Note 2. Investments and Fair Value Measurements

Our investments consist of instruments with original maturities of more than three months. As of June 30, 2026 and December 31, 2025, our cash, restricted cash, cash equivalents and debt investments are classified as follows (in thousands):

We manage our debt investments as a portfolio of highly marketable securities available to support our liquidity and capital needs. Although long-term investments may be sold before maturity, as of June 30, 2026, we did not intend to sell those investments within the next twelve months.

The following table summarizes the fair value and gross unrealized losses of available-for-sale debt securities, aggregated by investment category and length of time in a continuous unrealized loss position, as of June 30, 2026 (in thousands):

We review our debt investment portfolio at least quarterly, or when there are changes in credit risks or other potential valuation concerns. As of  June 30, 2026, we determined that the unrealized losses were attributable to changes in market interest rates rather than credit deterioration; accordingly, no allowance for credit losses was recorded.

Restricted Cash

We maintain restricted cash in connection with cash balances temporarily restricted for regular business operations. These balances have been excluded from the Company’s cash balance. As of June 30, 2026 and December 31, 2025, $33.1 million and $8.1 million were included in restricted cash in our condensed consolidated balance sheets, respectively. The increase in restricted cash was primarily attributable to additional deposits pledged as collateral in connection with borrowings by the Company’s subsidiaries from PRC banks.

Investments in Privately-held Raw Material Companies

We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 7). The investment balances for the non-consolidated companies are accounted for under the equity method, included in “Other assets” in the condensed consolidated balance sheets, totaled $14.1 million and $15.0 million as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, there were three companies accounted for under the equity method. There were no impairment charges for these investments during the three and six months ended June 30, 2026 and 2025.

Fair Value Measurements

We invest primarily in certificates of deposits, corporate bonds and notes, government securities and money market accounts. We review our debt investment portfolio for credit loss at least quarterly or when there are changes in credit risk or other potential valuation concerns. We believe it is probable the principal and interest will be collected in accordance with the contractual terms, and the unrealized loss on these securities was due to normal market fluctuations, and not due to increased credit risk or other valuation concerns. ASC 820, Fair Value Measurements and Disclosures, establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily- available, observable pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term debt investments.

The type of instrument valued based on quoted market prices in active markets includes our money market funds, which are generally classified within Level 1 of the fair value hierarchy. We classify our available-for-sale debt securities, including certificates of deposit and corporate bonds, as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency.

We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with U.S. GAAP. At quarter end, any foreign currency hedges not settled are netted in “Accrued liabilities” on the condensed consolidated balance sheets and classified as Level 3 assets and liabilities. As of June 30, 2026, the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact on the condensed consolidated results.

There were no changes in valuation techniques or related inputs in the three and six months ended June 30, 2026. There have been no transfers between fair value measurements levels during the three and six months ended June 30, 2026. 

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by the equity method (see Note 7). We did not record any other-than-temporary impairment charges for these investments during the three and six months ended June 30, 2026 and 2025, respectively.