaming,] smart TVs, [removed: mobile devices,] lighting, monitors, [removed: stereos, set-top boxes] and [removed: chargers] [added: stereos] | | | [removed: 17.8] [added: 12.9] | % | | | [removed: 23.4] [added: 17.8] | % | | | [removed: 26.1] [added: 23.4] | % |

Our proprietary process [added: and packaging] technologies enable us to design and deliver smaller, single-chip power management ICs.

Our product families are differentiated [added: from those of our competitors] with respect to their high degree of integration and strong levels of accuracy, power efficiency, quality and longevity, making them cost-effective and more sustainable relative to many competing solutions.

These features are important to our customers as they [added: are designed to] result in fewer components that need to be produced and consumed, a smaller form factor, more accurate regulation of voltages, lower power consumption and, ultimately, lower system cost, increased reliability and lower carbon emissions through the elimination of many discrete components and power devices.

The DC to DC product family accounted for [removed: 95%] [added: 94%] of our total revenue in [removed: each] [added: 2023 and 95%] of [removed: 2022, 2021] [added: our total revenue in both 2022] and [removed: 2020.][added: 2021.]

The Lighting Control product family accounted for [removed: 5%] [added: 6%] of our total revenue in [removed: each] [added: 2023 and 5%] of [removed: 2022, 2021] [added: our total revenue in both 2022] and [removed: 2020.][added: 2021.]

Our ability to achieve revenue growth will depend in part upon our ability to continue to innovate while fulfilling our customers’ evolving needs, enter new market segments, [removed: gain market share,] [added: obtain design wins,] grow [added: our sales to customers] in regions outside [removed: of] China, Taiwan and other Asian markets, expand our customer base and continue to secure manufacturing capacity.

[removed: We] [added: Once we secure our product positioning through our technical sales and applications engineers’ efforts, we then] sell our products through third-party distributors, value-added resellers and directly to original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”), electronic manufacturing service (“EMS”) providers and other end customers.

[removed: Sales to] [added: In 2022,] our [added: two] largest [removed: distributor] [added: distributors] accounted for 24% [added: and 19%] of our total [removed: revenue in 2022, 26% in 2021, and 24% in 2020.][added: revenue.]

In [removed: addition to] [added: 2021,] our [added: three] largest [removed: distributor, one distributor accounted for 19% of our total revenue in 2022, two] distributors accounted for [added: 26%,] 15% and 10% of our total [removed: revenue in 2021, and one distributor accounted for 11% of our total revenue in 2020.][added: revenue.]

Current distribution agreements with several of our major distributors provide that each distributor has the non-exclusive right to sell and [added: shall] use its best efforts to promote and develop a market for our products.

We have sales offices in China, India, Japan, [added: Singapore,] South Korea, [removed: Singapore,] Taiwan, the United States and throughout Europe.

In [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] our revenue from sales to customers in Asia was [removed: 86%, 90%] [added: 87%, 86%] and [removed: 91%,] [added: 90%,] respectively.

In addition, in response to market conditions, we may slow the rate of manufacturing our products, which could result in insufficient inventory levels [added: and reduced sales] if we underestimate the demand for our products.

We have assembled a qualified team of engineers primarily in China, [removed: Taiwan,] the United States, [added: Taiwan,] Spain, Switzerland, [removed: Germany, and] Hungary, [added: Portugal and Germany] with core competencies in analog and mixed-signal design.

In the area of process technologies, we are investing in research and development resources to provide leading-edge analog power processes for our next generation of [removed: integrated circuits.][added: ICs.]

Our growth is fueled by our customers’ need for our [removed: power efficient] [added: power-efficient] solutions.

Our products are principally positioned [removed: as achieving] [added: to achieve] lower power loss and [removed: enabling] [added: enable] significant reductions in circuit board space [removed: and] [added: by] shrinking or eliminating many passive components that are otherwise needed by competitors’ offerings.

In addition, the life cycles of our products are typically over 10 years, reducing the manufacturing needs and associated carbon emissions associated with [added: the] production of replacement products.

As of December 31, [removed: 2022,] [added: 2023,] we had [removed: 1,557] [added: 1,701] patents/applications issued or pending, of which [removed: 546] [added: 585] patents have been issued in the United States.

Our issued patents are scheduled to expire at various times through December [removed: 2042.][added: 2043.]

In contrast to many fabless semiconductor companies, which utilize standard process technologies and design rules established by their foundry partners, we have developed our own proprietary process [added: and packaging] technologies and collaborate with our foundry partners to install our technologies on their equipment in their facilities for use on our behalf.

We currently contract with several suppliers to manufacture our wafers in foundries located in China, [removed: Taiwan and] [added: Taiwan,] South [removed: Korea.][added: Korea and Singapore.]

Once our silicon wafers have been produced, they are shipped to [removed: our] [added: the] facilities in [removed: Chengdu, China] [added: China, Taiwan, and Singapore that we and our partners utilize] for wafer sort, which is a testing process performed to identify non-functioning dies.

