iphi20190630

iphi20190630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-34942

Inphi Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware		77-0557980
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2953 Bunker Hill Lane, Suite 300,

Santa Clara, California 95054

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (408) 217-7300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	IPHI	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act). Yes ☐ No ☑

The total number of shares outstanding of the Registrant’s common stock, $0.001 par value per share, as of August 4, 2020 was 51,930,086.

Table of Contents

INPHI CORPORATION

QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2020

TABLE OF CONTENTS

		Page
Note Regarding COVID-19		2
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets at June 30, 2020 and December 31, 2019	3
	Unaudited Condensed Consolidated Statements of Income (Loss) for the Three and Six Months Ended June 30, 2020 and 2019	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2020 and 2019	5
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION		35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 6.	Exhibits	36
Signatures

NOTE REGARDING COVID-19

In March 2020, the World Health Organization declared the outbreak of coronavirus first reported in Wuhan, China (“COVID-19”), a pandemic, and the virus continues to spread in areas where we operate and sell our products and services. Several public health organizations have recommended, and many local governments have implemented, certain measures to slow and limit the transmission of the virus, including shelter in place and social distancing ordinances, which has resulted in a significant deterioration of economic conditions in many of the countries in which we operate.

The spread of the COVID-19 virus has caused us to modify our business practices, including implementing work-from-home policies and restricting travel by our employees, among other things. In response to the outbreak of COVID-19, we have taken the following measures to date:

●

Implemented work-from-home and social distancing policies throughout our organization;

●

Suspended all company travel;

●

Issued $506.0 million in convertible senior notes due 2025 in a private placement to provide additional liquidity;

●

Expanded internet capacity at multiple global sites to enable work from home connectivity to our internal networks;

●

Significantly increased the level of donations and planned contributions by year end towards COVID-19 medical support, supplies, and to abate hunger; and

●

Analyzed supply chain and enabled, in some situations, alternative sources and inventory movements to reduce supply chain risk.

COVID-19 has had a significant impact on the global economy, including accelerating a shift to cloud computing and driving a sharp increase in demand for bandwidth. While we expect our business to continue to be favorably impacted by these phenomena, given the dynamic nature of COVID-19, we have considered its impact when developing our estimates and assumptions. Actual results and outcomes may differ from our estimates and assumptions. Additionally, while the impact of the pandemic may increase demand for our products either in the short-term or in the long-term, it may also adversely affect our ability to meet that demand, as measures taken in response to the pandemic may affect the operations of our suppliers and customers, as their own workforces are disrupted. As a result, our supply chain may be interrupted, and we may experience delays in the delivery of our product.

The impact of the pandemic on our business, as well as the business of our suppliers and customers, and the additional measures that may be needed in the future in response to it, will depend on many factors beyond our control and knowledge. We will monitor the situation to determine what actions may be necessary or appropriate to address the impact of the pandemic, which may include actions mandated or recommended by federal, state or local authorities.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

INPHI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	*June 30,*			*December 31,*
	*2020*			*2019*

Assets
Current assets:
Cash and cash equivalents	$	133,885		$	282,723
Restricted cash		100			—
Investments in marketable securities (amortized cost of $87,084 and $139,448 as of June 30, 2020 and December 31, 2019, respectively)		88,040			140,131
Accounts receivable, net		85,413			60,295
Inventories		90,419			55,013
Prepaid expenses and other current assets		18,175			17,463
Total current assets		416,032			555,625
Property and equipment, net		109,334			79,563
Goodwill		181,689			104,502
Intangible assets, net		277,649			168,290
Right of use assets, net		33,974			33,576
Other assets, net		32,221			34,450
Total assets	$	1,050,899		$	976,006

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	45,159		$	18,771
Deferred revenue		5,271			3,719
Accrued employee expenses		22,023			13,164
Other accrued expenses		13,768			5,125
Convertible debt		48,277			217,467
Other current liabilities		42,843			33,531
Total current liabilities		177,341			291,777
Convertible debt		455,246			258,711
Other long-term liabilities		68,901			78,917
Total liabilities		701,488			629,405
Commitments and contingencies (Note 17)

Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued		—			—
Common stock, $0.001 par value; 500,000,000 shares authorized; 51,870,076 and 45,909,466 issued and outstanding at June 30, 2020 and December 31, 2019, respectively		52			46
Additional paid-in capital		634,729			587,862
Accumulated deficit		(287,144	)		(242,807	)
Accumulated other comprehensive income		1,774			1,500
Total stockholders’ equity		349,411			346,601
Total liabilities and stockholders’ equity	$	1,050,899		$	976,006

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

INPHI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except share and per share amounts)

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2020*			*2019*			*2020*			*2019*
Revenue	$	175,292		$	86,285		$	314,722		$	168,508
Cost of revenue		82,360			37,176			148,093			71,768
Gross profit		92,932			49,109			166,629			96,740
Operating expenses:
Research and development		69,176			44,705			131,869			89,104
Sales and marketing		15,024			11,154			29,933			23,033
General and administrative		12,991			7,480			25,383			14,313
Total operating expenses		97,191			63,339			187,185			126,450
Loss from operations		(4,259	)		(14,230	)		(20,556	)		(29,710	)
Interest expense		(10,159	)		(8,552	)		(19,059	)		(16,975	)
Loss on early extinguishment of debt		(13,297	)		—			(13,297	)		—
Other income, net		3,913			1,617			8,869			3,995
Loss before income taxes		(23,802	)		(21,165	)		(44,043	)		(42,690	)
Provision (benefit) for income taxes		249			(587	)		294			633
Net loss	$	(24,051	)	$	(20,578	)	$	(44,337	)	$	(43,323	)
Earnings per share:
Basic	$	(0.49	)	$	(0.46	)	$	(0.93	)	$	(0.97	)
Diluted	$	(0.49	)	$	(0.46	)	$	(0.93	)	$	(0.97	)

Weighted-average shares used in computing earnings per share:
Basic		48,928,224			45,191,674			47,477,159			44,823,562
Diluted		48,928,224			45,191,674			47,477,159			44,823,562

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

INPHI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2020*			*2019*			*2020*			*2019*
Net loss	$	(24,051	)	$	(20,578	)	$	(44,337	)	$	(43,323	)

Other comprehensive income (loss):
Available for sale investments:
Realized gain reclassified into earnings, net of tax		(296	)		—			(296	)		—
Change in unrealized gain or loss		1,465			566			570			1,106
Comprehensive loss	$	(22,882	)	$	(20,012	)	$	(44,063	)	$	(42,217	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

INPHI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

Six Months Ended June 30, 2020

	*Common Stock*				*Additional Paid-in Capital*			*Accumulated Deficit*			*Accumulated Other Comprehensive Income*			*Total Stock- holders’ Equity*

	*Shares*		*Amount*
Balance at December 31, 2019		45,909,466	$	46	$	587,862		$	(242,807	)	$	1,500		$	346,601
Issuance of common stock from exercise of stock options		103,318		—		995			—			—			995
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		60,651		—		(2,490	)		—			—			(2,490	)
Issuance of common stock from employee stock purchase plan purchases		74,896		—		4,112			—			—			4,112
Stock-based compensation expense		—		—		24,029			—			—			24,029
Net loss		—		—		—			(20,286	)		—			(20,286	)
Other comprehensive loss, net		—		—		—			—			(895	)		(895	)
Balance at March 31, 2020		46,148,331	$	46	$	614,508		$	(263,093	)	$	605		$	352,066

Issuance of common stock from exercise of stock options		77,051		—		904			—			—			904
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		702,180		1		(39,840	)		—			—			(39,839	)
Conversion feature of convertible debt, net of issuance costs		—		—		100,616			—			—			100,616
Purchase of capped calls		—		—		(55,660	)		—			—			(55,660	)
Impact of convertible debt repurchases		4,942,490		5		(14,025	)		—			—			(14,020	)
Conversion of convertible debt to common stock		24		—		—			—			—			—
Stock-based compensation expense		—		—		28,226			—			—			28,226
Net loss		—		—		—			(24,051	)		—			(24,051	)
Other comprehensive income, net		—		—		—			—			1,169			1,169
Balance at June 30, 2020		51,870,076	$	52	$	634,729		$	(287,144	)	$	1,774		$	349,411

Six Months Ended June 30, 2019

	*Common Stock*				*Additional Paid-in Capital*			*Accumulated Deficit*			*Accumulated Other Comprehensive Income*		*Total Stock- holders’ Equity*

	*Shares*		*Amount*
Balance at December 31, 2018		44,292,722	$	44	$	536,157		$	(169,896	)	$	389	$	366,694
Issuance of common stock from exercise of stock options		78,205		—		646			—			—		646
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		168,227		1		(4,017	)		—			—		(4,016	)
Issuance of common stock from employee stock purchase plan purchases		121,549		—		3,477			—			—		3,477
Stock-based compensation expense		—		—		18,758			—			—		18,758
Net loss		—		—		—			(22,745	)		—		(22,745	)
Other comprehensive income, net		—		—		—			—			540		540
Balance at March 31, 2019		44,660,703	$	45	$	555,021		$	(192,641	)	$	929	$	363,354

Issuance of common stock from exercise of stock options		45,317		—		486			—			—		486
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		695,379		1		(18,386	)		—			—		(18,385	)
Stock-based compensation expense		—		—		17,961			—			—		17,961
Net loss		—		—		—			(20,578	)		—		(20,578	)
Other comprehensive income, net		—		—		—			—			566		566
Balance at June 30, 2019		45,401,399	$	46	$	555,082		$	(213,219	)	$	1,495	$	343,404

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

INPHI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	*Six Months Ended June 30,*
	*2020*			*2019*

Cash flows from operating activities
Net loss	$	(44,337	)	$	(43,323	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		62,410			48,518
Stock-based compensation		52,255			36,719
Deferred income taxes		244			446
Accretion of convertible debt and amortization of debt issuance costs		15,931			13,805
Net unrealized loss (gain) on equity investments		(1,744	)		75
Realized gain on an equity investment		(4,999	)		—
Amortization of discount on marketable securities		(42	)		(516	)
Loss on termination of software lease contracts		3,370			—
Loss on early extinguishment of debt		13,297			—
Other noncash items		(328	)		302
Changes in assets and liabilities, net of acquisition:
Accounts receivable		(24,818	)		(5,737	)
Inventories		(14,194	)		(11,043	)
Prepaid expenses and other assets		19,591			(469	)
Income tax payable/receivable		10			126
Accounts payable		10,434			7,130
Accrued expenses		(7,130	)		194
Deferred revenue		(5,949	)		813
Other liabilities		(1,076	)		2,362
Net cash provided by operating activities		72,925			49,402

Cash flows from investing activities
Purchases of property and equipment		(27,849	)		(12,610	)
Purchases of marketable securities		(39,511	)		(141,764	)
Sales of marketable securities		65,509			15,029
Maturities of marketable securities		26,736			109,352
Purchases of intangible assets		(277	)		(450	)
Purchase of equity investments		(5,999	)		—
Proceeds from eSilicon investment		14,999			—
Acquisitions of business, net of cash		(223,731	)		—
Net cash used in investing activities		(190,123	)		(30,443	)

Cash flows from financing activities
Proceeds from exercise of stock options		1,899			1,132
Proceeds from employee stock purchase plan purchases		4,112			3,477
Proceeds from issuance of convertible debt, net of cost		492,743			—
Payment for convertible debt repurchases		(407,782	)		—
Payment of obligations related to equipment financing		(198	)		(238	)
Payment of obligations related to purchase of intangible assets		(23,595	)		(13,158	)
Purchase of capped call options		(55,660	)		—
Minimum tax withholding paid on behalf of employees for net share settlement		(43,059	)		(22,566	)
Net cash used in financing activities		(31,540	)		(31,353	)
Net decrease in cash and cash equivalents		(148,738	)		(12,394	)
Cash, cash equivalents and restricted cash at beginning of period		282,723			172,018
Cash, cash equivalents and restricted cash at end of period	$	133,985		$	159,624

Supplemental cash flow information:
Interest paid	$	3,097		$	3,196
Income taxes paid		629			126
Supplemental disclosure of non-cash investing and financing activities:
Software license intangible assets		1,000			2,433
Settlement of net receivable from eSilicon as part of purchase consideration		5,250			—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

1. Organization and Basis of Presentation

Inphi Corporation (the “Company”), a Delaware corporation, was incorporated in November 2000. The Company is a fabless provider of high-speed analog and mixed signal semiconductor solutions for the communications and cloud markets. The Company’s semiconductor solutions are designed to address bandwidth bottlenecks in networks, maximize throughput and minimize latency in computing environments and enable the rollout of next generation communications and cloud infrastructures. In addition, the semiconductor solutions provide a vital high-speed interface between analog signals and digital information in high-performance systems such as telecommunications transport systems, enterprise networking equipment and data centers.

On January 10, 2020, the Company completed the acquisition of eSilicon Corporation (“eSilicon”) for $214,644. The revenue and expenses of eSilicon from January 10, 2020 onwards are included in the condensed consolidated statement of income (loss).

On May 18, 2020, the Company purchased certain assets and rights of Arrive Technologies, Inc. ("Arrive") for $20,141. The revenue and expenses related to this purchase from May 18, 2020 onwards are included in the condensed consolidated statement of income (loss).

The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020.

The interim condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to state fairly the Company’s consolidated financial position as of June 30, 2020, its consolidated results of operations and stockholders’ equity for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for future quarters or the full year.

Use of Estimates and Judgments

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates and judgments compared to historical experience and expected trends. In March 2020, the outbreak of COVID-19 was declared a pandemic by the World Health Organization. While the nature of the situation is dynamic, the Company has considered the impact when developing its estimates and assumptions. Actual results and outcomes may differ from management's estimates and assumptions.

Revisions

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, in connection with the preparation of the Company’s 2019 year-end consolidated financial statements, a classification error in the Company’s previously issued consolidated statements of cash flows was identified. Specifically, it was determined that payments made under the Company’s multiyear agreements for the purchase of internal use intangible assets should have been classified as use of cash for financing activities and not as use of cash for investing activities as originally presented. Such classification error had no impact on the Company’s consolidated balance sheets, statements of income (loss), statements of comprehensive income (loss) or statements of stockholders’ equity. Although the Company assessed the materiality of the error and concluded that the error was not material to the previously issued annual or interim financial statements, the Company did revise its previously issued 2018 and 2017 annual financial statements to correct for such classification error in connection with the filing of its 2019 Annual Report on Form 10-K, and disclosed that it would be revising its unaudited quarterly condensed consolidated statements of cash flows in connection with the filing of its Quarterly Reports on Form 10-Q in fiscal year 2020. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying 2019 unaudited condensed consolidated statement of cash flows to correct for such classification error. The effect of the revisions on the unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2019 was as follows: (i) cash used in investing activities decreased by $13,158 from $43,601 to $30,443, and (ii) cash used in financing activities increased by $13,158 from $18,195 to $31,353.

Summary of Significant Accounting Policies

Refer to the Company’s Annual Report on Form 10-K for a summary of significant accounting policies. On January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) Topic 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), and accordingly, modified its policy on accounting for allowance for doubtful accounts on trade accounts receivable and available-for-sale debt securities as stated below. As described under the “Recent Accounting Pronouncements,” below, the impact of adopting ASC 326 for the Company was not material.

There have been no other significant changes to the Company’s significant accounting policies during the three and six months ended June 30, 2020.

Accounts Receivable

The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness. The Company monitors collections and payments from its customers and maintains an allowance for doubtful accounts based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar high risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The allowance for credit losses as of June 30, 2020 was $1,202. The allowance for doubtful accounts as of December 31, 2019 was $1,152. The activities in this account, including the current-period provision for expected credit losses for the three and six months ended June 30, 2020, were not material.

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

Debt Securities

The Company performs an evaluation of its available-for-sale debt securities in unrealized loss position. The Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through the statement of income (loss). For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the Company believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. There was no allowance for credit loss as of June 30, 2020. Accrued interest receivable on available-for-sale debt securities as of June 30, 2020 was $629 and excluded from the estimate of credit losses. Accrued interest receivable on available-for-sale debt securities is reported within Prepaid expenses and other current assets on the condensed consolidated balance sheets. Any interest accrued that is past due by more than 90 days is written off through reversal of interest income.

2. Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASC 326, to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition to historical loss information, to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses. The guidance is effective for the Company beginning with fiscal year 2020, including interim periods. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued guidance that eliminates certain disclosure requirements for fair value measurements for all entities, requiring public entities to disclose certain new information and modifies some disclosure requirements. The new guidance will no longer require disclosure of the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will require disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance will be effective for fiscal years beginning after December 15, 2019. The Company adopted this guidance on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued guidance requiring a customer in a cloud computing arrangement under a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs are expensed over the term of the hosting arrangement beginning when the module or component of the hosting arrangement is ready for its intended use. The guidance will be effective for fiscal years beginning after December 15, 2019. The Company adopted this guidance on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In November 2018, the FASB issued amendments to guidance on “Collaborative Arrangements” and “Revenue from Contracts with Customers”, that require transactions in collaborative arrangements to be accounted for under “Revenue from Contracts with Customers” if the counterparty is a customer for a good or service (or bundle of goods and services) that is a distinct unit of account. The amendments also preclude entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The amendments to the guidance are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes as part of FASB's overall initiative to reduce complexity in accounting standards. Amendments include removal of certain exceptions to the general principles of ASC 740, Income Taxes, and simplification in general other areas such as accounting for a franchise tax (or similar tax) that is partially based on income. The guidance will be effective for fiscal years beginning after December 15, 2020, though early adoption is permitted. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements.

In August 2020, the FASB issued guidance that simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The guidance will reduce the number of accounting models for convertible debt instruments and convertible preferred stock. This will result in fewer embedded conversion features being separately recognized from the host contract compared with current GAAP. More convertible debt instruments will be reported as a single liability instrument, and more convertible preferred stock will be reported as a single equity instrument with no separate accounting for embedded conversion features. FASB also made changes to the disclosures for convertible instruments and earnings-per-share guidance. The guidance will be effective for fiscal years beginning after December 15, 2021, though early adoption is permitted. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements.

3. Acquisitions

eSilicon

On January 10, 2020, the Company completed the acquisition of eSilicon for approximately $214,644. The Company acquired eSilicon to accelerate the Company’s roadmap in developing electro-optics solutions for cloud and telecommunications customers. An amount of $10,000 was placed in an escrow fund for 12 months (up to 36 months in certain circumstances) following the closing for the satisfaction of certain potential indemnification claims. The condensed consolidated financial statements include the results of operations of eSilicon from the acquisition date.

The acquisition has been accounted for using the purchase method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company allocated the purchase price to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of acquisition. As additional information becomes available, such as finalization of the estimated fair value of tax related items, the Company may revise the preliminary purchase price allocation during the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material as the Company finalizes the fair values of the tangible and intangible assets acquired and liabilities assumed.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The following table summarizes the preliminary purchase price allocation as of the acquisition date:

Cash	$	704
Restricted cash		2,100
Accounts receivable		5,750
Inventories		21,086
Prepaid expenses and other current assets		21,012
Property and equipment		7,106
Intangible assets		148,720
Right of use asset		1,022
Other noncurrent assets		252
Accounts payable		(9,105	)
Accrued expenses		(25,060	)
Deferred revenue		(7,501	)
Other current liabilities		(13,886	)
Other liabilities		(3,567	)
Total identifiable net assets	$	148,633
Goodwill		66,011
Net assets acquired	$	214,644

As of the acquisition date, the fair value of receivables, other assets, accounts payable, accrued expenses and other liabilities approximated the book value acquired.

The following table summarizes the estimated fair value of intangible assets and their estimated useful lives as of the date of acquisition:

	*Estimated Fair Value*		*Estimated Useful Life (Years)*
Contract manufacturing rights	$	105,160		5.0
Developed technology		33,630		8.0
Software		9,930		0.5 to 2.0
	$	148,720

Developed technology was valued using the multi-period excess earnings method under the income approach. This method involves discounting the direct cash flows expected to be generated by the technologies over their remaining lives, net of returns on contributory assets. The estimated useful life was determined based on the technology cycle related to product family and its expected contribution to forecasted revenue. Contract manufacturing rights were valued using a multi-period excess earnings method, which involved discounting the direct cash flow expected to be generated by these rights over their remaining economic lives, net of returns on contributory assets. The estimated useful life was determined to be five years based on the estimated life of the product, assuming that the existing customers will remain with the Company until the product becomes obsolete. The cash flows for the two intangible assets were distinctly separate and bifurcated for the purposes of the valuation of each asset.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and is attributable to the workforce of eSilicon, the Company’s going concern value with the opportunity to leverage its workforce to develop new technologies and the ability of the Company to grow the business faster and more profitable than was possible by eSilicon as a stand-alone company. Goodwill is not amortized and is not deductible for tax purposes.

The Company incurred acquisition costs of $1,550, of which $1,015 was incurred in the year ended December 31, 2019 and $535 was included in general and administrative expense in the condensed consolidated statement of income (loss) for the six months ended June 30, 2020.

eSilicon contributed revenue of $41,178 and pre-tax loss of $996 to the Company for the three months ended June 30, 2020. eSilicon contributed revenue of $59,851 and pre-tax loss of $14,991 for the period from January 10, 2020 to June 30, 2020.

Prior to the acquisition, the Company owned a minority equity interest in eSilicon. The fair value of the equity interest immediately before the acquisition date was $14,999, which resulted in a gain of $4,999 and was included in Other income, net in the condensed consolidated statement of income (loss) for the six months ended June 30, 2020. The fair value was determined based on the proceeds received as a holder of eSilicon's preferred stock.

Arrive

On May 18, 2020, the Company purchased certain assets and rights of Arrive for $20,141. The Company acquired Arrive for the purpose of expanding its presence into strategic geographic regions for talent acquisition. An amount of $3,000 was withheld by the Company for 12 months following the closing for the satisfaction of certain potential indemnification claims. The condensed consolidated financial statements include the results of operations of Arrive from the acquisition date.

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The acquisition has been accounted for using the purchase method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company allocated the purchase price to tangible and intangible assets acquired based on their estimated fair values. The fair value of the identifiable intangible asset acquired was based on estimates and assumptions made by management at the time of acquisition. As additional information becomes available, such as finalization of the estimated fair value of tax related items, the Company may revise the preliminary purchase price allocation during the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material as the Company finalizes the fair values of the tangible and intangible assets acquired.

The following table summarizes the preliminary purchase price allocation as of the acquisition date:

Inventories	$	126
Intangible asset		8,840
Total identifiable net assets		8,966
Goodwill		11,175
Net assets acquired	$	20,141

The estimated fair value of developed technology was $8,840 with an estimated useful life of five years. The developed technology was valued using the multi-period excess earnings method under the income approach. This method involves discounting the direct cash flows expected to be generated by the technologies over their remaining lives, net of returns on contributory assets. The estimated useful life was determined to be five years based on the estimated life of the product, assuming that the existing customers will remain with the Company until the product becomes obsolete.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and is attributable to the workforce of Arrive, the Company’s going concern value with the opportunity to leverage its workforce to develop new technologies and the ability of the Company to grow the business faster and more profitable than was possible by Arrive as a stand-alone company. Since this is an asset purchase agreement, the goodwill is amortized and is deductible for tax purposes.

