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  "docSlug": "1c836eeb374c",
  "documentTitle": "Monolithic Power Systems (MPWR)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-10-09 00:00:00",
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      "text": "Within a year after MPWR claimed inventory growth was a result of needing to meet \"current demand and future growth\", $10.5m (7.7% of inventories) was written down unexpectedly, and a wafer supplier agreement was terminated in Dec 2018.",
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      "text": "2018 Wafer Termination: \"In December 2018, a supplier terminated a prepaid wafer purchase agreement with the Company and agreed to refund the Company the remaining wafer purchase prepayment of $4.3 million...\"",
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      "text": "2018 Inventory Discussion: \"The increase in cost of revenue was also driven by an $10.5 million increase in inventory write-downs, a $2.1 million increase in warranty expenses, and a $1.7 million increase in manufacturing overhead costs...\"",
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      "text": "2017 Inventory Discussion: \"The increase in inventories was primarily driven by an increase in strategic wafer and die inventories as well as an increase in finished goods to meet current demand and future growth.\"",
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      "text": "Write-down % of Ending Inventory: 7.7%",
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      "text": "Within a year after MPWR claimed inventory growth was a result of needing to meet “current demand and future growth”, $10.5m (7.7% of inventories) was written down unexpectedly, and a wafer supplier agreement was terminated in Dec 2018. Yet, remarkably MPWR was still able to expand and hit its gross margin target in 2018. We believe wafer agreements take a long time to get qualified, so we believe the disruption could be a medium term headwind.",
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      "kind": "quote",
      "text": "\"The increase in inventories was primarily driven by an increase in strategic wafer and die inventories as well as an increase in finished goods to meet current demand and future growth.\" — MPWR 2017 10-K",
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      "text": "Source: MPWR's 2018 10-K / 2017 10-K",
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      "text": "Ending Inventory, Write-down, Write-down % of Ending Inventory for 2016, 2017, 2018",
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      "kind": "title",
      "text": "Inventory Charges Now Exploding",
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