Our semiconductor products are then assembled and packaged by independent subcontractors in [removed: China] [added: China, Taiwan] and Malaysia.

The assembled ICs are then sent [removed: either] for final testing [removed: at our Chengdu facilities, or] to [removed: other turnkey providers who perform final testing based on] [added: the facilities in China, Taiwan and Malaysia that we and] our [removed: standards] [added: partners utilize] prior to shipping to our customers.

[removed: Our] [added: The] manufacturing facilities [added: we utilize] in [removed: Chengdu, China,] [added: Asia] enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs.

We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, [removed: Semtech] [added: Semtech, STMicroelectronics] and Texas Instruments.

However, there is no assurance that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering [removed: this market.][added: our markets.]

While we are [removed: not immune from] [added: subject to] industry downturns, we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.

| Automotive | | Advanced driver assistance systems, infotainment, digital cockpit, USB connectors, body electronics, and lighting applications | | | 21.7 | % | | | 16.7 | % | | | 16.9 | % |

| Enterprise Data | | Cloud-based CPU server applications, and server artificial intelligence (“AI”) applications | | | 17.7 | % | | | 14.0 | % | | | 9.6 | % |

_Direct Current (_“_DC_”_) to DC Products._ DC to DC ICs are used to convert and control voltages within a broad range of electronic systems, such as cloud-based CPU servers, server AI applications, storage applications, commercial notebooks, digital cockpit, power sources, home appliances, 4G and 5G infrastructure and satellite communications applications.

In 2023, our three largest distributors accounted for 26%, 19% and 10% of our total revenue.

Certain employees are subject to collective bargaining agreements and we believe that we have good relations with these employees.

We have never experienced an employee-based work stoppage or strike.

We strive to maintain a culture that encourages innovation and create a workplace that values diverse backgrounds, a healthy and safe environment, and professional growth opportunities.

| • | We continue to recruit new talent from a diverse candidate pool through various university recruitment programs and employment websites targeting underrepresented groups. We provide unconscious bias training to promote an environment of inclusivity. We do not tolerate discrimination of any kind and have adopted policies for reporting concerns or violations. |

| --- | --- |

| --- | --- |

| • | We provide employees with access to various learning tools and resources to explore their interests and develop their business skills and knowledge. |

| --- | --- |

| • | We have occupational health and safety management systems and environmental management plans in place. They include our standards for chemical and hazardous waste management, rules on use of personal protective equipment, and safety training plans. Our largest testing facilities in Chengdu, China are ISO 14001 and ISO 45001 certified. |

| --- | --- |

| • | We support the well-being of our employees. In certain offices, we offer onsite flu shot clinics and other annual health checkups and workshops. Our largest facilities have amenities including fitness centers, sports courts and private rooms for nursing. We also offer free exercise classes, strength training and yoga in some of our offices. |

| --- | --- |

In addition, we will disclose on our website any amendments to, or waivers from, our code of ethics.

| Enterprise Data | | Data center and workstation computing | | | 14.0 | % | | | 9.6 | % | | | 8.6 | % |

| Automotive | | Infotainment, digital cockpits and connectivity applications | | | 16.7 | % | | | 16.9 | % | | | 12.9 | % |

_Direct Current (_“_DC_”_) to DC Products._ DC to DC ICs are used to convert and control voltages within a broad range of electronic systems, such as portable electronic devices, wireless LAN access points, computers and notebooks, monitors, infotainment applications and medical equipment.

In recent years, these controls, tariffs, regulations, and restrictions have had, and we believe may continue to have, a material impact on our business, including our ability to sell products and to manufacture or source components.

We may not be successful in attracting and retaining such personnel.

Our employees are not represented by a collective bargaining organization, and we have never experienced a work stoppage or strike.

Competition for talent in the semiconductor industry is strong, and compensation is critical to our recruiting and retention philosophy, especially given our rapid growth and our need to attract talented employees with a broad range of skills.

Our employee benefits programs include a combination of supplemental benefits including paid time off for holidays and vacations, health insurance and other plan benefits.

We are an equal-opportunity employer, and we make employment decisions based on merit and business needs.

We are committed to providing a healthy and safe environment for all our workers.

Our Worker Health and Safety Plan is certified to ISO 45001 standards, the world’s voluntary, international standard for occupational health and safety.

We believe that certifying to these standards enables our company to provide safe and healthy workplaces by preventing work-related injury and health issues.

We [removed: intend to] defend ourselves vigorously against any such claims.

As of December 31, [removed: 2022_,_] [added: 2023_,_] there were no material pending legal proceedings to which we were a party.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based upon the closing price of the common stock on the Nasdaq Global Select Market on June 30, [removed: 2022,] [added: 2023,] was [removed: $13.3] [added: $16.4] billion.*

There were [removed: 47,305,000] [added: 48,661,000] shares of the registrant’s common stock issued and outstanding as of February [removed: 17, 2023.][added: 22, 2024.]

