Factors Related to Intellectual Property and Litigation

The intellectual property licensing component of our business strategy increases our business risk and fluctuation of our revenue and margins.

Our business strategy includes licensing our intellectual property to companies that incorporate it into their technologies that address multiple markets, including markets where we participate and compete. Our Licensing and services revenue may be impacted by the introduction of new technologies by customers in lateplace of the technologies we license, changes in the law that may weaken our ability to prevent the use of our patented technology by others, the expiration of our patents, and changes of demand or selling prices for products using licensed patents. We cannot assure that our licensing customers will continue to license our technology on commercially favorable terms or at all, or that these customers will introduce and sell products incorporating our technology, accurately report royalties owed to us, pay agreed upon royalties, honor agreed upon market restrictions, or maintain the confidentiality of our proprietary information, or will not infringe upon or misappropriate our intellectual property. Our intellectual property licensing agreements are complex and may depend upon many factors that require significant judgments, including completion of milestones, allocation of values to delivered items and customer acceptance.

Our sale of patents and intermittent significant licensing transactions can cause material fluctuations in our revenue and gross margins.

We have generated revenue from the sale of certain patents from our portfolio in the past, generally for non-core technology that we are no longer actively developing. While we plan to continue to monetize our patent portfolio through sales of non-core patents, we may not be able to realize adequate interest or prices for those patents. Accordingly, we cannot provide assurance that we will continue to generate revenue from these sales. In addition, although we seek to be strategic in our decisions to sell patents, we might incur reputational harm if a purchaser of our patents sues one of our customers for infringement of the purchased patent, and we might later decide to enter a space that requires the use of one or more of the patents we sold. In addition, as we sell groups of patents, we no longer have the opportunity to further sell or to license those patents and receive a continuing royalty stream.

Our Licensing and services revenue fluctuates, sometimes significantly, from period to period because it is heavily dependent on a few key transactions being completed in a given period, the timing of which is difficult to predict and may not match our expectations. Licensing and services revenue may include revenue from the sales of patents, which may be difficult to complete and which may have complex terms for the payment which affects revenue recognition. Because of its high margin, the Licensing and services revenue portion of our overall revenue can have a disproportionate impact on gross profit and profitability. In addition, generating revenue from patent sales and intellectual property licenses is a lengthy and complex process that may last beyond the period in which our efforts begin, and the accounting rules governing the recognition of revenue from patent sales and intellectual property licensing transactions are increasingly complex and require significant judgment. As a result, the amount of license revenue recognized in any period may differ significantly from our expectations.

Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results.

From time to time, we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business. Certain claims may not yet be resolved, including but not limited to any that are discussed under Note 15 - Contingencies to our Consolidated Financial Statements in Part II, Item 8 of this report, and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. Regardless of merit or outcome, claims or litigation may be both time-consuming and disruptive to our operations and cause significant expense and diversion of management attention and we may enter into material settlements to avoid these risks. Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business.

Our participation in the HDMI standard is evolving, and our share of adopter fees and royalties for the HDMI standard is subject to variability.

We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed generally every three years. In the fourth quarter of fiscal 2019, the mediaHDMI Founders adopted a new agreement covering the five-year period beginning January 1, 2018. The HDMI Founders are currently negotiating a new agreement covering the next sharing period beginning January 1, 2023. The amount of our portion of the royalty allocation is dependent on the royalties generated by adopter sales of royalty-bearing HDMI technology, which are subject to variability in economic trends particularly in the market for consumer electronics.

If we are unable to adequately protect our new and existing intellectual property rights globally, our financial results and our ability to compete effectively may suffer.

Our success depends in part on our proprietary technology and we rely upon patent, copyright, trade secret, mask work, and trademark laws to protect our intellectual property globally. We intend to continue to protect our proprietary technology, however, we may be unsuccessful in asserting our intellectual property rights or such rights may be invalidated, violated, circumvented, or challenged. From time to time, third parties, including our competitors, have asserted against us patent, copyright, and other intellectual property rights to technologies that are important to us. Third parties may attempt to misappropriate our intellectual property through electronic or other means or assert infringement claims against us in the future. Such assertions by third parties may result in costly litigation, indemnity claims, or other legal actions, and we may not prevail in such matters or be able to license any valid and infringed patents from third parties on commercially reasonable terms. This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products. Any infringement claim, indemnification claim, or impairment or loss of use of our intellectual property could materially adversely affect our financial condition and results of operations.

Factors Related to Overall Business & Operations

Our business depends on the proper functioning of information technology systems. A failure of these systems, data breaches, cyber-attacks, or cyber-fraud may cause business disruptions, compromise our intellectual property or other sensitive information, or result in losses.

We rely on various information technology ("IT") networks and systems to manage our operations, including financial reporting, and we regularly make changes to improve them as necessary by periodically implementing new, or upgrading or enhancing existing, operational and IT systems, procedures, and controls. These systems are supported by subcontractors, and they may also be subject to power and telecommunication outages or other general system failures. The legal, regulatory and contractual environments surrounding information security, data privacy, and data protection are complex and evolving. We continue to commit significant resources to implementing new systems to standardize our processes worldwide and to develop our capabilities in these areas. We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.

In the normal course of business, we may implement new or updated IT systems and, as a result, we may experience delays or disruptions in the integration of these systems, or the related procedures or controls. The policies and security measures established with our IT systems may be vulnerable to security breaches and incidents, cyber-attacks, or fraud. We may also encounter errors in corruption or loss of data, an inability to accurately process or record transactions, and security or technical reliability issues. All of these could harm our ability to conduct core operating functions such as processing invoices, shipping and receiving, recording and reporting financial and management information on a timely and accurate basis, and could impact our internal control compliance efforts. If the technical solution or end user training are inadequate, it could limit our ability to manufacture and ship products as planned. Moreover, the proper functioning of the internal processes that the IT systems and networks support relies on qualified employees. Competition for qualified employees has reported a public health epidemic originatinggenerally increased across the economy in China, prompting precautionary government-imposed closuresthe United States, which, if we experience employee turnover, could lead to disruptions in our processes, inadequate end user training or difficulty updating our IT systems and networks.

We maintain sensitive data on our networks and on the networks of certain travelour business partners and business. The operationsthird-party providers, including proprietary and confidential information relating to our intellectual property, personnel, and business, and that of our customers and third-party providers. Companies have been increasingly subject to a wide variety of security incidents, cyber-attacks, hacking, phishing, malware, ransomware, and other attempts to gain unauthorized access to systems or data, or to engage in fraudulent behavior. Cyber-attacks have become more prevalent, sophisticated and much harder to detect and defend against and it is often difficult to anticipate or detect such incidents on a timely basis and to assess the Companydamage caused by them. In addition, our agreements with third-party providers, including but not limited to the liability limitations and insurance provisions contained in China and elsewheresuch agreements, may be affected by thisinadequate to cover the liability, if any, associated with any security breaches. Increasing geopolitical tensions or conflicts have also created, and may continue to create, a heightened risk of cyberattacks. Our policies and security measures cannot guarantee security, and our information technology infrastructure, including our networks and systems, may be vulnerable to security breaches and incidents, cyber-attacks, or fraud. In the past, third parties have attempted to penetrate and/or infect our network and systems with malicious software and phishing attacks in an effort to gain access to our network and systems. In addition, we are subject to the risk of third parties falsifying invoices and similar public health matters. Althoughfraud, frequently by obtaining unauthorized access to our vendors’ and business partners’ networks.

In some circumstances, we may partner with third-party providers and provide them with certain data, including sensitive data, or the ability to access or otherwise process such data. These third parties also face substantial security risks from a variety of sources. There can be no assurance that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats, and we cannot guarantee that our systems and networks or those of our third-party service providers have not been breached or otherwise compromised, or that they and any software in our or their supply chain doeschains do not appearcontain bugs, vulnerabilities, or compromised code that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our services. If any of our third-party providers fails to adopt or adhere to adequate data security practices, or suffers a security breach or incident, any data, including sensitive data, that we provide them or that they otherwise may access or process for us may be improperly accessed, used, disclosed, modified, lost, destroyed, or rendered unavailable. Any security breaches or incidents that we or our third-party providers may suffer could compromise our intellectual property, expose sensitive business information and otherwise result in unauthorized access to or disclosure, modification, misuse, loss or destruction of sensitive information. We may need to expend significant financial and development resources to analyze, correct, eliminate, or work around errors or defects or to eliminate or otherwise address security vulnerabilities, and we and our third-party service providers may face difficulties or delays in identifying or otherwise responding to any potential security breach or incident.

Further, the increase in cyber-attacks has resulted in an increased focus on cybersecurity by certain government agencies. Any cyber-attack or other security breach or incident that we or our third-party providers may suffer, or the perception that any such attack, breach, or incident has occurred, could result in a loss of customer confidence in our security measures, damage to our brand, reputation, and market position, result in unauthorized access to or disclosure, modification, misuse, loss, corruption, unavailability, or destruction of our data or other sensitive data that we or our third-party providers process or maintain, disrupt normal business operations, require us to spend material resources to investigate or correct any breach or incident and to prevent future security breaches and incidents, expose us to legal claims and liabilities, including litigation, regulatory investigations and enforcement actions, and indemnity obligations, and adversely affect our revenues and operating results. Further, any such actual or perceived breach or incident, and any claims, demands, litigation, or investigations or enforcement actions related to cybersecurity could cause us to incur significant remediation costs, result in product development delays, disrupt key business operations, and divert attention of management and key information technology resources. In addition, we may incur loss as a result of cyber-fraud, such as those experienced by other companies by making unauthorized payments irrespective of robust internal controls.

Failure or disruptions of our IT systems or difficulties or delays in maintaining, managing, and integrating them could adversely affect our controls and procedures and could impact our ability to perform necessary operations, which could materially adversely affect our business.

We cannot be certain that our insurance coverage will be adequate for data security liabilities incurred and, will cover any indemnification claims against us relating to any incident, that insurance will continue to be affected by this epidemic, it may leadavailable to events outsideus on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our control whichinsurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

Climate change may have a long-term impact on our business.

Climate-related risks are inherent wherever our business is conducted. Global climate change is causing, and is projected to continue to cause, an increase in the frequency and intensity of certain natural disasters and adverse weather, such as drought, wildfires, storms, sea-level rise, flooding, heat waves, and cold waves, occurring more frequently or with greater intensity. Such extreme events are driving changes in market dynamics, stakeholder expectations, and local, national and international climate change policies and regulations, any of which could result in disruptions to us, our suppliers, vendors, customers and logistics hubs, and may impact employees’ abilities to commute or to work from home effectively. These disruptions could make it more difficult and costly for us to deliver our products and services, obtain components or other supplies through our supply chain, maintain, or resume operations or perform other critical corporate functions, and could reduce customer demand for our products and services.

The increasing concern over climate change could also result in transition risks such as shifting customer preferences and increased regulatory requirements. Changing customer preferences may result in increased expectations regarding our solutions, products, and services, including the use of packaging materials and other components in our products and their environmental impact. These expectations may cause us to incur additional costs or make other changes to our operations to respond to them, which could adversely affect our financial results. If we fail to manage transition risks and customer expectations in an effective manner, customer demand for our solutions, products, and services could diminish, and our profitability could suffer. Concerns over climate change, as well as the adoption of new laws or regulations, may also impact market dynamics and may result in shifts in customer expectations, preferences, or requirements, which may require us to change our practices or incur increased costs or adversely impact customer demand for our products and services.

Additionally, concerns over climate change have resulted in, and are expected to continue to result in, the adoption of legal and regulatory requirements designed to address climate change, as well as legal and regulatory requirements requiring certain climate-related disclosures. Where new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet such obligations. Climate change also may reduce the availability or increase the cost of insurance for these negative impacts of natural disasters by contributing to an increase in the incidence and severity of such natural disasters. Ultimately, the impacts of climate change, whether involving physical risks (such as disruptions resulting from climate-related events or rising sea levels) or transition risks (such as regulatory changes, changes in market dynamics or increased operating costs, including the cost of insurance) are expected to be widespread and unpredictable and may materially adversely affect our business and financial results.

We regularly test for goodwill and other impairments as required under U.S. GAAP, and we may incur future impairments.

We are required under U.S. GAAP to test goodwill for possible impairment on an annual basis and to test goodwill and long-lived assets, including amortizable intangible assets, for impairment at any other time that circumstances arise indicating the carrying value may not be recoverable.For purposes of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice business, which includes intellectual property and semiconductor devices. There were no impairment charges to goodwill or amortizable intangible assets in fiscal years 2022, 2021, or 2020. There is no certainty that future impairment tests will indicate that goodwill or amortizable intangible assets will be deemed recoverable. As we continue to review our business operations and test for impairment or in connection with possible sales of assets, we may have impairment charges in the future, which may be material.

Changes to financial accounting standards may affect our results of operations and could cause us to change our business practices.

We prepare our consolidated financial statements to conform to generally accepted accounting principles in the United States. These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create accounting rules and regulations. Changes in these rules have occurred in the past and future changes to these rules, or in the guidance relating to interpretation and adoption of the rules, could have a material effect on our financial results and could affect portions of our business differently. Accounting standards also require us to make estimates and assumptions in connection with the preparation of our financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations, cash flows and financial condition.

Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.

We are subject to taxation in the United States and other countries. Certain tax positions may remain open to examination for several years. Challenges by tax authorities to our previous tax positions and intercompany transfer pricing arrangements, and continuing assessments of our tax exposures may have an adverse effect on our provision for income taxes and cash tax liability. We have a global tax structure that aligns our corporate structure with our global business operations, and we currently operate legal entities in multiple countries. We may choose to consolidate or integrate certain of these entities, and these integration activities, as well as changes in composition of our earnings in jurisdictions with different tax rates, may impact the taxes we pay or tax provision we record, which could adversely affect our results of operations. Furthermore, various levels of government are focused on tax reform and other legislative actions to increase tax revenue.

We also may be impacted by changes in the tax laws of the United States and foreign jurisdictions. President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”) on August 16, 2022 and the CHIPS and Science Act of 2022 on August 9, 2022. These laws implement new tax provisions, including a 1% excise tax on certain stock repurchases made by publicly traded corporations after December 31, 2022, and provide for various incentives and tax credits. The Organisation for Economic Co-operation and Development, which represents a coalition of member countries, recommended changes to numerous long-standing tax principles, including a 15% global minimum tax. If implemented by taxing authorities, such changes, as well as changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on our business, results of operations, or financial condition. In addition, future effective tax rates could be affected by changes in the valuation of deferred tax assets and liabilities.

Weakness in our internal control over financial reporting and business processes could adversely affect our business and financial results.

We are required to maintain internal controls over financial reporting. We review these controls regularly and deficiencies may be identified from time to time. In the future, we may identify material weaknesses in our internal controls over financial reporting. Any failure to maintain an effective system of internal controls over financial reporting could limit our ability to report our financial results accurately and timely, which could adversely affect our business, financial results, and stock price.

We must also maintain high quality business processes. We rely on our business processes to, among other things, coordinate with our suppliers, manage our supply chain efficiently, manufacture high quality products and comply with various laws and regulations. Any failure to maintain high quality business processes, or to effectively adjust our business processes to changing circumstances and needs, could limit our ability to meet our business’ needs, which could adversely affect our business, financial results, and stock price.

We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel could adversely affect our ability to compete effectively.

We depend on the efforts and abilities of certain key members of management and other technical personnel. Our future success depends, in part, upon our ability to retain such personnel and attract and retain other highly qualified personnel, particularly product engineers who can respond to market demands and required product innovation. Competition for such personnel is intense and has been increasing generally throughout the economy, and we may not be successful in hiring or retaining new or existing qualified personnel. If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, we could have difficulty competing in our highly competitive and innovative environment.

Our insurance may not adequately cover certain risks and, as a result, our financial condition and results may be adversely affected.

We carry insurance customary for companies in our industry, including, but not limited to, liability, property, and casualty; workers' compensation; cyber liability; and business interruption insurance. We also insure our employees for basic medical expenses. In addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers. Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies. Based on management's assessment and judgment, we have determined that it is more cost effective to self-insure against certain risks than to incur the insurance premium costs. The risks and exposures for which we self-insure include, but are not limited to, certain natural disasters, certain product defects, certain matters for which we indemnify third parties, political risk, certain theft, patent infringement, and employment practice matters. Should there be a catastrophic loss due to an uninsured event (such as an earthquake) or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could be adversely affected.

Our outstanding indebtedness could reduce our strategic flexibility and liquidity and may have other adverse effects on our results of operations.

As of December 31, 2022, we had approximately $130 million outstanding in revolving loans under an amended and restated credit agreement, dated September 1, 2022 (the “2022 Credit Agreement”). Our obligations under the 2022 Credit Agreement are guaranteed by certain of our U.S. subsidiaries meeting materiality thresholds set forth in the 2022 Credit Agreement, and the revolving loans under the 2022 Credit Agreement may be repaid and reborrowed at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loan facility on September 1, 2027. Our ability to meet our debt service obligations depends upon our operating and financial condition.performance, which is subject to general economic and competitive conditions and to financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to service our debt, we may need to sell material assets, restructure or refinance our debt, or seek additional equity capital. Prevailing economic conditions and global credit markets could adversely impact our ability to sell material assets, restructure or refinance our debt on terms acceptable to us, or at all, or we may not be able to restructure or refinance our debt without incurring significant additional fees and expenses.

The 2022 Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and our subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the 2022 Credit Agreement. We are also required to maintain compliance with a total net leverage ratio and an interest coverage ratio, in each case, determined in accordance with the terms of the 2022 Credit Agreement. 

The amount and terms of our indebtedness, as well as our credit rating, could have important consequences, including the following:

If we breach a loan covenant, the lenders could accelerate the repayment of the facility. We might not have sufficient assets to repay our indebtedness upon acceleration. If we are unable to repay or refinance the indebtedness upon acceleration or at maturity, the lenders could initiate a bankruptcy proceeding against us or collection proceedings with respect to our assets and subsidiaries securing the facility, which could materially decrease the value of our common stock.

●	timely completion and introduction of new product designs;
●	ability to generate new design opportunities and design wins, including those which result in sales of significant volume;
●	achievement of necessary volume of production to achieve acceptable cost;
●	availability of specialized field application engineering resources supporting demand creation and customer adoption of new products;
●	ability to utilize advanced manufacturing process technologies;
●	achieving acceptable yields and obtaining adequate production capacity from our wafer foundries and assembly and test subcontractors;
●	ability to obtain advanced packaging;
●	availability of supporting software design tools;
●	utilization of predefined IP logic;
●	customer acceptance of advanced features in our new products; and
●	market acceptance of our customers' products.

The failure of any of these factors, among others, could adversely affect our product innovation, development and introduction efforts and our financial condition and results of operations.

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Table of Contents

Our business depends

We compete against companies that have significantly greater resources than us and numerous other product solutions.

The semiconductor industry is highly competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing, and sales resources than us. Consolidation in our industry may increasingly mean that our competitors have greater consolidated resources, or other synergies, including the ability to attract qualified employee or incorporate higher costs into product and service prices, that could put us at a competitive disadvantage. We currently compete directly with companies that have licensed our technology or have developed similar products, as well as numerous semiconductor companies that offer products based on the proper functioningalternative solutions, such as applications processor, application specific standard product, microcontroller, analog, and digital signal processing technologies. Competition from these semiconductor companies may intensify as we offer more products in any of internal processesour end markets. These competitors include established, multinational semiconductor companies, as well as emerging companies.

We depend on independent contractors and information technology systems. A failurethird parties to provide key services in our product development and operations, and any disruption of their services, or an increase in cost of these processesservices, could negatively impact our financial condition and systems, data breaches, cyber-attacks, or cyber-fraud may cause business disruptions, compromiseresults of operations.

We depend on subcontractors to provide cost effective and efficient services in our product development and supply chain functions, including test and assembly services, software and hardware development, support of intellectual property or other sensitive information, or result in losses.

We rely on various information technology ("IT") networkscores, inventory management, order fulfillment and systemsdirect sales logistics.

Our operations and operating results may be adversely affected if we experience problems with our subcontractors that impact the delivery of product to manage our operations, including financial reporting, and we regularly make changes to improve them as necessary by periodically implementing new, or upgrading or enhancing existing, operational and IT systems, procedures, and controls.customers. These systems are supported by subcontractors, and theyproblems may also be subject to power and telecommunication outages or other general system failures. The legal, regulatory and contractual environment surrounding information security and data privacy is complex and evolving. We continue to commit significant resources to implementing new systems to standardize our processes worldwide and adopt best-in-class capabilities. We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.

In the normal course of business, we may implement new or updated IT systems and, as a result, we may experienceinclude: schedule delays or disruptionsdefects in the integration of these systems,software or the related procedures or controls. The policies and security measures established with our IT systems may be vulnerable to data breaches, cyber-attacks or fraud. We may also encounter errors in data, anhardware development deliverables; prolonged inability to accurately processobtain wafers or record transactions,packaging materials with competitive performance and securitycost attributes; inability to achieve adequate yields or technical reliability issues. All of these could harmtimely delivery; inability to meet customer timelines or demands; disruption or defects in assembly, test, or shipping services; or delays in stabilizing manufacturing processes or ramping up volume for new products. If our abilitythird-party supply chain providers were to conduct core operating functions such as processing invoices, shipping and receiving, recording and reporting financial and management information on a timely and accurate basis, and could impact our internal control compliance efforts. If the technical solutionreduce or end user trainingdiscontinue services for us or their operations are inadequate, it could limit our ability to manufacture and ship products as planned. We have various systems that remain that may be nearing the end of their useful life or vendor support, which will ultimately need to be replaced.

We maintain sensitive data on our networks and the networks of our business partners and third-party providers, including proprietary and confidential information relating to our intellectual property, personnel, and business, and that of our customers and third-party providers. Companies have been increasingly subject to a wide variety of security incidents, cyber-attacks, hacking, phishing, and other attempts to gain unauthorized access or engage in fraudulent behavior. Cyber-attacks have become more prevalent, sophisticated and much harder to detect and defend against and it is often difficult to anticipate or detect such incidents and to assess the damage caused by them. Our policies and security measures cannot guarantee security, and our information technology infrastructure, including our networks and systems, may be vulnerable to data breaches, cyber-attacks or fraud. In the past, third parties have attempted to penetrate and/or infect our network and systems with malicious software and phishing attacks in an effort to gain access to our network and systems. In addition, we are subject to the risk of third parties falsifying invoices and similar fraud, frequently by obtaining unauthorized access to our vendors’ and business partners’ networks.

In some circumstances, we may partner with third-party providers and provide them with certain sensitive data. If these third parties fail to adopt or adhere to adequate data security practices, or in the event of a breach of their networks, this sensitive data may be improperly accessed, used or disclosed. These data breaches and any unauthorized access or disclosure of sensitive data could compromise our intellectual property, expose sensitive business information and subject us to third party claims.

The increase in cyber-attacks has resulted in an increased focus on cybersecurity by certain government agencies. Cyber-attacks or any investigation or enforcement action related to cybersecurity could cause us to incur significant remediation costs, result in product development delays, disrupt key business operations, and divert attention of management and key information technology resources. In addition, we may incur lossdisrupted as a result of cyber-fraud, such as those experienced bya fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease, or other companies by making unauthorized payments irrespective of robust internal controls.

Failure of our IT systemsnatural disaster or difficultiescatastrophic event, weak economic conditions, inflation, recession, labor market disruptions, or delays in maintaining, managing, and integrating them could adversely affect the Company’s controls and procedures and could impact the Company's ability to perform necessary operations, which could materially adversely affect our business. Furthermore, our reputation, brand, and business could be significantly harmed, and we could be subject to third-party claims or governmental penalties in the event of a security breach.

The intellectual property licensing component of our business strategy increases our business risk and fluctuation of our revenue and margins.

Our business strategy includes licensing our intellectual property to companies that incorporate it into their technologies that address multiple markets, including markets where we participate and compete. Our Licensing and services revenue may be impacted by the introduction of new technologies by customers in place of the technologies we license, changes in the law that may weaken our ability to prevent the use of our patented technology by others, the expiration of our patents, and changes of demand or selling prices for products using licensed patents. We cannot assure that our licensing customers will continue to license our technology on commercially favorable terms or at all, or that these customers will introduce and sell products incorporating our technology, accurately report royalties owed to us, pay agreed upon royalties, honor agreed upon market restrictions, or maintain the confidentiality of our proprietary information, or will not infringe upon or misappropriate our intellectual property. Our intellectual property licensing agreements are complex and may depend upon many factors that require significant judgments, including completion of milestones, allocation of values to delivered items and customer acceptance.

Our sale of patents and intermittent significant licensing transactions can cause material fluctuations in our revenue and gross margins.

We have generated revenue from the sale of certain patents from our portfolio, generally for non-core technology that we are no longer actively developing. While we plan to continue to monetize our patent portfolio through sales of non-core patents, we may not be able to realize adequate interest or prices for those patents. Accordingly, we cannot provide assurance that we will continue to generate revenue from these sales. In addition, although we seek to be strategic in our decisions to sell patents, we might incur reputational harm if a purchaser of our patents sues one of our customers for infringement of the purchased patent, and we might later decide to enter a space that requires the use of one or more of the patents we sold. In addition, as we sell groups of patents, we no longer have the opportunity to further sell or to license those patents and receive a continuing royalty stream.

Our Licensing and services revenue fluctuates, sometimes significantly, from period to period because it is heavily dependent on a few key transactions being completed in a given period, the timing of which is difficult to predict and may not match our expectations. Licensing and services revenue may include revenue from the sales of patents, which sales may be difficult to complete and which may have complex terms for the payment which affect revenue recognition. Because of its high margin, the Licensing and services revenue portion of our overall revenue can have a disproportionate impact on gross profit and profitability. In addition, generating revenue from patent sales and intellectual property licenses is a lengthy and complex process that may last beyond the period in which our efforts begin, and the accounting rules governing the recognition of revenue from patent sales and intellectual property licensing transactions are increasingly complex and require significant judgment. As a result, the amount of license revenue recognized in any period may differ significantly from our expectations.

Our margins are dependent on our achieving continued yield improvement.

We rely on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products and on introducing new products that incorporate advanced features and other price/performance factors that enable us to increase revenues while maintaining acceptable margins. To the extent such cost reductions and new product introductions do not occur in a timely manner, or that our products do not achieve market acceptance or market acceptance at acceptable pricing, our forecasts of future revenue, financial condition, and operating results could be materially adversely affected.

Shortages in, or increased costs of, wafers and materials could adversely impact our gross margins and lead to reduced revenues.

Worldwide manufacturing capacity for silicon wafers is relatively inelastic. If the demand for silicon wafers or assembly material exceeds market supply, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive. We typically have short-term wafer supply agreements that do not ensure long-term supply or allocation commitments. A shortage in manufacturing capacity could hinder our ability to meet product demand and therefore reduce our revenue. In addition, silicon wafers constitute a material portion of our product cost. If we are unable to purchase wafers at favorable prices,reason, our financial condition and results of operations willcould be adversely affected.

Factors Related to Our Sales and Revenue

Our revenues depend on our relationships with our distributors and on a concentrated group of end customers. An adverse change in the relationships with, or performance of, our distributors, or any reduction in the use of our products by our end customers, could harm our sales and significantly decrease our revenue.

We depend on a concentrated group of distributors to sell our products to end customers, complete order fulfillment, maintain sufficient inventory of our products and provide services to our end customers. In fiscal 2022, revenue attributable to sales to distributors accounted for 89% of our total revenue, with two distributors accounting for 59% of total revenue. We have significant outstanding receivables with our top distributors, and expect our distributors to generate a significant portion of our revenue in the future. Any adverse change to our relationships or agreements with our distributors, a failure by one or more of our distributors to perform its obligations to us, or consolidation in the distribution industry could have a material impact on our business, including a reduction in our access to certain end customers, or our ability to sell our products.

If our relationships with any material customers were to diminish, if these customers were to develop their own solutions or adopt alternative solutions or competitors' solutions, if any one or more of our concentrated groups of customers were to experience significantly adverse financial conditions, including as a result of inflation, economic slowdown or recession, or labor market disruptions, or if as a result of trade disputes or sanctions these customers were restricted from purchasing our products, our results could be adversely affected.

In addition, the inability of customers to obtain credit, the insolvency of one or more customers, or tariffs applicable to our customers’ products, could impact our sales. Any of these effects could impact our ability to effectively manage inventory levels and collect receivables, require additional restructuring actions, and decrease our revenue and profitability.

