CYPRESS SEMICONDUCTOR CORP /DE/ (Form: 10-Q, Received: 04/26/2019 16:54:03)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-10079

Cypress Semiconductor Corporation

(Exact name of registrant as specified in its charter)



Delaware		94-2885898

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

198 Champion Court, San Jose, California 95134

(Address of principal executive offices and zip code)

(408) 943-2600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The total number of outstanding shares of the registrant’s common stock as of April 20, 2019 was 365,289,260.

INDEX



		Page
PART I—FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements		3

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	39

PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
	Signatures	43

PART I—FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts and include statements relating to, among other things, the future results, operations, strategies, and prospects of Cypress Semiconductor Corporation and its consolidated subsidiaries ("Cypress," the "Company," "we," or "us"), and can in some cases be identified by our use of words such as "may," "will," "should," "plan," "anticipate," "believe," "expect," "future," "intend," "estimate," "predict," "potential," "continue," and similar expressions. This Quarterly Report includes, among others, forward-looking statements regarding: our expectations regarding dividends, debt repayments, and stock repurchases; our expectations regarding restructuring plan costs and effects; our expectations regarding active litigation matters; the sufficiency of our cash, cash equivalents, and borrowing arrangements to meet our requirements for the next 12 months; possible recognition of certain unrecognized tax benefits within the next 12 months; and the potential impact of our indemnification obligations. Our forward-looking statements are based on the expectations, beliefs and intentions of, and the information available to, our executive management on the filing date of this Quarterly Report. Readers are cautioned not to place undue reliance on forward-looking statements. Except as required by law, we assume no responsibility to update our forward-looking statements.

The forward-looking statements in this Quarterly Report involve risks and uncertainties. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: potential disruptions in the international trade and investment environment, including deteriorating relationships between the U.S. government and foreign governments; the current and future state of the general economy and its impact on the markets and consumers we serve (including credit conditions); our ability to execute on our Cypress 3.0 strategy and our margin improvement plan; potential volatility in our stock price; risks related to paying down our indebtedness and meeting the covenants set forth in our debt agreements; our efforts to retain and expand our customer base (which may be adversely affected if we were to raise prices) in the intensely competitive and rapidly evolving semiconductor industry; risks related to significant supply and demand volatility in semiconductor markets (including the challenges of forecasting demand, scheduling production, and making timely delivery on customer orders); risks related to our strategy of developing and maintaining a leading portfolio of programmable microcontroller, connectivity and memory products; risks related to our flexible manufacturing strategy (and the challenge of efficiently managing a smaller number of manufacturing facilities while increasing our reliance on third-party manufacturers); our reliance on distributors and resellers; risks related to our "take or pay" agreements with certain vendors; the risk of defects, errors, or security vulnerabilities in our products; risks related to the integrity of our information systems, including the possibility of cyber-attacks, business-activity disruption, and loss or corruption of sensitive data; changes in tax law and policy; risks related to our pending tax examinations; risks related to our tax incentive/holiday arrangements in Malaysia, the Philippines, and Thailand; potential lack of liquidity for certain strategic investments (including the challenge of disposing of businesses, product lines, or assets on favorable terms in a timely manner); risks related to our joint venture for NAND flash memory products; risks related to our restructuring activities; the failure or success of the privately-held companies in which we are invested; the challenges of effectively integrating companies and assets that we acquire; the possibility of impairment charges; the challenges of attracting and retaining key personnel; risks related to our reliance on stock-based compensation; possible changes to our dividend policy; risks related to our share repurchase authorization; the uncertain nature of business outlook guidance; risks related to industry consolidation and the challenge of competing effectively against a smaller number of stronger companies; the challenges of adequately protecting our intellectual property rights and risks of intellectual property litigation; the possibilities that activist stockholders could negatively affect our business and that our deferred tax assets could be negatively impacted by changes in our stockholder base; risks associated with international operations; the challenges and costs of complying with environmental, data privacy, health/safety, and other laws; risks related to "conflict minerals" reporting; the possibility of business disruptions due to natural disasters; risks arising from indemnification commitments to our officers and directors; our ability to manage our financial investments and interest rate and exchange rate exposure; and the uncertainty and expense of pending litigation matters. These and other factors are described in more detail in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018 (our "Annual Report"), which item is incorporated herein by reference; Part I, Item 3 (Quantitative and Qualitative Disclosures about Market Risk) in this Quarterly Report; and/or Part II, Item 1A (Risk Factors) in this Quarterly Report.

ITEM 1. FINANCIAL STATEMENTS

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



	March 31, 2019			December 30, 2018
ASSETS	(In thousands, except per-share amounts)
Current assets:
Cash and cash equivalents	$	285,119		$	285,720
Accounts receivable, net	266,374			324,274
Inventories	316,921			292,093
Assets held for sale	10,818			13,510
Other current assets	92,712			101,163
Total current assets	971,944			1,016,760
Property, plant and equipment, net	274,123			282,986
Operating lease right-of-use assets	45,860			—
Equity method investment	61,555			65,145
Intangible assets, net	438,702			490,590
Goodwill	1,373,750			1,373,750
Deferred tax assets	342,749			339,679
Other long-term assets	118,941			124,305
Total assets	$	3,627,624		$	3,693,215
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	181,220		$	210,715
Accrued compensation and employee benefits	46,966			61,994
Price adjustment and other revenue reserves	141,216			163,088
Dividend payable	40,134			39,748
Current portion of long-term debt	8,038			6,943
Other current liabilities	116,671			138,064
Total current liabilities	534,245			620,552
Deferred income taxes and other tax liabilities	53,041			53,469
Revolving credit facility and long-term portion of debt	851,279			874,235
Other long-term liabilities	69,286			27,920
Total liabilities	$	1,507,851		$	1,576,176
Commitments and contingencies (Note 12)	—			—
Equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; none issued and outstanding	—			—
Common stock, $0.01 par value, 650,000 and 650,000 shares authorized; 541,180 and 537,327 shares issued; 364,951 and 361,452 shares outstanding at March 31, 2019 and December 30, 2018, respectively	5,412			5,373
Additional paid-in-capital	5,630,673			5,636,099
Accumulated other comprehensive income (loss)	(4,624		)	1,829
Accumulated deficit	(1,137,154		)	(1,157,115		)
Stockholders’ equity before treasury stock	4,494,307			4,486,186
Less: Shares of common stock held in treasury, at cost; 176,229 and 175,875 shares at March 31, 2019 and December 30, 2018, respectively	(2,375,838		)	(2,370,452		)
Total Cypress stockholders’ equity	2,118,469			2,115,734
Non-controlling interest	1,304			1,305
Total equity	2,119,773			2,117,039
Total liabilities and equity	$	3,627,624		$	3,693,215

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands, except per-share amounts)
Revenues	$	539,004		$	582,241
Cost of revenues	336,595			369,849
Gross profit	202,409			212,392
Research and development	88,606			93,233
Selling, general and administrative	81,987			83,397
Total operating expenses	170,593			176,630
Operating income	31,816			35,762
Interest expense	(13,579		)	(18,859		)
Other income, net	4,335			705
Income before income taxes, share in net loss of equity method investee and non-controlling interest	22,572			17,608
Income tax provision	730			(5,057		)
Share in net loss of equity method investee	(3,590		)	(3,461		)
Net income	19,712			9,090
Net income (loss) attributable to non-controlling interest	2			(12		)
Net income attributable to Cypress	$	19,714		$	9,078
Net income per share attributable to Cypress:
Basic	$	0.05		$	0.03
Diluted	$	0.05		$	0.02
Shares used in net income per share calculation:
Basic	363,700			355,461
Diluted	373,131			370,592

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In Thousands)
Net income	$	19,712		$	9,090
Other comprehensive (loss) income:
Net unrecognized gain (loss) on defined benefit plan	(13		)	—
Net unrealized gain (loss) on cash flow hedges:
Net unrealized gain (loss) arising during the period	(5,938		)	4,464
Net (gain) loss reclassified into earnings for revenue hedges (effective portion)	(173		)	607
Net loss (gain) reclassified into earnings for expense hedges (effective portion)	85			(1,137		)
Net (gain) loss reclassified into earnings for interest rate hedges (effective portion)	(414		)	—
Net unrealized gain (loss) on cash flow hedges	(6,440		)	3,934
Total other comprehensive (loss) income	(6,453		)	3,934
Comprehensive income	13,259			13,024
Comprehensive income (loss) attributable to non-controlling interest	2			(12		)
Comprehensive income attributable to Cypress	$	13,261		$	13,012

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)



	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Treasury Stock				Non-controlling Interest			Total Equity
	Shares	Amount											Shares	Amount

Balances at December 30, 2018	537,327	$	5,373	$	5,636,099		$	1,829		$	(1,157,115	)	175,875	$	(2,370,452	)	$	1,305		$	2,117,039
Net income attributable to Cypress										19,714										19,714
Unrealized loss on defined benefit pension plan							(13		)	—										(13		)
Net unrealized gain on cash flow hedges and interest rate swaps							(6,440		)	247										(6,193		)
Issuance of common shares under employee stock plans, net	3,853	39		14,240			—													14,279
Extinguishment of 2% 2020 Exchangeable Notes																				—
Net settlement in stock													354	(5,386		)				(5,386		)
Dividend ($0.11 per share)				(40,134		)														(40,134		)
Stock-based compensation				20,468																20,468
Non-controlling interest																	(1		)	(1		)

Balances at March 31, 2019	541,180	$	5,412	$	5,630,673		$	(4,624	)	$	(1,137,154	)	176,229	$	(2,375,838	)	$	1,304		$	2,119,773

