Risk Factors Dashboard

Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.

Risk Factors - ALGM

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$ALGM Risk Factor changes from 00/05/25/23/2023 to 00/05/23/24/2024

Item 1A. “Risk Factors” in this Annual Report. These risks and uncertainties include, but are not limited to: •downturns or volatility in general economic conditions; •our ability to compete effectively, expand our market share and increase our net sales and profitability; •our reliance on a limited number of third-party semiconductor wafer fabrication facilities and suppliers of other materials; •any failure to adjust purchase commitments and inventory management based on changing market conditions or customer demand; •shifts in our product mix, customer mix or channel mix, which could negatively impact our gross margin; •the cyclical nature of the semiconductor industry, including the analog segment in which we compete; •any downturn or disruption in the automotive market or industry; •our ability to successfully integrate the acquisition of other companies or technologies and products into our business; •our ability to compensate for decreases in average selling prices of our products and increases in input costs; •our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products; •our ability to accurately predict our quarterly net sales and operating results and meet the expectations of investors; •our dependence on manufacturing operations in the Philippines; •our reliance on distributors to generate sales; •events beyond our control impacting us, our key suppliers or our manufacturing partners; •our ability to develop new product features or new products in a timely and cost-effective manner; •our ability to manage growth; •any slowdown in the growth of our end markets; •the loss of one or more significant customers; •our ability to meet customers’ quality requirements; •uncertainties related to the design win process and our ability to recover design and development expenses and to generate timely or sufficient net sales or margins; •changes in government trade policies, including the imposition of export restrictions and tariffs; •our exposures to warranty claims, product liability claims and product recalls; •our dependence on international customers and operations; •the availability of rebates, tax credits and other financial incentives on end-user demands for certain products; 1 •risks, liabilities, costs and obligations related to governmental regulations and other legal obligations, including export/trade control, privacy, data protection, information security, cybersecurity, consumer protection, environmental and occupational health and safety, antitrust, anti-corruption and anti-bribery, product safety, environmental protection, employment matters, and tax; •the volatility of currency exchange rates; •our ability to raise capital to support our growth strategy; •our indebtedness may limit our flexibility to operate our business; •our ability to effectively manage our growth and to retain key and highly skilled personnel; •our ability to protect our proprietary technology and inventions through patents or trade secrets; •our ability to commercialize our products without infringing third-party intellectual property rights; •disruptions or breaches of our information technology systems or confidential information or those of our third-party service providers; •our principal stockholder has substantial control over us; •anti-takeover provisions in our organizational documents and under the General Corporation Law of the State of Delaware (the “DGCL”); •any failure to design, implement or maintain effective internal control over financial reporting; •changes in tax rates or the adoption of new tax legislation; •the negative impacts of sustained inflation on our business; •the physical, transition and litigation risks presented by climate change; and •other events beyond our control. These risks and uncertainties include, but are not limited to:•downturns or volatility in general economic conditions;•our ability to compete effectively, expand our market share and increase our net sales and profitability;•our reliance on a limited number of third-party semiconductor wafer fabrication facilities and suppliers of other materials;•our failure to adjust purchase commitments and inventory management based on changing market conditions or customer demand;•shifts in our product mix or customer mix, which could negatively impact our gross margin;•the cyclical nature of the analog semiconductor industry;•any downturn or disruption in the automotive market;•our ability to compensate for decreases in average selling prices of our products and increases in input costs;•our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products;•our ability to accurately predict our quarterly net sales and operating results;•our ability to adjust our supply chain volume to account for changing market conditions and customer demand;•our dependence on manufacturing operations in the Philippines;•our reliance on distributors to generate sales;•the effects of COVID-19 on our supply chain and customer demand;•our ability to develop new product features or new products in a timely and cost-effective manner;•our ability to manage growth;•any slowdown in the growth of our end markets;•the loss of one or more significant customers;•our ability to meet customers’ quality requirements;•uncertainties related to the design win process and our ability to recover design and development expenses and to generate timely or sufficient net sales or margins;•changes in government trade policies, including the imposition of export restrictions and tariffs;•our exposures to warranty claims, product liability claims and product recalls;2•our dependence on international customers and operations;•the availability of rebates, tax credits and other financial incentives on end-user demands for certain products;•risks, liabilities, costs and obligations related to governmental regulation and other legal obligations, including export control, privacy, data protection, information security, consumer protection, environmental and occupational health and safety, anti-corruption and anti-bribery, and trade controls;•the volatility of currency exchange rates;•our ability to raise capital to support our growth strategy;•our indebtedness may limit our flexibility to operate our business;•our ability to effectively manage our growth and to retain key and highly skilled personnel;•our ability to protect our proprietary technology and inventions through patents or trade secrets;•our ability to commercialize our products without infringing third-party intellectual property rights;•disruptions or breaches of our information technology systems or those of our third-party service providers;•our principal stockholders have substantial control over us;•the inapplicability of the “corporate opportunity” doctrine to any director or stockholder who is not employed by us;•anti-takeover provisions in our organizational documents and under the General Corporation Law of the State of Delaware (the “DGCL”);•our inability to design, implement or maintain effective internal control over financial reporting;•changes in tax rates or the adoption of new tax legislation;•the negative impacts of sustained inflation on our business;•disruptions in the banking and financial sector that limit our or our partners’ ability to access capital and borrowings;•the physical, transition and litigation risks presented by climate change; and •other events beyond our control. Moreover, we operate in an evolving environment.Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. You should read this Annual Report and the documents that we reference in this Annual Report completely and with the understanding that our actual future results may be materially different from what we expect.You should read this Annual Report and the documents that we reference in this Annual Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Annual Report, whether as a result of any new information, future events or otherwise. Additionally, our discussion of various items herein or elsewhere, including our discussion of environmental, social and governance (“ESG”) matters, may include information that is not necessarily “material” under the federal securities laws for SEC reporting purposes.Additionally, our discussion of various items herein, including our discussion of environmental, social and governance (“ESG”) matters, may include information that is not necessarily “material” under the federal securities laws for SEC reporting purposes. For many ESG matters, this disclosure is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. For many ESG matters, this is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. Much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. For example, we note that methodologies regarding the calculation of greenhouse gas emissions and related ESG data are still evolving. Our disclosures on such matters may change as well, but we cannot guarantee that they will align with the expectations of any particular stakeholder. Similarly, our disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control. For example, our disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control. Unless the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Allegro” refer to the operations of Allegro MicroSystems, Inc.Unless the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Allegro” refer to the operations of Allegro MicroSystems, Inc. and its consolidated subsidiaries. 