The nature of our business and length of our sales cycle makes our revenue, gross margin, and net income, and inventory subject to fluctuation and difficult to accurately predict.

A number of factors, including how products are manufactured to support end markets, yield, wafer pricing, cost of packaging raw materials, product mix, market acceptance of our new products, competitive pricing dynamics, product quality, geographic and/or end market mix, and pricing strategies, can cause our revenue, gross margins, and net income, and inventory to fluctuate significantly either positively or negatively from period to period.

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We have limited visibility into the demand for our products, particularly new products, because demand for our products depends upon our products being designed into our end customers' products and those products achieving market acceptance. During our sales cycle, our customers typically test and evaluate our products prior to deciding to include our products into the design of their own products, and then require additional time to begin volume production of their products. This lengthy sales cycle may cause us to incur significant expenses, which could be exacerbated by rising inflation, experience significant production delays and to incur additional inventory costs before we receive a customer order that may be delayed or never get placed. A key strategic customer may demand certain design or production resources to meet their requirements or work on a specific solution, which could cause delays in our normal development schedule and result in significant investment of our resources or missed opportunities with other potential customers. We may incur these expenses without generating revenue from our products to offset the expenses.

While our sales cycles are typically long, our average product life cycles tend tocan be short as a result of the rapidly changing technology environment in which we operate. OurFrom time to time, our inventory levels may be higher than historical norms from time to time, due to inventory build decisions aimed at meeting expected demand, from a single large customer,ramping for new products, reducing direct material cost, or enabling responsiveness to expected demand. In the event the expected demand does not materialize, or if our short sales cycle does not generate sufficient revenue, we may be subject to incremental excess and obsolescence costs.

These factors make it difficult for us to accurately forecast future sales and project quarterly revenues. The difficulty in forecasting future sales weakens our ability to project our inventory requirements, which could result, and in the past has resulted, in inventory write-downs or failure to meet customer product demands in a timely manner. While we may giveissue guidance, the difficulty in forecasting revenues as well as thefinancial performance, relative customer and product mix, and the unpredictability of those revenues limitsunknown variables and their impact on our financial performance may impair the accuracy of our forward-looking financial measures.

Accounting requirements related to sales through our distribution channel could result in our reporting revenue in excess of demand.

Revenue recognition standards require recognition of revenue based on estimates and may require us to record revenue from distributors that is in excess of actual end customer demand. Since we have limited ability to forecast inventory levels of our end customers, we depend on the timeliness and accuracy of resale reports from our distributors. Late or inaccurate resale reports could mask significant build-up of inventories in our distribution channel, have a detrimental effect on our ability to provide accurate forward-lookingproperly recognize revenue, and gross margin guidance.

We compete against companies that have significantly greater resources than usimpact our ability to forecast future sales. An inventory build-up in our distribution channel could result in a slowdown in orders, requests for returns from customers, or requests to move out planned shipments. If our distributors do not ultimately sell the inventory and numerous other product solutions.

The semiconductor industry is highly competitive and manyour estimates change, we could be required to materially correct our recognized revenue in a future period, depending on actual results. Any failure to manage these challenges could disrupt or reduce sales of our directproducts and indirect competitorsunfavorably impact our financial results.

General Risk Factors

Our operations are subject to the effects of inflationary pressures and recessionary concerns.

Global economic conditions have substantially greater financial, technological, manufacturing, marketing,recently experienced historically high levels of inflation, and sales resources. Consolidationthere is increasing concern about the potential for recession. Recent inflation is primarily believed to be the result of the economic impacts from the ongoing COVID-19 pandemic, including the global supply chain disruptions, strong economic recovery and associated widespread demand for goods, and government stimulus packages, among other factors. For instance, global supply chain disruptions have resulted in our industry may increasingly mean that our competitorsshortages in materials and services. Such shortages have greater consolidated resources, or other synergies, thatresulted in inflationary cost increases for labor, materials, and services across the economy, and could put us at a competitive disadvantage. We currently compete directly with companies that have licensed our technology or have developed similar products,continue to cause costs to increase as well as numerous semiconductor companiesscarcity of certain products. If the inflation rate continues to increase, it will affect our expenses. To the extent inflation results in rising interest rates and has other adverse effects on the market, including the possibility of recession, it may adversely affect our consolidated financial condition and results of operations.

Business disruptions could seriously harm our future revenue, cash flows, and financial condition and increase our costs and expenses.

Our worldwide operations and supply chain could be disrupted by natural or human-induced disasters including, but not limited to, earthquakes, tsunamis, or floods; hurricanes, cyclones, or typhoons; fires, or other extreme weather conditions; power or water shortages; telecommunications failures; materials scarcity and price volatility; manufacturing equipment failures; IT system failures; cybersecurity attacks; data breaches; medical epidemics or pandemics (such as COVID-19); terrorist acts, civil unrest, military actions, conflicts, or wars; or other natural or man-made disasters or catastrophic events.

The occurrence of any of these business disruptions could adversely affect our competitive position and result in significant losses, decrease demand for our products, seriously harm our revenue, profitability and financial condition, increase our costs and expenses, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain, result in the need to impose employee travel restrictions, and require substantial expenditures and recovery time in order to fully resume operations. The impacts and frequency of any of the above could furthermore be exacerbated by climate change, particularly in countries where we, or our suppliers or customers, operate that offer products based on alternative solutions,have limited infrastructure and disaster recovery resources.

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Our operations and those of our significant suppliers and distributors could be adversely affected if manufacturing, logistics, or other operations in key locations, including logistics hubs in Asia, are disrupted for any reason, such as applications processor, application specific standard product, microcontroller, analog,those described above or other economic, business, labor, environmental, public health, regulatory or political reasons. In addition, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a catastrophic event, they may reduce or cancel their orders, or these events could otherwise result in a decrease in demand for our products. Although it is impossible to completely predict the occurrences or consequences of any such events, forecasting disruptive events and digital signal processing technologies. Competition from these semiconductor companies may intensify as we offer more products in anybuilding additional resiliency into our operations accordingly will become an increasing business imperative.

The trading price of our end markets. These competitors include established, multinational semiconductor companies,common stock has been and may continue to be subject to volatility in response to a variety of factors.

Our common stock has experienced substantial price volatility in the past and may continue to do so in the future. Additionally, the technology industry and the stock market as wella whole has experienced extreme volatility that often has been unrelated to the performance of particular companies. The trading price of our common stock may fluctuate widely due to various factors, including, but not limited to, actual or anticipated fluctuations in our financial condition and operating results; changes in financial estimates by us or financial or other market estimates and ratings by securities and other analysts; our ability to develop new products, enter new market segments, gain market share, manage cyber-security and litigation risk, diversify our customer base, and successfully secure manufacturing capacity; news regarding our products or products of our competitors; any mergers, acquisitions or divestitures of assets undertaken by us; inflationary conditions, interest rate changes, and recessionary concerns; regulatory changes to international trade policies, economic sanctions, or export controls, such as emerging companies.

new licensing requirements for exporting certain chip-related technology to China; terrorist acts or acts of war, including the ongoing conflict between Ukraine and Russia; epidemics and pandemics, such as developments and restrictions with respect to the COVID-19 pandemic; trading activity in our common stock, including stock repurchases, actions by institutional or other large stockholders, or our inclusion in market indices; or general economic, industry, and market conditions worldwide.

The volatility of our stock may cause the value of a stockholder’s investment to change rapidly. Investors in our common stock may not realize any return on their investment in us and may lose some or all of their investment. Additionally, if our stock price declines, it may be more difficult for us to raise capital and may have other adverse effects on our business. Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. Volatility in the trading price of our common stock could also result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources. For these reasons, investors should not rely on recent or historical trends to predict future trading prices of our common stock, financial condition, results of operations, or cash flows.

Acquisitions, divestitures, strategic investments and strategic partnerships could disrupt our business and adversely affect our financial condition and operating results.

We may pursue growth opportunities by acquiring complementary businesses, solutions or technologies through strategic transactions, investments or partnerships. The identification of suitable acquisition, strategic investment or strategic partnership candidates can be costly and time consuming and can distract our management team from our current operations. If such strategic transactions require us to seek additional debt or equity financing, we may not be able to obtain such financing on terms favorable to us or at all, and such transaction may adversely affect our liquidity and capital structure. We may also choose to divest certain non-core assets, which divestitures could lead to charges against earnings and may expose us to additional liabilities and risks. Any strategic transaction might not strengthen our competitive position, may increase some of our risks, and may be viewed negatively by our customers, partners or investors. Even if we successfully complete a strategic transaction, we may not be able to effectively integrate the acquired business, technology, systems, control environment, solutions, personnel or operations into our business or global tax structure. We may experience unexpected changes in how we are required to account for strategic transactions pursuant to U.S. GAAP and may not achieve the anticipated benefits of any strategic transaction. We may incur unexpected costs, claims or liabilities that we incur during the strategic transaction or that we assume from the acquired company, or we may discover adverse conditions post acquisition for which we have limited or no recourse.

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We regularly test for goodwill and other impairments as required under U.S. GAAP, and we may incur future impairments.

We are required under U.S. GAAP to test goodwill for possible impairment on an annual basis and to test goodwill and long-lived assets, including amortizable intangible assets, for impairment at any other time that circumstances arise indicating the carrying value may not be recoverable.For purposesTable of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice ("Core") business, which includes intellectual property and semiconductor devices. We had no impairment charges in fiscal 2019. Impairment charges related to amortizable intangible assets from the Silicon Image acquisition totaled approximately $12.5 million and $32.4 million in fiscal years 2018 and 2017, respectively. There is no assurance that future impairment tests will indicate that goodwill or amortizable intangible assets will be deemed recoverable. As we continue to review our business operations and test for impairment or in connection with possible sales of assets, we may have impairment charges in the future, which may be material.Contents

We depend on independent contractors and third parties to provide key services in our product development and operations, and any disruption of their services, or an increase in cost of these services, could negatively impact our financial condition and results of operations.

We depend on subcontractors to provide cost effective and efficient services in our product development and supply chain functions, including test and assembly services, software and hardware development, support of intellectual property cores, inventory management, order fulfillment and direct sales logistics.

Our operations and operating results may be adversely affected if we experience problems with our subcontractors that impact the delivery of product to our customers. These problems may include: delays in software or hardware development timelines, prolonged inability to obtain wafers or packaging materials with competitive performance and cost attributes; inability to achieve adequate yields or timely delivery; inability to meet customer timelines or demands, disruption or defects in assembly, test, or shipping services; or delays in stabilizing manufacturing processes or ramping up volume for new products. If our third-party supply chain providers were to reduce or discontinue services for us or their operations are disrupted as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease, or other natural disaster or catastrophic event, weak economic conditions, or any other reason, our financial condition and results of operations could be adversely affected.

Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results.

From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business. Certain claims may not yet be resolved, including but not limited to any that are discussed under Item 3. Legal Proceedings and "Note 13 - Contingencies" contained in the Notes to Consolidated Financial Statements, and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. Regardless of merit or outcome, claims or litigation may be both time-consuming and disruptive to our operations and cause significant expense and diversion of management attention and we may enter into material settlements to avoid these risks. Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business.

Changes to financial accounting standards may affect our results of operations and could cause us to change our business practices.

We prepare our consolidated financial statements to conform to generally accepted accounting principles in the United States, or U.S. GAAP. These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create accounting rules and regulations. Changes in these rules, such as the adoption of ASC 606 - Revenue from Contracts with Customers in fiscal 2018 or ASC 842 - Leases in fiscal 2019, or in the guidance relating to interpretation and adoption of the rules could have a significant effect on our financial results and could affect portions of our business differently.

Accounting requirements related to sales through our distribution channel could result in our reporting revenue in excess of demand.

Revenue recognition standards require recognition of revenue based on estimates and may require us to book revenue from distributors that is in excess of actual end customer demand. Since we have limited ability to forecast inventory levels of our end customers, we depend on the timeliness and accuracy of resale reports from our distributors. Late or inaccurate resale reports could mask significant build-up of inventories in our distribution channel, have a detrimental effect on our ability to properly recognize revenue, and impact our ability to forecast future sales. An inventory build-up in our distribution channel could result in a slowdown in orders, requests for returns from customers, or requests to move out planned shipments. If our distributors do not ultimately sell the inventory and our estimates change, we could be required to materially correct our recognized revenue in a future period, depending on actual results. Any failure to manage these challenges could disrupt or reduce sales of our products and unfavorably impact our financial results.

Our participation in the HDMI standard is evolving. We no longer act as agent for the HDMI standard, and our share of adopter fees and royalties for the HDMI standard is subject to variability.

We acted as agent of the HDMI consortium until December 31, 2016 and were responsible for promoting and administering the specification. We received all of the adopter fees paid by adopters of the HDMI specification in connection with our role as agent. In September 2016, the Founders of the HDMI consortium, of which we are a member, amended the Founders Agreement resulting in changes to our role as agent for the HDMI consortium and to the model for sharing adopter fee revenues. Under the terms of the agreement, our role as the agent was terminated effective January 1, 2017 and a new independent entity was appointed to act as the new HDMI licensing agent with responsibility for licensing and the distribution of royalties among Founders. As a result of the amended model for sharing adopter fee revenue, we are entitled to a share of the adopter fees paid by parties adopting the HDMI standard.

We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed generally every three years. In the fourth quarter of fiscal 2019, the HDMI Founders adopted a new agreement covering the five-year period beginning January 1, 2018. The amount of our portion of the royalty allocation is dependent on the royalties generated by adopter sales of royalty-bearing HDMI technology.

Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.

We are subject to taxation in the United States and other countries. We have a global tax structure that aligns our corporate structure with our global business operations, and we currently operate legal entities in multiple countries. In some countries, we maintain multiple entities for tax or other purposes. We may choose to consolidate or integrate certain of these entities, and these integration activities, changes in tax laws, rates, regulations, future jurisdictional profitability of the Company, and related regulatory interpretations in the countries in which we operate may impact the taxes we pay or tax provision we record, which could adversely affect our results of operations. In addition, future effective tax rates could be affected by changes in the composition of our earnings in countries with differing tax rates, and by changes in the valuation of deferred tax assets and liabilities. We make no assurance as to what taxes we pay or the ability to estimate our future effective tax rate because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we operate, or the potential impact of releasing our valuation allowance.

We may be subject to warranty claims and other costs related to our products.

In general, we warrant our products for varying lengths of time against non-conformance to our specifications and certain other defects. Because our products, including hardware, software, and intellectual property cores, are highly complex and increasingly incorporate advanced technology, our quality assurance programs may not detect all defects, whether these are specific manufacturing defects affecting individual products or these are systematic defects that could affect numerous shipments. Inability to detect a defect could result in a diversion of our engineering resources from product development efforts, increased engineering expenses to remediate the defect, and increased costs due to customer accommodation or inventory impairment charges. On occasion, we have also repaired or replaced certain components, made software fixes, or refunded the purchase price or license fee paid by our customers due to product or software defects. Our insurance may be unavailable or inadequate to protect against these issues. If there are significant product defects, the costs to remediate such defects, net of reimbursed amounts from our vendors, if any, or to resolve warranty claims may adversely affect our financial condition and results of operations and may harm our reputation.

If we are unable to adequately protect our new and existing intellectual property rights, our financial results and our ability to compete effectively may suffer.

Our success depends in part on our proprietary technology and we rely upon patent, copyright, trade secret, mask work, and trademark laws to protect our intellectual property. We intend to continue to protect our proprietary technology, however, we may be unsuccessful in asserting our intellectual property rights or such rights may be invalidated, violated, circumvented, or challenged. From time to time, third parties, including our competitors, have asserted against us patent, copyright, and other intellectual property rights to technologies that are important to us. Third parties may attempt to misappropriate our intellectual property through electronic or other means or assert infringement claims against us in the future. Such assertions by third parties may result in costly litigation, indemnity claims, or other legal actions, and we may not prevail in such matters or be able to license any valid and infringed patents from third parties on commercially reasonable terms. This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products. Any infringement claim, indemnification claim, or impairment or loss of use of our intellectual property could materially adversely affect our financial condition and results of operations.

Weakness in our internal control over financial reporting could adversely affect our business and financial results.

We are required to maintain internal controls over financial reporting. We review these controls regularly and deficiencies may be identified from time to time. During the quarter ended December 28, 2019, we evaluated and remediated certain deficiencies in our information technology controls over system access and no material weakness existed at the end of the period. We previously disclosed a material weakness in 2017 related to our risk assessment involving significant unusual transactions that was remediated in 2018.  In the future, we may identify material weaknesses in our internal controls over financial reporting. Any failure to maintain an effective system of internal controls over financial reporting could limit our ability to report our financial results accurately and timely, which could adversely affect our business, financial results, and stock price.

We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel could adversely affect our ability to compete effectively.

We depend on the efforts and abilities of certain key members of management and other technical personnel. Our future success depends, in part, upon our ability to retain such personnel and attract and retain other highly qualified personnel, particularly product engineers who can respond to market demands and required product innovation. Competition for such personnel is intense and we may not be successful in hiring or retaining new or existing qualified personnel. If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, we could have difficulty competing in our highly-competitive and innovative environment.

Our outstanding indebtedness could reduce our strategic flexibility and liquidity and may have other adverse effects on our results of operations.

As of December 28, 2019, we had approximately $148.1 million outstanding under a Credit Agreement, dated May 17, 2019 (the “Current Credit Agreement”). Our obligations under the Current Credit Agreement are guaranteed by our U.S. subsidiaries, and include a requirement to pay quarterly installments of approximately $4.4 million with the remaining balance due upon maturity in May 2024. Our ability to meet our debt service obligations depends upon our operating and financial performance, which is subject to general economic and competitive conditions and to financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to service our debt, we may need to sell material assets, restructure or refinance our debt, or seek additional equity capital. Prevailing economic conditions and global credit markets could adversely impact our ability to sell material assets, restructure or refinance our debt on terms acceptable to us, or at all, or we may not be able to restructure or refinance our debt without incurring significant additional fees and expenses.

The Current Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the Current Credit Agreement. We are also required to maintain compliance with a total leverage ratio and an interest coverage ratio, in each case, determined in accordance with the terms of the Current Credit Agreement.

The amount and terms of our indebtedness, as well as our credit rating, could have important consequences, including the following:

we may be more vulnerable to economic downturns, less able to withstand competitive pressures, and less flexible in responding to changing business and economic conditions;

our cash flow from operations may be allocated to the payment of outstanding indebtedness, and not to research and development, operations or business growth;

we might not generate sufficient cash flow from operations or other sources to enable us to meet our payment obligations under the facility and to fund other liquidity needs;

our ability to make distributions to our stockholders in a sale or liquidation may be limited until any balance on the facility is repaid in full; and

our ability to incur additional debt, including for working capital, acquisitions, or other needs, is more limited.

If we breach a loan covenant, the lenders could accelerate the repayment of the facility. We might not have sufficient assets to repay our indebtedness upon acceleration. If we are unable to repay or refinance the indebtedness upon acceleration or at maturity, the lenders could initiate a bankruptcy proceeding against us or collection proceedings with respect to our assets and subsidiaries securing the facility, which could materially decrease the value of our common stock.

A material change in the agreements governing encryption keys we use could place additional restrictions on us, or our distributors or contract manufacturers, which could restrict product shipment or significantly increase the cost to track products throughout the distribution chain.

Certain components in our products contain encryption keys used in connection with High Definition Content Protection ("HDCP"). The regulation and distribution of these encryption keys are controlled through license agreements with Digital Content Protection ("DCP"), a wholly owned subsidiary of Intel Corporation. These license agreements have been modified by DCP from time to time, and such changes could impact us, our distributors, and our customers. An important element of HDMI is the ability to implement link protection for high definition ("HD"), and more recently, 4K UltraHD, content. We implement various aspects of the HDCP link protection within certain parts we sell. We also, for the benefit of our customers, include the necessary HDCP encryption keys in parts we ship to customers. These encryption keys are provided to us from DCP. We have a specific process for tracking and handling these encryption keys. If DCP changes any of the tracking or handling requirements associated with HDCP encryption keys, we may be required to change our manufacturing and distribution processes, which could adversely affect our manufacturing and distribution costs associated with these products. If we cannot satisfy new requirements for the handling and tracking of encryption keys, we may have to cease shipping or manufacturing certain products.

We may have failed to adequately insure against certain risks, and, as a result, our financial condition and results may be adversely affected.

We carry insurance customary for companies in our industry, including, but not limited to, liability, property, and casualty; workers' compensation; and business interruption insurance. We also insure our employees for basic medical expenses. In addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers. Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies. Based on management's assessment and judgment, we have determined that it is more cost effective to self-insure against certain risks than to incur the insurance premium costs. The risks and exposures for which we self-insure include, but are not limited to, certain natural disasters, certain product defects, certain matters for which we indemnify third parties, political risk, certain theft, patent infringement, and employment practice matters. Should there be a catastrophic loss due to an uninsured event (such as an earthquake) or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could be adversely affected.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We lease a 47,800 square foot of space in Hillsboro, Oregon as our corporate headquarters and a research and development facility through November 2022. October 2028.

In San Jose, California, we have 98,874 square feet under lease through September 2026, of which we use 49,579 square feet as a research and development facility, while wefacility. We vacated 49,295 square feet during the fourth quarter of 2018 and intend to sublease the vacated space.2018. During 2019, we vacated a 23,680 square foot office space in Portland, Oregon, which we have subleased through the end of the lease in March 2025.

In Muntinlupa City, Philippines, we lease a total of 48,56550,503 square feet through May 2025 and 1,938 square feet through June 2025 for research and development and operations facilities. In this location, we also leased another 2,856 square feet through April 2018 as storage space that has been consolidated into other facilities.

In Shanghai, China, we lease 68,027 square feet through May 20212024 for research and development operations. We also owned an 18,869 square foot research and development facility in Shanghai, China, which we sold in August 2017.

We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff. We believe that our existing facilities are suitable and adequate for our current and foreseeable future needs.

Item 3. Legal Proceedings

On or about December 19, 2018, Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswald (collectively,

The information contained under the “Plaintiffs”) commenced an action against the Company and several unnamed defendantsheading "Legal Matters" in the Multnomah County Circuit CourtNote 15 - Contingencies to our Consolidated Financial Statements in Part II, Item 8 of the State of Oregon, in connection with the sale of certain productsthis report is incorporated by the Company to the Plaintiffs in or around 2008. The Plaintiffs allege that we violated The Lanham Act, engaged in negligence and fraud by failing to disclose to the Plaintiffs the export-controlled status of the subject parts. The Plaintiffs seek damages of $138 million, treble damages, and other remedies. In January 2019, we removed the action to the United States District Court for the District of Oregon. Atreference into this stage of the proceedings, we do not have an estimate of the likelihood or the amount of any potential exposure to the Company; however, we believe that these claims are without merit and intend to vigorously defend the action. SeePart I, Item 3. Also, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.

From time to time, we are exposed to certain asserted and unasserted potential claims. Periodically, we review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we then accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may revise estimates.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC".

Holders

As of February 20, 2020,13, 2023, we had approximately 216177 stockholders of record.

Dividends

The payment of dividends on our common stock is within the discretion of our Board of Directors. We intend to retain earnings to finance our business. We have never paid cash dividends.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

On August 8, 2022, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $150 million of outstanding common stock could be repurchased from time to time (the "2023 Repurchase Program"). The duration of the 2023 Repurchase Program is through the end of December 2023. Under the 2023 Repurchase Program during the fourth quarter of fiscal 2022, we repurchased 288,652 shares for $20.0 million, or an average price paid per share of $69.27. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2023 Repurchase Programs were retired by the end of the fourth quarter of fiscal 2022. We have repurchased a total of 1,951,934 shares for $110.1 million, or an average price paid per share of $56.42, during fiscal year 2022.

The following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2022:

Period		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)				Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b)
October 2, 2022 through October 29, 2022			—			$	—				—			$	149.7
October 30, 2022 through November 26, 2022			—			$	—				—			$	149.7
November 27, 2022 through December 31, 2022			288,652			$	69.27				288,652			$	129.7
Total			288,652			$	69.27				288,652			$	129.7

(a)		All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our Board of Directors to purchase up to $150.0 million of our common stock announced August 8, 2022
(b)		As of December 31, 2022 this amount consisted of the remaining portion of the $150.0 million program authorized through the end of December 2023 that was announced August 8, 2022.

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None.

Comparison of Total Cumulative Stockholder Return

The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 20142017 through December 2019.2022. Cumulative stockholder return assumes $100 invested at the beginning of the period in our common stock, the S&P and PHLX. Historical stock price performance is not necessarily indicative of future stock price performance.

Lattice Cumulative Stockholder Return

Item 6. Selected Financial Data

Reserved

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		Year Ended (1)
STATEMENT OF OPERATIONS:		December 28, 2019				December 29, 2018				December 30, 2017				December 31, 2016				January 2, 2016 (2)
(In thousands, except per share data)
Revenue		$	404,093			$	398,799			$	385,961			$	427,054			$	405,966
Cost of revenue		165,671				179,360				169,382				180,620				186,057
Gross margin		238,422				219,439				216,579				246,434				219,909
Operating expenses:
Research and development		78,617				82,449				103,357				117,518				136,868
Selling, general, and administrative		82,542				91,054				90,718				98,602				97,349
Amortization of acquired intangible assets		13,558				17,690				31,340				33,575				29,580
Restructuring charges		4,664				17,349				7,196				9,267				19,239
Impairment of acquired intangible assets and goodwill		—				12,486				32,431				7,866				21,655
Acquisition related charges		—				1,531				3,781				6,305				22,450
Gain on sale of building		—				—				(4,624		)		—				—
Total operating expenses		179,381				222,559				264,199				273,133				327,141
Income (loss) from operations		59,041				(3,120		)		(47,620		)		(26,699		)		(107,232		)
Interest expense		(11,731		)		(20,600		)		(18,807		)		(20,327		)		(18,389		)
Other (expense) income, net		(2,245		)		(249		)		(3,286		)		2,844				(1,072		)
Income (loss) before income taxes		45,065				(23,969		)		(69,713		)		(44,182		)		(126,693		)
Income tax expense		1,572				2,353				849				9,917				32,540
Net income (loss)		$	43,493			$	(26,322	)		$	(70,562	)		$	(54,099	)		$	(159,233	)
Net income (loss) per share:
Basic		$	0.33			$	(0.21	)		$	(0.58	)		$	(0.45	)		$	(1.36	)
Diluted		$	0.32			$	(0.21	)		$	(0.58	)		$	(0.45	)		$	(1.36	)
Shares used in per share calculations:
Basic		132,471				126,564				122,677				119,994				117,387
Diluted		137,274				126,564				122,677				119,994				117,387
BALANCE SHEET:		December 28, 2019				December 29, 2018				December 30, 2017				December 31, 2016				January 2, 2016
(In thousands)
Cash, cash equivalents, and short-term marketable securities		$	118,081			$	128,675			$	111,797			$	116,860			$	102,574
Total assets		$	612,016			$	623,687			$	635,961			$	766,883			$	785,920
Long term liabilities		$	184,538			$	295,812			$	334,621			$	338,903			$	369,223
Total liabilities		$	284,357			$	365,230			$	418,268			$	496,453			$	480,400
Total stockholders' equity		$	327,659			$	258,457			$	217,693			$	270,430			$	305,520
(1)	Results for periods prior to 2018 are presented in accordance with ASC 605, which was in effect during those fiscal years.
(2)	Our results for the year ended January 2, 2016 include the results associated with the acquisition of Silicon Image for the approximately 10-month period from March 11, 2015 through January 2, 2016.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Lattice Semiconductor Corporation and its subsidiaries (“Lattice,” the “Company,” “we,” “us,” or “our”) develop technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and licenses.

Lattice is the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive, and consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.

Lattice has focused its strategy on delivering programmable logic products and related solutions based on low power, small size, and ease of use. We also serve our customers with IP licensing and various other services. Our product development activities include new proprietary products, advanced packaging, existing product enhancements, software development tools, soft IP, and system solutions for high-growth applications such as Edge AI, 5G infrastructure, platform security, and factory automation.

This discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes included in Part II, Item 8. "Financial Statements and Supplementary Data" of this report. Discussions of results for prior periods (fiscal 20182021 compared to fiscal 2017)2020) are incorporated by reference from our Annual Report on Form 10-K for the year ended December 29, 2018January 1, 2022.