Balances at December 31, 2017	525,719	$	4,936	$	5,659,612		$	(1,362	)	$	(1,511,706	)	173,499	$	(2,334,944	)	$	1,056		$	1,817,592
Net income attributable to Cypress	—	—		—			—			9,078			—	—			—			9,078
Changes in employee deferred compensation plan assets	—	—		—			—			—			—	—			—			—
Net unrealized gain on cash flow hedges and interest rate swaps	—	—		—			3,934			—			—	—			—			3,934
Issuance of common shares under employee stock plans, net	4,644	19		20,524			—			—			4	—			—			20,543
Extinguishment of 2% 2020 Exchangeable Notes	—	—		(25,696		)	—			—			—	—			—			(25,696		)
Issuance of common shares upon conversion of 2% 2020 Exchangeable Notes	1,402	14		25,152			—			—			—	—			—			25,166
Dividend ($0.11 per share)	—	—		(39,401		)	—			—			—	—			—			(39,401		)
Stock-based compensation	—	—		17,577			—			—			—	—			—			17,577
Non-controlling interest	—	—		—			—			—			—	—			12			12

Balances at April 1, 2018	531,765	$	4,969	$	5,657,767		$	2,572		$	(1,502,628	)	173,503	$	(2,334,944	)	$	1,068		$	1,828,805

CYPRESS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
Cash flows from operating activities:
Net income	$	19,712		$	9,090
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	20,395			18,458
Depreciation and amortization	71,400			71,450
Loss on assets held for sale	3,532			—
Loss / (Gain) on disposal or impairment of property and equipment	(234		)	5,337
Share in net loss of equity method investee	3,590			3,461
Accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt	4,767			8,423
Restructuring and other adjustments	691			3,911
Accounts receivable	57,900			(97,312		)
Operating lease right-of-use assets	(48,564		)	—
Inventories	(25,890		)	(4,203		)
Other current and long-term assets	3,503			(6,252		)
Price adjustment and other revenue reserves	(21,871		)	41,037
Accounts payable and other liabilities	(30,375		)	(21,722		)
Asset held for sale	2,692			—
Net cash provided by operating activities	61,248			31,678
Cash flows from investing activities:
Distributions, net of contributions from deferred compensation plan	6,098			4,743
Acquisition of property, plant and equipment, net	(10,534		)	(17,267		)
Other investing	60			(1,649		)
Net cash used in investing activities	(4,376		)	(14,173		)
Cash flows from financing activities:
Borrowings under senior secured revolving credit facility	—			60,000
Repayment of revolving credit facility				(87,000		)
Repayment of term loans	(26,263		)	(6,826		)
Tax withholdings related to net share settlements of restricted stock units	(5,386		)	—
Finance lease payment for principal portion	(388		)	—
Payment of cash dividends	(39,748		)	(38,741		)
Proceeds from employee stock-based awards	14,312			20,543
Payment for extinguishment of 2% 2020 Spansion Exchangeable Notes	—			(10,000		)
Financing costs related to debt	—			(325		)
Net cash used in financing activities	(57,473		)	(62,349		)
Net decrease in cash and cash equivalents	(601		)	(44,844		)
Cash and cash equivalents, beginning of period	285,720			151,596
Cash and cash equivalents, end of period	$	285,119		$	106,752

Supplemental Cash Flows Disclosures:
Unpaid purchases of property, plant and equipment	$	3,784		$	20,159

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYPRESS SEMICONDUCTOR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Years

Cypress Semiconductor Corporation (together with its consolidated subsidiaries, "Cypress" or the "Company") reports on a fiscal-year basis. The Company ends its quarters on the Sunday closest to the end of the applicable calendar quarter, except in a 53-week fiscal year, in which case the additional week falls into the fourth quarter of that fiscal year. Fiscal years 2019 and 2018 each contain(ed) 52 weeks. The first quarter of fiscal 2019 ended on March 31, 2019 and the first quarter of fiscal 2018 ended on April 1, 2018 .

Basis of Presentation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Cypress Semiconductor Corporation and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments of a normal, recurring nature, which are necessary to state fairly the financial information included therein. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Cypress' Annual Report on Form 10-K for the fiscal year ended December 30, 2018 . The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Results reported in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full fiscal year.

Summary of Significant Accounting Policies

Leases

The Company applies the guidance in Accounting Standards Codification ("ASC") Topic 842 to individual leases of assets. When the Company receives substantially all of the economic benefits from and directs the use of specified property, plant and equipment, transactions give rise to leases.

The Company’s classes of assets include real estate leases, equipment leases, and vehicles leases.

Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Finance leases are included in property and equipment, current portion of long-term debt, revolving credit facility and long-term portion of debt in our consolidated balance sheets.

The Company has elected the practical expedient within ASC Topic 842 to not separate lease and non-lease components within lease transactions for all classes of assets. Additionally, the Company has elected the short-term lease exception for all classes of assets, does not apply the recognition requirements for leases of 12 months or less, and recognizes lease payments for short-term leases as expense either straight-line over the lease term or as incurred depending on whether the lease payments are fixed or variable. These elections are applied consistently for all leases.

The Company subleases certain portions of buildings and land subject to operating leases. The terms and conditions of the subleases are commensurate with the terms and conditions within the original operating leases. The term of the subleases range from one to eight years, payments are fixed within the contracts, and there are no residual value guarantees or other restrictions or covenants in the leases.

When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and ROU assets. The incremental borrowing rate used by the Company was based on baseline rates and adjusted by the credit spreads

commensurate with the Company’s secured borrowing rate, over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter will be used.

Other significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 30, 2018 .

Recent Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued Accounting Standard Update ("ASU") No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." The standard modifies the disclosure requirements on fair value measurements in Topic 820 by removing the requirement to disclose the reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The standard expands the disclosure requirements for Level 3 fair value measurement, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." The standard is designed to improve the effectiveness of disclosures by removing and adding disclosures related to defined benefit plans. The update is effective for fiscal years ending after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, "Leases (ASC Topic 842)". The standard introduces new requirements to increase transparency and comparability among organizations for leasing transactions for both lessees and lessors. ASU No. 2016-02 requires a lessee to record a right-of-use asset and a lease liability for all leases with terms longer than 12 months. These leases will be either finance or operating, with classification affecting the pattern of expense recognition.

In July 2018, the Board issued ASU 2018-11, which provided an alternative modified retrospective transition method. Under this method, the cumulative-effect adjustment to the opening balance of retained earnings is recognized on the date of adoption (December 31, 2018). The Company adopted ASC Topic 842 , as of December 31, 2018 and applied the alternative modified retrospective transition method requiring application of the new guidance to all leases existing at, or entered into on or after, the date of adoption, i.e. December 31, 2018.

As part of applying the transition method, the Company has elected to apply the package of transition practical expedients within the new guidance. As required by the new standard, these expedients have been elected as a package and are consistently applied across the Company’s lease portfolio. Given this election, the Company need not reassess:


•	whether any expired or existing contracts are or contain leases


•	the lease classification for any expired or existing leases


•	treatment of initial direct costs relating to any existing leases

As a result of adoption of this standard, and election of the transition practical expedients, the Company recognized ROU assets and lease liabilities for those leases classified as operating leases under ASC Topic 840 that continued to be classified as operating leases under ASC Topic 842 at the date of initial application. Leases classified as a capital lease under ASC 840 are classified as ‘Finance lease’ under this new standard.

In applying the alternative modified retrospective transition method, the Company measured lease liabilities at the present value of the sum of remaining minimum rental payments (as defined under ASC Topic 840). The present value of lease liabilities has been measured using the Company’s incremental borrowing rates as of December 31, 2018 (the date of initial application). Additionally, ROU assets for these operating leases have been measured as the initial measurement of applicable lease liabilities adjusted for any unamortized initial direct costs, prepaid/accrued rent, unamortized lease incentives, and any ASC Topic 420 liabilities.

The adoption of this new standard at December 31, 2018, and the application of the modified retrospective transition approach resulted in the following changes:

(1) assets increased by $54.3 million, primarily representing the recognition of ROU assets for operating leases and finance leases partially offset by derecognition of assets for capital leases previously designated under ASC Topic 840; and

(2) liabilities increased by $57.2 million, primarily representing the recognition of lease liabilities for operating leases and finance leases partially offset by derecognition of liabilities for capital leases previously designated under ASC Topic 840.

Other Recently Adopted Pronouncements:

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The amendments in ASU 2017-12 are intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The Company adopted this guidance in the first quarter of fiscal 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in ASU 2018-02 are intended to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company adopted this guidance in the first quarter of fiscal 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures.

In June 2018, the FASB issued ASU No. 2018-07, "Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting." The standard expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. Under the amended guidance, equity-classified share-based payment awards issued to nonemployees will be measured at grant date fair value. Upon transition, the entity is required to remeasure these nonemployee awards at fair value as of the adoption date. The Company adopted this guidance in the first quarter of fiscal 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures.

NOTE 2. REVENUE

The following table presents the Company's revenue disaggregated by segment, end market, revenue type and geographical locations:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Microcontroller and Connectivity Division ("MCD")	$	310,389	$	336,710
Memory Products Division ("MPD")	228,615		245,531
Total revenues	$	539,004	$	582,241



	Three Months Ended
	March 31, 2019	April 1, 2018
	(In thousands)
IoT	153,724	185,618
Automotive	197,814	200,000
Legacy	187,466	196,623
Total revenues	539,004	582,241



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Product revenue	$	528,558	$	571,430
Non-product revenue (1)	10,446		10,811
Total revenue	$	539,004	$	582,241

(1) Non-product revenue primarily includes royalty, non-recurring engineering services revenue, and revenue from intellectual property arrangements.