2 PART I Item 1. Business. Our Mission Our mission is to be a global leader in semiconductor sensing and power solutions for motion control and energy-efficient systems in automotive and industrial applications, moving the world to a safer and more sustainable future.Our MissionOur mission is to be a global leader in semiconductor sensing and power solutions for motion control and energy-efficient systems in automotive and industrial applications, moving the world to a safer and more sustainable future. Company Overview The Company is a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling the most important emerging technologies in the automotive and industrial markets.Company OverviewThe Company is a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling the most important emerging technologies in the automotive and industrial markets. We are a leading supplier of magnetic sensor IC solutions worldwide based on market share, driven by our market leadership in the automotive market. Our products are foundational to automotive and industrial electronic systems. Our sensor ICs enable our customers to precisely measure motion, speed, position and current, while our power ICs include high-temperature and high-voltage capable motor drivers, power management ICs, light emitting diode (“LED”) driver ICs and isolated gate drivers. We believe that our technology expertise, combined with our deep applications knowledge and strong customer relationships, enable us to develop solutions that provide more value to customers than typical ICs. Compared to a typical IC, our solutions are more integrated, intelligent and sophisticated for complex applications and easier for customers to use. Growth in the global semiconductor industry has traditionally been driven by the consumer market.Growth in the global semiconductor industry has traditionally been driven by the consumer market. Looking ahead, industry growth is expected to be driven by technology mega trends in the automotive and industrial markets. These mega trends have created requirements for new technologies in vehicles, both powertrain and in the cabin, to support vehicle electrification and advanced driver assistance systems (“ADAS”). These mega trends have created requirements for new technologies in vehicles, both under the hood and in the cabin, to support vehicle electrification and advanced driver assistance systems (“ADAS”). These shifts also require technology to enable intelligence and automation in factories and energy efficiency in clean energy applications. According to industry experts, these mega trends are expected to dramatically increase the demand for sensing and power solutions like those we develop. We believe our patented portfolio of sensor and power ICs provides the underlying technology required to win in the presence of larger competitors. We believe our patented portfolio of sensor and power ICs provides the underlying technology required to establish an early lead in the market and win in the presence of larger competitors. Our longstanding history of innovation in the semiconductor industry is built on our market leading magnetic sensor IC technology. Our “first of its kind” approach took the complexity of magnetic systems design and embedded it within our solutions, dramatically simplifying the customers’ design effort while increasing system reliability. This is a pattern we have repeated over consecutive generations of products, enabling us to establish a strong presence in the most rigorous and demanding automotive markets. Our portfolio now includes more than 1,000 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. By developing sophisticated, analog mixed-signal IC solutions that incorporate our patented intellectual property, proprietary and robust process technologies with our unique packaging know-how, we believe we are well-positioned to compete across all of our target markets. Our established position as an incumbent supplier for the automotive market and our long product life cycles attest to the strength of this competitive advantage. Our value proposition is based on providing complete IC solutions for motion control and energy efficient systems.Our value proposition is based on providing complete IC solutions for motion control and energy efficient systems. This includes sensing angular or linear position, driving an electric motor or actuator, and regulating the power applied to sensing and driving circuits so they operate safely and efficiently. These capabilities are based on fundamental technical advances we have made in the field of Hall-effect and magnetoresistive (“xMR”) sensors and Bipolar-CMOS-DMOS (“BCD”) power ICs. These capabilities are based on fundamental technical advances we have made in the field of Hall-effect and xMR magnetic sensors and Bipolar-CMOS-DMOS (“BCD”) power ICs. We continue to be instrumental in developing Hall-effect and xMR transducers and power double diffusion metal oxide semiconductor devices on silicon, application-optimized packaging, high-temperature operation, high-speed precision signal paths for signal processing, and 100-volt (“100V”) capable BCD wafer technology. We continue to be instrumental in developing Hall-effect and magnetoresistive transducers (“xMR”) and power double diffusion metal oxide semiconductor devices on silicon, application-optimized packaging, high-temperature operation, high-speed precision signal paths for signal processing, and 100-volt (“100V”) capable BCD wafer technology. With our 2023 acquisition of Crocus Technology International Corp. (“Crocus”), we now offer tunnel magnetoresistance (“TMR”) solutions that provide the highest magnetic sensitivity, lower power consumption, and the smallest size by comparison to other magnetic technologies. In Hybrid Electric Vehicles (“HEV”), Electric Vehicles (“EV”) and ADAS applications, these innovations translate to increased driving range for EVs, smaller and more reliable power conversion systems, and improved safety and efficiency of motor and power management systems, as well as safer and more reliable steering and braking systems. In Hybrid Electric Vehicles (“HEV”), Electric Vehicles (“EV”) and ADAS applications, these innovations translate to increased driving range for an electric vehicle, smaller and more reliable power conversion systems, improved safety and efficiency of motor and power management systems and safer and more reliable steering and braking systems. In the industrial market, these technologies enable clean energy and automation. These innovations improve reliability to avoid factory downtime, accurately measure current to support increased energy efficiency for high-density clean energy applications and reduce the solution footprint to lower total system cost. We have maintained our sensor IC leadership and built our power IC business through successfully developing deep customer relationships over time.We have maintained our sensor IC leadership and built our power IC business through successfully developing deep customer relationships over time. We commonly collaborate with customers early and over a multi-year period to design products capable of meeting demanding performance and quality requirements. We commonly collaborate with customers early on over a multi-year period in order to design products capable of meeting demanding performance and quality requirements. Through this customer collaboration in product design, we believe we have unique insight into market trends and customer requirements for new, improved and innovative products. We believe that these insights enable us to develop differentiated solutions, often in advance of our competitors. 3 Our customer list includes virtually all of the world’s top automotive companies by market share and a large number of leading industrial companies. We are a preferred vendor to tier-one suppliers in the automotive industry that supply parts or systems directly to original equipment manufacturers (“OEMs”). We are also a preferred partner or vendor to many global OEMs. Our products can be found in vehicles built by nearly every automotive OEM worldwide and in many common industrial systems. We support customers through design and application centers located in North America, South America, Asia and Europe. Our local teams in these centers work closely with our customers on their unique design requirements, often acting as an extension of a customer’s development team. Our strategy to extend our market leadership in high-growth markets, increase our IC design footprint and capacity, and accelerate growth through enhanced sales operations relies on a fabless and asset-lite manufacturing model. We use external wafer manufacturing consisting of both standard and proprietary processes, along with internal and external assembly and test capabilities to provide both flexibility and scale. Through our subcontractor manufacturers, we are able to employ our proprietary wafer fabrication processes while leveraging our subcontractors’ manufacturing technologies and high-volume capacity. Our use of both internal and external assembly and test capabilities is designed to balance the protection of our proprietary technology and processes while achieving automotive quality manufacturing at scale. Our Market Within the global semiconductor industry, we focus on the magnetic sensor and power management IC markets.Our MarketWithin the global semiconductor industry, we focus on the magnetic sensor and power management IC markets. E-Mobility We define e-Mobility as the electrification of vehicles, HEVs and EVs powertrain, and the increasing adoption of advanced safety-related driver assistance systems, known as ADAS.E-MobilityWe define e-Mobility as the electrification of vehicles and the increasing adoption of advance safety-related driver assistance systems, known as ADAS. We are a leading provider of sensing and power solutions for vehicle electrification, building on our decades of experience in powertrain efficiency and performance leadership in technologies that reduce emissions. The ability to improve efficiency is critical as OEMs strive to comply with increasingly stringent regulations and heightened customer awareness of the environmental impact of high emissions. As HEVs and EVs become a meaningful share of the automotive market, OEMs face challenges and opportunities to change system architectures in order to reduce complexities while achieving optimal system efficiency and vehicle range.As EVs become a meaningful share of the automotive market, OEMs face challenges and opportunities to change system architectures in order to reduce complexities while achieving optimal system efficiency and vehicle range. This presents a number of new socket opportunities for semiconductors, and we expect our content per vehicle will continue to increase, driven by research and development innovation to serve this high-growth market. As an expert in delivering ICs supporting efficient power conversion in HEVs and EVs, we believe we are uniquely positioned to support increased electrification, providing the critical automotive-grade components required to enable energy-efficient and cost-effective vehicles.As an expert in delivering ICs supporting efficient power conversion in HEV and EVs, we believe we are uniquely positioned to support increased electrification, providing the critical automotive-grade components required to enable energy-efficient and cost-effective vehicles. We believe this allows us to take advantage of the significant semiconductor content increases expected to result from the HEV and EV migration and strong growth of electrified powertrains over the coming years. We believe this allows us to take advantage of the significant semiconductor content increases expected to result from the EV migration and strong growth of electrified powertrains over the coming years. Our October 2023 acquisition of Crocus and its leading TMR technology bolsters our current sensor and position sensor product portfolio and solidifies our leading magnetic sensing market position. TMR technology provides the highest magnetic sensitivity, lower power consumption, and the smallest size by comparison to other magnetic technologies. We believe our TMR products, which we market under the name XtremeSense™, are an ideal fit for high growth industries such as automotive, industrial and consumer goods, which require higher accuracy, greater bandwidth and lower power consumption. Our high voltage power portfolio provides us with additional content opportunities in both HEV and EV powertrains. This first-to-market technology, which integrates an isolated DC-DC and isolated gate driver (“IGD”) is more efficient than competitive solutions