Impact of COVID-19 and Global Economic Environment on our Business

The COVID-19 pandemic, increased financial market volatility, inflationary pressure, rising interest rates, recessionary concerns, and geopolitical tension continue to impact business globally and may impact our operations by causing disruption to our labor markets and supply chains. The ongoing COVID-19 pandemic, including the periodic resurgence of cases relating to the spread of new variants, has and continues to impact worldwide economic activity and poses the risk that our employees, contractors, suppliers and other partners may be prevented from conducting business activities. The extent to which the COVID-19 pandemic, increased financial market volatility, inflationary pressures and related uncertainty will impact our business activities will depend on future developments that are highly uncertain and cannot be predicted at this time. See the section entitled “Risk Factors” in Item 1A of Part I of this report for further information about related risks and uncertainties.

Critical Accounting Policies and Use of Estimates

Critical accounting policies are those that are both most important to the portrayal of a company's financial condition and results of operations, and that require management's most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments affecting the amounts reported in our consolidated condensed financial statements and the accompanying notes. We base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, actual results may differ materially from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.

We believe the following accounting policies and the related estimates are critical in the portrayal of our financial condition and results of operations, and require management's most difficult, subjective, or complex judgments. See "Note 1 - Nature of Operations and Significant Accounting Policies" under to our Consolidated Financial Statements in Part II, Item 8 of this report for further information on the significant accounting policies and methods used in the preparation of the consolidated financial statements.

Revenue from Contracts with Customers

We adopted ASC 606, Revenue from Contracts with Customers, effective on December 31, 2017, the first day of our 2018 fiscal year, using the modified retrospective method.

We recognize revenue upon satisfaction of performance obligations when control of promised goods or services has been transferred to our customers. We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. For revenue recognized on both sales to distributors and related to HDMI and other royalties, the amount of consideration we expect to be entitled to receive is based on estimates that require assumptions and judgments relating to trends in recent and historical activity. See "Note 1 - Basis of Presentation and Significant Accounting Policies" under to our Consolidated Financial Statements in Part II, Item 8 of this report for further information on our recognition of revenue. Sales to most distributors are made under terms allowing certain price adjustments upon sale to their end customers and limited rights of return of our products held in their inventory. The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends used in the estimates.

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Inventories and Cost of Revenue

Inventories are recordedstated at the lower of averageactual cost determined(determined using the first-in, first-out method) or net realizable value. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on a first-in-first-out basis or market. We establishspecific facts and circumstances. In determining provisions for inventory if it isexcess or obsolete orproducts, we hold quantities which areconsider assumptions such as changes in excess ofbusiness and economic conditions, projected customer demand.demand for our products, and changes in technology or customer requirements. The creation of such provisions results in a write-down of inventory to net realizable value and a charge to Cost of revenue.

If in any period we anticipate a change in assumptions such as future market or economic conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in Cost of revenue, resulting in a negative impact to our gross margin in that period. If in any period we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, related revenue would be recorded with a lower or no offsetting charge to Cost of revenue resulting in a net benefit to our gross margin in that period.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting, under which we allocate the purchase price paid for a company to identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill is measured as the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed. Determining the fair value of assets acquired and liabilities assumed requires management to make assumptions, estimates, and judgments that are based on all available information, including comparable market data and information obtained from our management and the management of the acquired companies. These judgments affect the amount of consideration paid that is allocable to identified tangible and intangible assets acquired and liabilities assumed in the business combination. The estimation of the fair values of the intangible assets requires significant judgment and the use of valuation techniques including primarily the income approach. Consideration is given to all relevant factors that might affect the fair value such as estimates of future revenues and costs, present value factors, and the estimated useful lives of intangible assets.

Accounting for Income Taxes

Our

We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax is comprisedjurisdictions around the world. These estimates involve significant judgment and interpretations of our currentregulations and are inherently complex. Resolution of income tax liability and changestreatments in deferred tax assets and liabilities.individual jurisdictions may not be known for many years after completion of the applicable year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse.

Valuation allowances are provided to reduce deferred tax assets to an amount that in management’s judgment is more-likely-than-not to be recoverable against future taxable income. The determination of a valuation allowance and when it should be released requires complex judgment. In assessing the ability to realize deferred tax assets, we regularly evaluate both positive and negative evidence that may exist and consider whether it is more-likely-than-not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

As part of our regular financial review process, we also assess the likelihood that our tax reporting positions will ultimately be sustained.sustained on examination by the taxing authorities, based on the technical merits of the position. To the extent it is determined it is more likely than not (a likelihood of more than 50 percent) that some portion or all of a tax reporting position will ultimately not be recognized and sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability. Our judgment regarding the sustainability of our tax reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in income tax expense which may result in a corresponding increase or decrease in net income in the period when such determinations are made. We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.

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Results of Operations

Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table:

	Year Ended *
(In thousands)	December 28, 2019							December 29, 2018							December 30, 2017
Revenue	$	404,093			100.0	%		$	398,799			100.0	%		$	385,961			100.0	%
Gross margin	238,422				59.0			219,439				55.0			216,579				56.1
Research and development	78,617				19.5			82,449				20.7			103,357				26.8
Selling, general, and administrative	82,542				20.4			91,054				22.8			90,718				23.5
Amortization of acquired intangible assets	13,558				3.4			17,690				4.4			31,340				8.1
Restructuring charges	4,664				1.2			17,349				4.4			7,196				1.9
Impairment of acquired intangible assets	—				—			12,486				3.1			32,431				8.4
Acquisition related charges	—				—			1,531				0.4			3,781				1.0
Gain on sale of building	—				—			—				—			(4,624		)		(1.2	)
Income (loss) from operations	$	59,041			14.6	%		$	(3,120	)		(0.8	)%		$	(47,620	)		(12.3	)%

		Year Ended *
		December 31,								January 1,								January 2,
(In thousands)		2022								2022								2021
Revenue		$	660,356				100.0	%		$	515,327				100.0	%		$	408,120				100.0	%
Gross margin			452,050				68.5				321,675				62.4				245,306				60.1
Research and development			135,767				20.6				110,518				21.4				89,223				21.9
Selling, general and, administrative			122,076				18.5				105,617				20.5				95,331				23.4
Amortization of acquired intangible assets			3,778				0.6				2,613				0.5				4,449				1.1
Restructuring charges			2,551				0.4				940				0.2				3,937				1.0
Acquisition related charges			511				0.1				1,171				0.2				—				—
Income from operations		$	187,367				28.4	%		$	100,816				19.6	%		$	52,366				12.8	%

* Results for 2017 areThe year ended January 2, 2021 was a 53-week year as compared to the other years presented, in accordance with ASC 605, which was in effect during that fiscalwere based on our standard 52-week year.

Revenue

	Year Ended *												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Revenue	$	404,093			$	398,799			$	385,961			1.3	%		3.3	%

* Results for 2017 are presented in accordance with ASC 605, which was in effect during that fiscal year.

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Revenue		$	660,356			$	515,327			$	408,120				28.1	%			26.3	%

Revenue increased $5.3$145.0 million, or 1%28.1%, in fiscal 20192022 compared to fiscal 2018,2021, primarily driven by increased demand forfrom our products used in data center servers, client computing solutions, and in 5G wireless infrastructure, along with increases in IP revenue, offset by broad market weakness.

industrial automation, and robotics applications.

Revenue by End Market

We sell our products globally to a broad base of customers in three primary groups of end markets:markets groups: Communications and Computing, Industrial and Automotive, and Consumer. We also provide Intellectual PropertyIP licensing and services to these end markets.

We anticipate future revenue growth due to

Within these end markets, there are multiple market segment drivers, including:

Communications and computing: 5G infrastructure deployments, cloud and enterprise servers, and client computing platforms,

Industrial and automotive: industrial Internet of Things ("IoT"), factory automation, and automotive electronics,

Consumer: smart home and prosumer.

	•	Communications and Computing: datacenter servers and networking equipment, client computing platforms, and 5G communications infrastructure deployments,
	•	Industrial and Automotive: factory automation, robotics, automotive electronics, and industrial IoT,
	•	Consumer: smart home, prosumer, and other applications.

We also generate revenue from the licensing of our Intellectual Property ("IP"),IP, the collection of certain royalties, patent sales, the revenue related to our participation in consortia and standard-setting activities, and services. While these activities may be associated with multiple markets, Licensing and services revenue is reported as a separate end market as it has characteristics that differ from other categories, most notably a higher gross margin.

The end market data below is derived from data provided to us by our distributors and end customers. With a diverse base of customers who may manufacture end products spanning multiple end markets, the assignment of revenue to a specific end market requires the use of judgment. We also recognize certain revenue for which end customers and end markets are not yet known. We assign this revenue first to a specific end market using historical and anticipated usage of the specific products, if possible, and allocate the remainder to the end markets by product family based uponon either historical usage for each product family if we cannot identify a specific end market.or industry application data for certain product types.

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The following are examples of end market applications for the fiscal years presented:

Communications and Computing	Industrial and Automotive	Consumer	Licensing and Services
Wireless	Security and Surveillance	Cameras	IP Royalties
Wireline	Machine Vision	Displays	Adopter Fees
Data Backhaul	Industrial Automation	Wearables	IP Licenses
Server Computing	Robotics	Televisions	Patent Sales
Client Computing	Automotive	Home Theater
Data Storage	Drones

The composition of our revenue by end market is presented in the following table:

	Year Ended *																					% Change in
(In thousands)	December 28, 2019							December 29, 2018							December 30, 2017							2019			2018
Communications and Computing	$	155,821			38.6	%		$	123,195			30.9	%		$	113,019			29.3	%		26.4	%		9.0	%
Industrial and Automotive	151,607				37.5			157,979				39.6			134,639				34.9			(4.0	)		17.3
Consumer	75,120				18.6			99,294				24.9			108,844				28.2			(24.3	)		(8.8	)
Licensing and Services	21,545				5.3			18,331				4.6			29,459				7.6			17.5			(37.8	)
Total revenue	$	404,093			100.0	%		$	398,799			100.0	%		$	385,961			100.0	%		1.3	%		3.3	%

* Results for 2017 are presented in accordance with ASC 605, which was in effect during that fiscal year.

Our revenue in

		Year Ended
		December 31,								January 1,								January 2,								% Change in
(In thousands)		2022								2022								2021								2022				2021
Communications and Computing		$	274,754				41.6	%		$	217,960				42.3	%		$	174,656				42.8	%			26.1	%			24.8	%
Industrial and Automotive			319,399				48.4				226,240				43.9				168,323				41.2				41.2				34.4
Consumer			49,064				7.4				50,652				9.8				45,523				11.2				(3.1	)			11.3
Licensing and Services			17,139				2.6				20,475				4.0				19,618				4.8				(16.3	)			4.4
Total revenue		$	660,356				100.0	%		$	515,327				100.0	%		$	408,120				100.0	%			28.1	%			26.3	%

Revenue from the Communications and Computing end market increased by 26% in fiscal 20192022 compared to fiscal 20182021 primarily due to demand increases for server andcontent expansion in datacenter servers, new greenfield client computing products, as well as for products used inopportunities, 5G wireless infrastructure.

For fiscal 2019 compared to fiscal 2018,infrastructure, and datacenter networking.

Revenue from the Industrial and Automotive end market revenue decreased 4%increased by 41% in fiscal 2022 compared to fiscal 2021, primarily due to strong customer adoption in a broad market weakness, primarilyrange of applications, including industrial automation and robotics. Growth in AsiaAutomotive was driven by the adoption of new designs in ADAS and Europe.

infotainment applications.

Revenue from the Consumer end market revenue decreased 24%by 3% in fiscal 20192022 compared to fiscal 2018 2021 primarily due to a greater focus onmacroeconomic weakness in Consumer in the Industrial and Automotive and the Communications and Computing end markets, and due to Asia market softness and broad market weakness.

current year.

Revenue from the Licensing and Services end market is subject to variability between periods. Revenue from the Licensing and Services end market increaseddecreased by 18%16% in fiscal 20192022 compared to fiscal 2018 predominantly2021 primarily due to increases in HDMI royalty revenuedecreased licensing and certain patent and asset sales recognized in 2019.

We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed periodically, generally every three years. In the fourth quarter of fiscal 2019, the Founders adopted a new agreement covering the five-year period beginning January 1, 2018. Revenues recorded during fiscal 2019 and 2018 based on our estimated share of the royalties were consistent with the amounts recognized under the new agreement.

IP royalties.

Revenue by Geography

We assign revenue to geographies based on ship-to location of the end customer, where available, and based upon the location of the distributor to which the product was shipped otherwise.

customer.

The composition of our revenue by geography is presented in the following table:

		Year Ended
		December 31,								January 1,								January 2,								% Change in
(In thousands)		2022								2022								2021								2022				2021
Asia		$	464,904				70.5	%		$	384,568				74.6	%		$	305,183				74.8	%			20.9	%			26.0	%
Americas			100,260				15.2				80,870				15.7				62,137				15.2				24.0				30.1
Europe			95,192				14.3				49,889				9.7				40,800				10.0				90.8				22.3
Total revenue		$	660,356				100.0	%		$	515,327				100.0	%		$	408,120				100.0	%			28.1	%			26.3	%

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	Year Ended *																					% Change in
(In thousands)	December 28, 2019							December 29, 2018							December 30, 2017							2019			2018
Asia	$	298,765			73.9	%		$	298,119			74.8	%		$	277,638			71.9	%		0.2	%		7.4	%
Europe	47,392				11.7			45,546				11.4			44,547				11.5			4.1			2.2
Americas	57,936				14.4			55,134				13.8			63,776				16.6			5.1			(13.6	)
Total revenue	$	404,093			100.0	%		$	398,799			100.0	%		$	385,961			100.0	%		1.3	%		3.3	%

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* Results for 2017 are presented in accordance with ASC 605, which was in effect during that fiscal year.

Revenue from End Customers

In the periods covered by this report, no end customer accounted for more than 10% of total revenue, and we expect to continue to

We sell our products to a broad base of endindependent distributors and directly to customers.

Revenue from Distributors

Distributors have historically accounted for a significant portion of our total revenue. Revenue attributable torevenue, and the two distributor groups noted below individually accounted for more than 10% of our primary distributorstotal revenue in the periods covered by this report.

The composition of our revenue by customer is presented in the following table:

	Year Ended *
	December 28, 2019			December 29, 2018			December 30, 2017
Weikeng Group	29.8	%		25.4	%		26.7	%
Arrow Electronics Inc.	25.4			28.7			23.9
All others	26.9			28.8			26.4
All distributors **	82.1	%		82.9	%		77.1	%

*	Results for 2017 are presented in accordance with ASC 605, which was in effect during that fiscal year.
**	During the first quarter of 2018, we updated our channel categories to group all forms of distribution into a single channel. Prior periods have been reclassified to match current period presentation.

		% of Total Revenue
		Year Ended
		December 31,				January 1,				January 2,
		2022				2022				2021
Weikeng Group			30.3	%			37.2	%			34.8	%
Arrow Electronics Inc.			28.5				27.1				25.1
Other distributors			30.7				23.0				23.2
All distributors			89.5				87.3				83.1	%
Direct customers			7.9				8.7				12.1
Licensing and services revenue			2.6				4.0				4.8
Total revenue			100.0	%			100.0	%			100.0	%

Gross margin

The composition of our gross margin, including as a percentage of revenue, is presented in the following table:

	Year Ended *
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017
Gross margin	$	238,422			$	219,439			$	216,579
Percentage of revenue	59.0		%		55.0		%		56.1		%
Product gross margin %	56.7		%		52.9		%		53.8		%
Licensing and services gross margin %	100.0		%		98.6		%		84.0		%

* Results for 2017 are presented in accordance with ASC 605, which was in effect during that fiscal year.

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Gross margin		$	452,050			$	321,675			$	245,306
Gross margin percentage			68.5	%			62.4	%			60.1	%
Product gross margin %			67.6	%			60.9	%			58.1	%
Licensing and services gross margin %			100.0	%			100.0	%			100.0	%

Gross margin as a percentage of revenue, increased 400610 basis points from fiscal 20182021 to fiscal 2019 due to product cost reductions,2022. Improved margins were driven by benefits from pricing optimization, as well as overall mix. The increase inour gross margin was also attributable to the non-recurrence in 2019 of the $8.0 million in specific inventory charges taken in the second quarter of fiscal 2018 as a result of the discontinuation of our millimeter wave business.

Additionally, Gross margin was favorably impacted by the relative mix between product revenue and licensing and services revenue. Licensing and services accounted for 5.3% of total revenue in fiscal 2019 compared to 4.6% of total revenue in fiscal 2018. expansion strategy.

Because of its higher margin, the licensing and services portion of our overall revenue can have a disproportionate impact on Gross Margin.

margin.

Operating Expenses

Research and development expense

Development Expense

The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Research and development	$	78,617			$	82,449			$	103,357			(4.6	)%		(20.2	)%
Percentage of revenue	19.5		%		20.7		%		26.8		%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Research and development		$	135,767			$	110,518			$	89,223				22.8	%			23.9	%
Percentage of revenue			20.6	%			21.4	%			21.9	%

Research and development expense includes costs for compensation and benefits, stock compensation, engineering wafers, depreciation, licenses, and outside engineering services. These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions.

The decreaseincrease in Research and development expense for fiscal 20192022 compared to fiscal 20182021 was due mainly primarily to the cost reductions realized from the discontinuation ofincreased headcount-related costs as we continue to invest in our millimeter wave business and other restructuring actions including the consolidation of leased facilities. These savings were predominantly from headcount related expenses and from reductions in both depreciation and rent expense, partially offset by increased stock compensation expense.

long-term product roadmap.

We believe that a continued commitment to Researchinvesting in research and development is essentialimportant to maintaining product leadership and providingdelivering innovative new product offeringsproducts to our customers and, therefore, we expect to continue to make significant future investments in Research and development, particularly with expandedincrease our investment in softwareresearch and solutions.development.

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Selling, general,General, and administrative expense

Administrative Expense

The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Selling, general, and administrative	$	82,542			$	91,054			$	90,718			(9.3	)%		0.4	%
Percentage of revenue	20.4		%		22.8		%		23.5		%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Selling, general, and administrative		$	122,076			$	105,617			$	95,331				15.6	%			10.8	%
Percentage of revenue			18.5	%			20.5	%			23.4	%

Selling, general, and administrative expense includes costs for compensation and benefits related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.

The decreaseincrease in Selling, general, and administrative expense for fiscal 20192022 compared to fiscal 20182021 was due mainlyprimarily to increased headcount-related costs to support the growth of our business, and to increased legal expenses primarily related to the cost reductions realized from restructuring actions includingdefense of claims outside the consolidationordinary course of leased facilities. These savings were predominantly from headcount related expenses and from reductions in both depreciation and rent expense, partially offset by increased stock compensation expense. Additional savings in the current year period resulted from the non-recurrence of certain one-time costs related to our CEO transition in the prior year, including accelerated stock compensation, severance expense, and CEO search fees

business.

Amortization of acquired intangible assets

Acquired Intangible Assets

The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Amortization of acquired intangible assets	$	13,558			$	17,690			$	31,340			(23.4	)%		(43.6	)%
Percentage of revenue	3.4		%		4.4		%		8.1		%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Amortization of acquired intangible assets		$	3,778			$	2,613			$	4,449				44.6	%			(41.3	)%
Percentage of revenue			0.6	%			0.5	%			1.1	%

The decreaseincrease in Amortization of acquired intangible assets for fiscal 20192022 compared to fiscal 20182021 was due to the amortization expense for new intangible assets added in the fourth quarter of fiscal 2021 through the acquisition of Mirametrix, Inc., partially offset by end of the amortization period for certain intangibles and to the reduction of certain intangibles as a result of impairment charges in previous periods. The amortization period for most of our acquired intangible assets will end induring the first quarter of fiscal 2020.

2022 for acquired intangible assets from previous acquisitions.

Restructuring charges

Charges

The composition of our Restructuring charges, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Restructuring charges	$	4,664			$	17,349			$	7,196			(73.1	)%		100+%
Percentage of revenue	1.2		%		4.4		%		1.9		%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Restructuring charges		$	2,551			$	940			$	3,937				171.4	%			(76.1	)%
Percentage of revenue			0.4	%			0.2	%			1.0	%

Restructuring charges are comprised of expenses resulting from reductions in our worldwide workforce, consolidation of our facilities, removal of fixed assets from service, and cancellation of software contracts and engineering tools. Details of our restructuring plans and expenses incurred under them are more fully discussed in "Note 79 - Restructuring" to our Consolidated Financial Statements in Part II, Item 8 of this report.

The $12.7 million decrease in

Restructuring charges increased in fiscal 20192022 compared to fiscal 2018 was driven primarily by2021 due to additional lease right-of-use asset impairment charges for our partially vacated facility in San Jose, California and contract termination fees in the higher headcount-relatedcurrent year under the internal restructuring chargesplan that our management approved and executed in April 2019, as compared to minimal activity in the prior year periods, as compared to lower charges in the current period from ceasing use of certain leased facilities and from termination fees on the cancellation of certain contracts.

Impairment of acquired intangible assets

The composition of our Impairment of acquired intangible assets, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Impairment of acquired intangible assets	$	—			$	12,486			$	32,431			(100.0	)%		(61.5	)%
Percentage of revenue	—		%		3.1		%		8.4		%

During the third quarter of fiscal 2018, we concluded that a certain product line had limited future revenue potential due to a decline in customer demand for that product. We determined that this conclusion constituted an impairment indicator to the related specific developed technology intangible asset acquired in our acquisition of Silicon Image. Our assessment of the fair value of this intangible asset concluded that it had been fully impaired as of September 29, 2018, and we recorded an impairment charge of $0.6 million in the Consolidated Statements of Operations.

In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain wireless technology intangible assets. We determined that this action constituted an impairment indicator related to certain of the developed technology intangible assets acquired in our acquisition of Silicon Image. Our assessment of the fair value of these intangible assets concluded that they had been fully impaired as of June 30, 2018, and we recorded an impairment charge of $11.9 million in the Consolidated Statements of Operations.

year.

Acquisition related charges

Related Charges

The composition of our Acquisition related charges, including as a percentage of revenue, is presented in the following table:

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Acquisition related charges		$	511			$	1,171			$	—				(56.4	)%			100+%
Percentage of revenue			0.1	%			0.2	%			—	%

30

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	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Acquisition related charges	$	—			$	1,531			$	3,781			(100.0	)%		(59.5	)%
Percentage of revenue	—		%		0.4		%		1.0		%

Table of Contents

Acquisition related charges include legal and professional fees directly related to acquisitions. We incurred no Acquisition related charges in fiscal 2019. For fiscal years 2018,2022 and 2017,2021, Acquisition related charges were entirely attributable to our acquisition of Mirametrix in November 2021 and were comprised primarily of professional services including legal and accounting fees, and outside services in connection with our proposed acquisition by Canyon Bridge Acquisition Company, Inc. Although the acquisition was terminated, we continued to incur certain residual legal fees directly related to this transaction.

as well as closing costs.

Interest Expense

The composition of our Interest expense, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019			2018
Interest expense	$	(11,731	)		$	(20,600	)		$	(18,807	)		(43.1	)%		9.5	%
Percentage of revenue	(2.9		)%		(5.2		)%		(4.9		)%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Interest expense		$	(4,146	)		$	(2,738	)		$	(3,702	)			51.4	%			(26.0	)%
Percentage of revenue			(0.6	)%			(0.5	)%			(0.9	)%

Interest expense is primarily related to our long-term debt, which is further discussed under the Credit Arrangements heading in the Liquidity and Capital Resources section, below.debt. This interest expense is comprised of contractual interest and amortization of original issue discount and debt issuance costs based on the effective interest method.

The decreaseincrease in Interest expense for fiscal 20192022 compared to fiscal 2018 2021 was largely driven by the significant reductionincrease in the effective interestapplicable base rate onfor our long-term debt, under the terms ofadjusted Term Secured Overnight Financing Rate ("SOFR") from September 1, 2022, and the new Credit Agreement, coupled with the reduction in the principal balance of our long-term debt as a result of the additional principal payments made in the current and previous periods.

London Interbank Offered Rate ("LIBOR") prior to that date.

Other expense,(Expense) Income, net

The composition of our Other expense,(expense) income, net, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019		2018
Other expense, net	$	(2,245	)		$	(249	)		$	(3,286	)		100+%		(92	)%
Percentage of revenue	(0.6		)%		(0.1		)%		(0.9		)%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Other (expense) income, net		$	(1,109	)		$	(452	)		$	(208	)			145.4	%			117.3	%
Percentage of revenue			(0.2	)%			(0.1	)%			(0.1	)%

For fiscal 20192022 compared to fiscal 2018,2021, the increase in Other expense,(expense) income, net increased was primarily due to the $2.2$0.7 million loss on re-financing charge taken in the second quarterrefinancing of fiscal 2019 to write off the remaining unamortized balance of debt costs and original issue discount related to our refinanced long-term debt partially offset by reduced miscellaneous expenses during the period.

current year.

Income taxes

Taxes

The composition of our Income tax expense is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017				2019		2018
Income tax expense	$	1,572			$	2,353			$	849			(33.2)%		177.1%

		Year Ended
		December 31,				January 1,				January 2,				% Change in
(In thousands)		2022				2022				2021				2022				2021
Income tax expense (benefit)		$	3,230			$	1,704			$	1,064				89.6	%			60.2	%

Our Income tax expense (benefit) is composed primarily of foreign income and withholding taxes, partially offset by benefits resulting from the release of uncertain tax positions ("UTP") due to statute of limitation expirations that occurred in the respective periods. The decreaseincrease in expense in fiscal 20192022 as compared to fiscal 20182021 is primarily results from the release ofdue to increased worldwide income and changes in uncertain tax positions due to statute of limitations expiration.

.

We are not currently paying U.S. federal income taxes and do not expect to pay such taxes until we fully utilizeupdated our tax net operating loss and credit carryforwards. We expect to pay a nominal amount of state income tax. We are paying foreign income taxes, which are primarily related to withholding taxes on income from foreign royalties, foreign sales, and the cost of operating offshore research and development, marketing, and sales subsidiaries. It is reasonably possible that during the next twelve months, we will establish a sustained level of profitability in the U.S. As a result, we may reverse a significant portionevaluation of the valuation allowance recordedposition in the United States through December 31, 2022 and concluded that we should continue to maintain a full valuation allowance against the net federal and state deferred tax assets. In making this evaluation, we considered the uncertain stability of the current economic and operating environment and estimates about our U.S.ability to generate taxable income in future periods within the United States. We continue to evaluate future projected financial performance to determine whether such performance is sufficient evidence to support a reduction in or reversal of the valuation allowance. We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets. The reversal would resultamount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists. Details of our deferred tax assets and valuation allowance are discussed in an income tax benefit for the quarterly and annual fiscal period in which we release the valuation allowance. We accrue interest and penalties relatedNote 13 - Income Taxes to uncertain tax positions in income tax expense on our Consolidated Financial Statements in Part II, Item 8 of Operations. The inherent uncertainties related to the geographical distribution and relative levelthis report.

31

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Table of profitability among various high and low tax jurisdictions make it difficult to estimate the impact of the global tax structure on our future effective tax rate.

Contents

Liquidity and Capital Resources

The following sections discuss material changes in our financial condition from the end of fiscal 2018,2021, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources.

There continues to be uncertainty around the extent and duration of the disruption to our business, including from the effects of the ongoing COVID-19 pandemic, market volatility, and inflationary pressures, which may impact our liquidity and working capital needs in future periods.

We have historically financed our operating and capital resource requirements through cash flows from operations, and from the issuance of long-term debt to fund acquisitions. Cash provided by or used in operating activities will fluctuate from period to period due to fluctuations in operating results, the timing and collection of accounts receivable, and required inventory levels, among other things.

We believe that our financial resources, including current cash and cash equivalents, cash flow from operating activities, and our credit facilities, will be sufficient to meet our liquidity and working capital needs through at least the next 12 months. On September 1, 2022, we entered into our 2022 Credit Agreement, as described in Note 8 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of December 28, 2019,31, 2022, we did not have significant long-term commitments for capital expenditures. For further information on our cash commitments for operating lease liabilities, see Note 10 - Leases to our Consolidated Financial Statements in Part II, Item 8 of this report.

