Arteris, Inc. (AIP) 2024年年度報告「NASDAQ」.pdf

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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXC

2、HANGE ACT OF 1934For the transition period from toCommission file number 001-40960Arteris,Inc.(Exact name of registrant as specified in its charter)Delaware27-0117058(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)900 E.Hamilton Ave.,Suite 300Campbell

3、,CA 95008(408)470-7300(Address,including zip code,and telephone number,including area code,of registrants principal executive offices)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.001 par valueAI

4、PThe Nasdaq Stock Market LLCSecurities registered pursuant to section 12(g)of the Act:Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes o No xIndicate by check mark if the registrant is not required to file reports pursuant to S

5、ection 13 or Section 15(d)of the Act.Yes o No xIndicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter periodthat the registrant was required to file su

6、ch reports);and(2)has been subject to such filing requirements for the past 90 days.Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of

7、Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes x No oIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smal

8、ler reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated fileroAccelerated fileroNon-accelerated filerxSmaller reporting companyxEmerging growth companyxIf an emerging growth

9、 company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuantto Section 13(a)of the Exchange Act.oIndicate by check mark whether the registrant has filed a report on and a

10、ttestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of theSarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.oIf securities are registered pursuant to Sect

11、ion 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issuedfinancial statements.oIndicate by check mark whether any of those error corrections are restatements that required a recovery an

12、alysis of incentive-based compensation received by any of the registrants executive officers during therelevant recovery period pursuant to Section 240.10D-1(b).oIndicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes o No xAs of June 30,2024,the agg

13、regate market value of shares held by non-affiliates of the registrant(based upon the closing sale prices of such shares on the Nasdaq Global Select Market on June 30,2024)wasapproximately$202.1 million.Shares of common stock held by each officer,director and entities affiliated with directors have

14、been excluded because such persons may be deemed to be“affiliates”as that term isdefined under the rules and regulations of the Exchange Act.This determination of affiliate status is not necessarily a conclusive determination for any other purpose.As of February 11,2025,there were 40,948,190 shares

15、of the registrants common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants definitive Proxy Statement relating to the 2024 Annual Meeting of Stockholders are incorporated herein by references in Part III of this Annual Report on Form 10-K to the extent statedherein.Su

16、ch Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrants fiscal year ended December 31,2024.Table of ContentsTable of ContentsPagePART IItem 1.Business.5Item 1A.Risk Factors.20Item 1B.Unresolved Staff Comments.55Item 1C.Cybersecurity Risk Manage

17、ment and Strategy.55Item 2.Properties.56Item 3.Legal Proceedings.56Item 4.Mine Safety Disclosures.56PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.57Item 6.Reserved.58Item 7.Managements Discussion and Analysis of Financial Con

18、dition and Results of Operations.59Item 7A.Quantitative and Qualitative Disclosures About Market Risk.72Item 8.Financial Statements and Supplementary Data.74Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.109Item 9A.Controls and Procedures.109Item 9B.Other

19、 Information.110Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.110PART IIIItem 10.Directors,Executive Officers and Corporate Governance.111Item 11.Executive Compensation.111Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Mat

20、ters.111Item 13.Certain Relationships and Related Transactions,and Director Independence.111Item 14.Principal Accounting Fees and Services.111PART IVItem 15.Exhibits,Financial Statement Schedules.112Item 16.Form 10-K Summary.114Signatures1152Table of ContentsCAUTIONARY NOTE REGARDING FORWARD-LOOKING

21、 STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,asamended,(Securities Act),and Section 21E of the Securities Exchange Act of 1934,as amended(Exchange Act),about us and our industry thatinvolve substantial

22、risks and uncertainties.All statements other than statements of historical facts contained in this report are forward-lookingstatements.Statements regarding our future results of operations and financial position,business strategy and plans and objectives of managementfor future operations,including

23、,among others,statements regarding liquidity,growth and profitability strategies and factors and trends affecting ourbusiness are forward-looking statements.In some cases,you can identify forward-looking statements by terms such as“may,”“will,”“should,”“expects,”“plans,”“anticipates,”“could,”“intend

24、s,”“targets,”“projects,”“contemplates,”“believes,”“estimates,”“predicts,”“potential”or“continue”orthe negative of these terms or other similar expressions.The forward-looking statements in this Annual Report on Form 10-K include,among otherthings,statements about:our expectations regarding our reven

25、ue,expenses,and other operating results;our ability to acquire new customers and successfully retain existing customers;our ability to achieve or sustain our profitability;future investments in our business,our anticipated capital expenditures,and our estimates regarding our capital requirements;the

26、 costs and success of our sales and marketing efforts,and our ability to promote our brand;our growth strategies;our reliance on key personnel and our ability to identify,recruit,and retain skilled personnel;our ability to effectively manage our growth;our ability to protect our intellectual propert

27、y rights and any costs associated therewith;beliefs and expectations regarding opportunities,developments and projections relating to our competitors and our industry;andour expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startup Ac

28、t of2012.The forward-looking statements in this report are only predictions.We have based these forward-looking statements largely on our currentexpectations and projections about future events and financial trends that we believe may affect our business,financial condition and results ofoperations.

29、Forward-looking statements involve known and unknown risks,uncertainties and other important factors that may cause our actualresults,performance or achievements to be materially different from any future results,performance or achievements expressed or implied by theforward-looking statements.We be

30、lieve that these factors include,but are not limited to,the factors set forth under“Risk Factors.”Because forward-looking statements are inherently subject to risks and uncertainties,some of which cannot be predicted or quantified,you should not rely on theseforward-looking statements as predictions

31、 of future events.The events and circumstances reflected in our forward-looking statements may not beachieved or occur and actual results could differ materially from those projected in the forward-looking statements.In addition,statements that“we believe”and similar statements reflect our beliefs a

32、nd opinions on the relevant subject.These statements are basedupon information available to us as of the date of this report,and while we believe such information forms a reasonable basis for such statements,such information may be limited or incomplete,and our statements should not be read to indic

33、ate that we have conducted an exhaustive inquiry into,or review of,all potentially available relevant information.These statements are inherently uncertain,and investors are cautioned not to unduly relyupon these statements.These forward-looking statements speak only as of the date of this Annual Re

34、port on Form 10-K.Except as required by applicable law,we do notplan to publicly update or revise any forward-looking statements contained in this report after we distribute this Annual Report on Form 10-K,whether as a result of any new information,future events or otherwise.We may not actually achi

35、eve the plans,intentions,or expectations disclosedin our forward-looking statements,and you should not place undue reliance on our forward-looking statements.Our forward-looking statements donot reflect the potential impact of any future acquisitions,mergers,dispositions,joint ventures,or investment

36、s.3Table of ContentsSUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESSOur business is subject to numerous risks and uncertainties that you should be aware,including those described in the section entitled“RiskFactors.”The risks include the following:We face significant competition from larger co

37、mpanies and third-party providers that may deploy their resources so they can develop theirIP solutions internally;We have a history of net losses,and we may not achieve or maintain profitability in the future;Because our IP solutions are components of end products,if semiconductor system producers

38、and/or end product producer companies inthe automotive market,enterprise computing market,communications market,consumer electronics market,and industrial market do notincorporate our solutions into their end products or if the end products of our customers do not achieve market acceptance,we may no

39、t beable to generate adequate license sales and royalty income from our products;Political and regulatory conditions that contribute to uncertainty and market volatility including legislative,regulatory,trade and policychanges associated with the new U.S.presidential administration could materially

40、and adversely impact our business operations andfinancial results;We depend on market acceptance of third-party semiconductor IP;The success of our business depends on sustaining or growing our licensing revenue,and the failure to achieve such revenue would lead toa material decline in our results o

41、f operations;The nature of the design win process requires us to incur significant expenses without any guarantee that research and development andsales efforts will generate revenue,which could adversely affect our financial results;Even if we succeed in securing design wins for our IP interconnect

42、 and other solutions and our System-on-Chip(SoC)IntegrationAutomation software(SIA)(formerly IP deployment software)solutions,we may not generate timely or sufficient margins or margins fromthose wins and our financial results could suffer;Claims by other companies that we infringe their intellectua

43、l property rights or that patents on which we rely are invalid could adverselyaffect our business;We continually pursue new IP interconnect,SoC integration automation,and other technology initiatives,and if we fail to successfully carryout these initiatives,our business could be harmed;We may have t

44、o invest more resources in research and development than anticipated,which could increase our operating expenses andnegatively affect our operating results;We are subject to government regulation,including import,export and economic sanctions laws and artificial intelligence regulations thatmay expo

45、se us to liability and increase our costs;Product errors or defects could expose us to liability and harm our reputation and we could lose market share;If we fail to offer high-quality support,our reputation could suffer;Our dependence on international customers and operations also subjects us to a

46、range of other additional regulatory,operational,financialand political risks that could adversely affect our financial results;If we are unable to protect our proprietary technology and inventions through patents and other IP rights,our ability to compete successfullyand our financial results could

47、 be adversely impacted;We face risks associated with doing business in China;andLitigation,including securities class action litigation,may impair our reputation and lead us to incur significant costs.For example,we arecurrently involved in ongoing litigation related to patent infringement claims.Th

48、e summary risk factors described above should be read together with the text of the full risk factors below in the section entitled“Risk Factors”and the other information set forth in this Annual Report on Form 10-K,including our consolidated financial statements and the related notes,as wellas in o

49、ther documents that we file with the U.S.Securities and Exchange Commission.The risks summarized above or described in full below arenot the only risks that we face.Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may alsomaterially adversely af