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Products/Services transferred at a point in time	$	537,165	$	578,235
Products/Services transferred over time	1,839		4,006
Total revenue	$	539,004	$	582,241



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
United States	$	64,320	$	73,662
China, Taiwan, and Hong Kong	199,907		215,822
Japan	117,462		135,354
Europe	85,328		87,324
Rest of the World	71,987		70,079
Total revenue	$	539,004	$	582,241

NOTE 3. BALANCE SHEET COMPONENTS

Accounts Receivable, Net



	As of
	March 31, 2019			December 30, 2018
	(In thousands)
Accounts receivable, gross	$	267,276		$	325,178
Allowance for doubtful accounts receivable	(902		)	(904		)
Total accounts receivable, net	$	266,374		$	324,274

Inventories



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
Raw materials	$	10,329	$	10,004
Work-in-process	245,729		215,820
Finished goods	60,863		66,269
Total inventories	$	316,921	$	292,093

Other Current Assets



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
Prepaid tooling	$	25,422	$	25,891
Advances to suppliers	10,188		12,058
Prepaid royalty and licenses	11,813		14,863
Derivative assets	2,448		3,492
Value added tax receivable	8,466		7,652
Prepaid expenses	19,355		17,814
Withholding tax receivable and tax advance	1,857		4,236
Other current assets	13,163		15,157
Total other current assets	$	92,712	$	101,163

Other Long-term Assets



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
Employee deferred compensation plan assets	$	43,732	$	44,397
Long-term licenses	5,324		4,495
Advances to suppliers	10,982		11,471
Deposits	9,469		9,441
Pension plan assets	1,831		1,765
Derivative assets	—		1,419
Prepaid tooling and other non-current assets	47,603		51,317
Total other long-term assets	$	118,941	$	124,305

Other Current Liabilities



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
Employee deferred compensation plan liability	$	43,752	$	44,834
Restructuring accrual (See Note 8)	111		14,536
Derivative liability	2,017		1,621
Accrued expenses	39,423		46,592
Accrued interest	3,783		9,440
Customer advances	44		5,296
Operating lease liability	11,285		—
Other current liabilities	16,256		15,745
Total other current liabilities	$	116,671	$	138,064

Other Long-term Liabilities



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
Pension and other employee-related liabilities	$	14,643	$	14,083
Asset retirement obligation	5,876		5,916
Derivative liability	7,795		4,051
Operating lease liability	35,886		—
Other long-term liabilities	5,086		3,870
Total other long-term liabilities	$	69,286	$	27,920

NOTE 4. INTANGIBLE ASSETS

The following table presents details of the Company's intangible assets:



	As of March 31, 2019							As of December 30, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(In thousands)
Developed technology and other intangible assets
Acquisition-related intangible assets	$	1,188,521	$	(754,075	)	$	434,446	$	1,188,521	$	(702,883	)	$	485,638
Non-acquisition related intangible assets	19,884		(15,628		)	4,256		19,884		(14,932		)	4,952
Total intangible assets	$	1,208,405	$	(769,703	)	$	438,702	$	1,208,405	$	(717,815	)	$	490,590

The following table summarizes the amortization expense by line item recorded in the Condensed Consolidated Statements of Operations:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Cost of revenues	$	46,881	$	48,102
Research and development	697		1,261
Selling, general and administrative	4,310		4,948
Total amortization expense	$	51,888	$	54,311

The estimated future amortization expense related to developed technology and other intangible assets as of March 31, 2019 is as follows:



	(In thousands)
2019 (remaining nine months)	155,519
2020	153,689
2021	58,489
2022	33,001
2023	28,334
2024 and thereafter	9,670
Total future amortization expense	$	438,702

NOTE 5. ASSETS HELD FOR SALE

Sale of NAND business

On April 1, 2019, the Company closed the transfer of its NAND business to a newly-formed joint venture between the Company and SK hynix system ic ("SKHS"). The joint venture entity will be called SkyHigh Memory Limited ("SkyHigh") and its headquarter will be in Hong Kong, China. SkyHigh will be 60 -percent-owned by SKHS and 40 -percent-owned by Cypress. The Company paid $2.4 million in cash as its capital contribution in SkyHigh upon close of the transaction. Additionally, Cypress will provide certain transition and back-end manufacturing services to SkyHigh.

In the fourth quarter of fiscal 2018, the Company allocated $65.7 million of goodwill previously recorded in the MPD segment to the NAND business being divested. The allocation was based on the relative estimated enterprise value of the NAND business and that of the MPD business. The intangible assets attributable to the NAND business acquired as part of a previous acquisition were $10.9 million . Based on an analysis carried out in the fourth quarter of fiscal 2018, the Company recorded an impairment charge of $76.6 million which related to the goodwill and intangible assets allocated to the NAND business and classified as held-for-sale. During the first quarter of the fiscal 2019, the Company recognized an incremental loss of $3.5 million related to adjustments in the carrying value of certain assets and estimated costs of certain transition services.

As of March 31, 2019 and December 30, 2018 inventories related to the NAND business in the amount of $10.8 million and $13.5 million , respectively, were classified as held-for-sale assets as SkyHigh has agreed to purchase such inventories. SkyHigh will pay cash consideration for these inventories to the Company of a fixed amount and a contingent amount to be determined based on the profit on sales of such inventories generated by SkyHigh, if any.

NOTE 6. EQUITY METHOD INVESTMENTS

Privately-held equity investments in entities the Company does not control are accounted for under the equity method of accounting if the Company has an ownership interest of 20% or greater or if it has the ability to exercise significant influence over the operations of such companies.

Deca Technologies Inc. ("Deca")

Deca continues to be in the process of developing and testing a fan-out wafer level packaging technology. Deca’s estimated enterprise value is sensitive to its ability to achieve key product development and testing milestones. Additional delays or failure by Deca to complete these milestones - similar to those previously experienced by Deca in fiscal 2018 - may have a significant adverse impact on Deca’s estimated enterprise value. In addition, Deca’s current and future revenues are dependent on a small number of significant customers. The loss of, material delay in placing orders by, or significant decrease in demand from any of its key customers would have a material adverse effect on Deca’s business, results of operations and financial condition. Deca may need to secure additional funding to support its growth and cash needs. Failure to secure such funding, if needed, will impact its ability to continue as a going concern.

Deca management is currently working with its significant customers to secure their long-term commitment to use Deca’s technology given the current downturn in the semiconductor industry and is in the process of evaluating certain alternative strategic options.

During the fourth quarter of fiscal 2018, the Company determined that its investment in Deca was other-than temporarily impaired and recognized a charge of $41.5 million in order to write down the carrying amount of the investment in Deca to the estimated fair value as of the end of fiscal 2018. Given the factors described above, there continues to be a substantial risk that the carrying value of our investment in Deca may become impaired in the future. If Deca is unable to (a) secure sufficient orders from its existing significant customers or other new customers, (b) raise sufficient funding, if needed, for continuing its operations, (c) consummate a strategic transaction that allows realization of its economic value, Cypress will be required to partially or fully impair the carrying value of its investment in Deca. The Company’s carrying value in Deca was $61.6 million and $65.1 million as of March 31, 2019 and December 30, 2018, respectively.

The Company held 52.5% of Deca's outstanding voting shares as of March 31, 2019 and December 30, 2018. The Company's investment in Deca is accounted for as an equity method investment.

The below table presents the changes in carrying value of the equity method investment related to Deca.



	As of March 31, 2019
	Deca Technologies Inc.
	(In thousands)
Carrying value as of December 30, 2018	$	65,145
Share in net loss of equity method investee	(3,590		)
Carrying value as of March 31, 2019	$	61,555

The following table presents summarized aggregate financial information derived from the respective consolidated financial statements of Deca for the three months ended March 31, 2019 and April 1, 2018, respectively.



	March 31, 2019			April 1, 2018
	(In thousands)
Operating data:
Revenue	$	4,621		$	4,149
Gross loss	(1,926		)	(2,322		)
Loss from operations	(6,462		)	(6,749		)
Net loss	(6,843		)	(6,640		)
Net loss attributable to Cypress	$	(3,590	)	$	(3,461	)

The following table represents the assets and liabilities held by Deca as of March 31, 2019 and December 30, 2018.



	March 31, 2019		December 30, 2018
	(In thousands)
Balance Sheet Data:
Current assets	$	19,727	$	25,865
Long-term assets	49,297		51,176
Current liabilities	8,400		9,635
Long-term liabilities	$	904	$	877

NOTE 7. FAIR VALUE MEASUREMENTS

Assets/Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the fair value hierarchy for the Company's financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 30, 2018 :



	March 31, 2019						December 30, 2018
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In thousands)
Financial Assets
Cash equivalents:
Money market funds	$	188,613	$	—	$	188,613	$	171,777	$	—	$	171,777
Other current assets:
Certificates of deposit	—		870		870		—		870		870
Total cash equivalents other current assets	188,613		870		189,483		171,777		870		172,647
Employee deferred compensation plan assets	16,375		27,357		43,732		18,648		25,749		44,397
Interest rate swap	—		802		802		—		2,548		2,548
Foreign exchange forward contracts	—		1,646		1,646		—		2,362		2,362
Total financial assets	$	204,988	$	30,675	$	235,663	$	190,425	$	31,529	$	221,954
Financial Liabilities
Foreign exchange forward contracts	—		2,017		2,017		—		1,621		1,621
Interest rate swap	—		7,795		7,795		—		4,051		4,051
Total financial liabilities	$	—	$	9,812	$	9,812	$	—	$	5,672	$	5,672

The Company did not have any material assets or liabilities measured at fair value on a recurring basis using Level 3 inputs as of March 31, 2019 and December 30, 2018 .

Valuation Techniques:

There have been no changes to the valuation techniques used to measure the fair value of the Company's assets and liabilities. For a description of the valuation techniques, refer to Note 8 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 30, 2018 .

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of the Company’s assets, including intangible assets, goodwill and assets held for sale, are measured at fair value on a nonrecurring basis using Level 3 inputs if impairment is indicated.

Fair Value of Long-Term Debt

As of March 31, 2019 , the carrying value of the Company's senior secured credit facility was $442.5 million (See Note 10). The carrying value of the Company's senior secured credit facility approximates its fair value since it bears an interest rate that is comparable to rates on similar credit facilities and is determined using Level 2 inputs.