The Company incurred acquisition costs of $180 included in general and administrative expense in the condensed consolidated statement of income (loss) for the three and six months ended June 30, 2020.

Arrive contributed revenue of $571 and pre-tax loss of $121 to the Company for the period from May 18, 2020 to June 30, 2020.

Pro Forma Information

The following unaudited pro forma financial information presents a summary of the Company’s condensed consolidated results of operations for the three and six months ended June 30, 2020 and 2019, assuming the eSilicon and Arrive acquisitions have been completed as of January 1, 2019. The pro forma information includes adjustments to revenue, amortization and depreciation for intangible assets and property and equipment acquired, amortization of the purchase accounting effect on inventory acquired from eSilicon and interest income for reduction in short-term investments to fund the acquisition.

	*Pro Forma Three Months Ended*						*Pro Forma Six Months Ended*
	*June 30, 2020*			*June 30, 2019*			*June 30, 2020*			*June 30, 2019*
	(unaudited)						(unaudited)
Revenue	$	177,537		$	97,443		$	322,201		$	223,228
Net loss	$	(21,683	)	$	(47,229	)	$	(47,881	)	$	(84,902	)

The unaudited pro forma financial information was prepared using the acquisition method of accounting and are based on the historical financial information of the Company, eSilicon and Arrive, reflecting the results of operations for the three and six months ended June 30, 2020 and 2019. The unaudited pro forma financial information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the Company completed the acquisitions as of the beginning of the period presented. In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined company nor do they reflect the expected realization of any cost savings associated with the acquisitions.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

4. Investments

The following table summarizes the investments in marketable securities by investment category:

	*June 30, 2020*				*December 31, 2019*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
Available-for-sale securities:
U.S. Treasury securities	$	—	$	—	$	3,752	$	3,759
Municipal bonds		19,083		19,220		6,062		6,119
Corporate notes/bonds		60,307		61,090		118,859		119,449
Asset backed securities		2,579		2,612		4,239		4,268
Commercial paper		5,115		5,118		6,464		6,464
Certificate of deposit		—		—		72		72
Total investments	$	87,084	$	88,040	$	139,448	$	140,131

As of June 30, 2020, there were no investments that had unrealized loss position. The Company reviews the investments to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

The contractual maturities of available-for-sale securities at June 30, 2020 are presented in the following table:

	*Cost*		*Fair Value*
Due in one year or less	$	53,653	$	53,963
Due between one and five years		33,431		34,077
	$	87,084	$	88,040

The Company has a marketable equity investment in a company located in Taiwan. The fair value of the investment and unrealized loss as of June 30, 2020 was $1,606 and $388, respectively. The fair value of the investment and unrealized loss as of December 31, 2019 was $1,662 and $332, respectively. This investment is included in Other assets, net in the condensed consolidated balance sheets.

The Company has non-marketable equity investments in privately held companies without readily determinable market values. The Company adjusts the carrying value of non-marketable equity investments to fair value upon observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity investments, realized and unrealized, are recognized in Other income, net in the condensed consolidated statement of income (loss). As of June 30, 2020, non-marketable equity investments had a carrying value of approximately $23,593, of which $11,093 was remeasured to fair value based on an observable transaction during the three months ended June 30, 2020. These investments are included in Other assets, net in the condensed consolidated balance sheets. An unrealized gain of $1,801 was recorded in Other income and included as an adjustment to the carrying value of non-marketable equity investments for the three and six months ended June 30, 2020.

5. Inventories

Inventories consist of the following:

	*June 30, 2020*		*December 31, 2019*
Raw materials	$	38,416	$	18,593
Work in process		31,336		19,081
Finished goods		20,667		17,339
	$	90,419	$	55,013

6. Property and Equipment, net

Property and equipment consist of the following:

	*June 30, 2020*			*December 31, 2019*
Laboratory and production equipment	$	173,919		$	144,866
Office, software and computer equipment		41,941			37,241
Furniture and fixtures		1,952			1,617
Leasehold improvements		17,646			8,282
		235,458			192,006
Less accumulated depreciation and amortization		(126,124	)		(112,443	)
	$	109,334		$	79,563

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

Depreciation and amortization expense of property and equipment for the three and six months ended June 30, 2020 was $6,385 and $13,265, respectively. Depreciation and amortization expense of property and equipment for the three and six months ended June 30, 2019 was $5,566 and $11,058, respectively.

As of June 30, 2020 and December 31, 2019, computer software costs included in property and equipment were $8,009 and $7,339, respectively. Amortization expense of capitalized computer software costs was $253 and $503 for the three and six months ended June 30, 2020, respectively. Amortization expense of capitalized computer software costs was $86 and $186 for the three and six months ended June 30, 2019, respectively.

Property and equipment not yet paid in cash as of June 30, 2020 and December 31, 2019 was $11,829 and $4,728, respectively.

7. Intangible Assets

The following table presents details of intangible assets:

	*June 30, 2020*						*December 31, 2019*
	*Gross*		*Accumulated Amortization*		*Net*		*Gross*		*Accumulated Amortization*		*Net*
Developed technology	$	229,270	$	137,108	$	92,162	$	186,800	$	123,365	$	63,435
Customer relationships		70,540		36,273		34,267		70,540		31,409		39,131
Contract manufacturing rights		102,388		9,675		92,713		—		—		—
Trade name		2,310		1,905		405		2,310		1,766		544
Patents		1,579		1,063		516		1,579		1,010		569
Software		78,646		21,060		57,586		74,022		9,411		64,611
	$	484,733	$	207,084	$	277,649	$	335,251	$	166,961	$	168,290

The following table presents amortization of intangible assets for the three and six months ended June 30, 2020 and 2019:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Cost of goods sold	$	12,175	$	9,724	$	23,558	$	19,448
Research and development		6,959		5,514		13,584		10,916
Sales and marketing		2,432		2,432		4,864		4,864
General and administrative		95		148		192		298
	$	21,661	$	17,818	$	42,198	$	35,526

Based on the amount of intangible assets subject to amortization at June 30, 2020, the expected amortization expense for each of the next five fiscal years and thereafter is as follows:

2020 (remaining)	$	43,885
2021		80,795
2022		69,413
2023		42,315
2024		27,122
Thereafter		14,119
	$	277,649

The weighted-average amortization periods remaining by intangible asset category were as follows (in years):

Developed technology			4.5
Customer relationship			3.5
Contract manufacturing rights			4.5
Trade name			1.5
Patents			7.4
Software			2.2

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

8. Leases

The Company has operating leases for office facilities. The leases have remaining lease terms of one year to ten years and some may include options to extend the lease for up to five years.

Information related to operating leases are as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Operating lease cost	$	2,375	$	1,044	$	4,526	$	2,098
Cash paid for leases		1,741		927		3,320		2,191
Right of use assets obtained in exchange for lease obligations		2,001		—		3,743		224

Weighted average remaining lease term and weighted average discount are as follows:

	*June 30, 2020*			*December 31, 2019*
Weighted average remaining lease term (years)		7.88			8.52
Weighted average discount rate		3.7	%		3.9	%

Future minimum lease payments under non-cancellable leases as of June 30, 2020 are as follows:

2020 (remaining)	$	3,726
2021		6,694
2022		6,900
2023		6,873
2024		6,621
Thereafter		23,914
Total future minimum lease payments		54,728
Less: Imputed interest		7,966
Lease incentive recognized as offset to lease liability		2,576
Present value of lease obligations	$	44,186

As of June 30, 2020, the Company has additional operating leases for office facilities that have not yet commenced of $661. These operating leases will commence in the third quarter of 2020 with lease terms between three to five years.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

9. Product Warranty Obligation

As of June 30, 2020 and December 31, 2019, the product warranty liability was $110. There was no change in product warranty liability during the three and six months ended June 30, 2020 and 2019.

10. Convertible Debt

The carrying amount of the Company’s long-term debt consists of the following:

	*June 30, 2020*			*December 31, 2019*
Principal	$	619,956		$	517,500
Less:
Unamortized debt discount		(105,568	)		(38,105	)
Unamortized debt issuance costs		(10,865	)		(3,217	)
Net carrying amount of long-term debt		503,523			476,178
Less current portion of long-term debt		48,277			217,467
Long-term debt, non-current portion	$	455,246		$	258,711

In December 2015, the Company issued $230,000 of 1.125% convertible senior notes due 2020 (the “Convertible Notes 2015”). The Convertible Notes 2015 will mature December 1, 2020, unless earlier converted or repurchased. Interest on the Convertible Notes 2015 is payable on June 1 and December 1 of each year, beginning on June 1, 2016. The initial conversion rate is 24.8988 shares of common stock per $1 principal amount of Convertible Notes 2015, which represents an initial conversion price of approximately $40.16 per share.

Interest expense for the Convertible Notes 2015 are as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Contractual interest expense	$	370	$	646	$	1,013	$	1,286
Amortization of debt discount		1,704		2,877		4,740		5,667
Amortization of debt issuance costs		153		259		427		510
Total interest expense	$	2,227	$	3,782	$	6,180	$	7,463

In connection with the issuance of the Convertible Notes 2015, the Company entered into capped call transactions (the “Capped Call 2015”) in private transactions. Under the Capped Call 2015, the Company purchased capped call options that in aggregate relate to 100% of the total number of shares of the Company's common stock underlying the Convertible Notes 2015, with a strike price approximately equal to the conversion price of the Convertible Notes 2015 and with a cap price equal to $52.06 per share.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

In September 2016, the Company issued $287,500 of 0.75% convertible senior notes due 2021 (the “Convertible Notes 2016”). The Convertible Notes 2016 will mature on September 1, 2021, unless earlier converted or repurchased. Interest on the Convertible Notes 2016 is payable on March 1 and September 1 of each year, beginning on March 1, 2017. The initial conversion rate is 17.7508 shares of common stock per $1 principal amount of the Convertible Notes 2016, which represents an initial conversion price of approximately $56.34 per share.

Interest expense for the Convertible Notes 2016 are as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Contractual interest expense	$	397	$	533	$	934	$	1,066
Amortization of debt discount		2,877		3,577		6,649		7,050
Amortization of debt issuance costs		236		293		545		578
Total interest expense	$	3,510	$	4,403	$	8,128	$	8,694

In connection with the issuance of the Convertible Notes 2016, the Company entered into capped call transactions (the “Capped Call 2016”) in private transactions. Under the Capped Call 2016, the Company purchased capped call options that in aggregate relate to 100% of the total number of shares of the Company's common stock underlying the Convertible Notes 2016, with a strike price approximately equal to the conversion price of the Convertible Notes 2016 and with a cap price equal to approximately $73.03 per share.

In April 2020, the Company issued $506,000 of 0.75% convertible senior notes due 2025 (“Convertible Notes 2020” and, together with the Convertible Notes 2015 and Convertible Notes 2016, the “Convertible Notes”). The Convertible Notes 2020 will mature April 15, 2025, unless earlier converted or repurchased. Interest on the Convertible Notes 2020 is payable on April 15 and October 15 of each year, beginning on October 15, 2020. The initial conversion rate is 8.0059 shares of common stock per $1 principal amount of Convertible Notes 2020, which represents an initial conversion price of approximately $124.91 per share. The Convertible Notes 2020 will be subject to repurchase at the option of the holders following certain fundamental corporate changes, at a fundamental change in repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. Certain corporate events that occur prior to the stated maturity date can cause the Company to increase the conversion rate for a holder.

Prior to the close of business on the business day immediately preceding October 15, 2024, holders may convert all or any portion of their Convertible Notes 2020 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the Convertible Notes 2020 on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture 2020 (as defined below)) per $1 principal amount of Convertible Notes 2020 for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; (iii) if the Company calls any or all of the Convertible Notes 2020 for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate events. On or after October 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes 2020 at any time, regardless of the foregoing circumstances. Upon conversion of a Convertible Notes 2020, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. The Company's current intent is to settle the principal amount of the Convertible Notes 2020 in cash upon conversion. If the conversion value exceeds the principal amount, the Company would deliver shares of its common stock in respect to the remainder of its conversion obligation in excess of the aggregate principal amount.

The Company may not redeem the Convertible Notes 2020 prior to April 20, 2023. The Company may redeem for cash all or any portion of the Convertible Notes 2020, at its option, on or after April 20, 2023 if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Notes 2020 to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Upon the occurrence of certain fundamental changes, the holders of the Convertible Notes 2020 may require the Company to repurchase all or a portion of the Convertible Notes 2020 for cash at a price equal to 100% of the principal amount of the Convertible Notes 2020, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The Convertible Notes 2020 are governed by an Indenture dated April 24, 2020 (the “Indenture 2020”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”). The Indenture 2020 does not contain any financial or operating covenants, or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. The Indenture 2020 contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Convertible Notes 2020 then outstanding may declare 100% of the principal of and accrued and unpaid interest, if any, on all the Convertible Notes 2020, to be due and payable. Upon events of default involving specified bankruptcy events involving the Company, 100% of the principal of and accrued and unpaid interest, if any, on all of the Convertible Notes 2020 will be due and payable immediately. Notwithstanding the foregoing, the Indenture 2020 provides that, to the extent the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture 2020 consists exclusively of the right to receive additional interest on the Convertible Notes 2020. As of June 30, 2020, none of the conditions allowing holders of the Convertible Notes 2020 to convert had been met.

In accounting for the issuance of the Convertible Notes 2020, the Company separated the Convertible Notes 2020 into liability and equity components. The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the face value of the Convertible Notes 2020 as a whole. The excess of the face amount of the liability component over its carrying amount is amortized to interest expense over the term of the Convertible Notes 2020 using the effective interest method. The gross proceeds of $506,000 were accordingly allocated between long-term debt of $402,624 and stockholders' equity of $103,376. Issuance costs of $13,507 were allocated between long-term debt of $10,747 and equity of $2,760.

Interest expense for the Convertible Notes 2020 for the three and six months ended June 30, 2020 are as follows:

Contractual interest expense	$	759
Amortization of debt discount		3,234
Amortization of debt issuance costs		336
Total interest expense	$	4,329

In connection with the issuance of the Convertible Notes 2020, the Company entered into capped call transactions (“Capped Call 2020”) in private transactions. Under the Capped Call 2020, the Company purchased capped call options that in aggregate relate to 100% of the total number of shares of the Company's common stock underlying the Convertible Notes 2020, with a strike price approximately equal to the conversion price of the Convertible Notes 2020 and with a cap price equal to $188.54 per share. The Capped Call 2020 were purchased for $55,660 and recorded as a reduction to additional paid-in-capital in accordance with ASC 815-40, Contracts in Entity’s Own Equity.

The purchased Capped Call 2020 allows the Company to receive shares of its common stock and/or cash from counterparties equal to the amounts of common stock and/or cash related to the excess of the market price per share of the common stock, as measured under the terms of the Capped Call 2020 over the strike price of the Capped Call 2020 during the relevant valuation period. The purchased Capped Call 2020 is intended to reduce the potential dilution to common stock upon future conversion of the Convertible Notes 2020 by effectively increasing the initial conversion price to $188.54 as well as to offset potential cash payments the Company is required to make in excess of the principal amount of the Convertible Notes 2020 in applicable events.

The Capped Call 2020 is a separate transaction entered into by the Company with the option counterparties, is not part of the terms of the Convertible Notes 2020 and will not change the holders' rights under the Convertible Notes 2020.

During the three months June 30, 2020, the Company repurchased $180,454 and $223,090 aggregate principal amount of the Convertible Notes 2015 and Convertible Notes 2016, respectively. The repurchase was accounted for as debt extinguishment. The Company paid $407,782 cash (excluding payment for accrued interest) and issued 4,942,490 shares of common stock. The total repurchase consideration was allocated to the liability and equity components of respective Convertible Notes. The total repurchase consideration allocated to the liability component was based on the fair value of the liability component using discount rates based on the Company's estimated rate for a similar liability with the same maturity, but without the conversion option. The repurchase consideration allocated to the equity component was calculated by deducting the fair value of the liability component from the aggregate repurchase consideration. The loss on extinguishment was determined by comparing the allocated purchase consideration with the carrying value of the liability component, which includes the proportionate amounts of unamortized debt discount and the remaining unamortized debt issuance costs.

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The net carrying amount of the liability component of the convertible debt immediately prior to the repurchase was as follows:

	Convertible Notes 2015			Convertible Notes 2016
Principal	$	180,454		$	223,090
Unamortized debt discount		(5,596	)		(15,694	)
Unamortized debt issuance costs		(504	)		(1,287	)
Total	$	174,354		$	206,109

The loss on early extinguishment of debt is calculated as follows:

	*Convertible Notes 2015*			*Convertible Notes 2016*
Repurchase consideration allocated to the liability component	$	177,622		$	216,138
Net carrying value of debt		(174,354	)		(206,109	)
Loss on early extinguishment	$	3,268		$	10,029

The repurchase consideration allocated to the equity component of $299,458 and $269,875 for the Convertible Notes 2015 and Convertible Notes 2016, respectively, was recorded as a reduction to additional paid-in capital in the Company's balance sheet. The total value of common stock issued in relation to the repurchases was $295,660 and $259,653 for the Convertible Notes 2015 and Convertible Notes 2016, respectively.

The conversion condition for the Convertible Notes 2015 and Convertible Notes 2016 was met during the three months ended June 30, 2020. During the three months ended June 30, 2020, the Company received conversion request on the aggregate principal amount for the Convertible Notes 2016 of $2,211, which remain unsettled as of June 30, 2020.

11. Other Liabilities

Other current liabilities consist of the following:

	*June 30, 2020*		*December 31, 2019*
Software license agreements liability	$	28,500	$	25,810
Operating lease liability		3,128		2,545
Others		11,215		5,176
	$	42,843	$	33,531

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

Other long-term liabilities consist of the following:

	*June 30, 2020*		*December 31, 2019*
Income tax payable	$	1,067	$	692
Software license agreements liability		24,823		36,144
Operating lease liability		41,058		41,074
Others		1,953		1,007
	$	68,901	$	78,917

12. Income Taxes

The Company normally determines its interim income tax provision using an estimated single annual effective tax rate for all tax jurisdictions. ASC 740 provides that when an entity operates in a jurisdiction that has generated ordinary losses on a year-to-date basis or on the basis of the results anticipated for the full fiscal year and no benefit can be recognized on those losses, a separate effective tax rate should be computed and applied to ordinary income (or loss) in that jurisdiction. The Company incurred pretax loss during the three and six months ended June 30, 2020 and 2019 from its U.S. operations and will not recognize a tax benefit of the losses due to the full valuation allowance established against deferred tax assets. Thus, a separate effective tax rate was applied to losses from the U.S. jurisdiction to compute the Company’s June 30, 2020 and 2019 interim tax provision.

The Company recorded an income tax provision of $249 and $294 in the three and six months ended June 30, 2020, respectively. The effective tax rates were (1.0%) and (0.7%) in the three and six months ended June 30, 2020, respectively. The difference between the effective tax rates and the 21% federal statutory rate was primarily due to change in valuation allowance, foreign income taxes provided at lower rates, geographic mix in expected operating results, unrecognized tax benefits, recognition of federal and state research and development credits, windfall tax benefits from stock-based compensation and global intangible low-taxed income ("GILTI") inclusion. The income tax expense for the three and six months ended June 30, 2020 included a reversal of certain unrecognized tax benefit as a result of the Internal Revenue Service exam conclusion with a no change report. The reversal of the unrecognized tax benefit had no impact on the Company’s income tax provision as a result of the full federal valuation allowance. The income tax expense for the three and six months ended June 30, 2020 included an accrual for unrecognized tax benefit for foreign taxes and an income tax benefit for the remeasurement of certain net foreign deferred tax liability based on the renewed tax holiday period in Singapore.

The Company recorded an income tax provision (benefit) of ($587) and $633 in the three and six months ended June 30, 2019, respectively. The effective tax rates were 2.8% and (1.5%) in the three and six months ended June 30, 2019, respectively. The difference between the effective tax rates and the 21% federal statutory rate was primarily due to change in valuation allowance, foreign income taxes provided at lower rates, geographic mix in expected operating results, unrecognized tax benefits, recognition of federal and state research and development credits, and windfall tax benefits from stock-based compensation.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

During the three and six months ended June 30, 2020, the gross amount of the Company’s unrecognized tax benefits decreased approximately $5,204 and $3,653, respectively, primarily as a result of the Internal Revenue Service exam conclusion, partially offset by the results of the tax positions taken during the current year. Substantially all of the unrecognized tax benefits as of June 30, 2020, if recognized, would affect the Company’s effective tax rate.

The Company does not provide for U.S. income taxes on undistributed earnings of its controlled foreign corporations as the Company intends to reinvest these earnings indefinitely outside the U.S.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes measures concerning income tax, employer payroll taxes, and loan programs. The effect of the CARES Act is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

13. Earnings Per Share

The following securities were not included in the computation of diluted earnings per share as inclusion would have been anti-dilutive:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Common stock options		764,328		1,056,682		810,597		1,092,153
Unvested restricted stock units and market value stock units		2,938,459		2,772,493		2,930,147		2,790,574
Convertible debt		10,041,179		10,830,038		10,435,608		10,830,038
		13,743,966		14,659,213		14,176,352		14,712,765

14. Stock–Based Compensation

In June 2010, the Company's Board of Directors (the “Board”) approved the Company’s 2010 Stock Incentive Plan (the “2010 Plan”), which became effective in November 2010. The 2010 Plan provides for the grants of restricted stock, stock appreciation rights and stock unit awards to employees, non-employee directors, advisors and consultants. The compensation committee of the Board administers the 2010 Plan, including the determination of the recipient of an award, the number of shares subject to each award, whether an option is to be classified as an incentive stock option or nonstatutory option, and the terms and conditions of each award, including the exercise and purchase prices and the vesting or duration of the award. Options granted under the 2010 Plan are exercisable only upon vesting. At June 30, 2020, 5,729,552 shares of common stock have been reserved for future grants under the 2010 Plan.

Stock Option Awards

The Company did not grant any stock options during the three and six months ended June 30, 2020 and 2019.

The following table summarizes information regarding options outstanding:

	*Number of Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Value*
Outstanding at December 31, 2019		905,141		$	13.68		1.81	$	54,616
Exercised		(180,369	)	$	10.53
Outstanding at June 30, 2020		724,772		$	14.46		1.52	$	74,677
Vested and Exercisable at June 30, 2020		724,772		$	14.46		1.52	$	74,677

The intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the respective balance sheet dates.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The total intrinsic value of options exercised during the six months ended June 30, 2020 and 2019 was $14,451 and $4,506, respectively. The intrinsic value of exercised options is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. Cash received from the exercise of stock options was $1,899 and $1,132 for the six months ended June 30, 2020 and 2019, respectively.

