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United States securities and exchange commission logo
September 8, 2022
Haley Aman
Chief Financial Officer
Pixelworks, Inc.
16760 SW Upper Boones Ferry Rd., Ste. 101
Portland, OR 97224
Re: Pixelworks, Inc.
Form 10-K for the
Fiscal Year ended December 31, 2021
Filed March 9, 2022
File No. 000-30269
Dear Ms. Aman:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2021
Business, page 7
1. Please revise as
necessary to more clearly address the disclosure requirements in Item
101(h)(4) of Regulation
S-K. For example, describe your principal products with greater
specificity in order to
understand their relative significance to your current operations,
including any material
concentrations among the four key market segments that you
identify on page 8.
Please also expand your disclosures to address the following points.
Describe your
manufacturing arrangements and your role in the movement of
products through
the distribution channels identified on pages 13 and 14.
Describe the
status of any publicly announced new products or services, including the
dates when these
have been introduced or are expected to become available.
Provide
differentiation for products and services that are mentioned though which
you are no longer
providing, including the dates of discontinuance.
Haley Aman
FirstName
Pixelworks,LastNameHaley Aman
Inc.
Comapany 8,
September NamePixelworks,
2022 Inc.
September
Page 2 8, 2022 Page 2
FirstName LastName
Address the duration and utility of patents, including the
extent to which your
products and services rely on all of the 335 patents that you
mention.
Describe any need for governmental approvals of principal
products and services and
the effects of any existing or probable governmental regulations.
Risk Factors
Company Specific Risks, page 18
2. We note that you provide a risk factor on page 23 concerning your
operations in China
and are further developing you operations and presence in China,
particularly with regard
to your subsidiary Pixelworks Semiconductor Technology (Shanghai) Co.,
Ltd.
Given these plans and the significance of your current operations in
China, it appears that
you should provide disclosures that are responsive to the guidance in
our Sample Letter to
China-Based Companies (posted to our website in December 2021), to the
extent
applicable and without regard to sectional headings, concerning the
legal and operational
risks associated with having operations in China. You may view the
Sample Letter to
China-Based Companies on our website at the following address:
https://www.sec.gov/corpfin/sample-letter-china-based-companies.
Please submit the incremental disclosures that you propose to address
these concerns.
Management's Discussion and Analysis of Financial Condition and Results of
Operation
Overview, page 40
3. We note that your disclosures on pages 17 and 28 mention the
possibility that operations
of your key suppliers and manufacturing partners may be adversely
affected as a result of
the pandemic and of shortages in the global semiconductor business.
Please clarify
whether these concerns materially effect your outlook or business
goals, and disclose the
extent to which your results of operations and capital resources have
been impacted.
Please also discuss any efforts that you have undertaken to mitigate
these concerns and
any uncertainties arising from those efforts or which otherwise
prevail over your ability to
maintain or ensure product quality, reliability of product development
and order
fulfillment processes, or to obtain regulatory approvals
Results of Operations, page 42
4. Please expand your discussion and analysis to provide further details
of activity and
changes based on your various products and services, product groups or
target markets to
comply with Item 303(a), (b), and (b)(2) of Regulation S-K.
For example, as you appear to design products having similar
characteristics and
differentiate based on sales in the target markets, address changes in
revenues for these
markets in both quantitative and qualitative terms, e.g. volumes and
prices of products
Haley Aman
FirstName
Pixelworks,LastNameHaley Aman
Inc.
Comapany 8,
September NamePixelworks,
2022 Inc.
September
Page 3 8, 2022 Page 3
FirstName LastName
sold in each of the target markets, and the reasons for material
changes in comparison to
prior periods. Please also address costs and expenses associated with
sales in the target
markets by identifying and quantifying material components and any
factors, including
offsetting factors, underlying material changes in comparison to prior
periods.
Please submit the revisions that you propose to more clearly address
this guidance.
Financial Statements
Note 7 - Revenue Recognition, page 69
5. We note that your disaggregation of revenues results in two revenue
categories being
identified, including "IC sales" and "Engineering services, license
and other," and that the
first of these represented 92% and 96% of total revenues for 2021 and
2020, respectively.
However, you report having 335 patents related to visual display of
digital image data,
and describe four primary target markets as Mobile, Home
Entertainment, Content, and
Business & Education (although in the August 2022 Investor
Presentation on your
website, you identify Mobile, Cinema, and Home & Enterprise as your
target markets).
You also refer to mobile, projector, and video delivery businesses
when describing plans
to transform operations of your subsidiary, Pixelworks Semiconductor
Technology
(Shanghai) Co., Ltd, and you identify multiple products and product
categories in your
periodic reports and in the Investor Presentation (IP) including the
following.
highly integrated products vs. high-speed mixed signal products
video System on Chip ("SoC"), commercial dual-channel 1080i
deinterlacer
integrated circuit, and the Topaz product line
motion estimation/motion compensation technology ("MEMC"), and
mobile-
optimized MEMC for smartphones
mobile-optimized X5 visual processor
video delivery and streaming solutions
Visual processors and AI-enhanced display for mobile devices
XCode transcoders for media players and STB recorders
SoCs for digital projectors
Pixelworks Pro display processing software for smartphones
TrueCut Motion grading, HDR content creation SDK
Given the foregoing, it is unclear how the two revenue categories that
you have identified
would fairly depict how the nature, amount, timing, and uncertainty of
revenue and cash
flows are affected by economic factors.
Please explain how you have considered the guidance in FASB ASC
606-10-55-89
through 55-91, relative to the various products and product categories
mentioned above,
as well as the target markets and the mobile, projector, and video
delivery businesses.
Haley Aman
Pixelworks, Inc.
September 8, 2022
Page 4
Please submit the revisions that you propose to more clearly reflect
disaggregation into
meaningful revenue categories in conformity with this guidance.
Note 14 - Segment Information, page 78
6. We note you have identified a single reportable operating segment,
although it is unclear
how you have arrived at this view, considering other disclosures in
your periodic reports,
earnings releases, and the August 2022 Investor Presentation on your
website.
For example, you have identified mobile, projector and video as
businesses within your
consolidated results, associated various products with distinct target
markets, and
identified projector-video delivery and mobile as segments while
differentiating between
these in discussing revenue trends and growth. Therefore, it is
unclear how assessing
performance and allocating resources would not be oriented towards and
informed by
financial metrics associated with multiple segments of your
operations.
Tell us how you considered the guidance in FASB ASC 280-10-55-7A, B,
and C in
concluding that you have a single reportable operating segment, given
the observations
above; and describe the scope of information utilized by your chief
operating decision
maker(s) in assessing performance and making resource allocation
decisions, as may
pertain to the various product groups and target markets that you have
identified.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Jenifer Gallagher, Staff Accountant at (202) 551-3706 or
Karl Hiller,
Branch Chief at (202) 551-3686 if you have questions on any matters.
FirstName LastNameHaley Aman Sincerely,
Comapany NamePixelworks, Inc.
Division of
Corporation Finance
September 8, 2022 Page 4 Office of Energy
& Transportation
FirstName LastName