50、fect our business,financial condition,results of operations,and future growth prospects.4Table of ContentsPart IItem 1.BusinessOverviewWe are a leading provider of semiconductor system IP,including interconnect and other intellectual property,(collectively,System IP)technology.Our System IP technolo

51、gy manages the on-chip communications and IP block deployments in System-on-Chip(SoC)semiconductors and systemsof chiplets.Our leading proprietary System IP solutions achieve this by connecting client IP blocks such as processors,memories,artificialintelligence/machine learning(AI/ML)accelerators,gr

52、aphics subsystems,safety and security,and other input/output subsystems(I/Os)via multipleNetwork-on-Chips(NoCs)in order for our customers to experience faster SoC targeting,as well as,more efficient,and lower cost solutions.Growthfor our solutions is being driven by growing SoC sophistication and as

53、sociated complexity,now extending into disaggregation of SoCs into systemsthat implement the communication protocol aspects and partner with industry-leading providers like Synopsys,Cadence,Alphawave and others toconnect to their die-to-die interfaces.The addition of more processors,channels of memo

54、ry access,machine learning sections,additional I/Osinterface standards,and other subsystems within SoCs is driving the need for more advanced System IP,including NoC interconnect IPs.Thegrowth in the number of these connected on-chip subsystems places an increasing premium on the interconnect IP cap

55、ability to move data insidecomplex SoCs.We believe this increase in SoC complexity has created a significant opportunity for sophisticated System IP solutions thatincorporate NoC interconnect IP,SoC Integration Automation software(SIA)(formerly IP deployment software)and NoC interface IP(consisting

56、ofperipheral data transport IP and control plane networks connected to NoC interconnect IPs).Moreover,our technology can also provide more cost-effective solutions and reduce the risks of building and maintaining in-house NoC teams,which we believe has positively contributed to our marketsegment sha

57、re growth.Founded in 2003,we are among the pioneers in the development of NoC IP technology for on-chip communication that addresses the growingcomplexity,performance,and cost requirements of SoC semiconductors and as a result,we have emerged as a global leader.Over time,we haveexpanded and scaled o

58、ur interconnect IP and other IP businesses to provide hardware,software,documentation,support,and training under alicense fee and a royalty business model,to companies that design and produce semiconductors.In addition,we are also finding an increasingnumber of customers further down the supply chai

59、n,such as system-level companies and automotive original equipment manufacturers(OEMs).Our SoC integration automation capabilities were significantly enhanced by our acquisitions of Magillem in 2020 and Semifore in 2022,complementing our interconnect IP solutions by helping to automate the customer

60、configuration of its NoC IPs,the process of integrating andassembling all of the customers IP blocks into SoC hardware,and ensuring correct hardware-software integration for software development.Products incorporating our IP are used to carry important data inside todays complex SoCs across a broad

61、range of applications,includingautomotive,enterprise computing,communications,consumer electronics,and industrial markets.Our interconnect IP solutions can be found inmultiple industry-standard designs supporting instruction set architectures such as x86,Arm,RISC-V,CEVA,Synopsys ARC,Cadence Tensilic

62、a andMIPS,as well as memory controllers,UCIe,BoW,and XSR controllers,I/O and a variety of IP subsystems,to enable customers to integrate such IPblocks with high levels of efficiency and performance.Our solutions enable customer innovation because they are configurable for each customersdesign flow a

63、nd SoC development projects and have wide applicability for many types of SoCs.We estimate that our solutions have beenincorporated into over three and a half billion production SoCs since inception.Traditional on-chip communication methods,including bus and crossbar interconnect IPs,are generally i

64、nadequate in handling modernsemiconductor communications,and even more so for sophisticated applications or more complex designs.Technological advancements have led toincreasingly complex SoCs that integrate numerous functions into a single semiconductor device.Massive amounts of wires,challenging t

65、imingclosure,and routing congestion lead to greater die area and chip cost.Increased transistor density and design frequencies create higher powerconsumption leading to heat dissipation challenges and shorter battery life for electronic devices.These challenges have significantly complicatedSoC inno

66、vation and contributed to the increasing adoption of System IP,across the growing number of customer design starts coupled with theexpanding number of NoC IPs used in current SoC.We leveraged our extensive technical expertise to develop configurable IP for a new method for on-chip communication,the

67、NoC,that has emergedover the past couple of decades to address these critical semiconductor development challenges.We accomplished this by pioneering the use ofproprietary networking techniques for on-chip communications to remove the inherent architectural limitations of traditional on-chip communi

68、cations,thereby improving ease of integration,performance,silicon area,and power consumption.In doing so,we enable our customers to achieve theirdesign goals faster,more efficiently,and at lower costs.In addition,our SIA solutions enable easier IP integration of our interconnect IPs amongother IP bl

69、ocks that make up an SoC,across both hardware and software.5Table of ContentsWe work directly with our customers throughout the SoC development process and seek to develop long-term,sustainable relationships with themas our technology becomes embedded in their products.Increasingly,we are also seein

70、g system companies and even their customers becomingdirectly involved in SoC and NoC specifications and design,further expanding our ability to partner in this growing market.We also leverage our longhistory in interconnect IP designs and are able to serve a broad range of applications and deliver a

71、pplication and customer-specific features to ourcustomers.For example,we are a leader in the market of interconnect for advanced driver assistance systems(ADAS)SoCs,which we believe is aresult of our quality,reliability,and innovative technology targeted at that business application,and longstanding

72、 collaboration with automotivesemiconductor companies,Tier 1 suppliers,and car manufacturing OEMs.We provide solutions for the global SoC market and believe that market growth will be driven by an increasing number of SoC designs and growingcomplexity,increasing average selling prices of interconnec

73、t IP and SIA,and the growing proliferation of the NoC interface IP market segment.Morespecifically,we believe our growth will be driven by technology trends requiring more sophisticated on-chip processing in the automotive,communications,enterprise computing,consumer electronics,and industrial marke

74、ts.Also,the need for sophisticated system IP products is growingrapidly in order to address the requirements of smaller die size,multi-die systems,lower power consumption,and higher operation frequency,as wellas management of critical net latency in a timely and cost-effective manner.As a result,we

75、believe these trends have led to an increased economicbenefit of in-licensing commercial semiconductor design IP,a trend that we expect to continue.For the years ended December 31,2024,and 2023,we generated$57.7 million and$53.7 million in revenue,$0.7 million and$15.7 million in cashflows used in o

76、perating activities,and$33.6 million and$36.9 million in net loss,respectively.We expect to incur further net losses in the short termas we invest in our business.As of December 31,2024,we had Annual Contract Value(ACV),which we define for an individual customeragreement as the total fixed fees unde

77、r the agreement divided by the number of years in the agreement term,of$60.7 million.ACV plus royaltiesreached$65.1 million as of December 31,2024.In 2024,we added 10 net new Active Customers.We define Active Customers as customers whohave entered into a license agreement with us that remains in eff

78、ect.Industry BackgroundThe semiconductor industry is characterized by rapid technological change and increasing levels of integration.The semiconductor industry movedfrom integrated circuits that process data to SoCs that make decisions,and now extends to systems.SoCs grew more complex,enablingappli

79、cations such as automated driving and enterprise computing data center acceleration.Integration of processors,accelerators,machine learningsubsystems,sophisticated multi-channel memories,and an ever-larger number of interface standards has increased the need to move dataefficiently inside the SoC an

80、d between SoC chiplets.Increasing chip design complexity leads to rising costs.The move to more advanced process nodes has led to significantly more expensive andcomplex chip design methods and manufacturing processes.Increasing SoC complexity leads to increasing System IP value while also placing p

81、ressure on IP block assembly and connectivity efforts.As SoCsgrow in size,partly due to machine learning subsystems,communication complexity increases.The increasing use of cache coherent and non-coherent traffic in a single SoC may amplify demand for our System IP solutions.Increased SoC complexity

82、 also requires SoC teams to managepotentially hundreds of IP blocks from various vendors and internal development groups.These teams and their electronic design software(EDA)groups must implement IP supply chains with increasingly capable SoC integration automation to succeed,supported by standards

83、like IEEE 1685IP-XACT.As these standards become increasingly sophisticated with each generation,more sophisticated software is required to support them.Rising demand from emerging end markets and new market participants is increasing the need for System IP solutions.New applications in marketssuch a

84、s automotive,enterprise computing,communications,consumer electronics,and industrial have increased the diversity and overall demand inthe semiconductor market.These new applications,which often include more AI/ML technology,safety,or complex hardware-software integrations,have led to an increase in

85、 the number and complexity of SoC designs.Chips used for artificial intelligence(AI)training and inference accelerationhave increased in size,with added design complexities and performance requirements,leading to higher design costs.There is a shift to third-party IP due to cost benefits,product dif

86、ferentiation,and accelerated time to market.Developing state-of-the-art SoCinterconnect IP solutions is difficult,time-consuming and expensive.We believe this dynamic is accelerating the degree to which interconnect IPsolutions are outsourced to commercial vendors.Commercial interconnect vendors,suc

87、h as Arteris,can potentially accelerate time-to-market byengaging with a greater variety of SoC applications and designs than the typical internal interconnect teams.6Table of ContentsSystem IP MarketSoC-type semiconductors consist of pre-made IP blocks that are either licensed from third parties by

88、 semiconductor and electronics companies ordeveloped in-house.These IP blocks must be assembled into SoCs as efficiently as possible to address semiconductor company and system OEMcustomer requirements.Many of these IP blocks,including processors and other functional blocks,such as machine learning

89、and visionsubsystems,perform processing functions and execute complex software stacks.These IP blocks can number in the hundreds on a single chip andgenerate and consume commands and data,as well as work together as a unit.As SoCs become more complex,there has emerged a class ofsilicon IP and softwa