Portions of the registrant’s Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, [removed: 2022.][added: 2023.]

| * | Excludes [removed: 12,110,000] [added: 17,279,000] shares of the registrant’s common stock held by executive officers, directors and stockholders whose ownership exceeds 5% (“affiliates”) of the common stock outstanding at June 30, [removed: 2022.] [added: 2023.] Exclusion of such shares should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common control with the registrant. |

FOR THE FISCAL YEAR ENDED [removed: DECEMBER] [added: December] 31, [removed: 2022][added: 2023]

| | [Information about Executive Officers](#infoaboutexec) | [removed: [9](#infoaboutexec)] [added: [10](#infoaboutexec)] |

| Item 1A. | [Risk Factors](#item1a) | [removed: [10](#item1a)] [added: [11](#item1a)] |

| Item 1B. | [Unresolved Staff Comments](#item1b) | [removed: [29](#item1b)] [added: [30](#item1b)] |

| Item 2. | [Properties](#item2) | [removed: [29](#item2)] [added: [31](#item2)] |

| Item 3. | [Legal Proceedings](#item3) | [removed: [29](#item3)] [added: [31](#item3)] |

| Item 4. | [Mine Safety Disclosures](#item4) | [removed: [29](#item4)] [added: [31](#item4)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#item5) | [removed: [30](#item5)] [added: [32](#item5)] |

| Item 6. | [\[Reserved\]](#item6) | [removed: [31](#item6)] [added: [34](#item6)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#item7) | [removed: [31](#item7)] [added: [34](#item7)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#item7a) | [removed: [39](#item7a)] [added: [40](#item7a)] |

| Item 8. | [Financial Statements and Supplementary Data](#item8) | [removed: [40](#item8)] [added: [41](#item8)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#item9) | [removed: [75](#item9)] [added: [73](#item9)] |

| Item 9A. | [Controls and Procedures](#item9a) | [removed: [75](#item9a)] [added: [73](#item9a)] |

| Item 9B. | [Other Information](#item9b) | [removed: [75](#item9b)] [added: [73](#item9b)] |

| Item [removed: 9C] [added: 9C.] | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#item9c) | [removed: [75](#item9c)] [added: [73](#item9c)] |

| Item 10. | [Directors, Executive Officers and Corporate Governance](#item10) | [removed: [76](#item10)] [added: [74](#item10)] |

| Item 11. | [Executive Compensation](#item11) | [removed: [76](#item11)] [added: [74](#item11)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#item12) | [removed: [76](#item12)] [added: [74](#item12)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#item13) | [removed: [76](#item13)] [added: [74](#item13)] |

| Item 14. | [Principal Accountant Fees and Services](#item14) | [removed: [76](#item14)] [added: [74](#item14)] |

| Item 15. | [Exhibits and Financial Statement Schedules](#item15) | [removed: [77](#item15)] [added: [75](#item15)] |

| Item 16. | [Form 10-K Summary](#summary) | [removed: [79](#summary)] [added: [77](#summary)] |

| | [Signatures](#signatures) | [removed: [80](#signatures)] [added: [78](#signatures)] |

| | • | the effects of macroeconomic factors, including the [removed: COVID-19 pandemic,] [added: 2023 banking crisis,] the global economic [removed: downturn and] [added: downturn,] the Russia-Ukraine [removed: conflict,] [added: conflict and the Middle East conflict] on the semiconductor industry and our business; |

| | • | [added: expectations regarding] protection of our proprietary technology; |

| | • | business outlook for [removed: 2023] [added: 2024] and beyond; |

| | • | the [added: expected] percentage of our total revenue from various end markets; |

| | • | the [added: expected] impact of various tax laws and regulations on our income tax provision, financial position and cash flows; |

| | • | our intention and ability to [added: continue our stock repurchase program and] pay cash dividends and dividend equivalents; [removed: and] |

| | • | the factors that differentiate us from our [removed: competitors.] [added: competitors; and] |

All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, such as the [removed: COVID-19 pandemic,] [added: 2023 banking crisis,] the global economic [removed: downturn and] [added: downturn,] the Russia-Ukraine conflict [added: and the Middle East conflict] on the semiconductor industry and our business.

Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report on Form [removed: 10-K.][added: 10-K and entail significant risks.]

| Item 1C. | [Cybersecurity](#item1c) | [30](#item1c) |

| | • | our mission statement to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future; |

| | | |

| | | |

| | • | our ability to adequately remediate our material weakness. |

| --- | --- |

Cybersecurity Risk Management and Strategy

We recognize the 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 issues through a diversified approach including threat-monitoring and assessments by third-parties, adopting IT security ISO standards/governance, 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 existing and emerging laws and regulations related to data protection and information security and implement appropriate changes.

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.

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 to our cybersecurity risk management and strategy programs to the Board of Directors on a quarterly basis.