In the future, we may continue to consider acquisition opportunities to further extend our product or technology portfolios and further expand our product offerings. In connection with funding capital expenditures, acquisitions, securing additional wafer supply, increasing our working capital, or other operations, we may seek to obtain equity or additional debt financing, or advance purchase payments or similar arrangements with wafer manufacturers.financing. We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs. On May 17, 2019,

Liquidity

Cash and cash equivalents

(In thousands)		December 31, 2022				January 1, 2022				$ Change				% Change
Cash and cash equivalents		$	145,722			$	131,570			$	14,152				10.8	%

As of December 31, 2022, we entered into our Current Credit Agreement that is more fully discussed under the "Credit Arrangements" heading, below.

Liquidity

had Cash and cash equivalents and Short-term marketable securities

(In thousands)	December 28, 2019				December 29, 2018				$ Change				%Change
Cash and cash equivalents	$	118,081			$	119,051			$	(970	)		(0.8	)%
Short-term marketable securities	—				9,624				(9,624		)		(100.0	)%
Total Cash and cash equivalents and Short-term marketable securities	$	118,081			$	128,675			$	(10,594	)		(8.2	)%

As of December 28, 2019, we had total Cash, cash equivalents, and short-term marketable securities of $118.1$145.7 million, of which approximately $57.4$30.9 million in Cash and cash equivalents was held by our foreign subsidiaries. During the first quarter of fiscal 2019, we liquidated our Short-term marketable securities. We manage our global cash requirements considering, among other things, (i) available funds among our subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-US earnings may require us to withhold and pay foreign income tax on dividends. This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of December 28, 2019,31, 2022, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.

The net decreaseincrease in Cash and cash equivalents and short-term marketable securities of $10.6$14.2 million between December 29, 2018January 1, 2022 and December 28, 201931, 2022 was primarily driven by cash flows from the following activities:

Operating activities —Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities was $238.8 million in fiscal 20192022 compared to $167.7 million in fiscal 2021. This increase of $71.1 million was $124.1 million,primarily driven by an increase of $72.6$98.9 million from the $51.5 million of cash provided by operating activities in fiscal 2018. This increase was driven by both improved operating performance, which contributed $64.5partially offset by $27.8 million to the increase, and byof changes in working capital, which contributed $8.1 million to the increase, primarily due to the receipt of royalties distributedfrom cash used by the HDMI agent with the adoption of the new sharing agreement, partially offset by changes in Operating lease liabilities. We are using this increased cash provided by operating activities to invest in our operations.

inventories.

Investing activities — Investing cash flows consist primarily of transactions related to short-term marketable securities, capital expenditures and payments for software licenses. The $15.5 million ofand intellectual property licenses, and a business acquisition in fiscal 2021. Net cash used by investing activities in fiscal 20192022 was $5.6$34.9 million less than the $21.1compared to $89.8 million used by investing activities in fiscal 20182021. This $54.9 million decrease was primarily due to a $14.3 million changeresult of the acquisition of Mirametrix in the prior year, which used cash, net of cash flows for short-term marketable securities offset by $8.7 million moreacquired, of $68.1 million. Total cash used for capital expenditures and software licenses. In fiscal 2018, we made $4.6 million in net purchases of short-term marketable securities, whereas we liquidated all short-term investments in 2019 for $9.7 million. The total $25.2 million of cash used in fiscal 2019 for capital expenditures and payments for software and intellectual property licenses was $8.7increased $13.2 million greater than the $16.5to $34.9 million used in fiscal 2018 due primarily to increased investments2022 from $21.7 million in test equipment and software enhancements.

fiscal 2021.

Financing activities — Financing cash flows consist primarily of repurchases of common stock, tax payments on and refinancingrelated to the net share settlement of our long-term debt,restricted stock units, proceeds from the exercise of options to acquire common stock, and tax payments relatedactivity on our long-term debt. Net cash used by financing activities in fiscal 2022 was $188.1 million compared to $128.6 million in fiscal 2021. This $59.5 million increase was due to the following mix of activities. During fiscal 2022, we repurchased approximately 2.0 million shares of common stock for $110.1 million compared to repurchases in fiscal 2021 of approximately 1.3 million shares of common stock for $70.1 million. Payments for tax withholdings on vesting of RSUs partially offset by employee exercises of stock options used net share settlementcash flows of restricted stock units.$47.8 million in fiscal 2022, an increase of approximately $2.4 million from the net $45.4 million used in fiscal 2021. In May 2019,September 2022, we entered into our Current2022 Credit Agreement and received $206.5drew down an initial $150.0 million revolving loan at closing, which we used to pay off the $204.4$150.0 million outstanding balance on our previous loan.term and revolving loans. In connection with the Current2022 Credit Agreement, we paid $2.1$1.4 million in debt issuance costs. During fiscal 2019,2022, we made a totaldiscretionary payment of $117.0$20.0 million in voluntaryon our current revolving loans, and we paid required principal paymentsquarterly installments on our previous long-term debt totaling $8.8 million. During fiscal 2021, we paid required quarterly installments on our long-term debt. Employee exercisesdebt totaling $13.1 million.

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Table of stock options partially offset by tax withholdings on vesting of RSUs provided net cash flows of $7.1 million in fiscal 2019, which is a decrease of approximately $19.8 million from the $26.9 million provided in fiscal 2018.Contents

Accounts receivable, net

(In thousands)	December 28, 2019				December 29, 2018				$Change				%Change
Accounts receivable, net	$	64,917			$	60,890			$	4,027			6.6	%
Days sales outstanding - Overall	59				58				1

(In thousands)		December 31, 2022				January 1, 2022				$ Change				% Change
Accounts receivable, net		$	94,018			$	79,859			$	14,159				17.7	%
Days sales outstanding - Overall			49				51				(2	)

Accounts receivable, net as of December 28, 201931, 2022 increased by approximately $4.0 million, or 7%, compared to December 29, 2018. This resulted primarily from the timing of shipments in December 2019 compared to December 2018.

Inventories

(In thousands)	December 28, 2019				December 29, 2018				$Change				%Change
Inventories	$	54,980			$	67,096			$	(12,116	)		(18.1	)%
Days of inventory on hand	123				147				(24		)

Inventories as of December 28, 2019 decreased $12.1$14.2 million, or approximately 18%, compared to January 1, 2022. This resulted primarily from higher revenue shipments in the fourth quarter of fiscal 2022 compared to the fourth quarter of fiscal 2021. We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.

Inventories

(In thousands)		December 31, 2022				January 1, 2022				$ Change				% Change
Inventories		$	110,375			$	67,594			$	42,781				63.3	%
Days of inventory on hand			187				122				65

Inventories as of December 29, 201831, 2022 increased $42.8 million, or approximately 63%, compared to January 1, 2022 primarily due to meet the increased demands of our improved management of inventory levels, as well as the ramp down of maturecustomers and aging products.

for new product ramps.

The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of sales in that quarter. OurWe calculate Days of inventory on hand decreased to 123 dayson the basis of a 365-day year as Inventories at December 28, 2019 from 147 days at December 29, 2018. This decrease resulted from improved inventory management.

the end of the quarter divided by Cost of sales during the quarter annualized and then multiplied by 365.

Credit Arrangements

On May 17, 2019,September 1, 2022, we entered into our new2022 Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and other lenders.Agreement. The details of this new arrangement are more fully described in "Note 68 - Long-Term Debt" in the accompanying Notes to our Consolidated Financial Statements.

Statements in Part II, Item 8 of this report. As of December 28, 2019,31, 2022, we had no significant long-term purchase commitments for capital expenditures or existing used or unused credit arrangements beyond the secured revolving loan facility described above.

Contractual Cash Obligations

The following table summarizes our contractual cash obligations at December 28, 2019:

Fiscal year (In thousands)		Operating leases (1)				Long-term Debt (2)
2020		$	6,445			$	26,335
2021		5,485				21,337
2022		4,468				20,799
2023		4,596				20,261
2024		4,716				74,658
Thereafter		6,705				—
		$	32,415			$	163,390

(1) Certain of our facilities and equipment are leased under operating leases, which expire at various times through 2027.

(2) Cash payments due for long-term debt include estimated interest payments, which are based on outstanding principal amounts, currently effective interest rates as of December 28, 2019, timing of scheduled payments and the debt term. Our 53-week fiscal 2020 will result in five quarterly installments being paid during that fiscal year. See Liquidity section of Item 7 for further discussion pertaining to our Credit Arrangements.

The table above does not include amounts related to uncertain tax positions because we cannot reliably estimate the timing of the settlement of such liabilities.

Our significant operating leases are for our facilities in Hillsboro and Portland, Oregon; San Jose, California; Muntinlupa City, Philippines; and Shanghai, China.

In the first quarter of 2019, we relocated our corporate headquarters to our facility in Hillsboro, Oregon, which is leased until November 2022. Annual rental costs are estimated at $0.6 million with 3% annual increases.

The lease for our former office space in Portland, Oregon expires in March 2025. Annual rental costs are estimated at $0.7 million with average annual increases of approximately 5%. Under a previously approved restructuring plan, we fully vacated the space in Portland, Oregon in early 2019 and subleased the vacated space.

Our lease in San Jose, California expires September 2026 with total annual rental costs estimated to be $2.4 million and annual increases of approximately 3%. Under a previously approved restructuring plan, we vacated approximately 50% or our facility in San Jose, California in the fourth quarter2022 Credit Agreement.

Share Repurchase Program

See "Issuer Purchases of fiscal 2018 and intend to subleaseEquity Securities" under Part II, Item 5 of this Annual Report on Form 10-K for more information about the vacated space.

Two of our leases in Muntinlupa City, Philippines expire in May 2025 and June 2025, with total annual rental costs estimated to be $0.7 million and annual increases of approximately 5%. Our lease in Shanghai expires in May 2021, with total annual rental costs estimated to be $1.8 million.

share repurchase program.

New Accounting Pronouncements

The information contained under the heading "New Accounting Pronouncements" in Note 1 - Nature of Operations and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part II, Item 7.

Off-Balance Sheet Arrangements

As of December 28, 2019, we did not have any off-balance sheet arrangements of the type described by Item 303(a)(4) of SEC Regulation S-K.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We assess these risks on a regular basis and have established policies that are designed to protect against the adverse effects of these and other potential exposures.

Foreign Currency Exchange Rate Risk

While our revenues and the majority of our expenses are denominated in U.S. dollars, we collect an annual Japanese consumption tax refund in yen, and as a result of having various international subsidiary and branch operations, our financial position and results of operations are subject to foreign currency exchange rate risk.

We mitigate the resultingrisk as a result of having various international subsidiary and branch operations. Historically, exposure to foreign currency exchange rate exposure by enteringrisk has not had a material impact on our results from operations. At times in the past, we have entered into foreign currency forward exchange contracts details ofin relation to certain activities, which are presented inmitigated the following table:

		December 28, 2019				December 29, 2018
Total cost of contracts for Japanese yen (thousands)		$	1,894			$	1,955
Number of contracts		2				2
Settlement month		June 2020				June 2019

Although these hedges mitigate our foreign currency exchange rate exposure from an economic perspective, theybut these were not designated as "effective" hedges under U.S. GAAP and as such are adjusted to fair value through Other expense, net. We do not engage in speculative trading in any financial or capital market.

The net fair value of these contracts was favorable by approximately $0.1 million at both December 28, 2019 and December 29, 2018. A hypothetical 10% unfavorable exchange rate change in the yen against the U.S. dollar would have resulted in an unfavorable change in net fair value of approximately $0.2 million at both December 28, 2019 and December 29, 2018. Changes in fair value resulting from foreign exchange rate fluctuations would be substantially offset by the change in value of the underlying hedged transactions.

GAAP.

Interest Rate Risk

We are exposed to interest rate risk related to our indebtedness. At December 28, 2019,31, 2022, we had $148.1$130.0 million outstanding under our 2022 Credit Agreement. A hypothetical increase in the one-month LIBORSOFR by 1% (100 basis points) would increase our future interest expense by approximately $0.4$0.3 million per quarter.

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Table of Contents

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements:		Page
Consolidated Statements of Operations		2935
Consolidated Statements of Comprehensive Income (Loss)		3036
Consolidated Balance Sheets		3137
Consolidated Statements of Cash Flows		3238
Consolidated Statements of Stockholders' Equity		3439
Notes to Consolidated Financial Statements		3540
Reports of Independent Registered Public Accounting Firm (Ernst & Young LLP)	(PCAOB ID: 42)	5459

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Table of Contents

LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

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		Year Ended
		December 31,				January 1,				January 2,
(In thousands, except per share data)		2022				2022				2021
Revenue		$	660,356			$	515,327			$	408,120
Cost of revenue			208,306				193,652				162,814
Gross margin			452,050				321,675				245,306
Operating expenses:
Research and development			135,767				110,518				89,223
Selling, general, and administrative			122,076				105,617				95,331
Amortization of acquired intangible assets			3,778				2,613				4,449
Restructuring charges			2,551				940				3,937
Acquisition related charges			511				1,171				—
Total operating expenses			264,683				220,859				192,940
Income from operations			187,367				100,816				52,366
Interest expense			(4,146	)			(2,738	)			(3,702	)
Other (expense) income, net			(1,109	)			(452	)			(208	)
Income before income taxes			182,112				97,626				48,456
Income tax expense (benefit)			3,230				1,704				1,064
Net income		$	178,882			$	95,922			$	47,392
Net income per share:
Basic		$	1.30			$	0.70			$	0.35
Diluted		$	1.27			$	0.67			$	0.34
Shares used in per share calculations:
Basic			137,321				136,619				135,220
Diluted			140,667				142,143				141,276

---

		Year Ended
(In thousands, except per share data)		December 28, 2019				December 29, 2018				December 30, 2017
Revenue		$	404,093			$	398,799			$	385,961
Cost of revenue		165,671				179,360				169,382
Gross margin		238,422				219,439				216,579
Operating expenses:
Research and development		78,617				82,449				103,357
Selling, general, and administrative		82,542				91,054				90,718
Amortization of acquired intangible assets		13,558				17,690				31,340
Restructuring charges		4,664				17,349				7,196
Impairment of acquired intangible assets		—				12,486				32,431
Acquisition related charges		—				1,531				3,781
Gain on sale of building		—				—				(4,624		)
Total operating expenses		179,381				222,559				264,199
Income (loss) from operations		59,041				(3,120		)		(47,620		)
Interest expense		(11,731		)		(20,600		)		(18,807		)
Other expense, net		(2,245		)		(249		)		(3,286		)
Income (loss) before income taxes		45,065				(23,969		)		(69,713		)
Income tax expense		1,572				2,353				849
Net income (loss)		$	43,493			$	(26,322	)		$	(70,562	)
Net income (loss) per share:
Basic		$	0.33			$	(0.21	)		$	(0.58	)
Diluted		$	0.32			$	(0.21	)		$	(0.58	)
Shares used in per share calculations:
Basic		132,471				126,564				122,677
Diluted		137,274				126,564				122,677

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Net income		$	178,882			$	95,922			$	47,392
Other comprehensive income (loss):
Translation adjustment			(1,554	)			(75	)			1,533
Change in actuarial valuation of defined benefit pension, net of tax			591				372				(678	)
Comprehensive income		$	177,919			$	96,219			$	48,247

---

		Year Ended
(In thousands)		December 28, 2019				December 29, 2018				December 30, 2017
Net income (loss)		$	43,493			$	(26,322	)		$	(70,562	)
Other comprehensive income (loss):
Unrealized gain (loss) related to marketable securities, net of tax		42				41				(73		)
Reclassification adjustment for (gains) losses related to marketable securities included in Other expense, net of tax		(53		)		(18		)		252
Translation adjustment, net of tax		341				(1,271		)		2,620
Change in actuarial valuation of defined benefit pension		(602		)		369				(95		)
Comprehensive income (loss)		$	43,221			$	(27,201	)		$	(67,858	)

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED BALANCE SHEETS

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		December 31,				January 1,
(In thousands, except share and par value data)		2022				2022
ASSETS
Current assets:
Cash and cash equivalents		$	145,722			$	131,570
Accounts receivable, net of allowance for credit losses			94,018				79,859
Inventories, net			110,375				67,594
Prepaid expenses and other current assets			29,052				22,328
Total current assets			379,167				301,351
Property and equipment, net			47,614				38,094
Operating lease right-of-use assets			17,590				23,818
Intangible assets, net			25,070				29,782
Goodwill			315,358				315,358
Other long-term assets			13,914				18,091
Total assets		$	798,713			$	726,494
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	42,036			$	34,597
Accrued liabilities			48,467				26,444
Accrued payroll obligations			36,870				27,967
Current portion of long-term debt			—				17,173
Total current liabilities			127,373				106,181
Long-term debt, net of current portion			128,752				140,760
Long-term operating lease liabilities, net of current portion			13,618				19,248
Other long-term liabilities			41,807				48,672
Total liabilities			311,550				314,861
Contingencies (Note 15)
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued and outstanding			—				—
Common stock, $.01 par value, 300,000,000 shares authorized; 137,099,000 shares issued and outstanding as of December 31, 2022 and 137,239,000 shares issued and outstanding as of January 1, 2022			1,371				1,372
Additional paid-in capital			599,300				701,688
Accumulated deficit			(111,094	)			(289,976	)
Accumulated other comprehensive loss			(2,414	)			(1,451	)
Total stockholders' equity			487,163				411,633
Total liabilities and stockholders' equity		$	798,713			$	726,494

---

(In thousands, except share and par value data)	December 28, 2019				December 29, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	118,081			$	119,051
Short-term marketable securities	—				9,624
Accounts receivable, net of allowance for doubtful accounts	64,917				60,890
Inventories	54,980				67,096
Prepaid expenses and other current assets	24,452				27,762
Total current assets	262,430				284,423
Property and equipment, net	39,230				34,883
Operating lease right-of-use assets	23,591				—
Intangible assets, net	6,977				21,325
Goodwill	267,514				267,514
Deferred income taxes	478				215
Other long-term assets	11,796				15,327
Total assets	$	612,016			$	623,687
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses (includes restructuring)	$	60,255			$	51,763
Accrued payroll obligations	13,404				9,365
Current portion of long-term debt	21,474				8,290
Current portion of operating lease liabilities	4,686				—
Total current liabilities	99,819				69,418
Long-term debt, net of current portion	125,072				251,357
Long-term operating lease liabilities, net of current portion	21,438				—
Other long-term liabilities	38,028				44,455
Total liabilities	284,357				365,230
Commitments and contingencies (Notes 8 and 13)	—				—
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued and outstanding	—				—
Common stock, $.01 par value, 300,000,000 shares authorized; 133,883,000 shares issued and outstanding as of December 28, 2019 and 129,728,000 shares issued and outstanding as of December 29, 2018	1,339				1,297
Additional paid-in capital	762,213				736,274
Accumulated deficit	(433,290		)		(476,783		)
Accumulated other comprehensive loss	(2,603		)		(2,331		)
Total stockholders' equity	327,659				258,457
Total liabilities and stockholders' equity	$	612,016			$	623,687

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

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		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Cash flows from operating activities:
Net income		$	178,882			$	95,922			$	47,392
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			29,323				24,429				25,140
Stock-based compensation expense			55,530				46,475				40,372
Amortization of right-of-use assets			6,512				6,587				5,960
Impairment of operating lease right-of-use asset			1,149				—				—
Other non-cash adjustments			642				(239	)			144
Changes in assets and liabilities:
Accounts receivable, net			(14,159	)			(12,013	)			336
Inventories, net			(42,781	)			(2,995	)			(9,619	)
Prepaid expenses and other assets			(6,276	)			1,918				(6,441	)
Accounts payable			7,439				7,046				(16,820	)
Accrued liabilities			20,101				(2,855	)			6,314
Accrued payroll obligations			8,903				9,692				4,624
Operating lease liabilities, current and long-term portions			(6,459	)			(6,245	)			(5,715	)
Net cash provided by (used in) operating activities			238,806				167,722				91,687
Cash flows from investing activities:
Cash paid for business acquisition, net of cash acquired			—				(68,099	)			—
Capital expenditures			(23,338	)			(9,835	)			(12,121	)
Cash paid for software and intellectual property licenses			(11,594	)			(11,862	)			(8,747	)
Net cash provided by (used in) investing activities			(34,932	)			(89,796	)			(20,868	)
Cash flows from financing activities:
Restricted stock unit tax withholdings			(54,946	)			(54,191	)			(26,965	)
Proceeds from issuance of common stock			7,159				8,827				10,103
Repurchase of common stock			(110,132	)			(70,124	)			(14,989	)
Proceeds from long-term debt, net of issuance costs			148,597				—				50,000
Repayment of long-term debt			(178,750	)			(13,125	)			(26,250	)
Net cash provided by (used in) financing activities			(188,072	)			(128,613	)			(8,101	)
Effect of exchange rate change on cash			(1,650	)			(75	)			1,533
Net increase (decrease) in cash and cash equivalents			14,152				(50,762	)			64,251
Beginning cash and cash equivalents			131,570				182,332				118,081
Ending cash and cash equivalents		$	145,722			$	131,570			$	182,332
Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Interest paid		$	3,973			$	2,313			$	3,700
Operating lease payments		$	7,419			$	7,639			$	7,713
Income taxes paid, net of refunds		$	4,621			$	3,304			$	1,868
Accrued purchases of plant and equipment		$	1,357			$	1,360			$	975
Operating lease right-of-use assets obtained in exchange for lease obligations		$	2,134			$	8,134			$	2,645

---

	Year Ended
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017
Cash flows from operating activities:
Net income (loss)	$	43,493			$	(26,322	)		$	(70,562	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	33,056				39,261				57,861
Impairment of acquired intangible assets	—				12,486				32,431
Stock-based compensation expense	18,899				13,646				12,543
Reduction in the carrying amount of right-of-use assets	5,797				—				—
Loss on re-financing of long-term debt	2,235				—				—
Amortization of debt issuance costs and discount	1,659				2,230				1,982
Impairment of operating lease right-of-use asset (recorded in Restructuring charges)	977				—				—
Gain on sale of building	—				—				(4,624		)
Loss on sale of assets and business units	—				—				1,496
Other non-cash adjustments	(374		)		(79		)		1,707
Changes in assets and liabilities:
Accounts receivable, net	(4,027		)		(3,978		)		44,613
Inventories	12,116				13,177				(902		)
Prepaid expenses and other assets	3,740				(11,667		)		889
Accounts payable and accrued expenses (includes restructuring)	9,261				13,325				(23,588		)
Accrued payroll obligations	4,039				(1,051		)		726
Operating lease liabilities, current and long-term portions	(6,896		)		—				—
Income taxes payable	162				498				(556		)
Deferred income and allowances on sales to distributors	—				—				(15,007		)
Deferred licensing and services revenue	—				(68		)		(495		)
Net cash provided by operating activities	124,137				51,458				38,514
Cash flows from investing activities:
Proceeds from sales of and maturities of short-term marketable securities	9,655				5,000				12,689
Purchases of marketable securities	—				(9,603		)		(7,420		)
Proceeds from sale of building	—				—				7,895
Cash paid for costs of sale of building	—				—				(1,004		)
Capital expenditures	(15,590		)		(8,384		)		(12,855		)
Proceeds from sale of assets and business units, net of cash sold	—				—				967
Repayment received on short-term loan to cost-method investee	—				—				2,000
Short-term loan to cost-method investee	—				—				(2,000		)
Cash paid for software licenses	(9,601		)		(8,123		)		(8,532		)
Net cash used in investing activities	$	(15,536	)		$	(21,110	)		$	(8,260	)
The accompanying notes are an integral part of these Consolidated Financial Statements

LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
	Year Ended
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017
Cash flows from financing activities:
Restricted stock unit tax withholdings	$	(10,084	)		$	(2,370	)		$	(3,267	)
Proceeds from issuance of common stock	17,166				29,288				6,085
Proceeds from issuance of long-term debt	206,500				—				—
Original issue discount and debt issuance costs	(2,086		)		—				—
Repayment of debt	(321,408		)		(43,759		)		(35,429		)
Net cash used in financing activities	(109,912		)		(16,841		)		(32,611		)
Effect of exchange rate change on cash	341				(1,271		)		2,620
Net (decrease) increase in cash and cash equivalents	(970		)		12,236				263
Beginning cash and cash equivalents	119,051				106,815				106,552
Ending cash and cash equivalents	$	118,081			$	119,051			$	106,815
Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Interest paid	$	10,995			$	18,607			$	20,649
Operating lease payments	$	8,425			$	—			$	—
Income taxes paid, net of refunds	$	3,393			$	3,054			$	2,387
Accrued purchases of property and equipment	$	826			$	110			$	588
Operating lease right-of-use assets obtained in exchange for lease obligations	$	747			$	—			$	—
Note receivable resulting from sale of assets and business units	$	—			$	—			$	3,050

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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																		Accumulated
		Common Stock								Additional								Other
		($.01 par value)								Paid-in				Accumulated				Comprehensive
(In thousands, except par value data)		Shares				Amount				Capital				Deficit				Income (Loss)				Total
Balances, December 28, 2019			133,883			$	1,339			$	762,213			$	(433,290	)		$	(2,603	)		$	327,659
Components of comprehensive income, net of tax:
Net income			—				—				—				47,392				—				47,392
Other comprehensive income (loss)			—				—				—				—				855				855
Total comprehensive income																							48,247
Common stock issued in connection with employee equity incentive plans, net of shares withheld for employee taxes			2,738				27				(16,889	)			—				—				(16,862	)
Stock-based compensation expense			—				—				40,372				—				—				40,372
Repurchase of common stock			(385	)			(4	)			(14,985	)			—				—				(14,989	)
Balances, January 2, 2021			136,236			$	1,362			$	770,711			$	(385,898	)		$	(1,748	)		$	384,427
Components of comprehensive income, net of tax:
Net income			—				—				—				95,922				—				95,922
Other comprehensive income (loss)			—				—				—				—				297				297
Total comprehensive income																							96,219
Common stock issued in connection with employee equity incentive plans, net of shares withheld for employee taxes			2,270				23				(45,387	)			—				—				(45,364	)
Stock-based compensation expense			—				—				46,475				—				—				46,475
Repurchase of common stock			(1,267	)			(13	)			(70,111	)			—				—				(70,124	)
Balances, January 1, 2022			137,239			$	1,372			$	701,688			$	(289,976	)		$	(1,451	)		$	411,633
Components of comprehensive income, net of tax:
Net income			—				—				—				178,882				—				178,882
Other comprehensive income (loss)			—				—				—				—				(963	)			(963	)
Total comprehensive income																							177,919
Common stock issued in connection with employee equity incentive plans, net of shares withheld for employee taxes			1,812				18				(47,806	)			—				—				(47,788	)
Stock-based compensation expense			—				—				55,530				—				—				55,530
Repurchase of common stock			(1,952	)			(19	)			(110,112	)			—				—				(110,131	)
Balances, December 31, 2022			137,099			$	1,371			$	599,300			$	(111,094	)		$	(2,414	)		$	487,163

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	Common Stock ($.01 par value)							Additional Paid-in capital				Accumulated deficit				Accumulated other comprehensive loss
(In thousands, except par value data)	Shares			Amount																Total
Balances, December 31, 2016	121,645			$	1,216			$	680,315			$	(406,945	)		$	(4,156	)		$	270,430
Net loss for 2017	—			—				—				(70,562		)		—				(70,562		)
Unrealized loss related to marketable securities, net of tax	—			—				—				—				(73		)		(73		)
Recognized gain on redemption of marketable securities, previously unrealized	—			—				—				—				252				252
Translation adjustments, net of tax	—			—				—				—				2,620				2,620
Common stock issued in connection with the exercise of stock options, ESPP and vested RSUs, net of shares withheld for employee taxes	2,250			23				2,795				—				—				2,818
Stock-based compensation expense related to stock options, ESPP and RSUs (1)	—			—				12,658				—				—				12,658
Defined benefit pension, net of actuarial valuation adjustments	—			—				—				—				(95		)		(95		)
Accounting method transition adjustment (2)	—			—				—				(355		)		—				(355		)
Balances, December 30, 2017	123,895			$	1,239			$	695,768			$	(477,862	)		$	(1,452	)		$	217,693
Net loss for 2018	—			—				—				(26,322		)		—				(26,322		)
Unrealized gain related to marketable securities, net of tax	—			—				—				—				41				41
Recognized loss on redemption of marketable securities, previously unrealized	—			—				—				—				(18		)		(18		)
Translation adjustments, net of tax	—			—				—				—				(1,271		)		(1,271		)
Common stock issued in connection with the exercise of stock options, ESPP and vested RSUs, net of shares withheld for employee taxes	5,833			58				26,860				—				—				26,918
Stock-based compensation expense related to stock options, ESPP and RSUs	—			—				13,646				—				—				13,646
Defined benefit pension, net of actuarial valuation adjustments	—			—				—				—				369				369
Accounting method transition adjustment (3)	—			—				—				27,401				—				27,401
Balances, December 29, 2018	129,728			$	1,297			$	736,274			$	(476,783	)		$	(2,331	)		$	258,457
Net income for 2019	—			—				—				43,493				—				43,493
Unrealized gain related to marketable securities, net of tax	—			—				—				—				42				42
Recognized gain on redemption of marketable securities, previously unrealized	—			—				—				—				(53		)		(53		)
Translation adjustments, net of tax	—			—				—				—				341				341
Common stock issued in connection with the exercise of stock options, ESPP and vested RSUs, net of shares withheld for employee taxes	4,155			42				7,040				—				—				7,082
Stock-based compensation expense related to stock options, ESPP and RSUs	—			—				18,899				—				—				18,899
Defined benefit pension, net of actuarial valuation adjustments	—			—				—				—				(602		)		(602		)
Balances, December 28, 2019	133,883			$	1,339			$	762,213			$	(433,290	)		$	(2,603	)		$	327,659

(1)    In the third quarter of fiscal 2017, in relation to the sale of 100% of the equity of our Hyderabad, India subsidiary and certain assets related to our Simplay

Labs testing and certification business, certain stock compensation was accelerated due to a change of control agreement. As a result of this acceleration,

the equity effect of stock compensation shown above includes approximately $0.1 million that was charged to restructuring expense as part of the June

2017 Plan (see "Note 7 - Restructuring").

(2)    During the first quarter of fiscal 2017, we early adopted ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.

