MONOLITHIC POWER SYSTEMS INC (MPWR)

CIK: 0001280452. SIC: 3674 Semiconductors & Related Devices. Latest 10-K as of: 2026-02-27.

SIC breadcrumb: Manufacturing > Electronic And Other Electrical Equipment And Components, Except Computer Equipment > SIC 3674 Semiconductors & Related Devices

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1280452. Latest filing source: 0001437749-26-006113.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001280452.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

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Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-27. Report date: 2025-12-31.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and related notes which appear under Item 8 in this Annual Report on Form 10-K. This discussion and analysis contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Part I, Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Discussions of 2023 results and year-to-year comparisons between 2024 and 2023 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025.

Overview

We are a fabless global company that provides high-performance, semiconductor-based power electronics solutions. Our mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future. Founded in 1997 by our CEO Michael Hsing, we have three core strengths: deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging. These combined advantages are designed to enable us to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders.

We operate in the cyclical semiconductor industry. We are subject to industry downturns, but we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term. 

We work with third parties to manufacture, assemble and test our ICs. This has enabled us to limit our capital expenditures and fixed costs, while focusing our engineering and design resources on our core strengths.

Following the introduction of a product, our sales cycle generally takes a number of quarters after we receive an initial customer order for a new product to ramp up. Typical supply chain lead times for orders are generally 16 to 26 weeks. These factors, combined with the fact that our customers can cancel or reschedule orders without incurring a significant penalty, make the forecasting of our orders, revenue and expenses difficult.

We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. Our revenue from sales to customers in Asia was 92%, 94% and 87% for the years ended December 31, 2025, 2024 and 2023, respectively. We believe our ability to achieve revenue growth will depend, in part, on our ability to develop new products, enter new markets, gain market share, manage litigation risk, diversify our customer base and continue to secure manufacturing capacity.

Macroeconomic Conditions and Regulations

The semiconductor industry is impacted by various macroeconomic challenges including fluctuations in consumer spending, fluctuations in demand for semiconductors, rising inflation, global tariffs and retaliatory measures and announcements regarding the same, increased interest rates, and fluctuations in currency rates. We remain cautious in light of continued challenging global macroeconomic conditions and will continue to monitor the potential impact on our operations. The extent and duration of the direct and indirect impact of macroeconomic events on our business, results of operations and overall financial position remain uncertain and depend on future developments.

We closely monitor changes to export control laws, tariffs, trade regulations and other trade requirements. For the year ended December 31, 2025 and through the date we filed this Annual Report, no restrictions or requirements have had a material impact on our revenue and operations. We believe that our diverse, agile and resilient supply chain is structured in a way to minimize the impact of tariffs; however, such restrictions or requirements can be enacted quickly and unexpectedly and could impact our business in the future. To the extent tariffs, trade regulations or retaliatory measures or announcements regarding the same that affect us are implemented, we will seek to take mitigating actions in the near- and medium-term, as necessary, but there can be no assurance we will be successful. We are committed to complying with all applicable trade laws, regulations and other requirements.

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Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

We evaluate our estimates on an on-going basis, including those related to income taxes valuation allowances and stock-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control. These factors include demand for our products, economic conditions and other current and future events, such as macroeconomic factors, global economic uncertainties, current and potential global conflicts and global tariffs, export controls and retaliatory measures and announcements regarding the same. Actual results could differ from these estimates and assumptions, and any such differences may be material to our consolidated financial statements.

See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.

We believe the following critical accounting estimates reflect our significant judgments used in the preparation of our consolidated financial statements. 

Accounting for Income Taxes 

Our calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws. Our estimates of current and deferred tax assets and liabilities may change based, in part, on added certainty, finality or uncertainty to an anticipated outcome, changes in accounting or tax laws in the U.S. or foreign jurisdictions where we operate, or changes in other facts or circumstances. In addition, we recognize liabilities for potential U.S. and foreign income tax for uncertain income tax positions taken on our tax returns if it has less than a 50% likelihood of being sustained. If we determine that payment of these amounts is unnecessary or if the recorded tax liability is less than our current assessment, we may be required to recognize an income tax benefit or additional income tax expense in our financial statements in the period such determination is made.  