Our cybersecurity risk management and strategy processes are overseen by the Cybersecurity Steering Committee, which includes individuals with an average of over 18 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.

| [removed: _United States:_] | | [added: United States] | | | | [added: Other Countries | | | | Total | | |]

We believe that our existing facilities are [removed: adequate] [added: suitable] for our current operations.

As of December 31, 2023, our owned and leased facilities in excess of 10,000 square feet consisted of:

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | (in square feet) | | | | | | |

| Owned facilities | | | 216,000 | | | | 923,000 | | | | 1,139,000 | |

| Leased facilities | | | \- | | | | 290,000 | | | | 290,000 | |

| Total facilities | | | 216,000 | | | | 1,213,000 | | | | 1,429,000 | |

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

| | | Approximate | | | |

| --- | --- | --- | --- | --- | --- |

| | | Building | | | |

| Location | | Square Footage | | | Primary Use |

| Owned: | | | | | |

| Kirkland, Washington | | | 70,000 | | Principal executive office, research and development, sales and marketing |

| Livonia, Michigan | | | 40,000 | | Sales and marketing, research and development |

| San Jose, California | | | 106,000 | | Research and development, sales and marketing, administrative |

| _International:_ | | | | | |

| Barcelona, Spain | | | 12,000 | | Research and development, sales and marketing, administrative |

| Chengdu, China | | | 200,000 | | Research and development, administrative |

| Chengdu, China | | | 60,000 | | Manufacturing operations |

| Chengdu, China | | | 451,000 | | Manufacturing operations, research and development, administrative |

| Ettenheim, Germany | | | 57,000 | | Sales and marketing |

| Hangzhou, China | | | 68,000 | | Research and development |

| Shanghai, China | | | 16,000 | | Sales and marketing |

| Shenzhen, China | | | 8,000 | | Sales and marketing |

| Taipei, Taiwan | | | 47,000 | | Sales and marketing, research and development, administrative |

| | | | | | |

| Leased: | | | | | |

| Barcelona, Spain | | | 12,000 | | Research and development |

| Chengdu, China | | | 235,000 | | Manufacturing operations, inventory warehouse |

| Hsinchu, Taiwan | | | 34,000 | | Research and development |

Our common stock is traded on the Nasdaq Global Select Market under the symbol [removed: “MPWR.”][added: “MPWR”.]

As of February [removed: 17, 2023,] [added: 22, 2024,] there were [removed: 58] [added: 68] registered holders of record of our common stock.

An investment of $100 is assumed to have been made in our common stock on December 31, [removed: 2017] [added: 2018,] and its performance relative to the performance of a similar investment in the two indexes is shown through December 31, [removed: 2022,] [added: 2023,] assuming the reinvestment of dividends.

[removed: ][added: ]

Issuer Purchases of Equity Securities

In October 2023, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026.

Shares are retired upon repurchase.

We repurchased approximately 7,000 shares of our common stock for an aggregate purchase price of $3.7 million during the year ended December 31, 2023.

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 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.

The following table represents details of our stock repurchase transactions during the fourth quarter of 2023:

| 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) | | | | | | | | | | | |

| November 1, 2023 – November 30, 2023 | | | 5 | | $ | 505.65 | | | 5 | | $ | 637,465 | |

| December 1, 2023 – December 31, 2023 | | | 2 | | $ | 603.15 | | | 2 | | $ | 636,259 | |

| Total | | | 7 | | $ | 533.45 | | | 7 | | | | |

| [Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)](#reportindependent) | [removed: [41](#reportindependent)] [added: [42](#reportindependent)] |

| [Consolidated Balance Sheets](#balancesheets) | [removed: [43](#balancesheets)] [added: [44](#balancesheets)] |

| [Consolidated Statements of Operations](#operations) | [removed: [44](#operations)] [added: [45](#operations)] |

| [Consolidated Statements of Comprehensive Income](#compincome) | [removed: [45](#compincome)] [added: [46](#compincome)] |

| [Consolidated Statements of Stockholders’ Equity](#equity) | [removed: [46](#equity)] [added: [47](#equity)] |

| [Consolidated Statements of Cash Flows](#cashflows) | [removed: [47](#cashflows)] [added: [48](#cashflows)] |

| [Notes to Consolidated Financial Statements](#notes) | [removed: [48](#notes)] [added: [49](#notes)] |

We have audited the accompanying consolidated balance sheets of Monolithic Power Systems, Inc. (the Company) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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, [removed: 2022,] [added: 2023,] 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, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] 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, [removed: 2022,] [added: 2023,] based on criteria established in Internal Control [removed: -] [added: –] Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 24, 2023] [added: 29, 2024] expressed an [removed: unqualified] [added: adverse] opinion thereon.