The Company's 2% 2020 Spansion Exchangeable Notes assumed as part of the Company's merger with Spansion Inc. ("Spansion") are traded in the secondary market for debt instruments and are categorized as Level 2 inputs. The principal and the estimated fair value of the principal of these notes as of March 31, 2019 were $12.0 million and $37.6 million , respectively. See Note 10 for further details.

The Company’s 4.5% 2022 Senior Exchangeable Notes are traded in the secondary market for debt instruments and the fair value is determined using Level 2 inputs. The principal and the estimated fair value of the principal of these notes as of March 31, 2019 were $287.5 million and $363.3 million , respectively. See Note 10 for further details.

The Company's 2% 2023 Exchangeable Notes are traded in the secondary market and the fair value is determined using Level 2 inputs. The principal and the estimated fair value of the principal of these notes as of March 31, 2019 were $150.0 million and $152.7 million , respectively. See Note 10 for further details.

NOTE 8. RESTRUCTURING

Since 2016, the Company has launched certain long-term strategic corporate transformation initiatives which required restructuring activities to streamline internal processes and redeploy personnel and resources to target markets as discussed below:

2018 Restructuring Plan

In fiscal 2018, the Company began implementation of a reduction in workforce (the "2018 Plan") which resulted in the elimination of approximately 130 positions across various functions. The Company anticipates that the remaining restructuring accrual balance of $0.1 million will be paid out in cash through the second quarter of fiscal 2019.

2017 Restructuring Plan

In December 2017, the Company began implementation of a reduction in workforce (the "2017 Plan") which resulted in the elimination of approximately 80 positions worldwide across various functions. The restructuring accrual has been fully settled in the first quarter of fiscal 2019.

Spansion Integration-Related Restructuring Plan ("Spansion Integration Plan")

In March 2015, the Company began implementation of cost reduction and restructuring activities in connection with its merger with Spansion. The restructuring charge of $90.1 million recorded for the fiscal year ended January 3, 2016 primarily consists of severance costs, lease termination costs and impairment of property, plant and equipment.

As part of this restructuring plan, the Company exited an office space leased by Spansion and recorded a reserve related to excess lease obligation for the building. During the fourth quarter of fiscal 2018, the Company signed a termination agreement with the building’s owner. The lease termination cost was approximately $19.0 million . The Company paid $4.7 million during the fiscal 2018 and paid the remaining $14.3 million during the first quarter of fiscal 2019.

Summary of Restructuring Costs

The following table summarizes the restructuring charges recorded in the Consolidated Statements of Operations:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Personnel costs	$	7	$	4,096
Lease termination costs	89		—
Total restructuring costs	$	96	$	4,096

The following table summarizes the restructuring costs by line item recorded in the Condensed Consolidated Statements of Operations:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Cost of goods sold	$	—	$	1,887
Research and development	—		293
Selling, general and administrative	96		1,916
Total restructuring costs	$	96	$	4,096

Roll-Forward of the Restructuring Reserves

Restructuring activity under the Company's restructuring plans was as follows:



	(In thousands)
	2018 Plan			2017 Plan			Spansion Integration Plan			Total
Accrued restructuring balance as of December 30, 2018	$	248		$	30		$	14,258		$	14,536
Provision	7			—			89			96
Cash payments and other adjustments	(144		)	(30		)	(14,347		)	(14,521		)
Accrued restructuring balance as of March 31, 2019	$	111		$	—		$	—		$	111
Current portion of the restructuring accrual	$	111		$	—		$	—		$	111

NOTE 9. EMPLOYEE STOCK PLANS AND STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expense by line item recorded in the Condensed Consolidated Statements of Operations:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Cost of revenues	$	2,684	$	3,584
Research and development	6,680		6,713
Selling, general and administrative	11,031		8,161
Total stock-based compensation expense	$	20,395	$	18,458

As of March 31, 2019 and December 30, 2018 , stock-based compensation capitalized in inventory totaled $2.6 million and $2.5 million , respectively.

The following table summarizes the stock-based compensation expense by type of awards:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Stock options	$	—	$	96
Restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs")	18,638		17,249
Employee Stock Purchase Plan (“ESPP”)	1,757		1,113
Total stock-based compensation expense	$	20,395	$	18,458

The following table summarizes the unrecognized stock-based compensation balance, by type of award as of March 31, 2019:



			Weighted- Average Amortization Period
	(In thousands)		(In years)
RSUs and PSUs	$	128,091	1.56
ESPP	1,748		0.24
Total unrecognized stock-based compensation expense	$	129,839	1.54

Equity Incentive Program

As of March 31, 2019 , approximately 29.8 million stock options, or 16.0 million RSUs and PSUs, were available for grant as stock-based awards under the 2013 Stock Plan, the 2010 Equity Incentive Award Plan and the 2012 Incentive Award Plan. As of March 31, 2019 , there were 7.9 million shares of stock available for issuance under the ESPP plan.

Stock Options

The following table summarizes the Company's stock option activities:



	Shares		Weighted- Average Exercise Price Per Share		Weighted Average Remaining Contractual term	Aggregate Intrinsic Value
	(In thousands, except per-share amounts)				(In years)	($ in millions)
Options outstanding as of December 30, 2018	2,639		$	11.75
Exercised	(379	)	$	8.14
Forfeited or expired	(66	)	$	21.59
Options outstanding as of March 31, 2019	2,194		$	12.07	1.94	$	7.3
Options exercisable as of March 31, 2019	2,182		$	12.08	1.93	$	7.2

No options were granted during the three months ended March 31, 2019 and April 1, 2018.

RSUs and PSUs

The following table summarizes the Company's RSU and PSU activities:



	Shares		Weighted- Average Grant Date Fair Value Per Share
	(In thousands, except per-share amounts)
Balance as of December 30, 2018	10,175		$	14.42
Granted	6,026		15.08
Released	(2,437	)	14.38
Forfeited	(172	)	12.80
Balance as of March 31, 2019	13,592		$	14.64

2019 Long-Term Incentive Program

During the first quarter of 2019, the Compensation Committee of the Company's Board of Directors approved the issuance of service-based and performance-based restricted stock units under the Company's Long-Term Incentive Program ("LTIP") to certain employees. The performance goals for the performance-based 2019 LTIP grants relate to non-GAAP operating margin and achievement of our customer experience plan milestones for fiscal 2019 and include a multiplier based on our total stockholder return relative to an index.

Dividend

On February 19, 2019, the Company's Board of Directors approved a cash dividend of $0.11 per share payable to holders of record of its common stock at the close of the business day on March 28, 2019. This cash dividend was paid on April 18, 2019 and totaled $40.1 million which was accrued for and shown as "Dividends payable" on the Condensed Consolidated Balance Sheets as of March 31, 2019.

NOTE 10. DEBT

Total debt, including finance lease obligations, is comprised of the following as of March 31, 2019 and December 30, 2018:



	March 31, 2019		December 30, 2018
	(In thousands)
Current portion of long-term debt
Senior Secured Credit Facility:
Term Loan B	$	6,314	$	5,051
Finance lease obligations	1,724		1,892
Current portion of long-term debt	8,038		6,943
Revolving credit facility and long-term portion of debt
Senior Secured Credit Facility:
Revolving Credit Facility	—		—
Term Loan B	436,221		462,868
2% 2020 Spansion Exchangeable Notes	11,520		11,438
4.5% 2022 Senior Exchangeable Notes	259,283		256,726
2% 2023 Exchangeable Notes	135,968		135,057
Finance lease obligations	8,287		8,146
Credit facility, finance lease obligations, and long-term debt	851,279		874,235
Total debt	$	859,317	$	881,178

As of March 31, 2019 , the Company was in compliance with all of the financial covenants under all of its debt facilities.

Senior Secured Credit Facility: Revolving Credit Facility and Term Loan B

On March 18, 2019, the Company repaid $25.0 million of the outstanding Term Loan B principal in addition to the scheduled quarterly principal payment of $1.3 million .

Interest expense related to the contractual interest expense, the amortization of the debt issuance costs and the amortization of debt discounts was $6.9 million and $11.3 million during the fiscal quarter ended March 31, 2019 and April 1, 2018, respectively.

As of March 31, 2019 and December 30, 2018, $450.0 million and $476.3 million aggregate principal amount of loans, which is related to Term Loan B, is outstanding under the Credit Facility, respectively.

2% 2020 Spansion Exchangeable Notes

Pursuant to the merger with Spansion, Cypress assumed Spansion's 2% 2020 Spansion Exchangeable Notes (the "Spansion Notes"). The Spansion Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company. The Spansion Notes will mature on September 1, 2020, unless earlier repurchased or converted, and bear interest of 2% per year payable semi-annually in arrears on March 1 and September 1. The Spansion Notes may be due and payable immediately upon certain events of default.

The Spansion Notes consisted of the following as of March 31, 2019 and December 30, 2018 (in thousands):



	March 31, 2019			December 30, 2018
Equity component	$	22,971		$	22,971
Liability component:
Principal	11,990			11,990
Less debt discount and debt issuance costs, net	(470		)	(552		)
Net carrying amount	$	11,520		$	11,438

The following table summarizes the components of the total interest expenses on the Spansion Notes recognized during the three months ended March 31, 2019 and April 1, 2018 (in thousands):



	March 31, 2019		April 1, 2018
Contractual interest expense at 2% per annum	$	61	$	43
Accretion of debt discount	82		59
Total	$	143	$	102

4.5% 2022 Exchangeable Notes

On June 23, 2016, the Company issued, at face value, $287.5 million of Senior Exchangeable Notes due in 2022 (the "2022 Notes") in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended.

