Annual report pursuant to Section 13 and 15(d)

Property and Equipment

v3.24.0.1
Property and Equipment
 12 Months Ended
Dec. 31, 2023
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Property and equipment consists of the following categories (in thousands).
December 31, 2023 January 1,
2023
Machinery and equipment $ 100,335  $ 55,694 
Building and leasehold improvements 36,651  24,565 
Office equipment and software 2,561  1,586 
Furniture and fixtures 898  771 
Land 1,433  — 
Construction in process 68,958  33,268 
Total property and equipment 210,836  115,884 
Less: accumulated depreciation (44,365) (12,016)
Property and equipment, net $ 166,471  $ 103,868 
During the fiscal year 2022, the Company placed its leasehold improvement and machinery and equipment into service for the Company's first production line (“Fab1”) and transferred the amount that was previously capitalized as construction in process into the machinery and equipment category. The Company began its depreciation using the straight-line method on the date that machinery and equipment and leasehold improvement were placed into service.
The Company is in the progress of constructing a facility in Malaysia for high-volume production and acquired Routejade, which contributed to increases in machinery and equipment, building and leasehold improvements, land and construction in process categories. Furthermore, the Company announced that it initiated a strategic realignment of the Company’s Fab1 in Fremont designed to refocus the facility from a manufacturing hub to its “Center for Innovation,” focused on new product development, including a plan of workforce reduction. In connection with this strategic realignment, the Company recognized an accelerated depreciation expenses of approximately $18.5 million for Fab1 equipment in the fourth quarter of 2023, of which approximately $5.3 million, $13.1 million, and $0.1 million were recorded as cost of revenue, research and development expense, and selling, general and administrative expense, respectively, in the Consolidated Statements of Operations. In addition, approximately $18.5 million of depreciation expense is expected to be recognized in the first quarter of 2024.
The following table summarizes the depreciation and amortization expenses related to property and equipment, which were recorded within cost of revenue, research and development expense and selling, general and administrative expense in the Consolidated Statements of Operations (in thousands).
Fiscal Years
2023 2022 2021
Depreciation expense $ 33,870  $ 7,425  $ 995 
Equipment Impairment
The following table summarizes impairment of equipment (in thousands).
Fiscal Years
2023 2022 2021
Impairment of equipment $ 4,411  $ 4,921  $ — 
In the fourth quarter of 2022, the Company ceased to construct certain automation for a small portion of the Company’s equipment, which was previously capitalized as “construction in process” category of property and equipment, net on the Consolidated Balance Sheets.
In the second quarter of 2023, the Company disposed a group of machinery and equipment and these impaired assets were previously capitalized as “Machinery and equipment” category of property and equipment, net on the Consolidated Balance Sheets. As of December 31, 2023 and January 1, 2023, $0.6 million and $1.7 million of the impairment charges, respectively, were recorded as accrued expenses on the Consolidated Balance Sheets.