90、re tools designed to assemble these IP blocks into a functioning SoC at target cost and performance.We call this the System IPmarket.The System IP market consists of interconnect IP,NoC interface IP and SIA solutions.As SoC technology evolves,we believe that there is asignificant opportunity for us

91、to increase our value by introducing additional functionality for our customers to integrate their SoCs efficiently using ourSystem IP solutions.Informa PLC segments the aforementioned semiconductor and OEM markets into six industry segments:automotive,computing,consumer,industrial,wireless,and wire

92、d communication.Our market penetration spans all of these segments identified by Informa PLC and customer adoptionis most pronounced in the automotive,enterprise computing,consumer electronics,communications across wired and wireless,and industrialmarkets,driven by a higher rate of disruptive innova

93、tions.Automotive ApplicationsThe automotive market continues to undergo technology disruption with the advent of automated driving,electrification,electronic control unitconsolidation and vehicle connectivity to the internet.However,the consumption of SoCs,other than those for rechargeable batteries

94、 that power theelectric motors in EVs,is similar across all forms of vehicle propulsion.Furthermore,cars are becoming increasingly connected to a large network ofdata centers,roadside and city infrastructures,and other vehicles,creating the“Internet of Cars.”Due to the complex requirements of electr

95、onically enabled vehicles and the high rate of innovation required to compete in the“Internet of Cars”revolution,industry players are designing SoCs tailored to their sophisticated software and applications.This will result in more complex automotive-targeted SoCs,which we expect will continue to gr

96、ow demand for reliable,configurable,and proven interconnect technologies that accelerate aproducts time to market while reducing overall costs.The“Internet of Cars”revolution is disrupting the automotive supply chain.New business models such as ridesharing,transportation subscriptionsand transportat

97、ion as a service are being created.New potential entrants such as ride-sharing companies,large data center companies,and newautomotive startups are changing the automotive business landscape,while increasing demand for more sophisticated transportation-targetedsemiconductors and therefore System IP

98、solutions.The move toward the Internet of Cars may be non-linear and take longer than anticipated but since hardware decisions are often made between sixand seven years before deployment,we believe that over the next 20 to 30 years,the creation of the internet of cars represents one of the largestse

99、miconductor opportunities available.Enterprise Computing ApplicationsLarge-scale cloud data centers are augmenting and replacing corporate data centers.This evolution expands the market size and value forenterprise solid-state storage systems and the custom ASICs that control them,further strengthen

100、ing demand for interconnect technologies thatimprove storage performance and provide data integrity.In addition,enterprise hyperscale computing companies are now creating proprietary SoCsand accelerators for their own products and data centers.We believe that these new entrants into semiconductor de

101、sign may provide marketopportunities for third-party System IP solutions,including those from Arteris.Some of the key areas for workload specific acceleration in data centers are AI/ML,database processing,video/audio transcoding,and scientificcomputing.AI/ML SoCs must be“trained”on large data sets t

102、hat have to be collected from real-world data utilizing“training”SoCs.A different classof AI/ML SoCs uses such data to match the training data against actual data collected by sensors of the system utilizing“inference”SoCs.7Table of ContentsCommunications ApplicationsThe wireless communications mark

103、et is in the midst of disruption as it allows efficient machine-to-machine communications at a massive scope andscale.5G technology allows the cost-efficient connections of massive numbers of embedded sensors and other devices into ultra-reliable,high-bandwidth,and low-latency networks.In short,5G e

104、nables smart devices utilizing sophisticated SoCs to communicate more information at fasterspeeds while using less power.As 5G is adopted as the wireless market standard,it is expected to revolutionize markets,including cars and smartcity vehicle infrastructure,factory automation,logistics,and consu

105、mer and business broadband.Already approaching the next generation networkinfrastructure,the industry has started the development of a roadmap towards 6G technology to be rolled out towards the end of this decade,withvarious 5G Advanced steps in-between.We believe the transition to 5G and 6G will re

106、sult in more stringent requirements for bandwidth,latency,and power consumption,making an easy-to-integrate,high performance and low power on-chip interconnect a critical requirement.Other Applications and TechnologiesThe consumer electronics and industrial markets are also expected to require incre

107、asingly complex chips primarily driven by the incorporation ofAI/ML processing,particularly at the edge,increased use of 5G communications,and more stringent safety and security requirements.In addition,the chip market in these domains is sensitive to time-to-market pressures,which also generates th

108、e need for increased semiconductor designproductivity and faster implementation as enhanced by sophisticated interconnect IP solutions.Our low-power features are valuable for battery lifeand power consumption in our targeted markets.Industry ChallengesInterconnect IP development is a challenging,tim

109、e-consuming,and expensive process.The need for robust,maintainable interconnect technologybecomes increasingly important as chip designs become more complex and larger in size,both driven by advances in semiconductor manufacturingtechnology.Key interconnect IP development requirements and challenges

110、 include:Deep technical expertise and knowledge.Interconnect development requires an interdisciplinary engineering team with expertise andskill sets across a wide-range of engineering and scientific domains including hardware architecture,design,verification,EDA-class software development,and System

111、C modeling,as well as deep understanding of physical design,design methodologies andnetworking architectures.The design process requires expertise in developing advanced hardware architectures to handle datacoherency and consistency across the interconnect to achieve a high-performance,low power imp

112、lementation.The design processrequires expertise in developing advanced hardware architectures,engineers that have an awareness of the physical implementation andfloorplan of the target chip in order to generate an architecture that meets SoC requirements and in-depth knowledge of graph theory,commo

113、n interface protocols,data models,and graphical user interfaces.High quality.Interconnect IP requires a systematic deployment of quality-oriented methodologies,as any customer-level problems in theinterconnect will result in SoC project delays or even project failures.Engineering teams creating inte

114、rconnects must invest heavily notonly in skilled engineering resources to develop and verify,but also processes and methodologies that provide early indication of anypotential quality issues.Safety standards.High reliability of the interconnect is a heightened requirement for mission-critical market

115、s including automotive,industrial robotics,medical and space.Long time commitment and high investment cost.We believe the engineering development cycle for each new interconnect and themarket development cycle to establish a significant market position for a customer or for a commercial vendor requi

116、res large teams,manyyears and great expense.Additionally,we believe the investment required by a customer to internally create a configurable interconnecttechnology for a new SoC can be very expensive compared to the cost of licensing from a proven interconnect IP provider.Breadth of System IP solut

117、ions.With the need to address cache coherent,non-coherent,machine learning and chiplet traffic,customers need a System IP solution that works together across all these data traffic types.SoC integration automation technologiesallow customers to manage the deployment of the rest of the IP blocks in t

118、he SoC in order to ease SoC IP integration.Meeting suchrequirements requires significant enterprise scale in engineering and customer support.Necessity for such combined technologiesamounts to a significant barrier to entry in terms of time,cost and customer adoption.8Table of ContentsGiven the abov

119、e requirements and challenges,developing commercial interconnect IP and software tools requires large engineering teams withadvanced skill sets,significant amounts of time,and substantial financial investment.By licensing commercial interconnect IP,companies can freeup resources to focus on developi

120、ng new product capabilities and differentiators.Further,we believe the large investments needed to developcommercial interconnect IP also create barriers to entry for potential commercial competitors.Our Solutions and Competitive StrengthsWe are a leading provider of interconnect and other IP techno

121、logy that manages the on-chip communications in SoC semiconductor devices.Webelieve our System IP is integral to our customers in the automotive,enterprise computing,consumer electronics,communications across wired andwireless,and industrial markets.Our core strengths include:We help accelerate our

122、customers time to market.Our interconnect IP software and SIA solutions help accelerate SoC developmentat several different steps in the design cycle.For example,we offer design exploration and modeling capability and we have automatedtest bench generation to accelerate the verification of our inter

123、connect IP products.Our System IP product lines are structured so that ourcustomers can customize the interconnect for their needs,helping accelerate interconnect IP customization for their particular SoCconfigurations.In addition to interconnect IP productivity features,we offer a combination of au

124、tomated interconnect configurationsoftware,pre-verified interfaces to IP block protocols,pre-verified interfaces to EDA tools and a pre-verified interconnect IP elementlibrary for rapid generation of customer-specific interconnect IP products.Our SIA solutions also help accelerate SoC development by

125、enabling the IP blocks making up an SoC to be packaged in a standard format called IP-XACT(Institute of Electrical and ElectronicsEngineersIEEE 1685),which provides a uniform IP block assembly and reuse methodology.Our SIA tool suite includes numerouspackages that allow the configuration of IP block

126、 exit port registers,establish high-level SoC connectivity and link documentation tothe IP-XACT design information.Our products help improve the performance of our customers SoCs.We believe that using our System IP solutions can result inimproved SoC metrics such as higher performance,lower power co

127、nsumption and smaller die area.We have extensive low-powermanagement features such as three levels of clock gating and power domain features for low-power applications such as smartphoneapplication processors and other SoCs for hand-held applications.We enable customers to partition their designs in

128、to“frequencydomains”,allowing some domains to run at higher frequencies than others,in order to trade off performance against SoC powerconsumption.We enable lower customer research and development and SoC unit costs.We believe that we enable lower chip research anddevelopment costs,lower SoC unit co

129、sts and reduce project risk as compared to solutions developed internally or licensed from anothervendor.We have targeted our interconnect IP to be area-efficient so that we can offer silicon area savings,and resulting chip costsavings,compared to other interconnect IP alternatives.We provide an int