The 2022 Notes consisted of the following as of March 31, 2019 and December 30, 2018 (in thousands):



	March 31, 2019			December 30, 2018
Equity component	$	47,686		$	47,686
Liability component:
Principal	287,500			287,500
Less debt discount and debt issuance costs, net	(28,217		)	(30,774		)
Net carrying amount	$	259,283		$	256,726

The following table includes total interest expense related to the 4.5% 2022 Senior Exchangeable Notes recognized during the first quarter ended March 31, 2019 and April 1, 2018, respectively (in thousands):



	March 31, 2019		April 1, 2018
Contractual interest expense	$	3,270	$	3,234
Amortization of debt issuance costs	324		320
Accretion of debt discount	2,233		2,209
Total	$	5,827	$	5,763

Capped Calls

In connection with the issuance of the 2022 Notes, the Company entered into capped call transactions with certain bank counterparties to reduce the risk of potential dilution of the Company’s common stock upon the exchange of the 2022 Notes. The capped call transactions have an initial strike price of approximately $13.49 and an initial cap price of approximately $15.27 , in each case, subject to adjustment. T he capped calls expire in January 2022.

2% 2023 Exchangeable Notes

On November 6, 2017, the Company, issued at face value, $150.0 million of Senior Exchangeable Notes due in 2023 (the "2023 Notes") in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended.

The 2% 2023 Exchangeable Notes consisted of the following as of March 31, 2019 and December 30, 2018 (in thousands):



	March 31, 2019			December 30, 2018
Equity component	$	15,028		$	15,028
Liability component:
Principal	150,000			150,000
Less debt discount and debt issuance costs, net	(14,032		)	(14,943		)
Net carrying amount	$	135,968		$	135,057

The following table includes total interest expense related to the 2% 2023 Exchangeable Notes recognized during the first quarter ended March 31, 2019 and April 1, 2018 (in thousands):



	March 31, 2019		April 1, 2018
Contractual interest expense	$	748	$	748
Amortization of debt issuance costs	175		175
Accretion of debt discount	736		735
Total	$	1,659	$	1,658

Future Debt Payments

The future scheduled principal payments for the Company's outstanding debt as of March 31, 2019 , were as follows (in thousands):



Fiscal Year	Total
2019 (remaining nine months)	$	3,788
2020	17,041
2021	441,209
2022	287,500
2023	150,000
Thereafter	—
Total (excluding finance leases)	$	899,538
Finance lease liabilities	10,011
Total debt	$	909,549

NOTE 11. LEASES

The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. The Company's leases have remaining lease terms of 1 year to 8 years , some of which include options to extend the leases for up to 5 years , and some of which include options to terminate the leases within the lease terms.

Supplemental balance sheet information related to leases was as follows (in thousands):



	As of
	March 31, 2019
Finance Leases
Property and equipment, at cost	$	9,108
Accumulated depreciation	(636		)
Property and equipment, net	$	8,472

Current portion of long-term debt	$	1,724
Revolving credit facility and long-term portion of debt	8,287
Total finance lease liabilities	$	10,011

Operating Leases
Operating lease right-of-use assets	$	45,860
Other current liabilities	11,285
Other long-term liabilities	35,886
Total operating lease liabilities	$	47,171

The component of lease costs was as follows (in thousands):



	March 31, 2019
Lease cost
Finance lease cost	$	410
Amortization of right-of-use assets	413
Interest on lease liabilities	102
Operating lease cost	3,370
Short term lease cost	338
Variable lease cost	559
Total lease cost	$	5,192

Other information related to leases were as follows (in thousands):



	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	101
Operating cash flows from operating leases	$	3,402
Financing cash flows from finance leases	$	388
Right-of-use assets obtained in exchange for new finance lease liabilities	—
Right-of-use assets obtained in exchange for new operating lease liabilities	—
Weighted-average remaining lease term:
Finance leases	5.68
Operating leases	5.72
Weighted-average discount rate:
Finance leases	3.97		%
Operating leases	6.91		%

As of March 31, 2019 , the maturities of the Company's operating lease liabilities are as follows:



	Operating lease liabilities		Finance lease liabilities
Fiscal Year	(In thousands)
2019 (remaining nine months)	$	10,512	$	1,578
2020	13,895		2,062
2021	7,262		2,083
2022	5,699		2,085
2023	4,537		1,963
2024 and thereafter	17,977		1,384
Total undiscounted future cash flows	$	59,882	$	11,155
Less: Imputed interest	$	12,711	$	1,144
Present value of undiscounted future cash flows	$	47,171	$	10,011

Presentation on statement of financial position
Current	$	11,285	$	1,724
Non-current	$	35,886	$	8,287

ASC 840 Disclosures

As of December 30, 2018, future minimum lease payments under non-cancelable operating leases were as follows:



Fiscal Year	(In thousands)
2019	$	29,315
2020	12,860
2021	8,176
2022	6,241
2023	2,476
Thereafter	3,808
Total	$	62,876

NOTE 12. COMMITMENTS AND CONTINGENCIES

Product Warranties

The Company generally warrants its products against defects in materials and workmanship for a period of one year , and that product warranty is generally limited to a refund of the original purchase price of the product or a replacement part. The Company estimates its warranty costs based upon its historical warranty claim experience. Warranty returns are recorded as an allowance for sales returns. The allowance for sales returns is reviewed quarterly to verify that it reflects the remaining obligations based on the anticipated returns over the balance of the obligation period.

The following table presents the Company's warranty reserve activities:



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
Beginning balance	$	3,982		$	4,445
Settlements made	(1,754		)	(1,948		)
Provisions	1,327			1,948
Ending balance	$	3,555		$	4,445

Contractual Obligations

The Company has entered into agreements with certain vendors that include "take or pay" terms. Take or pay terms obligate the Company to purchase a minimum required amount of materials or services or make specified payments in lieu of such purchase. The Company may not be able to consume minimum commitments under these take or pay terms, requiring payments to vendors, which may have a material adverse impact on the Company’s earnings.

Litigation and Asserted Claims

The Company is currently involved in various legal proceedings, claims, and disputes arising in the ordinary course of business, including intellectual property claims and other matters.

For many legal matters, particularly those in early stages, the Company cannot reasonably estimate the possible loss (or range of loss), if any. The Company records an accrual for legal matters at the time or times it determines that a loss is both probable and reasonably estimable. Amounts accrued as of March 31, 2019 were not material. Regarding matters for which no accrual has been made (including the potential for losses in excess of amounts accrued), the Company currently believes, based on its own investigations, that any losses (or ranges of losses) that are reasonably possible and estimable will not, in the aggregate, have a material adverse effect on its financial position, results of operations, or cash flows. However, the ultimate outcome of legal proceedings involves judgments, estimates, and inherent uncertainties and cannot be predicted with certainty. Should the ultimate outcome of any legal matter be unfavorable, the Company's business, financial condition, results of operations, or cash flows could be materially and adversely affected. The Company may also incur substantial legal fees, which are expensed as incurred, in defending against legal claims.

Indemnification Obligations

The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify other parties to such agreements with respect to certain matters. Typically, these obligations arise in the context of contracts that the Company has entered into, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants or terms and conditions related to such matters as the sale and/or delivery of its products, title to assets sold, certain intellectual property claims, defective products, specified environmental matters and certain income taxes. With respect to the sale of a manufacturing facility or subsidiary business, such indemnification may also cover tax matters and the Company's management of the facility or business prior to the sale. In the foregoing circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party’s claims and vigorously defend itself and the other party against related third-party claims. Further, the Company's obligations under these agreements may be limited in terms of time, amount or the scope of its responsibility and in some instances, the Company may have recourse against third parties for certain payments made under these agreements.

It is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of the Company's obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments the Company has made under these agreements have not had a material effect on the Company’s business, financial

condition or results of operations. As of March 31, 2019, management believes that if the Company were to incur a loss (in excess of amounts already recognized) in any of these matters, such loss would not have a material effect on its business, financial condition, cash flows or results of operations, though there can be no assurance in this regard.

NOTE 13. FOREIGN CURRENCY AND INTEREST RATE DERIVATIVES

The Company enters into multiple foreign exchange forward contracts to hedge certain foreign currency risk resulting from fluctuations in Japanese yen (¥) and Euro (€) exchange rates. In addition, the Company entered into fixed-for-interest rate forward swap agreements and has designated these swaps as hedging instruments. The Company does not enter into derivative securities for speculative purposes. The Company’s hedging policy is designed to mitigate the impact of foreign currency exchange rate fluctuations on its operating results. Some foreign currency forward contracts are considered to be economic hedges that were not designated as hedging instruments while others were designated as cash flow hedges. Whether designated or undesignated as cash flow hedges or not, these forward contracts protect the Company against the variability of forecasted foreign currency cash flows resulting from revenues, expenses and net asset or liability positions designated in currencies other than the U.S. dollar. The maximum original duration of any contract allowable under the Company’s hedging policy is thirteen months for foreign currency hedging contracts.

Cash Flow Hedges

The Company enters into cash flow hedges to protect non-functional currency inventory purchases and certain other operational expenses, in addition to its ongoing program of cash flow hedges to protect its non-functional currency revenues against variability in cash flows due to foreign currency fluctuations. The Company’s foreign currency forward contracts that were designated as cash flow hedges generally have maturities between three and thirteen months . All hedging relationships are formally documented, and the hedges are designed to offset changes to future cash flows on hedged transactions at the inception of the hedge. The Company recognizes derivative instruments from hedging activities as either assets or liabilities on the balance sheet and measures them at fair value on a monthly basis. The Company records changes in the intrinsic value of its cash flow hedges in accumulated other comprehensive income on the Condensed Consolidated Balance Sheets, until the forecasted transaction occurs. Prior to the second quarter of 2018, interest charges or "forward points" on the forward contracts are excluded from the assessment of hedge effectiveness and were recorded in interest and other income, net in the Condensed Consolidated Statements of Operations. In the second quarter of 2018, the Company entered into cash flow hedges, in which interest charges or "forward points" on the forward contracts are included in the assessment of hedge effectiveness, and are recorded in the underlying hedged items in the Condensed Consolidated Statements of Operations. When the forecasted transaction occurs, the Company reclassifies the related gain or loss on the cash flow hedge to revenue or costs, depending on the risk hedged. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company will reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive income to interest and other income, net in its Condensed Consolidated Statements of Operations at that time. For the three months ended March 31, 2019 and April 1, 2018 , the Company had a loss of $0.8 million and a gain of $0.9 million , which was related to cash flow hedges, recorded in other comprehensive income, respectively.

