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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 12. Commitments and Contingencies ​ Indemnification Agreements ​ We have entered into indemnification agreements with our directors and officers that require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature; to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and to obtain directors’ and officers’ insurance if available on reasonable terms, which we currently have in place. ​ Product Warranty ​ We provide warranties for our products for a specific period of time, generally twelve months, against material defects. We provide for the estimated future costs of warranty obligations in cost of sales when the related revenue is recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs is primarily based on historical experience as to product failures as well as current information on repair costs. On a quarterly basis, we review the accrued balances and update the historical warranty cost trends. ​ The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” in the condensed consolidated balance sheets, during the three and six months ended June 30, 2024 and 2023 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Six Months Ended |
​ | ​ | June 30, | ​ | June 30, |
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Beginning accrued product warranty | ​ | $ | 495 | ​ | $ | 915 | ​ | $ | 703 | ​ | $ | 669 | ​
Accruals for warranties issued | ​ |  | 131 | ​ |  | 114 | ​ |  | 188 | ​ |  | 658 | ​
Adjustments related to pre-existing warranties including expirations and changes in estimates | ​ |  | (50) | ​ |  | (64) | ​ |  | (260) | ​ |  | (39) | ​
Cost of warranty repair | ​ |  | (155) | ​ |  | (113) | ​ |  | (210) | ​ |  | (436) | ​
Ending accrued product warranty | ​ | $ | 421 | ​ | $ | 852 | ​ | $ | 421 | ​ | $ | 852 | ​
​ Contractual Obligations ​ In 2020, we and a competitor entered into a cross license and covenant agreement (the “Cross License Agreement”), which has a term that began on January 1, 2020 and expires on December 31, 2029. The Cross License Agreement is a fixed-cost cross license and not a variable-cost cross license that is based on revenue or units. Under the Cross License Agreement, we are obligated to make annual payments over a 10-year period. ​ Land Purchase and Investment Agreement ​ In 2017, Baoding Tongmei established a wafer process production line in Dingxing, China. In addition to a land rights and building purchase agreement that Baoding Tongmei entered into with a private real estate development company to acquire our new manufacturing facility, Baoding Tongmei also entered into a cooperation agreement with the Dingxing local government. In addition to pledging its full support and cooperation, the Dingxing local government will issue certain credits or rebates to Baoding Tongmei as Baoding Tongmei achieves certain milestones. Baoding Tongmei, in turn, agreed to hire local workers over time, pay taxes when due and eventually demonstrate a total investment of approximately $90 million in value, assets and capital. The investment will include cash paid for the land and buildings, cash on deposit in our name at local banks, the gross value of new and used equipment (including future equipment that might be used for indium phosphide and germanium substrates production), the deemed value for our customer list or the end user of our substrates, for example, the end users of 3-D sensing VCSELs (vertical cavity surface emitting lasers), a deemed value for employment of local citizens, a deemed value for our proprietary process technology, other intellectual property, other intangibles and additional items of value. There is no timeline or deadline by which this must be accomplished, rather it is a good faith covenant entered into between Baoding Tongmei and the Dingxing local government. Further, there is no specific penalty contemplated if either party breaches the agreement. However, the agreement does state that each party has a right to seek from the other party compensation for losses. Under certain conditions, the Dingxing local government may purchase the land and building at the appraised value. We believe that such cooperation agreements are normal, customary and usual in China and that the future valuation is flexible. Chaoyang Tongmei has a similar agreement with the city of Kazuo, China, although on a smaller scale. The total investment targeted by Chaoyang Tongmei in Kazuo is approximately $15 million in value, assets and capital. In addition, BoYu has a similar agreement with the city of Kazuo. The total investment targeted by BoYu in Kazuo is approximately $8 million in value, assets and capital. ​ Purchase Obligations with Penalties for Cancellation ​ In the normal course of business, we issue purchase orders to various suppliers. In certain cases, we may incur a penalty if we cancel the purchase order. As of June 30, 2024, we do not have any outstanding purchase orders that will incur a penalty if cancelled by the Company. ​ Legal Proceedings ​ From time to time we may be involved in judicial or administrative proceedings concerning matters arising in the ordinary course of business. We do not expect that any of these matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations. ​ On May 6, 2024, a shareholder class action complaint was filed in the U.S. District Court for the Eastern District of New York on behalf of persons or entities who purchased or acquired our publicly traded securities, against us, Morris S. Young, our Chief Executive Officer, and Gary L. Fischer, our Chief Financial Officer. The complaint asserts a putative class period from March 24, 2021 and April 3, 2024, inclusive (the “Class Period”). The complaint asserts that the defendants issued materially false and misleading statements about our business and financial condition in certain filings made with the SEC during the Class Period, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder by the defendants, and seeks unspecified monetary relief, interest, and attorneys’ fees. The Court has ordered the case to be transferred to the Northern District of California, where our headquarters is located. ​ It is not possible at this time to reasonably assess the final outcome of this litigation or reasonably to estimate the possible loss or range of loss with respect to this litigation. Management believes these claims to be meritless and intends to vigorously defend against them.

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