| Description of the Matter | | The Company’s inventories totaled [removed: $447.3] [added: $383.7] million as of December 31, [removed: 2022,] [added: 2023,] representing [removed: 21.7%] [added: 15.8%] of total assets. As explained in Note 1 to the consolidated financial statements, the Company values inventories at the lower of standard cost (which approximates actual cost determined on a first-in first-out basis) and estimated net realizable value in each reporting period. Excess and obsolete inventory is written down to its estimated net realizable value if less than cost. |

| | | Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required and the measurement of any excess of cost over net realizable value is judgmental and considers a number of qualitative factors that are affected by market and economic conditions outside the Company’s control. In particular, [removed: the] [added: determination of] excess and obsolete inventory [removed: calculations are sensitive to significant] [added: utilizes] assumptions, including [added: estimated] demand for the Company’s products, [removed: which considers adjustments to sales forecasts for specific product considerations, including but not limited to] new product [removed: launches and] [added: launches,] expected industry sales [removed: growth.] [added: growth, and product lifecycle.] |

| [added: How We Addressed the Matter in Our Audit] | | Our [removed: substantive] audit procedures included, among others, evaluating the significant assumptions stated above and testing the completeness and accuracy of the underlying data used in management’s excess and obsolete inventory valuation assessment. We evaluated inventory levels compared to forecasted product demand, historical sales and specific product considerations. We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions. |

We have audited Monolithic Power Systems, Inc.’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] 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, [added: 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) [removed: maintained, in all material respects,] [added: has not maintained] effective internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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, [removed: 2022,] [added: 2023,] and the related [removed: notes and our report dated February 24, 2023 expressed an unqualified opinion thereon.][added: notes.]

| | | [removed: December 31,] [added: __December 31,__] | | | | | | |

| | | [removed: 2022] [added: _2023_] | | | | [removed: 2021] [added: _2022_] | | | [added: | _2021_ | | |]

| Cash and cash equivalents | | $ | [removed: 288,607] [added: 527,843] | | | $ | [removed: 189,265] [added: 288,607] | |

| Short-term investments | | | [removed: 449,266] [added: 580,633] | | | | [removed: 535,817] [added: 449,266] | |

| Accounts receivable, net | | | [removed: 182,714] [added: 179,858] | | | | [removed: 104,813] [added: 182,714] | |

| Inventories | | | [removed: 447,290] [added: 383,702] | | | | [removed: 259,417] [added: 447,290] | |

| Other current assets | | | [removed: 42,742] [added: 147,463] | | | | [removed: 35,540] [added: 42,742] | |

| Total current assets | | | [removed: 1,410,619] [added: 1,819,499] | | | | [removed: 1,124,852] [added: 1,410,619] | |

| Property and equipment, net | | | [removed: 357,157] [added: 368,952] | | | | [removed: 362,962] [added: 357,157] | |

| Deferred tax assets, net | | | [removed: 35,252] [added: 28,054] | | | | [removed: 21,917] [added: 35,252] | |

| Other long-term assets | | | [removed: 249,286] [added: 211,277] | | | | [removed: 69,523] [added: 249,286] | |

| Total assets | | $ | [removed: 2,058,885] [added: 2,434,353] | | | $ | [removed: 1,585,825] [added: 2,058,885] | |

| LIABILITIES AND [removed: STOCKHOLDERS’ EQUITY] [added: STOCKHOLDERS’ EQUITY] | | | | | | | | |

| Accounts payable | | $ | [removed: 61,461] [added: 62,958] | | | $ | [removed: 83,027] [added: 61,461] | |

| Accrued compensation and related benefits | | | [removed: 88,260] [added: 56,286] | | | | [removed: 62,635] [added: 88,260] | |

| Other accrued liabilities | | | [removed: 113,679] [added: 115,791] | | | | [removed: 81,282] [added: 113,679] | |

| Total current liabilities | | | [removed: 263,400] [added: 235,035] | | | | [removed: 226,944] [added: 263,400] | |

| Income tax liabilities | | | [removed: 53,509] [added: 60,724] | | | | [removed: 47,669] [added: 53,509] | |

| Other long-term liabilities | | | [removed: 73,374] [added: 88,655] | | | | [removed: 67,227] [added: 73,374] | |

| Total liabilities | | | [removed: 390,283] [added: 384,414] | | | | [removed: 341,840] [added: 390,283] | |

| Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: [removed: 47,107] [added: 48,028] and [removed: 46,256,] [added: 47,107,] respectively | | | [removed: 975,276] [added: 1,129,937] | | | | [removed: 803,226] [added: 975,276] | |

| Retained earnings | | | [removed: 716,403] [added: 947,064] | | | | [removed: 424,879] [added: 716,403] | |

| Accumulated other comprehensive [removed: income (loss)] [added: loss] | | | [removed: (23,077] [added: (27,062] | ) | | | [removed: 15,880] [added: (23,077] | [added: )] |

| Total stockholders’ equity | | | [removed: 1,668,602] [added: 2,049,939] | | | | [removed: 1,243,985] [added: 1,668,602] | |

February 29, 2024

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 inventory demand forecasting process.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 29, 2024, which expressed an unqualified opinion thereon.