The Company evaluates hedge effectiveness at the inception of the hedge prospectively as well as retrospectively and records any ineffective portion of the hedge in other income, net in its Condensed Consolidated Statements of Operations.

Designated Hedges

Total notional amounts of net outstanding contracts were as summarized below:



Buy / Sell	March 31, 2019	December 30, 2018
	(In millions)
U.S. dollar / Japanese Yen	$47.7 / ¥5,120	$44.5 / ¥4,850
Japanese Yen / U.S. dollar	¥9,277 / $85.9	¥10,827 / $98.8

Non-designated hedges

Total notional amounts of net outstanding contracts were as summarized below:



Buy / Sell	March 31, 2019	December 30, 2018
	(In millions)
U.S. dollar / EUR	$3.2/ €2.8	$9.1 / €8.0
U.S. dollar / Japanese Yen	$12.4 / ¥1,350	$13.2 / ¥1,430
Japanese Yen / U.S. dollar	¥4,840 / $44.0	¥4,210 / $38.0

In December 2017, the Company entered into fixed-for-floating interest rate forward swap agreements starting April 2018 with two counterparties to swap future variable interest payments on certain debt for fixed interest payments; these agreements will

expire in July 2021. The objective of the swaps was to effectively fix the interest rate at current levels without having to refinance the outstanding term loan, thereby avoiding the incurrence of transaction costs. The interest rate on the variable debt was fixed in December 2017 and became effective in April 2018.

On January 3, 2018, the Company evaluated the hedge effectiveness of the interest rate swaps and designated these swaps as hedging instruments. Upon designation as cash flow hedge instruments, future changes in fair value of these swaps are recognized in accumulated other comprehensive income (loss).

In October 2018, the Company entered into fixed-for-floating interest rate forward swap agreements starting in July 2021 with two counterparties to swap future variable interest payments on existing debt for fixed interest payments; these agreements will expire in December 2024. The objective of the swaps was to effectively fix the future interest rate at the level currently available to avoid the uncertainty in financing cost for a portion of debt due to future interest rate fluctuations. The aggregate notional amount of these interest rate swaps was $300 million . The Company has evaluated the hedge effectiveness of the interest rate swaps and has designated these swaps as cash flow hedges of the debt with future changes in fair value of these swaps to be recognized in accumulated other comprehensive income (loss).

For the three months ended March 31, 2019 , the Company has recognized a loss in other comprehensive income of $7.1 million for these interest rate swaps.

The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 was as follows:



	Three Months Ended
	March 31, 2019
	(In thousands)
	Revenue	Cost of Goods Sold		Operating Expenses	Interest Expense
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value and cash flow hedges are recorded	539,004	336,595		170,593	13,579

Gain or (loss) on cash flow hedge relationships in Subtopic ASC 815-20:
Interest rate contracts
Amount of gain or (loss) reclassified from AOCI into income	—	—		—	414
Foreign exchange contracts
Amount of gain or (loss) reclassified from AOCI into income	173	(127	)	42	—

The gross fair values of derivative instruments on the Condensed Consolidated Balance Sheets as of March 31, 2019 and December 30, 2018 were as follows:



	March 31, 2019				December 30, 2018
Balance Sheet location	Derivatives designated as hedging instruments		Derivatives not designated as hedging instruments		Derivatives designated as hedging instruments		Derivatives not designated as hedging instruments
	(In thousands)
Other Current Assets
Derivative Asset	$	2,096	$	352	$	2,767	$	725

Non-Current Assets
Derivative Asset	$	—	$	—	$	1,419	$	—

Other Current Liabilities
Derivative Liability	$	1,629	$	388	$	1,210	$	411

Non-Current Liabilities
Derivative Liability	$	7,795	$	—	$	4,051	$	—

NOTE 14. NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands, except per-share amounts)
Net income attributable to Cypress	$	19,714	$	9,078
Weighted-average common shares	363,700		355,461
Weighted-average diluted shares	373,131		370,592
Net income per share—basic	$	0.05	$	0.03
Net income per share—diluted	$	0.05	$	0.02

For the three months ended March 31, 2019 and April 1, 2018 , approximately 4.3 million and 2.5 million weighted average potentially dilutive shares underlying outstanding stock-based awards and convertible debt, respectively, were excluded in the computation of diluted net loss per share because their effect would have been anti-dilutive.

NOTE 15. INCOME TAXES

The Company's income tax (benefit) / expense was $(0.7) million and $5.1 million for the three months ended March 31, 2019 and April 1, 2018 , respectively. The provision for the fiscal quarter ended March 31, 2019 was primarily due to profits from continuing operations, offset by a net discrete benefit of $6.8 million during the period. Income tax expense for the three months ended April 1, 2018 was primarily attributable to non-U.S. taxes associated with the Company's non-U.S. operations.

A valuation allowance is established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of the deferred tax assets will not be realized. We regularly assess our valuation allowance against deferred tax assets on a jurisdiction by jurisdiction basis. We consider all available positive and negative evidence, including future reversals of temporary differences, projected future taxable income, tax planning strategies and recent financial results. During the fourth quarter of 2018, the Company emerged from a cumulative loss position over the previous three years. The cumulative three-year pre-tax income is considered positive evidence which is objective and verifiable and thus received significant weighting. The continued pattern of income before tax, recent global restructuring executed in fiscal 2018 and projected future operating income in the U.S. was additional positive evidence. As a result, the Company released $343.3

million of the valuation allowance attributable to certain U.S. deferred tax assets during 2018. Based on management’s assessment of the realizability of deferred tax assets, there was no change to the previously recorded valuation allowances during the quarter ending March 31, 2019 .

Unrecognized Tax Benefits

Gross unrecognized tax benefits were $121.7 million and $121.9 million as of March 31, 2019 and December 30, 2018 , respectively. As of March 31, 2019 , and December 30, 2018 , the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate totaled $66.3 million and $65.8 million , respectively.

Management believes events that could occur in the next 12 months and cause a change in unrecognized tax benefits include, but are not limited to, the following:

• completion of examinations by the U.S. or foreign taxing authorities; and

• expiration of statutes of limitations on the Company's tax returns.

The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. Management regularly assesses the Company’s tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which the Company does business. Given the uncertainty in the development of ongoing tax examinations and tax correspondence with taxing authorities, it is possible that the Company’s balance of gross unrecognized tax benefits could materially change in the next 12 months. As a result, we are unable to estimate the full range of possible adjustments to this balance.

Classification of Interest and Penalties

The Company's policy is to classify interest expense and penalties, if any, as components of the income tax provision in the Condensed Consolidated Statements of Operations. As of March 31, 2019 and December 30, 2018 , the amounts of accrued interest and penalties totaled $13.6 million and $13.0 million , respectively.

NOTE 16. SEGMENT, GEOGRAPHICAL AND CUSTOMER INFORMATION

Segment Information

The Company designs, develops, manufactures and markets a broad range of solutions for embedded systems, from automotive, industrial, consumer electronics, and medical products.

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker ("CODM"), or decision-making group, in making decisions on how to allocate resources and assess performance. The CODM is considered to be the Chief Executive Officer.

The Company's segments are its MCD (Microcontroller and Connectivity Division) and MPD (Memory Products Division).

Income Before Income Taxes



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
MCD	$	16,726		$	13,484
MPD	88,056			89,838
Unallocated items:
Stock-based compensation expense	(20,395		)	(18,458		)
Restructuring charges	(96		)	(4,096		)
Amortization of intangible assets and other	(52,527		)	(54,588		)
Impairment of assets held for sale	(3,532		)	—
Changes related to debt extinguishment	—			630
Changes in value of deferred compensation plan	(599		)	(417		)
Other adjustments	(5,061		)	(8,785		)
Income from operations before income taxes	$	22,572		$	17,608

The Company does not allocate stock-based compensation, changes in value of deferred compensation plan, restructuring charges, amortization of intangible assets and certain other expenses to its segments.

Geographical Information

Property, plant and equipment, net, by geographic locations were as follows:



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
United States	$	166,763	$	173,973
Philippines	32,647		33,413
Thailand	33,582		34,581
Japan	11,640		11,251
Other	29,491		29,768
Total property, plant and equipment, net	$	274,123	$	282,986

The Company tracks its assets by physical location. Although management reviews asset information on a corporate level and allocates depreciation expense by segment, the Company’s CODM does not review asset information on a segment basis.

Customer Information

Outstanding accounts receivable from two of the Company's distributors accounted for 24.2% and 11.1% of its consolidated accounts receivable as of March 31, 2019 . Outstanding accounts receivable from one of the Company's distributors accounted for 25.0% of its consolidated accounts receivable as of December 30, 2018 .

Revenue from sales to two of the Company's distributors accounted for 16.9% and 15.4% of its consolidated revenues for the three months ended March 31, 2019 . No other distributors or customers accounted for 10% or more of the Company's consolidated revenues for the three months ended March 31, 2019 .

Revenue from sales to two of the Company’s distributors accounted for 19.4% and 13.5% of its consolidated revenues for the three months ended April 1, 2018 . No other distributors or customers accounted for 10% or more of the Company's consolidated revenues for the three months ended April 1, 2018 .