130、egrated package of software,hardware,documentation,verification tools and pre-verified interfaces to major IP blocks and EDA tools.We believe our IP and software can save our customerstime and money and enable them to focus on product differentiation and revenue generation.We believe we have grown o

131、ur product portfolio through robust and focused research and development.Developing commercialinterconnect IP and software tooling requires large and specialized engineering teams,significant amounts of time and extensive periodsof commercial productization.We believe we have been the pioneer of usi

132、ng networking technology for on-chip communications and havebeen licensing such interconnect IP products since 2006.Our strategy is to deliver continuous innovation across both Interconnect IP andSIA software,with at least one major new product or major technology addition each year,and we have done

133、 so since 2013.As ofDecember 31,2024,we have 159 development engineers on staff covering IP hardware,software,verification,testing and methodologydevelopment.Such a sizeable,multi-disciplinary engineering team allows us to undertake System IP products of sizeable scale andpermits us to work on multi

134、ple product development projects at the same time.We have grown our solutions through targeted acquisitions.We believe we have the ability to complement our product developmentwith selective acquisitions to strengthen our System IP product portfolio.With our acquisition of Magillem in 2020 and Semif

135、ore in 2022,we added complementary technology that helps automate the process of integrating and assembling all of the customers IP blocks intoan SoC,and its hardware-software integration to accelerate end product system development.9Table of ContentsWe are able to address mission critical applicati

136、ons.We believe we are positioned to take advantage of the rapid growth ofsemiconductor content in cars.We have been focused on the automotive market since inception and have 162 automotive SoC designwins.Additionally,we have established customer relationships with market leaders such as Mobileye/Int

137、el,BMW,NXP,Bosch,and DreamChip.As cars continue to grow in complexity and connectivity,we believe there will be significant growth in the number of increasinglypowerful SoCs that will need automotive grade on-chip interconnect IP.Our interconnect IP is designed to meet the automotive safetyintegrity

138、 level D(ASIL D)of the ISO 26262 automotive functional safety standard,which is the highest level,helping to position us as anideal partner to innovative companies in the advanced automotive SoC market.We believe our solutions make it easier for our automotivesemiconductor Tier 1 and OEM customers t

139、o collaborate and meet functional safety standards by establishing traceability betweenrequirements,specifications,hardware and software implementation,verification and testing,and quality assurance.Because of this,ourSIA solutions are a complement to our interconnect IP in helping our customers mee

140、t their ISO 26262 functional safety requirements.Recently,our System IP and its resilience features have also seen increasing adoption for space exploration related applications.We have developed a“Connected by Arteris”ecosystem to provide a broad set of System IP solutions.Interconnect IP is the da

141、tatransport backbone of the SoC,connecting IP blocks such as CPUs,GPUs and memory controllers.We work with suppliers who providethese blocks,including IP companies such as Arm,SiFive,MIPS,Synopsys,Cadence Design Systems,Semidynamics,Andes,Codasipand other RISC-V IP vendors to support their products

142、and protocols working with our SIA and interconnect IP products.By offering anunbiased,standards-based interconnect infrastructure to which other IP vendors can connect,and supporting a broad range oftransaction protocols,we believe we have simplified the industrys development of heterogeneous SoCs

143、while solidifying our role as aneutral,technology-agnostic provider across the semiconductor industry.In addition to on-chip integrations with partners,we work withEDA companies such as Synopsys,Cadence and Siemens to provide prepackaged interfaces to their EDA tools such as simulators,modeling syst

144、ems,and logic and physical synthesis tools.By working closely with semiconductor IP and EDA leaders,some of whomcompete with each other,we believe we have established credibility as a trusted enabler for the integration of their products within ourjoint customers chips and design flows.We believe we

145、 benefit from distinct competitive advantages.We believe our interconnect IP technology benefits from barriers to entrydue to our many years of experience and the strength of our proprietary solutions,as well as the significant technical expertise andresearch costs required to develop a competitive

146、product.We were founded in 2003 when we believe we helped pioneer the industrysNoC interconnect IP and have maintained our competitive position with our global team of 159 hardware and software engineers as ofDecember 31,2024.Developing interconnect IP requires an interdisciplinary engineering team

147、with expertise and skill sets across a widerange of sciences and domains as well as a deep understanding of semiconductor physical design,design methodologies,andnetworking architectures.Building such teams and keeping them together over long periods of time presents a challenge for manycompanies.Ad

148、ditionally,strategic patience and focus are required to participate in the market.For example,we believe that the customeracquisition process has a typical duration of two to nine months;following this,a customers chip design cycle is typically between one tothree years.Customers typically start shi

149、pping their products containing our interconnect IP solutions between one to five years followingcompletion of their product design,known as mass production at which point we start to receive royalties;this lasts for up to seven yearsor longer depending on the particular market.We also leverage our

150、long history of interconnect IP design to deliver customer-specificfeatures,further deepening our relationship and integration with the customers product.With our System IP products embedded in ourcustomers SoCs,there are significant switching costs in moving to alternative solutions.We believe that

151、 our product quality and technicalstrength have enabled our high customer retention rate.We offer global support for our System IP customers.Interconnect IP technology is complex,and our customer support is critical forthe successful deployment of our IP in our customers designs.We support customers

152、 utilizing our interconnect IP solutions on a globalbasis with architectural reviews,training,implementation support,and tape-out support.We work directly with our customers throughouttheir design processes to develop long-term sustainable relationships as our technology becomes embedded in their pr

153、oducts.Many ofour application engineers have advanced degrees,years of SoC design experience and passion for helping our customers drive their SoCdesigns to production status.We believe our application engineers are critical advisors to our customers design teams and offercompetitive value to our cu

154、stomers SoC creation projects.10Table of ContentsOur Growth StrategyWe believe that as SoCs become more numerous and complex,the value of System IP technology increases since it enables the efficient movementof data within the ever-growing number of SoCs.We also believe that,as SoCs become more comp

155、lex,interconnect IP technology becomes moretime-consuming and riskier to develop internally within semiconductor and system companies,favoring System IP solutions provided by outsideparties such as Arteris.As a dedicated interconnect IP provider,we enable our customers to leverage the knowledge and

156、deep expertise developedby us through many years of focus on solutions for a variety of customers.Our growth strategy includes the following:Leverage our System IP technology leadership and focused research and development to provide solutions for the semiconductorindustry that designs and builds co

157、mplex SoCs.Address high-growth markets,including automotive,enterprise computing,consumer electronics,communications across wired andwireless,industrial and AI/ML markets.Expand our customer base through ongoing System IP innovation.Expand our customer base through increased investment in sales and

158、marketing.Continue to pursue selective acquisitions and other strategic transactions,such as joint ventures,to acquire complementary solutions andaccelerate growth.NoC Interface IP Growth OpportunityNoC IP carries the majority of the data in an SoC.As a result,there is an opportunity to add addition

159、al customer value by developing additional dataplane and control plane capabilities that attach directly to our interconnect IPs and are implemented in SoCs by our IP software.Currently,we offerNoC interface IP products such as a memory scheduler,last-level cache,SoC data visibility and SoC debug IP

160、s.We see an opportunity to furtherexpand our product portfolio and market with additional control networks and subsystems that can accelerate our customers ability to deliverproduction SoCs to their end markets.Such networks may include clocking,register management and interrupt networks.Control sub

161、systems suchas power management,security,performance monitoring and debug may provide additional value to customers looking to lower the cost and risk ofSoC development.With the integration of interconnect IP and NoC interface IPs,we believe we would be able to provide end-to-end solutions forqualit

162、y of service,system level security and SoC resilience.NoC interface IP represents a natural expansion of our technical and businesscapabilities.Our SolutionsWe provide semiconductor interconnect IP and SIA solutions to serve our target end-markets,including automotive,enterprise computing,consumerel

163、ectronics,communications across wired and wireless,and industrial markets.We regularly release new products to address the rapid evolution ofSoC technology.We recently announced the release of an innovative new non-coherent NoC IP product that is marketed under the name FlexGen,which builds upon the

164、 silicon-proven and physically aware FlexNoC to automate the creation of high-performance network-on-chip designs.Our twocore product platforms are as follows:a.Network-on-Chip IP Productsi.Non-coherent NoC IP,with FlexGen,FlexNoC and FlexWayii.Cache-coherent NoC IP,with Ncoreiii.NoC interface IP,wi

165、th CodaCacheb.SoC Integration Automation Software Solutions Productsi.IP and SoC software,with Magillem(Connectivity and Registers)and CSRCompilerIn addition to historical annual introductions of new System IP solutions,we regularly develop and deliver updates that provide productenhancements to our

166、 customers.We believe the combination of our solutions and the strategic neutrality that we offer to the semiconductor industrypositions us well as a reliable,trusted and innovative System IP solution for our customers.11Table of ContentsNetwork-on-Chip IP Products We believe we offer the semiconduc

167、tor industry an industry-leading commercially available interconnect IP portfolio.Our commercially available interconnect IP products are shipping in billions of devices worldwide.Innovative use of proprietary networkingtechniques for on-chip communications has enabled our industry-proven solutions

168、to deliver higher SoC performance with shorter design schedules,lower research and development costs,lower SoC unit costs,and reduced project risk when compared to customer-developed internal solutions.Select offerings of our semiconductor IP product portfolio include:FlexGen,FlexNoC and FlexWay:Sil

169、icon-proven,interconnect IP products that have been integrated into hundreds of chip designs.Theunderlying NoC technology converts on-chip communication signals between IP blocks,such as reads from and writes to memory,intodigital packets.Packetizing on-chip communications allows the interconnect to

170、 be configured for enhanced performance and simplifies theconnections of on-chip IP blocks,similar to how the internet eases the simultaneous connectivity of large numbers of computing devices.FlexWay is targeted at simpler SoC while FlexNoC targets the mainstream application.We also provide optiona