that require two chips. This not only allows customers to reduce their printed circuit boards (“PCBs”), but also enables the entire system, like an on-board charger, to shrink. We continue to innovate this technology, which will enable gallium nitride (“GaN”) and silicon carbide (“SiC”) solutions in the electric powertrain. ADAS capabilities are considered some of the most desirable features in modern vehicles and continue to be adopted in vehicles worldwide.ADAS capabilities are considered some of the most desirable features in modern vehicles and are currently being adopted in vehicles worldwide. Industry experts expect ADAS feature adoption will continue to increase over time. ADAS is a precursor to fully autonomous vehicles. While many ADAS-equipped vehicles are being produced today, as ADAS features become more sophisticated and increasingly adopted, demand for our sensor and power ICs is expected to expand in steering and braking systems. Based on industry forecasts, we believe the transition to vehicles that incorporate ADAS Level 2 through 5 technologies and strong adoption of sensors and power management products to support these vehicles, will enable us to increase our total available market related to ADAS and related safety and chassis technologies. Our devices play a key role in ADAS applications, reacting to system inputs to enable collision avoidance, lane keeping, automatic emergency braking or self-park features through automatic steering and braking.Our devices play a key role in ADAS applications, reacting to system inputs to enable collision avoidance, lane keeping, automatic emergency braking or self-park features through automatic steering and braking. A steering system equipped with even a modest degree of automation utilizes products across our entire portfolio, including sensors, power management ICs and motor driver ICs, which we believe is indicative of the size of our potential market opportunity as ADAS applications become increasingly more sophisticated. 4 Adoption of ADAS technologies continues to grow, and our solutions do not require waiting for widespread adoption of fully autonomous vehicles; we already ship a significant volume of devices every year that enable ADAS capabilities. Vehicles equipped with Level 1 ADAS feature sets (i. Vehicles equipped with Level 1 ADAS feature sets use Allegro devices. e., the capability to take control of one functionality) use Allegro devices. We have been helping to increase the safety and drive features in ADAS applications of steering and braking systems for years. We believe our track record of supplying devices for safety applications and experience with supporting ADAS features in high-end vehicles, combined with increased penetration of ADAS as it scales from luxury vehicles to mainstream and economy vehicles, positions us to expand our business to capitalize on this rapidly growing opportunity. Along with increased adoption, there will be increased content opportunities as ADAS technology and system architectures continue to advance. Traditional Automotive Applications The internal combustion engine (“ICE”) will continue to exist in some form for the foreseeable future, either in pure ICE vehicles or HEVs, the largest portion of the EV market for the next few years.Traditional Automotive ApplicationsThe internal combustion engine (“ICE”) will continue to exist in some form for the foreseeable future, either in pure ICE vehicles or hybrids, the largest portion of the EV market for the next few years. OEMs continue to improve their fuel mileage and look to Allegro to help create the most efficient ICE powertrains possible. We have decades of experience as a proven supplier in ICE powertrains to support engine efficiency. Safety, comfort and convenience business will continue to evolve with vehicle electrification, which we believe leads to more content opportunities. Systems that historically relied on engine temperature or mechanical energy are now electrifying, and new system technologies are being rolled out. Products our customers have relied on for lighting and infotainment are becoming more energy efficient as we develop more advanced products and innovate with our customers. Clean Energy Our automotive first philosophy resonates with our industrial customers who appreciate our rigorous quality standards, devices designed to withstand extreme environments and our long product lifecycle of 10 years or more.Clean EnergyOur automotive first philosophy resonates with our industrial customers who appreciate our rigorous quality standards, devices designed to withstand extreme environments and our long product lifecycle of 10 years or more. These customers are in our target markets of clean energy, defined as renewable energy generation, storage and distribution, EV charging infrastructure and data centers. Renewable energy, especially solar, and EV charging are being driven by government regulations to reduce emissions and the increased electrification of a variety of products and processes.Renewable energy, especially solar, and EV charging are being driven by government regulations for reduced emissions and the increased electrification of a variety of products and processes. We have the flexibility to meet the needs of a variety of solar and EV charging technologies and types. Having the technology and products to support these markets from their infancy provides us with an advantage to help customers bring their products to market more quickly. Having the technology and products to support these markets from their infancy provides us an advantage in helping customers bring their products to market more quickly. This enables us to learn with our customers and solve challenges as they arise. Additionally, our IGDs will have a strong presence in these power conversion markets, enabling GaN and SiC-based platforms. We offer one of the largest portfolios of current sensors on the market today, including those with integrated components, requiring less board space.We offer one of the largest portfolios of current sensors on the market today, including those with integrated components, requiring less board space. Our “lossless” current sensor ICs are used to improve efficiency in power conversion systems. Our “lossless” current sensor ICs are used to improve efficiency in these power conversion systems. Our 100V BCD wafer process technology and galvanically isolated current sensors are suited for higher voltage operation, and we believe the demand for current sensor ICs will increase as more solar and EV applications come to market. In addition, we expect our IGD technology to enable us to use a single, small-footprint package to significantly reduce system design time and complexity. Our motor drivers are heavily adopted in data center applications, mainly for thermal efficiency, as these products reduce complexity and design time, while also reducing the energy consumption required to cool servers.Our motor drivers are heavily adopted in the data center space, mainly for thermal efficiency, as these products reduce complexity and design time, while also reducing the energy consumption required to cool servers. Automation With the growing adoption of factory automation, there is increasing demand for precise motion control and energy efficient technologies presenting additional meaningful growth opportunities for us.AutomationWith the growing adoption of factory automation, there is increasing demand for precise motion control and energy efficient technologies representing additional meaningful growth opportunities for us. We believe we can leverage our technology leadership in solutions optimized for high-accuracy, high-voltage and high-reliability conditions to expand our presence in these markets. Many of these applications require the same safety and accuracy specifications that we have designed into our automotive first devices. Many of these applications require the same safety and accuracy, which we have designed into our automotive first devices. In particular, we believe we have the potential to leverage synergies between our power and sensor solutions, including motor drivers, voltage regulators, display drivers, and current, position and speed sensors, in under-penetrated opportunities within industrial automation. In particular, we believe we have the potential to leverage the synergy between our power and sensor solutions, including motor drivers, voltage regulators, display drivers, and current, position and speed sensors, into under-penetrated opportunities within industrial automation. Broad Industrial The Broad Industrial market includes our personal mobility, or two-wheeler market, and a broad variety of other use cases from heavy equipment to telecom connectivity.Broad Industrial The Broad Industrial market includes our personal mobility, or two wheeler market, and a number of other end uses from heavy equipment to telecom connectivity. Our two-wheeler business is seeing similar electrification trends as larger vehicles. Our solutions are proven in electrified powertrains and in the small form factors needed in these applications. Our solutions are proven in electrified powertrains and in small form factors needed in these applications. These markets are looking for many of the same device specifications that our automotive customers use, from high voltage and high temperature performance to long life cycle, small form factors, integration and unique packaging. These markets are looking for many of the same devices our automotive customers use, from high voltage and high temperature performance to long life cycle, small form factors, integration and unique packaging. Our automotive quality standards result in solutions that provide robust, high performance over long lifecycles, garnering trust from our industrial customers. 