#United States #Portland #Pixelworks #VeriSilicon #Todd DeBonis

Pixelworks CEO's Letter to Shareholders

On November 4, 2025, Todd DeBonis, the CEO of Pixelworks, Inc. (NASDAQ: PXLW), addressed shareholders with significant news regarding the company's future direction and strategic changes. The company, recognized for its innovative video and display processing solutions, released a formal letter outlining plans to sell its majority-owned subsidiary, Pixelworks Semiconductor Technology (Shanghai) Co., Ltd. to VeriSilicon. This sale is expected to generate substantial revenue, allowing the company to shift focus to its core strengths and enhance shareholder value.

Background of the Transaction

Pixelworks Shanghai, established as a fabless semiconductor display solutions firm in 2021, has exhibited considerable potential, but current geopolitical tensions and constrained capital markets in China necessitated a comprehensive reevaluation of its viability and contribution to the company's overall mission. After careful analysis and consideration, the Board of Directors unanimously endorsed the sale.

The transaction proposes an equity value of approximately RMB 950 million (around USD 133 million), with Pixelworks expecting net cash proceeds of USD 50 to 60 million after accounting for associated costs and taxes. However, the sale is contingent upon approval from shareholders who collectively hold a minimum of two-thirds of the company’s outstanding common stock.

Strategic Reasons for the Sale

DeBonis emphasized three primary justifications for the transaction:
1. Maximizing Shareholder Value: While Pixelworks Shanghai holds strategic significance, the sale facilitates the optimal realization of its value in the current market environment.
2. Refocusing on Core Competency: Once the subsidiary is divested, Pixelworks will concentrate on its global licensing business, particularly in cinematic visualization solutions. This transition positions the company to leverage its intellectual property with an emphasis on scalable growth.
3. Improved Financial Flexibility: The influx of cash from the sale will significantly enhance Pixelworks' balance sheet, providing the flexibility needed for further investments, support for licensing initiatives, and a focus on high-return projects.

Future Outlook

Post-sale, Pixelworks will evolve into a pure technology licensing company, specializing in cinematic visualization. A focal point of this new strategy includes its flagship TrueCut Motion™ platform, which cinematic professionals use to enhance viewer experiences in theaters and at home. This refocused strategy is designed to cultivate a robust, property-rich portfolio that taps into high-growth sectors, thus strengthening the company’s market position.

DeBonis urged shareholders to prioritize this vote, recognizing it as a critical juncture for Pixelworks. “Your participation is invaluable,” he wrote. He also reminded them to carefully review the detailed proxy materials that accompany the proposal.

Conclusion

In closing, DeBonis expressed gratitude to the shareholders for their ongoing trust and support, reiterating that the aforementioned transaction represents a strategic leap for Pixelworks. By divesting Pixelworks Shanghai, the firm is poised to sharpen its focus on growth and positioning, enabling it to meet and exceed future expectations in the ever-evolving tech landscape.

Call to Action

Shareholders are encouraged to vote in favor of the sale at the upcoming special meeting. For additional inquiries, they can reach out to the proxy solicitor, Alliance Advisors.

This strategic move reflects a significant evolution within Pixelworks, with aspirations of unlocking new opportunities for enhanced shareholder value and a more dynamic future in technology licensing.