171、l add-on packages forFlexNoC and FlexWay,such as the resilience package,which provide on-chip data protection that enables customers to meet the ISO26262 and IEC functional safety standards for markets like automotive,and a large design performance package that addresses highlyscalable peer-to-peer

172、on-chip communications required by large SoCs such as those which include machine learning neural networks.FlexNoC and FlexWay started shipping in 2011 and we estimate that our solutions have been incorporated into over three and a halfbillion production SoCs since inception.Our most recently announ

173、ced product FlexGen builds upon the silicon-proven and physicallyaware FlexNoC IP to automate the creation of high-performance NoC designs.Supported by AI-driven automation,FlexGen reducesmanual iteration providing expert-level NoC topologies.We believe these advancements are critical to meet the in

174、creasing computingdemands of advanced technologies like AI,autonomous driving and cloud computing.Ncore:Silicon-proven,cache coherent interconnect IP product that provides scalable,configurable,and area-efficient features for useacross multiple end markets.In an SoC,cache coherency is a special data

175、 traffic class that requires a corresponding coherentinterconnect IP to manage it.In a multiprocessor system using shared memory,each processor has a local cache memory for efficiency,however,it is possible to end up with many copies of shared data in the system.One copy of the data may be in the ma

176、in memory,whilstother copies may exist in one or more of the processor cache memories.When one of the copies of data is changed,the rest must alsoreflect that change.Ncore assists the timely propagation of data changes across the SoC in order to maintain cache coherency.Ncore isalso more scalable an

177、d area-efficient than mesh-based interconnects and is optimized for heterogeneous cache coherent systems andoffers multiple configurable snoop filters,multiple configurable proxy caches,and a modular,distributed architecture to provide systemarchitects with the most advanced technology and more degr

178、ees of freedom to innovate.Since the initial shipment in 2016,we havelaunched multiple releases of Ncore which have been designed into various production SoCs for automotive,consumer electronics,industrial,and communications applications.In 2022 we also entered into an Arm automotive agreement,with

179、Arm as the processor IPprovider and Arteris as interconnect IP provider for automotive microcontrollers(MCU)and SoCs to service growing customer needs.In2023 Ncore achieved ISO 26262 certification up to ASIL-D,the most stringent level of functional automotive safety.CodaCache:CodaCache is a silicon-

180、proven,last-level cache(or local memory)semiconductor IP product,used anywhere in the network-on-chip,for minimization of SoC data latency or improvement of performance.Frequent DRAM accesses waste clock cycles and causesperformance to drop.CodaCache keeps data closer to the access point and lowers

181、costs in certain SoC architectures.Design teams andarchitects can easily configure CodaCache based on area,timing,and other requirements.CodaCache provides the most flexibility of anycommercial on-chip last-level cache IP,from setting associativity up to 16 ways,to configuring cache sizes and multip

182、le target ports.12Table of ContentsSoC Integration Automation Software SolutionsWe provide a suite of SIA solutions that enables the packaging,reuse and integration of most types of IP blocks using the IP-XACT(IEEE 1685)standard.This SIA suite of products from Magillem and Semifore acquisitions prov

183、ides a design environment to any semiconductor and systemcompany from the architecture of the SoC through the delivery of a fully documented and traceable chip design.This software suite manages theassembly of multiple IP blocks into SoC devices,registers configurations of IP blocks,and links design

184、 parameters and metadata to documentation.Our SIA solutions are designed to shorten our customers design schedules and improve SoC engineers productivity across architects,logicdesigners,software/firmware developers,verification teams,and documentation teams.Arteris products provide a broad suite of

185、 software front-enddesign capabilities that can accelerate SoC development by providing highly configurable and scalable solutions.Our solutions address packaging,connectivity,register configuration,embedded software,and design software flows and we believe we provide best-in-class front-end designe

186、nvironments based on worldwide IEEE 1685 IP-XACT extensible markup language(XML)standard and SystemRDL language through our ready-made design solutions.We believe the combination of SIA solutions and SoC interconnect hardware provides our customers with more comprehensive SoC integrationcapabilities

187、.Our SIA technology suite across Magillem and CSRCompiler products cover the following key capabilities for SoC integrationautomation and overall SoC development acceleration:Magillem Connectivity:The Magillem connectivity product shortens and streamlines the system-on-chip(SoC)integration process.M

188、agillem Connectivity allows users to build very complex,correct-by-construction SoC designs.IPs are packaged by the tool using thewidely supported IP-XACT standard and can be configured and instantiated to create an SoC design in a single environment whilstensuring design-data consistency.Magillem C

189、onnectivity uses built-in checkers to help automate time-consuming tasks,resulting inefficient and safe design updates or even restructuring of large sections of the design.Magillem Registers and CSRCompiler:The combination of Magillem and CSRCompiler products addresses hardware-softwareintegration

190、challenges for SoCs,where complex software algorithms control a growing array of specialized processors and hardwareaccelerators to deliver a robust semiconductor.The hardware/software interface(HSI)provides the technology for software to control thisSoC hardware and it forms the foundation of the e

191、ntire SoC design project.The Magillem Register product and CSRCompiler productsautomate the creation of this SoC foundation.As mentioned above,critical tools in our SIA product portfolio have been“Tool Confidence Level”(TCL)-certified by the TUV Sud to confirm that theyare safe to use in automotive

192、and mission-critical markets like aerospace&space as part of the industrial vertical.CustomersWe license our products to a global and diverse customer base,including semiconductor manufacturers,OEMs,hyperscale system houses,semiconductor design houses and other producers of electronic systems.We wor

193、k directly with our customers throughout their design processesand seek to develop long-term,sustainable relationships with them as our technology becomes embedded in their products.As a result,we believewe are well positioned to continue to attract and retain customers,and to continue developing ne

194、xt-generation System IP solutions for their futureproducts.We added 10 net new Active Customers during the year ended December 31,2024.In 2024,we had one customer that represented more than 10%of our revenue.During the fiscal year 2024,our revenue by geographic area based on customer location was as

195、 follows:39.4%of our revenue was derived from customers based in the Americas;12.5%of our revenue was derived from customers based in Europe and the Middle East;and48.1%of our revenue was derived from customers based in the Asia Pacific region.13Table of ContentsSales and MarketingWe work closely wi

196、th our customers throughout the SoC design lifecycle to help them use our System IP solutions to meet their specific needs.It isimportant to our success that we engage our customers early and collaborate throughout the design cycle.Our support organization is able tocommunicate the best practices in

197、 SoC design practices and receive early insight into customer requirements.This insight often results in new andinnovative product features.System IP sales cycles range from six to twelve months or longer.For repeat customers,our sales cycle length is generally shorter.As of December 31,2024,we main

198、tained sales offices,sales personnel,or sales representatives in the United States,China,France,South Korea,Japan,and Israel.As of December 31,2024,our sales management had an average of 26 years of sales experience.As of December 31,2024,wehad 43 corporate and field application engineers.Corporate

199、and field application engineers work closely with our customers in both presales andsupport roles,providing expert advice to our SoC architect and engineering users on how best to use our IP and software to design and implementtheir SoCs.As a result of these close relationships and detailed informat

200、ion sharing,our application engineers gather early knowledge of futureexpected customer needs including potential new sales opportunities within the customer and requirements for new capabilities for our products.Therefore,we believe our close relationships and technical credibility with our custome

201、rs provide a competitive advantage.Our marketing strategy emphasizes thought leadership and educates potential customers about how our products can address their System IPchallenges.We use technical papers,and in-person and online events,to highlight our capabilities.Research and DevelopmentWe devot

202、e most of our operating expense to research and development of interconnect IP and SIA solutions.The development of interconnect IPsfor complex SoCs is a challenging task that requires multiple competencies and close contact with customers in order to deliver sophisticatedsolutions.The development a

203、nd maintenance of these solutions require:Management of an interdisciplinary engineering team with expertise and skill set across a wide range of sciences and domains such asarchitecture,design,design verification,EDA-class software development,and SystemC modeling,as well as deep understanding ofph

204、ysical design,design methodologies and networking architectures;Advanced SoC architectures for handling data coherency and consistency that result in a high-performance implementation with lowpower;Complex design flows and methodologies,as well as specialized languages for generating configurable in

205、terconnect IP.The designsrequire configuration using thousands of parameters that must be meticulously managed with millions of combinations;Capability to understand the physical implementation and floorplan of the target SoC in order to generate a design that meets physicalimplementation requiremen

206、ts in terms of timing,area and power;Sophisticated design verification methodologies to ensure the quality of configurable interconnect IP across millions of possiblecombinations,as well as complex test benches for simulation and emulation;In-depth knowledge of common interface protocols,graph theor

207、y,data models and graphical user interfaces;In-depth knowledge of safety standards including ISO 26262 ASIL B/D for automotive,IEEE 1685 IP-XACT IP standard for IP and SoCpackaging,IEEE 1800 UVM verification standard;andSupport a broad ecosystem of processors suppliers,other IP vendors,SoC design to

208、ol software providers,semiconductor foundries,andothers.SoC integration automation development is similarly challenging as it requires broad support of the IP packaging standard,IEEE 1685 IP-XACT,andthe ability to deliver features and enhancements required as customers deploy ever-changing IP block

209、libraries for their SoC projects,addresshardware-software integrations.Our SIA solutions have to conform not only to industry standards,but also to ever-evolving SoC integrationmethodologies.Once interconnect IP is designed into customer SoC projects,there are significant switching costs to adopting