5 Consumer & Computer Markets The consumer and computer markets include smart home applications, personal computers, consumer grade medical devices and consumer electronics. Our devices enable our customers in these markets to manufacture more energy efficient products with extended battery life. Market Opportunity Within our target markets, a key element of our growth strategy is to increase our revenue through portfolio and customer expansion.Market OpportunityWithin our target markets, a key element of our growth strategy is to increase our business through portfolio and customer expansion. We are a market share leader in the magnetic sensor IC market, and we believe there is considerable opportunity to continue to grow this foundational business. For example, over the last five years, we introduced new position sensor ICs and quickly ramped up revenue in motion control applications, particularly in the ADAS market. For example, over the last five years, we introduced new position sensor ICs and quickly ramped revenue in motion control applications, particularly in the ADAS market. We believe similar share growth opportunities exist in other adjacent areas of the magnetic sensor IC market. We also plan to grow in the magnetic sensor market through the release of our new TMR technology. We are also leveraging our power IC products to increase our total content within automotive and industrial applications.We are also just beginning to leverage our power IC products to increase our total content within automotive and industrial applications. For example, over the last five years, we introduced new power devices, including motor driver ICs, and grew revenue in the automotive ADAS and data center markets. We believe there is more opportunity for us to expand our offerings, as electrified vehicles will require more motors to run pumps and fans and as data center architecture continues to evolve. We believe these improved tools enable us to more accurately predict the performance of our designs, resulting in improved time-to-market for our products and satisfaction of our customers. Our latest opportunity to expand our market presence is with our new IGDs.Our latest opportunity to expand our market presence is with our new IGDs. These solutions will have applications in power conversion in EVs, such as on-board chargers and traction inverters, as well as in clean energy. Increasing our Served Available Market Another focus of our growth strategy is to significantly expand our served available market by using our established position in high-value automotive and industrial applications to increase our content per system.Increasing our Served Available MarketAnother focus of our growth strategy is to significantly expand our served available market by using our established position in high-value automotive and industrial applications to increase our content per system. We believe the automotive market is very attractive due to the rigorous quality and safety requirements that create meaningful challenges for new competitors and the significant technology shifts currently underway that are expected to significantly increase semiconductor content per vehicle. We believe the automotive market is very attractive given the rigorous quality and safety requirements that create meaningful challenges for new competitors and the significant technology shifts currently underway that are expected to significantly increase semiconductor content per vehicle. Part of our served available market expansion is through acquisitions that open new sockets and new applications to us. We anticipate that the Crocus acquisition will provide us access to an additional served available market of almost $1 billion in 2030. With the growth of semiconductor content opportunities related to EV and ADAS penetration already accelerating, we have seen significant increases in our electronic system content per vehicle.With the growth of semiconductor content opportunities related to EV and ADAS penetration already accelerating, we have seen significant increases in our electronic system content per vehicle. For example: •Our opportunity for vehicles adopting ADAS features is expected to grow as the adoption moves from high-end vehicles to mid- and lower-range vehicles. For example:•Our opportunity for vehicles adopting ADAS features is expected to grow as the adoption moves from high end vehicles to mid- and lower-range vehicles. An additional benefit from ADAS is the content opportunity increase per system as new architectures are adopted. We believe that moving from today’s systems to electromechanical braking and steer-by-wire will nearly double the devices required per system. •According to our internal estimates and third-party sources, we believe that we have a total opportunity of up to approximately $100 of potential content in each battery EV or plug-in EV. •In a popular mid-sized 2022 model sedan shipped worldwide, our content per vehicle increased by over 50% as the vehicle model transitioned from ICE to a battery EV.•In a popular mid-sized 2022 model sedan shipped worldwide, our content per vehicle increased by over 50% as the vehicle model transitioned from ICE to a battery EV. There is a similar dynamic in the industrial market, where clean energy and automation are two mega trends requiring more semiconductor content as they gain mainstream adoption.There is a similar dynamic in the industrial market, where clean energy and automation are two mega trends requiring more semiconductor content as they gain mainstream adoption. Our current sensors, motor drivers, and position sensors’ performance and reliability make them uniquely capable of delivering on customer expectations for both energy efficiency and motion control. Company Strategy Our strategy is to provide complete IC solutions for our customers, innovate with purpose to build on leadership in our key markets and expand our presence to become a global leader in semiconductor power and sensing solutions for motion control and energy efficient systems in automotive and industrial applications.Company StrategyOur strategy is to provide complete IC solutions for our customers, innovate with purpose to build on leadership in our key markets and expand our presence to become a global leader in semiconductor power and sensing solutions for motion control and energy efficient systems in automotive and industrial applications. Invest in research and development that is market-aligned and focused on targeted portfolio expansion We believe that our investments in research and development in the areas of product design, automotive-grade wafer fabrication technology and IC packaging development are critical to maintaining our competitive advantage.Invest in research and development that is market-aligned and focused on targeted portfolio expansionWe believe that our investments in research and development in the areas of product design, automotive-grade wafer fabrication technology and IC packaging development are critical to maintaining our competitive advantage. In both the automotive and industrial markets, major technology shifts driven by disruptive technologies are creating high-growth opportunities in areas such as e-Mobility, clean energy and automation. We believe the convergence of requirements for intelligence and energy efficiency within these emerging markets is directly aligned with our core competencies. Our knowledge of customers’ end systems has driven an expansion of our sensor IC and power solutions to enable these new technologies. By aligning our research and development investments with disruptive technology trends while undergoing a rigorous return on investment (“ROI”) review, we believe we can deliver an attractive combination of growth and profitability. By aligning our research and development investments with disruptive technology trends while undergoing a rigorous ROI review, we believe we can deliver an attractive combination of growth and profitability. 6 Emphasize our automotive “first” philosophy to align our product development with the most rigorous applications and safety standards We are a leading supplier of magnetic sensor ICs for the automotive market because we have been intentional about incorporating support for the stringent automotive operating voltages, temperature ranges and safety and reliability standards into every part of our operations, from design to manufacturing.Emphasize our automotive “first” philosophy to align our product development with the most rigorous applications and safety standardsWe are a leading supplier of magnetic sensor ICs for the automotive market because we have been intentional about incorporating support for the stringent automotive operating voltages, temperature ranges and safety and reliability standards into every part of our operations, from design to manufacturing. By designing our products from the ground up to operate at high temperatures and at high voltages, we have built a strong technical reputation among our automotive customers. We believe our focus on meeting or exceeding industry standards as the baseline for product development increases our opportunity in the automotive market as customers look for trusted suppliers to deliver highly reliable solutions for rapidly growing emerging markets. For example, growing adoption of HEVs and EVs has dramatically increased the variety and complexity of components needed to support modern powertrains. For example, the rise in HEVs and EVs has dramatically increased the variety and complexity of components needed to support modern powertrains. We believe our philosophy of designing for automotive safety and reliability gives us a meaningful lead over new entrants attempting to enter the automotive market. We believe our philosophy of designing for automotive safety and reliability gives us a meaningful lead over new entrants attempting to enter the automotive market by modifying existing solutions originally developed for consumer and other less demanding applications. We also believe we can use our expertise in designing for the automotive market combined with our expanding product portfolio to capitalize on increasing demand from industrial customers for rugged solutions that meet the highest quality and reliability standards. We also believe we can use our expertise in designing for the automotive market and our expanding product portfolio to capitalize on increasing demand among industrial customers for ruggedized solutions that meet the highest quality and reliability standards. Additionally, in our experience, demand for solutions that meet or exceed stringent safety and reliability specifications supports higher average selling prices (“ASPs”) and slower ASP declines over time than are typical for our industry. Additionally, in our experience, demand for solutions that meet or exceed stringent safety and reliability specifications supports higher ASPs and slower ASP declines over time than are typical for our industry. Invest to lead in chosen markets and apply our intellectual property and technology to pursue adjacent growth markets We intend to continue to invest in technology advancements and our intellectual property portfolio to maintain the leading market share position in magnetic sensor ICs and achieve leadership positions in power ICs within our target markets.Invest to lead in chosen markets and apply our intellectual property and technology to pursue adjacent growth marketsWe intend to continue to invest in technology advancements and our intellectual property portfolio to maintain the leading market share position in magnetic sensor ICs and achieve leadership positions in power ICs within our target markets. We believe we can maximize our investments by leveraging our proven technology and existing research and development, sales and support efforts to take advantage of synergistic opportunities in new, adjacent growth markets. For example: •We target our patented sensor IC, and power-related intellectual property to address increasing electronics content in automotive applications based on the growing adoption of electric powertrains and advanced safety systems for semi-autonomous and autonomous vehicles. For example:•We target our patented sensor IC, and power-related intellectual property to address increasing electronics content in automotive applications based on the increasing adoption of electric powertrains and advanced safety systems for semi-autonomous and autonomous vehicles. •We are investing in advanced current sensor IC and sensor-less motor control technologies to target industrial clean energy applications where we believe the trend towards increasing energy efficiency provides an opportunity to apply our rich history of innovation to rapidly accelerate our growth.