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Basis of Presentation | 9 Months Ended
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Sep. 30, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Basis of Presentation | BASIS OF PRESENTATION Nature of Business Pixelworks is a leading provider of high-performance and power-efficient visual processing semiconductor and software solutions that enable consistently high-quality and authentic viewing experiences in a wide variety of applications. We define our primary target markets as Mobile (smartphone and tablet), Home & Enterprise (projectors, personal video recorders ("PVR"), and over-the-air ("OTA") streaming devices), and Cinema (creation, remastering, and delivery of digital video content). Previously we classified our primary target markets as Mobile, Projector, Video Delivery and Cinema, but have since aggregated the Projector and Video Delivery categories into one market called "Home & Enterprise". During 2021, we engaged in a strategic plan to re-align our Mobile and Home & Enterprise businesses to improve their focus on their Asia-centered customers and employee stakeholders (the "Strategic Plan"). One of our Chinese subsidiaries, Pixelworks Semiconductor Technology (Shanghai) Co., Ltd. ("PWSH"), now operates these businesses as a full profit-and-loss center underneath Pixelworks. In connection with the strategic plan, the Company and PWSH closed three separate financing transactions in 2021 and 2022, which are further described in "Note 13: Redeemable Non-Controlling Interest and Equity Interest of PWSH Sold to Employees" and "Note 14: Non-Controlling Interest", below. PWSH has a branch office located in Shenzhen, China (Pixelworks Semiconductor Technology (Shanghai) Co. Ltd. Shenzhen Branch Office No. 1), which is primarily for sales and customer support for PWSH, and a subsidiary located in Hong Kong (Pixelworks Hong Kong Limited), which has no employees and is used for distribution of PWSH products. Pixelworks has an additional subsidiary in China (Frame Shadow Technology (Shanghai) Co., Ltd. (formerly called Mucheng Huai Management Consulting (Shanghai) Co., Ltd)) which is a research and development center for our TrueCut business. This subsidiary does not operate under PWSH, but rather is owned by Pixelworks through our Oregon limited liability company, Pixelworks Semiconductor Technology Company, LLC ("Pixelworks LLC"). More than a majority of our operations are in China, but our executive officers and all of our directors but one are located in the United States (and he resides in Singapore). We are neither a PRC operating company nor do we conduct our operations in China through the use of variable interest entities. Our auditor is Grant Thornton LLP, with headquarters in Chicago, Illinois. The Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, and related regulations, therefore do not apply to Pixelworks. In the second half of 2024 we engaged with Morgan Stanley and initiated a formal review process after receiving inbound strategic interest in PWSH. In May of 2025, we received non-binding term sheets from three different potential buyers, and engaged in due diligence with each. On October 6, 2025, we announced that the Company was in discussions with a buyer relating to the sale of the shares of PWSH indirectly held by the Company, and on October 15, 2025, the Company, PWSH, Pixelworks LLC and all other shareholders of PWSH except VeriSilicon Microelectronics (Shanghai) Co., Ltd. (each, a “Selling Shareholder”), entered into a Share Purchase Agreement (the “Purchase Agreement") with Tiansui Xinyuan Technology (Shanghai) Co., Ltd. (the “Buyer”), a special purpose entity led by VeriSilicon Microelectronics (Shanghai) Co., Ltd. (“VeriSilicon”), pursuant to which each of the Company, Pixelworks LLC, and each Selling Shareholder agreed to sell all of their shares in PWSH to the Buyer (the “Sale”). The purchase price is calculated based on an equity value of 100% of PWSH of RMB 950 million (approximately $133 million USD as of September 30, 2025). Net of agreed-upon share transfers to other shareholders, transaction costs, and withholding taxes in China, the Company expects to receive cash in the range of approximately $50 million to $60 million upon closing of the Sale. The Sale may be deemed to represent the sale of substantially all of the assets of the Company, and therefore is being submitted to a vote of the Company’s shareholders; the affirmative vote of the holders of at least 67% of the outstanding shares of the Company’s common stock is required for approval. The Company has disseminated to its shareholders a proxy statement with respect to a special meeting of shareholders to approve the Sale. Assuming all closing conditions are met in a timely manner, the Company expects the closing of the Sale to take place by December 31, 2025. Following the Sale, the Company intends to focus on its remaining business in cinematic visualization solutions, including its flagship TrueCut Motion TM platform. Pixelworks was founded in 1997 and is incorporated under the laws of the state of Oregon. Reverse Stock Split On June 6, 2025, the Company effected a one-for-twelve reverse stock split of the Company’s common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, every twelve shares of the Company's Common Stock issued or outstanding were automatically reclassified into one new share of common stock. Proportionate adjustments were also made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans and certain existing agreements. The Reverse Stock Split did not decrease the number of authorized shares of common stock or otherwise affect the par value of the common stock. No fractional shares were issued in connection with the Reverse Stock Split. Shareholders who would have otherwise been entitled to receive fractional shares were entitled to have their fractional shares rounded up to the next whole number share quantity. All shares of the Company’s common stock, per-share data and related information included in the accompanying condensed consolidated financial statements and the accompanying notes have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented. Condensed Consolidated Financial Statements The financial information included herein for the nine months ended September 30, 2025 and 2024 is prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and is unaudited. Such information reflects all adjustments, consisting of only normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of our condensed consolidated financial statements for these interim periods. The financial information as of December 31, 2024 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2024, included in Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 13, 2025, as amended, and should be read in conjunction with such consolidated financial statements. The results of operations for the nine months ended September 30, 2025 and 2024 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2025. Significant Accounting Policies There have been no material changes to our significant accounting policies disclosed in "Note 2: Summary of Significant Accounting Policies", of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as amended. Recent Accounting Pronouncements On July 4, 2025, Public Law 119-21 or the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA includes a broad range of provisions, such as the permanent extension of otherwise expiring provisions, modifications to the international tax framework, and the reinstatement of certain business tax provisions. While most of the changes made by the OBBBA are effective in future years, some of its provisions are effective in 2025. We do not expect the impact of these tax law changes to have a material impact to our consolidated financial statements and are continuing to evaluate. In December 2023, the Financial Standards Accounting Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Improvements To Income Tax Disclosures ("ASU 2023-09"), which includes new and updated income tax disclosures, including disaggregation of information in the rate reconciliation and income taxes paid. ASU 2023-09 will become effective for us in the year ending December 31, 2025. We are evaluating the impact that the adoption of ASU 2023-09 will have on our financial position, results of operations and cash flows. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures ("ASU 2024-03"), requiring disclosures of certain additional expense information on an annual and interim basis, including, among other items, the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption, as applicable. ASU 2024-03 will become effective for us in the year ending December 31, 2027. We are evaluating the impact that the adoption of ASU 2024-03 will have on our financial position, results of operations and cash flows. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Our significant estimates and judgments include those related to revenue recognition, valuation of excess and obsolete inventory, useful lives and recoverability of equipment and other long-lived assets, valuation of goodwill, valuation of share-based payments, income taxes, litigation and other contingencies. The actual results experienced could differ materially from our estimates.

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