As of both December 31, 2025 and 2024, we had a valuation allowance of $3.6 billion attributable to management’s determination that it is more likely than not that certain deferred tax assets will not be fully realized. In 2024, one of the Company’s foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025. In the event we determine that it is more likely than not that we would be able to realize the deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance for the deferred tax assets would increase income in the period such determination is made. Likewise, should it be determined that additional amounts of the net deferred tax assets will not be realized in the future, an adjustment to increase the deferred tax assets valuation allowance will be charged to income in the period such determination is made. For example, a change in forecasted income could impact the expected utilization of our tax incentive and result in an income tax benefit or additional income tax expense in our financial statements in the period such determination is made.

Stock-Based Compensation

For equity awards with performance conditions, we recognize compensation expense when it becomes probable that the performance goals will be achieved. Management performs the probability assessment on a quarterly basis by reviewing external factors, such as macroeconomic conditions and analog industry revenue forecasts, and internal factors, such as our business and operational objectives and revenue forecasts. Changes in the probability assessment of achievement of the performance conditions are accounted for in the period of change by recording a cumulative catch-up adjustment as if the new estimate had been applied since the service inception date. If the projected achievement was revised upward or if the actual results were higher than the projected achievement, additional compensation expense would be recorded for the awards due to the cumulative catch-up adjustment, which would have an adverse impact on our results of operations. Conversely, if the projected achievement was revised downward or if the actual results were lower than the projected achievement, previously accrued compensation expense would be reversed for the awards, which would have a favorable impact on our results of operations. As a result, our stock-based compensation expense is subject to volatility and may fluctuate significantly each quarter due to changes in our probability assessment of achievement of the performance conditions or actual results being different from projections made by management.

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Recent Accounting Pronouncements

See Note 1 of the Notes to Consolidated Financial Statements regarding a recently adopted accounting pronouncement and a recent accounting pronouncement not yet adopted as of December 31, 2025.

Results of Operations

The following table summarizes our results of operations for the periods presented:

Year Ended December 31,

2025

2024 (As Restated)

2023

(In thousands, except percentages)

Revenue

$

2,790,459

100.0

%

$

2,207,100

100.0

%

$

1,821,072

100.0

%

Cost of revenue

1,250,718

44.8

986,230

44.7

799,953

43.9

Gross profit

1,539,741

55.2

1,220,870

55.3

1,021,119

56.1

Operating expenses:

Research and development

382,263

13.7

324,748

14.7

263,643

14.5

Selling, general and administrative

428,842

15.4

356,764

16.2

275,740

15.1

Total operating expenses

811,105

29.1

681,512

30.9

539,383

29.6

Operating income

728,636

26.1

539,358

24.4

481,736

26.5

Other income, net

37,580

1.4

33,554

1.6

24,105

1.3

Income before income taxes

766,216

27.5

572,912

26.0

505,841

27.8

Income tax expense (benefit), net

144,733

5.2

(1,019,146

)

(46.1

)

78,467

4.3

Net income

$

621,483

22.3

%

$

1,592,058

72.1

%

$

427,374

23.5

%

Revenue

The following table summarizes our revenue by end market for the periods presented:

Year Ended December 31,

End Market

2025

% of Revenue

2024

% of Revenue

2023

% of Revenue

(In thousands, except percentages)

Storage and Computing

$

732,522

26.3

%

$

501,576

22.7

%

$

491,139

27.0

%

Enterprise Data

701,846

25.2

716,264

32.5

322,980

17.7

Automotive

592,518

21.2

413,973

18.8

394,665

21.7

Communications

309,064

11.1

225,905

10.2

204,911

11.3

Consumer

255,155

9.1

202,015

9.1

234,660

12.9

Industrial

199,354

7.1

147,367

6.7

172,717

9.4

Total

$

2,790,459

100.0

%

$

2,207,100

100.0

%

$

1,821,072

100.0

%

Revenue for the full year ended December 31, 2025 was $2.8 billion, an increase of $583.4 million, or 26.4%, from $2.2 billion for the year ended December 31, 2024. The increase in revenue was primarily due to increases in shipment volume.

By end market, full year 2025 revenue for storage and computing of $732.5 million increased $230.9 million, or 46.0%, from the same period in 2024. This increase was primarily driven by increased sales of power solutions for memory, storage, notebooks and graphic cards. Revenue from the enterprise data market decreased $14.4 million, or 2.0%, from the same period in 2024. Full year 2025 automotive revenue of $592.5 million increased $178.5 million, or 43.1%, from the same period in 2024. This increase was broad-based and primarily driven by increased sales of our highly integrated applications supporting advanced driver assistance systems and infotainment. Communications revenue of $309.1 million increased $83.2 million, or 36.8%, from the same period in 2024 due to higher sales of power solutions for optical modules and routers. Full year 2025 consumer revenue of $255.2 million increased $53.2 million, or 26.3%, from the same period in 2024. This increase was a result of higher sales of products for home appliances and gaming. Revenue of $199.4 million from the industrial market increased $52.0 million, or 35.3%, from the same period in 2024 due to higher sales for power sources and instrumentation applications.

