Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8. COMMITMENTS AND CONTINGENCIES

Product Warranties

The Company generally provides one to two year warranties against defects in materials and workmanship and will repair the products, provide replacements at no charge to customers or issue a refund. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. Warranty reserve requirements are generally based on a specific assessment of the products sold with warranties when a customer asserts a claim for warranty or a product defect.

The changes in warranty reserves are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Balance at beginning of period	$	25,209		$	10,873		$	20,989		$	6,895
Warranty provision for product sales		1,141			7,757			11,531			12,954
Settlements made		(306	)		(770	)		(1,825	)		(1,739	)
Unused warranty provision		(3,400	)		(84	)		(8,051	)		(334	)
Balance at end of period	$	22,644		$	17,776		$	22,644		$	17,776

The warranty and unused warranty provisions for product sales included net adjustments for changes in estimates to pre-existing claims of $(3.4) million and $1.4 million for the three months ended September 30, 2022 and 2021, respectively, and $1.9 million and $2.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Purchase Commitments

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

In May 2022, the Company entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over the next four years. As of September 30, 2022, the Company had made prepayments under this agreement of $170.0 million.

Total estimated future unconditional purchase commitments to all suppliers and other parties as of September 30, 2022 were as follows (in thousands):

2022 (remaining three months)	$	303,070
2023		420,883
2024		285,813
2025		353,952
Total	$	1,363,718

Litigation

The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters. The Company may also be subject to litigation initiated by its stockholders. These proceedings often involve complex questions of fact and law and  may require the expenditure of significant funds and the diversion of other resources to prosecute and defend. The Company intends to defend itself vigorously against any such claims. As of September 30, 2022, there were no material pending legal proceedings to which the Company was a party.