•We are investing in advanced current sensor IC and sensor-less motor control technologies to target industrial clean energy applications where we believe the trend towards increasing energy efficiency provides an opportunity to apply our rich history of innovation to rapidly accelerate our growth. •We are aligning our application domain knowledge, sensor design skills and power management and motor control algorithm expertise to capitalize on the trend towards increasing automation and electronics content inherent in the industrial automation transformation.•We are aligning our application domain knowledge, sensor design skills and power management and motor control algorithm expertise to capitalize on the trend towards increasing automation and electronics content inherent in the industrial automation transformation. We believe our strategy of leveraging our key capabilities to target adjacent growth markets will enable us to achieve higher returns on our research and development investments.We believe our strategy of leveraging our key capabilities to target adjacent growth markets will enable us to achieve higher returns on our research and development investments. Expand our sales channels and enhance our sales operations and customer relationships We sell our products globally through our direct sales force, distributors and independent sales representatives.Expand our sales channels and enhance our sales operations and customer relationshipsWe sell our products globally through our direct sales force, distributors and independent sales representatives. Our global sales infrastructure is optimized to support customers through a combination of key account managers and regional technical and support centers near customer locations. These centers enable us to act as an extension of our customers’ design teams, providing us with key insights into product requirements and accelerating the adoption and ramp up of our products in customer designs. We intend to continue strengthening our relationships with our existing customers while also enabling our channel partners to support demand creation and fulfillment for smaller broad-based industrial customers. We believe we will be able to further penetrate the industrial market and efficiently scale our business to accelerate growth by enabling our channel to become an extension of our demand generation and customer support efforts. Continue to improve our gross margins through product innovation and cost optimization We strive to improve our profitability by both rapidly introducing new products with value-added features and reducing our manufacturing costs through our fabless, asset-lite manufacturing model.Continue to improve our gross margins through product innovation and cost optimizationWe strive to improve our profitability by both rapidly introducing new products with value-added features and reducing our manufacturing costs through our fabless, asset-lite manufacturing model. Over the last several years, we have improved our gross margin from a 40% range historically to the mid 50% range. Over the last several years, we have 10improved our gross margin from a 40% range historically to the 56% range. We expect to continue to improve our product mix by developing new products for growth markets where we believe we can generate higher ASPs and/or higher gross margins. We also intend to further our relationships with key foundry suppliers to apply our products and applications knowledge to develop differentiated and cost-efficient wafer processes and packages. We believe we can reduce our manufacturing costs by leveraging the advanced manufacturing capabilities of our strategic suppliers, implementing more cost-effective packaging technologies and leveraging both internal and external assembly and test capacity to reduce our capital requirements, lower our operating costs, enhance reliability of supply and support our continued growth. We intend to continue to choose the industry’s leading manufacturing partners to maintain the quality of our products for the automotive market, to ensure continuity of supply and to best protect our intellectual property. 7 Selectively pursue acquisitions and other strategic transactions We evaluate and selectively pursue acquisitions and transactions as an integral part of our strategy to supplement organic growth.Selectively pursue acquisitions and other strategic transactionsWe evaluate and selectively pursue acquisitions and transactions as an integral part of our strategy to supplement organic growth. Acquisitions should accelerate our growth in strategic e-Mobility and industrial markets, extend or enhance our existing technology expertise, and leverage our existing sales channels. Such acquisitions include our acquisitions of Crocus and Heyday Integrated Circuits (“Heyday”). Maintain sustainability efforts We intend to continue to innovate with purpose, aiming to help address critical global challenges related to energy efficiency and vehicle emissions, as well as clean and renewable energy with our sensing and power management product portfolio. Maintain sustainability effortsWe intend to continue to innovate with purpose, aiming to help address critical global challenges related to energy efficiency, vehicle emissions and clean and renewable energy with our sensing and power management product portfolio. In addition, we strive to operate our business in a socially responsible and environmentally sustainable manner, and with the goals of maintaining a dedication to social responsibility in our supply chain and disclosing the environmental impact of our business operations. We identified five goals that help to inform our ESG strategy: (1) maximize the positive impact of our products, (2) build a diverse and innovative workforce, (3) minimize our impact on the planet, (4) engage our supply chain to advance sustainability, and (5) cultivate opportunities in local communities.We identified five goals that help to inform our ESG strategy: (1) maximize the positive impact of our products, (2) build a diverse and innovative workforce, (3) minimize our impact on the planet, (4) engage our supply chain to advance sustainability, and (5) cultivate opportunities in local communities. Company Products and Solutions Our product portfolio includes over 1,000 products across a range of high-performance analog mixed-signal semiconductors.Company Products and SolutionsOur product portfolio includes over 1,000 products across a range of high-performance analog mixed-signal semiconductors. We apply our deep technology know-how to deliver magnetic sensing IC and power IC solutions to: •Sense speed, position, and current to enable electric powertrains, improve vehicle fuel efficiency and CO2 emissions, enable safer cars through ADAS safety features, and enhance factory automation and clean energy systems; •Regulate systems to improve safety and power efficiency and ultimately reduce solution size; and •Drive motors through our advanced, proprietary algorithms that provide industry leading reliability and energy efficiency, with minimal audible noise and vibration.We apply our deep technology know-how to deliver magnetic sensing IC and power IC solutions to:•Sense speed, position, and current to enable electric powertrains, improve vehicle fuel efficiency and CO2 emissions, enable safer cars through ADAS safety features, and enhance factory automation and clean energy systems;•Regulate systems to improve safety and power efficiency and ultimately reduce solution size; and•Drive motors through our advanced, proprietary algorithms that provide industry leading reliability and energy efficiency, with minimal audible noise and vibration. Magnetic Sensor ICs We offer what we believe to be the industry’s leading portfolio of integrated magnetic sensor ICs.Magnetic Sensor ICsWe offer what we believe to be the industry’s leading portfolio of integrated magnetic sensor ICs. Our solutions are based on our monolithic Hall-effect, GMR and TMR technology that allows customers to develop contactless sensor solutions that reduce mechanical wear and provide greater measurement accuracy and system control. Our solutions are based on our monolithic Hall-effect and xMR technology that allows customers to develop contactless sensor solutions that reduce mechanical wear and provide greater measurement accuracy and system control. Our portfolio of magnetic sensor ICs includes the following: •Current Sensor ICs: Current sensor ICs provide output signals proportional to the overall strength of a magnetic field created by a current carrying conductor. Our portfolio of magnetic sensor ICs includes the following:•Current Sensor ICs: Current sensor ICs provide output signals proportional to the overall strength of a magnetic field created by a current carrying conductor. We have developed a broad portfolio of current sensors to meet multiple voltage and application needs for our customers. Current sensor ICs are used to improve energy efficiency in a broad range of applications, including on-board chargers, DC-DC converters, inverters, industrial motors, solar inverters, and EV charging infrastructure. Current sensor ICs are used to improve energy efficiency in a broad range of applications, on-board chargers, DC-DC converters, inverters, industrial motors, solar inverters, and EV charging infrastructure. •Position Sensor ICs: Position sensor ICs provide an analog or digital voltage output that measures the intensity of a magnetic field, thereby establishing a precise position.•Position Sensor ICs: Position sensor ICs provide an analog or digital voltage output that measures the intensity of a magnetic field, thereby establishing a precise position. In automotive applications, our position sensor ICs are used to improve safety applications such as ADAS power steering and braking systems, certain HEV powertrain systems such as the shaft position of a starter generator and ICE powertrain systems such as clutch and fork position in advanced transmissions. In automotive applications, our position sensor ICs are used to improve safety applications such as ADAS power steering and braking systems, mild HEV powertrain systems such as the shaft position of a starter generator and ICE powertrain systems such as clutch and fork position in advanced transmissions. Our TMR angle sensor ICs offer high resolution position feedback and the safety diagnostics required for adoption in advanced ADAS motor position applications. Our TMR Angle Sensor ICs offer high resolution position feedback and the safety diagnostics required for adoption in advanced ADAS motor position applications. •Speed Sensor ICs: Speed sensor ICs detect and process the magnetic fields created by a rotating gear tooth or ring magnet with the output being a digital reading proportional to speed.