Restricted Stock Units

The Company granted restricted stock units (“RSUs”) to members of the Board and its employees. Most of the Company’s outstanding RSUs vest over four years with vesting contingent upon continuous service, and RSUs granted to non-employee directors after the initial grant vest on the first anniversary of the date of grant or immediately prior to the Company's next annual meeting of stockholders, if earlier. The Company estimates the fair value of RSUs using the market price of the common stock on the date of the grant. The fair value of these awards is amortized on a straight-line basis over the vesting period.

The following table summarizes information regarding outstanding RSUs:

	*Number of Shares*			*Weighted Average Grant Date Fair Value Per Share*
Outstanding at December 31, 2019		3,822,325		$	41.38
Granted		1,380,565		$	86.59
Vested		(1,205,934	)	$	41.96
Canceled		(61,070	)	$	56.19
Outstanding at June 30, 2020		3,935,886		$	56.82
Expected to vest at June 30, 2020		3,860,310

The RSUs include performance-based stock units subject to achievement of pre-established revenue goal and earnings per share on a non-GAAP basis. Once the goals are met, the performance-based stock units are subject to four years of vesting from the original grant date, contingent upon continuous service. As of June 30, 2020, the total performance-based units outstanding was 43,338.

Market Value Stock Units

In February 2020, the compensation committee of the Board approved long-term market value stock unit (“MVSU”) awards to certain executive officers and employees, subject to certain market and service conditions, in the maximum total amount of 346,201 units. Recipients may earn between 0% to 225% of the target number of shares based on the Company’s achievement of total shareholder return (“TSR”) in comparison to the TSR of companies in the S&P 500 Index over a period of approximately two years and three years in length. The two-year and three-year MVSU grants will end on February 9, 2022 and 2023, respectively. If the Company’s absolute TSR is negative for the performance period, then the maximum number of shares that may be earned is the target number of shares. The fair value of the MVSU awards was estimated using a Monte Carlo simulation model and compensation is being recognized ratably over the service period. The expected volatility of the Company’s common stock was estimated based on the historical average volatility rate over the two- and three-year periods. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk-free interest rate assumption was based on observed interest rates consistent with two- and three-year measurement periods. The total amount of compensation to recognize over the service period, and the assumptions used to value the grants are as follows:

	*Two-Year Term*			*Three-Year Term*
Total target shares		53,448			101,775
Fair value per share	$	119.90		$	125.30
Total amount to be recognized over the service period	$	6,408		$	12,752
Risk free interest rate		1.41	%		1.38	%
Expected volatility		41.37	%		43.79	%
Dividend yield		—			—

Employee Stock Purchase Plan

In December 2011, the Company adopted the Employee Stock Purchase Plan (the “ESPP”). Participants purchase the Company's stock using payroll deductions, which may not exceed 15% of their total cash compensation. Pursuant to the terms of the ESPP, the "look-back" period for the stock purchase price is six months. Offering and purchase periods will begin on February 10 and August 10 of each year. Participants will be granted the right to purchase common stock at a price per share that is 85% of the lesser of the fair market value of the Company's common stock at the beginning or the end of each six-month period.

The ESPP imposes certain limitations upon an employee’s right to acquire common stock, including the following: (i) no employee shall be granted a right to participate if such employee would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company immediately after the election to purchase common stock, and (ii) no employee may be granted rights to purchase more than $25 of fair value of common stock in each calendar year. The maximum aggregate number of shares of common stock available for purchase under the ESPP is 2,750,000 shares. Total common stock issued under the ESPP during the six months ended June 30, 2020 and 2019 was 74,896 and 121,549, respectively.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The fair value of the ESPP purchases is estimated at the start of the offering period using the Black-Scholes option pricing model with the following assumptions:

	Six Months Ended June 30,
	2020			2019
Risk-free interest rate		1.51	%		2.50	%
Expected life (in years)		0.49			0.49
Dividend yield		—			—
Expected volatility		39	%		45	%
Estimated fair value	$	21.71		$	11.11

Stock-Based Compensation Expense

Stock-based compensation expense is included in the Company’s condensed consolidated statements of income (loss) as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Cost of goods sold	$	1,986	$	1,674	$	3,897	$	2,479
Research and development		16,432		9,925		29,511		20,657
Sales and marketing		5,261		3,269		10,462		7,417
General and administrative		4,547		3,093		8,385		6,166
	$	28,226	$	17,961	$	52,255	$	36,719

Total unrecognized compensation cost related to unvested restricted stock units at June 30, 2020, prior to the consideration of expected forfeitures, is approximately $209,046 and is expected to be recognized over a weighted-average period of 2.74 years.

15. Fair Value Measurements

The guidance on fair value measurements requires fair value measurements to be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The Company measures its investments in marketable securities at fair value using the market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company has cash equivalents which consist of money market funds valued using the amortized cost method, in accordance with Rule 2a-7 under the 1940 Act which approximates fair value.

The convertible notes are carried on the condensed consolidated balance sheets at their original issuance value including accreted interest, net of unamortized debt discount and issuance cost. The convertible notes are not marked to fair value at the end of each reporting period. As of June 30, 2020 and December 31, 2019, the fair value of the convertible notes was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. The fair value of the outstanding convertible notes as of June 30, 2020 and December 31, 2019 was $888,791 and $845,296, respectively.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

The following table presents information about assets and liabilities required to be carried at fair value on a recurring basis:

June 30, 2020	*Total*		*Level 1*		*Level 2*
Assets
Cash equivalents:
Money market funds	$	6,155	$	5,519	$	636
Commercial paper		8,198		—		8,198
Investment in marketable debt securities:
Municipal bonds		19,220		—		19,220
Corporate notes/bonds		61,090		—		61,090
Asset backed securities		2,612		—		2,612
Commercial paper		5,118		—		5,118
	$	102,393	$	5,519	$	96,874

December 31, 2019	*Total*		*Level 1*		*Level 2*
Assets
Cash equivalents:
Money market funds	$	190,598	$	67,494	$	123,104
Commercial paper		9,465		—		9,465
Municipal bonds		1,250		—		1,250
Investments in marketable securities:
U.S. Treasury securities		3,759		3,759		—
Municipal bonds		6,119		—		6,119
Corporate notes/bonds		119,449		—		119,449
Asset-backed securities		4,268		—		4,268
Commercial paper		6,464		—		6,464
Certificate of deposit		72		72		—
	$	341,444	$	71,325	$	270,119

As discussed in note 4, the Company has a marketable equity investment. The marketable equity investment is classified as Level 1 in the fair value hierarchy. As discussed in note 4, the Company has non-marketable equity investments, which are classified within Level 3 in the fair value hierarchy because the Company estimates the value based on valuation methods using the observable transaction price at the most recent transaction date.

16. Segment and Geographic Information

The Company operates in one reportable segment. The Company’s Chief Executive Officer, who is considered to be the chief operating decision maker, manages the Company’s operations as a whole and reviews consolidated financial information for purposes of evaluating financial performance and allocating resources. Revenue by region is classified based on the locations to which the products are shipped, which may differ from the customer’s principal offices.

The following table sets forth the Company’s revenue by geographic region:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
China	$	102,019	$	38,449	$	169,860	$	76,266
United States		33,477		20,520		75,081		40,967
Thailand		18,801		14,225		32,731		26,844
Other		20,995		13,091		37,050		24,431
	$	175,292	$	86,285	$	314,722	$	168,508

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

As of June 30, 2020, $53,226 of long-lived tangible assets are located outside the United States, of which $43,945 are located in Taiwan. As of December 31, 2019, $33,826 of long-lived tangible assets are located outside the United States, of which $27,750 are located in Taiwan.

17. Commitments and Contingencies

Noncancelable Purchase Obligations

The Company has noncancelable service agreements, including software licenses, colocation and cloud services used in research and development activities expiring in various years through 2025. As of June 30, 2020, future minimum payments under the noncancelable agreements are as follows:

2020 (remaining)	$	187
2021		280
2022		226
2023		130
2024		95
Thereafter		55
Total	$	973

The Company depends upon third-party subcontractors to manufacture its wafers. The Company’s subcontractor relationships typically allow for the cancellation of outstanding purchase orders, but require payment of all expenses incurred through the date of cancellation. As of June 30, 2020, the total value of open purchase orders for wafers was approximately $31,278.

Legal Proceedings

Netlist, Inc. v. Inphi Corporation, Case No. 09-cv-6900 (C.D. Cal.)

On September 22, 2009, Netlist filed suit in the United States District Court, Central District of California (the “Court”), asserting that the Company infringes U.S. Patent No. 7,532,537. Netlist filed an amended complaint on December 22, 2009, further asserting that the Company infringes U.S. Patent Nos. 7,619,912 and 7,636,274, collectively with U.S. Patent No. 7,532,537, the patents-in-suit, and seeking both unspecified monetary damages to be determined and an injunction to prevent further infringement. These infringement claims allege that the iMB™ and certain other memory module components infringe the patents-in-suit. The Company answered the amended complaint on February 11, 2010 and asserted that the Company does not infringe the patents-in-suit and that the patents-in-suit are invalid. In 2010, the Company filed inter partes requests for reexamination with the United States Patent and Trademark Office (the “USPTO”), asserting that the patents-in-suit are invalid. As a result of the proceedings at the USPTO, the Court has stayed the litigation, with the parties advising the Court on status every 120 days.

As to the proceeding at the USPTO, reexamination has been ordered for all of the patents that Netlist alleged to infringe. At present, the USPTO has determined that almost all of the originally filed claims are not valid, and determined certain amended claims to be patentable. The Reexamination Certificate for U.S. Patent No. 7,532,537 was issued on August 2, 2016 based on amended claims. The Reexamination Certificate for U.S. Patent No. 7,636,274 was issued on November 5, 2018, indicating that all claims, 1 through 97, were cancelled. The Court of Appeals for the Federal Circuit decided the appeals of various parties, and affirmed the decision of the Patent Trial and Appeal Board on June 15, 2020 with respect to the reexamination proceeding for U.S. Patent No. 7,619,912. The Patent Office is expected to proceed in a manner that is consistent with the decision of the Court of Appeals for the Federal Circuit.

While the Company intends to defend the foregoing USPTO proceedings and lawsuit vigorously, the USPTO proceedings and litigation, whether or not determined in the Company’s favor or settled, could be costly and time-consuming and could divert management’s attention and resources, which could adversely affect the Company’s business.

Due to the nature of USPTO proceedings and litigation, the Company is currently unable to predict the final outcome of this lawsuit and therefore cannot determine the likelihood of loss nor estimate a range of possible loss. However, because of the nature and inherent uncertainties of litigation, should the outcome of these actions be unfavorable, the Company’s business, financial condition, results of operations or cash flows could be materially and adversely affected.

Table of Contents

Inphi Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands except share and per share amounts)

Claims Against eSilicon

In connection with the Company's acquisition of eSilicon, eSilicon and the Company have received written communications from certain former stockholders of eSilicon demanding to inspect eSilicon’s books and records and indicating that such stockholders will be seeking appraisal of shares they held in eSilicon. Certain of these former eSilicon stockholders also have stated that they may assert claims against eSilicon’s directors and senior officers for alleged breaches of fiduciary duty and other violations in connection with the merger between eSilicon and a subsidiary of the Company. The Company is unaware of any petition for appraisal and/or lawsuit being filed by any former eSilicon stockholder. The Company believes that the claims in such written communications are without merit, and plan to vigorously defend against lawsuits arising out of or relating to the merger agreement and/or the merger that may be filed in the future.

Indemnifications

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third-parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnifications. Accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2020 and December 31, 2019.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations and this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the terms “may,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “anticipate,” “seek,” “future,” “strategy,” “likely,” or the negative of these terms, and similar expressions are intended to identify forward-looking statements. These statements include statements regarding the impact of the COVID-19 pandemic (including any changes in laws or regulations in reaction to same) on our personnel, on our suppliers, and on our customers and their respective end markets, our anticipated trends and challenges in our business and the markets in which we operate, including the market for 25G to 600G high-speed analog semiconductor solutions, our competitive position, demand for our current products, our plans for future products and anticipated features and benefits thereof, expansion of our product offerings and business activities, our plans to expand international operations, enhancements of existing products, the benefits of outsourcing, our ability to forecast demand and its effects, the impact of U.S. government export restrictions on Huawei, our acquisitions and investments in other companies or technologies, including our acquisitions of eSilicon Corporation and Arrive Technologies, Inc. and the anticipated benefits thereof, critical accounting policies and estimates, our expectations regarding our expenses and revenue, sources of revenue, our effective tax rate and tax benefits, the benefits of our products and services, our technological capabilities and expertise, our liquidity position and sufficiency thereof, including our anticipated cash needs and uses of cash, our ability to generate cash, our operating and capital expenditures and requirements and our needs for additional financing and potential consequences thereof, expectations regarding settlement of convertible notes, repatriation of cash balances from our foreign subsidiaries, our contractual obligations, our anticipated growth and growth strategies, including growing our end customer base, interest rate sensitivity, adequacy of our disclosure controls, and our legal proceedings and warranty claims. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these or any other forward-looking statements. These risks and uncertainties include, but are not limited to, the impact of the COVID-19 pandemic, factors affecting our results of operations, our ability to manage our growth, our ability to sustain or increase profitability, demand for our solutions, the effect of changes in average selling prices for our products, our ability to compete, our ability to rapidly develop new technology and introduce new products, our ability to safeguard our intellectual property, our ability to qualify for tax holidays and incentives, trends in the semiconductor industry and fluctuations in general economic conditions, the risks set forth throughout this report, including the risks set forth under Part II, “Item 1A. Risk Factors” and the risks set forth from time to time in our filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2019. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on current expectations and reflect management's opinions only as of the date hereof. These forward-looking statements speak only as of the date of this report. We do not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based, unless otherwise required by law.

All references to “Inphi,” “we,” “us” or “our” mean Inphi Corporation.

Inphi®, iKON™, InphiNityCore™, Canopus™, ColorZ®, ColorZ-Lite™, iMB™, OmniConnect™, Polaris™, Tri-rate®, Vega™, M200 LightSpeed-III™, Porrima™ and the Inphi logo are among the trademarks, registered trademarks, or service marks owned by Inphi.

Overview

COVID-19

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the virus continues to spread in areas where we operate and sell our products and services. Several public health organizations have recommended, and many local governments have implemented, certain measures to slow and limit the transmission of the virus, including shelter in place and social distancing ordinances, which has resulted in a significant deterioration of economic conditions in many of the countries in which we operate.

The impact of COVID-19 and the related disruptions caused to the global economy and our business did not have a material adverse impact on our business during the six months ended June 30, 2020. During the six months ended June 30, 2020, COVID-19 had a significant impact on the global economy, including accelerating the shift to cloud computing and driving a sharp increase in demand for bandwidth. Our operating results for the three and six months ended June 30, 2020 were not significantly affected by the COVID-19 pandemic. However, the spread of the COVID-19 virus caused us to modify our business practices, including implementing work-from-home policies and restricting travel by our employees. We also took certain actions in response to the pandemic, which are set forth above in “Note Regarding COVID-19.”

Looking forward, we believe that our business will continue to be favorably impacted by the increased demand for bandwidth caused by the impact of the COVID-19 pandemic, however, given the dynamic nature of COVID-19, we have considered its impact when developing our estimates and assumptions. Actual results and outcomes may differ from our estimates and assumptions. Additionally, while the impact of the pandemic may increase demand for our products either in the short-term or in the long-term, it may also adversely affect our ability to meet that demand, as measures taken in response to the pandemic may affect the operations of our suppliers and customers, as their own workforces are disrupted. As a result, our supply chain may be interrupted and we may experience delays in the delivery of our product. The impact of the pandemic on the global economy and on our business, as well as on the business of our suppliers and customers, and the additional measures that may be needed in the future in response to it, will depend on many factors beyond our control and knowledge. We will monitor the situation to determine what actions may be necessary or appropriate to address the impact of the pandemic, which may include actions mandated or recommended by federal, state or local authorities.

Our Company

We are a fabless provider of high-speed analog and mixed signal semiconductor solutions for the communications and cloud markets. Our analog and mixed signal semiconductor solutions provide high signal integrity at leading-edge data speeds while reducing system power consumption. Our semiconductor solutions are designed to address bandwidth bottlenecks in networks, maximize throughput and minimize latency in computing environments and enable the rollout of next generation communications and cloud infrastructures. Our solutions provide a vital high-speed interface between analog and mixed signals and digital information in high-performance systems such as telecommunications transport systems, enterprise networking equipment and data centers. We provide 25G to 600G high-speed analog and mixed signal semiconductor solutions for the communications market.

In January 2020, we completed the acquisition of eSilicon Corporation (“eSilicon”) for approximately $214.6 million. A portion of the consideration has been placed in an escrow fund for up to 12 months (or up to 36 months in certain circumstances) following the closing for the satisfaction of certain indemnification obligations. We acquired eSilicon to accelerate our roadmap in developing electro-optics solutions for cloud and telecommunications customers.

In May 2020, we purchased certain assets and rights of Arrive Technologies, Inc. ("Arrive") for approximately $20.1 million. A portion of the consideration was withheld for 12 months following the closing for the satisfaction of certain potential indemnification claims. We acquired Arrive for the expansion of our presence into strategic geographic regions for talent acquisition.

During the three months ended June 30, 2020, we issued $506.0 million aggregate principal amount of our 0.75% Convertible Senior Notes due 2025 in a private placement. We also repurchased some of our Convertible Notes 2015 and 2016.

A detailed discussion of our business may be found in Part I, “Item 1. Business.” of our Annual Report on Form 10-K for the year ended December 31, 2019.

Quarterly Update

As discussed in more detail below, for the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019, we delivered the following financial performance:

•

Revenue increased by $89.0 million, or 103%, to $175.3 million in the three months ended June 30, 2020. In the six months ended June 30, 2020, revenue increased by $146.2 million, or 87% to $314.7 million.

Table of Contents

	•	Gross profit as a percentage of revenue decreased from 57% to 53% in the three and six months ended June 30, 2020.

	•	Total operating expenses increased by $33.9 million, or 53%, to $97.2 million in the three months ended June 30, 2020. In the six months ended June 30, 2020, total operating expenses increased by $60.7 million, or 48% to $187.2 million.

•

Loss from operations decreased by $10.0 million to $4.3 million in the three months ended June 30, 2020. In the six months ended June 30, 2020, loss from operations decreased by $9.2 million to $20.6 million.

•

During the three months ended June 30, 2020, we repurchased some of our Convertible Notes 2015 and 2016 which resulted in a loss on early extinguishment of $13.3 million.

•

Loss per share increased to $0.49 from $0.46 in the three months ended June 30, 2020. In the six months ended June 30, 2020, loss per share decreased to $0.93 from $0.97.

The increase in our revenue for the three months and six months ended June 30, 2020 was primarily the result of increases in telecommunication, cloud and legacy products, including eSilicon products.

The decrease in gross profit as a percentage of revenue in the three and six months ended June 30, 2020 was due to amortization of inventory fair value step-up of acquired inventories and amortization of acquired intangibles related to the eSilicon acquisition and change in product and revenue mix.

Total operating expenses for the three and six months ended June 30, 2020 increased year-over-year primarily due to an increase in headcount and stock-based compensation expense as a result of new equity grants. Our expenses primarily consist of personnel costs, which include compensation, benefits, payroll related taxes and stock-based compensation. From July 2019 to June 2020, our headcount increased by 121 new employees, primarily in the engineering department. In addition, the acquisitions of eSilicon and Arrive added 335 employees, including transition employees. We expect expenses to continue to increase in absolute dollars as we continue to invest resources to develop more products and to support the growth of our business. Our loss per share for the three months ended June 30, 2020 increased primarily due to higher operating expenses and loss on early extinguishment of debt, partially offset by higher gross profit. Our loss per share for the six months ended June 30, 2020 decreased primarily due to higher gross profit and gain realized on the eSilicon investment, partially offset higher operating expenses and loss on early extinguishment of debt.

Our cash, cash equivalents and restricted cash were $134.0 million at June 30, 2020, compared with $282.7 million at December 31, 2019. Cash provided by operating activities was $72.9 million during the six months ended June 30, 2020 compared to $49.4 million during the six months ended June 30, 2019. Cash used in investing activities during the six months ended June 30, 2020 was $190.1 million due to the acquisitions of business of $223.7 million, purchases of property and equipment of $27.8 million, marketable securities of $39.5 million, and equity investment of $6.0 million, partially offset by maturities and sales of marketable securities of $92.2 million, and proceeds from the eSilicon investment of $15.0 million. Cash used in financing activities during the six months ended June 30, 2020 was $31.5 million primarily due to convertible debt repurchases of $407.8 million, payments of obligations relating to purchase of intangible assets of $23.6 million, minimum tax withholding paid on behalf of employees for net share settlement of $43.1 million, purchase of capped call options of $55.7 million, and payments of obligations relating to equipment financing of $0.2 million, partially offset by proceeds from convertible debt, net of cost of $492.7 million, proceeds from ESPP purchases and exercise of stock options of $6.0 million.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to credit losses, warranty reserves, inventory reserves, stock-based compensation expense, goodwill and intangible assets valuation, allowance for distributors’ price discounts, valuation of equity securities, recognition and disclosure of fair value of convertible debt, deferred income tax asset valuation allowances, uncertain tax positions, litigation, other loss contingencies and business combinations. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. In March 2020, the outbreak of COVID-19 was declared a pandemic by the World Health Organization. While the nature of the situation is dynamic, the Company has considered the impact when developing its estimates and assumptions noted above. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected. For a description of our critical accounting policies and estimates, please refer to the “Critical Accounting Policies and Estimates” section of our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2019. There have been no material changes in any of our critical accounting policies during the six months ended June 30, 2020. On January 1, 2020, we adopted ASU 2016-13, Credit Losses (Topic 326). The effects of this adoption are discussed in note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

Results of Operations

The following table sets forth a summary of our statements of income (loss) as a percentage of each line item to the revenue:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue		100	%		100	%		100	%		100	%
Cost of revenue		47			43			47			43
Gross profit		53			57			53			57
Operating expenses:
Research and development		39			52			42			53
Sales and marketing		9			13			10			14
General and administrative		7			9			8			8
Total operating expenses		55			74			60			75
Loss from operations		(2	)		(17	)		(7	)		(18	)
Interest expense		(6	)		(10	)		(6	)		(10	)
Loss on early extinguishment of debt		(8	)		—			(4	)		—
Other income, net		2			2			3			2
Loss before income taxes		(14	)		(25	)		(14	)		(26	)
Provision for income taxes		—			(1	)		—			—
Net loss		(14	)%		(24	)%		(14	)%		(26	)%

Comparison of Three and Six Months Ended June 30, 2020 and 2019

Revenue

	Three Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
Revenue	$	175,292	$	86,285	$	89,007		103	%

	Six Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
Revenue	$	314,722	$	168,508	$	146,214		87	%

Revenue for the three and six months ended June 30, 2020 increased by $89.0 million and $146.2 million, respectively, primarily due to an increase in the number of units sold, partially offset by decrease in average selling price (“ASP”). Revenue for the three months ended June 30, 2020 increased primarily due to increases in revenue from cloud products by $36.6 million, telecommunication products by $36.4 million and legacy products by $16.0 million. The number of units sold increased for the three months ended June 30, 2020 by 424% primarily due to eSilicon products sold. The ASP decreased by 61% due to an increase in the number of units sold of lower ASP eSilicon products. In addition, non-product revenue increased by $3.5 million due to new license and nonrecurring engineering development agreements.

In the six months ended June 30, 2020, revenue increased primarily due to increases in revenue from cloud products by $82.3 million, telecommunication products by $45.2 million and legacy products by $18.7 million. The number of units sold increased for the six months ended June 30, 2020 by 513% primarily due to eSilicon products sold. The ASP decreased by 70% due to an increase in the number of units sold of lower ASP eSilicon products. In addition, non-product revenue increased by $9.9 million due to new license and nonrecurring engineering development agreements.

Table of Contents

Cost of Revenue and Gross Profit

	Three Months Ended June 30,						Change
	2020			2019			Amount		%
	(dollars in thousands)
Cost of revenue	$	82,360		$	37,176		$	45,184		122	%
Gross profit	$	92,932		$	49,109		$	43,823		89	%
Gross profit as a percentage of revenue		53	%		57	%		—		(4	%)

	Six Months Ended						Change
	2020			2019			Amount		%
	(dollars in thousands)
Cost of revenue	$	148,093		$	71,768		$	76,325		106	%
Gross profit	$	166,629		$	96,740		$	69,889		72	%
Gross profit as a percentage of revenue		53	%		57	%		—		(4	%)

Cost of revenue and gross profit for the three and six months ended June 30, 2020 increased primarily due to higher revenue as discussed above. Gross profit as a percentage of revenue for both the three and six months ended June 30, 2020 decreased from 57% to 53% due mainly to amortization of inventory fair value step-up related to acquired eSilicon inventories of $2.0 million and $4.3 million sold during the three and six months ended June 30, 2020, respectively, and amortization of acquired intangibles of $6.2 million and $11.8 million for the three and six months ended June 30, 2020, respectively.

Research and Development

	Three Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
Research and development	$	69,176	$	44,705	$	24,471		55	%

	Six Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
Research and development	$	131,869	$	89,104	$	42,765		48	%

Research and development expense for the three and six months ended June 30, 2020 increased compared to the corresponding 2019 periods primarily due to increase in personnel costs and stock-based compensation of $16.6 million and $28.0 million, respectively, mainly as a result of the eSilicon acquisition, new hires and new equity awards granted to employees. Software tools expense increased by $1.7 million and $6.3 million for the three and six months ended June 30, 2020, respectively, mainly due to new software license subscriptions and cost of termination of eSilicon contracts. Information technology and allocated expenses increased by $4.5 million and $7.5 million for the three and six months ended June 30, 2020, respectively, due to the eSilicon acquisition, increased design activities and higher engineering activities. Testing, laboratory supplies, packaging and pre-production engineering mask costs increased by $1.7 million and $1.4 million for the three and six months ended June 30, 2020, respectively, due to increased research and development activities.

Sales and Marketing

	Three Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
Sales and marketing	$	15,024	$	11,154	$	3,870		35	%

	Six Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
Sales and marketing	$	29,933	$	23,033	$	6,900		30	%

Sales and marketing expense for the three and six months ended June 30, 2020 increased compared to the corresponding 2019 periods primarily due to increase in personnel costs and stock-based compensation by $3.4 million and $5.8 million, respectively, mainly as a result of the eSilicon acquisition, new hires and new equity awards granted to employees. In addition, commission expense increased by $0.3 million and $0.5 million for the three and six months ended June 30, 2020, respectively, due to higher revenue.

Table of Contents

General and Administrative

	Three Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
General and administrative	$	12,991	$	7,480	$	5,511		74	%

	Six Months Ended June 30,				Change
	2020		2019		Amount		%
	(dollars in thousands)
General and administrative	$	25,383	$	14,313	$	11,070		77	%

General and administrative expenses for the three and six months ended June 30, 2020 increased compared to the corresponding 2019 periods primarily due to increase in salary and stock-based compensation by $3.0 million and $4.9 million, respectively, mainly as a result of the eSilicon and Arrive acquisitions, new hires and new equity awards granted to employees. Professional service fees increased by $1.0 million and $2.2 million for the three and six months ended June 30, 2020, respectively, due to the eSilicon and Arrive acquisitions. In addition, allocated expenses such as facility, human resources and information technology expenses increased by $0.8 million and $2.4 million for the three and six months ended June 30, 2020, respectively, due to the acquisition of eSilicon and new building lease for the Company's head office in California.

Provision (benefit) for Income Tax

	Three Months Ended June 30,					Change
	2020		2019			Amount		%
	(dollars in thousands)
Provision (benefit) for income taxes	$	249	$	(587	)	$	836		142%

	Six Months Ended June 30,				Change
	2020		2019		Amount			%
	(dollars in thousands)
Provision for income taxes	$	294	$	633	$	(339	)		(54	%)

We normally determine our interim provision for income tax using an estimated single annual effective tax rate for all tax jurisdictions. ASC 740 provides that when an entity operates in a jurisdiction that has generated ordinary losses on a year-to-date basis or on the basis of the results anticipated for the full fiscal year and no benefit can be recognized on those losses, a separate effective tax rate should be computed and applied to ordinary income (or loss) in that jurisdiction. We incurred a pretax loss during the three and six months ended June 30, 2020 and 2019 from our U.S. operations and will not recognize tax benefit of the losses due to the full valuation allowance established against deferred tax assets. Thus, a separate effective tax rate was applied to losses from the U.S. jurisdiction to compute our June 30, 2020 and 2019 interim tax provision.

The income tax expense of $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2020, respectively, reflects an effective tax rate of (1.0%) and (0.7%), respectively. The effective tax rates for the three and six months ended June 30, 2020 differed from the statutory rate of 21%, primarily due to the change in valuation allowance, foreign income taxes paid at lower rates, geographic mix in operating results, unrecognized tax benefits, recognition of federal and state research and development credits, windfall tax benefits from stock-based compensation, and GILTI inclusion. The income tax expense for the three months ended June 30, 2020 included a reversal of certain unrecognized tax benefit as a result of the Internal Revenue Service exam conclusion with a no change report. The reversal of the unrecognized tax benefit had no impact on the income tax provision as a result of the full federal valuation allowance. The income tax expense for the three months ended June 30, 2020 included an accrual for unrecognized tax benefit for foreign taxes and an income tax benefit for the remeasurement of certain net foreign deferred tax liability based on the renewed tax holiday period in Singapore.

The income tax expense (benefit) of ($0.6) million and $0.6 million for the three and six months ended June 30, 2019 reflects an effective tax rate of 2.8% and (1.5%), respectively. The effective tax rates for the three and six months ended June 30, 2019 differed from the statutory rate of 21% primarily due to the change in valuation allowance, foreign income taxes paid at lower rates, geographic mix in operating results, unrecognized tax benefits, recognition of federal and state research and development credits, and windfall tax benefits from stock-based compensation.

Table of Contents

Liquidity and Capital Resources

As of June 30, 2020, we had cash, cash equivalents, restricted cash and investments in marketable securities of $222.0 million. Our primary uses of cash are to fund operating expenses, purchase inventory and acquire property and equipment and business acquisitions. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the changes in our outstanding accounts payable and accrued expenses. Our primary sources of cash are cash receipts on accounts receivable from our revenue. In 2015, 2016 and 2020, we issued convertible debt, which resulted in an increase in cash, cash equivalents and investments in marketable securities. Aside from the growth in amounts billed to our customers, net cash collections of accounts receivable are impacted by the efficiency of our cash collections process, which can vary from period to period, depending on the payment cycles of our major customers.

The consolidated statement of cash flows for the six months ended June 30, 2019 has been revised to correct a prior period classification error as discussed in note 1 of the Notes to Unaudited, Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Accordingly, the discussion below reflects the impact of those revisions.

The following table summarizes our cash flows for the periods indicated:

	Six Months Ended June 30,
	2020			2019
	(in thousands)
Net cash provided by operating activities	$	72,925		$	49,402
Net cash used in investing activities		(190,123	)		(30,443	)
Net cash used in financing activities		(31,540	)		(31,353	)
Net decrease in cash, cash equivalents and restricted cash	$	(148,738	)	$	(12,394	)

Net Cash Provided by Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2020 primarily reflected depreciation and amortization of $62.4 million, stock-based compensation expense of $52.3 million, accretion of convertible debt and amortization of issuance expenses of $15.9 million, loss on termination software lease contracts of $3.4 million, loss on early extinguishment of debt of $13.3 million, decrease in prepaid expenses and other assets of $19.6 million and increase in accounts payable of $10.4 million, partially offset by a net loss of $44.3 million, realized gain on an equity investment of $5.0 million, unrealized gain on equity investments of $1.7 million, increases in accounts receivable of $24.8 million and inventories of $14.2 million, decreases in accrued expenses of $7.1 million, deferred revenue of $5.9 million and other liabilities of $1.1 million. Our prepaid expenses and other current assets decreased due to collection of receivables from eSilicon stockholders to pay eSilicon employees and usage of prepaid expenses. Our accounts receivable increased due to higher revenue. Our accounts payable and inventories increased due to build-up of inventories for future shipments and addition of eSilicon inventories. Accrued expenses decreased due to payment to eSilicon employees as part of the acquisition. Our deferred revenue decreased due to services provided or shipment of products. Other liabilities decreased due to payments.

Net cash provided by operating activities during the six months ended June 30, 2019 primarily reflected depreciation and amortization of $48.5 million, stock-based compensation expense of $36.7 million, accretion of convertible debt and amortization of issuance expenses of $13.8 million, increases in accounts payable of $7.1 million, deferred revenue of $0.8 million and other liabilities of $2.4 million, partially offset by a net loss of $43.3 million, increases in accounts receivable of $5.7 million and inventories of $11.0 million. Our inventories and accounts payable increased due to build-up of inventories for future shipments. Our deferred revenue increased due to receipts from customers in which revenue is not yet recognized. Our other liabilities increased mainly from estimated liabilities due to sales channel pricing. Our accounts receivable increased due to higher product shipments to customers.

Net Cash Used in Investing Activities

Net cash used in investing activities during the six months ended June 30, 2020 primarily consisted of acquisitions of business of $223.7 million, purchases of marketable securities of $39.5 million and equity investments of $6.0 million and purchases of property and equipment of $27.8 million, partially offset by proceeds from maturities and sales of marketable securities of $92.2 million and proceeds from eSilicon investment of $15.0 million.

Net cash used in investing activities during the six months ended June 30, 2019 primarily consisted of purchases of marketable securities of $141.8 million, purchases of property and equipment of $12.6 million, payments related to purchase of intangible assets of $0.4 million, partially offset by proceeds from maturities and sales of marketable securities of $124.4 million.

Table of Contents

Net Cash Used in Financing Activities

Net cash used in financing activities during the six months ended June 30, 2020 primarily consisted of payment for debt retirement and conversion of $407.8 million, minimum tax withholding paid on behalf of employees for net share settlement of $43.1 million, purchase of capped call options of $55.7 million, payment of obligations related to purchase of intangible assets and equipment financing of $23.8 million, partially offset by proceeds from convertible debt, net of cost of $492.7 million, proceeds from the exercise of stock options and ESPP purchases of $6.0 million.

Net cash used in financing activities during the six months ended June 30, 2019 primarily consisted of minimum tax withholding paid on behalf of employees for restricted stock of $22.6 million and payment of obligations related to purchase of intangible assets and equipment financing of $13.4 million, partially offset by proceeds from the exercise of stock options and ESPP purchases of $4.6 million.

Operating and Capital Expenditure Requirements

Our principal source of liquidity as of June 30, 2020 consisted of $221.9 million of cash, cash equivalents and investments in marketable securities, of which $40.8 million is held by our foreign subsidiaries. Based on our current operating plan, we believe that our existing cash and cash equivalents from operations will be sufficient to finance our operational cash needs through at least the next 12 months. In the future, we expect our operating and capital expenditures to increase as we increase headcount, expand our business activities and grow our end customer base which will result in higher needs for working capital. Our ability to generate cash from operations is also subject to substantial risks described in Part II, Item 1A, Risk Factors. If any of these risks occur, we may be unable to generate or sustain positive cash flow from operating activities. We would then be required to use existing cash and cash equivalents to support our working capital and other cash requirements. If additional funds are required to support our working capital requirements, acquisitions or other purposes, we may seek to raise funds through debt financing or from other sources. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility, and would also require us to incur interest expense. We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us.

We do not plan to repatriate cash balances from foreign subsidiaries to fund our operations in the United States. There may be adverse tax effects upon repatriation of these funds to the United States.

Contractual Payment Obligations

Our outstanding contractual obligations as of December 31, 2019 are included in our Annual Report on Form 10-K for the year ended December 31, 2019. See note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements for information regarding certain contractual obligations as of June 30, 2020.

Off-Balance Sheet Arrangements

As of June 30, 2020, we had no material off-balance sheet arrangements, other than certain noncancelable purchase obligations as discussed in note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements.

Recent Authoritative Accounting Guidance

See note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements for information regarding recently issued accounting pronouncements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

We had cash and cash equivalents and investments in marketable securities of $221.9 million and $282.7 million at June 30, 2020 and December 31, 2019, respectively, which were held for working capital purposes. Our exposure to market interest-rate risk relates primarily to our investment portfolio. We do not use derivative financial instruments to hedge the market risks of our investments. We manage our total portfolio to encompass a diversified pool of investment-grade securities to preserve principal and maintain liquidity. We place our investments with high-quality issuers, money market funds and debt securities. Our investment portfolio as of June 30, 2020 consisted of money market funds, municipal bonds, corporate bonds/notes, commercial papers and asset-backed securities. Investments in both fixed rate and floating rate instruments carry a degree of interest rate risk. Fixed rate securities may have their market value adversely impacted due to an increase in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or if the decline in fair value of our publicly traded debt investments is judged to be a credit loss. We may suffer losses in principal if we are forced to sell securities that have declined in market value due to changes in interest rates. However, because any debt securities we hold are classified as available-for-sale, no gains or losses are realized in the income statement due to changes in interest rates unless we intend to sell or it is more likely than not that we will be required to sell such securities before recovery or unless declines in value have resulted from credit losses. These securities are reported at fair value with the related unrealized gains and losses, net of applicable taxes, included in accumulated other comprehensive income (loss), reported in a separate component of stockholders' equity. Although we currently expect that our ability to access or liquidate these investments as needed to support our business activities will continue, we cannot ensure that this will not change.

Table of Contents

In a low interest rate environment, as short-term investments mature, reinvestment may occur at less favorable market rates. Given the short-term nature of certain investments, the current interest rate environment may negatively impact our investment income.

As of June 30, 2020, we had outstanding debt of $620.0 million of the Convertible Notes. The fair value of the Convertible Notes is subject to interest rate risk, market risk and other factors due to the convertible feature. The fair value of the Convertible Notes will generally increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the Convertible Notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. The interest and market value changes affect the fair value of the Convertible Notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation.

Foreign Currency Risk

To date, our international customer and vendor agreements have been denominated almost exclusively in United States dollars. Accordingly, we have limited exposure to foreign currency exchange rates and currently enter into immaterial foreign currency hedging transactions.

Item 4.

Controls and Procedures

Evaluation of disclosure controls and procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act 1934, or the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that such controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards, but management does not expect that our disclosure controls and procedures will prevent or detect all error and all fraud. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer) have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this Item 1 is set forth under note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, and is hereby incorporated by reference herein. For an additional discussion of certain risks associated with legal proceedings, see Item 1A. Risk Factors below.

Item 1A. Risk Factors

You should carefully consider the risks described in Part I, Item 1A. Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2019, which are incorporated by reference herein, as our business, financial condition and results of operations could be adversely affected by any of the risks and uncertainties described therein. Other than as set forth herein, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2020.

Table of Contents

Item 6. Exhibits


Exhibit
Number		Description
3(i)		Restated Certificate of Incorporation of the Registrant (incorporated by reference to exhibit 3(i) of the Registrant’s Annual Report on Form 10-K filed with the SEC on March 7, 2011).

3(ii)		Amended and Restated Bylaws of the Registrant (incorporated by reference to exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 20, 2020).

4.1		Indenture dated April 24, 2020 between the Registrant and U.S. Bank National Association, as trustee (including form of Note) (incorporated by reference to exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 27, 2020).

10.1		Form of Base Capped Call Confirmation dated April 21, 2020 (incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 27, 2020).

10.2		Form of Additional Capped Call Confirmation dated April 22, 2020 (incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 27, 2020).

10.3		Form of Amendment dated April 24, 2020 to Base Capped Call Confirmations dated December 2, 2015.

10.4		Form of Amendment dated May 20, 2020 to Base Capped Call Confirmations dated September 6, 2016.

10.5		Form of Amendment No. 2 dated May 21, 2020 to Base Capped Call Confirmations dated September 6, 2016.

10.6+		Inphi Corporation Amended and Restated 2010 Stock Incentive Plan, as amended and restated on April 14, 2020.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1(1)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

32.2(1)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

101.INS		Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL).

+ Indicates management contract or compensatory plan.
(1) The material contained in Exhibit 32.1 and Exhibit 32.2 is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INPHI CORPORATION,

(Registrant)

By: /s/ Ford Tamer

Ford Tamer

President and Chief Executive Officer

(Principal Executive Officer)

By: /s/ John Edmunds

John Edmunds

Chief Financial Officer and Chief Accounting Officer

(Principal Financial Officer and Principal Accounting Officer)

August 7, 2020

ex_197129.htm

Exhibit 10.3

[Insert Dealer Name]
[Insert Dealer Address]

DATE:

TO:

ATTENTION:

TELEPHONE:

FACSIMILE:

April 24, 2020

Inphi Corporation

2953 Bunker Hill Lane, Suite 300

Santa Clara, California 95054

Chief Financial Officer

(408) 217-7308

(408) 217-7351

FROM:

TELEPHONE:

SUBJECT:

[Insert Dealer Name]

[_______]

Amendment

The parties have previously entered into a letter agreement (the “Base Confirmation”) dated as of December 2, 2015 and an additional letter agreement (the “Additional Confirmation” and, together with the Base Confirmation, the “Confirmations” and each a “Confirmation”) dated as of December 4, 2015, the purpose of each of which was to confirm the terms and conditions of the capped call option transactions entered into between [Insert Dealer Name] (“Dealer”) and Inphi Corporation (“Counterparty”). The parties have now agreed to amend each Confirmation by the terms of this Amendment (this “Amendment”).

Amendments. Each Confirmation is hereby amended as follows:

(a)

by inserting the following new language at the end of the first paragraph opposite the caption, “Automatic Exercise”:

“In addition, all outstanding Options not deemed automatically exercised pursuant to the immediately preceding sentence (“Remaining Options”) shall be deemed to be automatically exercised at the Expiration Time on the Expiration Date”;

(b)

by inserting immediately following the phrase, “in order to exercise any Options”, opposite the caption, “Notice of Exercise”, the following new language: “(except with respect to any Remaining Options)”;

(c)

by inserting immediately prior to the period at the end of the sentence appearing opposite the caption, “Settlement Method”, the following new language:

“provided further that, with respect to any Remaining Options, Counterparty may elect that Cash Settlement shall apply by providing Dealer with written notice of such election on or prior to 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the first day of the Settlement Averaging Period for such Options”;

(d)

by deleting all the language appearing opposite the caption, “Net Share Settlement”, from “; provided” through the end of the sentence;

(e)

by deleting all the language in clause (ii) appearing opposite the caption, “Combination Settlement”, from “; provided” through the end of the sentence;

(f)

by deleting the captions, “Applicable Limit” and “Applicable Limit Price”, and all language appearing opposite those captions; and

(g)

by replacing clause (B) in the second sentence of Section 9(e)(ii) to read in its entirety as follows:

“(B) the Option Equity Percentage exceeds 14.5% or”.

Representations

Each party represents to the other party in respect of each Confirmation, as amended pursuant to this Amendment, that all representations made by it under such Confirmation, are true and accurate as of the date of this Amendment.

Miscellaneous

(a)

Entire Agreement; Restatement.

(i)

This Amendment constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided herein) with respect thereto.

(ii)

Except for any amendment to the Confirmation made pursuant to this Amendment, all terms and conditions of the Confirmation will continue in full force and effect in accordance with its provisions on the date of this Amendment. References to the Confirmation will be to the Confirmation, as amended by this Amendment.

(b)

Amendments. No amendment, modification or waiver in respect of the matters contemplated by this Amendment will be effective unless made in accordance with the terms of the Confirmation.

(c)

Counterparts. This Amendment may be executed and delivered in counterparts (including by facsimile transmission or by e-mail), each of which will be deemed an original.

(d)

Headings. The headings used in this Amendment are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Amendment.

(e)

Governing Law. This Amendment will be governed by and construed in accordance with the laws of the State of New York as the governing law (without reference to choice of law doctrine).

[Signature Pages Follow]

Very truly yours,

[_________]

By:

Name:
Title:

[Signature Page to Capped Call Amendment]

Accepted and confirmed:

INPHI CORPORATION


By:
Authorized Signatory
Name:

[Signature Page to Capped Call Amendment]

ex_197130.htm

Exhibit 10.4

[Insert Dealer Name]
[Insert Dealer Address]

DATE:

TO:

ATTENTION:

TELEPHONE:

FACSIMILE:

May 20, 2020

Inphi Corporation

2953 Bunker Hill Lane, Suite 300

Santa Clara, California 95054

Chief Financial Officer

(408) 217-7308

(408) 217-7351

FROM:

TELEPHONE:

SUBJECT:

[Insert Dealer Name]

[_______]

Amendment

The parties have previously entered into a letter agreement (the “Base Confirmation”) dated as of September 6, 2016 and an additional letter agreement (the “Additional Confirmation” and, together with the Base Confirmation, each a “Confirmation”) dated as of September 7, 2016, the purpose of each of which was to confirm the terms and conditions of the capped call option transactions entered into between [Insert Dealer Name] (“Dealer”) and Inphi Corporation (“Counterparty”) in connection with the issuance by Counterparty of its 0.75% Convertible Senior Notes due 2021 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”). On May 20, 2020, Counterparty entered into certain exchange transactions (the “Exchange Transactions”) with holders of Convertible Notes pursuant to which Counterparty acquired Convertible Notes in an aggregate principal amount of USD 171,396,000 (the “Exchanged Convertible Notes”). To provide for the automatic exercise at expiration of those capped call options corresponding to the Exchanged Convertible Notes, the parties have now agreed to amend each Confirmation by the terms of this Amendment (this “Amendment”).

Amendments. Each Confirmation is hereby amended as follows:

(a)

by inserting the following new language at the end of the first paragraph opposite the caption, “Automatic Exercise”:

“In addition, all outstanding Options that are not deemed automatically exercised pursuant to the immediately preceding sentence as a result of Counterparty’s acquisition of Convertible Notes in an aggregate principal amount of USD 171,396,000 Convertible Notes pursuant to certain exchange transactions effected on May 20, 2020 (“Exchange-related Options”) shall be deemed to be automatically exercised at the Expiration Time on the Expiration Date”;

(b)

(c)

by inserting immediately prior to the period at the end of the sentence appearing opposite the caption, “Settlement Method”, the following new language:

“; provided further that, with respect to any Exchange-related Options, Counterparty may elect that Cash Settlement shall apply by providing Dealer with written notice of such election on or prior to 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the first day of the Settlement Averaging Period for such Options (which written notice shall contain a representation from Counterparty that it is not, on the date thereof, in possession of any material non-public information with respect to Counterparty or the Shares)”; and

(d)

by inserting immediately prior to the colon at the end of the first line appearing opposite the caption, “Relevant Settlement Method”, the following new language: “(except with respect to any Exchange-related Options)”.

Representations

Miscellaneous

(a)

Entire Agreement; Restatement.

(i)

(ii)

(b)

Amendments. No amendment, modification or waiver in respect of the matters contemplated by this Amendment will be effective unless made in accordance with the terms of the Confirmation.

(c)

Counterparts. This Amendment may be executed and delivered in counterparts (including by facsimile transmission or by e-mail), each of which will be deemed an original.

(d)

Headings. The headings used in this Amendment are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Amendment.

(e)

Governing Law. This Amendment will be governed by and construed in accordance with the laws of the State of New York as the governing law (without reference to choice of law doctrine).

(f)

Effectiveness. This Amendment shall become effective upon the later of: (i) the execution and delivery hereof by the parties hereto and (ii) the closing of the Exchange Transactions.

[Signature Pages Follow]

Very truly yours,

[Insert Dealer Name]

By:

Name:
Title:

[[_____]
as Agent

By:

Name:
Title: ]

[Signature Page to Capped Call Amendment]

Accepted and confirmed:

INPHI CORPORATION


By:
Authorized Signatory
Name:

[Signature Page to Capped Call Amendment]

ex_197131.htm

Exhibit 10.5

[Insert Dealer Name]
[Insert Dealer Address]

DATE:

TO:

ATTENTION:

TELEPHONE:

FACSIMILE:

May 21, 2020

Inphi Corporation

2953 Bunker Hill Lane, Suite 300

Santa Clara, California 95054

Chief Financial Officer

(408) 217-7308

(408) 217-7351

FROM:

TELEPHONE:

SUBJECT:

[Insert Dealer Name]

[_______]

Amendment No. 2

The parties have previously entered into a letter agreement (the “Base Confirmation”) dated as of September 6, 2016 and an additional letter agreement (the “Additional Confirmation” and, together with the Base Confirmation, each a “Confirmation”) dated as of September 7, 2016, the purpose of each of which was to confirm the terms and conditions of the capped call option transactions entered into between [Insert Dealer Name] (“Dealer”) and Inphi Corporation (“Counterparty”) in connection with the issuance by Counterparty of its 0.75% Convertible Senior Notes due 2021 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”). On May 20, 2020, Counterparty entered into certain exchange transactions with holders of Convertible Notes pursuant to which Counterparty acquired Convertible Notes in an aggregate principal amount of USD 171,396,000 (the “Exchanged Convertible Notes”) and entered into an amendment to each Confirmation to provide for the automatic exercise at expiration of those capped call options corresponding to the Exchanged Convertible Notes (“Amendment No. 1”). On May 21, 2020, Counterparty entered into certain additional exchange transactions (the “Additional Exchange Transactions”) with holders of Convertible Notes pursuant to which Counterparty acquired additional Convertible Notes in an aggregate principal amount of USD 51,694,000 (the “Additional Exchanged Convertible Notes”). To provide for the automatic exercise at expiration of those capped call options corresponding to the Additional Exchanged Convertible Notes, the parties have now agreed to amend each Confirmation by the terms of this Amendment No. 2 (this “Amendment No. 2”).

Amendments. Each Confirmation is hereby amended as follows:

(a)

by deleting the first paragraph opposite the caption, “Automatic Exercise” and replacing it in its entirety with the following language:

“Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date occurring on or after the Free Convertibility Date, in respect of which a “Notice of Conversion” (as such term is defined in the Indenture) that is effective as to Counterparty has been delivered by the relevant converting Holder, a number of Options equal to the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion Date has occurred shall be deemed to be automatically exercised; provided that such Options shall be exercised or deemed exercised only if Counterparty has provided a Notice of Exercise to Dealer in accordance with “Notice of Exercise” below. In addition, all outstanding Options that are not deemed automatically exercised pursuant to the immediately preceding sentence as a result of Counterparty’s acquisition of Convertible Notes in an aggregate principal amount of USD 223,090,000 Convertible Notes pursuant to certain exchange transactions effected on May 20, 2020 and May 21, 2020 (“Exchange-related Options”) shall be deemed to be automatically exercised at the Expiration Time on the Expiration Date.”

Representations

Each party represents to the other party in respect of each Confirmation, as amended pursuant to this Amendment No. 2, that all representations made by it under such Confirmation, are true and accurate as of the date of this Amendment No. 2.

Miscellaneous

(a)

Entire Agreement; Restatement.

(i)

This Amendment No. 2 constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings (except as otherwise provided herein) with respect thereto.

(ii)

Except for any amendment to the Confirmation made pursuant to Amendment No. 1 and this Amendment No. 2, all terms and conditions of the Confirmation will continue in full force and effect in accordance with its provisions on the date of this Amendment No. 2. References to the Confirmation will be to the Confirmation, as amended by Amendment No. 1 and this Amendment No. 2.

(b)

Amendments. No amendment, modification or waiver in respect of the matters contemplated by this Amendment No. 2 will be effective unless made in accordance with the terms of the Confirmation.

(c)

Counterparts. This Amendment No. 2 may be executed and delivered in counterparts (including by facsimile transmission or by e-mail), each of which will be deemed an original.

(d)

Headings. The headings used in this Amendment No. 2 are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Amendment No. 2.

(e)

Governing Law. This Amendment No. 2 will be governed by and construed in accordance with the laws of the State of New York as the governing law (without reference to choice of law doctrine).

(f)

Effectiveness. This Amendment No. 2 shall become effective upon the later of: (i) the execution and delivery hereof by the parties hereto and (ii) the closing of the Additional Exchange Transactions.

[Signature Pages Follow]

Very truly yours,

[Insert Dealer Name]

By:

Name:
Title:

[[_____]
as Agent

By:

Name:
Title: ]

[Signature Page to Capped Call Amendment]

Accepted and confirmed:

INPHI CORPORATION


By:
Authorized Signatory
Name:

[Signature Page to Capped Call Amendment]

ex_196563.htm

Exhibit 10.6

INPHI CORPORATION

AMENDED AND RESTATED 2010 STOCK INCENTIVE PLAN

(As amended and restated by the Board on April 14, 2020)

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

Table of Contents

Page

SECTION 1.	ESTABLISHMENT AND PURPOSE.	1
SECTION 2.	DEFINITIONS.	1
(a)	“Affiliate”	1
(b)	“Award”	1
(c)	“Board of Directors”	1
(d)	“Change in Control”	1
(e)	“Code”	3
(f)	“Committee”	3
(g)	“Company”	3
(h)	“Consultant”	3
(i)	“Employee”	3
(j)	“Exchange Act”	3
(k)	“Exercise Price”	3
(l)	“Fair Market Value”	3
(m)	“ISO”	4
(n)	“Nonstatutory Option” or “NSO”	4
(o)	“Offeree”	4
(p)	“Option”	4
(q)	“Optionee”	4
(r)	“Outside Director”	4
(s)	“Parent”	4
(t)	“Participant”	4
(u)	“Plan”	4
(v)	“Purchase Price”	4
(w)	“Restricted Share”	4
(x)	“Restricted Share Agreement”	4
(y)	“SAR”	4
(z)	“SAR Agreement”	4
(aa)	“Service”	4
(bb)	“Share”	5
(cc)	“Stock”	5
(dd)	“Stock Option Agreement”	5

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-i-

(ee)	“Stock Unit”	5
(ff)	“Stock Unit Agreement”	5
(gg)	“Subsidiary”	5
(hh)	“Total and Permanent Disability”	5
SECTION 3.	ADMINISTRATION.	5
(a)	Committee Composition	5
(b)	Committee for Non-Officer Grants	5
(c)	Committee Procedures	6
(d)	Committee Responsibilities	6
SECTION 4.	ELIGIBILITY.	7
(a)	General Rule	7
(b)	Automatic Grants to Outside Directors; Limits on Director Compensation	7
(c)	Ten-Percent Stockholders	8
(d)	Attribution Rules	8
(e)	Outstanding Stock	8
SECTION 5.	STOCK SUBJECT TO PLAN.	9
(a)	Basic Limitation.	9
(b)	Additional Shares	9
SECTION 6.	RESTRICTED SHARES.	9
(a)	Restricted Stock Agreement	9
(b)	Payment for Awards	10
(c)	Vesting	10
(d)	Voting and Dividend Rights	10
(e)	Restrictions on Transfer of Shares	10
SECTION 7.	TERMS AND CONDITIONS OF OPTIONS.	10
(a)	Stock Option Agreement	10
(b)	Number of Shares	11
(c)	Exercise Price	11
(d)	Withholding Taxes	11
(e)	Exercisability and Term	11
(f)	Exercise of Options	11
(g)	Effect of Change in Control	11
(h)	No Rights as a Stockholder	12
(i)	Modification, Extension and Renewal of Options	12
(j)	Restrictions on Transfer of Shares	12

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-ii-

SECTION 8.	PAYMENT FOR SHARES.	12
(a)	General Rule	12
(b)	Surrender of Stock	12
(c)	Services Rendered	12
(d)	Cashless Exercise	13
(e)	Exercise/Pledge	13
(f)	Promissory Note	13
(g)	Other Forms of Payment	13
(h)	Limitations under Applicable Law	13
SECTION 9.	STOCK APPRECIATION RIGHTS.	13
(a)	SAR Agreement	13
(b)	Number of Shares	13
(c)	Exercise Price	13
(d)	Exercisability and Term	14
(e)	Effect of Change in Control	14
(f)	Exercise of SARs	14
(g)	Modification or Assumption of SARs	14
SECTION 10.	STOCK UNITS.	14
(a)	Stock Unit Agreement	14
(b)	Payment for Awards	14
(c)	Vesting Conditions	15
(d)	Voting and Dividend Rights	15
(e)	Form and Time of Settlement of Stock Units	15
(f)	Death of Recipient	15
(g)	Creditors’ Rights	16
SECTION 11.	ADJUSTMENT OF SHARES.	16
(a)	Adjustments	16
(b)	Dissolution or Liquidation	16
(c)	Reorganizations	16
(d)	Reservation of Rights	17
SECTION 12.	DEFERRAL OF AWARDS.	17
(a)	Committee Powers	17
(b)	General Rules	17
SECTION 13.	AWARDS UNDER OTHER PLANS.	18
SECTION 14.	PAYMENT OF DIRECTOR’S FEES IN SECURITIES.	18
(a)	Effective Date	18
(b)	Elections to Receive NSOs, Restricted Shares or Stock Units	18

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-iii-

(c)	Number and Terms of NSOs, Restricted Shares or Stock Units	18
SECTION 15.	LEGAL AND REGULATORY REQUIREMENTS.	18
SECTION 16.	WITHHOLDING TAXES.	19
(a)	General	19
(b)	Share Withholding	19
SECTION 17.	OTHER PROVISIONS APPLICABLE TO AWARDS.	19
(a)	Transferability	19
(b)	Substitution and Assumption of Awards	19
(c)	Performance Criteria	20
(d)	Recoupment	20
SECTION 18.	NO EMPLOYMENT RIGHTS.	20
SECTION 19.	DURATION AND AMENDMENTS.	21
(a)	Term of the Plan	21
(b)	Right to Amend or Terminate the Plan	21
(c)	Effect of Termination	21
SECTION 20.	EXECUTION.	22

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-iv-

INPHI CORPORATION

AMENDED AND RESTATED 2010 STOCK INCENTIVE PLAN

(As amended and restated on May 21, 2020)

SECTION 1.

ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Board of Directors on June 7, 2010, and became effective immediately prior to the closing of the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”). The Plan was amended and restated on February 22, 2011, subsequently amended on April 19, 2013 and on April 19, 2017, and amended and restated on July 19, 2017. The Plan was most recently amended and restated on May 21, 2020 (the “Restatement Date”), subject to Company stockholder approval. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options) or stock appreciation rights.

SECTION 2.

DEFINITIONS.

(a)

“Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

(b)

“Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan.

(c)

“Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

(d)

“Change in Control” shall mean the occurrence of any of the following events:

(i)

A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:

(A) Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

(B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); or

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-1-

(ii)

Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or

(iii)

The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or

(iv)

The sale, transfer or other disposition of all or substantially all of the Company’s assets.

For purposes of subsection 2(d)(i) above, the term “look-back” date shall mean the date 24 months prior to the date of the event that may constitute a Change in Control.

For purposes of subsection 2(d)(ii) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial offering of Stock to the public.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-2-

(e)

“Code” shall mean the Internal Revenue Code of 1986, as amended.

(f)

“Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

(g)

“Company” shall mean Inphi Corporation, a Delaware corporation.

(h)

“Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

(i)

“Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

(j)

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(k)

“Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

(l)

“Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

(i)

If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Quote system;

(ii)

If the Stock was traded on any established stock exchange (such as the New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market) or national market system on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; and

(iii)

If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-3-

(m)

“ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

(n)

“Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

(o)

“Offeree” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).

(p)

“Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

(q)

“Optionee” shall mean an individual or estate who holds an Option or SAR.

(r)

“Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary.

(s)

“Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

(t)

“Participant” shall mean an individual or estate who holds an Award.

(u)

“Plan” shall mean this Amended and Restated 2010 Stock Incentive Plan of Inphi Corporation, as amended from time to time.

(v)

“Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

(w)

“Restricted Share” shall mean a Share awarded under the Plan.

(x)

“Restricted Share Agreement” shall mean the agreement between the Company and the recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Shares.

(y)

“SAR” shall mean a stock appreciation right granted under the Plan.

(z)

“SAR Agreement” shall mean the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR.

(aa)

“Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Stock Option Agreement, SAR Agreement, Restricted Share Agreement or Stock Unit Agreement. Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-4-

(bb)

“Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable).

(cc)

“Stock” shall mean the Common Stock of the Company.

(dd)

“Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to such Option.

(ee)

“Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Agreement.

(ff)

“Stock Unit Agreement” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit.

(gg)

“Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

(hh)

“Total and Permanent Disability” shall mean any permanent and total disability as defined by section 22(e)(3) of the Code.

SECTION 3.

ADMINISTRATION.

(a)

Committee Composition. The Plan shall be administered by the Board or a Committee appointed by the Board. The Committee shall consist of two or more directors of the Company. In addition, to the extent required by the Board, the composition of the Committee shall satisfy such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act.

(b)

Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-5-

(c)

Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.

(d)

Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

(i)

To interpret the Plan and to apply its provisions;

(ii)

To adopt, amend or rescind rules, procedures and forms relating to the Plan;

(iii)

To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;

(iv)

To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

(v)

To determine when Awards are to be granted under the Plan;

(vi)

To select the Offerees and Optionees;

(vii)

To determine the number of Shares to be made subject to each Award;

(viii)

To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

(ix)

To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-6-

(x)

To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

(xi)

To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

(xii)

To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

(xiii)

To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement;

(xiv)

To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

(xv)

To take any other actions deemed necessary or advisable for the administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Options or other rights under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons deriving their rights from an Offeree or Optionee. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan.

SECTION 4.

ELIGIBILITY.

(a)

General Rule. Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs.

(b)

Automatic Grants to Outside Directors; Limits on Director Compensation. Unless otherwise provided by the Board:

(i)

Each Outside Director who first joins the Board of Directors on or after the Restatement Date, and who was not previously an Employee, shall receive a grant of Stock Units with respect to a number of Shares having an aggregate fair market value equal to $160,000 calculated on the date of grant, on the date of his or her election to the Board of Directors. The Stock Units granted under this Section 4(b)(i) shall vest annually over a 4-year period beginning on the day which is one year after the date of grant, at an annual rate of 25% of the total number of Stock Units subject to such Award. Notwithstanding the foregoing, each such Award shall become 100% vested if a Change in Control occurs with respect to the Company during such Outside Director’s Service.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-7-

(ii)

On the first business day following the conclusion of each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring after the Restatement Date, each Outside Director who was not elected to the Board for the first time at such meeting and who will continue serving as a member of the Board of Directors thereafter shall receive a grant of Stock Units with respect to a number of Shares having an aggregate fair market value equal to $175,000 calculated on the date of grant, provided that such Outside Director has served on the Board of Directors for at least six months. Each Stock Unit granted under this Section 4(b)(ii) shall become fully vested on the first anniversary of the date of grant; provided, however, that each such Award shall become vested in full immediately prior to the next regular annual meeting of the Company’s stockholders following such date of grant in the event such meeting occurs prior to such first anniversary date. Notwithstanding the foregoing, each Stock Unit granted under this Section 4(b)(ii) shall become 100% vested if a Change in Control occurs with respect to the Company during such Outside Director’s Service.

Notwithstanding any provision of the Plan to the contrary, the grant date fair value of all Awards (as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) granted under the Plan, plus the amount of cash compensation paid, to any Outside Director as compensation for services as an Outside Director during any twelve (12)-month period may not exceed $500,000.

(c)

Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

(d)

Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

(e)

Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-8-

SECTION 5.

STOCK SUBJECT TO PLAN.

(a)

Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 3,000,000 Shares, plus (x) any Shares subject to outstanding options or forfeiture restrictions under the Company’s 2000 Stock Option/Stock Issuance Plan (the “Predecessor Plan”) on the Effective Date of this Plan that are subsequently forfeited or terminated for any reason before being exercised and any reserved shares not issued or subject to outstanding grants under the Predecessor Plan on the Effective Date of this Plan, such number of additional Shares not to exceed an aggregate of 1,000,000 Shares, and (y) an annual increase on the first day of each fiscal year beginning in 2011 and ending in 2020, in an amount equal to the lesser of (i) 3,000,000 Shares, (ii) 5% of the outstanding Shares on the last day of the immediately preceding year or (iii) an amount determined by the Board. The final increase under clause (y) above occurred on January 1, 2020 and no such increases will occur thereafter. No more than 10,000,000 Shares may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 5(b). The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 11. The number of Shares that are subject to Options or other Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

(b)

Additional Shares. If Restricted Shares are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, then the corresponding Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available in Section 5(a) and the balance (including any Shares withheld to satisfy tax withholding obligations) shall again become available for Awards under the Plan. The full number of Options exercised shall be counted against the number of Shares available for Awards under the Plan, regardless of the number of Shares actually issued upon exercise of such Options. The full number of SARs settled shall be counted against the number of Shares available for Awards under the Plan, regardless of the number of Shares actually issued in settlement of such SARs. For the avoidance of doubt, any Shares withheld to satisfy the exercise price or tax withholding obligation pursuant to any Award of Options or SARs shall not be added to the Shares available for Awards under the Plan. Notwithstanding the foregoing provisions of this Section 5(b), Shares that have actually been issued shall not again become available for Awards under the Plan, except for Restricted Shares that are forfeited and do not become vested.

SECTION 6.

RESTRICTED SHARES.

(a)

Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-9-

(b)

Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services.

(c)

Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

(d)

Voting and Dividend Rights. A holder of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders, except that in the case of any unvested Restricted Shares, the holder shall not be entitled to any dividends or other distributions paid or distributed by the Company in respect of outstanding Shares. Notwithstanding the foregoing, at the Committee’s discretion, the holder of unvested Restricted Shares may be credited with such dividends and other distributions, provided that such dividends and other distributions shall be paid or distributed to the holder only if, when and to the extent such unvested Restricted Shares vest. The value of dividends and other distributions payable or distributable with respect to any unvested Restricted Shares that do not vest shall be forfeited. For the avoidance of doubt, other than with respect to the right to receive dividends and other distributions, the holders of unvested Restricted Shares shall have the same voting rights and other rights as the Company’s other stockholders in respect of such unvested Restricted Shares.

(e)

Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

SECTION 7.

TERMS AND CONDITIONS OF OPTIONS.

(a)

Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-10-

(b)

Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 11.

(c)

Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(c), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.

(d)

Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

(e)

Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(c)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

(f)

Exercise of Options. Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

(g)

Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-11-

(h)

No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 11.

(i)

Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price, or in return for the grant of a different Award for the same or a different number of Shares or for cash; provided, however, that other than in connection with an adjustment of Awards pursuant to Section 11, the Committee may not modify outstanding Options to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding Options in return for cash or the grant of new Awards when the Exercise Price is greater than the Fair Market Value of the Shares covered by such Options, unless such action has been approved by the Company’s stockholders. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, materially impair his or her rights or obligations under such Option.

(j)

Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

SECTION 8.

PAYMENT FOR SHARES.

(a)

General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below.

(b)

Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

(c)

Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(b).

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-12-

(d)

Cashless Exercise. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

(e)

Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.

(f)

Promissory Note. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note.

(g)

Other Forms of Payment. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

(h)

Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Agreement or Restricted Stock Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

SECTION 9.

STOCK APPRECIATION RIGHTS.

(a)

SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical.

(b)

Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 11.

(c)

Exercise Price. Each SAR Agreement shall specify the Exercise Price. The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-13-

(d)

Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

(e)

Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company.

(f)

Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

(g)

Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price, or in return for the grant of a different Award for the same or a different number of Shares or cash; provided, however, that other than in connection with an adjustment of Awards pursuant to Section 11, the Committee may not modify outstanding SARs to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding SARs in return for cash or the grant of new Awards when the Exercise Price is greater than the Fair Market Value of the Shares covered by such SARs, unless such action has been approved by the Company’s stockholders. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

SECTION 10.

STOCK UNITS.

(a)

Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical.

(b)

Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-14-

(c)

Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.

(d)

Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Dividend equivalents shall not be distributed prior to settlement of the Stock Unit to which the dividend equivalents pertain. Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach. The value of dividend equivalents payable or distributable with respect to any unvested Stock Units that do not vest shall be forfeited.

(e)

Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Stock Unit Agreement may provide that vested Stock Units may be settled in a lump sum or in installments. A Stock Unit Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11.

(f)

Death of Recipient. Any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-15-

(g)

Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

SECTION 11.

ADJUSTMENT OF SHARES.

(a)

Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:

(i)

The number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Section 5;

(ii)

The limitations set forth in Section 5(a);

(iii)

The number of Stock Units to be granted to Outside Directors under Section 4(b);

(iv)

The number of Shares covered by each outstanding Option and SAR;

(v)

The Exercise Price under each outstanding Option and SAR; and

(vi)

The number of Stock Units included in any prior Award which has not yet been settled.

(b)

Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

(c)

Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A of the Code, such agreement shall provide for:

(i)

The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;

(ii)

The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;

(iii)

The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-16-

(iv)

Full exercisability or vesting and accelerated expiration of the outstanding Awards; or

(v)

Settlement of the intrinsic value of the outstanding Awards in cash or cash equivalents followed by cancellation of such Awards.

(d)

Reservation of Rights. Except as provided in this Section 11, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the occurrence of such event.

SECTION 12.

DEFERRAL OF AWARDS.

(a)

Committee Powers. Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to:

(i)

Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books;

(ii)

Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or

(iii)

Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

(b)

General Rules. A deferred compensation account established under this Section 12 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 12.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-17-

SECTION 13.

AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

SECTION 14.

PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

(a)

Effective Date. No provision of this Section 14 shall be effective unless and until the Board has determined to implement such provision.

(b)

Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 14 shall be filed with the Company on the prescribed form.

(c)

Number and Terms of NSOs, Restricted Shares or Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the Board.

SECTION 15.

LEGAL AND REGULATORY REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-18-

SECTION 16.

WITHHOLDING TAXES.

(a)

General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

(b)

Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the maximum statutory tax rates in the Participant’s applicable jurisdiction(s).

SECTION 17.

OTHER PROVISIONS APPLICABLE TO AWARDS.

(a)

Transferability. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 17(a) shall be void and unenforceable against the Company.

(b)

Substitution and Assumption of Awards. The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate). Notwithstanding any provision of the Plan (other than the maximum number of Shares that may be issued under the Plan), the terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-19-

(c)

Performance Criteria. The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals.

(i) The Committee may utilize any performance criteria including, but not limited to any of the following: (a) cash flow, (b) earnings per share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, (p) market segment shares, (q) costs, (r) expenses, (s) regulatory body approval for commercialization of a product, or (t) implementation or completion of critical projects, any of which may be measured either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award; and

(ii) The Committee may appropriately adjust any evaluation of performance under a performance criteria, including without limitation to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year.

(d)

Recoupment. Effective with respect to post-Restatement Date Awards and performance periods, in the event that the Company is required to prepare restated financial results owing to an executive officer’s intentional misconduct or grossly negligent conduct, the Board (or a designated committee) shall have the authority, to the extent permitted by applicable law (including California law), to require reimbursement or forfeiture to the Company of the amount of bonus or incentive compensation (whether cash-based or equity-based) such executive officer received during the three fiscal years preceding the year the restatement is determined to be required, to the extent that such bonus or incentive compensation exceeds what the officer would have received based on an applicable restated performance measure or target. The Company will recoup incentive-based compensation from executive officers to the extent required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules, regulations and listing standards that may be issued under that act. Any right of recoupment under this provision will be in addition to, and not in lieu of, any other rights of recoupment that may be available to the Company. This Section 17(d) shall apply to Awards granted on or after the Restatement Date.

SECTION 18.

NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-20-

SECTION 19.

DURATION AND AMENDMENTS.

(a)

Term of the Plan. The Plan, as set forth herein, shall terminate automatically on June 6, 2030, and may be terminated on any earlier date pursuant to Subsection (b) below. No ISOs may be granted after the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board of Directors, or (ii) the date the Plan is approved the stockholders of the Company.

(b)

Right to Amend or Terminate the Plan. The Board of Directors may amend or terminate the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

(c)

Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

[Remainder of this page intentionally left blank]

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-21-

SECTION 20.

EXECUTION.

To record the amendment and restatement of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.

	INPHI CORPORATION



	By	/s/John Edmunds

	Name	John Edmunds

	Title	CFO

Inphi Corporation

Amended and Restated 2010 Stock Incentive Plan

-22-

ex_151940.htm

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to
Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ford Tamer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Inphi Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2020
/s/ Ford Tamer
Ford Tamer
President and Chief Executive Officer (Principal Executive Officer)

ex_151941.htm

EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to
Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John Edmunds, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Inphi Corporation;

(a)

(b)

(c)

(d)

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2020
/s/ John Edmunds
John Edmunds
Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer)

ex_151942.htm

EXHIBIT 32.1

Certification of Chief Executive Officer Pursuant to
18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Ford Tamer, the president and chief executive officer of Inphi Corporation (the "Company"), certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to my knowledge:

1.	The Company's Quarterly Report on Form 10-Q for the three months ended June 30, 2020 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, and

2.	The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2020

/s/ Ford Tamer

Ford Tamer

President and Chief Executive Officer

(Principal Executive Officer)

ex_151943.htm

EXHIBIT 32.2

Certification of Chief Financial Officer Pursuant to
18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, John Edmunds, the chief financial officer and chief accounting officer of Inphi Corporation (the "Company"), certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to my knowledge:

1.	The Company's Quarterly Report on Form 10-Q for the three months ended June 30, 2020 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, and

2.	The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2020

/s/ John Edmunds

John Edmunds

Chief Financial Officer and Chief Accounting Officer

(Principal Financial Officer)

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2020	Aug. 04, 2020
Document Information [Line Items]
Entity Central Index Key	0001160958
Entity Registrant Name	INPHI CORP
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-34942
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	77-0557980
Entity Address, Address Line One	2953 Bunker Hill Lane, Suite 300
Entity Address, City or Town	Santa Clara
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95054
City Area Code	408
Local Phone Number	217-7300
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	IPHI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		51,930,086

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 133,885	$ 282,723
Restricted cash	100	0
Investments in marketable securities (amortized cost of $87,084 and $139,448 as of June 30, 2020 and December 31, 2019, respectively)	88,040	140,131
Accounts receivable, net	85,413	60,295
Inventories	90,419	55,013
Prepaid expenses and other current assets	18,175	17,463
Total current assets	416,032	555,625
Property and equipment, net	109,334	79,563
Goodwill	181,689	104,502
Intangible assets, net	277,649	168,290
Right of use assets, net	33,974	33,576
Other assets, net	32,221	34,450
Total assets	1,050,899	976,006
Current liabilities:
Accounts payable	45,159	18,771
Deferred revenue	5,271	3,719
Accrued employee expenses	22,023	13,164
Other accrued expenses	13,768	5,125
Convertible debt	48,277	217,467
Other current liabilities	42,843	33,531
Total current liabilities	177,341	291,777
Convertible debt	455,246	258,711
Other long-term liabilities	68,901	78,917
Total liabilities	701,488	629,405
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued	0	0
Common stock, $0.001 par value; 500,000,000 shares authorized; 51,870,076 and 45,909,466 issued and outstanding at June 30, 2020 and December 31, 2019, respectively	52	46
Additional paid-in capital	634,729	587,862
Accumulated deficit	(287,144)	(242,807)
Accumulated other comprehensive income	1,774	1,500
Total stockholders’ equity	349,411	346,601
Total liabilities and stockholders’ equity	$ 1,050,899	$ 976,006

Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	51,870,076	45,909,466
Common stock, outstanding (in shares)	51,870,076	45,909,466

Unaudited Condensed Consolidated Statements of Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 175,292	$ 86,285	$ 314,722	$ 168,508
Cost of revenue	82,360	37,176	148,093	71,768
Gross profit	92,932	49,109	166,629	96,740
Operating expenses:
Research and development	69,176	44,705	131,869	89,104
Sales and marketing	15,024	11,154	29,933	23,033
General and administrative	12,991	7,480	25,383	14,313
Total operating expenses	97,191	63,339	187,185	126,450
Loss from operations	(4,259)	(14,230)	(20,556)	(29,710)
Interest expense	(10,159)	(8,552)	(19,059)	(16,975)
Loss on early extinguishment of debt	(13,297)	0	(13,297)	0
Other income, net	3,913	1,617	8,869	3,995
Loss before income taxes	(23,802)	(21,165)	(44,043)	(42,690)
Provision (benefit) for income taxes	249	(587)	294	633
Net loss	$ (24,051)	$ (20,578)	$ (44,337)	$ (43,323)
Earnings per share:
Basic (in dollars per share)	$ (0.49)	$ (0.46)	$ (0.93)	$ (0.97)
Diluted (in dollars per share)	$ (0.49)	$ (0.46)	$ (0.93)	$ (0.97)
Weighted-average shares used in computing earnings per share:
Basic (in shares)	48,928,224	45,191,674	47,477,159	44,823,562
Diluted (in shares)	48,928,224	45,191,674	47,477,159	44,823,562

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net loss	$ (24,051)	$ (20,578)	$ (44,337)	$ (43,323)
Other comprehensive income (loss):
Realized gain reclassified into earnings, net of tax	(296)	0	(296)	0
Change in unrealized gain or loss	1,465	566	570	1,106
Comprehensive loss	$ (22,882)	$ (20,012)	$ (44,063)	$ (42,217)

Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2018	44,292,722
Balance at Dec. 31, 2018	$ 44	$ 536,157	$ (169,896)	$ 389	$ 366,694
Issuance of common stock from exercise of stock options (in shares)	78,205
Issuance of common stock from exercise of stock options	$ 0	646	0	0	646
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax (in shares)	168,227
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax	$ 1		0	0
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		(4,017)			(4,016)
Issuance of common stock from employee stock purchase plan purchases (in shares)	121,549
Issuance of common stock from employee stock purchase plan purchases	$ 0	3,477	0	0	3,477
Stock-based compensation expense	0	18,758	0	0	18,758
Net loss	0	0	(22,745)	0	(22,745)
Other comprehensive income (loss), net	$ 0	0	0	540	540
Balance (in shares) at Mar. 31, 2019	44,660,703
Balance at Mar. 31, 2019	$ 45	555,021	(192,641)	929	363,354
Balance (in shares) at Dec. 31, 2018	44,292,722
Balance at Dec. 31, 2018	$ 44	536,157	(169,896)	389	$ 366,694
Issuance of common stock from employee stock purchase plan purchases (in shares)					121,549
Net loss					$ (43,323)
Balance (in shares) at Jun. 30, 2019	45,401,399
Balance at Jun. 30, 2019	$ 46	555,082	(213,219)	1,495	343,404
Balance (in shares) at Mar. 31, 2019	44,660,703
Balance at Mar. 31, 2019	$ 45	555,021	(192,641)	929	363,354
Issuance of common stock from exercise of stock options (in shares)	45,317
Issuance of common stock from exercise of stock options	$ 0	486	0	0	486
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax (in shares)	695,379
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax	$ 1		0	0
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		(18,386)			(18,385)
Stock-based compensation expense	0	17,961	0	0	17,961
Net loss	0	0	(20,578)	0	(20,578)
Other comprehensive income (loss), net	$ 0	0	0	566	566
Balance (in shares) at Jun. 30, 2019	45,401,399
Balance at Jun. 30, 2019	$ 46	555,082	(213,219)	1,495	343,404
Balance (in shares) at Dec. 31, 2019	45,909,466
Balance at Dec. 31, 2019	$ 46	587,862	(242,807)	1,500	346,601
Issuance of common stock from exercise of stock options (in shares)	103,318
Issuance of common stock from exercise of stock options	$ 0	995	0	0	995
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax (in shares)	60,651
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax	$ 0		0	0
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		(2,490)			(2,490)
Issuance of common stock from employee stock purchase plan purchases (in shares)	74,896
Issuance of common stock from employee stock purchase plan purchases	$ 0	4,112	0	0	4,112
Stock-based compensation expense	0	24,029	0	0	24,029
Net loss	0	0	(20,286)	0	(20,286)
Other comprehensive income (loss), net	$ 0	0	0	(895)	(895)
Balance (in shares) at Mar. 31, 2020	46,148,331
Balance at Mar. 31, 2020	$ 46	614,508	(263,093)	605	352,066
Balance (in shares) at Dec. 31, 2019	45,909,466
Balance at Dec. 31, 2019	$ 46	587,862	(242,807)	1,500	$ 346,601
Issuance of common stock from exercise of stock options (in shares)					180,369
Issuance of common stock from employee stock purchase plan purchases (in shares)					74,896
Net loss					$ (44,337)
Balance (in shares) at Jun. 30, 2020	51,870,076
Balance at Jun. 30, 2020	$ 52	634,729	(287,144)	1,774	349,411
Balance (in shares) at Mar. 31, 2020	46,148,331
Balance at Mar. 31, 2020	$ 46	614,508	(263,093)	605	352,066
Issuance of common stock from exercise of stock options (in shares)	77,051
Issuance of common stock from exercise of stock options	$ 0	904	0	0	904
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax (in shares)	702,180
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax	$ 1		0	0
Issuance of common stock from restricted stock unit grant, net of shares withheld for tax		(39,840)			(39,839)
Stock-based compensation expense	0	28,226	0	0	28,226
Net loss	0	0	(24,051)	0	(24,051)
Other comprehensive income (loss), net	0	0	0	1,169	1,169
Conversion feature of convertible debt, net of issuance costs	0	100,616	0	0	100,616
Purchase of capped calls	$ 0	(55,660)	0	0	(55,660)
Impact of convertible debt repurchases (in shares)	4,942,490
Impact of convertible debt repurchases	$ 5	(14,025)	0	0	(14,020)
Conversion of convertible debt to common stock (in shares)	24
Conversion of convertible debt to common stock	$ 0	0	0	0	0
Balance (in shares) at Jun. 30, 2020	51,870,076
Balance at Jun. 30, 2020	$ 52	$ 634,729	$ (287,144)	$ 1,774	$ 349,411

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities
Net loss	$ (44,337)	$ (43,323)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	62,410	48,518
Stock-based compensation	52,255	36,719
Deferred income taxes	244	446
Accretion of convertible debt and amortization of debt issuance costs	15,931	13,805
Net unrealized loss (gain) on equity investments	(1,744)	75
Realized gain on an equity investment	(4,999)	0
Amortization of discount on marketable securities	(42)	(516)
Loss on termination of software lease contracts	3,370	0
Loss on early extinguishment of debt	13,297	0
Other noncash items	(328)	302
Changes in assets and liabilities, net of acquisition:
Accounts receivable	(24,818)	(5,737)
Inventories	(14,194)	(11,043)
Prepaid expenses and other assets	19,591	(469)
Income tax payable/receivable	10	126
Accounts payable	10,434	7,130
Accrued expenses	(7,130)	194
Deferred revenue	(5,949)	813
Other liabilities	(1,076)	2,362
Net cash provided by operating activities	72,925	49,402
Cash flows from investing activities
Purchases of property and equipment	(27,849)	(12,610)
Purchases of marketable securities	(39,511)	(141,764)
Sales of marketable securities	65,509	15,029
Maturities of marketable securities	26,736	109,352
Purchases of intangible assets	(277)	(450)
Purchase of equity investments	(5,999)	0
Proceeds from eSilicon investment	14,999	0
Acquisitions of business, net of cash	(223,731)	0
Net cash used in investing activities	(190,123)	(30,443)
Cash flows from financing activities
Proceeds from exercise of stock options	1,899	1,132
Proceeds from employee stock purchase plan purchases	4,112	3,477
Proceeds from issuance of convertible debt, net of cost	492,743	0
Payment for convertible debt repurchases	(407,782)	0
Payment of obligations related to equipment financing	(198)	(238)
Payment of obligations related to purchase of intangible assets	(23,595)	(13,158)
Purchase of capped call options	(55,660)	0
Minimum tax withholding paid on behalf of employees for net share settlement	(43,059)	(22,566)
Net cash used in financing activities	(31,540)	(31,353)
Net decrease in cash and cash equivalents	(148,738)	(12,394)
Cash, cash equivalents and restricted cash at beginning of period	282,723	172,018
Cash, cash equivalents and restricted cash at end of period	133,985	159,624
Supplemental cash flow information:
Interest paid	3,097	3,196
Income taxes paid	629	126
Supplemental disclosure of non-cash investing and financing activities:
Software license intangible assets	1,000	2,433
eSilicon [Member]
Supplemental disclosure of non-cash investing and financing activities:
Settlement of net receivable from eSilicon as part of purchase consideration	$ 5,250	$ 0

Note 1 - Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Organization and Basis of Presentation

Use of Estimates and Judgments

Revisions

Summary of Significant Accounting Policies

There have been no other significant changes to the Company’s significant accounting policies during the three and six months ended June 30, 2020.

Accounts Receivable

Debt Securities

Note 2 - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

2. Recent Accounting Pronouncements

Note 3 - Acquisitions

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Business Combination Disclosure [Text Block]

3. Acquisitions

eSilicon

The following table summarizes the preliminary purchase price allocation as of the acquisition date:

Cash	$	704
Restricted cash		2,100
Accounts receivable		5,750
Inventories		21,086
Prepaid expenses and other current assets		21,012
Property and equipment		7,106
Intangible assets		148,720
Right of use asset		1,022
Other noncurrent assets		252
Accounts payable		(9,105	)
Accrued expenses		(25,060	)
Deferred revenue		(7,501	)
Other current liabilities		(13,886	)
Other liabilities		(3,567	)
Total identifiable net assets	$	148,633
Goodwill		66,011
Net assets acquired	$	214,644

As of the acquisition date, the fair value of receivables, other assets, accounts payable, accrued expenses and other liabilities approximated the book value acquired.

The following table summarizes the estimated fair value of intangible assets and their estimated useful lives as of the date of acquisition:

	*Estimated Fair Value*		*Estimated Useful Life (Years)*
Contract manufacturing rights	$	105,160		5.0
Developed technology		33,630		8.0
Software		9,930		0.5 to 2.0
	$	148,720

Arrive

The acquisition has been accounted for using the purchase method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company allocated the purchase price to tangible and intangible assets acquired based on their estimated fair values. The fair value of the identifiable intangible asset acquired was based on estimates and assumptions made by management at the time of acquisition. As additional information becomes available, such as finalization of the estimated fair value of tax related items, the Company may revise the preliminary purchase price allocation during the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material as the Company finalizes the fair values of the tangible and intangible assets acquired.

The following table summarizes the preliminary purchase price allocation as of the acquisition date:

Inventories	$	126
Intangible asset		8,840
Total identifiable net assets		8,966
Goodwill		11,175
Net assets acquired	$	20,141

Arrive contributed revenue of $571 and pre-tax loss of $121 to the Company for the period from May 18, 2020 to June 30, 2020.

Pro Forma Information

	*Pro Forma Three Months Ended*						*Pro Forma Six Months Ended*
	*June 30, 2020*			*June 30, 2019*			*June 30, 2020*			*June 30, 2019*
	(unaudited)						(unaudited)
Revenue	$	177,537		$	97,443		$	322,201		$	223,228
Net loss	$	(21,683	)	$	(47,229	)	$	(47,881	)	$	(84,902	)

Note 4 - Investments

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Investment [Text Block]

4. Investments

The following table summarizes the investments in marketable securities by investment category:

	*June 30, 2020*				*December 31, 2019*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
Available-for-sale securities:
U.S. Treasury securities	$	—	$	—	$	3,752	$	3,759
Municipal bonds		19,083		19,220		6,062		6,119
Corporate notes/bonds		60,307		61,090		118,859		119,449
Asset backed securities		2,579		2,612		4,239		4,268
Commercial paper		5,115		5,118		6,464		6,464
Certificate of deposit		—		—		72		72
Total investments	$	87,084	$	88,040	$	139,448	$	140,131

The contractual maturities of available-for-sale securities at June 30, 2020 are presented in the following table:

	*Cost*		*Fair Value*
Due in one year or less	$	53,653	$	53,963
Due between one and five years		33,431		34,077
	$	87,084	$	88,040

Note 5 - Inventories

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

5. Inventories

Inventories consist of the following:

	*June 30, 2020*		*December 31, 2019*
Raw materials	$	38,416	$	18,593
Work in process		31,336		19,081
Finished goods		20,667		17,339
	$	90,419	$	55,013

Note 6 - Property and Equipment, Net

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

6. Property and Equipment, net

Property and equipment consist of the following:

	*June 30, 2020*			*December 31, 2019*
Laboratory and production equipment	$	173,919		$	144,866
Office, software and computer equipment		41,941			37,241
Furniture and fixtures		1,952			1,617
Leasehold improvements		17,646			8,282
		235,458			192,006
Less accumulated depreciation and amortization		(126,124	)		(112,443	)
	$	109,334		$	79,563

Property and equipment not yet paid in cash as of June 30, 2020 and December 31, 2019 was $11,829 and $4,728, respectively.

Note 7 - Intangible Assets

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

7. Intangible Assets

The following table presents details of intangible assets:

	*June 30, 2020*						*December 31, 2019*
	*Gross*		*Accumulated Amortization*		*Net*		*Gross*		*Accumulated Amortization*		*Net*
Developed technology	$	229,270	$	137,108	$	92,162	$	186,800	$	123,365	$	63,435
Customer relationships		70,540		36,273		34,267		70,540		31,409		39,131
Contract manufacturing rights		102,388		9,675		92,713		—		—		—
Trade name		2,310		1,905		405		2,310		1,766		544
Patents		1,579		1,063		516		1,579		1,010		569
Software		78,646		21,060		57,586		74,022		9,411		64,611
	$	484,733	$	207,084	$	277,649	$	335,251	$	166,961	$	168,290

The following table presents amortization of intangible assets for the three and six months ended June 30, 2020 and 2019:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Cost of goods sold	$	12,175	$	9,724	$	23,558	$	19,448
Research and development		6,959		5,514		13,584		10,916
Sales and marketing		2,432		2,432		4,864		4,864
General and administrative		95		148		192		298
	$	21,661	$	17,818	$	42,198	$	35,526

Based on the amount of intangible assets subject to amortization at June 30, 2020, the expected amortization expense for each of the next five fiscal years and thereafter is as follows:

2020 (remaining)	$	43,885
2021		80,795
2022		69,413
2023		42,315
2024		27,122
Thereafter		14,119
	$	277,649

The weighted-average amortization periods remaining by intangible asset category were as follows (in years):

Developed technology			4.5
Customer relationship			3.5
Contract manufacturing rights			4.5
Trade name			1.5
Patents			7.4
Software			2.2

Note 8 - Leases

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

8. Leases

The Company has operating leases for office facilities. The leases have remaining lease terms of one year to ten years and some may include options to extend the lease for up to five years.

Information related to operating leases are as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Operating lease cost	$	2,375	$	1,044	$	4,526	$	2,098
Cash paid for leases		1,741		927		3,320		2,191
Right of use assets obtained in exchange for lease obligations		2,001		—		3,743		224

Weighted average remaining lease term and weighted average discount are as follows:

	*June 30, 2020*			*December 31, 2019*
Weighted average remaining lease term (years)		7.88			8.52
Weighted average discount rate		3.7	%		3.9	%

Future minimum lease payments under non-cancellable leases as of June 30, 2020 are as follows:

2020 (remaining)	$	3,726
2021		6,694
2022		6,900
2023		6,873
2024		6,621
Thereafter		23,914
Total future minimum lease payments		54,728
Less: Imputed interest		7,966
Lease incentive recognized as offset to lease liability		2,576
Present value of lease obligations	$	44,186

Note 9 - Product Warranty Obligation

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

9. Product Warranty Obligation

Note 10 - Convertible Debt

6 Months Ended

Jun. 30, 2020

Convertible Debt [Member]

Notes to Financial Statements

Debt Disclosure [Text Block]

10. Convertible Debt

The carrying amount of the Company’s long-term debt consists of the following:

	*June 30, 2020*			*December 31, 2019*
Principal	$	619,956		$	517,500
Less:
Unamortized debt discount		(105,568	)		(38,105	)
Unamortized debt issuance costs		(10,865	)		(3,217	)
Net carrying amount of long-term debt		503,523			476,178
Less current portion of long-term debt		48,277			217,467
Long-term debt, non-current portion	$	455,246		$	258,711

Interest expense for the Convertible Notes 2015 are as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Contractual interest expense	$	370	$	646	$	1,013	$	1,286
Amortization of debt discount		1,704		2,877		4,740		5,667
Amortization of debt issuance costs		153		259		427		510
Total interest expense	$	2,227	$	3,782	$	6,180	$	7,463

Interest expense for the Convertible Notes 2016 are as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Contractual interest expense	$	397	$	533	$	934	$	1,066
Amortization of debt discount		2,877		3,577		6,649		7,050
Amortization of debt issuance costs		236		293		545		578
Total interest expense	$	3,510	$	4,403	$	8,128	$	8,694

Interest expense for the Convertible Notes 2020 for the three and six months ended June 30, 2020 are as follows:

Contractual interest expense	$	759
Amortization of debt discount		3,234
Amortization of debt issuance costs		336
Total interest expense	$	4,329

The net carrying amount of the liability component of the convertible debt immediately prior to the repurchase was as follows:

	Convertible Notes 2015			Convertible Notes 2016
Principal	$	180,454		$	223,090
Unamortized debt discount		(5,596	)		(15,694	)
Unamortized debt issuance costs		(504	)		(1,287	)
Total	$	174,354		$	206,109

The loss on early extinguishment of debt is calculated as follows:

	*Convertible Notes 2015*			*Convertible Notes 2016*
Repurchase consideration allocated to the liability component	$	177,622		$	216,138
Net carrying value of debt		(174,354	)		(206,109	)
Loss on early extinguishment	$	3,268		$	10,029

Note 11 - Other Liabilities

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Other Liabilities Disclosure [Text Block]

11. Other Liabilities

Other current liabilities consist of the following:

	*June 30, 2020*		*December 31, 2019*
Software license agreements liability	$	28,500	$	25,810
Operating lease liability		3,128		2,545
Others		11,215		5,176
	$	42,843	$	33,531

Other long-term liabilities consist of the following:

June 30, 2020 December 31, 2019

Income tax payable
$ 1,067 $ 692

Software license agreements liability
24,823 36,144

Operating lease liability
41,058 41,074

Others
1,953 1,007
$ 68,901 $ 78,917

Note 12 - Income Taxes

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. Income Taxes

The Company does not provide for U.S. income taxes on undistributed earnings of its controlled foreign corporations as the Company intends to reinvest these earnings indefinitely outside the U.S.

Note 13 - Earnings Per Share

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

13. Earnings Per Share

The following securities were not included in the computation of diluted earnings per share as inclusion would have been anti-dilutive:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Common stock options		764,328		1,056,682		810,597		1,092,153
Unvested restricted stock units and market value stock units		2,938,459		2,772,493		2,930,147		2,790,574
Convertible debt		10,041,179		10,830,038		10,435,608		10,830,038
		13,743,966		14,659,213		14,176,352		14,712,765

Note 14 - Stock-based Compensation

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

14. Stock–Based Compensation

Stock Option Awards

The Company did not grant any stock options during the three and six months ended June 30, 2020 and 2019.

The following table summarizes information regarding options outstanding:

	*Number of Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Value*
Outstanding at December 31, 2019		905,141		$	13.68		1.81	$	54,616
Exercised		(180,369	)	$	10.53
Outstanding at June 30, 2020		724,772		$	14.46		1.52	$	74,677
Vested and Exercisable at June 30, 2020		724,772		$	14.46		1.52	$	74,677

Restricted Stock Units

The following table summarizes information regarding outstanding RSUs:

	*Number of Shares*			*Weighted Average Grant Date Fair Value Per Share*
Outstanding at December 31, 2019		3,822,325		$	41.38
Granted		1,380,565		$	86.59
Vested		(1,205,934	)	$	41.96
Canceled		(61,070	)	$	56.19
Outstanding at June 30, 2020		3,935,886		$	56.82
Expected to vest at June 30, 2020		3,860,310

Market Value Stock Units

	*Two-Year Term*			*Three-Year Term*
Total target shares		53,448			101,775
Fair value per share	$	119.90		$	125.30
Total amount to be recognized over the service period	$	6,408		$	12,752
Risk free interest rate		1.41	%		1.38	%
Expected volatility		41.37	%		43.79	%
Dividend yield		—			—

Employee Stock Purchase Plan

The fair value of the ESPP purchases is estimated at the start of the offering period using the Black-Scholes option pricing model with the following assumptions:

	Six Months Ended June 30,
	2020			2019
Risk-free interest rate		1.51	%		2.50	%
Expected life (in years)		0.49			0.49
Dividend yield		—			—
Expected volatility		39	%		45	%
Estimated fair value	$	21.71		$	11.11

Stock-Based Compensation Expense

Stock-based compensation expense is included in the Company’s condensed consolidated statements of income (loss) as follows:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Cost of goods sold	$	1,986	$	1,674	$	3,897	$	2,479
Research and development		16,432		9,925		29,511		20,657
Sales and marketing		5,261		3,269		10,462		7,417
General and administrative		4,547		3,093		8,385		6,166
	$	28,226	$	17,961	$	52,255	$	36,719

Note 15 - Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

15. Fair Value Measurements

The guidance on fair value measurements requires fair value measurements to be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table presents information about assets and liabilities required to be carried at fair value on a recurring basis:

June 30, 2020	*Total*		*Level 1*		*Level 2*
Assets
Cash equivalents:
Money market funds	$	6,155	$	5,519	$	636
Commercial paper		8,198		—		8,198
Investment in marketable debt securities:
Municipal bonds		19,220		—		19,220
Corporate notes/bonds		61,090		—		61,090
Asset backed securities		2,612		—		2,612
Commercial paper		5,118		—		5,118
	$	102,393	$	5,519	$	96,874

December 31, 2019	*Total*		*Level 1*		*Level 2*
Assets
Cash equivalents:
Money market funds	$	190,598	$	67,494	$	123,104
Commercial paper		9,465		—		9,465
Municipal bonds		1,250		—		1,250
Investments in marketable securities:
U.S. Treasury securities		3,759		3,759		—
Municipal bonds		6,119		—		6,119
Corporate notes/bonds		119,449		—		119,449
Asset-backed securities		4,268		—		4,268
Commercial paper		6,464		—		6,464
Certificate of deposit		72		72		—
	$	341,444	$	71,325	$	270,119

Note 16 - Segment and Geographic Information

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

16. Segment and Geographic Information

The following table sets forth the Company’s revenue by geographic region:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
China	$	102,019	$	38,449	$	169,860	$	76,266
United States		33,477		20,520		75,081		40,967
Thailand		18,801		14,225		32,731		26,844
Other		20,995		13,091		37,050		24,431
	$	175,292	$	86,285	$	314,722	$	168,508

Note 17 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

17. Commitments and Contingencies

Noncancelable Purchase Obligations

2020 (remaining)	$	187
2021		280
2022		226
2023		130
2024		95
Thereafter		55
Total	$	973

Legal Proceedings

Netlist, Inc. v. Inphi Corporation, Case No. 09-cv-6900 (C.D. Cal.)

Claims Against eSilicon

Indemnifications

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Note 3 - Acquisitions (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Cash	$	704
Restricted cash		2,100
Accounts receivable		5,750
Inventories		21,086
Prepaid expenses and other current assets		21,012
Property and equipment		7,106
Intangible assets		148,720
Right of use asset		1,022
Other noncurrent assets		252
Accounts payable		(9,105	)
Accrued expenses		(25,060	)
Deferred revenue		(7,501	)
Other current liabilities		(13,886	)
Other liabilities		(3,567	)
Total identifiable net assets	$	148,633
Goodwill		66,011
Net assets acquired	$	214,644

Inventories	$	126
Intangible asset		8,840
Total identifiable net assets		8,966
Goodwill		11,175
Net assets acquired	$	20,141

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

	*Estimated Fair Value*		*Estimated Useful Life (Years)*
Contract manufacturing rights	$	105,160		5.0
Developed technology		33,630		8.0
Software		9,930		0.5 to 2.0
	$	148,720

Business Acquisition, Pro Forma Information [Table Text Block]

	*Pro Forma Three Months Ended*						*Pro Forma Six Months Ended*
	*June 30, 2020*			*June 30, 2019*			*June 30, 2020*			*June 30, 2019*
	(unaudited)						(unaudited)
Revenue	$	177,537		$	97,443		$	322,201		$	223,228
Net loss	$	(21,683	)	$	(47,229	)	$	(47,881	)	$	(84,902	)

Note 4 - Investments (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Available-for-sale Securities [Table Text Block]

	*June 30, 2020*				*December 31, 2019*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
Available-for-sale securities:
U.S. Treasury securities	$	—	$	—	$	3,752	$	3,759
Municipal bonds		19,083		19,220		6,062		6,119
Corporate notes/bonds		60,307		61,090		118,859		119,449
Asset backed securities		2,579		2,612		4,239		4,268
Commercial paper		5,115		5,118		6,464		6,464
Certificate of deposit		—		—		72		72
Total investments	$	87,084	$	88,040	$	139,448	$	140,131

Investments Classified by Contractual Maturity Date [Table Text Block]

	*Cost*		*Fair Value*
Due in one year or less	$	53,653	$	53,963
Due between one and five years		33,431		34,077
	$	87,084	$	88,040

Note 5 - Inventories (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	*June 30, 2020*		*December 31, 2019*
Raw materials	$	38,416	$	18,593
Work in process		31,336		19,081
Finished goods		20,667		17,339
	$	90,419	$	55,013

Note 6 - Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Property, Plant and Equipment [Table Text Block]

	*June 30, 2020*			*December 31, 2019*
Laboratory and production equipment	$	173,919		$	144,866
Office, software and computer equipment		41,941			37,241
Furniture and fixtures		1,952			1,617
Leasehold improvements		17,646			8,282
		235,458			192,006
Less accumulated depreciation and amortization		(126,124	)		(112,443	)
	$	109,334		$	79,563

Note 7 - Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	*June 30, 2020*						*December 31, 2019*
	*Gross*		*Accumulated Amortization*		*Net*		*Gross*		*Accumulated Amortization*		*Net*
Developed technology	$	229,270	$	137,108	$	92,162	$	186,800	$	123,365	$	63,435
Customer relationships		70,540		36,273		34,267		70,540		31,409		39,131
Contract manufacturing rights		102,388		9,675		92,713		—		—		—
Trade name		2,310		1,905		405		2,310		1,766		544
Patents		1,579		1,063		516		1,579		1,010		569
Software		78,646		21,060		57,586		74,022		9,411		64,611
	$	484,733	$	207,084	$	277,649	$	335,251	$	166,961	$	168,290

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Cost of goods sold	$	12,175	$	9,724	$	23,558	$	19,448
Research and development		6,959		5,514		13,584		10,916
Sales and marketing		2,432		2,432		4,864		4,864
General and administrative		95		148		192		298
	$	21,661	$	17,818	$	42,198	$	35,526

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2020 (remaining)	$	43,885
2021		80,795
2022		69,413
2023		42,315
2024		27,122
Thereafter		14,119
	$	277,649

Finite Lived Intangible Assets Remaining Amortization Period [Table Text Block]

Developed technology			4.5
Customer relationship			3.5
Contract manufacturing rights			4.5
Trade name			1.5
Patents			7.4
Software			2.2

Note 8 - Leases (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Lease, Cost [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Operating lease cost	$	2,375	$	1,044	$	4,526	$	2,098
Cash paid for leases		1,741		927		3,320		2,191
Right of use assets obtained in exchange for lease obligations		2,001		—		3,743		224

	*June 30, 2020*			*December 31, 2019*
Weighted average remaining lease term (years)		7.88			8.52
Weighted average discount rate		3.7	%		3.9	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

2020 (remaining)	$	3,726
2021		6,694
2022		6,900
2023		6,873
2024		6,621
Thereafter		23,914
Total future minimum lease payments		54,728
Less: Imputed interest		7,966
Lease incentive recognized as offset to lease liability		2,576
Present value of lease obligations	$	44,186

Note 10 - Convertible Debt (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	*June 30, 2020*			*December 31, 2019*
Principal	$	619,956		$	517,500
Less:
Unamortized debt discount		(105,568	)		(38,105	)
Unamortized debt issuance costs		(10,865	)		(3,217	)
Net carrying amount of long-term debt		503,523			476,178
Less current portion of long-term debt		48,277			217,467
Long-term debt, non-current portion	$	455,246		$	258,711

Interest Income and Interest Expense Disclosure [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Contractual interest expense	$	370	$	646	$	1,013	$	1,286
Amortization of debt discount		1,704		2,877		4,740		5,667
Amortization of debt issuance costs		153		259		427		510
Total interest expense	$	2,227	$	3,782	$	6,180	$	7,463

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Contractual interest expense	$	397	$	533	$	934	$	1,066
Amortization of debt discount		2,877		3,577		6,649		7,050
Amortization of debt issuance costs		236		293		545		578
Total interest expense	$	3,510	$	4,403	$	8,128	$	8,694

Contractual interest expense	$	759
Amortization of debt discount		3,234
Amortization of debt issuance costs		336
Total interest expense	$	4,329

Schedule of Extinguishment of Debt [Table Text Block]

	Convertible Notes 2015			Convertible Notes 2016
Principal	$	180,454		$	223,090
Unamortized debt discount		(5,596	)		(15,694	)
Unamortized debt issuance costs		(504	)		(1,287	)
Total	$	174,354		$	206,109

	*Convertible Notes 2015*			*Convertible Notes 2016*
Repurchase consideration allocated to the liability component	$	177,622		$	216,138
Net carrying value of debt		(174,354	)		(206,109	)
Loss on early extinguishment	$	3,268		$	10,029

Note 11 - Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Other Current Liabilities [Table Text Block]

	*June 30, 2020*		*December 31, 2019*
Software license agreements liability	$	28,500	$	25,810
Operating lease liability		3,128		2,545
Others		11,215		5,176
	$	42,843	$	33,531

Other Noncurrent Liabilities [Table Text Block]

	*June 30, 2020*		*December 31, 2019*
Income tax payable	$	1,067	$	692
Software license agreements liability		24,823		36,144
Operating lease liability		41,058		41,074
Others		1,953		1,007
	$	68,901	$	78,917

Note 13 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Common stock options		764,328		1,056,682		810,597		1,092,153
Unvested restricted stock units and market value stock units		2,938,459		2,772,493		2,930,147		2,790,574
Convertible debt		10,041,179		10,830,038		10,435,608		10,830,038
		13,743,966		14,659,213		14,176,352		14,712,765

Note 14 - Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	*Number of Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Value*
Outstanding at December 31, 2019		905,141		$	13.68		1.81	$	54,616
Exercised		(180,369	)	$	10.53
Outstanding at June 30, 2020		724,772		$	14.46		1.52	$	74,677
Vested and Exercisable at June 30, 2020		724,772		$	14.46		1.52	$	74,677

Share-based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

	*Number of Shares*			*Weighted Average Grant Date Fair Value Per Share*
Outstanding at December 31, 2019		3,822,325		$	41.38
Granted		1,380,565		$	86.59
Vested		(1,205,934	)	$	41.96
Canceled		(61,070	)	$	56.19
Outstanding at June 30, 2020		3,935,886		$	56.82
Expected to vest at June 30, 2020		3,860,310

Schedule of Share-based Payment Award, Equity Instruments Other than Option, Valuation Assumptions [Table Text Block]

	*Two-Year Term*			*Three-Year Term*
Total target shares		53,448			101,775
Fair value per share	$	119.90		$	125.30
Total amount to be recognized over the service period	$	6,408		$	12,752
Risk free interest rate		1.41	%		1.38	%
Expected volatility		41.37	%		43.79	%
Dividend yield		—			—

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

	Six Months Ended June 30,
	2020			2019
Risk-free interest rate		1.51	%		2.50	%
Expected life (in years)		0.49			0.49
Dividend yield		—			—
Expected volatility		39	%		45	%
Estimated fair value	$	21.71		$	11.11

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
Cost of goods sold	$	1,986	$	1,674	$	3,897	$	2,479
Research and development		16,432		9,925		29,511		20,657
Sales and marketing		5,261		3,269		10,462		7,417
General and administrative		4,547		3,093		8,385		6,166
	$	28,226	$	17,961	$	52,255	$	36,719

Note 15 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

June 30, 2020	*Total*		*Level 1*		*Level 2*
Assets
Cash equivalents:
Money market funds	$	6,155	$	5,519	$	636
Commercial paper		8,198		—		8,198
Investment in marketable debt securities:
Municipal bonds		19,220		—		19,220
Corporate notes/bonds		61,090		—		61,090
Asset backed securities		2,612		—		2,612
Commercial paper		5,118		—		5,118
	$	102,393	$	5,519	$	96,874

December 31, 2019	*Total*		*Level 1*		*Level 2*
Assets
Cash equivalents:
Money market funds	$	190,598	$	67,494	$	123,104
Commercial paper		9,465		—		9,465
Municipal bonds		1,250		—		1,250
Investments in marketable securities:
U.S. Treasury securities		3,759		3,759		—
Municipal bonds		6,119		—		6,119
Corporate notes/bonds		119,449		—		119,449
Asset-backed securities		4,268		—		4,268
Commercial paper		6,464		—		6,464
Certificate of deposit		72		72		—
	$	341,444	$	71,325	$	270,119

Note 16 - Segment and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Revenue from External Customers by Geographic Areas [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*		*2019*		*2020*		*2019*
China	$	102,019	$	38,449	$	169,860	$	76,266
United States		33,477		20,520		75,081		40,967
Thailand		18,801		14,225		32,731		26,844
Other		20,995		13,091		37,050		24,431
	$	175,292	$	86,285	$	314,722	$	168,508

Note 17 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Notes Tables

Unrecorded Unconditional Purchase Obligations Disclosure [Table Text Block]

2020 (remaining)	$	187
2021		280
2022		226
2023		130
2024		95
Thereafter		55
Total	$	973

Note 1 - Organization and Basis of Presentation (Details Textual) - USD ($) $ in Thousands			6 Months Ended
	May 18, 2020	Jan. 10, 2020	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Net Cash Provided by (Used in) Investing Activities, Total			$ (190,123)	$ (30,443)
Net Cash Provided by (Used in) Financing Activities, Total			(31,540)	(31,353)
Accounts Receivable, Allowance for Credit Loss, Ending Balance			1,202		$ 1,152
Debt Securities, Available-for-sale, Allowance for Credit Loss, Ending Balance			0
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Total			$ 629
Revision [Member]
Net Cash Provided by (Used in) Investing Activities, Total				13,158
Net Cash Provided by (Used in) Financing Activities, Total				13,158
Previously Reported [Member]
Net Cash Provided by (Used in) Investing Activities, Total				43,601
Net Cash Provided by (Used in) Financing Activities, Total				$ 18,195
eSilicon [Member]
Payments to Acquire Businesses, Gross		$ 214,644
Arrive [Member]
Payments to Acquire Businesses, Gross	$ 20,141

Note 3 - Acquisitions (Details Textual) - USD ($) $ in Thousands			1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended	18 Months Ended
	May 18, 2020	Jan. 10, 2020	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2020
eSilicon [Member]
Payments to Acquire Businesses, Gross		$ 214,644
Purchase Consideration in Escrow		10,000
Business Combination, Acquisition Related Costs							$ 1,015	$ 1,550
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual				$ 41,178		$ 59,851
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual				(996)		(14,991)
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value						14,999
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain (Loss), Net, Total						$ 4,999
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		148,720
eSilicon [Member] \| Developed Technology Rights [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		$ 33,630
eSilicon [Member] \| General and Administrative Expense [Member]
Business Combination, Acquisition Related Costs					$ 535
Arrive [Member]
Payments to Acquire Businesses, Gross	$ 20,141
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual			$ 571
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual			$ (121)
Holdback Payments to Acquire Business	3,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	8,840
Arrive [Member] \| Developed Technology Rights [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 8,840
Finite-Lived Intangible Asset, Useful Life (Year)	5 years
Arrive [Member] \| General and Administrative Expense [Member]
Business Combination, Acquisition Related Costs				$ 180	$ 180

Note 3 - Acquisitions - Purchase Price Allocation (Details) - USD ($) $ in Thousands	Jun. 30, 2020	May 18, 2020	Jan. 10, 2020	Dec. 31, 2019
Goodwill	$ 181,689			$ 104,502
eSilicon [Member]
Cash			$ 704
Restricted cash			2,100
Accounts receivable			5,750
Inventories			21,086
Prepaid expenses and other current assets			21,012
Property and equipment			7,106
Intangible assets			148,720
Right of use asset			1,022
Other noncurrent assets			252
Accounts payable			(9,105)
Accrued expenses			(25,060)
Deferred revenue			(7,501)
Other current liabilities			(13,886)
Other liabilities			(3,567)
Total identifiable net assets			148,633
Goodwill			66,011
Net assets acquired			214,644
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			$ 148,720
Arrive [Member]
Inventories		$ 126
Total identifiable net assets		8,966
Goodwill		11,175
Net assets acquired		20,141
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		$ 8,840

Note 3 - Acquisitions - Intangible Assets Acquired (Details) - eSilicon [Member] $ in Thousands	Jan. 10, 2020 USD ($)
Estimated Fair Value	$ 148,720
Contractual Rights [Member]
Estimated Fair Value	$ 105,160
Estimated Useful Life (Year)	5 years
Developed Technology Rights [Member]
Estimated Fair Value	$ 33,630
Estimated Useful Life (Year)	8 years
Computer Software, Intangible Asset [Member]
Estimated Fair Value	$ 9,930
Computer Software, Intangible Asset [Member] \| Minimum [Member]
Estimated Useful Life (Year)	6 months
Computer Software, Intangible Asset [Member] \| Maximum [Member]
Estimated Useful Life (Year)	2 years

Note 3 - Acquisitions - Pro Forma Information (Details) - ESilicon and Arrive [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 177,537	$ 97,443	$ 322,201	$ 223,228
Net loss	$ (21,683)	$ (47,229)	$ (47,881)	$ (84,902)

Note 4 - Investments (Details Textual) Pure in Thousands, $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	0	0
Equity Securities, Fair Value Based on Observable Transaction [Member] \| Other Income [Member]
Equity Securities without Readily Determinable Fair Value, Upward Price Adjustment, Annual Amount	$ 1,801	$ 1,801
Other Noncurrent Assets [Member] \| Equity Securities, Fair Value Based on Observable Transaction [Member]
Equity Securities without Readily Determinable Fair Value, Amount	23,593	23,593
Equity Securities without Readily Determinable Fair Value, Amount Remeasured to Fair Value	11,093	11,093
TAIWAN, PROVINCE OF CHINA
Equity Securities, FV-NI	$ 1,606	1,606	$ 1,662
Equity Securities, FV-NI, Unrealized Loss		$ 388	$ 332

Note 4 - Investments - Summary of Investments by Investment Category (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Available-for-sale securities, amortized cost	$ 87,084	$ 139,448
Available-for-sale securities, fair value	88,040	140,131
US Treasury Securities [Member]
Available-for-sale securities, amortized cost	0	3,752
Available-for-sale securities, fair value	0	3,759
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities, amortized cost	19,083	6,062
Available-for-sale securities, fair value	19,220	6,119
Corporate Debt Securities [Member]
Available-for-sale securities, amortized cost	60,307	118,859
Available-for-sale securities, fair value	61,090	119,449
Asset-backed Securities [Member]
Available-for-sale securities, amortized cost	2,579	4,239
Available-for-sale securities, fair value	2,612	4,268
Commercial Paper [Member]
Available-for-sale securities, amortized cost	5,115	6,464
Available-for-sale securities, fair value	5,118	6,464
Certificates of Deposit [Member]
Available-for-sale securities, amortized cost	0	72
Available-for-sale securities, fair value	$ 0	$ 72

Note 4 - Investments - Contractual Maturities of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Due in one year or less, cost	$ 53,653
Due in one year or less, fair value	53,963
Due between one and five years, cost	33,431
Due between one and five years, fair value	34,077
Available-for-sale securities, cost	87,084	$ 139,448
Available-for-sale securities, fair value	$ 88,040	$ 140,131

Note 5 - Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Raw materials	$ 38,416	$ 18,593
Work in process	31,336	19,081
Finished goods	20,667	17,339
Inventory, Net, Total	$ 90,419	$ 55,013

Note 6 - Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Depreciation, Total	$ 6,385	$ 5,566	$ 13,265	$ 11,058
Capitalized Computer Software, Gross	8,009		8,009		$ 7,339
Capitalized Computer Software, Amortization	$ 253	$ 86	503	$ 186
Capital Expenditures Incurred but Not yet Paid			$ 11,829		$ 4,728

Note 6 - Property and Equipment, Net - Property and Equipment Components (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property and equipment, gross	$ 235,458	$ 192,006
Less accumulated depreciation and amortization	(126,124)	(112,443)
Property and equipment, gross	109,334	79,563
Equipment [Member]
Property and equipment, gross	173,919	144,866
Office, Software, and Computer Equipment [Member]
Property and equipment, gross	41,941	37,241
Furniture and Fixtures [Member]
Property and equipment, gross	1,952	1,617
Leasehold Improvements [Member]
Property and equipment, gross	$ 17,646	$ 8,282

Note 7 - Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Intangible assets, gross	$ 484,733	$ 335,251
Intangible assets, accumulated amortization	207,084	166,961
Intangible assets, net	277,649	168,290
Developed Technology Rights [Member]
Intangible assets, gross	229,270	186,800
Intangible assets, accumulated amortization	137,108	123,365
Intangible assets, net	92,162	63,435
Customer Relationships [Member]
Intangible assets, gross	70,540	70,540
Intangible assets, accumulated amortization	36,273	31,409
Intangible assets, net	34,267	39,131
Contractual Rights [Member]
Intangible assets, gross	102,388	0
Intangible assets, accumulated amortization	9,675	0
Intangible assets, net	92,713	0
Trade Names [Member]
Intangible assets, gross	2,310	2,310
Intangible assets, accumulated amortization	1,905	1,766
Intangible assets, net	405	544
Patents [Member]
Intangible assets, gross	1,579	1,579
Intangible assets, accumulated amortization	1,063	1,010
Intangible assets, net	516	569
Computer Software, Intangible Asset [Member]
Intangible assets, gross	78,646	74,022
Intangible assets, accumulated amortization	21,060	9,411
Intangible assets, net	$ 57,586	$ 64,611

Note 7 - Intangible Assets - Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Amortization of intangible assets	$ 21,661	$ 17,818	$ 42,198	$ 35,526
Cost of Sales [Member]
Amortization of intangible assets	12,175	9,724	23,558	19,448
Research and Development Expense [Member]
Amortization of intangible assets	6,959	5,514	13,584	10,916
Selling and Marketing Expense [Member]
Amortization of intangible assets	2,432	2,432	4,864	4,864
General and Administrative Expense [Member]
Amortization of intangible assets	$ 95	$ 148	$ 192	$ 298

Note 7 - Intangible Assets - Expected Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
2020 (remaining)	$ 43,885
2021	80,795
2022	69,413
2023	42,315
2024	27,122
Thereafter	14,119
Finite-Lived Intangible Assets, Net, Ending Balance	$ 277,649	$ 168,290

Note 7 - Intangible Assets - Weighted-average Amortization Periods Remaining (Details)	6 Months Ended
	Jun. 30, 2020
Developed Technology Rights [Member]
Finite-lived intangible assets, remaining amortization period (Year)	4 years 6 months
Customer Relationships [Member]
Finite-lived intangible assets, remaining amortization period (Year)	3 years 6 months
Contractual Rights [Member]
Finite-lived intangible assets, remaining amortization period (Year)	4 years 6 months
Trade Names [Member]
Finite-lived intangible assets, remaining amortization period (Year)	1 year 6 months
Patents [Member]
Finite-lived intangible assets, remaining amortization period (Year)	7 years 4 months 24 days
Computer Software, Intangible Asset [Member]
Finite-lived intangible assets, remaining amortization period (Year)	2 years 2 months 12 days

Note 8 - Leases (Details Textual) $ in Thousands	Jun. 30, 2020 USD ($)
Lessee, Operating Lease, Renewal Term (Year)	5 years
Lessee, Operating Lease, Lease Not yet Commenced	$ 661
Minimum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)	1 year
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract (Year)	3 years
Maximum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)	10 years
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract (Year)	5 years

Note 8 - Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Operating lease cost	$ 2,375	$ 1,044	$ 4,526	$ 2,098
Cash paid for leases	1,741	927	3,320	2,191
Right of use assets obtained in exchange for lease obligations	$ 2,001	$ 0	$ 3,743	$ 224
Weighted average remaining lease term (years) (Year)	7 years 10 months 17 days		7 years 10 months 17 days		8 years 6 months 7 days
Weighted average discount rate	3.70%		3.70%		3.90%

Note 8 - Leases - Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) $ in Thousands	Jun. 30, 2020 USD ($)
2020 (remaining)	$ 3,726
2021	6,694
2022	6,900
2023	6,873
2024	6,621
Thereafter	23,914
Total future minimum lease payments	54,728
Less: Imputed interest	7,966
Lease incentive recognized as offset to lease liability	2,576
Liabilities [Member]
Present value of lease obligations	$ 44,186

Note 9 - Product Warranty Obligation (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Standard and Extended Product Warranty Accrual, Ending Balance	$ 110	$ 110
Standard and Extended Product Warranty Accrual, Period Increase (Decrease), Total	$ 0

Note 10 - Convertible Debt (Details Textual) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Apr. 24, 2020 USD ($) $ / shares $ / item shares	Sep. 30, 2016 USD ($) $ / shares $ / item	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2015 USD ($) $ / shares $ / item
Proceeds from Convertible Debt				$ 492,743	$ 0
Payments for Call Options				55,660	(0)
Repayments of Convertible Debt				407,782	$ (0)
Exchange for Convertible Notes 2015 [Member]
Extinguishment of Debt, Amount			$ 180,454
Exchange for Convertible Notes 2016 [Member]
Extinguishment of Debt, Amount			223,090
Convertible Debt [Member]
Repayments of Convertible Debt	$ 407,782
Convertible Debt Repurchases, Shares Outstanding Impact (in shares) \| shares	4,942,490
Convertible Debt [Member] \| Convertible Notes 2015 [Member]
Debt Instrument, Face Amount						$ 230,000
Debt Instrument, Interest Rate, Stated Percentage						1.125%
Debt Instrument, Convertible, Conversion Ratio						24.8988
Debt Instrument, Convertible, Conversion Price (in dollars per share) \| $ / shares						$ 40.16
Convertible Debt in Default, Percent Holders to Declare Due and Payable						100.00%
Derivative, Cap Price (in USD per Per Share) \| $ / item						52.06
Extinguishment of Debt, Amount	$ 180,454
Adjustments to Additional Paid in Capital Equity Component of Convertible Debt Retired	(299,458)
Common Stock Issued in Relation to Repurchases of Convertible Debt, Value	295,660
Convertible Debt [Member] \| Convertible Notes 2016 [Member]
Debt Instrument, Face Amount		$ 287,500
Debt Instrument, Interest Rate, Stated Percentage		0.75%
Debt Instrument, Convertible, Conversion Ratio		17.7508
Debt Instrument, Convertible, Conversion Price (in dollars per share) \| $ / shares		$ 56.34
Convertible Debt in Default, Percent Holders to Declare Due and Payable		100.00%
Derivative, Cap Price (in USD per Per Share) \| $ / item		73.03
Extinguishment of Debt, Amount	223,090
Convertible Debt [Member] \| Convertible Notes 2020 [Member]
Debt Instrument, Face Amount	$ 506,000
Debt Instrument, Interest Rate, Stated Percentage	0.75%
Debt Instrument, Convertible, Conversion Ratio	8.0059
Debt Instrument, Convertible, Conversion Price (in dollars per share) \| $ / shares	$ 124.91
Convertible Debt in Default, Percent Holders to Declare Due and Payable	100.00%
Derivative, Cap Price (in USD per Per Share) \| $ / item	188.54
Debt Instrument, Convertible, Threshold Trading Days	20
Debt Instrument, Convertible, Threshold Consecutive Trading Days	30
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger	130.00%
Convertible Debt in Bankruptcy, Insolvency, and Reorganization, Percent due and Payable	100.00%
Convertible Debt Holders in Default, Percent of Principal Amount	25.00%
Proceeds from Convertible Debt	$ 506,000
Proceeds from Convertible Debt, Portion Allocated to Long-term Debt	402,624
Proceeds from Convertible Debt, Allocated to Stockholders' Equity	103,376
Debt Issuance Costs, Gross	13,507
Convertible Debt Issuance Costs, Gross, Long-term Debt Component	10,747
Convertible Debt Issuance Costs, Gross, Equity Component	$ 2,760
Capped Call Options, Percentage of Common Shares Underlying the Convertible Debt	100.00%
Payments for Call Options	$ 55,660
Convertible Debt [Member] \| Convertible Notes 2020 [Member] \| Conversion Circumstance 1 [Member]
Debt Instrument, Convertible, Threshold Trading Days	20
Debt Instrument, Convertible, Threshold Consecutive Trading Days	30
Convertible Debt [Member] \| Convertible Notes 2016, Issuance Costs [Member]
Adjustments to Additional Paid in Capital Equity Component of Convertible Debt Retired	$ (269,875)
Common Stock Issued in Relation to Repurchases of Convertible Debt, Value	$ 259,653
Convertible Debt, Conversion Request Received, Aggregate Principal Amount			$ 2,211	$ 2,211

Note 10 - Convertible Debt - Carrying Amount of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Principal	$ 619,956	$ 517,500
Unamortized debt discount	(105,568)	(38,105)
Unamortized debt issuance costs	(10,865)	(3,217)
Net carrying amount of long-term debt	503,523	476,178
Less current portion of long-term debt	48,277	217,467
Long-term debt, non-current portion	$ 455,246	$ 258,711

Note 10 - Convertible Debt - Schedule of Interest Expense for Convertible Debt (Details) - Convertible Debt [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Convertible Notes 2020 [Member]
Contractual interest expense			$ 759
Amortization of debt discount			3,234
Amortization of debt issuance costs			336
Total interest expense			4,329
Convertible Notes 2015 [Member]
Contractual interest expense	$ 370	$ 646	1,013	$ 1,286
Amortization of debt discount	1,704	2,877	4,740	5,667
Amortization of debt issuance costs	153	259	427	510
Total interest expense	2,227	3,782	6,180	7,463
Convertible Notes 2016 [Member]
Contractual interest expense	397	533	934	1,066
Amortization of debt discount	2,877	3,577	6,649	7,050
Amortization of debt issuance costs	236	293	545	578
Total interest expense	$ 3,510	$ 4,403	$ 8,128	$ 8,694

Note 10 - Convertible Debt - Retired Long-term Debt (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Apr. 24, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Loss on early extinguishment		$ 13,297	$ 0	$ 13,297	$ 0
Convertible Notes 2015 [Member] \| Convertible Debt [Member]
Principal	$ 180,454
Unamortized debt discount	(5,596)
Unamortized debt issuance costs	(504)
Total	174,354
Repurchase consideration allocated to the liability component	177,622
Net carrying value of debt	(174,354)
Loss on early extinguishment	3,268
Convertible Notes 2016 [Member] \| Convertible Debt [Member]
Principal	223,090
Unamortized debt discount	(15,694)
Unamortized debt issuance costs	(1,287)
Total	206,109
Repurchase consideration allocated to the liability component	216,138
Net carrying value of debt	(206,109)
Loss on early extinguishment	$ 10,029

Note 11 - Other Liabilities - Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other Liabilities, Current, Total	$ 42,843	$ 33,531
Other Current Liabilities [Member]
Software license agreements liability	28,500	25,810
Operating lease liability	3,128	2,545
Others	$ 11,215	$ 5,176

Note 11 - Other Liabilities - Other Long-term Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other Liabilities, Noncurrent, Total	$ 68,901	$ 78,917
Other Noncurrent Liabilities [Member]
Income tax payable	1,067	692
Software license agreements liability	24,823	36,144
Operating lease liability	41,058	41,074
Others	$ 1,953	$ 1,007

Note 12 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Expense (Benefit), Total	$ 249	$ (587)	$ 294	$ 633
Effective Income Tax Rate Reconciliation, Percent, Total	(1.00%)	2.80%	(0.70%)	(1.50%)
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			21.00%	21.00%
Unrecognized Tax Benefits, Period Increase (Decrease), Total	$ (5,204)		$ (3,653)

Note 13 - Earnings Per Share - Securities Not Included in Computation of Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Anti-dilutive securities (in shares)	13,743,966	14,659,213	14,176,352	14,712,765
Share-based Payment Arrangement, Option [Member]
Anti-dilutive securities (in shares)	764,328	1,056,682	810,597	1,092,153
Restricted Stock and Market Value Stock Units [Member]
Anti-dilutive securities (in shares)	2,938,459	2,772,493	2,930,147	2,790,574
Convertible Debt Securities [Member]
Anti-dilutive securities (in shares)	10,041,179	10,830,038	10,435,608	10,830,038

Note 14 - Stock-based Compensation (Details Textual) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended		6 Months Ended
	Feb. 28, 2020	Feb. 28, 2019	Dec. 31, 2011	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Common Stock, Capital Shares Reserved for Future Issuance (in shares)				5,729,552		5,729,552
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)				0	0	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value						$ 14,451	$ 4,506
Proceeds from Stock Options Exercised						$ 1,899	$ 1,132
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in shares)						74,896	121,549
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total				$ 209,046		$ 209,046
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)						2 years 8 months 26 days
Employee Stock Purchase Plan [Member]
Maximum Percentage of Aggregate Cash Compensation for Purchase of Stock Using Payroll Deduction			15.00%
Purchase Price PerShare as Percentage of Market Value			85.00%
Percentage of Combined Voting Power or Value of All Classes of Stock Not Eligible to Participate			5.00%
Fair Value of Common Stock in Calendar Year per Employee Not Eligible to Participate			$ 25
Maximum Aggregate Number of Shares of Common Stock Available for Purchase under Employee Stock Purchase Plan (in shares)						2,750,000
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)						4 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance (in shares)				3,935,886		3,935,886		3,822,325
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)						1,380,565
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)						4 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance (in shares)				43,338		43,338
Market Value Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		346,201
Market Value Stock Units [Member] \| Minimum [Member]
Percentage of Target Number of Shares		0.00%
Market Value Stock Units, Performance Period (Year)	2 years
Market Value Stock Units [Member] \| Maximum [Member]
Percentage of Target Number of Shares		225.00%
Market Value Stock Units, Performance Period (Year)	3 years

Note 14 - Stock-based Compensation - Options Outstanding (Details) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares
Number of shares outstanding (in shares) \| shares	905,141
Number of shares outstanding, weighted-average exercise price (in dollars per share) \| $ / shares	$ 13.68
Number of shares outstanding, weighted-average remaining contractual life (Year)	1 year 6 months 7 days	1 year 9 months 21 days
Number of shares outstanding, aggregate intrinsic value \| $	$ 54,616
Number of shares exercised (in shares) \| shares	(180,369)
Number of shares exercised, weighted-average exercise price (in dollars per share) \| $ / shares	$ 10.53
Number of shares outstanding (in shares) \| shares	724,772	905,141
Number of shares outstanding, weighted-average exercise price (in dollars per share) \| $ / shares	$ 14.46	$ 13.68
Number of shares outstanding, aggregate intrinsic value \| $	$ 74,677	$ 54,616
Vested and expected to vest in the future (in shares) \| shares	724,772
Number of shares vested and expected to vest in the future, weighted-average exercise price (in dollars per share) \| $ / shares	$ 14.46
Number of shares vested and expected to vest in the future, weighted-average remaining contractual life (Year)	1 year 6 months 7 days
Number of shares vested and expected to vest in the future, aggregate intrinsic value \| $	$ 74,677

Note 14 - Stock-based Compensation - Outstanding Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member]	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Outstanding (in shares)	3,822,325
Outstanding, weighted-average grant date fair value (in dollars per share) \| $ / shares	$ 41.38
Granted (in shares)	1,380,565
Granted, weighted-average grant date fair value (in dollars per share) \| $ / shares	$ 86.59
Vested (in shares)	(1,205,934)
Vested, weighted-average grant date fair value (in dollars per share) \| $ / shares	$ 41.96
Canceled (in shares)	(61,070)
Canceled, weighted-average grant date fair value (in dollars per share) \| $ / shares	$ 56.19
Outstanding (in shares)	3,935,886
Outstanding, weighted-average grant date fair value (in dollars per share) \| $ / shares	$ 56.82
Expected to vest (in shares)	3,860,310

Note 14 - Stock-based Compensation - Assumptions Valuation for Market Value Stock Units (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares
Two Year Term Market Value Stock Units [Member]
Total target shares (in shares) \| shares	53,448
Fair value per share (in dollars per share) \| $ / shares	$ 119.90
Total amount to be recognized over the service period \| $	$ 6,408
Risk free interest rate	1.41%
Expected volatility	41.37%
Dividend yield	0.00%
Three Year Term Market Value Stock Units [Member]
Total target shares (in shares) \| shares	101,775
Fair value per share (in dollars per share) \| $ / shares	$ 125.30
Total amount to be recognized over the service period \| $	$ 12,752
Risk free interest rate	1.38%
Expected volatility	43.79%
Dividend yield	0.00%

Note 14 - Stock-based Compensation - Fair Value of Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan [Member] - $ / shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Risk-free interest rate	1.51%	2.50%
Expected life (Year)	5 months 26 days	5 months 26 days
Dividend yield	0.00%	0.00%
Expected volatility	39.00%	45.00%
Estimated fair value (in dollars per share)	$ 21.71	$ 11.11

Note 14 - Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock-based compensation expense	$ 28,226	$ 17,961	$ 52,255	$ 36,719
Cost of Sales [Member]
Stock-based compensation expense	1,986	1,674	3,897	2,479
Research and Development Expense [Member]
Stock-based compensation expense	16,432	9,925	29,511	20,657
Selling and Marketing Expense [Member]
Stock-based compensation expense	5,261	3,269	10,462	7,417
General and Administrative Expense [Member]
Stock-based compensation expense	$ 4,547	$ 3,093	$ 8,385	$ 6,166

Note 15 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Convertible Debt, Fair Value Disclosures	$ 888,791	$ 845,296

Note 15 - Fair Value Measurements - Assets and Liabilities Carried at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Total fair value of assets	$ 102,393	$ 341,444
Fair Value, Inputs, Level 1 [Member]
Total fair value of assets	5,519	71,325
Fair Value, Inputs, Level 2 [Member]
Total fair value of assets	96,874	270,119
Money Market Funds [Member]
Cash equivalents	6,155	190,598
Money Market Funds [Member] \| Fair Value, Inputs, Level 1 [Member]
Cash equivalents	5,519	67,494
Money Market Funds [Member] \| Fair Value, Inputs, Level 2 [Member]
Cash equivalents	636	123,104
Commercial Paper [Member]
Cash equivalents	8,198	9,465
Investment in marketable securities	5,118	6,464
Commercial Paper [Member] \| Fair Value, Inputs, Level 1 [Member]
Cash equivalents	0	0
Investment in marketable securities	0	0
Commercial Paper [Member] \| Fair Value, Inputs, Level 2 [Member]
Cash equivalents	8,198	9,465
Investment in marketable securities	5,118	6,464
Municipal Bonds [Member]
Cash equivalents		1,250
Investment in marketable securities	19,220	6,119
Municipal Bonds [Member] \| Fair Value, Inputs, Level 1 [Member]
Cash equivalents		0
Investment in marketable securities	0	0
Municipal Bonds [Member] \| Fair Value, Inputs, Level 2 [Member]
Cash equivalents		1,250
Investment in marketable securities	19,220	6,119
Corporate Debt Securities [Member]
Investment in marketable securities	61,090	119,449
Corporate Debt Securities [Member] \| Fair Value, Inputs, Level 1 [Member]
Investment in marketable securities	0	0
Corporate Debt Securities [Member] \| Fair Value, Inputs, Level 2 [Member]
Investment in marketable securities	61,090	119,449
US Treasury Securities [Member]
Investment in marketable securities		3,759
US Treasury Securities [Member] \| Fair Value, Inputs, Level 1 [Member]
Investment in marketable securities		3,759
US Treasury Securities [Member] \| Fair Value, Inputs, Level 2 [Member]
Investment in marketable securities		0
Asset-backed Securities [Member]
Investment in marketable securities	2,612	4,268
Asset-backed Securities [Member] \| Fair Value, Inputs, Level 1 [Member]
Investment in marketable securities	0	0
Asset-backed Securities [Member] \| Fair Value, Inputs, Level 2 [Member]
Investment in marketable securities	$ 2,612	4,268
Certificates of Deposit [Member]
Investment in marketable securities		72
Certificates of Deposit [Member] \| Fair Value, Inputs, Level 1 [Member]
Investment in marketable securities		72
Certificates of Deposit [Member] \| Fair Value, Inputs, Level 2 [Member]
Investment in marketable securities		$ 0

Note 16 - Segment and Geographic Information (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Non-US [Member]
Long-Lived Assets	$ 53,226	$ 33,826
TAIWAN, PROVINCE OF CHINA
Long-Lived Assets	$ 43,945	$ 27,750

Note 16 - Segment and Geographic Information - Revenue by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 175,292	$ 86,285	$ 314,722	$ 168,508
CHINA
Revenue	102,019	38,449	169,860	76,266
UNITED STATES
Revenue	33,477	20,520	75,081	40,967
THAILAND
Revenue	18,801	14,225	32,731	26,844
Other Country [Member]
Revenue	$ 20,995	$ 13,091	$ 37,050	$ 24,431

Note 17 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Value of Open Purchase Orders	$ 31,278
Indemnification Agreement [Member]
Loss Contingency Accrual, Ending Balance	$ 0	$ 0

Note 17 - Commitments and Contingencies - Future Minimum Payments Under Non-cancelable Service Agreements (Details) $ in Thousands	Jun. 30, 2020 USD ($)
2020 (remaining)	$ 187
2021	280
2022	226
2023	130
2024	95
Thereafter	55
Total	$ 973