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Cost of Revenue and Gross Margin 

Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses. 

Year Ended December 31,

2025

2024

2023

(In thousands, except percentages)

Cost of revenue

$

1,250,718

$

986,230

$

799,953

As a percentage of revenue

44.8

%

44.7

%

43.9

%

Gross profit

$

1,539,741

$

1,220,870

$

1,021,119

Gross margin

55.2

%

55.3

%

56.1

%

Cost of revenue was $1,250.7 million, or 44.8% of revenue, for the year ended December 31, 2025, and $986.2 million, or 44.7% of revenue, for the year ended December 31, 2024. The $264.5 million increase in cost of revenue was primarily driven by higher shipment volume.

Gross margin was 55.2% for the year ended December 31, 2025, compared with 55.3% for the year ended December 31, 2024. The decrease in gross margin was mainly driven by higher warranty expenses as a percentage of revenue, partially offset by lower inventory write-downs as a percentage of revenue.

Research and Development (“R&D”)

R&D expenses primarily consist of cash-based compensation and benefits, stock-based compensation and deferred compensation for design and product engineers, expenses related to new product development and supplies, and facility costs.   

Year Ended December 31,

2025

2024

2023

(In thousands, except percentages)

R&D expenses

$

382,263

$

324,748

$

263,643

As a percentage of revenue

13.7

%

14.7

%

14.5

%

R&D expenses were $382.3 million, or 13.7% of revenue, for the year ended December 31, 2025, and $324.7 million, or 14.7% of revenue, for the year ended December 31, 2024. The $57.6 million increase in R&D expenses was primarily due to a $30.1 million increase in cash-based compensation and benefits, a $9.1 million increase in new product development expenses, a $5.8 million increase in laboratory and other supplies, and a $4.1 million increase in stock-based compensation and related payroll taxes.

Selling, General and Administrative (“SG&A”)

SG&A expenses primarily include cash-based compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, travel expenses, facilities costs, third-party service fees and legal expenses. 

Year Ended December 31,

2025

2024

2023

(In thousands, except percentages)

SG&A expenses

$

428,842

$

356,764

$

275,740

As a percentage of revenue

15.4

%

16.2

%

15.1

%

SG&A expenses were $428.8 million, or 15.4% of revenue, for the year ended December 31, 2025, and $356.8 million, or 16.2% of revenue, for the year ended December 31, 2024. The $72.0 million increase in SG&A expenses was primarily driven by a $37.3 million increase in cash-based compensation and benefits, and a $23.8 million increase in stock-based compensation and related payroll taxes.

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Other Income, Net

Other income, net, was $37.6 million for the year ended December 31, 2025, compared with $33.6 million for the year ended December 31, 2024. 

Income Tax Expense (Benefit), Net

The budget reconciliation bill H.R.1 (“H.R.1 Act”) signed into law on July 4, 2025, makes permanent certain expiring provisions of the 2017 Tax Cuts and Jobs Act and makes modifications to the existing tax framework. The primary impact for the current year is the immediate tax expensing of prior year unamortized and current year domestic R&D expenses and accelerated depreciation in the year ended December 31, 2025. Our tax provision for the year ended December 31, 2025 includes the estimated impact of the H.R.1 Act.

The income tax expense for the year ended December 31, 2025 was $144.7 million, or 18.9% of pre-tax income. The effective tax rate was lower than the federal statutory rate of 21% primarily due to income generated by our subsidiaries in lower tax jurisdictions and research tax credits. The lower effective tax rate relative to the federal statutory rate was partially offset by the U.S. taxation of foreign earnings and non-deductible stock-based compensation.

The income tax benefit for the year ended December 31, 2024 was $1.0 billion, or 177.9% of pre-tax income. The effective tax rate was lower than the federal statutory rate of 21% primarily due to tax benefits associated with a ten-year tax incentive. In 2024, one of our foreign subsidiaries was granted a ten-year tax incentive, beginning in 2025. A deferred tax benefit of $1.1 billion, net of $0.2 billion of deferred tax liability and $0.1 billion of valuation allowance, was recorded during the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive. Furthermore, the effective tax rate for the year ended December 31, 2024 benefited from lower statutory tax rates at certain of our foreign subsidiaries. The effective tax rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax, the addition of a valuation allowance against foreign tax assets, and excess tax benefits from stock-based compensation.