210、 different interconnect IP and SIAsolutions,especially in the automotive sector where switching interconnect IP solutions may involve product functional safety re-certification.14Table of ContentsOur research and development strategy includes offering customers several product enhancement releases p

211、er year,complemented with a plannedintroduction of at least one new interconnect IP or SIA product every year.We believe we have assembled one of the premier engineering teams for interconnect IP development and SIA in the world.As of December 31,2024,we had 105 engineers devoted to interconnect IP

212、development and 54 engineers devoted to SIA solutions totaling 159 employees.In 2024,we spent$45.0 million on research and development,which represented 78%of our revenue.CompetitionFor interconnect IP,we primarily compete with interconnect solutions developed internally by our SoC customers and pot

213、ential customers.Many ofthe largest semiconductor companies have their own interconnect IP development teams which make customer penetration relatively difficult,time-consuming,and expensive.However,we believe that over time the expense and difficulty of developing a broad suite of interconnect IP a

214、nd SoCintegration automation has the potential to expand the use of commercial SoC integration solutions.In addition,we also compete with third-partyproviders,including Arm and several smaller companies.While we do compete with Arm in the interconnect IP market,we believe our solutions arecomplement

215、ary to Arms processor portfolio and protocol deployment and are actively collaborating on joint automotive solutions.We often executethe integration of Arm processors in heterogeneous environments,which can accelerate the deployment of Arm processors.While smallercompanies are developing interconnec

216、t solutions,we believe that our extensive investment in research and development over many years creates abarrier to entry.Developing interconnect IP solutions that are robust,configurable,and capable of handling multiple functionalities require deeptechnology expertise and large research and develo

217、pment investments.We compete based on die area reduction,lower idle power consumption,improved data movement performance such as frequency,latency,and bandwidth,as well as faster time to market.We believe we competefavorably with respect to these factors.Based on managements experience,we believe th

218、at in order to develop a new interconnect IP product,it would take a new entrant in theinterconnect IP market three to four years to develop a mature product,two to four years of market development and five to seven years to build aroyalty generating customer base.Our SIA solutions similarly compete

219、 mainly against internally developed solutions.Commercial competitors consist of smaller companies thatgenerally provide point products rather than complete solutions.Intellectual Property and Proprietary RightsWe rely on a combination of intellectual property rights,including patents,trade secrets,

220、copyrights and trademarks,and contractual protections,toprotect our core technology and intellectual property.As of December 31,2024,we had 94 total allowed or issued patents,pending patentapplications and non-expired provisional patent applications worldwide.Of these 94 allowed or issued patents,78

221、 are U.S.allowed or issuedpatents,10 are allowed or issued China patents,three are South Korea issued patents,one is a U.K.issued patent,one is a Europe issued patent,and one is a Japan issued patent.The 94 allowed or issued patents generally expire between July 2035 and July 2042.As of December 31,

222、2024,we had 120 pending non-provisional and provisional patent application filings,39 in the United States,30 in Europe,24 in China,14 in South Koreaand 13 in Japan.In addition,we have a trademark program covering,where feasible and in accordance with local laws,our products as well as ourcorporate

223、names and logos.Our progress in developing our technology and products,and our ability to compete worldwide,is a direct result of our commitment to develop andmaintain leadership of our proprietary products and to develop and file to protect our intellectual property.We rely on a combination of pate

224、nt,trademark,trade secret,and copyright laws,as well as contractual and licensing restrictions to protect the proprietary aspects of our technology.Wealso take steps to protect against misuse of our licensed products,for example with license keys that limit the time allowed for our licenseecustomers

225、 to use configuration tools to generate hardware description source code that is used in their semiconductor hardware products.We routinely use non-disclosure agreements,limited evaluation agreements,and substantive license agreements with procedures to assistcustomer usage while limiting wrongful d

226、isclosure or misuse of our intellectual property.In addition,we are committed to developing products notonly in the U.S.but in France and other countries,where the country of origin may favorably impact the ability to license our IP solutions andtechnology in accordance with applicable export laws a

227、nd regulations.Technological change and customer needs for emerging feature needs in oursolutions inspire and motivate our personnel to update and enhance our offerings periodically.15Table of ContentsWe focus on patent protection beyond the United States in countries and jurisdictions where we dete

228、rmine that such filings will assist the strategicreach and value of our patent portfolio.Patents and other legal IP protections arise when we have conceived or developed novel and valuable newor improved technology relating to our IP solutions,that may affect our customer and our own licensing busin

229、ess outside the U.S.Certain countriesin which our IP solutions are or may be developed,manufactured or sold may not have or enforce laws that protect our technology and intellectualproperty rights to the same extent as under U.S.law.Material AgreementsQualcomm AgreementsIn connection with an Asset P

230、urchase Agreement by and among Qualcomm Technologies,Inc.and Qualcomm France SARL(collectively,Qualcomm)and us and certain of our subsidiaries dated October 9,2013,pursuant to which we sold to Qualcomm certain assets and intellectualproperty related to our FlexNoC product(the Purchase Agreement),we

231、and our affiliates retained a non-exclusive,worldwide,perpetual right underpatents acquired under the Purchase Agreement to,among other things,manufacture,license and distribute certain FlexNoC products and certainmodifications thereto(the Retained Rights).In addition,we and Qualcomm Technologies,In

232、c.entered into a License Agreement dated October 11,2013(the License Agreement)pursuant to which we and our affiliates obtained a license to,among other things,reproduce,use,license,anddistribute certain FlexNoC-related works of authorship and technology that were acquired or owned by Qualcomm in co

233、nnection with the PurchaseAgreement for the purpose of enabling us to continue to offer and support FlexNoC products and certain modifications thereto(the Licensed Rights).There is no charge under the Purchase Agreement for our use of the Retained Rights or the Licensed Rights.Our rights in the Reta

234、ined Rightscontinue until the last to expire of the relevant patents,and the License Agreement continues in perpetuity,in each case unless terminated asdescribed below.Qualcomm may terminate the Retained Rights in the event(i)we or our subsidiaries that are party to the Purchase Agreement breach any

235、 materialterms of the Purchase Agreement applicable to the Retained Rights or any material terms of the License Agreement and fail to cure any such breachwithin 90 days after notice of such breach from Qualcomm,or(ii)we or any of our affiliates initiate a claim of patent infringement against Qualcom

236、mor its affiliates(excluding such claims that are counterclaims in proceedings initiated by Qualcomm or its affiliates)and does not withdraw such claimwithin 30 days after Qualcomms written request to do so.Qualcomm may terminate the License Agreement in the event we breach any materialterms of the

237、License Agreement or any material terms of the Purchase Agreement applicable to the Retained Rights and fail to cure such breachwithin 90 days after notice of such breach from Qualcomm.Qualcomm may also terminate rights granted under the License Agreement to a certaindevelopment environment used in

238、connection with our FlexNoC product(which could effectively preclude us from continuing to enhance ourFlexNoC product and adversely affect our FlexNoC business)in the event of a change of control of our company(as defined in the LicenseAgreement)which would effectively include,in a transaction or se

239、ries of related transactions,a sale of our company,or the sales of securities by usor our stockholders that would result in the stockholders and option holders of our company as of the date of the License Agreement not retainingbeneficial ownership of more than 50%of our company.We believe that,as w

240、e have and continue to deliver new products since the date of theLicense Agreement,such as our range of SIA solutions,Ncore cache coherent interconnect,CodaCache last-level cache,and CSRCompilerphysical awareness capabilities,the importance to our business and product portfolio of the FlexNoC develo

241、pment environment will decrease overtime.We may not assign the License Agreement without Qualcomms written consent(and a change of control of our company shall be considered anassignment for the purposes of such prohibition)except that we may assign the License Agreement to an acquirer of our busine

242、ss that consists oflicensing certain FlexNoC products,and we may only assign the Retained Rights to an entity to whom we have assigned the License Agreement.16Table of ContentsGovernmental RegulationWe are subject to regulation by various governmental agencies in the United States and other jurisdic

243、tions in which we operate.These laws andregulations(and the government entities,regulators,and agencies responsible for their enforcement)in the United States cover among other things:radio frequency emission regulatory activities(Federal Communications Commission);anti-trust regulatory activities(F

244、ederal Trade Commission andDepartment of Justice);insider trading,anti-bribery,and anti-corruption(Department of Justice),consumer protection(Federal Trade Commission);import/export regulatory activities(Department of Commerce and Department of Treasury);product safety regulatory activities(Consumer

245、 ProductsSafety Commission);worker safety(Occupational Safety and Health Administration);environmental protection(Environmental Protection Agencyand similar state and local agencies);employment matters(Equal Employment Opportunity Commission);and federal and state tax and otherregulations by a varie

246、ty of regulatory authorities in each of the areas in which we conduct business.Our operations are also subject to the U.S.Foreign Corrupt Practices Act of 1977,as amended(the FCPA),the U.S.domestic bribery statute contained in 18 U.S.C.201,the U.S.Travel Act,the USA PATRIOT Act,as well as the anti-c

247、orruption,anti-bribery,and anti-money laundering laws in the U.S.and other countries where we conductbusiness.In addition,certain of our products,including our IP interconnect and other solutions and technology,are subject to U.S.export controls,includingthe U.S.Department of Commerces Export Admini

248、stration Regulations(EAR)and economic and trade sanctions regulations administered by theU.S.Treasury Departments Office of Foreign Assets Controls(OFAC).Other products are subject to French export controls.These regulations maylimit the export of our products and technology,and the provision of our

249、 services outside of the United States and/or France,or may require exportauthorizations,including by license,a license exception,or other appropriate government authorizations and conditions,including annual or semi-annual reporting.Export control and economic sanctions laws may also include prohib