February 29, 2024

| | | _2023_ | | | | _2022_ | | |

| Selling, general and administrative | | | 275,740 | | | | 281,596 | | | | 232,415 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net income | | | _\-_ | | | | \- | | | | 427,374 | | | | \- | | | | 427,374 | |

| Other comprehensive loss | | | _\-_ | | | | \- | | | | \- | | | | (3,985 | ) | | | (3,985 | ) |

| Repurchase of common stock | | | (7 | ) | | | (3,741 | ) | | | \- | | | | \- | | | | (3,741 | ) |

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

| Gain on sale of equity investment | | | (1,424 | ) | | | \- | | | | \- | |

| Purchases of investments | | | (582,603 | ) | | | (65,785 | ) | | | (394,886 | ) |

| Maturities and sales of investments | | | 468,308 | | | | 128,610 | | | | 113,755 | |

| Repurchase of common stock | | | (3,741 | ) | | | \- | | | | \- | |

See Note _4_ for additional information on the fair value of the Company’s financial instruments.

| | | _2023_ | | | | _2022_ | | |

| RSUs with performance conditions (“PSUs”) that have a purchase price adjustment | | Monte Carlo simulation model |

_Recently Adopted Accounting Pronouncement_

The Company adopted this guidance at the beginning of fiscal year _2023_ prospectively and it did _not_ impact the consolidated financial statements for the year ended _December 31, 2023._ The Company is evaluating the impact of this guidance on its recent acquisition but does _not_ expect a material impact on its consolidated financial statements.

See Note _17_ for additional information regarding this acquisition.

In _November 2023,_ the FASB issued ASU _2023_\-_07,_ _Segment Reporting (Topic _280_): Improvements to Reportable Segment Disclosures_, which aims to improve disclosures regarding a public entity’s reportable segments, primarily through more comprehensive disclosures around significant segment expenses.

The guidance will be effective for the annual reporting for fiscal year _2024_ and interim reporting for the _first_ quarter in _2025,_ and should be applied retroactively to all prior periods presented.

The Company is evaluating the impact of adoption on its consolidated financial statements.

In _December 2023,_ the FASB issued 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 guidance will be effective for annual reporting for fiscal year _2025._ The standard should be applied prospectively and retrospective application is permitted.

_54_

| | | _2023_ | | | | _2022_ | | |

| | | _2023_ | | | | _2022_ | | |

| Due in less than 1 year | | $ | 398,670 | | | $ | 397,884 | |

| Due in 1 - 5 years | | | 183,266 | | | | 182,749 | |

| Total | | $ | 582,510 | | | $ | 581,200 | |

| Certificates of deposit | | | 127,123 | | | | _\-_ | | | | _\-_ | | | | 127,123 | |

| Corporate debt securities | | | 96,636 | | | | 4 | | | | (1,539 | ) | | | 95,101 | |

| Total | | $ | 718,024 | | | $ | 331 | | | $ | (1,641 | ) | | $ | 716,714 | |

_56_

| Corporate debt securities | | $ | 20,792 | | | $ | (19 | ) | | $ | 70,806 | | | $ | (1,520 | ) | | $ | 91,598 | | | $ | (1,539 | ) |

| Total | | $ | 118,391 | | | $ | (114 | ) | | $ | 71,373 | | | $ | (1,527 | ) | | $ | 189,764 | | | $ | (1,641 | ) |

| --- | --- | --- |

| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess and obsolete inventory write down process. This included controls over management’s assessment of inventory valuation, including the determination of forecasted usage of inventories. |

| --- | --- | --- |

February 24, 2023

February 24, 2023

| Selling, general and administrative | | | 273,595 | | | | 226,190 | | | | 161,670 | |

| Litigation expense, net | | | 8,001 | | | | 6,225 | | | | 7,804 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance as of January 1, 2020 | | | 43,616 | | | | $ | 549,517 | | | | $ | 229,450 | | | | $ | (5,476 | ) | | | $ | 773,491 | |

| Net income | | | _\-_ | | | | | \- | | | | | 164,375 | | | | | \- | | | | | 164,375 | |

| Other comprehensive income | | | _\-_ | | | | | \- | | | | | \- | | | | | 5,740 | | | | | 5,740 | |

| Purchases of short-term investments | | | (63,700 | ) | | | (394,886 | ) | | | (334,947 | ) |

| Maturities and sales of short-term investments | | | 127,860 | | | | 113,255 | | | | 357,092 | |

| Purchases of long-term investments | | | (2,085 | ) | | | \- | | | | (3,316 | ) |

| Sales of long-term investments | | | 750 | | | | 500 | | | | 300 | |

_48_

| | ● | Level _1_ - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |

| --- | --- | --- |

| | ● | Level _2_ - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are _not_ active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. |

| --- | --- | --- |

| | ● | Level _3_ - Significant unobservable inputs to the valuation methodology and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. |

| RSUs with performance conditions (“PSUs”) | | Black-Scholes model |

Litigation expense, net, recorded on the Consolidated Statements of Operations includes primarily patent infringement litigation and other business matters.