NOTE 17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive loss, net of tax, by components are as follows (in thousands):



	Accumulated net unrealized income (loss) on cash flow hedges and other			Accumulated unrecognized gain (loss) on the Defined Benefit Plan			Accumulated other comprehensive income (loss)
Balance as of December 30, 2018	$	(763	)	$	2,592		$	1,829
Other comprehensive income (loss) before reclassification	(5,938		)	—			(5,938		)
Amounts reclassified to operating income	(502		)	—			(502		)
Net unrealized gain (loss) on the defined benefit plan	—			(13		)	(13		)
Balance as of March 31, 2019	$	(7,203	)	$	2,579		$	(4,624	)

NOTE 18. RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company purchases from, or sells to (a) entities for which one of the Company's directors or executive officers serves as a director or (b) entities that are otherwise affiliated with one of the Company's directors or executive officers (collectively, "related parties").

For the indicated periods, the following table presents information on the Company's transactions with such entities occurring at a time when the other entity was a related party of the Company:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Total revenues	$	120	$	3,277
Total purchases	$	2,001	$	16,088

As of March 31, 2019 , and April 1, 2018 , amounts due from these parties totaled $0.4 million and $0.5 million , respectively, and amounts due to these parties totaled $1.0 million and $8.9 million , respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties, which are discussed in the "Cautionary Note Regarding Forward-Looking Statements" section in Part I of this Quarterly Report on Form 10-Q.

Overview

Cypress manufactures and sells advanced embedded system solutions for automotive, industrial, consumer and enterprise end markets. Cypress' microcontrollers, analog ICs, wireless and wired connectivity solutions and memories help engineers design differentiated products and help with speed to market. Cypress is committed to providing customers with quality support and engineering resources.

Business Segments

We continuously evaluate our reportable business segments in accordance with the applicable accounting guidance. We currently operate under two reportable business segments: Microcontroller and Connectivity Division ("MCD") and Memory Products Division ("MPD").



Business Segments		Description

Microcontroller and Connectivity Division		MCD focuses on connectivity and computing solutions for the Internet of Things and automotive solutions that enhance the in-cabin user experience. MCD offerings include robust wireless and wired connectivity solutions that combine with flexible, high-performance microcontroller ("MCU") and analog solutions, backed with a focus on superior design software. The portfolio includes Wi-Fi® and Bluetooth® and Bluetooth Low Energy (BLE), and Wi-Fi plus Bluetooth combo solutions; Traveo™ automotive MCUs, PSoC® programmable MCUs and general-purpose MCUs; CapSense® capacitive-sensing controllers and automotive TrueTouch® touchscreen solutions; a broad line of USB controllers, including solutions for the USB-C and USB Power Delivery standards; and analog PMIC Power Management ICs. This division also includes our intellectual property ("IP") business.

Memory Products Division		MPD focuses on fail-safe storage and datalogging solutions for mission critical applications. The portfolio includes specialized, high-performance parallel and serial NOR flash memories, static random access memories ("SRAM"), F-RAM™ ferroelectric memory devices, nonvolatile SRAMs ("nvSRAM"), and other specialty memories. This division also includes our nonvolatile DIMM subsidiary AgigA Tech, Inc.

Business Strategy

Refer to Part I Item 1. Business in our Annual Report on Form 10-K for the year ended December 30, 2018 for a discussion of our strategies.

As we continue to implement our strategies, there are many internal and external factors that could impact our ability to meet any or all of our objectives. Some of these factors are discussed in Part I Item 1A in our Annual Report on Form 10-K for the year ended December 30, 2018 as well as in Part II Item 1A in this Quarterly Report on Form 10-Q.

Results of Operations

Revenues

Our total revenues decreased by $43.2 million , or 7.4% , to $539.0 million for the three-month period ended March 31, 2019 compared to the same period in the prior year. The decrease was primarily due to demand softening across broad markets.

The following table summarizes our consolidated revenues by segments:



	Three Months Ended
	March 31, 2019		April 1, 2018
	(In thousands)
Microcontroller and Connectivity Division ("MCD")	$	310,389	$	336,710
Memory Products Division ("MPD")	228,615		245,531
Total revenues	$	539,004	$	582,241

Microcontroller and Connectivity Division:

Revenues recorded by MCD decreased by $26.3 million , or 7.8% , in the three months ended March 31, 2019 compared to the same prior year period. The decrease was primarily due to the stage of a major end customer's product life-cycle in wireless connectivity and a decline in demand for memory products.

Memory Products Division:

Revenues recorded by MPD decreased by $16.9 million , or 6.9% , in the three months ended March 31, 2019 compared to the same prior year period. The decrease was primarily due to a decline in demand for NAND Flash products.

Gross Profit & Margin



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
Revenues	$	539,004		$	582,241
Less: Cost of revenues	336,595			369,849
Gross profit	$	202,409		$	212,392
Gross margin (%)	37.6		%	36.5		%

Our gross margin improved to 37.6% in the three months ended March 31, 2019 from 36.5% in the three months ended April 1, 2018 . The primary drivers of the improvement in gross margin were a shift in the product mix towards higher density memory products and a decrease in commoditized products, higher fab utilization, which increased from 74% in the three months ended April 1, 2018 to 83% in the three months ended March 31, 2019 , and a reduction in the cost of certain products. This improvement was partially offset by a decrease in the sale of inventory that was previously written off or written down for the three months ended March 31, 2019 as compared to the same prior year period. The gross margin in the first quarter of fiscal 2019 and 2018 was benefited by 0.7% and 1.6%, respectively, from the sale of previously reserved inventory. Included in cost of revenues are amortization of intangible assets of $46.9 million and $48.1 million for the first quarters of fiscal years 2019 and 2018, respectively.

Research and Development ("R&D") Expenses



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
R&D expenses	$	88,606		$	93,233
As a percentage of revenues	16.4		%	16.0		%

R&D expenses decreased by $ 4.6 million in the three months ended March 31, 2019 compared to the same period of the prior year. The decrease was mainly attributable to $7.0 million in lower labor costs due to decreases in variable compensation expenses, offset by increases of $1.9 million in deferred compensation expenses and $0.5 million in project expenses.

Selling, General and Administrative ("SG&A") Expenses



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
SG&A expenses	$	81,987		$	83,397
As a percentage of revenues	15.2		%	14.3		%

SG&A expenses decreased by $ 1.4 million in the three months ended March 31, 2019 compared to the same period of the prior year. The decrease was mainly due to a $2.4 million decrease in professional fees, a $2.6 million decrease in advertising and marketing communication expenses, and a $1.8 million decrease in restructuring charges. These decreases were partially offset by a $2.9 million increase in stock-based compensation expense, a $1.5 million increase due to reserve for certain transition services and assets to be provided to SkyHigh, and a $0.8 million increase in facility related expenses.

Income Taxes

Our income tax (benefit) / expense was $ (0.7) million and $ 5.1 million for the three months ended March 31, 2019 and April 1, 2018 , respectively. The provision for the fiscal quarter ended March 31, 2019 was primarily due to profits from continuing operations, offset by a net discrete benefit of $6.8 million during the period. Income tax expense for the fiscal quarter ended April 1, 2018 was primarily attributable to non-U.S. taxes associated with our non-U.S. operations.

Equity Method Investments

For the three months ended March 31, 2019, our share in Deca's net loss was $3.6 million. By comparison, for the corresponding period of 2018 our share in the net loss of Deca was $3.5 million. Deca continues to be in the process of developing and testing a fan-out wafer level packaging technology. Deca’s estimated enterprise value is sensitive to its ability to achieve these product development and testing milestones. Delays or failure by Deca to complete these milestones, or secure funding needed to support its growth and cash needs, may have a significant adverse impact on Deca’s estimated enterprise value and may result in our recognition of a material impairment in the carrying value of our investment in Deca. We held 52.5% of Deca's outstanding voting shares as of March 31, 2019 and December 30, 2018.

Liquidity and Capital Resources

Our Revolving Credit Facility has a capacity of $540 million which was undrawn as of March 31, 2019.

The following table summarizes information regarding our cash and cash equivalents and working capital:



	As of
	March 31, 2019		December 30, 2018
	(In thousands)
Cash and cash equivalents	$	285,119	$	285,720
Working capital, net	$	437,699	$	396,208

Key Components of Cash Flows



	Three Months Ended
	March 31, 2019			April 1, 2018
	(In thousands)
Net cash provided by operating activities	$	61,248		$	31,678
Net cash (used in) investing activities	$	(4,376	)	$	(14,173	)
Net cash used in financing activities	$	(57,473	)	$	(62,349	)

Operating Activities

Net cash provided by operating activities during the nine months ended March 31, 2019 was $61.2 million as compared to $31.7 million in the three months ended April 1, 2018 . Net income recorded during the three months ended March 31, 2019 was 19.7 million which included net non-cash items of $104.1 million . The non-cash items primarily consisted of:


•	depreciation and amortization of $71.4 million ;


•	stock-based compensation expense of $20.4 million ;


•	accretion of interest expense on Senior Exchangeable Notes and amortization of debt and financing costs on other debt of $4.8 million ;


•	our share in the net loss of an equity method investee of $3.6 million ;


•	loss related to assets held for sale of $3.5 million ; and


•	restructuring costs and other adjustments of $0.7 million .

Cash from operations in the three months ended March 31, 2019 was impacted by a $62.6 million increase in operating assets and liabilities. The increase in operating assets and liabilities for the three months ended March 31, 2019 of $62.6 million was primarily due to the following:


•	a increase of $48.6 million in operating lease right-of-use assets;


•	a decrease in accounts payable and accrued and other liabilities of $30.4 million mainly due to timing of payments to vendors;


•	a decrease of $21.9 million in price adjustments and other revenue reserves for sales to distributors due to an increase in revenue during the first three months of 2019;


•	an increase in inventories of $25.9 million ;


•	partially offset by a decrease in accounts receivable of $57.9 million due to timing of invoicing and collections. Days sales outstanding for the three months ended March 31, 2019 was 45 days as compared to 61 days in the three months ended April 1, 2018 ;


•	a decrease in other current and long-term assets of $3.5 million for prepayments for licenses and other vendors; and


•	a decrease in assets held for sale due to the changes in inventories of $2.7 million .