In December 2024, we completed an intercompany transaction that resulted in one of our foreign subsidiaries recording a step up in the tax basis of intangible assets of $23.2 billion. This resulted in a deferred tax difference between the U.S. GAAP basis and local tax basis of the specified intangibles. We do not expect to realize the deferred tax asset for U.S. GAAP purposes; therefore, we have recorded a full valuation allowance of $23.2 billion as of December 31, 2024 which remains the same as of December 31, 2025.

In January 2025, the OECD released new Administrative Guidance on the application of the Global Anti-Base Erosion Model Rules. We will continue to evaluate the impact of this release and of other future guidance on our future global tax provision.

Liquidity and Capital Resources

December 31,

2025

2024 (As Restated)

(In thousands, except percentages)

Cash and cash equivalents

$

1,099,302

$

691,816

Short-term investments

157,243

171,130

Total cash, cash equivalents and short-term investments

$

1,256,545

$

862,946

Percentage of total assets

30.0

%

24.5

%

Total current assets

$

2,183,802

$

1,565,053

Total current liabilities

(369,365

)

(294,567

)

Working capital

$

1,814,437

$

1,270,486

As of December 31, 2025, we had cash and cash equivalents of $1.1 billion and short-term investments of $157.2 million, compared with cash and cash equivalents of $691.8 million and short-term investments of $171.1 million as of December 31, 2024. As of December 31, 2025, $672.9 million of cash and cash equivalents and $157.2 million of short-term investments were held by our foreign subsidiaries. For the years ended December 31, 2025 and 2024, we repatriated $275 million and $642 million, respectively, of cash from certain of our foreign subsidiaries to the U.S. with immaterial tax impact. The proceeds are primarily used to fund our stock repurchase program, dividend program and ongoing business operations. We may repatriate additional cash from certain of our foreign subsidiaries in future periods. We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

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Summary of Cash Flows 

The following table summarizes our cash flow activities for the periods presented:

Year Ended December 31,

2025

2024

2023

(In thousands)

Net cash provided by operating activities

$

838,202

$

788,410

$

638,213

Net cash provided by (used in) investing activities

(157,269

)

223,047

(178,726

)

Net cash used in financing activities

(285,863

)

(872,227

)

(183,725

)

Effect of change in exchange rates

12,510

(8,470

)

(3,310

)

Net increase in cash, cash equivalents and restricted cash

$

407,580

$

130,760

$

272,452

For the year ended December 31, 2025, the $49.8 million increase in net cash provided by operating activities compared to the prior period was primarily due to increased accounts receivable collections, partially offset by increased inventory purchases and other changes in working capital. 

For the year ended December 31, 2025, the $380.3 million decrease in net cash provided by investing activities compared to the prior period was primarily due to $403.3 million in lower net sales of investments.

For the year ended December 31, 2025, the $586.4 million decrease in net cash used in financing activities compared to the prior period was primarily due to a $628.6 million decrease in stock repurchases, partially offset by a $44.2 million increase in dividends and dividend equivalent payments.

Cash Requirements

Although consequences of economic uncertainties and macroeconomic conditions, including tariffs and retaliatory measures and announcements regarding the same, and many other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1.3 billion as of December 31, 2025, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months.

Our material cash requirements include the following contractual and other obligations:

Purchase Obligations

Purchase obligations represent commitments to our suppliers and other parties requiring the purchases of goods or services. Our purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements.

As of December 31, 2025, total estimated future unconditional purchase commitments to all suppliers and other parties were $442.2 million, of which $389.8 million was due within a year.

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Capital Return to Stockholders

In February 2025, our Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028. Shares are retired upon repurchase. We repurchased approximately 8,000 shares of our common stock for an aggregate purchase price of $6.6 million during the year ended December 31, 2025. As of December 31, 2025, $493.4 million remained available for future repurchases under the program.

We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock. Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month. As of December 31, 2025, accrued dividends totaled $76.0 million. The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders.

In February 2026, our Board of Directors approved an increase in the quarterly cash dividend from $1.56 per share to $2.00 per share, which amount will be paid on April 15, 2026 to all stockholders of record as of the close of business on March 31, 2026.

Other Long-Term Obligations

Other long-term obligations primarily include deferred compensation plan liabilities and accrued dividend equivalents. As of December 31, 2025, these obligations totaled $107.9 million.