The Company records litigation costs in the period in which they are incurred.

Proceeds resulting from settlement of litigation or favorable judgments are recorded as a reduction against litigation expense.

The standard is effective for fiscal years beginning after _December 15, 2022,_ including interim period within those fiscal years, and is applied prospectively.

| Due in less than 1 year | | $ | 355,492 | | | $ | 351,915 | |

| Due in 1 - 5 years | | | 101,919 | | | | 97,351 | |

| Total | | $ | 459,181 | | | $ | 450,977 | |

For the year ended _December 31, 2020,_ the Company recognized gross realized gains of $1.1 million on the sale of investments.

| Certificates of deposit | | | 141,478 | | | | \- | | | | \- | | | | 141,478 | |

| Corporate debt securities | | | 388,081 | | | | 570 | | | | (1,768 | ) | | | 386,883 | |

| Total | | $ | 553,902 | | | $ | 570 | | | $ | (1,926 | ) | | $ | 552,546 | |

| Corporate debt securities | | $ | 285,954 | | | $ | (1,765 | ) | | $ | 4,760 | | | $ | (3 | ) | | $ | 290,714 | | | $ | (1,768 | ) |

| Total | | $ | 293,410 | | | $ | (1,804 | ) | | $ | 7,161 | | | $ | (122 | ) | | $ | 300,571 | | | $ | (1,926 | ) |

The Company’s auction-rate securities are backed by pools of student loans supported by guarantees by the U.S. Department of Education.

The underlying maturities of these securities are up to _23_ years.

The Company has received all scheduled interest payments on a timely basis pursuant to the terms and conditions of the securities.

The Company does _not_ intend to sell these securities, and it is more likely than _not_ that the Company will _not_ be required to sell these securities, before recovery of its amortized cost basis.

To date, the Company has redeemed $41.5 million, or 96% of the original portfolio in these auction-rate securities, at par without any realized losses.

Based on this evaluation, [added: 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, [removed: 2022,] [added: 2023,] our disclosure controls and procedures [removed: are designed at a reasonable assurance level and are] [added: 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 [removed: forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.][added: forms.]

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in _Internal [removed: Control_—_Integrated Framework_ (_2013)_] [added: Control—Integrated Framework (2013)_] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

[removed: Our independent registered public accounting firm,] Ernst & Young [removed: LLP,] [added: 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.

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2022,] [added: 2023,] that [added: would] have materially affected, or [removed: are] [added: were] reasonably likely to materially affect, our internal control over financial reporting.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource [removed: constraints] [added: constraints,] and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Notwithstanding the material weakness in internal control over financial reporting 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.

During the year-end financial reporting process of fiscal 2023, a material weakness was identified in internal control over financial reporting within the Company’s demand forecast process regarding excess and obsolete inventory.

The material weakness resulted from ineffective design of the controls related to management’s review and documentation of the Company’s inventory demand information and other assumptions used to determine the inventory carrying value adjustments necessary to record such quantities at the lower of their cost or net realizable value.

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.

We do not believe that this material weakness resulted in any material errors.

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:

| | • | Increased frequency of inventory reserve calculations and reconcile data between the inventory demand forecast system and our financial system at the same frequency; |

| --- | --- | --- |

| | • | Amend inventory provision spreadsheet formats to include additional columns and color coding to delineate specific parts and products before and after review, setting dollar thresholds for reserve requirements, and adding a tab for management review comments; and |

| --- | --- | --- |

| | • | Document discussions and proposed actions and follow-up at inventory demand forecast meetings. |

| --- | --- | --- |

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 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 2024.

However, there is no assurance as to when such remediation will be completed.

As the remediation plans are implemented, management may take additional measures or modify the remediation plan elements described above.

However, the Company has initiated enhancements to its internal control over financial reporting to remediate the material weakness described above identified during the year-end financial reporting process of fiscal 2023.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2022.

Management reviewed the results of its assessment with our Audit Committee.

__10b5_\-_1_ Trading Plans_

Certain of our executive officers 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 _2004_ ESPP and the Amended _2004_ ESPP, and upon vesting of RSUs.

During the _three_ months ended _December 31, 2023_, _no_ director or officer of the Company adopted, modified or terminated trading plans intended to satisfy the affirmative defense conditions of Rule _10b5_\-_1_(c) as defined in Item _408_(a) of Regulation S-K.

During the _three_ months ended _December 31, 2023,_ _no_ pre-existing trading plans intended to satisfy the affirmative defense conditions of Rule _10b5_\-_1_(c) were modified or terminated, and _no_ other written trading arrangements that are _not_ intended to qualify for the Rule _10b5_\-_1_(c) affirmative defense were adopted, modified, or terminated.

None.