•Speed Sensor ICs: Speed sensor ICs detect and process the magnetic fields created by a rotating gear tooth or ring magnet with the output being a digital reading proportional to speed. These sensor ICs are used in camshaft/crankshaft and transmission systems and employ proprietary algorithms for high accuracy, leading to reduced CO2 emissions and improved fuel economy of combustion engines. Additionally, xMR wheel speed sensors play an important role in increasing the safety of ADAS braking systems. Additionally, xMR wheel speed sensors play an important role to increase the safety of ADAS braking systems. Power ICs Our power IC portfolio comprises of high-temperature and high-voltage capable motor driver ICs, regulator power management ICs, LED driver ICs and high-voltage IGDs, which allow our customers to design safer, smaller and more power-efficient systems.Power ICsOur power IC portfolio is comprised of high-temperature and high-voltage capable motor driver ICs, regulator power management ICs, LED driver ICs and high-voltage IGDs, which allow our customers to design safer, smaller and more power-efficient systems. We employ embedded algorithms that simplify system-level design, reduce audible noise, and increase start-up reliability in brushless DC (“BLDC”) motors and fans. We employ embedded algorithms that simplify system-level design, reduce audible noise, and increase start-up reliability in BLDC motors and fans. Our portfolio of power ICs includes the following: •Motor Driver ICs: Motor driver ICs contain the power drivers and the sequencing logic to drive the coils of a variety of motors. Our portfolio of power ICs includes the following:•Motor Driver ICs: Motor driver ICs contain the power drivers and the sequencing logic to drive the coils of a variety of motors. Our motor driver ICs utilize embedded algorithms to improve energy efficiency and motion control in HEV and EV systems, automotive fans and pumps, data center cooling fans, automation and home appliances. •Regulator and LED Driver ICs: As the industry transitions to more highly integrated products, our portfolio of regulator ICs, and power management ICs (“PMICs”) is used extensively in under-hood automotive ADAS and powertrain systems.•Regulator and LED Driver ICs: As the industry transitions to more highly integrated products, our portfolio of regulator ICs, and power management ICs (“PMICs”) is used extensively in under-hood automotive ADAS and powertrain systems. Our LED driver ICs and modules are used in smart lighting systems to improve system safety, efficiency and size. 8 •Isolated Gate Drivers: These devices combine isolated DC-DC and IGDs into a single package.•Isolated Gate Drivers: These devices combine isolated DC-DC and IGDs into a single package. They are designed to complement GaN and SiC switches in high-efficiency power conversion systems. They are designed to complement GaN and SiC switches in high-efficiency power conversion systems. Our IGDs enable an application that is smaller and more efficient than competing solutions, helping to shrink PCBs and reduce total system size in clean energy, data centers, and electrified powertrains. Our IGDs enable an application that is smaller and more efficient than the competing solutions, helping to shrink PCBs and reduce total system size. Examples of our IC products and their applications in end markets are set forth in the following table.Examples of our IC products and their applications in end markets are set forth in the following table. Environmental, Social and Governance Initiatives Our commitment to sustainability is intrinsic to our core value of “Innovation with Purpose” and is directly aligned to our corporate strategy and growth plans.Environmental, Social and Governance Initiatives Our commitment to ESG is intrinsic to our core value of “Innovation with Purpose” and is directly aligned to our corporate strategy and growth plans. As we expand the reach and influence of our products, we have an important opportunity to make a positive impact on our teams, communities, and the planet. Our world-class innovators are not only helping to solve customer challenges, like reducing emissions, make applications more energy efficient, and harness renewable energy, they are also looking inward, imagining ways we can enhance our impact on the communities where we live and work. Our innovators and teams are not only focused on solving customer challenges like reducing emissions, making applications more energy efficient, and harnessing 12renewable energy, but they are also looking inward, imagining ways we can enhance our impact on the communities where we live and work. ESG is an integral part of our future as it aligns with our stakeholders’ evolving expectations and supports our customers to achieve their own ESG goals. We are able to advance our ESG journey through the work of our five strategic ESG initiatives, which are: •Maximizing the positive impact of our products; •Minimizing our impact on the planet; •Engaging our supply chain to advance sustainability; •Building a diverse and innovative workforce; and •Cultivating opportunities in local communities. At the core of this strategy is to maximize the positive impact of our products. We believe our ICs help address global challenges related to CO2 emissions, energy efficiency and clean, renewable energy in a variety of applications, for example: •Reduced vehicle emissions and improved fuel economy for ICE vehicles. We believe our ICs help address global challenges related to CO2 emissions, energy efficiency and clean, renewable energy in a variety of applications, for example:•Reduced vehicle emissions and improved fuel economy for internal combustion engines. Our magnetic speed and position sensor ICs, motor driver ICs, and PMICs are used in advanced, high-efficiency transmission, steering and braking systems in vehicles. Our magnetic speed and position sensor ICs, motor driver ICs, and PMICs are used in advanced, high-efficiency vehicle transmissions. For example, our magnetic speed sensor ICs are used to provide precise transmission gear speed and position information, improving engine performance, reducing CO2 emissions, and improving fuel economy. Our magnetic speed sensor ICs are used in combustion engines to reduce CO2 emissions and improve fuel economy by providing gear speed and position information necessary to improve engine performance. We are also a leading provider of specialized crankshaft speed sensor ICs needed to operate the stop/start engine systems designed to reduce emissions through improved efficiency. For example, we are a leading provider of specialized crankshaft speed sensor ICs needed to operate the stop/start engine systems designed to reduce emissions through improved efficiency. Allegro ICs sense the steering angle and torque, measure wheel speed, regulate power to the sensors and control electronics, and drive the actuators needed to operate the steering motors and braking calipers in advanced electronic braking and steering systems which help to improve fuel efficiency in vehicles. •Energy efficiency in HEVs and EVs. Our fast response magnetic current sensor ICs are used to accurately measure electric current and protect electronics used in EV powertrains, while improving the energy efficiency of the EV. Our “lossless” magnetic current sensor ICs are used to accurately measure and control electric current flowing in EV powertrains, improving the energy efficiency of the electric vehicle. In many EVs, up to 40 current sensor ICs are used across the vehicle in traction motor inverters, DC-DC converters, battery management systems 9 and on-board-charging systems. In addition, our highly integrated power IC products help reduce electronic system size, material cost and overall weight thereby improving energy efficiency in HEVs and EVs. Our 100-volt capable wafer technology is ideal for use in powering electronics directly from the internal 48-volt battery further reducing inefficiencies associated with multiple stages of voltage conversion and regulation. •Renewable and smart energy applications.•Renewable and smart energy applications. Our magnetic current sensor ICs with embedded high-voltage isolation are used extensively in power conversion and inverter applications in solar and wind energy generation. In addition, our IGDs simplify design, reduce size and greatly improve efficiency of renewable energy systems. In other instances, our angle sensor ICs and motor driver ICs play a key role in the mechatronic systems used to optimize the alignment between solar panels and the changing position of the sun. In addition, our angle sensor ICs and motor driver ICs play a key role in the mechatronic systems used to optimize the alignment between solar panels and the changing position of the sun, for example. Our products also provide a non-intrusive, reliable, high-precision and low-cost way to measure power in power monitoring applications. •Energy efficiency in next generation infrastructure.•Energy efficiency in next generation infrastructure. Our power IC products, such as motor driver ICs, are used extensively in data center cooling fan applications. In addition, our magnetic current sensor ICs help improve energy efficiency and minimize energy losses in power supply units in data center and telecom systems. In addition, our magnetic current sensor ICs help improve energy efficiency and minimize energy losses in data center power supplies and power amplifiers in 5G telecom systems. We expect the transition from 12-volt to 48-volt power architectures in data center and telecom markets will require energy-efficient, high-voltage power and sensor IC solutions to achieve necessary levels of energy efficiency. We expect the transition from 12-volt to 48-volt power architectures in data center and 5G telecom markets will continue to require energy-efficient, high-voltage power and sensor IC solutions to achieve necessary levels of energy efficiency. As part of the Company’s aim to reduce the environmental impact of our products throughout the lifecycle, we are investing in innovation as well as measuring and tracking emissions, waste, and water usage across our facilities.As part of the Company’s commitment to reduce the environmental impact of our products throughout the lifecycle, we are investing in innovation as well as measuring and tracking emissions, waste, and water usage across facilities. The Company has implemented several energy, water, and waste reduction projects at our facilities. The Company has implemented several energy, water, and waste reduction projects across our facilities and established an environmental policy, climate change policy, and water policy. We also strive to adhere to international standards and regulations regarding manufacturing and business procedures and product composition. We have publicly disclosed Scope 1 and Scope 2 emissions and targets, energy use, waste data, water consumption, and other key ESG metrics in our ESG Report and in CDP (formerly the Carbon Disclosure Project) questionnaires on climate change and water security. These reports are available on our website at www.allegromicro.com/en/about-allegro/corporate-responsibility.