This guidance is required to be applied on a modified retrospective basis through a cumulative-effect adjustment to the balance sheet as of the beginning

of the fiscal year of adoption. As a result of this adoption, we recorded a nominal amount to Accumulated deficit, as detailed in the table above.

(3)    As of the beginning of fiscal 2018, we adopted ASC 606, Revenue from Contracts With Customers, using the modified retrospective transition method. As

a result of this adoption, we recorded a cumulative-effect adjustment to Accumulated deficit, as shown in the table above.

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Note 1 - Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). They include the accounts of Lattice and its subsidiaries after the elimination of all intercompany balances and transactions.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments affecting the amounts reported in our consolidated condensed financial statements and the accompanying notes. TheWe base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, the actual results that we experience may differ materially from these estimates under different assumptions or conditions. We evaluate our estimates.

estimates and judgments on an ongoing basis.

Certain prior year balances have been reclassified to conform to the current year’s presentation.

Fiscal Reporting Periods

We report based on a 52 or 53-week53-week fiscal year ending on the Saturday closest to December 31. Our fiscal 2019, 2018, and 2017 were 52-week years2022 was a 52-week year that ended on December 28, 2019, December 29, 2018, and December 30, 2017 respectively. 31, 2022. Our fiscal 2020 will be2021 was a 53-week52-week year that ended on January 1, 2022, and will endour fiscal 2020 was a 53-week year that ended on January 2, 2021.2021. All references to quarterly or annual financial results are references to the results for the relevant fiscal period.

Concentrations of Risk

Potential exposure to concentrations of risk may impact revenue, accounts receivable, andand supply of wafers for our new products.

In the periods covered by this report, no end customer accounted for more than 10% of total revenue.

products.

Distributors have historically accounted for a significant portion of our total revenue. Our two largest distributor groups, the Weikeng Group ("Weikeng") and Arrow Electronics, Inc. ("Arrow"), each account for substantial portionsmore than 10% of our total revenue and our net accounts receivable. Revenue attributable to distributors as a percentage of total revenue is presented in the following table:

	Year Ended
	December 28, 2019			December 29, 2018			December 30, 2017
Weikeng Group	30	%		25	%		27	%
Arrow Electronics Inc.	25			29			24
All others	27			29			26
Revenue attributable to distributors*	82	%		83	%		77	%

*	During the first quarter of 2018, we updated our channel categories to group all forms of distribution into a single channel. Prior periods have been reclassified to match the current period presentation.

		Year Ended
		December 31,				January 1,				January 2,
		2022				2022				2021
Weikeng Group			30	%			37	%			35	%
Arrow Electronics Inc.			28				27				25
Other distributors			31				23				23
Revenue attributable to distributors			89	%			87	%			83	%

At December 28, 2019 31, 2022 and December 29, 2018,January 1, 2022, Weikeng accounted for approximately 47% and 59%, respectively, and Arrow accounted for 40%approximately 27% and 41%, respectively, and Weikeng accounted for 38% and 23%28%, respectively, of net accounts receivable. No other distributor group or end customer accounted for more than 10% of net accounts receivable at these dates.

Concentration of credit risk with respect to accounts receivable is mitigated by our credit and collection process including active management of collections, credit limits, routine credit evaluations for essentially all customers, and secure transactions with letters of credit or advance payments where appropriate. We regularly review our allowance for doubtful accounts and the aging of our accounts receivable.

We rely on a limited number of foundries for our wafer purchases. We seek to mitigate the concentration of supply risk by establishing, maintaining and managing multiple foundry relationships; however, certain of our products are sourced from a single foundry and changing from one foundry to another can have a significant cost, or create delays in production or shipments, among other factors.

Cash and Cash Equivalents

We consider all investments that are readily convertible into cash and that have original maturities of three months or less to be cash equivalents. Cash equivalents consist primarily of highly liquid investments in time deposits or money market accounts and are carried at cost, which approximates fair value. Deposits with financial institutions at times exceed Federal Deposit Insurance Corporation insurance limits.

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Foreign Exchange and Translation of Foreign Currencies

While our revenues and the majority of our expenses are denominated in U.S. dollars, we also have international subsidiaries and branch operations that conduct some transactions in foreign currencies.currencies that differ from the functional currency of that entity. Gains or losses from foreign exchange rate fluctuations on balances denominated in foreigncurrencies that differ from the functional currencies are reflected in Other expense, net.

We translate accounts denominated in foreign currencies in accordance with ASC 830, “Foreign Currency Matters,” using the current rate method under which asset and liability accounts are translated at the current rate, while stockholders' equity accounts are translated at the appropriate historical rates, and revenue and expense accounts are translated at average monthly exchange rates. Translation adjustments related to the consolidation of foreign subsidiary financial statements are reflected in Accumulated other comprehensive loss in Stockholders' equity (See our Consolidated Statements of Stockholders' Equity)Equity).

Revenue Recognition

We adopted ASC 606 effective on December 31, 2017, the first day of our 2018 fiscal year, using the modified retrospective method. Under this transition method, we applied the provisions of the new standard to all open customer contracts as of the date of adoption and recorded the cumulative effect of adoption to Accumulated deficit on December 31, 2017. We have not restated any prior financial statements presented.

Under the guidance in effect prior to the adoptionterms of ASC 606, we deferred the recognition of revenue and the cost of revenue"Revenue from certain sales until the distributors of our products reported that they had sold the products to their customers, at which point the selling price of these products became fixed and determinable, and certain licensing revenues were not recognizable under previous GAAP due to the fixed and determinable revenue recognition criteria not being met.

Under ASC 606,Contracts with Customers", we recognize revenue when we satisfy performance obligations as evidenced by the transfer of control of our products or services to customers. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For sales to distributors, we have concluded that our contracts are with the distributor, rather than with the distributor’s end customer, as we hold a contract bearing enforceable rights and obligations only with the distributor. The majority of ourOur revenue is derived primarily from product sales.sales of silicon-based products, with additional revenue from sales of silicon-enabling products. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, we consider our promise to transfer each distinct product to be the identified performance obligations. Revenue for product sales is recognized at the time of product shipment, as determined by the agreed upon contract shipping terms.

Our Licensing and services revenue is comprised of revenue from our intellectual property ("IP")IP core licensing activity, patent monetization activities, design services, and royalty and adopter fee revenue from our standards activities. These activities are complementary to our product sales and help us to monetize our IP associated with our technology and standards. We consider licensing arrangements with our customers and agreements with the standards consortia of which we are a member to be the contract. For each contract, we consider the promise to deliver a license that grants the customer the right to use the IP, as well as any professional services provided under the contract, as distinct performance obligations. We recognize license revenue at the point in time that control of the license transfers to the customer, which is generally upon delivery, or as usage occurs.

We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. Variable consideration is estimated and reflected as an adjustment to the transaction price. We determine variable consideration, which consists primarily of various sales price concessions, by estimating the most likely amount of consideration we expect to receive from the customer based on an analysis of historical ship and debitrebate claims at the distributor and product level, over a period of time considered adequate to account for current pricing and business trends. Sales rebates earned by customers are offset against their receivable balances. Rebates earned by customers when they do not have outstanding receivable balances are recorded within other accruedAccrued liabilities. The impacts of distributor sales price reductions resulting from price protection agreements are also estimated based on historical analysis of such activityLicensing and are reflected as a reduction in net revenue. Ourservices revenue, which includes HDMI and MHL standards revenue, as well as certain IP licenses, includeincludes variable consideration in the form of usage-based royalties.

We generally provide an assurance warranty that our products will substantially conform to the published specifications for twelve months from the date of shipment. In some cases, the warranty period may be longer than twelve months. We do not separately price or sell the assurance warranty. Our liability is limited to either a credit equal to the purchase price or replacement of the defective part. Under the practical expedient provided by ASC 340, we generally expense sales commissions when incurred because the amortization period would be less than one year. We record these costs within Selling, general, and administrative expenses. Substantially all of our performance obligations are satisfied within twelve months. Accordingly, under the optional exemption provided by ASC 606, we do not disclose revenues allocated to future performance obligations of partially completed contracts.

Inventories and Cost of Revenue

Inventories are recordedstated at the lower of averageactual cost determined(determined using the first-in, first-out method) or net realizable value. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on a first-in-first-out basis or market. We establishspecific facts and circumstances. In determining provisions for inventory if it isexcess or obsolete orproducts, we hold quantities which areconsider assumptions such as changes in excess ofbusiness and economic conditions, projected customer demand.demand for our products, and changes in technology or customer requirements. The creation of such provisions results in a write-down of inventory to net realizable value and a charge to Cost of revenue. Lower of cost or net realizable value is based on assumptions such as recent historical sales activity and selling prices, as well as estimates of future sales activity and selling prices. Shipping and handling costs are included in Cost of revenue in our Consolidated Statements of Operations.

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Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets, generally three to five years for equipment and software, and one to three years for tooling, and thirty years for buildings and building space.tooling. Leasehold improvements are amortized over the shorter of the non-cancelable lease term or the estimated useful life of the assets. We capitalize costs for the fabrication of masks used by our foundry partners to manufacture our products. The capitalized mask costs begin depreciating to Cost of revenue once the products go into production, and depreciation is straight-lined over a three-yearthree-year period, which is the expected useful life of the mask. Upon disposal of property and equipment, the accounts are relieved of the costs and related accumulated depreciation and amortization, and resulting gains or losses are reflected in the Consolidated Statements of Operations for recognized gains and losses, or in the Consolidated Balance Sheets for deferred gains and losses. Repair and maintenance costs are expensed as incurred.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting, under which we allocate the purchase price paid for a company to identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill is measured as the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed. Determining the fair value of identifiable tangible and intangible assets acquired and liabilities assumed requires management to make assumptions, estimates, and judgments that are based on all available information, including comparable market data and information obtained from our management and the management of the acquired companies. The estimation of the fair values of the intangible assets requires significant judgment and the use of valuation techniques including primarily the income approach. Consideration is given to all relevant factors that might affect the fair value such as estimates of future revenues and costs, present value factors, and the estimated useful lives of intangible assets. We expense acquisition-related costs in the period incurred.

Impairment of Long-Lived Assets

Long-lived assets, which consist primarily of property and equipment, and amortizable intangible assets, and right-of-use assets, are carried on our financial statements based on their cost less accumulated depreciation or amortization. We monitor the carrying value of our long-lived assets for potential impairment and test the recoverability of such assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset group to its undiscounted expected future cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset group; (ii) actual third-partythird-party valuations; and/or (iii) information available regarding the current market for similar asset groups. If the fair value of the asset group is determined to be less than the carrying amount of the asset group, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs and is included in our Consolidated Statements of Operations. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired. There has been no occurrence of events to date that would trigger an impairment analysis of property and equipment. The results of our assessments of amortizable intangible assets are detailed in "Note 9 - Intangible Assets."

Valuation of Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized, but is instead tested for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. When evaluating whether goodwill is impaired, we make a qualitative assessment to determine if it is more likely than not that the reporting unit's fair value is less than the carrying amount. If the qualitative assessment determines that it is more likely than not that the fair value is less than the carrying amount, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, then goodwill impairment exists for the reporting unit. The impairment loss, if any, is recognized for the amount by which the carrying value exceeds the fair value. If the fair value of the reporting unit exceeds its carrying value, no further impairment analysis is needed. For purposes of testing goodwill for impairment, we currently operate as a single reporting unit:unit.

Leases

We account for leases under the core Lattice ("Core") business, which includes intellectual property and semiconductor devices. We do not expect goodwill impairment to be tax deductible for income tax purposes.

We determined that the strategic decision to discontinue our millimeter wave business in the second quarterterms of 2018 constituted a triggering event related to goodwill, and we evaluated our goodwill balance as of June 30, 2018. We concluded that goodwill was not impaired, and no impairment charges relating to goodwill were recorded for fiscal 2018. No impairment charges relating to goodwill were recorded for either fiscal 2019 or 2017 as no indicators of impairment were present.

Leases

We adopted ASC 842, "Leases," effective on December 30, 2018, the first day of our 2019 fiscal year, using the modified retrospective transition method. The new standardwhich requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. WeUpon adoption, we elected the "package of practical expedients" that would allow us to carryforward our historical lease classifications, not reassess historical contracts to determine if they contain leases, and not reassess the initial direct costs for any existing leases. We also elected the practical expedient to not separate lease and non-lease components, which we have applied to all asset classes. Concurrent with our adoption of Topic 842, we have early adopted ASU 2019-01, 2019-01,Leases (Topic 842)842): Codification Improvements, which grantsgranted disclosure relief for interim periods during the year in which a company adopted Topic 842.

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Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we determine the present value of lease payments using an incremental borrowing rate based on information from our commercial bank for an equivalent borrowing and term in the respective region as of the lease commencement date. At inception, we determine if an arrangement is a lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that we will exercise the options. Lease cost, representing lease payments over the term of the lease and any capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense. We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center.

The exercise of lease renewal options is at our sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and lease payment obligation, respectively. For our leases that contain variable lease payments, residual value guarantees, or restrictive covenants, we have concluded that these inputs are not significant to the determination of the ROU asset and lease liability.

Research and Development

Research and development expenses include costs for compensation and benefits, engineering wafers, depreciation, licenses, and outside engineering services. These expenditures are for the design of new products, intellectual property cores, processes, packaging, and software solutions. Research and development costs are generally expensed as incurred.

incurred, with certain licensed technology agreements capitalized as intangible assets and amortized to Research and development expense over their estimated useful lives.

Restructuring Charges

Expenses associated with exit or disposal activities are recognized when incurred under ASC 420, “Exit or Disposal Cost Obligations,” for everything except severance expenses and vacated leased facilities. Because we have a history of paying severance benefits, the cost of severance benefits associated with a restructuring plan is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC 712, “Compensation - Nonretirement Postemployment Benefits.” When leased facilities are vacated, the amount of any ROU asset impairment is calculated in accordance with ASC 360, "Property, Plant, and Equipment" and recorded as a part of restructuring charges. Expenses from other exit or disposal activities, including the cancellation of software contracts and engineering tools or the abandonment of long-lived assets, is recorded as a part of restructuringRestructuring charges.

Accounting for Income Taxes

Our

We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax is comprisedjurisdictions around the world. These estimates involve significant judgment and interpretations of our currentregulations and are inherently complex. Resolution of income tax liability and changestreatments in deferred tax assets and liabilities.individual jurisdictions may not be known for many years after completion of the applicable year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse. Valuation allowances are provided to reduce deferred tax assets to an amount that in management’s judgment is more-likely-than-notmore-likely-than-not to be recoverable against future taxable income. The determination of a valuation allowance and when it should be released requires complex judgment.

In assessing the ability to realize deferred tax assets, we evaluate both positive and negative evidence that may exist and consider whether it is more-likely-than-notmore-likely-than-not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Any adjustment to the net deferred tax asset valuation allowance is recorded in the Consolidated Statements of Operations for the period that the adjustment is determined to be required.

Our income tax calculations are based on application of the respective U.S. federal, state or foreign tax law. Our tax filings, however, are subject to audit by the relevant tax authorities. Accordingly, we recognize tax liabilities based upon our estimate of whether, and the extent to which, additional taxes will be due when such estimates are more-likely-than-notmore-likely-than-not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. To the extent the final tax liabilities are different than the amounts originally accrued, the increases or decreases as well as any interest or penalties are recorded as income tax expense or benefit in the Consolidated Statements of Operations. We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.

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Stock-Based Compensation

We use the Black-Scholes option pricing model to estimate the fair value of substantially all share-based awards consistent with the provisions of ASC 718, “Compensation - Stock Compensation.” We have also grantedvalue RSUs using the closing market price on the date of grant, and we value stock options and RSUs with a market condition to certain executives. We determined and fixedusing the fair value of the awards with a market condition using a lattice-based option-pricingBlack-Scholes option pricing model. The valuation of these awards incorporated a Monte-Carlo simulation, and considered the likelihood that we would achieve the market condition. The awards with a market condition generally have a two- or three-year vesting period and vest between 0% and 250% of the target amount, based on the Company's relative Total Shareholder Return ("TSR") when compared to the TSR of a component of companies of the PHLX Semiconductor Sector Index over the measurement period. TSR is a measure of stock price appreciation plus dividends paid, if any, in the performance period. We have also granted RSUs with a market condition or a performance condition to our Presidentcertain executives. The terms of these grants, including achievement criteria and Chief Executive Officer, which willvesting schedules, are detailed under the heading "Market-Based and Performance-Based Awards — Grants" in "Note 11 - Stock-Based Compensation Plans." Our current practice is to issue new shares to satisfy option exercises. For RSUs, we issue new shares when awards vest and become payable based uponwithhold a portion of these shares on behalf of employees to satisfy the Company’s generating specified “adjusted” EBITDA levels on a trailing four-quarter basis in any two consecutive trailing four-quarter periods. We assess the probability of achieving the performance condition on a quarterly basis. We valued the RSUs with a performance condition using the market price on the day of grant.

minimum statutory tax withholding requirements.

Segment Information

As of December 28, 2019, 31, 2022, we had one operating segment: the core Lattice business, which includes semiconductor devices,silicon-based and silicon-enabling products, evaluation boards, development hardware, and related intellectual property licensing, services, and sales. Our chief operating decision maker is the Chief Executive Officer, who reviews operating results and financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

New Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance requires entities to use a current expected credit loss (“CECL”) methodology to measure impairments of certain financial assets and to recognize an allowance for its estimate of lifetime expected credit losses. The new standard will become effective for our fiscal year 2020, which begins on December 29, 2019. We are evaluating the implementation of ASC 326 and expect it will not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which adds new guidance for accounting for tax law changes, year-to-date losses in interim periods, and determining how to apply the income tax guidance to franchise taxes that are partially based on income, as well as other changes to simplify accounting for income taxes. The ASU is effective for calendar year-end public business entities on January 1, 2021. Entities may early adopt the ASU in any interim period for which financial statements have not yet been issued (or made available for issuance). We are currently assessing the impact of ASU 2019-12 on our consolidated financial statements and related disclosures.

Note 2 - Net Income (Loss) Per Share

Our calculation of the diluted share count includes the number of shares from our equity awards with market conditions or performance conditions that would be issuable under the terms of such awards at the end of the reporting period. For equity awards with a market condition, the maximum number of shares issuable are included in the diluted share count as of December 28, 2019, asthe end of each period presented is determined by measuring the achievement of the market condition would have been achieved at the highest level of vesting if measured as of the end of the respective reporting period.periods. For equity awards with a performance condition, nothe number of shares that qualified for vesting as of the end of each period presented are included in the diluted share count as of December 28, 2019, as vesting of these awards is contingent upon achievementwhen the condition for their issuance was satisfied by the end of the performance condition over two consecutive trailing four-quarter periods, which has not yet been achieved.respective reporting periods. See "Note 1011 - Stock-Based Compensation Plans" to our consolidated financial statements for further discussion of our equity awards with market or performance conditions.

A summary of basic and diluted Net income (loss) per share is presented in the following table:

		Year Ended
(in thousands, except per share data)		December 28, 2019				December 29, 2018				December 30, 2017
Net income (loss)		$	43,493			$	(26,322	)		$	(70,562	)
Shares used in basic Net income (loss) per share		132,471				126,564				122,677
Dilutive effect of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition		4,803				—				—
Shares used in diluted Net (loss) income per share		137,274				126,564				122,677
Basic Net income (loss) per share		$	0.33			$	(0.21	)		$	(0.58	)
Diluted Net income (loss) per share		$	0.32			$	(0.21	)		$	(0.58	)

		Year Ended
		December 31,				January 1,				January 2,
(In thousands, except per share data)		2022				2022				2021
Net income		$	178,882			$	95,922			$	47,392
Shares used in basic Net income per share			137,321				136,619				135,220
Dilutive effect of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition			3,346				5,524				6,056
Shares used in diluted Net income per share			140,667				142,143				141,276
Basic Net income per share		$	1.30			$	0.70			$	0.35
Diluted Net income per share		$	1.27			$	0.67			$	0.34

The computation of diluted Net income (loss) per share excludes the effects of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition that are antidilutive, aggregating to approximately the following number of shares:

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition excluded as they are antidilutive			472				638				646

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		Year Ended
(in thousands)		December 28, 2019			December 29, 2018			December 30, 2017
Stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition excluded as they are antidilutive		890			7,567			6,622

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Note 3 - Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables provide disaggregation ofinformation about revenue from contracts with customers by major class of revenue, revenuedisaggregated by channel and by geographical market, based on ship-to location of the end customer, where available, and ship-to location of distributor otherwise:

	Major Class of Revenue		Year Ended *
	(In thousands)		December 28, 2019					December 29, 2018					December 30, 2017
	Product		$	382,548		95%		$	380,468		95%		$	356,502		92%
	Licensing and services		21,545			5%		18,331			5%		29,459			8%
	Total revenue		$	404,093		100%		$	398,799		100%		$	385,961		100%
	Revenue by Channel		Year Ended *
	(In thousands)		December 28, 2019					December 29, 2018					December 30, 2017
	Product revenue - Distributors		$	331,941		82%		$	330,719		83%		$	297,736		77%
	Product revenue - Direct		50,607			13%		49,749			12%		58,766			15%
	Licensing and services revenue		21,545			5%		18,331			5%		29,459			8%
	Total revenue		$	404,093		100%		$	398,799		100%		$	385,961		100%
	Revenue by Geographical Market		Year Ended *
	(In thousands)		December 28, 2019					December 29, 2018					December 30, 2017
	Asia		$	298,765		74%		$	298,119		75%		$	277,638		72%
	Europe		47,392			12%		45,546			11%		44,547			12%
	Americas		57,936			14%		55,134			14%		63,776			16%
	Total revenue		$	404,093		100%		$	398,799		100%		$	385,961		100%
*	Amounts in periods prior to fiscal 2018 have not been adjusted under the modified retrospective method of adopting ASC 606 and, therefore, are presented under GAAP in effect during that period.

customer:

		Year Ended
Revenue by Channel		December 31,								January 1,								January 2,
(In thousands)		2022								2022								2021
Product revenue - Distributors		$	591,229				89	%		$	449,650				87	%		$	339,100				83	%
Product revenue - Direct			51,988				8	%			45,202				9	%			49,402				12	%
Licensing and services			17,139				3	%			20,475				4	%			19,618				5	%
Total revenue		$	660,356				100	%		$	515,327				100	%		$	408,120				100	%
Revenue by Geographical Market
(In thousands)
United States		$	94,972				14	%		$	60,176				12	%		$	43,945				11	%
Other Americas			5,288				1	%			20,694				4	%			18,192				4	%
Americas			100,260				15	%			80,870				16	%			62,137				15	%
China			296,917				45	%			281,237				55	%			213,714				52	%
Japan			90,902				14	%			47,915				9	%			25,435				6	%
Other Asia			77,085				12	%			55,416				10	%			66,034				17	%
Asia			464,904				71	%			384,568				74	%			305,183				75	%
Europe			95,192				14	%			49,889				10	%			40,800				10	%
Total revenue		$	660,356				100	%		$	515,327				100	%		$	408,120				100	%

Contract balances

Balances

Our contract assets relate to our rights to consideration for licenses and royalties due to us as a member of the HDMI consortium, with collection dependent on events other than the passage of time, such as collection of licenses and royalties from customers by the HDMI licensing agent. The balance results primarily from the amount of estimated revenue related to HDMI that we have recognized to date, but which has not yet been collected by the agent. Contract assets are recorded in Prepaid expenses and other current assets in our Consolidated Balance Sheets.

The following table summarizes activity during the periods presented:

(In thousands)
Balance as of December 31, 2017	$	7,515
Revenues recorded during the period	11,618
Transferred to accounts receivable or collected	(9,990		)
Contract assets as of December 29, 2018	9,143
Revenues recorded during the period	17,356
Transferred to Accounts receivable or collected	(20,930		)
Contract assets as of December 28, 2019	$	5,569

(In thousands)
Contract assets as of January 2, 2021		$	5,611
Revenues recorded during the period			15,587
Transferred to Accounts receivable or collected			(15,526	)
Contract assets as of January 1, 2022		$	5,672
Revenues recorded during the period			15,848
Transferred to Accounts receivable or collected			(14,173	)
Contract assets as of December 31, 2022		$	7,347

Contract liabilities are included in Accounts payable and accrued expensesAccrued liabilities on our Consolidated Balance Sheets. The following table summarizes activity during the periods presented:

(In thousands)
Contract liabilities as of January 2, 2021		$	3,068
Accruals for estimated future stock rotation and scrap returns			4,613
Less: Release of accruals for recognized stock rotation and scrap returns			(2,913	)
Contract liabilities as of January 1, 2022		$	4,768
Prepaid customer deposit			12,811
Accruals for estimated future stock rotation and scrap returns			6,142
Less: Release of accruals for recognized stock rotation and scrap returns			(6,055	)
Contract liabilities as of December 31, 2022		$	17,666

45

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(In thousands)
Contract liabilities as of December 31, 2017	$	—
Accruals for estimated future stock rotation and scrap returns	4,281
Less: Release of accruals for recognized stock rotation and scrap returns	(2,667		)
Contract liabilities as of December 29, 2018	1,614
Accruals for estimated future stock rotation and scrap returns	5,763
Less: Release of accruals for recognized stock rotation and scrap returns	(5,064		)
Contract liabilities as of December 28, 2019	$	2,313

The impact to revenue in fiscal years 2019 and 2018 from the releaseTable of accruals for recognized stock rotation and scrap returns was offset by the processing of return merchandise authorizations totaling $5.0 million and $3.7 million, respectively, yielding a net revenue increase of approximately $0.1 million and a net revenue decrease of approximately $1.0 million, respectively.