Reference is made to the information regarding directors and nominees, code of ethics, corporate governance matters and disclosure relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing under the captions “Election of Directors” and “Delinquent Section 16(a) Reports” in the Company’s Proxy Statement for its [removed: 2023] [added: 2024] Annual Meeting of Stockholders (the [removed: “2023] [added: “2024] Annual Meeting”), which information is incorporated in this Annual Report on Form 10-K by reference.

The information required by this item will be set forth under the caption “Executive Officer Compensation” in the Company’s Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting, and is incorporated herein by reference.

The information required by this item will be set forth under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Company’s Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting, and is incorporated herein by reference.

The information required by this item will be set forth under the captions “Certain Relationships and Related Transactions” and “Election of Directors” in the Company’s Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting, and is incorporated herein by reference.

The information required by this item will be set forth under the caption “Audit and Other Fees” in the Company’s Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting, and is incorporated herein by reference.

| [Reports of Independent Registered Public Accounting [removed: Firm](#reportindependent)] [added: Firm (PCAOB ID: 42)](#reportindependent)] | [removed: [41](#reportindependent)] [added: [42](#reportindependent)] |

| [Consolidated Balance Sheets](#balancesheets) | [removed: [43](#balancesheets)] [added: [44](#balancesheets)] |

| [Consolidated Statements of Operations](#operations) | [removed: [44](#operations)] [added: [45](#operations)] |

| [Consolidated Statements of Comprehensive Income](#compincome) | [removed: [45](#compincome)] [added: [46](#compincome)] |

| [Consolidated Statements of Stockholders’ Equity](#equity) | [removed: [46](#equity)] [added: [47](#equity)] |

| [Consolidated Statements of Cash Flows](#cashflows) | [removed: [47](#cashflows)] [added: [48](#cashflows)] |

| [Notes to Consolidated Financial Statements](#notes) | [removed: [48](#notes)] [added: [49](#notes)] |

All schedules have been omitted because [removed: the required information is] [added: they are] not [removed: present or] [added: required,] not [removed: present in amounts sufficient to require submission of the schedules,] [added: applicable,] or [removed: because] the information required is [added: otherwise] included in the consolidated financial statements or notes thereto.

| 4.1 (3) | | [Description of the [removed: Registrant's] [added: Registrant](http://www.sec.gov/Archives/edgar/data/1280452/000143774920003943/ex_170638.htm)[’](http://www.sec.gov/Archives/edgar/data/1280452/000119312504196121/dex104.htm)[s] Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.](http://www.sec.gov/Archives/edgar/data/1280452/000143774920003943/ex_170638.htm) |

| 10.16+(19) | | [removed: [Forms] [added: [Form] of Grant [removed: Agreements] [added: Agreement for grants of Performance Stock Units] under the Monolithic Power Systems, Inc. Amended and Restated 2014 Equity Incentive [removed: Plan.](http://www.sec.gov/Archives/edgar/data/0001280452/000143774920022991/ex_210838.htm)] [added: Plan.](http://www.sec.gov/Archives/edgar/data/1280452/000143774923012797/ex_513928.htm)] |

| 21.1 | | [Subsidiaries of Monolithic Power Systems, [removed: Inc.](https://www.sec.gov/Archives/edgar/data/1280452/000143774923004540/ex_469365.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/1280452/000143774924006133/ex_594949.htm)] |

| 23.1 | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/1280452/000143774923004540/ex_469366.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/1280452/000143774924006133/ex_594950.htm)] |

| 31.1 | | [Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1280452/000143774923004540/ex_469367.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1280452/000143774924006133/ex_594951.htm)] |

| 31.2 | | [Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1280452/000143774923004540/ex_469368.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1280452/000143774924006133/ex_594952.htm)] |

| 32.1* | | [Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1280452/000143774923004540/ex_469369.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1280452/000143774924006133/ex_594953.htm)] |

| [removed: (19)] [added: (24)] | Incorporated by reference to Exhibit 10.1 of the Registrant’s quarterly report on Form 10-Q (File No. 000-51026), filed with the Securities and Exchange Commission on [removed: November 6, 2020.] [added: August 4, 2023.] |

| 10.21+(24) | | [Monolithic Power Systems, Inc. 2004 Employee Stock Purchase Plan, Amended and Restated as of August 16, 2023.](http://www.sec.gov/Archives/edgar/data/1280452/000143774923017560/ex_533582.htm) |

| 97.1 | | [Monolithic Power Systems, Inc. Compensation Clawback Policy](https://www.sec.gov/Archives/edgar/data/1280452/000143774924006133/ex_603791.htm) |

| | | |

| | | |

| (19) | Incorporated by reference to Exhibit 10.3 of the Registrant’s quarterly report on Form 10-Q (File No. 000-51026), filed with the Securities and Exchange Commission on May 5, 2023. |

| Date: February [removed: 24, 2023] [added: 29, 2024] | By: | /s/ Michael Hsing | |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February [removed: 24, 2023] [added: 29, 2024] by the following persons on behalf of the registrant and in the capacities indicated: