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Income Taxes | 12 Months Ended
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Dec. 28, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income (loss), inclusive of equity-method earnings (loss) and before income taxes, includes the following components (in thousands):
| Year Ended
| December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Domestic | $ | (33,032) |  |  | $ | (14,539) |  |  | $ | 32,088 |
Foreign | (121,781) |  |  | (12,034) |  |  | 97,764 |
| $ | (154,813) |  |  | $ | (26,573) |  |  | $ | 129,852 |
The provision (benefit) for income taxes consists of the following (in thousands):
| Year Ended
| December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Current: |  |  |  |  |
Domestic | $ | (252) |  |  | $ | 3,291 |  |  | $ | 52,834 |
Foreign | 6,978 |  |  | 15,599 |  |  | 3,856 |
Total Current | 6,726 |  |  | 18,890 |  |  | 56,690 |
Deferred: |  |  |  |  |
Domestic | 29,745 |  |  | (9,036) |  |  | (17,728) |
Foreign | (274) |  |  | (1,911) |  |  | (512) |
Total Deferred | 29,471 |  |  | (10,947) |  |  | (18,240) |
Provision for income taxes | $ | 36,197 |  |  | $ | 7,943 |  |  | $ | 38,450 |
The reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows:
| Year Ended
| December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Foreign tax rate benefit | (9.2) |  |  | (33.2) |  |  | (6.2) |
Current period valuation allowance | (18.9) |  |  | — |  |  | — |
Change in prior period valuation allowance | (12.9) |  |  | (1.5) |  |  | (0.3) |
GILTI and Subpart F income, net of foreign tax credits | (4.3) |  |  | (24.2) |  |  | 16.5 |
(Nondeductible) nontaxable foreign items | (3.1) |  |  | (26.0) |  |  | 4.5 |
(Nondeductible) nontaxable domestic items | (0.9) |  |  | (3.6) |  |  | 0.7 |
Nondeductible officer compensation | (0.8) |  |  | 1.3 |  |  | 2.0 |
Return to provision adjustments | (0.3) |  |  | 16.5 |  |  | (2.0) |
State tax expense | — |  |  | (1.5) |  |  | 1.2 |
Base erosion and anti-abuse tax | — |  |  | (7.4) |  |  | — |
Other tax effects of equity compensation | 0.1 |  |  | 1.1 |  |  | (0.3) |
Foreign withholding taxes | 0.3 |  |  | (2.2) |  |  | 0.4 |
Excess tax benefit of stock-based compensation | 0.6 |  |  | 4.0 |  |  | (1.1) |
Release of prior year unrecognized tax benefits | 1.2 |  |  | — |  |  | (0.4) |
Research and development tax credits | 4.2 |  |  | 26.9 |  |  | (5.5) |
Other | (0.4) |  |  | (1.1) |  |  | (0.9) |
Effective tax rate | (23.4) | % |  | (29.9) | % |  | 29.6 | %
The increase in the provision for income taxes for fiscal 2024 as compared to fiscal 2023 was primarily due to the establishment of a valuation allowance against the majority of the Company’s U.S. and Singapore deferred tax assets during the second quarter of fiscal 2024. The decrease in the provision for income taxes for fiscal 2023 was primarily due to decreases in pre-tax book income and global intangible low-taxed income inclusions as compared to fiscal 2022. The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Under the Act, research and experimental expenditures incurred for tax years beginning after December 31, 2021 must be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. The Company has elected to treat global intangible low-taxed income (“GILTI”) as a period cost, so the capitalization of research and experimental costs in GILTI increases the Company’s provision for income taxes. Additionally, the Act required companies to pay a one-time transition tax on the earnings of certain foreign subsidiaries that were previously deferred from U.S. income tax under U.S. tax law. The Company elected to pay the transition tax over the eight-year period provided in the Act. As of December 28, 2024, the unpaid balance of its transition tax obligation was $7.9 million, which is payable in April 2025 and recorded as a component of other current liabilities in the Consolidated Balance Sheet. Deferred Income Taxes Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities. Significant components of the Company’s deferred taxes as of December 28, 2024 and December 30, 2023 were as follows (in thousands):
| December 28, 2024 |  | December 30, 2023
Deferred tax assets: |  |  |
Capitalized research and development | $ | 28,613 |  |  | $ | 27,402 |
Tax credit carryforwards | 23,100 |  |  | 13,303 |
Net operating loss carryforwards | 17,484 |  |  | 6,911 |
Intangible assets | 6,447 |  |  | 7,188 |
Leases | 6,388 |  |  | 6,584 |
Deferred income on shipments to distributors | 2,153 |  |  | 6,465 |
Accrued liabilities | 2,063 |  |  | 2,859 |
Other | 6,130 |  |  | 3,072 |
| 92,378 |  |  | 73,784 |
Less: Valuation allowance | (60,760) |  |  | (10,530) |
| 31,618 |  |  | 63,254 |
Deferred tax liabilities: |  |  |
Intangible assets | 13,718 |  |  | 13,916 |
Fixed assets | 6,812 |  |  | 8,353 |
Leases | 6,053 |  |  | 6,238 |
Prepaid expenses and other | 3,555 |  |  | 4,534 |
Stock-based compensation | 1,001 |  |  | — |
| 31,139 |  |  | 33,041 |
Net deferred tax assets (liabilities) | $ | 479 |  |  | $ | 30,213 |
As of December 28, 2024, the Company had foreign net operating loss and research and development tax credit carryforwards of approximately $172.6 million and $0.4 million, respectively. The foreign net operating loss carryforward does not expire. The foreign research and development tax credits expire in fiscal years 2043 through 2044. As of December 28, 2024, the Company had U.S. federal net operating loss, research and development tax credit and foreign tax credit carryforwards of approximately $10.2 million, $7.3 million and $3.7 million, respectively. All of the net operating loss and $1.1 million of the research and development tax credit carryforwards are subject to an annual limit, which may cause them to expire before they are used. The net operating loss and research and development tax credit carryforwards that are subject to limitation expire in fiscal years 2026 through 2031, the remaining research and development tax credit carryforwards expire in fiscal year 2044, and the foreign tax credit carryforwards expire in fiscal years 2033 through 2034. Additionally, the Company had state net operating loss and state research and development tax credit carryforwards of approximately $34.7 million and $13.7 million, respectively. Certain of these carryforwards expire in fiscal years 2025 through 2044, and others do not expire. Recognition of some of these loss and credit carryforwards is subject to an annual limit, which may cause them to expire before they are used. A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized. The Company maintains a valuation allowance with respect to the majority of deferred tax assets in the U.S. and Singapore and with respect to research and development tax credit carryforwards in Canada. In the three months ended June 29, 2024, the Company determined that there is a need for a valuation allowance in the U.S. and Singapore due to a forecasted three-year cumulative pre-tax loss for the current and two preceding years in conjunction with the recent downturn in the semiconductor industry. The company intends to maintain the valuation allowance until sufficient future sources of taxable income are forecasted to realize the benefit of the deferred tax assets. The following table summarizes the activity related to the valuation allowance for deferred tax assets (in thousands):
| Balance at Beginning of Period |  | Additions Charged to Expenses |  | Deductions |  | Balance at End of Period
Year ended December 28, 2024 | $ | 10,530 |  |  | $ | 50,230 |  |  | — |  |  | $ | 60,760 |
Year ended December 30, 2023 | $ | 9,409 |  |  | $ | 1,121 |  |  | $ | — |  |  | $ | 10,530 |
Year ended December 31, 2022 | $ | 9,529 |  |  | $ | 792 |  |  | $ | (912) |  |  | $ | 9,409 |
Uncertain Tax Positions The following table summarizes the activity related to gross unrecognized tax benefits (in thousands):
| Year Ended
| December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Beginning balance | $ | 4,868 |  |  | $ | 4,109 |  |  | $ | 3,677 |
Additions based on tax positions related to current year | 970 |  |  | 737 |  |  | 872 |
Additions based on tax positions related to prior years | — |  |  | 22 |  |  | — |
Reductions based on tax positions related to prior years | (5) |  |  | — |  |  | (6) |
Reductions for tax positions as a result of a lapse of the applicable statute of limitations | (1,406) |  |  | — |  |  | (434) |
Ending balance | $ | 4,427 |  |  | $ | 4,868 |  |  | $ | 4,109 |
As of December 28, 2024, December 30, 2023 and December 31, 2022, the Company had gross unrecognized tax benefits, inclusive of interest, of $4.7 million, $5.4 million and $4.4 million, respectively, of which $3.5 million, $5.1 million and $4.4 million, respectively, would affect the effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. These amounts were not material for any of the periods presented. Following the completion of the Norwegian Tax Administration (“NTA”) examination of the Company’s Norwegian subsidiary for income tax matters relating to fiscal years 2013 – 2016, the Company received an assessment from the NTA in December 2017 concerning an adjustment to its 2013 taxable income related to the pricing of an intercompany transaction. The Company is currently appealing the assessment. The adjustment to the pricing of the intercompany transaction results in approximately 141.3 million Norwegian kroner, or $12.4 million, additional Norwegian income tax. The Company disagrees with the NTA’s assessment and believes the Company’s position on this matter is more likely than not to be sustained. The Company plans to exhaust all available administrative remedies, and if unable to resolve this matter through administrative remedies with the NTA, the Company plans to pursue judicial remedies. The Company believes that it has accrued adequate reserves related to all matters contained in tax periods open to examination. Should the Company experience an unfavorable outcome in the NTA matter, however, such an outcome could have a material impact on its financial statements. Tax years 2019 through 2024 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company’s 2021 and 2022 tax years are currently under examination in India. Although the outcome of tax audits is always uncertain, the Company believes that the results of the examination will not materially impact its financial position or results of operations. The Company is not currently under audit in any other major taxing jurisdiction. The Company believes it is reasonably possible that its gross unrecognized benefits will decrease by approximately $1.7 million, inclusive of interest, in the next 12 months due to the lapse of the statute of limitations.

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