The content on our website and in our ESG Report are not part of, nor are they incorporated by reference into, this Annual Report on Form 10-K. The Company is a member of the Responsible Business Alliance (“RBA”), the world’s largest industry coalition dedicated to corporate social responsibility in global supply chains.The Company is a member of the Responsible Business Alliance (RBA), the world’s largest industry coalition dedicated to corporate social responsibility in global supply chains. The Company’s subcontractors and direct materials suppliers must complete and sign the Company’s Supplier Code of Conduct, addressing labor and human rights, worker health and safety and environmental standards in alignment with RBA. In the Company’s Supplier Code of Conduct, subcontractors and direct materials suppliers attest to having ISO 14001 and ISO 450001 certifications (or comparable) or have a plan to become certified. To support our commitment to ESG, we have established a cross-functional team led by our legal department to manage our ESG program (the “ESG Steering Committee”). Our ESG Steering Committee consists of key team members from various departments throughout the Company who are responsible for providing oversight of ESG risks and opportunities, guiding the Company through our multi-year ESG goal setting and roadmap implementation, and working to promote our suppliers’ compliance with the Company’s global sustainability efforts. Additionally, on a quarterly basis, our ESG team updates senior management and the Nominating and Corporate Governance Committee of the Board of Directors on ESG target setting and progress, risks and opportunities, regulatory preparedness, ratings, customer requirements, and other key ESG focus areas. An ESG update is also provided annually to our full Board of Directors. Sales, Marketing and Customer Support We sell our products worldwide through multiple sales channels, including through our direct sales force and through distributors and independent sales representatives, who resell our products to numerous end customers.Sales, Marketing and Customer SupportWe sell our products worldwide through multiple sales channels, including through our direct sales force and through distributors and independent sales representatives, which resell our products to numerous end customers. We have a geographically diverse mix of sales. Our net sales made to distributors were approximately 52. Our net sales made to distributors accounted for approximately 39. 9%, 39.3% and 36.8% and 37. 8% of our net sales in fiscal years 2024, 2023 and 2022, respectively, excluding our distribution relationship with Sanken Electric Co.3% of our net sales in fiscal years 2023, 2022 and 2021, respectively, excluding our distribution relationship with Sanken in Japan, which represented approximately 16. , Ltd. (“Sanken”) in Japan. We have fully transitioned from Sanken to third-party distributors and direct to end customers in fiscal year 2024, and Sanken represented approximately 16.5% and 19.4% and 17. 4% of our net sales in fiscal years 2023 and 2022, respectively.4% of our net sales in fiscal years 2023, 2022 and 2021, respectively. Sales to our largest, non-affiliated distributor accounted for 10.2%, 10.8%, and 11.0%, and 11. 0% of our net sales in fiscal years 2024, 2023 and 2022, respectively.7% of our net sales in fiscal years 2023, 2022 and 2021, respectively. Our direct sales force and applications engineers provide our customers with specialized technical support.13Our direct sales force and applications engineers provide our customers with specialized technical support. We believe that maintaining a close relationship with our customers and serving their specific technical needs improves their level of satisfaction and enables us to anticipate and influence their future product needs. We provide ongoing technical training to our distributor and sales representatives to keep them informed of our existing and new products. 10 We maintain an internal marketing organization that is responsible for increasing our brand awareness and promoting our products to prospective customers.We maintain an internal marketing organization that is responsible for increasing our brand awareness and promoting our products to prospective customers. This includes the creative management of our website, market research and analytics, and development of demand generation strategies and materials, such as product announcements, press releases, brochures, training and videos, as well as securing thought leadership through published technical and trend articles and advertisements, and active engagement in key industry events. Customers We sell our products to major global OEMs and their key suppliers, primarily in the automotive and industrial markets.CustomersWe sell our products to major global OEMs and their key suppliers, primarily in the automotive and industrial markets. We sold to more than 10,000 end customers, directly and through distributors, during each of fiscal years 2024, 2023 and 2022. Approximately half of our net sales during each of fiscal years 2024, 2023 and 2022 were derived from sales to our top 20 customers, which includes distributors. We believe that no end customer, including those served through our distributors, exceeded 10% of our net sales during fiscal years 2024, 2023 and 2022. Research and Development Strategy We are a technology company, and we believe our future success depends on our ability to rapidly develop and introduce differentiated new products in our target markets.Research and Development StrategyWe are a technology company, and we believe our future success depends on our ability to rapidly develop and introduce differentiated new products in our target markets. As a result, we are committed to investing in our process and product development capabilities while focusing our engineering efforts on designing and introducing new application-specific products, developing new semiconductor process and packaging technologies, enhancing design productivity and evaluating new technologies. As a result, we are committed to investing in our process and product development capabilities and focusing our engineering efforts on designing and introducing new application-specific products, developing new semiconductor process and packaging technologies, enhancing design productivity and evaluating new technologies. Our research and development investments are subject to a rigorous ROI review to ensure alignment with our growth and profitability targets. We believe that by effectively applying these resources, we have developed proprietary innovations and intellectual property that will give us an early lead in our target markets and will enable accelerated growth over time. Over the last 10 years, we believe we have been instrumental in achieving fundamental developments that have enabled a number of key technology transitions in the automotive and industrial markets.Over the last 10 years, we believe we have been instrumental in achieving fundamental developments that have enabled a number of key technology transitions in the automotive and industrial markets. We believe we are one of very few suppliers in the semiconductor industry to integrate proprietary motor control algorithms into our motion control devices to achieve optimized BLDC motor performance. We remain one of the few suppliers who has developed multiple packaging technologies capable of operating up to 175 degrees Celsius and including passive components and high current conductors required to make high efficiency, high voltage current sensor products. We were also one of the first in our industry to develop automotive grade xMR technology on silicon wafers, which enabled breakthrough advances in product performance. This advanced technology is a key enabler across all of our strategic focus areas in the automotive and industrial markets as more of the e-Mobility and clean energy markets transition to xMR. We augment our internally generated intellectual property through a mix of licensed intellectual property, partnering with industry experts, and through acquisitions.We augment our internally generated intellectual property through a mix of licensed intellectual property, partnering with industry experts, and through acquisitions. For example, the two businesses we acquired in the past two years, provide leading technology, including TMR and IGD, which will expand our serviced available market, most notably in EV and clean energy. Our global team of highly skilled engineers has extensive semiconductor development experience, including expertise in analog design, test and process technology.Our global team of highly skilled engineers has extensive semiconductor development experience, including expertise in analog design, test and process technology. As of March 29, 2024, we had approximately 742 employees dedicated to research and development, with centers in the United States, Europe, South America, and Asia. The efforts of our engineering team and our strategic acquisitions have resulted in our intellectual property portfolio nearly doubling over the last three years, further strengthening our position in our target markets. We have also made significant investments in our core engineering capabilities, including improvements in tools to support greater engineering efficiency, electrical component modeling, magnetic performance modeling and thermal distribution modeling.We have also made significant investments in our core engineering