Impact of Adoption of ASC 606

We adopted ASC 606 effective on December 31, 2017, the first day of our 2018 fiscal year, using the modified retrospective method. ASC 606 requires us to disclose the effect of adoption on each financial statement line item in the year of adoption as compared to the revenue recognition accounting standard that was in effect previously, and an explanation of the reasons for significant changes. The significant impacts of the new standard were to accelerate the recognition of revenues on both sales to certain distributors and certain licensing activities. As a result of adopting this standard, we recorded a cumulative effect adjustment of $27.4 million as a reduction to Accumulated deficit on December 31, 2017, resulting primarily from a net $20.2 million of previously deferred distributor revenues and costs and $6.6 million of previously unrecognized licensing revenues. The effect of adoption on each financial statement line item is detailed in the tables below:

Contents

Condensed Consolidated Statement of Operations
		Year ended December 29, 2018
(In thousands, except per share data)		As reported under new standard				Adjustments				Pro forma as if previous standard was in effect
Product revenue		$	380,468			$	(14,098	)		$	366,370
Licensing and services revenue		18,331				(1,478		)		16,853
Cost of product revenue		179,101				(6,399		)		172,702
Net loss		$	(26,322	)		$	(9,177	)		$	(35,499	)
Net loss per share, basic and diluted		$	(0.21	)		$	(0.07	)		$	(0.28	)

Condensed Consolidated Balance Sheets
		As of December 29, 2018
(In thousands)		As reported under new standard				Adjustments				Pro forma as if previous standard was in effect
Accounts receivable, net of allowance for doubtful accounts		$	60,890			$	6,600			$	67,490
Inventories		67,096				78				67,174
Prepaid expenses and other current assets		27,762				(9,775		)		17,987
Total assets		$	623,687			$	(3,097	)		$	620,590
Accounts payable and accrued expenses (includes restructuring)		$	51,763			$	(1,156	)		$	50,607
Deferred income and allowances on sales to distributors		—				34,637				34,637
Accumulated deficit		(476,783		)		(36,578		)		(513,361		)
Total liabilities and stockholders' equity		$	623,687			$	(3,097	)		$	620,590

Condensed Consolidated Statement of Cash Flows
		Year ended December 29, 2018
(In thousands)		As reported under new standard				Adjustments				Pro forma as if previous standard was in effect
Cash flows from operating activities:
Net loss		$	(26,322	)		$	(9,177	)		$	(35,499	)
Accounts receivable, net		(3,978		)		(8,408		)		(12,386		)
Inventories		13,177				(448		)		12,729
Prepaid expenses and other assets		(11,667		)		2,260				(9,407		)
Accounts payable and accrued expenses (includes restructuring)		13,325				(1,614		)		11,711
Deferred income and allowances on sales to distributors		$	—			$	17,387			$	17,387

Note 4 - Balance Sheet Components

Short-Term Marketable Securities

Our Short-term marketable securities consisted of U.S. government agency obligations with maturities up to two years, which we carried at their fair value as Level 1 instruments in accordance with ASC 820, "Fair Value Measurements." We liquidated these investments in the first quarter of fiscal 2019. The following table summarizes the maturities of our formerly-held Short-term marketable securities at fair value.

(In thousands)	December 28, 2019				December 29, 2018
Short-term marketable securities:
Maturing within one year	$	—			$	7,454
Maturing between one and two years	—				2,170
Total marketable securities	$	—			$	9,624

Accounts Receivable

Accounts receivable do not bear interest and are shown net of allowances for doubtful accounts. Thean allowance for doubtful accountsexpected lifetime credit losses, which reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine thethis allowance based onthrough an assessment of known troubled accounts, analysis of the aging of our accounts receivable aging, historical experience, expectations for future economic conditions, management judgment, and other currently available evidence.

(In thousands)	December 28, 2019				December 29, 2018
Accounts receivable	$	65,023			$	61,087
Less: Allowance for doubtful accounts	(106		)		(197		)
Accounts receivable, net of allowance for doubtful accounts	$	64,917			$	60,890

The following table displays the activity related to changes in our allowance for doubtful accounts:

Fiscal Years Ended (In thousands)		Balance at beginning of period				Charged (Credit) to costs and expenses				Charged (credit) to other accounts				Settlements & write-offs net of recoveries				Balance at end of period
Allowance for doubtful accounts
December 28, 2019		$	197			$	(30	)		$	(12	)		$	(49	)		$	106
December 29, 2018		$	9,371			$	1			$	73			$	(9,248	)		$	197
December 30, 2017		$	9,299			$	3			$	38			$	31			$	9,371

During fiscal 2018, we wrote off $9.0 million of accounts receivable from a bankrupt distributor group. This write off

		December 31,				January 1,
(In thousands)		2022				2022
Accounts receivable		$	94,018			$	79,859
Less: Allowance for credit losses			—				—
Accounts receivable, net of allowance for credit losses		$	94,018			$	79,859

We had no impact on Accounts Receivable material bad debt expense in fiscal 2018, as we had recorded a full allowance against our accounts receivable, net of deferred revenue, from the bankrupt distributor group in fiscal 2016.

2022,2021, or 2020.

Inventories

(In thousands)	December 28, 2019				December 29, 2018
Work in progress	$	39,855			$	47,224
Finished goods	15,125				19,872
Total inventories	$	54,980			$	67,096

In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain wireless technology inventory items. As such, specific inventory charges of $8.0 million were taken during fiscal 2018 on product lines eliminated with the discontinuation of our millimeter wave business and were charged to Cost of revenue in the Consolidated Statements of Operations.

Accounts Payable and

		December 31,				January 1,
(In thousands)		2022				2022
Work in progress		$	58,269			$	43,546
Finished goods			52,106				24,048
Total inventories, net		$	110,375			$	67,594

Accrued Expenses

Liabilities

Included in Accounts payable and accrued expensesAccrued liabilities in the Consolidated Balance Sheets are the following balances:

(In thousands)	December 28, 2019				December 29, 2018
Trade accounts payable	$	44,350			$	31,880
Liability for non-cancelable contracts	6,964				6,078
Restructuring	3,060				4,220
Other accrued expenses	5,881				9,585
Total accounts payable and accrued expenses	$	60,255			$	51,763

		December 31,				January 1,
(In thousands)		2022				2022
Contract liability under ASC 606		$	17,666			$	4,768
Liability for non-cancelable contracts			10,498				9,930
Current portion of operating lease liabilities			6,454				5,696
Liability for production materials			6,002				—
Other accrued liabilities			7,847				6,050
Total accrued liabilities		$	48,467			$	26,444

Cloud Based Computing Implementation Costs

During

Under the fourth quarter of fiscal 2019, we early adoptedguidance in ASU 2018-15, 2018-15,Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)350-40), which clarifieswe are capitalizing the accounting for implementation costs infor cloud computing arrangements. We adopted this guidance using the retrospective method, but did not restate any prior financial statements presented. As of December 28, 2019, we had capitalized approximately $2.5 million of implementation costsarrangements, mainly for our new and interrelatedintegrated distributor accounting management systems. These cloud basedcloud-based computing implementation costs are recorded in Prepaid expenses and other current assets and Other long-term assets on our Consolidated Balance Sheets. The following table summarizes activity during the periods presented:

(In thousands)
Cloud based computing implementation costs as of January 2, 2021		$	2,831
Costs capitalized			324
Amortization			(775	)
Cloud based computing implementation costs as of January 1, 2022		$	2,380
Costs capitalized			63
Amortization			(841	)
Cloud based computing implementation costs as of December 31, 2022		$	1,602

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Table of Contents

Note 5 - Property and Equipment

(In thousands)	December 28, 2019				December 29, 2018
Production equipment and software	$	150,591			$	160,979
Leasehold improvements	12,517				12,648
Office furniture and equipment	2,112				2,623
	165,220				176,250
Accumulated depreciation and amortization	(125,990		)		(141,367		)
	$	39,230			$	34,883

		December 31,				January 1,
(In thousands)		2022				2022
Production equipment and software		$	149,787			$	133,039
Leasehold improvements			12,416				12,960
Office furniture and equipment			1,760				2,000
			163,963				147,999
Accumulated depreciation and amortization			(116,349	)			(109,905	)
		$	47,614			$	38,094

For fiscal year 2019,years 2022, 2021, and 2020 depreciation and amortization expense for property and equipment was $11.6$13.8 million, including $0.4 million of restructuring expense. For fiscal year 2018, depreciation and amortization expense for property and equipment was $13.4 million, including $0.6 million of restructuring expense. For fiscal year 2017, depreciation and amortization expense for property and equipment was $16.3 million.

In August 2017, we sold building space which we owned in Shanghai, China for gross proceeds of approximately $7.9 million. As of the sale date, the building had a historical cost of $3.6 million, accumulated depreciation of $1.4$12.0 million, and we incurred $1.1$11.8 million, of direct selling costs, resulting in a net gain on sale of $4.6 million, which is presented as Gain on sale of building in our Consolidated Statements of Operations.

respectively.

Property and Equipment – Geographic Information

Our Property and equipment, net by country at the end of each period was as follows:

		December 31,				January 1,
(In thousands)		2022				2022
United States		$	29,118			$	26,509
Taiwan			10,732				6,555
Philippines			3,596				2,498
China			2,229				1,643
Other			1,939				889
Total foreign property and equipment, net			18,496				11,585
Total property and equipment, net		$	47,614			$	38,094

(In thousands)	December 28, 2019				December 29, 2018
United States	$	32,313			$	27,353
China	1,683				2,360
Philippines	2,683				3,319
Taiwan	1,885				949
Japan	283				324
Other	383				578
Total foreign property and equipment, net	6,917				7,530
Total property and equipment, net	$	39,230			$	34,883

Note 6 - Long-Term Debt

Business Combination and Goodwill

On May 17, 2019, November 12, 2021, we entered into a new credit agreement (the “Current Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and other lenders. The Current Credit Agreement provides for a five-year secured term loan facility in an aggregate principal amount of $175.0 million and a five-year secured revolving loan facility in an aggregate principal amount of up to $75.0 million, along with other components and options, such as a letter of credit, swing line, or expansion of the revolver, currently not in use, which are more fully described in the Current Credit Agreement.

We used the $175.0 million term loan proceeds and an initial $31.5 million revolving loan draw at closing to (i) repay the $204.4 million obligation outstanding under our previous credit agreement (the “Previous Credit Agreement”) with Jefferies Finance LLC, as administrative agent, and (ii) pay fees and expenses totaling $2.1 million incurred in connection with the Current Credit Agreement. The revolving loan may be used for working capital and general corporate purposes. With the repayment of our obligations under the Previous Credit Agreement, we wrote off the remaining unamortized balance of the related original issue discount and debt costs, which we recorded as a $2.2 million loss on refinancing in Other expense, net on our Consolidated Statements of Operations in the second quarter of fiscal 2019.

At our option, the term loan and the revolving loan (collectively, "long-term debt") accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.25% to 1.00%, determined based on our total leverage ratio or (ii) the London Interbank Offered Rate ("LIBOR") for interest periods of 1, 2, 3 or 6 months plus a margin ranging from 1.25% to 2.00%, determined based on our total leverage ratio. The base rate is defined as the highest of (i) the federal funds rate, plus 0.50%, (ii) Wells Fargo Bank, National Association’s prime rate or (iii) the LIBOR rate for a 1-month interest period plus 1.00%. As of December 28, 2019, the effective interest rate on the term loan was 3.16%, and the revolving loan did not have an outstanding balance. We pay a commitment fee of 0.20% on the unused portion of the revolving loan.

The term loan is payable through a combination of (i) required quarterly installments of approximately $4.4 million, and (ii) any payments due upon certain issuances of additional indebtedness and certain asset dispositions, with any remaining outstanding principal amount due and payable on the maturity date of the term loan. The revolving loan is payable at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loan.

The Current Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the Current Credit Agreement. We are also required to maintain compliance with a total leverage ratio and an interest coverage ratio, in each case, determined in accordance with the terms of the Current Credit Agreement.

We account for the original issue discount and the debt issuance costs as a reduction to the carrying value of our long-term debt on our Consolidated Balance Sheets. We amortize the discount and costs to Interest expense in our Consolidated Statements of Operations over the contractual term using the effective interest method. We determine the Current portion of long-term debt as the sum of the required quarterly installments to be made over the next twelve months, reduced by the original issue discount and the debt issuance costs to be amortized over the next twelve months.

The fair value of our long-term debt approximates the carrying value, which is reflected in our Consolidated Balance Sheets as follows:

(In thousands)	December 28, 2019				December 29, 2018
Principal amount	$	148,125			$	263,033
Unamortized original issue discount and debt costs	(1,579		)		(3,386		)
Less: Current portion of long-term debt	(21,474		)		(8,290		)
Long-term debt, net of current portion and unamortized debt issue costs	$	125,072			$	251,357

Interest expense related to our long-term debt was included in Interest expense on our Consolidated Statements of Operations as follows:

					Year Ended
(in thousands)	December 28, 2019				December 29, 2018				December 30, 2017
Contractual interest	$	10,278			$	18,600			$	16,503
Amortization of debt issuance costs and discount	1,659				2,230				1,982
Total Interest expense related to the long-term debt	$	11,937			$	20,830			$	18,485

Expected future principal payments are based on the schedule of required quarterly installments, adjusted for known voluntary payments. Our 53-week fiscal 2020 will result in five quarterly installments being paid during that fiscal year. As of December 28, 2019, expected future principal payments on our long-term debt were as follows:

Fiscal year		(in thousands)
2020		$	21,875
2021		17,500
2022		17,500
2023		17,500
2024		73,750
		$	148,125

Note 7 - Restructuring

In April 2019, our management approved and executed an internal restructuring plan (the “Q2 2019 Sales Plan”) which focused on a restructuring of the global sales organization through cancellation of certain contracts and a workforce reduction. Under this plan, we have incurred $2.0 million of restructuring expense during fiscal 2019. All actions planned under the Q2 2019 Sales Plan have been implemented.

In December 2018, our management approved and executed an internal restructuring plan (the “December 2018 Plan”), which included a global workforce reduction. This plan also included the abandonment of long lived assets related to the restructuring of our agreements with a privately-held investee. Under this plan, no restructuring expense was incurred during fiscal year 2019, and approximately $4.8 million of restructuring expense was incurred during fiscal year 2018. All actions planned under the December 2018 Plan have been implemented.

In June 2018, our Board of Directors approved an internal restructuring plan (the "June 2018 Plan"), which included the discontinuation of our millimeter wave business and the use of certain assets related to our Wireless products, and a workforce reduction. Under this plan, we recorded a total credit adjustment of approximately $0.1 million during fiscal 2019 due to the final reconciliation of expenses incurred, and we incurred approximately $4.2 million of restructuring expense during fiscal 2018. Approximately $4.1 million of total expense has been incurred through December 28, 2019 under the June 2018 Plan. All actions planned under the June 2018 Plan have been implemented.

In June 2017, our Board of Directors approved an internal restructuring plan (the "June 2017 Plan"), which included the sale ofacquired 100% of the equityoutstanding shares of our Hyderabad, India subsidiaryMirametrix, Inc. ("Mirametrix"), an innovator in advanced AI software and computer vision ("CV") applications. This acquisition combines Mirametrix technology and expertise with Lattice’s innovative hardware and software solution stacks to create an end-to-end AI and computer vision solution that spans from the transfer of certain assets relatedhardware to our Simplay Labs testing and certification business, a worldwide workforce reduction, and an initiativethe application layer. Total consideration to reduce our infrastructure costs, including reconfiguring our use of certain leased properties. Under this initiative approved by the Boardacquire Mirametrix was $68.5 million, paid 100% in 2017, we vacated 100% or our facility in Portland, Oregoncash to Mirametrix shareholders. There is no contingent consideration included in the first quarter of fiscal 2019, and recorded approximately $2.7 million of Restructuring charges from ceasing use of this space, which includes approximately $1.0 million of impairmentdetermination of the operating lease right-of-use asset for this property. During fiscal 2019, we entered into a sublease agreement for this facilitypurchase consideration.

Purchase consideration was allocated to the tangible and bought out the leaseintangible assets and liabilities assumed on the portionbasis of the space that was not sublet. Under this plan, approximately $2.7 million, $8.4 million, and $8.0 million of expense was incurred duringrespective estimated fair values on the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively. Approximately $19.1 million of total expense has been incurred through December 28, 2019 under the June 2017 Plan, and all planned actions have been implemented. We expect the total costacquisition date. The fair values of the June 2017 Plan to be approximately $20.0 million to $21.5 million as accretion expenses related to our partially vacated facility in San Jose, California will be incurred over the remaining lease term.

These expensesassets acquired and credits were recorded to Restructuring charges on our Consolidated Statements of Operations. The restructuring accrual balance is presented in Accounts payable and accrued expenses and Other long-term liabilities on our Consolidated Balance Sheets.

The following table displays the activity related to the restructuring plans described above:

(In thousands)	Severance & Related (1)				Lease Termination & Fixed Assets				Software Contracts & Engineering Tools (2)				Other (3)				Total
Balance at December 31, 2016	$	801			$	1,036			$	25			$	12			$	1,874
Restructuring charges	2,484				811				3,066				835				7,196
Costs paid or otherwise settled	(2,093		)		(977		)		(2,731		)		(822		)		(6,623		)
Balance at December 30, 2017	$	1,192			$	870			$	360			$	25			$	2,447
Restructuring charges	5,696				7,379				913				3,361				17,349
Costs paid or otherwise settled	(5,074		)		381				(1,055		)		(3,368		)		(9,116		)
Balance at December 29, 2018	$	1,814			$	8,630			$	218			$	18			$	10,680
Restructuring charges	625				2,716				—				1,323				4,664
Costs paid or otherwise settled	(2,279		)		(4,761		)		(218		)		(476		)		(7,734		)
Balance at December 28, 2019	$	160			$	6,585			$	—			$	865			$	7,610

(1)	Includes employee relocation costs and accelerated stock compensation
(2)	Includes cancellation of contracts, asset impairments, and accelerated depreciation on certain enterprise resource planning and customer relationship management systems
(3)	In fiscal 2018, "Other" activity included the abandonment of long lived assets related to the restructuring of our agreements with a privately-held investee. In fiscal 2019, "Other" activity included termination fees on the cancellation of certain contracts under the Q2 2019 Sales Plan

Note 8 - Leases

All of our facilities are leased under operating leases, which expire at various times through 2027. We recorded fixed operating lease cost of $7.7 million for fiscal 2019. Rental expense under the previous guidance for operating leases was $8.3 million and $8.9 million for fiscal years 2018 and 2017, respectively.

Our leases have remaining lease terms of 1 to 8 years, some of which include options to extend for up to 5 years, and some of which include options to terminate within 1 year. For our operating leases, the weighted-average remaining lease term was 5.7 years and the weighted-average discount rate is 7.0% as of December 28, 2019.

Our adoption of Topic 842 resultedassumed in the non-cash recognitionacquisition of additional net ROU assets and lease liabilitiesMirametrix, by major class, were recognized as follows:

(In thousands)		Estimated Fair Value
Assets acquired:
Cash and cash equivalents		$	437
Accounts receivable			3,265
Other current assets			262
Property and equipment			156
Intangible assets			24,800
Goodwill			47,844
Total assets acquired			76,764
Liabilities assumed
Accounts payable			21
Accrued liabilities			5
Accrued payroll obligations			247
Long-term liabilities			7,955
Total liabilities assumed			8,228
Fair value of net assets acquired		$	68,536

47

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Table of approximately $29.9 million and $32.3 million, respectively, as of December 30, 2018. The difference between these amounts resulted from an adjustment to the deferred rent balance existing under the prior guidance. Adoption of this standard did not materially affect our consolidated net earnings.Contents

The following table presents details of the lease balance classifications withinidentified intangible assets acquired through the Consolidated Balance Sheets and summarizes their activity during fiscal 2019:

Operating lease right-of-use assets		(in thousands)
Balance as of December 29, 2018		$	—
Right-of-use assets recorded from adoption of ASC 842		29,893
Right-of-use assets obtained in exchange for new lease obligations during the period		747
Reduction in the carrying amount of right-of-use assets during the period		(5,797		)
Impairment of right-of-use asset on Portland, Oregon office (recorded in Restructuring charges)		(977		)
Adjustments for present value and foreign currency effects		(275		)
Balance as of December 28, 2019		$	23,591
Operating lease liabilities		(in thousands)
Balance as of December 29, 2018		$	—
Lease liabilities recorded from adoption of ASC 842		32,273
Lease liabilities incurred for new lease obligations during the period		747
Accretion of lease liabilities		1,918
Operating cash used by payments on lease liabilities		(8,425		)
Adjustments for present value, foreign currency, and restructuring liability effects		(389		)
Balance as of December 28, 2019		26,124
Less: Current portion of operating lease liabilities		(4,686		)
Long-term operating lease liabilities, net of current portion		$	21,438

Maturitiesacquisition of operating lease liabilitiesMirametrix, as of December 28, 2019 are as follows:

Fiscal year		(in thousands)
2020		$	6,445
2021		5,485
2022		4,468
2023		4,596
2024		4,716
Thereafter		6,705
Total lease payments		32,415
Less: amount representing interest		(6,156		)
Less: amount representing restructuring liability adjustments		(135		)
Total lease liabilities		$	26,124

Under the previous lease guidance, ASC 840, future minimum lease commitments at December 29, 2018 were as follows:

Fiscal year		(In thousands)
2019		$	7,090
2020		6,893
2021		5,452
2022		4,658
2023		4,229
Thereafter		9,930
		$	38,252

Prior to 2019, the reporting of future minimum lease commitments included the lease obligationsNovember 12, 2021:

		Useful Life				Fair Value
		(In years)				(In thousands)
Existing technology			7			$	13,500
Customer relationships			7				9,800
Trade name / trademarks			10				1,500
Total identified intangible assets subject to amortization						$	24,800

We do not believe there is any significant residual value associated with previously restructured facilities. Lease obligationsthese intangible assets. We are amortizing the intangible assets using the straight-line method over their estimated useful lives.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The goodwill recognized in the acquisition of Mirametrix was derived from expected benefits from cost synergies and the knowledgeable and experienced workforce who joined the Company after the acquisition. Goodwill resulting from the acquisition is not deductible for facilities restructured prior to the adoptionCanada income tax purposes.

The goodwill balance of Topic 842 totaled approximately $6.6$315.4 million at December 28, 2019 and continued31, 2022 is comprised of approximately $267.5 million from prior acquisitions combined with the approximately $47.8 million from the acquisition of Mirametrix. No impairment charges relating to begoodwill were recorded in Other long-term liabilities on our Consolidated Balance Sheets.for fiscal 2022, 2021, or 2020.

Note 97 - Intangible Assets

In connection with our acquisitions of Mirametrix, Inc. in November 2021, Silicon Image, Inc. in March 2015, and SiliconBlue Technologies, Inc. in December 2011, we recorded identifiable intangible assets related to developed technology, customer relationships, licensed technology, patents, and in-process research and development based on guidance for determining fair value under the provisions of ASC 820, "Fair Value Measurements." Additionally, during the fiscal years presented, we licensed additional third-party technology. We do not believe there is any significant residual value associated with these intangible assets. We are amortizing the intangible assets using the straight-line method over their estimated useful lives.

Additionally, we have entered into license agreements for third-party technology and recorded them as intangible assets. These licenses are being amortized to Research and development expense over their estimated useful lives. No impairment charges relating to acquired intangible assets were recorded for fiscal 2022, 2021, or 2020.

The following tables summarize the details of our Intangible assets, net as of December 28, 2019 31, 2022 and December 29, 2018:

January 1, 2022:

		December 31, 2022
(In thousands)		Weighted Average Amortization Period (in years)			Gross				Accumulated Amortization				Intangible assets, net
Existing technology		5.1			$	124,487			$	(113,157	)		$	11,330
Customer relationships		6.1				32,734				(24,509	)			8,225
Trade name / trademarks		10.0				1,500				(169	)			1,331
Licensed technology		6.3				6,671				(2,487	)			4,184
Total identified intangible assets					$	165,392			$	(140,322	)		$	25,070

		January 1, 2022
(In thousands)		Weighted Average Amortization Period (in years)			Gross				Accumulated Amortization				Intangible assets, net
Existing technology		5.1			$	124,487			$	(111,090	)		$	13,397
Customer relationships		6.1				32,734				(22,947	)			9,787
Trade name / trademarks		10.0				1,500				(19	)			1,481
Licensed technology		6.3				6,551				(1,434	)			5,117
Total identified intangible assets					$	165,272			$	(135,490	)		$	29,782

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		December 28, 2019
(In thousands)		Weighted Average Amortization Period (in years)		Gross				Accumulated Amortization				Intangible assets, net
Developed technology		5.0		$	110,987			$	(105,594	)		$	5,393
Customer relationships		5.8		22,934				(21,400		)		1,534
Licensed technology		5.0		459				(409		)		50
Total identified intangible assets				$	134,380			$	(127,403	)		$	6,977

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		December 29, 2018
(In thousands)		Weighted Average Amortization Period (in years)		Gross				Accumulated Amortization				Intangible assets, net
Developed technology		5.0		$	110,987			$	(94,389	)		$	16,598
Customer relationships		5.8		22,934				(19,048		)		3,886
Licensed technology		5.0		1,194				(353		)		841
Total identified intangible assets				$	135,115			$	(113,790	)		$	21,325

We recorded amortization expense related to intangible assets on the Consolidated Statements of Operations as presented in the following table:

	Year Ended
(In thousands)	December 28, 2019				December 29, 2018				December 30, 2017
Research and development	$	55			$	277			$	569
Amortization of acquired intangible assets	13,558				17,690				31,340
	$	13,613			$	17,967			$	31,909

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Research and development		$	1,054			$	901			$	124
Amortization of acquired intangible assets			3,778				2,613				4,449
		$	4,832			$	3,514			$	4,573

The annual expected amortization expense of acquired intangible assets is as follows:

Fiscal year		(In thousands)
2023		$	4,522
2024			4,310
2025			4,263
2026			4,261
2027			4,197
Thereafter			3,517
Total		$	25,070

(In thousands)	Amount
2020	$	4,500
2021	2,239
2022	238
Total	$	6,977

No impairment charges relating

Note 8 - Long-Term Debt

On September 1, 2022, we entered into an Amended and Restated Credit Agreement (the “2022 Credit Agreement”), which provides for a five-year secured revolving loan facility with an aggregate principal amount of up to acquired intangible assets were recorded$350 million, along with other components and options, such as a letter of credit, swingline loan, and expansion of revolving and/or term loan commitments, currently not in use.

We drew down an initial $150 million revolving loan at closing, which we used along with $1.9 million of cash to (i) repay the $150.5 million term loan, revolving loan, and accrued interest obligations outstanding under our previous credit agreement (the “2019 Credit Agreement”), and (ii) pay fees and expenses totaling $1.4 million incurred in connection with the 2022 Credit Agreement. We intend to use the revolving loan facility for working capital and general corporate purposes.

At our option, the revolving loans accrue interest at a per annum rate based on ranges determined by our consolidated total leverage ratio of either (i) the base rate (as defined in the 2022 Credit Agreement) plus a margin ranging from 0.25% to 1.00%, or (ii) the adjusted Term Secured Overnight Financing Rate ("SOFR") for interest periods of 1,3 or 6 months plus a margin ranging from 1.25% to 2.00%. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted Term SOFR. In addition, we pay a quarterly commitment fee of 0.20% on the unused portion of the revolving facility.

With the amendment of our 2019 Credit Agreement pursuant to the 2022 Credit Agreement, we capitalized $0.9 million of the new debt costs, and expensed $0.7 million of debt costs and existing original issue discount ("OID") as a loss on refinancing in Other (expense) income, net on our Consolidated Statements of Operations for fiscal 20192022. We determine the Current portion of long-term debt, if any, as the sum of the required debt payments to be made over the next twelve months, reduced by the OID and the debt issuance costs to be amortized over the next twelve months.

The revolving loans under the 2022 Credit Agreement may be repaid and reborrowed at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loans on September 1, 2027. During fiscal 2022, we made principal payments totaling $28.8 million, including a discretionary payment of $20 million on the revolving loans outstanding under the 2022 Credit Agreement and required quarterly installments totaling $8.8 million on the term loans outstanding under the 2019 Credit Agreement.

The fair value of our long-term debt approximates the carrying value, which is reflected in our Consolidated Balance Sheets as follows:

		December 31,				January 1,
(In thousands)		2022				2022
Principal amount		$	130,000			$	158,750
Unamortized original issuance discount and debt costs			(1,248	)			(817	)
Less: Current portion of long-term debt			—				(17,173	)
Long-term debt, net of current portion and unamortized debt issue costs		$	128,752			$	140,760

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Interest expense related to our long-term debt is included in Interest expense on our Consolidated Statements of Operations as follows:

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Contractual interest		$	4,500			$	2,304			$	3,319
Amortization of original issuance discount and debt costs			310				362				400
Total interest expense related to long-term debt		$	4,810			$	2,666			$	3,719

Note 9 - Restructuring

In September 2022, our management approved and implemented additional contract cancellations and headcount reductions under the Q22019 Sales Plan, an internal restructuring plan that our management approved and executed in April 2019. The Q22019 Sales Plan focused on a restructuring of the global sales organization through cancellation of certain contracts and a workforce reduction. With these actions, we incurred approximately $1.0 million of incremental restructuring costs in fiscal 2022. Under this plan, no indicators of impairment were present. During the third quarter ofrestructuring expense was incurred during fiscal 2018, we concluded that a certain product line had limited future revenue potential due to a decline in customer demand for that product,2021, and we recordedincurred restructuring expense of approximately $0.1 million during fiscal 2020. Under this plan, approximately $3.1 million of total expense has been incurred through December 31, 2022. All actions planned under the Q22019 Sales Plan have been implemented.