250、itions on the sale or supply of certain of our products toembargoed or sanctioned countries,regions,governments,persons,and entities.The export and re-export of our products and technology and theprovision of services,including by our partners,must comply with these laws,or else we may be adversely

251、affected through reputational harm,government investigations,penalties,and a denial or curtailment of our ability to export our products and technology.In July 2021,we submitted avoluntary self-disclosure(VSD)to the U.S.Department of Commerces Bureau of Industry and Security(BIS),noting potential vi

252、olations of the EAR.On April 28,2022,the Office of Export Enforcement of BIS closed the matter with the issuance of a warning letter.With respect to governmentauthorizations,we have no pending export license requests to BIS or any other government agency,and no export licenses are currently required

253、 toexport our products from the United States or other countries to countries where we do business.Complying with export control and sanctions laws may be time-consuming and may result in the delay or loss of sales opportunities.Although wetake precautions to prevent our products and technology from

254、 being provided in violation of such laws,our products and technology have previouslybeen,and could in the future be,provided inadvertently in violation of such laws,despite the precautions we take.If we are found to be in violation ofU.S.sanctions or export control laws,it could result in substanti

255、al fines and penalties for us and the individuals working for us.Changes in export orimport laws or sanctions policies may adversely impact our operations,delay the introduction and sale of our products in international markets,or,insome cases,prevent the export or import of our products and technol

256、ogy to certain countries,regions,governments,persons,or entities altogether,which could harm our business.From time to time,we have adopted and will continue to adopt remedial measures in response to government regulation.For example,we haveadopted several remedial measures prior to,in connection wi

257、th and following the initial notification of voluntary self-disclosure we submitted to BIS.These compliance enhancements were developed and implemented in consultation with outside counsel specializing in U.S.trade compliance.These steps have included annual basic export compliance training within o

258、ur company,updating our written export control policies and procedures,and adopting a revised export compliance manual in 2021.We have provided export awareness training for relevant personnel including in 2023 and2022.We previously provided our sales employees worldwide with training in basic expor

259、t compliance.We engaged third-party vendor software toassist us with an ongoing screening of new and existing customers,third-party agents or representatives,suppliers,and other vendors against U.S.,France and several other jurisdictions prohibited or restricted party lists.We screen all customers a

260、gainst applicable lists of denied or restrictedparties,including the Entity List administered by BIS as well as the list of Specially Designated Nationals and Blocked Persons,administered by theTreasury Departments Office of Foreign Assets Control.17Table of ContentsFor a discussion of the various r

261、isks we face from regulation and compliance matters,see“Risk FactorsRisks Related to Our Business andIndustryWe are subject to data protection,privacy and security laws,regulations,standards and other requirements across different marketswhere we conduct our business.Our actual or perceived failure

262、to comply with such obligations could harm our business,”“Risk FactorsRisksRelated to Legal,Regulatory,Accounting and Tax MattersOur failure to comply with the large body of laws and regulations to which we are subjectcould materially harm our business,”“Risk FactorsRisks Related to Legal,Regulatory

263、,Accounting and Tax MattersOur failure to comply with theForeign Corrupt Practices Act,other applicable anti-corruption and anti-bribery laws,and applicable anti-money laundering laws could subject us topenalties and other adverse consequences,”“Risk FactorsRisks Related to Legal,Regulatory,Accounti

264、ng and Tax MattersWe are subject togovernment regulation,including import,export and economic sanctions laws and artificial intelligence regulations that may expose us to liability andincrease our costs,”“Risk FactorsRisks Related to Legal,Regulatory,Accounting and Tax MattersWe will lose sales if w

265、e are unable to obtaingovernment authorization to export certain of our products and services,and we will be subject to legal and regulatory consequences if we do notcomply with applicable export control laws and regulations or if such laws and regulations were to change.”Human Capital ResourcesAs o

266、f December 31,2024,we had 267 employees as follows:NumberFunctionResearch and development159Sales and marketing65Administration43Geographic DistributionUnited States94France136China18South Korea4Japan4Poland4Elsewhere7We consider relations with our employees to be good and have never experienced a w

267、ork stoppage.None of our employees are either representedby a labor union,although our employees in France are subject to a collective bargaining agreement.Our human capital resources objectives include,as applicable,identifying,recruiting,retaining,incentivizing and integrating our existing andaddi

268、tional employees.The principal purposes of our equity incentive plans are to attract,retain and motivate selected employees,consultants anddirectors through the granting of stock-based compensation awards and cash-based performance bonus awards.Corporation InformationWe were incorporated in the Stat

269、e of Delaware in April 2004.Our principal executive offices are located at 900 E.Hamilton Ave.Suite 300,Campbell,CA 95008.Our telephone number is(408)470-7300,and our website address is .The information contained on,or thatcan be accessed through,our website is not incorporated by reference in this

270、report and does not form a part of this report.You should not considerthe information contained on our website to be part of this report in deciding whether to purchase shares of our common stock.Our common stock istraded on the Nasdaq Stock Market under the symbol“AIP”.18Table of ContentsAvailable

271、InformationOur website address is .Information found on,or accessible through,our website is not a part of,and is not incorporated into,thisAnnual Report on Form 10-K.We file electronically with the SEC our annual reports on Form 10-K,quarterly reports on Form 10-Q,current reportson Form 8-K,and ame

272、ndments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Exchange Act.We make available on ourwebsite at ,free of charge,copies of these reports and other information as soon as reasonably practicable after we electronicallyfile such material with,or furnish it to,the SEC.

273、19Table of ContentsItem 1A.Risk FactorsInvesting in our common stock involves a high degree of risk.Before making your decision to invest in shares of our common stock,you shouldcarefully consider and read carefully all of the risks described below,together with the other information contained in th

274、is report,including ourfinancial statements and the related notes and the section titled“Managements Discussion and Analysis of Financial Condition and Results ofOperations”in this report.We cannot assure you that any of the events discussed below will not occur.These events could have a material an

275、dadverse impact on our business,financial condition,results of operations and prospects.Unless otherwise indicated,references to our businessbeing harmed in these risk factors will include harm to our business,reputation,financial condition,results of operations,revenue and futureprospects.In such a

276、n event,the trading price of our common stock could decline,and you could lose all or part of your investment.Additional risksand uncertainties not presently known to us or not believed by us to be material may also negatively impact us.Risks Related to Our Business and IndustryWe face significant c

277、ompetition from larger companies and third-party providers that may deploy their resources so they can developtheir IP solutions internally.We are engaged in a competitive segment of the global semiconductor industry.Our competitive landscape is characterized by competition fromcompanies that have g

278、reater resources than us.A variety of factors could adversely impact our ability to compete,including rapid technologicalchange in product design and manufacturing,customers that make purchase decisions based on a mix of factors of varying importance andcontinuous declines in average selling prices(

279、ASPs).We compete principally on the basis of technology,product quality and features,license,royalty and usage terms,post-contract customer support,interoperability among products,and price and payment terms.We operate in industries characterized by rapidly changing technologies as well as rapid inn

280、ovation and technological obsolescence.Theappearance of new competitors,including start-up enterprises,introduction of new products by our competitors or our failure to timely develop newor enhanced products or technologies in response to changing market demand,whether due to technological shifts or

281、 otherwise,could result in theloss of customers and decreased revenue and have an adverse effect on our business,financial condition,and results of operations.Often,we compete against larger companies that possess substantial financial,technical,research and development and engineering resources tha

282、tcan be deployed so they can develop their IP solutions internally.In addition,we compete against other third-party providers of IP integrationsolutions,such as Arm and Cadence that similarly possess substantial financial,technical,research and development and engineering resources.Incertain cases,c

283、ompetitive companies may be supported by local or international government funding and similar resources.Varying combinations ofthese resources provide advantages to these competitors that enable them to influence industry trends and the pace at which they adapt to thesetrends.A strong competitive r

284、esponse from one or more of our competitors to our marketplace efforts,or a shift in customer preferences tocompetitors products,could result in increased pressure to lower our prices more rapidly than anticipated,increased sales and marketing expense,and/or market share loss.The consolidation of ou

285、r competitors or collaboration among our competitors to deliver more comprehensive offerings thanthey could individually,may also impact our ability to compete effectively.To the extent our revenue is negatively impacted by competitive pressuresand reduced pricing,our business could be harmed.Our ab

286、ility to compete in our market is subject to a variety of factors,many of which are beyond our control.The occurrence of any of the belowcould adversely affect our ability to compete and harm our business:Our ability to anticipate and lead critical product development cycles and technological shifts

287、 as driven by our target markets,to innovaterapidly and efficiently and to improve our existing solutions.Whether any competitor substantially increases its engineering and marketing resources to compete with us in the semiconductor IPinterconnect and SIA software technology arena.Whether a new entr

288、ant with substantially greater resources and/or supported by governmental resources decides to enter the markets inwhich we compete.Whether any existing or new competitor bundles its technologies into one package at a discounted price that would make it uneconomicalfor our customers to license our p

289、roducts separately.The challenges of developing,or acquiring externally developed,technology solutions that are adequate and competitive in meeting therapidly evolving requirements of next-generation design challenges.Our ability to compete on the basis of payment,pricing,features and/or terms.20Tab

290、le of ContentsDecisions by semiconductor companies,fabless chip design or system companies,device or other end product producers,and/or OEMsto develop IP development internally,rather than license IP from outside vendors due to budget constraints or excess engineeringcapacity.Actions by regulators o

291、r governmental entities to impose license requirements,limit product availability,limit trade and exportability of ourproducts,the features or contractual terms that either we or our customers can apply to product and service offerings,or to affectmonetary policy.Actions by regulators or governmenta