capabilities, including improvements in tools to support greater engineering efficiency, electrical component modeling, magnetic performance modeling and thermal distribution modeling. We believe these improved tools enable us to more accurately evaluate and predict the performance of our designs, resulting in improved time-to-market for our products and satisfaction of our customers. We believe these improved tools enable us to more accurately predict the performance of our designs, resulting in improved time-to-market for our products and satisfaction of our customers. Our focus on meeting or exceeding the stringent automotive market safety and reliability requirements is fundamental to our research and development process.Our focus on meeting or exceeding the stringent automotive market safety and reliability requirements is fundamental to our research and development process. We anticipate that we will continue to make research and development investments in order to enhance our leadership position and expand our markets with innovative, high-quality products and services (as exemplified through our acquisition of our high voltage power group and our acquisition of Crocus and its TMR technology). We anticipate that we will continue to make research and development investments in order to enhance our leadership position and expand our markets with innovative, high-quality products and services (as exemplified through our acquisition of Heyday). In addition, our board of directors has a standing Strategy Committee, whose purpose is to provide guidance to management on various technological choices and assist in implementing our strategic direction. In addition, our board of directors has a standing R&D and Strategy 14Committee, whose purpose is to provide guidance to management on various technological choices and research and development priorities to assist in implementing our strategic direction. Process and Packaging Technology Our product and technology development engineers have long-established expertise in designing mixed signal power and magnetic sensor ICs using proprietary semiconductor process technologies and intelligent packaging.Process and Packaging TechnologyOur product and technology development engineers have long-established expertise in designing mixed signal power ICs and magnetic sensor ICs using proprietary semiconductor process technologies and intelligent packaging. We consider these capabilities to be strategically important because they allow us to create complete system products and highly integrated solutions that meet the quality and robustness requirements of our most stringent automotive customers and applications. These have the benefit of advancing the feature, function and cost of ownership of our devices relative to those of our competitors. For example, we released a unique 100V- and 175-degree Celsius capable BCD wafer technology designed to handle automotive voltage and temperature transients while also integrating high-density logic circuits and electrically erasable programmable read-only memory to enable configurable and embedded 11 algorithms, and various Hall-effect and xMR transducer technology on the same silicon wafer. These technologies are fundamental to the transition from 12-volt to 48-volt power supply required in the rapidly emerging HEV and EV markets, and to the next generation of ADAS systems. These technologies are fundamental to the transition from 12-volt to 48-volt power supply required in the rapidly emerging mild HEV and EV markets, and to the next generation of ADAS systems. We are in the process of applying these capabilities to the industrialization of our IGD portfolio. In choosing the process technology to be used to manufacture a new product, we seek to optimize the match between the process technology and the desired performance parameters of the product for our customers.In choosing the process technology to be used to manufacture a new product, we seek to optimize the match between the process technology and the desired performance parameters of the product for our customers. Our current strategic semiconductor process innovations include the following: Automotive Quality and Safety We have developed, characterized and qualified our wafer and package technologies to meet or exceed the rigorous automotive requirements that our customers demand. Our current strategic semiconductor process innovations include the following:Automotive Quality and SafetyWe have developed, characterized and qualified our wafer and package technologies to meet or exceed the rigorous automotive requirements that our customers demand. Robust development processes and guidelines have resulted in devices capable of exceeding the requirements of AEC Q100 Automotive Grade 0 of 150 degrees Celsius, and our field failure rates are consistent with or better than customer requirements. Integrated Transducers One of our fundamental innovations is the integration of magnetic transducers and complementary metal oxide semiconductor circuitry into one piece of silicon to create a complete, fully integrated system.Integrated TransducersOne of our fundamental innovations is the integration of magnetic transducers and complementary metal oxide semiconductor circuitry into one piece of silicon to create a complete, fully integrated system. Hall-effect elements are implanted in silicon providing robust and low noise solutions that are optimized for stress and temperature effects. Thin film, high-resolution xMR transducers are deposited directly on top of the complimentary metal-oxide semiconductor (“CMOS”) circuitry creating a more reliable solution than multi-chip solutions by reducing interconnects and solution area. Thin film, high-resolution xMR transducers are deposited directly on top of the CMOS circuitry creating a more reliable solution than multi-chip solutions by reducing interconnects and solution area. To achieve the highest level of Automotive Safety Integrity Level (“ASIL”), we are able to integrate xMR and Hall-effect transducers onto the same silicon to produce heterogeneous solutions capable of performing reliably in the most demanding automotive environments. High-Voltage Technology Our intellectual property developed over years of experience in automotive applications includes advanced mixed-signal integration of high-voltage solutions with our high-precision analog designs.High-Voltage TechnologyOur intellectual property developed over years of experience in automotive applications includes advanced mixed-signal integration of high-voltage solutions with our high-precision analog designs. For example, our innovative wafer technology enables high-voltage power transistors to be combined with embedded digital logic and precision analog circuits on a monolithic motor control IC. This enables a number of application-specific advancements, including taking the complex algorithm development in motor drivers into the IC, vastly reducing our customers’ design complexity and creating the most efficient and quietest solutions in the market. Similar benefits exist for our sensor products through monolithic integration of transducers with precision analog circuits and intelligent signal processing on a high-voltage IC that can be powered from a 12-volt vehicle battery. Advanced, Small Form Factor Integrated Packages We continue to combine circuit design and process innovation with novel packaging solutions that improve performance and reliability while reducing solution footprint and our customers’ cost of ownership.Advanced, Small Form Factor Integrated PackagesWe continue to combine circuit design and process innovation with novel packaging solutions that improve performance and reliability while reducing solution footprint and our customers’ cost of ownership. Two decades of sensor package innovation have led to the development of a family of integrated systems in a package for magnetic current, position and speed sensor ICs as well as power systems. By integrating a combination of a magnet, magnetic core, passive components, and our silicon integrated circuit in a single body, we are able to offer inventive magnetic sensors that reduce our customers’ needs to design complex magnetic models or complex interface circuits, solve electrical interference issues with external PCBs, and enable smaller and more cost-effective customer systems. The current sensors integrate specially designed lead frames to allow a high-precision, factory-programmed single package solution that provides a unique high-efficiency and high-voltage isolation product and can sense current for products plugged directly into a household electrical outlet or connected to an 800-volt automotive battery. Years of design and manufacturing refinement have led to the latest generation of power products that integrate passive components and power delivery into small packages to reduce PCB footprint and reduce noise in high-power systems. We also believe we are one of only a few companies in our industry that have developed a broad portfolio of packages that are suitable for operation in automotive environments and 175-degree Celsius temperatures. Intellectual Property We consider the strength of our intellectual property portfolio to be a significant competitive advantage.Intellectual PropertyWe consider the strength of our intellectual property portfolio to be a significant competitive advantage. Our intellectual property includes patented inventions, trade secrets, accumulated technical know-how and trademarks. As of March 29, 2024, we