In March 2020, our management approved and executed an impairment charge of $0.6 millioninternal restructuring plan (the “Q12020 Plan”), which included a workforce reduction in order to the intangible asset associated with that product. During the second quarter of 2018, we recorded an impairment charge relating to intangible assets of $11.9 millionreduce our operating cost structure by leveraging our low-cost regions as a result of the strategic decision to discontinue our millimeter wave business. During fiscal 2017, well as enhancing efficiency. Under this plan, we recorded a net impairment chargecredit of $32.4approximately $0.1 million during fiscal 2022, and we incurred restructuring expense of approximately $0.2 million and $2.0 million, respectively, during fiscal 2021 and 2020. Approximately $2.1 million of total expense has been incurred through December 31, 2022 under the Q12020 Plan. All actions planned under the Q12020 Plan have been implemented.

In June 2017, our Board of Directors approved an internal restructuring plan (the "June 2017 Plan"), which included actions, among others, to reconfigure our use of certain leased properties. Under the June 2017 Plan, we incurred approximately $1.1 million of incremental restructuring costs in fiscal 2022 related to certainan impairment of the developed technology intangible assets acquiredoperating lease right-of-use asset for our partially vacated facility in our acquisitionSan Jose, California. Including these charges, we incurred restructuring expense of Silicon Image. approximately $1.6 million during fiscal 2022, and we incurred restructuring expense of approximately $0.7 million and $1.9 million, respectively, during fiscal 2021 and 2020.Under this plan, we have incurred approximately $23.3 million of total expense through December 31, 2022. All actions planned under the June 2017 Plan have been implemented.

These chargesexpenses and credits were recorded to Impairment of acquired intangible assets in theRestructuring charges on our Consolidated Statements of Operations. The restructuring accrual balance is presented in Accrued liabilities and Other long-term liabilities on our Consolidated Balance Sheets.

The following table displays the activity related to the restructuring plans described above:

(In thousands)		Severance & Related (1)				Lease Termination & Fixed Assets				Other (2)				Total
Accrued Restructuring at December 28, 2019		$	160			$	6,585			$	865			$	7,610
Restructuring charges			1,669				1,896				372				3,937
Costs paid or otherwise settled			(1,583	)			(248	)			(573	)			(2,404	)
Accrued Restructuring at January 2, 2021		$	246			$	8,233			$	664			$	9,143
Restructuring charges			250				690				—				940
Costs paid or otherwise settled			(245	)			(1,793	)			(664	)			(2,702	)
Accrued Restructuring at January 1, 2022		$	251			$	7,130			$	—			$	7,381
Restructuring charges			303				1,608				640				2,551
Costs paid or otherwise settled			(154	)			(2,846	)			—				(3,000	)
Accrued Restructuring at December 31, 2022		$	400			$	5,892			$	640			$	6,932

	(1)	Includes employee relocation costs and outplacement costs
	(2)	Includes termination fees on the cancellation of certain contracts

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Note 10 - Leases

We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center, all of which are leased under operating leases that expire at various times through 2028.Our leases have remaining lease terms of 1 to 6 years, some of which include options to extend for up to 5 years, and some of which include options to terminate within 1 year. The weighted-average remaining lease term was 3.5 years and the weighted-average discount rate was 5.4% as of December 31, 2022. We recorded fixed operating lease expense of $7.6 million, $7.9 million, and $7.6 million, respectively, for fiscal 2022, 2021, and 2020.

The following table presents the lease balance classifications within the Consolidated Balance Sheets and summarizes their activity during fiscal 2022:

Operating lease right-of-use assets		(In thousands)
Balance as of January 1, 2022		$	23,818
Right-of-use assets obtained for new lease contracts during the period			2,134
Amortization of right-of-use assets during the period			(6,512	)
Impairment of right-of use asset during the period (recorded in Restructuring charges)			(1,149	)
Adjustments for present value and foreign currency effects			(701	)
Balance as of December 31, 2022		$	17,590

Operating lease liabilities		(In thousands)
Balance as of January 1, 2022		$	24,944
Lease liabilities incurred for new lease contracts during the period			2,134
Accretion of lease liabilities			1,087
Operating cash used by payments on lease liabilities			(7,419	)
Adjustments for present value and foreign currency effects			(674	)
Balance as of December 31, 2022			20,072
Less: Current portion of operating lease liabilities (included in Accrued liabilities)			(6,454	)
Long-term operating lease liabilities, net of current portion		$	13,618

Lease obligations for facilities restructured prior to the adoption of Topic 842 totaled approximately $5.9 million at December 31, 2022 and continued to be recorded in Other long-term liabilities on our Consolidated Balance Sheets.

Maturities of operating lease liabilities as of December 31, 2022 are as follows:

Fiscal year		(In thousands)
2023			7,536
2024			6,042
2025			4,140
2026			2,522
2027			1,110
Thereafter			934
Total lease payments			22,284
Less: amount representing interest			(2,212	)
Total lease liabilities		$	20,072

Note 11 - Stock-Based Compensation Plans

Employee and Director Stock Options, Restricted Stock, and ESPP

Plans

We have two active equity incentive plans, the "2013"2013 Incentive PlanPlan" and the "2011"2011 Non-Employee Director Equity Incentive Plan", under which shares remain available for grants to employees and non-employee directors, respectively. In addition, we have made grants of inducement awards to certain of our newly hired executives and employees that are granted outside of, but governed by, the 2013 Incentive Plan. "Incentive stock options" under Section 422 of the U.S. Internal Revenue Code and restricted stock unit ("RSU") grants are part of our equity compensation practices for employees who receive equity grants. Options and RSUs generally vest quarterly over a four-yearfour-year period beginning on the grant date. The contractual terms of options granted do not exceed ten years.

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In May 2012, the Company's stockholders approved the 2012 Employee Stock Purchase Plan ("("2012 ESPP"), which authorizes the issuance of 3.0 million shares of common stock to eligible employees to purchase shares of common stock through payroll deductions, which cannot exceed 10% of an employee's compensation. The purchase price of the shares is the lower of 85% of the fair market value of the stock at the beginning of each six-monthsix-month offering period or 85% of the fair market value at the end of such period. We have treated the 2012 ESPP as a compensatory plan. We recorded $0.5 million and $0.6 million related compensation expense in fiscal 2019 and 2018, respectively. During fiscal 2017 only, the ESPP was suspended and we recorded no related compensation expense.

At December 28, 2019,31, 2022, a total of 9.01.0 million shares of our common stock were available for future purchases under the 2012 ESPP.

At December 31, 2022, a total of 5.0 million shares of our common stock were available for future grants under the 2013 Incentive Plan and the 2011 Non-Employee Director Equity Incentive Plan. Following our 2018 Shareholder meeting, a share ratio of 2.2:1 was applied to the 2013 Incentive Plan. This ratio takes two and two tenths-tenths shares out of the 2013 Plan for every one full value share granted. During fiscal 2019,2022, a total of 2.92.5 million shares were adjusted out of the 2013 Plan. Shares subject to stock option grants that expire or are canceled, without delivery of such shares, generally become available for re-issuance under equity incentive plans. At December 28, 2019, a total of 1.4 million shares of our common stock were available for future purchases under the 2012 ESPP.

Stock-Based Compensation

Expense

Total stock-based compensation expense included in our Consolidated Statements of Operations is presented in the following table:

		Year Ended
(In thousands)		December 28, 2019				December 29, 2018				December 30, 2017
Cost of revenue		$	1,422			$	940			$	795
Research and development		5,640				4,357				5,245
Selling, general, and administrative		11,837				8,349				6,503
Total stock-based compensation		$	18,899			$	13,646			$	12,543

The stock-based compensation expense included in Selling, general,

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Cost of revenue		$	3,674			$	3,049			$	3,179
Research and development			19,645				14,563				10,124
Selling, general, and administrative			32,211				28,863				27,069
Total stock-based compensation		$	55,530			$	46,475			$	40,372

ESPP and administrative expense for fiscal 2018 includes approximately $1.4 million of additional one-time expense for acceleration of stock compensation under the CEO separation agreement executed with our former CEO during the first quarter of fiscal 2018.

Stock Options

The fair values of each option award on the date of grant and of the shares expected to be issued under the employee stock purchase plan and of each option award on the date of grant were estimated using the Black-Scholes valuation model and the assumptions noted in the following table.No new stock options were granted during fiscal 2022,2021, or 2020. The expected volatility of both ESPP shares and stock options is based on the daily historical volatility of our stock price, measured over the ESPP purchase period or the expected term of the option. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option. The expected term is based on historical vested option exercises and includes an estimate of the expected term for options that are fully vested and outstanding. The expected volatility of both stock options and ESPP shares is based on the daily historical volatility of our stock price, measured over the expected term of the option or the ESPP purchase period. The risk-free interest rate is based on the impliedDividend yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option. The dividend yield reflects thathas no valuation impact, as we have not paid any cash dividends since inception and do not intend to pay any cash dividends in the foreseeable future.

The following table summarizes the assumptions used in the valuation of stockESPP compensation for the periods presented:

		Year Ended
		December 31,		January 1,		January 2,
		2022		2022		2021
Employee Stock Purchase Plan
Weighted average expected volatility		60.3%		39.9%		48.2%
Weighted average risk-free interest rate		3.74%		0.07%		0.89%
Expected term (in months)		6		6		6

The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $15.25, $13.04, and ESPP compensation:

	Year Ended
	December 28, 2019		December 29, 2018		December 30, 2017
Employee and Director Stock Options *
Expected volatility	n/a		39.87% to 41.11%		40.96% to 48.01%
Risk-free interest rate	n/a		2.29% to 2.78%		1.99% to 2.09%
Expected term (years)	n/a		4.08 to 4.25		4.08 to 4.25
Employee Stock Purchase Plan **
Weighted average expected volatility	31.6%		36.4%		n/a
Weighted average risk-free interest rate	2.51%		1.61%		n/a
Expected term	6 months		6 months		n/a
* No stock options granted during fiscal 2019
** ESPP suspended during fiscal 2017 only

$6.62 for fiscal years 2022, 2021, and 2020, respectively.

At December 28, 2019, 31, 2022, there was $3.2 million of totalno unrecognized compensation cost related to unvested employee and director stock options, which is expected to be recognized over a weighted average period of 1.5 years. Our current practice is to issue new shares to satisfy option exercises.options. Compensation expense for all stock-based compensation awards is recognized using the straight-line method. We recorded stock compensation expense related to the ESPP of approximately $1.5 million, $1.2 million, and $1.0 million in fiscal 2022, 2021, and 2020, respectively. Related to stock options, we recorded no expense in fiscal 2022, and approximately $1.0 million and $2.0 million, in fiscal 2021 and 2020, respectively.

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The following table summarizes our stock option activity and related information for the year ended December 28, 2019:

(Shares and aggregate intrinsic value in thousands)	Shares			Weighted average exercise price				Weighted average remaining contractual term (years)		Aggregate Intrinsic Value
Balance, December 29, 2018	6,616			$	5.94
Granted	—			—
Effect of vesting multiplier	36
Exercised	(2,715	)		5.73
Forfeited or expired	(605	)		5.72
Balance, December 28, 2019	3,332			$	6.16
Vested and expected to vest at December 28, 2019	3,332			$	6.16			4.50		$	43,553
Exercisable, December 28, 2019	1,721			$	6.00			3.95		$	22,758

31, 2022:

(Shares and aggregate intrinsic value in thousands)		Shares				Weighted average exercise price				Weighted average remaining contractual term (years)				Aggregate Intrinsic Value
Balance, January 1, 2022			1,367			$	6.62
Granted			—				—
Exercised			(448	)			6.48
Forfeited or expired			(1	)			5.01
Balance, December 31, 2022			918			$	6.70
Vested and expected to vest at December 31, 2022			918			$	6.70				1.93			$	53,433
Exercisable, December 31, 2022			918			$	6.70				1.93			$	53,433

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company's closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that day. This amount changes based on the fair market value of the Company's stock. Total intrinsic value of options exercised for fiscal 2019, 2018,2022, 2021, and 20172020 was $17.8$24.3 million, $6.5$44.7 million, and $2.2$21.5 million, respectively. The total fair value of options and RSUs vested and expensed in fiscal 2019, 2018, and 2017 was $18.4 million, $13.0 million, and $12.5 million, respectively.

The resultant grant date weighted-average fair values for stock options granted, calculated using the Black-Scholes option pricing model with the noted assumptions for stock options, were $2.73 and $2.02 for fiscal years 2018 and 2017, respectively. No stock options were granted during fiscal 2019. The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $1.69 and $1.50 for fiscal years 2019 and 2018, respectively.

Time-Based Restricted Stock Unit Awards

The following table summarizes the activity for our RSU activitytime-based RSUs for the year ended December 28, 2019:

(Shares in thousands)	Shares			Weighted average grant date fair value
Balance, December 29, 2018	4,412			$	7.53
Granted	2,445			16.23
Effect of vesting multiplier	216			—
Vested	(1,734	)		8.10
Forfeited or expired	(564	)		7.27
Balance, December 28, 2019	4,775			$	12.23

31, 2022:

(Shares in thousands)		Shares				Weighted average grant date fair value
Balance, January 1, 2022			2,188			$	31.85
Granted			843				62.23
Vested			(1,132	)			24.34
Forfeited or expired			(78	)			41.21
Balance, December 31, 2022			1,821			$	50.18

At December 28, 2019 31, 2022, there was $51.9$81.6 million of total unrecognized compensation costexpense related to unvested time-based RSUs. Our current practice is to issue new shares when RSUs vest. Compensation expense for RSUs is recognized using the straight-line method over the related vesting period.

In fiscal 2022, 2021, and 2020, we recorded stock compensation expense related to time-based RSUs of approximately $30.1 million, $21.7 million, and $16.6 million, respectively.

Market-Based and Performance-Based Stock Compensation

Awards

In fiscal years 20172020 through 2019,2022, we granted stock options and RSUs with either a market condition (TSR) or a performance condition (Adjusted EBITDA) to certain executives.

The options with a market condition granted in fiscal year 2017 have a two year vesting period and vest between 0% and 200% of the target amount, based on the Company's relative TSR when compared to the TSR of a component of companies of the PHLX Semiconductor Sector Index over a two year period. Under the terms of the grants, executives will receive the target amount if the Company’s TSR relative to that of the Index achieves or exceeds the 50^th percentile. Executives may receive 200% if the Company’s TSR exceeds the 75^th percentile. No vesting occurs if the Company’s TSR does not exceed the 25^th percentile.

In fiscal years 2018 and 2019, we granted inducement awards outside of, but subject to the terms and conditions of the 2013 Incentive Plan to certain executives. These awards consisted of RSUs with either a market condition or a performance condition thatto certain executives.

Market-Based and Performance-Based Awards — Grants

In the first quarters of fiscal 2022,2021 and 2020,we granted awards of RSUs with a market condition to certain executives. Under the terms of these grants, the RSUs with a market condition vest and become payable upon achievement of TSR or Adjusted EBITDA targets, respectively. The TSR-based awards vest and become payable over a three-yearthree-year period based on the Company’s TSR total shareholder return ("TSR") relative to the PHLX Semiconductor Sector Index,Russell 2000 index, which condition is measured for the 2022 and 2021grants on the third anniversary of the grant date, and measured for one-half of the 2020 grants on the second and third anniversary of the grant date. The awards may vest at 250% or 200%, depending upon the executive, if the 75th percentile of the market condition is achieved, with 100% of the units vesting at the 50th55th percentile, and either 200% or 250% of the units vesting at the 75th percentile, depending upon the executive, zero vesting if relative TSR is below the 25th percentile, and vesting scaling linearly for achievement between the 25th and 75th percentile. The Adjusted EBITDA-based awards will vest and become payable based upon

In the Company’s generating specified “adjusted” EBITDA levels on a trailing four quarter basis in any two consecutive trailing four-quarter periods. During the thirdfirst quarter of fiscal 2019,2021, we also granted awards of RSUs with a performance condition to certain executives, to specifically drive additional executive attention and focus on the Company’s revenue growth priorities. Under the terms of these grants, the RSUs with a performance condition will vest based on the Company generating specified levels of year-over-year revenue growth, which will be measured annually for one-fourth of the grants after each fiscal year-end through the end of fiscal 2024. Vesting of these awards scales for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 200%. Vesting of each tranche of these awards occurs 13 months after the performance conditions is met, and the entire award cannot be fully earned until five years from grant. For the first and second tranches of these awards, the Company had met the year-over-year revenue growth performance criteria at the 200% level of achievement as of January 1, 2022 and December 31, 2022, respectively.

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Market-Based and Performance-Based Awards — Vesting

During fiscal 2022, the market condition for awards granted to certain executives in previous years exceeded the previous year achieved the 75^th75th percentile of thetheir TSR condition, and the first trancheapplicable tranches of these awards vested at 200%250% or 250% of the RSUs, as applicable200% for the respective executive.executives. Also during fiscal 2022, the fifth and sixth tranches of 40% and 70%, respectively, of the base number of the awards with an EBITDA performance condition vested, as the Company had met the adjusted EBITDA performance criteria on a trailing four-quarter basis for two consecutive trailing four-quarter periods as of the end of the respective measurement periods.

The following table summarizesDuring fiscal 2021, the assumptions usedmarket condition for awards granted to certain executives in previous years exceeded the valuation75th percentile of stock optionstheir TSR condition, and RSUsapplicable tranches of these awards vested at 250% or 200% for the respective executives. Also during fiscal 2021, the second and third tranches, each 33.3% of the base number of the awards with an EBITDA performance condition vested and released, as the Company had met the adjusted EBITDA performance criteria on a trailing four-quarter basis for two consecutive trailing four-quarter periods as of the end of the respective measurement periods. Additionally, as of January 1, 2022, the Company had met the next adjusted EBITDA performance criteria on a trailing four-quarter basis for two consecutive trailing four-quarter periods, and the fourth tranche of the awards with an EBITDA performance condition qualified for vesting at 40% of the base number.

During fiscal 2020, the market condition for awards granted to certain executives in previous years exceeded the 75th percentile of their TSR condition, and annual tranches of these awards vested at 250% or 200%, and applicable tranches of these awards vested at 250% or 200% for the respective executives. Also during fiscal 2020, the first tranche of 33.3% of the base number of the awards with an EBITDA performance condition vested, as the Company had met the adjusted EBITDA performance criteria on a trailing four-quarter basis for two consecutive trailing four-quarter periods as of the end of the measurement period.

Market-Based and Performance-Based Awards — Compensation Expense

During the first quarter of fiscal 2020, the Board of Directors approved a modification to the market condition measurement periods associated with the unvested portions of certain of the Company’s awards with a market or performance condition:

condition that were granted prior to fiscal 2020. The modification extended the duration of the measurement period by adjusting the beginning date of each measurement period to the original grant date, resulting in approximately $1.8 million additional stock compensation expense during the first quarter of fiscal 2020.

	Year Ended
	December 28, 2019		December 29, 2018		December 30, 2017
Executive stock options with a market condition
Expected volatility	n/a		n/a		41%
Risk-free interest rate	n/a		n/a		1.9%
Expected term (years)	n/a		n/a		4.5
Executive RSUs with a market or performance condition
Expected volatility	40.15% to 41.10%		41.06% to 41.74%		n/a
Risk-free interest rate	1.66% to 2.55%		2.71% to 2.87%		n/a
Expected term (years)	3.00		3.00 to 3.16		n/a

The following table summarizes the activity for

For our stock options and RSUsawards with a market condition or a performance condition:

(Shares in thousands)		Unvested			Vested			Total
Balance, December 29, 2018		909			—			909
Granted		584			—			584
Effect of vesting multiplier		260			—			260
Vested		(484	)		71			(413	)
Exercised		—			(71	)		(71	)
Canceled		(106	)		—			(106	)
Balance, December 28, 2019		1,163			—			1,163

Wecondition, we incurred stock compensation expense, related to these stock option and RSU awards with a market or performance conditionincluding the effect of the modification in the first quarter of fiscal 2020, of approximately $5.7$24.0 million, $0.9$22.1 million, and $0.5$20.8 million in fiscal years 2019, 2018,2022, 2021, and 2017,2020, respectively, which is recorded as a component of total stock-based compensation. At December 31, 2022, there was $21.6 million of unrecognized compensation expense.expense related to unvested RSUs with a market condition or a performance condition. Awards with a TSR market condition were valued using a Monte Carlo simulation model.

The following table summarizes the assumptions used at the grant date in the valuation of RSUs with a market or performance condition:

		Year Ended
		December 31,		January 1,		January 2,
		2022		2022		2021
Executive RSUs with a market condition or performance condition
Weighted average expected volatility		51.44%		50.37% to 52.11%		42.38%
Weighted average risk-free interest rate		1.67%		0.22% to 0.77%		1.40%
Expected term (years)		3.00		3.00 to 5.00		3.00

The following table summarizes the activity for our awards with a market condition or performance condition:

(Shares in thousands)		Shares				Weighted average grant date fair value
Balance, January 1, 2022			1,246			$	41.23
Granted			183				96.63
Effect of vesting multiplier			642
Vested			(1,086	)			20.38
Balance, December 31, 2022			985			$	60.15

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Note 1112 - Common Stock Repurchase Program

On August 8, 2022, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $150 million of outstanding common stock could be repurchased from time to time (the "2023 Repurchase Program"). The duration of the 2023 Repurchase Program is through the end of December 2023. Under the 2023 Repurchase Program during the fourth quarter of fiscal 2022, we repurchased 288,652 shares for $20.0 million, or an average price paid per share of $69.27. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2023 Repurchase Program were retired by the end of the fourth quarter of fiscal 2022. As of December 31, 2022, the remaining portion of the amount authorized for the 2023 Repurchase Program is approximately $129.7 million. We repurchased a total of 1,951,934 shares for $110.1 million, or an average price paid per share of $56.42, during fiscal year 2022.

Note 13 - Income Taxes

We are subject to federal and state income tax as well as income tax in the various foreign jurisdictions in which we operate.

The domestic and foreign components of Income (loss) before income taxes were as follows:

		Year Ended
(In thousands)		December 28, 2019				December 29, 2018				December 30, 2017
Domestic		$	33,417			$	(8,274	)		$	(17,341	)
Foreign		11,648				(15,695		)		(52,372		)
Income (loss) before taxes		$	45,065			$	(23,969	)		$	(69,713	)

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Domestic		$	30,362			$	24,003			$	11,772
Foreign			151,750				73,623				36,684
Income before taxes		$	182,112			$	97,626			$	48,456

The components of the Income tax expense are as follows:

		Year Ended
		December 31,				January 1,				January 2,
(In thousands)		2022				2022				2021
Current:
Federal		$	748			$	445			$	54
State			265				45				68
Foreign			3,637				1,538				1,025
			4,650				2,028				1,147
Deferred:
Federal			—				—				—
State			—				—				—
Foreign			(1,420	)			(324	)			(83	)
			(1,420	)			(324	)			(83	)
Income tax expense		$	3,230			$	1,704			$	1,064

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		Year Ended
(In thousands)		December 28, 2019				December 29, 2018				December 30, 2017
Current:
Federal		$	499			$	536			$	508
State		45				38				30
Foreign		1,345				1,869				304
		1,889				2,443				842
Deferred:
Federal		—				—				—
State		—				—				—
Foreign		(317		)		(90		)		7
		(317		)		(90		)		7
Income tax expense		$	1,572			$	2,353			$	849

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Income tax expense differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

		Year Ended
		December 28, 2019		December 29, 2018		December 30, 2017
		%		%		%
Statutory federal rate		21		(21)		(35)
Adjustments for tax effects of:
State taxes, net		3		(6)		(7)
Research and development credits		3		(5)		(1)
Stock compensation		(11)		8		3
Foreign rate differential		(2)		20		28
Foreign dividends		—		—		1
Foreign withholding taxes		3		5		—
Other permanent		6		2		—
Other deferred tax asset adjustment		—		13		—
Valuation allowance		(19)		(11)		(73)
Change in uncertain tax benefit accrual		—		2		1
Stock compensation (ASU 2016-09) adoption		—		—		(8)
Tax rate change		—		—		93
Other		—		3		(1)
Effective income tax rate		4		10		1

ASC 740, “Income Taxes”, provides for the recognition

		Year Ended
		December 31,			January 1,			January 2,
		2022			2022			2021
		%			%			%
Statutory federal rate		21			21			21
Adjustments for tax effects of:
State taxes, net		(2)			(4)			(4)
Federal tax credits		(1)			(3)			(3)
Excess tax benefit from stock compensation		—			(8)			(10)
Foreign rate differential		(16)			(14)			(12)
U.S. tax on foreign operations		33			3			15
Foreign withholding taxes		1			1			3
Capital loss expiration		1			3			—
Other deferred tax asset adjustment		—			—			3
Valuation allowance		(33)			8			(13)
Change in uncertain tax benefit accrual		(2)			(5)			2
Effective income tax rate		2			2			2

We updated our evaluation of deferred tax assets if realization of these assets is more-likely-than-not. We evaluate both positive and negative evidence to determine if some or all of our deferred tax assets should be recognized on a quarterly basis.

Through December 28, 2019, we continued to evaluate the valuation allowance position in the United States through December 31, 2022 and concluded that we should continue to maintain a full valuation allowance against the net federal and state deferred tax assets. In making this evaluation, we exercised significant judgmentconsidered the uncertain stability of the current economic and consideredoperating environment and estimates about our ability to generate revenue and taxable profits sufficient to offset expendituresincome in future periods within the United States. It is reasonably possible that during the next twelve months, we will establish a sustained level of profitability in the U.S. As a result, we may reverse a significant portion of the valuation allowance recorded against our U.S. deferred tax assets. The reversal would result in an income tax benefit for the quarterly and annual fiscal period in which we release the valuation allowance.

We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the net deferred tax assets. We don't have a valuation allowance in any foreign jurisdictions as we have concluded it is more likely than not that we will realize the net deferred tax assets in future periods. The net decrease in the total valuation allowance affecting the effective tax rate for the year ended December 28, 2019 was approximately $8.6 million, mainly attributable to the write down of intangible assets which had no tax basis.

periods.

The components of our net deferred tax assets and liabilities are as follows:

(In thousands)		December 31, 2022				January 1, 2022
Deferred tax assets:
Intangible assets		$	6,264			$	8,236
Net operating loss carry forwards			15,362				88,254
Tax credit carry forwards			103,092				93,095
Accrued liabilities and reserves			12,932				6,590
Stock-based and deferred compensation			3,769				4,477
Other			5,031				6,615
Total deferred tax assets			146,450				207,267
Less: valuation allowance			(140,533	)			(200,438	)
Net deferred tax assets			5,917				6,829
Deferred tax liabilities:
Fixed assets			2,058				2,379
Unremitted earnings			2,498				2,128
Other			8,134				9,969
Total deferred tax liabilities			12,690				14,476
Net deferred taxes		$	(6,773	)		$	(7,647	)
Reported as:
Deferred tax assets (included in Other long-term assets)		$	1,022			$	953
Deferred tax liabilities (included in Other long-term liabilities)			(7,795	)			(8,600	)
Net deferred taxes		$	(6,773	)		$	(7,647	)

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(In thousands)		December 28, 2019				December 29, 2018
Deferred tax assets:
Accrued expenses and reserves		$	4,137			$	3,714
Inventory		—				2
Deferred Revenue		—				—
Stock-based and deferred compensation		2,812				2,660
Interest expense disallowance		—				1,283
Intangible assets		12,294				14,649
Fixed assets		256				281
Net operating loss carry forwards		86,899				88,333
Tax credit carry forwards		90,339				92,208
Capital loss carry forwards		4,235				5,007
Other		1,059				1,130
Total deferred tax assets		202,031				209,267
Less: valuation allowance		(198,499		)		(207,108		)
Net deferred tax assets		3,532				2,159
Deferred tax liabilities:
Fixed assets		2,620				1,536
Deferred revenue		434				525
Other		—				(57		)
Total deferred tax liabilities		3,054				2,004
Net deferred tax assets		$	478			$	155

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The following table displays the activity related to changes in our valuation allowance for deferred tax assets:

Fiscal Years Ended (In thousands)		Balance at beginning of period				Charged (Credit) to costs and expenses				Charged (credit) to other accounts				Balance at end of period
Valuation allowance for deferred tax assets
December 28, 2019		$	207,108			$	(8,609	)		$	—			$	198,499
December 29, 2018		$	209,691			$	(2,583	)		$	—			$	207,108
December 30, 2017		$	260,687			$	(50,960	)		$	(36	)		$	209,691

Fiscal Years Ended		Balance at beginning				Charged (Credit) to costs and				Charged (credit) to other				Balance at end of
(In thousands)		of period				expenses				accounts				period
December 31, 2022		$	200,438			$	(59,905	)		$	—			$	140,533
January 1, 2022		$	192,478			$	7,960			$	—			$	200,438
January 2, 2021		$	198,499			$	(6,021	)		$	—			$	192,478

At December 28, 2019, 31, 2022, we had U.S. federal net operating loss ("NOL") carryforwards (pretax) of approximately $360.5$16.3 million that expire at various dates between 2020 and 2037.which do not expire. We had state NOL carryforwards (pretax) of approximately $141.3$142.0 million that substantially all expire at various dates from 2023 through 2041. We also had federal credit carryforwards of $59.1 million that expire at various dates from 20202023 through 2039. We also had federal2042, and $75.0 million state credit carryforwards, of $50.1 million and $62.6 million, respectively. Of the $62.6 million state credit carryforwards, $61.9 millionwhich substantially all do not expire. The federal and remaining state credits expire at various dates from 2020 through 2039.