292、l entities to modify or augment tax treatment of our product and service offerings.The impact of global and regional inflation on ours and our customers profitability and expansion plans due to among other effects ofinflation,increases in wages,availability of capital,salaries,operating expenses,and

293、 costs of insurance,benefits and medical coverage.The potential effects of geopolitical conflicts,such as the military conflict between Russia and Ukraine and the conflict in Israel,includingretaliatory,military and regulatory actions,or other actions that escalate tensions,including with respect to

294、 the conflict in Israel,actionsinvolving Iran and other groups in the Middle East,on our customers engineering resources,design schedules,purchasing,development,sales and innovation responses and trends in response to such conflicts.Specifically,the conflict in Israel and Gaza has created anuncertai

295、n business and investment environment in the region.Many companies,particularly small to medium enterprises,areexperiencing challenges raising money leading to cutbacks and project delays.Competition,embargoes,sanctions,boycotts and/or social unrest.Local or international economic headwind trends th

296、at may lead to recessions,economic slowdowns or sudden changes in the economicneeds of regions and consumers.Silicon chip supply chain and shipment volume restrictions on our customers and their end customers that will impact the amount ofroyalties payable to us.We may be unable to reduce the cost o

297、f our products sufficiently to compete effectively against our competitors.Our cost reduction efforts may notallow us to keep pace with competitive pricing pressures and/or other economic factors including inflation and customer and end market supplychain constraints which could adversely affect our

298、 gross margins and ability to meet customer demand.To the extent we are unable to reduce theprices of our products and remain competitive,our revenue will likely decline,resulting in further pressure on our gross margins,which could harmour business.Many other companies in the IP interconnect space

299、have not been able to continue as a going concern due to intense competition andlow margins.See“BusinessCompetition”.We have a history of net losses,and we may not achieve or maintain profitability in the future.We have incurred net losses in certain periods historically.We incurred a net loss of$33

300、.6 million and$36.9 million for the years ended December31,2024,and 2023,respectively.As of December 31,2024,we had an accumulated deficit of$136.9 million.We have spent significant funds onorganizational and start-up activities,to recruit engineers and other employees and to support our research an

301、d development.The net losses weincur may fluctuate significantly from quarter to quarter and may increase as a result of geopolitical and market fluctuations,inflation,economicslowdown and/or recessionary pressures and other global economic factors.Our long-term success is dependent upon our ability

302、 to successfully market our interconnect IP and SIA solutions,develop new interconnect IP andSIA solutions,earn revenue,obtain additional capital when needed and,ultimately,to maintain profitable operations.We will need to generatesignificant additional revenue to achieve profitability.It is possibl

303、e that we will not achieve profitability or that,even if we do achieve profitability,wemay not maintain or increase profitability in the future.Our failure to achieve or maintain profitability could negatively impact the value of ourcommon stock.21Table of ContentsBecause our IP solutions are compon

304、ents of end products,if semiconductor,system producers and/or end product producer companiesin the automotive market,enterprise computing market,communications market,consumer electronics market,and industrial market donot incorporate our solutions into their end products or if the end products of o

305、ur customers do not achieve market acceptance,we maynot be able to generate adequate license sales and royalty income from our products.Our IP solutions include technology that manages on-chip communications in SoC semiconductor devices.We do not license our IP solutions anddeployment tools directly

306、 to end-users;we license our technology primarily to companies in the automotive market,enterprise computing market,communications market,consumer electronics market,and industrial market who then incorporate our technology into the products they sell.As aresult,we rely on our customers to incorpora

307、te our technology into their end products at the design stage.Once a company incorporates acompetitors technology or develops the technology internally and incorporates it into its end product,it becomes significantly more difficult for us tosell our technology to that company because changing suppl

308、iers involves significant cost,time,effort and risk for the company.As a result,we maynot achieve targeted customer acceptance despite incurring significant expenditures to develop new technology.Moreover,even after customers agree to incorporate our technology into their end products,the design cyc

309、le is long and may be delayed due tofactors beyond our control,which may result in our customers product not reaching the market until long after our initial design win,which we defineas winning the competitive bid selection process.From initial product design-in to volume production,many factors co

310、uld impact the timing and/oramount of sales realized from the design-in.These factors include,but are not limited to,changes in the competitive position of our customersproduct,our customers financial stability,and our customers ability to ship products under our customers original schedule.Moreover

311、,severalexternal factors affect our customers ability and willingness to start their own new product designs and to manufacture and ship their products,including target product market conditions,our customers financial stability,our customers competitive positioning and external economic conditions(

312、such as,but not,limited to inflation,recessions,customer and end market supply chain constraints,geopolitical conflict,sanctions,and competition)that may prolong the customers decision-making process and design cycle.Further,we do not control the business practices of our customers,and we do not inf

313、luence the degree to which they promote,market or set theirproduct pricing.We therefore cannot assure you that our customers will devote satisfactory efforts to promote their end products,which incorporateour IP technology and deployment solutions.We depend on growth and economic stability in the en

314、d markets that use our products.Any slowdown in the growth and economicstability of these end markets could harm our business.Our continued success will depend in large part on general economic growth and stability,and growth and stability within our target markets in theautomotive market,enterprise

315、 computing market,communications market,consumer electronics market,and industrial market.Factors affectingthese markets could seriously harm our customers and/or end customers and,as a result,harm us,examples of which include:Reduced sales of our customers and/or end customers products.The effects

316、of catastrophic and other disruptive events at our customers and/or end customers offices or facilities including,but notlimited to,natural disasters,telecommunications failures,cyber-attacks,terrorist attacks,regional conflicts,pandemics,epidemics or otheroutbreaks of infectious disease,breaches of

317、 security or loss of critical data.Increased costs associated with potential disruptions to our customers and/or end markets supply chain and other manufacturing andproduction operations.The deterioration of our customers and/or end customers financial condition.Delays and project cancellations as a

318、 result of design flaws in the products developed by our customers and/or end customers.The inability of our customers and/or end customers to expand or dedicate the resources necessary to promote and commercialize theirproducts.The inability of our customers and/or end customers to adapt to changin

319、g technological demands resulting in their products becomingobsolete.The failure of our customers and/or end customers products to achieve market success and gain broad market acceptance.22Table of ContentsDisruption and uncertainty caused by new developments in export and related regulations.Region

320、al and global effects of inflation or other adverse economic conditions,such as rising interest rates,recessions or economicslowdowns,resulting in delays or cancellations of new product design starts.Adverse impact of multiple interest rate increases implemented and forecasted by the U.S.Federal Res

321、erve.Any slowdown in the growth of these end markets,or the emergence of economic instability in these end markets,could harm our business.Forexample,a significant element of our growth strategy depends on the increasing adoption of vehicles with more sophisticated automated driving,which will likel

322、y require more complex SoCs.If anticipated demand in the end market for these vehicles does not materialize,whether due toconsumer demand not materializing,regulatory interventions delaying the deployment of automated driving,or the emergence of economic instabilityin end markets arising from factor

323、s such as inflationary trends,deteriorating purchasing power,trade or supply chain disruptions and regional and/orworldwide chip shortages or excess supply,demand fluctuations,unemployment spikes,labor shortages or end market reactions to regional orglobal geopolitical uncertainties or conflicts,or

324、other factors beyond our control,it would adversely affect demand for our products from customersand royalty revenue and impact our ability to execute our growth strategy.Political and regulatory conditions that contribute to uncertainty and market volatility including legislative,regulatory,trade a

325、nd policychanges associated with the new U.S.presidential administration could materially and adversely impact our business operations andfinancial results.The political and economic environment in the U.S.has resulted in and will continue to result in some uncertainty.Changing regulatory policiesas

326、sociated with the new U.S.presidential administration can affect regulatory and compliance costs and future revenues,all of which couldmaterially and adversely affect our business operations and financial results.Changes in federal policy by the executive branch and regulatoryagencies and personnel

327、may occur over time under the new U.S.presidential administration or Congress,which could lead to changes in the level ofoversight and focus on our industry including new laws,regulations and policies.At this time,it is unclear what laws,regulations and policies maychange and whether future changes

328、or uncertainty surrounding future changes will adversely affect our operating environment and therefore ourbusiness operations and financial results.Any future changes in federal and state laws and regulations,as well as the interpretation andimplementation of any laws and regulations,could affect u

329、s in substantial and unpredictable ways.For example,the new U.S.presidentialadministration may affect the manner in which the final regulations implementing the Executive Order 14105(the Final Rule)issued by the U.S.Department of Treasury on October 28,2024,is interpreted and enforced by the U.S.gov

330、ernment.We depend on market acceptance of third-party semiconductor IP.The semiconductor IP industry is a relatively small and emerging industry.Our future growth will depend on the level of market acceptance of ourthird-party licensable IP model,the variety of IP offerings available on the market a

331、nd the shift in customer preference away from in-house development of semiconductor IP technologies and SIA.Furthermore,the third-party licensable IP model is highly dependent on the marketadoption of new services and products,including in the automotive market,enterprise computing market,communicat

332、ions market,consumerelectronics market,and industrial market.Such market adoption is important because the increased cost associated with ownership andmaintenance of the more complex architectures in SoCs needed for the advanced services and products and time to market pressures on ourcustomers may

333、motivate companies to license third-party IP rather than design them in-house.The trends that would enable our growth are largely beyond our control.Semiconductor customers also may choose to adopt a multi-chip,off-the-shelf chip solution versus licensing or using highly integrated chipsets that embed our technologies or use our deployment software.If these marketshifts do not materialize or third