Future utilization of federal and state net operating losses and tax credit carry forwards may be limited if cumulative changes to ownership exceed 50% within any three-yearthree-year period. IfHowever, if there is a significant change in ownership, future tax attribute utilization may be restrictedlimited and NOL carryforwards and/or R&D credits will be reduced to reflect the limitation.

Foreign earnings may be subject to withholding taxes in local jurisdictions if they are distributed and repatriated in the United States.distributed. At December 28, 2019, 31, 2022, U.S. income taxes and foreign withholding taxes were not provided for on a cumulative total of approximately $2.9$3.0 million of the undistributed earnings of our Chinese subsidiary.foreign subsidiaries. We intend to reinvest these earnings indefinitely.

At December 28, 2019, 31, 2022 and January 1, 2022, our unrecognized tax benefits associated with uncertain tax positions were $41.9$58.9 million and $56.2 million, respectively, of which $39.9$56.3 million and $54.0 million, respectively, if recognized, would affect the effective tax rate, subject to valuation allowance. As of December 28, 2019, 31, 2022 and January 1, 2022, interest and penalties associated with unrecognized tax benefits were $9.0$10.6 million and $9.6 million, respectively, which are not reflected in the table below.

We accrue interest and penalties related to uncertain tax positions in Income tax expense.

The following table summarizes the changes to unrecognized tax benefits for the fiscal years presented:

(In thousands)		Amount
Balance at December 31, 2016		$	47,623
Additions based on tax positions related to the current year		471
Additions based on tax positions of prior years		11
Reduction for tax positions of prior years		(1,226		)
Reduction as a result of lapse of applicable statute of limitations		(2,047		)
Balance at December 30, 2017		44,832
Additions based on tax positions related to the current year		389
Additions based on tax positions of prior years		19
Reductions for tax positions of prior years		(5		)
Reduction as a result of lapse of applicable statute of limitations		(1,235		)
Balance at December 29, 2018		44,000
Additions based on tax positions related to the current year		238
Additions based on tax positions of prior years		334
Reductions for tax positions of prior years		(213		)
Reduction as a result of lapse of applicable statute of limitations		(2,432		)
Balance at December 28, 2019		$	41,927

		(In thousands)
Balance at December 28, 2019		$	56,962
Additions based on tax positions related to the current year			548
Additions based on tax positions of prior years			628
Reduction for tax positions of prior years			—
Reduction as a result of lapse of applicable statute of limitations			(2,401	)
Balance at January 2, 2021			55,737
Additions based on tax positions related to the current year			1,156
Additions based on tax positions of prior years			1,130
Additions due to acquisition			977
Settlements			(51	)
Reduction as a result of lapse of applicable statute of limitations			(2,718	)
Balance at January 1, 2022			56,231
Additions based on tax positions related to the current year			1,594
Additions based on tax positions of prior years			2,798
Settlements			(148	)
Reduction as a result of lapse of applicable statute of limitations			(1,586	)
Balance at December 31, 2022		$	58,889

Our liability for uncertain tax positions (including penalties and interest) was $24.6 million and $26.3$21.6 million at both December 28, 201931, 2022 and December 29, 2018, respectively,January 1, 2022 and is recorded as a component of Other long-term liabilities on our Consolidated Balance Sheets. The remainder of our uncertain tax position exposure of $24.8$47.9 million and $44.2 million at December 31, 2022 and January 1, 2022, respectively, is netted against deferred tax assets.

At December 28, 2019, 31, 2022, it is reasonably possible that $2.4$1.0 million of unrecognized tax benefits and $0.5$0.2 million of associated interest and penalties could be recognized during the next twelve months. The $2.9 million potential change would represent a decrease in unrecognized tax benefits, comprised

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Table of items related to tax filings for years that will no longer be subject to examination under expiring statutes of limitations.Contents

The years that remain subject to examination are 2016are 2017 for federal income taxes, 2015 forand state income taxes, and 20122016 for foreign income taxes, including years ending thereafter. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward amount.

Our Philippines 2016 and 2017 and Israeli 2013 through 2017Singapore 2020 income tax returns arereturn is currently under examination. We are not under examination in any other jurisdiction.

We are not currently paying U.S. federal income taxes and do not expect to pay such taxes until we fully utilize our tax NOL and credit carryforwards. We expect to pay a nominal amount of state income tax. We are paying foreign income and withholding taxes, which are reflected in income tax expense in our Consolidated Statements of Operations and are primarily related to the cost of operating offshore activities and subsidiaries. We accrue interest and penalties related to uncertain tax positions in income tax expense.

Note 1214 - Employee Benefit Plans

Qualified Investment Plan

In 1990, we adopted a 401(k)401(k) tax-deferred savings plan, which provides all employees in the United States who meet certain eligibility requirements with an opportunity to accumulate funds for retirement. Participants may contribute up to the amount allowable as a deduction for federal income tax purposes. The plan does not allow investments in the Company's common stock. The plan allows for the Company to make discretionary matching contributions in cash. We recorded matching contributions of approximately $0.8$2.8 million, $0.6$2.6 million, and $0.8$2.4 million in fiscal years 2019, 2018,2022, 2021, and 2017,2020, respectively.

Cash Incentive Plans

For 2019, 2018,2022, 2021, and 2017,2020, the Board of Directors of the Company, upon the recommendation of the Compensation Committee, approved the Cash Incentive Plan (the “Cash Plans”) for the respective fiscal year. The chief executive officer, other executive officers, and other members of senior management, including vice presidents and director-level employees, together with all other employees of the Company not on the Company's sales incentive plan are eligible to participate in the Cash Plans. Under the Cash Plans, individual cash incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives. The Compensation Committee determines the performance of the chief executive officer, the chief financial officer and other participants based on the achievement of the management objectives established by the Compensation Committee during the first quarter of the respective fiscal year. We recorded approximately $5.8$25.2 million, $5.9$18.0 million, and $7.2$7.9 million of expense under the Cash Plans in fiscal 2019, 2018,2022, 2021, and 2017,2020, respectively.

Note 1315 - Contingencies

Legal Matters

On or about December 19, 2018, Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswald (collectively, the “Plaintiffs”) commenced an action against the Company and several unnamed defendants in the Multnomah County Circuit Court of the State of Oregon, in connection with the sale of certain products by the Company to the Plaintiffs in or around 2008. The Plaintiffs allege that we violated The Lanham Act, engaged in negligence and fraud by failing to disclose to the Plaintiffs the export-controlled status of the subject parts. The Plaintiffs seek damages of $138$155 million to $268 million, treble damages, and other remedies. In January 2019, we removed the action to the United States District Court for the District of Oregon. At this stage of the proceedings, we do not have an estimate of the likelihood or the amount of any potential exposure to the Company; however, we believe that these claims are without merit and intend to vigorously defend the action. See “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.

From time to time, we are exposed to certain additional asserted and unasserted potential claims. Periodically, weWe review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we then accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may revise estimates.

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Note 14 - Quarterly Financial Data (Unaudited)

A summary of the Company's consolidated quarterly results of operations is as follows:

		2019																2018
(In thousands, except per share data)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Revenue		$	100,237			$	103,469			$	102,296			$	98,091			$	95,977			$	101,484			$	102,715			$	98,623
Gross margin		59,293				61,439				60,038				57,652				54,306				58,364				50,248				56,521
Restructuring charges		(55		)		252				3,126				1,341				11,854				90				4,376				1,029
Net income (loss)		$	13,987			$	13,539			$	8,559			$	7,408			$	(7,121	)		$	6,974			$	(20,223	)		$	(5,952	)
Net income (loss) per share - basic		$	0.10			$	0.10			$	0.06			$	0.06			$	(0.05	)		$	0.05			$	(0.16	)		$	(0.05	)
Net income (loss) per share - diluted		$	0.10			$	0.10			$	0.06			$	0.05			$	(0.05	)		$	0.05			$	(0.16	)		$	(0.05	)

Note 15 - Subsequent Event

Subsequent to December 28, 2019, the Company's Board of Directors approved a stock repurchase program pursuant to which up to $40.0 million of outstanding common stock may be repurchased from time to time. The duration of the repurchase program is twelve months. All repurchases will be open market transactions and funded from available working capital.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

of Lattice Semiconductor Corporation:

Corporation

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Lattice Semiconductor Corporation and subsidiaries (the Company) as of December 28, 201931, 2022 and December 29, 2018,January 1, 2022, the related consolidated statements of operations, comprehensive income, (loss), stockholders’ equity and cash flows for each of the three years in the three‑year period ended December 28, 2019,31, 2022, and the related notes (collectively referred to as the consolidated“consolidated financial statements)statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofat December 28, 201931, 2022 and December 29, 2018,January 1, 2022, and the results of its operations and its cash flows for each of the three years in the three‑year periodperiods ended December 28, 2019,31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sCompany's internal control over financial reporting as of December 28, 2019,31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 202017, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of December 30, 2018, due to the adoption of ASC 842, Leases, and related amendment ASU 2019-01, Leases (Topic 842): Codification Improvements.

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition as of December 31, 2017, due to the adoption of ASC 606, Revenue from Contracts with Customers.

thereon.

Basis for Opinion

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

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

Critical Audit Matter

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

Assessment of the net realizable value of inventory

As discussed in Notes 1 and 4 to the consolidated financial statements, the Company’s inventories were $54,980 thousand as of December 28, 2019. The Company records its inventories at the lower of average cost or market. The Company records an adjustment to the cost basis of inventory when it is obsolete or the Company holds quantities in excess of projected customer demand. These adjustments result in a write-down of inventory to net realizable value. The Company’s estimate of the obsolete and/or excess inventory includes comparing projected customer demand to inventory units-on-hand.

We identified the assessment of the net realizable value of inventory as a critical audit matter. This is due to a higher degree of auditor judgment that was required to evaluate projected customer demand, due to the dynamic business environment the Company competes in, which is characterized by rapid technology and product evolution.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s inventory process, including controls related to the Company’s projected customer demand. We evaluated the assumption that historical sales was a relevant predictor of projected customer demand by:

they relate.

		Inventory Valuation
–	inquiring of relevant Company personnel in order to identify and analyze changes to the overall business environment, including customers, key products or product lines, and industry factors,

–Description of the Matter	selecting	The Company's net inventory totaled $110.4 million as of December 31, 2022. As explained in “Note 1 - Basis of Presentation and Significant Accounting Policies” within the consolidated financial statements, the Company records inventory at the lower of cost or net realizable value, and writes down inventories to net realizable value if it is obsolete or if quantities are in excess of projected customer demand.
		Auditing management’s estimates of excess and obsolete inventory was challenging because the estimate is judgmental and considers a samplenumber of factors that are affected by market and economic conditions that are outside of the Company’s control. In particular, excess and obsolete inventory itemscalculations are sensitive to significant assumptions that relate to projected customer demand for the Company’s products.
How We Addressed the Matter in Our Audit		We evaluated and testingtested the design and operating effectiveness of the Company's internal controls over the calculation of excess and obsolete inventory, including the determination of projected customer demand and related application against on-hand inventory.
		Our audit procedures included, among others, evaluating the significant assumptions stated above and the underlying data used in management's excess and obsolete inventory assessment. We evaluated inventory levels compared to projected customer demand, historical sales, of those samples by agreeing them to underlying sales documents and comparing it to inventory units-on-hand, and

–	obtainingspecific product considerations. We also assessed the historical sales for each product line associated with each sample selectionaccuracy of management's estimates and performing a historical sales trend analysis.performed sensitivity analyses to evaluate the changes in inventory valuation that would result from changes in significant assumptions.

/s/ KPMGErnst & Young LLP

We have served as the Company's auditor since 2007.2020.

San Jose, California

February 17, 2023

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Portland, Oregon

February 24, 2020

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

of Lattice Semiconductor Corporation:

Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Lattice Semiconductor Corporation and subsidiaries’ (the Company)Corporation’s internal control over financial reporting as of December 28, 2019,31, 2022, based on criteria established in Internal Control - Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.Commission (2013 framework) (the COSO criteria). In our opinion, the CompanyLattice Semiconductor Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2019,31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheetssheet of the Company as of December 28, 201931, 2022 and December 29, 2018,January 1, 2022, the related consolidated statements of operations, comprehensive income, (loss), stockholders’ equity and cash flows for each of the three years in the three-year period ended December 28, 2019,31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 202017, 2023 expressed an unqualified opinion on those consolidated financial statements.

thereon.

Basis for Opinion

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

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

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

Definition and Limitations of Internal Control Over Financial Reporting

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

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

/s/ KPMGErnst & Young LLP

Portland, Oregon

San Jose, California

February 24, 202017, 2023

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Item 9. Changes in and Disagreements with Accountants On Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

In connection with the filing of this Annual Report on Form 10-K, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 28, 2019.31, 2022. These disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that we accumulate and communicate correct information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls are effective as of December 28, 2019.

31, 2022.

Management's Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that:

(i)	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii)	(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)	(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations,

We do not expect that our disclosure controls and procedures or our internal control over financial reporting may notwill prevent or detect misstatements.all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met, and may not prevent or detect misstatements. Also, projectionsFurther, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any evaluationsystem of effectiveness tocontrols also is based in part upon certain assumptions about the likelihood of future periods are subject to the riskevents, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's internal control over financial reporting as of December 28, 2019.31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on this assessment, management concluded that, as of December 28, 2019,31, 2022, the Company's internal control over financial reporting was effective.

KPMG

Ernst & Young LLP, our independent registered public accounting firm, has audited the Company's internal control over financial reporting and has issued its opinion on the effectiveness of the Company's internal control over financial reporting, which appears on page 5560 in this Annual Report on Form 10-K.

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Changes in Internal Control over Financial Reporting

During the quarter ended December 28, 2019, the Company’s management identified deficiencies in the design and operation of  general information technology controls over system access. We evaluated the controls over system access and designed a remediation plan which included implementing additional controls and improving the design of existing controls over system access. During the quarter ended December 28, 2019, management implemented the remediation plan, tested the controls over system access, and concluded the deficiencies had been remediated.

Except with respect to the changes in connection with our implementation of the remediation plan discussed above, there

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of fiscal 20192022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We do not believe there has been any material impact to our internal controls over financial reporting notwithstanding that most of our employees are working remotely due to the COVID-19 pandemic. We continue to monitor and assess the COVID-19 situation on our internal controls to address any potential impact on their design and operating effectiveness.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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None.

PART III

---

Certain information required by Part III is incorporated by reference from our definitive proxy statement (the “Proxy Statement”) for the 20202023 Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, which we will file not later than 120 days after the end of the fiscal year covered by this report. With the exception of the information expressly incorporated by reference from the Proxy Statement, the Proxy Statement is not to be deemed filed as a part of this report.

Item 10. Directors, Executive Officers and Corporate Governance

Information regarding our directors that is required by this item is incorporated by reference from the information contained under the captions “Proposal 1: Election of Directors” and “Corporate Governance and Other Matters--Board Meetings and Committees” in the Proxy Statement. Information regarding our executive officers that is required by this item is incorporated by reference from the information contained under the caption "Executive Compensation--The Executive Officers of the Company” in the Proxy Statement.

Information regarding Section 16(a) reporting compliance that is required by this item is incorporated by reference from the information contained under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

We have adopted a Code of Conduct that applies to all of our directors, employees, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions.functions, consultants, contractors, and agents. The Code of Conduct is posted on our website at www.latticesemi.com. There were no changes towww.latticesemi.com. In fiscal 2022, we rescinded our Director Code of Ethics and  expanded our Code of Conduct during fiscal 2019.to cover directors, consultants, and agents. In addition, we revised our Code of Conduct to provide general guidance on how to handle ethical business decisions, and to expand and/or clarify provisions in the Code of Conduct related to antitrust, conflicts of interest, improper conduct and activities, and public disclosures. We also revised our Corporate Governance Policies to incorporate any items previously addressed in the Director Code of Conduct that the revised Code of Conduct did not address. Amendments to the Code of Conduct or any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules, if any, will be disclosed on our website at www.latticesemi.com.

www.latticesemi.com.

Information about our Corporate Governance Policies our “Director Code of Ethics” and written committee charters for our Audit Committee, Compensation Committee, and Nominating and Governance Committee are available free of charge on the Company's website at www.latticesemi.com and are available in print to any shareholder upon request.

Information regarding our Audit Committee that is required by this Item is incorporated by reference from the information concerning our Audit Committee contained under the caption “Corporate Governance and Other Matters--Board Meetings and Committees” in the Proxy Statement.

Item 11. Executive Compensation

The information contained under the captions “Executive Compensation,” "Director Compensation," “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information contained under the captions “Security Ownership of Certain Beneficial Owners and Management” and "Equity Compensation Plan Information" in the Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information contained under the captions entitled “Certain Relationships and Related Transactions” and “Corporate Governance and Other Matters--Director Independence” in the Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information contained under the caption entitled “Proposal 5: Ratification of Appointment of Independent Registered Public Accounting Firm--Audit and Related Fees” in the Proxy Statement is incorporated herein by reference.

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PART IV

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Item 15. Exhibits

(a) List of Documents Filed as Part of this Report

(1) All financial statements

The following financial statements are filed as part of this report under Item 8.

Consolidated Financial Statements:	Page
Consolidated Statements of Operations	2935
Consolidated Statements of Comprehensive Income (Loss)	3036
Consolidated Balance Sheets	3137
Consolidated Statements of Cash Flows	3238
Consolidated Statements of Stockholders' Equity	3439
Notes to Consolidated Financial Statements	3540

All other schedules have been omitted because the required information is included in the Consolidated Financial Statements or the notes thereto, or is not applicable or required.

(2) Exhibits

Exhibit Number		Description
Exhibit Number 3.1		Description
3.1		The Company’s Restated Certificate of Incorporation, filed, as amended on June 4, 2009 (Incorporated by reference to Exhibit 3.1 filed with the Company's Current Report on Form 8-K filed June 4, 2009).
3.2		The Company’s Bylaws, as amended as of November 3, 2016April 29, 2022 (Incorporated by reference to Exhibit 3.23.1 filed with the Company's AnnualQuarterly Report on Form 10-K10-Q for the fiscal yearquarter ended December 31, 2016)April 2, 2022).
4.1		Description of SecuritiesSecurities.
10.1*		Lattice Semiconductor Corporation 1996 Stock Incentive Plan, as amended, and Related Form of Option Agreement (Incorporated by reference to Exhibit 10.24 filed with the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012).
10.2*		2001 Stock Plan, as amended, and related Form of Option Agreement (Incorporated by reference to Exhibit 10.34 filed with the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012).
10.3*		Form of Indemnification Agreement executed by each director and executive officer of the Company and certain other officers and employees of the Company and its subsidiaries (Incorporated by reference to Exhibit 10.41 filed with the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2004).
10.4* 10.2*		Form of Amendment to Stock Option Agreements for 1996 Stock Incentive Plan, as amended, and 2001 Stock Plan, as amended (Incorporated by reference to Exhibit 99.3 filed with the Company’s Current Report on Form 8-K filed on December 12, 2005).
10.5*		Form of Notice of Grant of Restricted Stock Units to Executive Officer (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K filed on February 8, 2007).
10.3*
10.6*		Employment Agreement between Lattice Semiconductor Corporation and Byron Milstead effective as of December 30, 2008 (Incorporated by reference to Exhibit 10.66 filed with the Company's Annual Report on Form 10-K filed for the fiscal year ended January 3, 2009).
10.7		Credit Agreement among Lattice Semiconductor Corporation, the Subsidiary Guarantors from time to time party thereto, the various Lenders from time to time party thereto, Jefferies Finance LLC as Administrative Agent, Jefferies Finance LLC and HSBC Securities (USA) Inc. as lead arrangers and book runners, Jefferies Finance LLC as syndication agent and HSBC Securities (USA) Inc. and ING Capital LLC as co-documentation agents (Incorporated by reference to Exhibit 10.1 filed with the Company's Current Report on Form 8-K filed March 11, 2015).
10.8*		Lattice Semiconductor Corporation 2012 Employee Stock Purchase Plan (incorporated by reference to Annex 1 to the Company's Definitive Proxy Statement on Schedule 14A for the 2012 Annual Meeting of Stockholders filed on April 12, 2012).
10.9*10.4*		Lattice Semiconductor Corporation 2011 Non-Employee Director Equity Incentive Plan. (Incorporated by reference to Exhibit 99.2 filed with the Company’s Registration Statement on Form S-8 filed June 25, 2019).
10.10*10.5*		Lattice Semiconductor Corporation 2013Form of 2011 Non-Employee Director Equity Incentive Plan. (Incorporated by reference to Exhibit 99.1 filed with the Company’s Registration Statement on Form S-8 filed June 25, 2019).Plan Outside Director Option Agreement.

10.6*		Form of 2011 Non-Employee Director Equity Incentive Plan Restricted Stock Unit Agreement.
10.7*		Lattice Semiconductor Corporation 2013 Incentive Plan, as amended and restated (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 23, 2020).
10.8*		Form of 2013 Incentive Plan Stock Option Agreement.

*	Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.

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Exhibit Number			Description
10.1110.9*			Office Lease, effective asForm of October 21, 2014, between 555 SW Oak, LLC2013 Incentive Plan Restricted Stock Unit Agreement.
10.10*			Form of 2013 Incentive Plan Stock Option Agreement (Performance-Based Option).
10.11*			Form of 2013 Incentive Plan Notice of Performance-Based Restricted Stock Unit Award and Lattice Semiconductor Corporation (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed October 27, 2014)Global Performance-Based Restricted Stock Unit Agreement (TSR Performance Basis).
10.12*			Lattice Semiconductor Corporation 2017 CashForm of 2013 Incentive Plan (Incorporated by reference to Exhibit 10.12 filed with the Company's Annual Report on Form 10-K filed on March 14, 2018)Notice of Performance-Based Restricted Stock Unit Award and Global Performance-Based Restricted Stock Unit Agreement (Revenue Growth Performance Basis).
10.13*10.13			Amended and Restated Credit Agreement, dated as of September 1, 2022, by and among Lattice Semiconductor Corporation, 2018 Cash Incentive Planas borrower, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. (Incorporated by reference to Exhibit 10.1310.1 filed with the Company's Current Report on Form 8-K filed September 2, 2022).
10.14*			Lattice Semiconductor Corporation 2020 Cash Incentive Plan (incorporated by reference to Exhibit 10.9 filed with the Company’s Annual Report on Form 10-K filed on February 26, 2019)2021).
10.15*			Lattice Semiconductor Corporation 2021 Cash Incentive Plan (incorporated by reference to Exhibit 10.9 filed with the Company’s Annual Report on Form 10-K filed on February 23, 2022).
10.14*10.16*			Lattice Semiconductor Corporation 20192022 Cash Incentive PlanPlan.
10.15* 10.17*			Separation Agreement, dated as of March 12, 2018, between Lattice Semiconductor Corporation and Darin G. Billerbeck (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on March 12, 2018).
10.16		Letter Agreement, dated as of March 7, 2018, among Lattice Semiconductor Corporation, Lion Point Capital, LP, Lion Point Master, LP, Lion Point Capital GP, LLC, Lion Point Holdings GP, LLC, Didric Cederholm and Jim Freeman (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on March 13, 2018).
10.17*		Amended Employment Agreement, by and between Lattice Semiconductor Corporation and James R. Anderson, effective September 4, 2018February 21, 2020. (Incorporated by reference to Exhibit 10.1 filed with10.23 of the Company’s CurrentAnnual Report on Form 8-K10-K filed on August 27, 2018)February 24, 2020).
10.18*			Form of Amended Employment Agreement (Incorporated by reference to Exhibit 10.24 of the Company’s Annual Report on Form 10-K filed on February 24, 2020).
10.19*			Employment Agreement, by and between Lattice Semiconductor Corporation and Stephen Douglass, effective September 4, 2018 (Incorporated by reference to Exhibit 10.2 filed with the Company’s Quarterly Report on Form 10-Q filed on October 29, 2018).
10.19* 10.20*			Employment Agreement, by and between Lattice Semiconductor Corporation and Sherri Luther, effective January 2, 2019 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on January 2, 2019).
10.20* 10.21*			CFO Notice and Supplemental Separation Benefit Letter, by and between Lattice Semiconductor Corporation and Max Downing, dated September 28, 2018 (Incorporated by reference to Exhibit 10.3 filed with the Company’s Quarterly Report on Form 10-Q filed on October 29, 2018).
10.21*		Employment Agreement, by and between Lattice Semiconductor Corporation and Esam Elashmawi, dated September 24, 2018 (Incorporated by reference to Exhibit 10.20 filed with the Company’s Annual Report on Form 10-K filed on February 26, 2019.).
10.22			Credit Agreement, dated as of May 17, 2019, by and among Lattice Semiconductor Corporation, as borrower, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. (Incorporated by reference to Exhibit 10.1 filed with the Company's Current Report on Form 8-K filed May 20, 2019).
10.23
10.23*		Amended Employment Agreement, byOffice Lease, effective as of October 21, 2014, between 555 SW Oak, LLC and between Lattice Semiconductor Corporation and James R. Anderson, effective February 21, 2020.
10.24*		(Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form of Amended Employment Agreement8-K filed October 27, 2014).
21.1			Subsidiaries of the Registrant.
23.1			Consent of Independent Registered Public Accounting Firm.Firm (Ernst & Young LLP).
31.124.1			Power of Attorney (reference is made to the signature page hereto).

*	Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.

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Exhibit Number			Description
31.1			Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.INS104			Cover Page Interactive Data File - formatted in Inline XBRL Instance Documentand included in Exhibit 101
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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*	Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LATTICE SEMICONDUCTOR CORPORATION
(Registrant)
By:	/s/ Sherri Luther
	Sherri Luther Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)
Date:	February 24, 202017, 2023

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James Anderson and Sherri Luther, or either of them, his or her attorneys-in-fact, each with the power of substitution, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated and on the dates indicated:

Signature	Title
Signature	Title	Date
Principal Executive
Officer
/s/ James Anderson		February 17, 2023
James Anderson	President, Chief Executive Officer, and Director
Principal Financial and
Accounting Officer
/s/ Sherri Luther		February 17, 2023
Sherri Luther	Chief Financial Officer
Directors
/s/ Robin Abrams		February 17, 2023
Robin Abrams	Director
/s/ James AndersonDoug Bettinger		February 24, 202017, 2023
James AndersonDoug Bettinger	President, Chief Executive Officer, and Director
Principal Financial and Accounting Officer
/s/ Sherri LutherMark Jensen		February 17, 2023
Mark Jensen	Director
	February 24, 2020
Sherri Luther	Chief Financial Officer
Directors
/s/ Robin Abrams		February 24, 2020
Robin Abrams	Director
/s/ John Bourgoin		February 24, 2020
John Bourgoin	Director
/s/ Mark Jensen		February 24, 2020
Mark Jensen	Director
/s/ Anjali Joshi		February 17, 2023
Anjali Joshi	Director
	February 24, 2020
Anjali Joshi	Director
/s/ James Lederer		February 24, 2020
James Lederer	Director
/s/ John Major		February 24, 2020
John Major	Director
		February 24, 2020
Krishna Rangasayee /s/ James Lederer		February 17, 2023
James Lederer	Director
/s/ Jeff Richardson		February 17, 2023
Jeff Richardson	Director
		February 24, 2020
Jeff Richardson	Director
/s/ Raejeanne Skillern		February 17, 2023
Raejeanne Skillern	Director

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