Investing Activities

During the three months ended March 31, 2019 , we used approximately $4.4 million of cash in our investing activities primarily due to:


•	property and equipment expenditures of $10.5 million relating to purchases of certain manufacturing facility equipment;


•	partially offset by $ 6.1 million in net distributions for the deferred compensation plan.

Financing Activities

During the three months ended March 31, 2019 , we used approximately $57.5 million of cash in our financing activities, primarily related to:


•	dividend payments of $39.7 million ;


•	payments of $26.3 million on Term Loan B;


•	payments of $5.4 million on net shares settlement of restricted stock units; and


•	payments of $0.4 million on finance lease liabilities;


•	partially offset by proceeds of $14.3 million from employee equity awards.

Liquidity and Contractual Obligations

Contractual Obligations

The following table summarizes our contractual obligations as of March 31, 2019 :



	Total		2019 (Remaining 9 months)		2020 and 2021		2022 and 2023		After 2023
	(In thousands)
Purchase obligations (1)	$	288,755	$	93,540	$	142,952	$	52,263	$	—
Operating lease commitments	59,882		10,512		21,157		10,236		17,977
Capital lease commitments	11,155		1,578		4,145		4,048		1,384
Term Loan B	450,048		3,788		446,260		—		—
2% 2020 Spansion Exchangeable Notes	11,990		—		11,990		—		—
4.5% 2022 Senior Exchangeable Notes	287,500		—		—		287,500		—
2% 2023 Exchangeable Notes	150,000		—		—		150,000		—
Interest and commitment fee due on debt (2)	94,178		23,849		59,056		11,232		41
Asset retirement obligations	5,876		1,594		3,948		334		—
Total contractual obligations	$	1,359,384	$	134,861	$	689,508	$	515,613	$	19,402

(1)

Purchase obligations primarily include commitments under "take or pay" arrangements, non-cancelable purchase orders for materials, services, manufacturing equipment, building improvements and supplies in the ordinary course of business. Purchase obligations are defined as enforceable agreements that are legally binding on us and that specify all significant terms, including quantity, price and timing.


(2)	Interest and commitment fees due on variable debt is based on the effective interest rates as of March 31, 2019 .

Capital Resources and Financial Condition

As of March 31, 2019 , our cash, cash equivalents and short-term investment balance was $285.1 million as compared to $285.7 million as of December 30, 2018. As of March 31, 2019 , approximately 12.4% of our cash and cash equivalents were held by our non-U.S. subsidiaries. While these amounts are primarily denominated in U.S. dollars, a portion is denominated in foreign currencies. All non-U.S. cash balances are exposed to local political, banking, currency control, and other risks. In addition, these amounts, if repatriated, may be subject to tax and other transfer restrictions.

We believe that the liquidity provided by existing cash, cash equivalents, and our borrowing arrangements will provide sufficient capital to meet our requirements for at least the next twelve months. However, should economic conditions and/or financial, business and other factors beyond our control adversely affect the estimates of our future cash requirements, we could be required to fund our cash requirements by alternative financing. There can be no assurance that additional financing, if needed, would be available on terms acceptable to us or at all. In addition, we may choose at any time to raise additional capital or debt to strengthen our financial position, facilitate growth, pursue strategic initiatives (including the acquisition of other companies) and provide us with additional flexibility to take advantage of other business opportunities that arise. As of March 31, 2019 , we were in compliance with all of the financial covenants under all of our debt facilities.

Critical Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and the data used to prepare them. Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States and we are required to make estimates, judgments and assumptions in the course of such preparation. Note 1 of the Notes to Condensed Consolidated Financial Statements under Part I, Item 1 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. On an ongoing basis, we re-evaluate our judgments and estimates including those related to revenue recognition, allowances for doubtful accounts receivable, inventory valuation, valuation of long-lived assets, goodwill and financial instruments, stock-based compensation, settlement costs, and income taxes. We base our estimates and judgments on historical experience, knowledge of current conditions and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates under different assumptions or conditions.

As discussed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 30, 2018, we consider the following accounting policies to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements:


•	Revenue Recognition


•	Business Combinations


•	Valuation of Inventories


•	Valuation of Long-Lived Assets


•	Valuation of Goodwill


•	Investments in Equity Interests


•	Cash Flow Hedges


•	Share-Based Compensation


•	Employee Benefit Plans


•	Accounting for Income Taxes

As discussed in Note 1, we adopted ASC Topic 842 in the first quarter of fiscal 2019. There have been no other changes to our critical accounting policies and estimates since the filing of our Annual Report on Form 10-K for the year ended December 30, 2018.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risks

Our investment portfolio consists of a variety of financial instruments that expose us to interest rate risk, including, but not limited to, money market funds, and certificates of deposit. Due to the relatively short-term nature of our investment portfolio, we do not believe that an immediate increase in interest rates would have a material effect on the fair market value of our portfolio.

Our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not limited to our revolving credit facility, term loans and exchangeable notes. Interest on the exchangeable notes is fixed and interest on our term loans is at variable rates. The interest rate on the term loans is tied to short-term interest rate benchmarks including the prime rate and the London inter-bank offered rate, or LIBOR.

A one hundred basis point change in the contractual interest rates would change our interest expense for the Revolving Credit Facility and Term Loan B by approximately $1.5 million annually.

Our long-term operating results and cash flows may be materially affected to a significant degree by a sudden change in market interest rates.

Foreign Currency Exchange Risk

We operate and sell products in various global markets and purchase capital equipment using foreign currencies but predominantly the U.S. dollar. We are exposed to certain risks associated with changes in foreign currency exchange rates in the Japanese yen, the Euro and other foreign currencies.

For example:


•	sales of our products to Japanese distributors are denominated in U.S. dollars, Japanese yen and Euros;


•	some of our manufacturing costs and operating expenses are denominated in Japanese yen, and other foreign currencies such as the Thai Baht, Philippine Peso and Malaysian Ringgit; and


•	some fixed asset purchases and sales are denominated in other foreign currencies.

Consequently, movements in exchange rates could cause our revenues and our expenses to fluctuate, affecting our profitability and cash flows. We use foreign currency forward contracts to reduce our foreign exchange exposure on our foreign currency denominated assets and liabilities. We also hedge a percentage of our forecasted revenue denominated in Japanese yen with foreign currency forward contracts. The objective of these contracts is to mitigate the impact of foreign currency exchange rate movements to our operating results on a short-term basis. We do not use these contracts for speculative or trading purposes.

To provide an assessment of the foreign currency exchange risk associated with our foreign currency exposures within our operations, we performed a sensitivity analysis to determine the impact that an adverse change in exchange rates would have on our financial statements. If the U.S. dollar weakened by 10%, our operating margin could be unfavorably impacted by approximately 2%. We expect our hedges of foreign currency exposures to be highly effective and offset a significant portion of the short-term impact of changes in exchange rates on the hedged portion of our exposures. Please see Note 13 of the Notes to Condensed Consolidated Financial Statements for details on the hedge contracts.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level.

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required by this item is included in Note 11 of the Notes to Condensed Consolidated Financial Statements in Part I Item 1, of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

ITEM 1A. RISK FACTORS

You should carefully consider the risks and uncertainties discussed in Part I, Item 1A (Risk Factors) of our Annual Report, any of which could materially affect our business, financial condition, and/or future results. Part I, Item 1A of our Annual Report is incorporated herein by reference. The risk factors in our Annual Report are not repeated in this Quarterly Report, unless the underlying risks have materially changed. The risks described in our Annual Report and this Quarterly Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial could materially and adversely affect our business, financial condition and/or future results.

Our joint venture for NAND flash memory products might not be successful.

On April 1, 2019, we launched a joint venture in Hong Kong with SK hynix system ic Inc. ("SKHS"), which is a wholly-owned subsidiary of SK hynix Inc. ("SKH"), a South Korean company. The joint venture entity, SkyHigh Memory Limited ("SkyHigh") is controlled by SKHS. We contributed our NAND flash memory business to the joint venture. NAND is a commoditized product line that has traditionally experienced volatile sales results with low gross margins. Upon launch, SkyHigh entered into a wafer supply agreement with SKH, and back-end manufacturing and transition services agreements with Cypress.

Although we expect to have influence over SkyHigh's operations, they are not under our control and we might be unaware of, or unable to correct, any operating or product issues that may develop. Any failure by SkyHigh to satisfy customer expectations could adversely impact our own relationships with such customers and/or the reputation of our brand. Any failure by SkyHigh to meet its commitments to Cypress under our back-end manufacturing agreement could cause Cypress's assembly and testing facilities to be underutilized and could adversely affect Cypress's operating margins. In addition, there can be no assurance that the joint venture will be profitable. SkyHigh's governing documents do not require it to distribute its profits (if any) regularly, or at all (apart from a commitment to distribute to us our share of profit on a specified portion of sales through January 31, 2021). We therefore face a risk that our investment might not generate meaningful cash flows to re-invest, for example, in higher-margin areas of our business. The success of this joint venture investment will depend on various other factors over which we may have limited or no control and will require ongoing and effective cooperation with SKHS, which might be difficult to maintain. Such risks could be exacerbated by unfavorable financial market and macroeconomic conditions, causing the value of this joint venture investment to decline and leading to impairment charges. Any failure to realize the anticipated benefits of the joint venture could adversely affect our stock price.

Our financial results could be adversely impacted if privately-held companies in which we have invested fail to launch new products or maintain key customer relationships.

We have invested in certain privately-held companies. There can be no guarantee that such businesses will perform as initially expected, launch new products and solutions as initially expected, or gain or maintain market acceptance. During the fourth quarter of fiscal 2017, we determined that our investment in Enovix Corporation, which is accounted for as an equity method investment, was other-than temporarily impaired as Enovix did not achieve key planned product development milestones. Consequently, we recognized an impairment charge of $51.2 million related to our investment in Enovix, reducing its carrying value on our books to zero. During the fourth quarter of fiscal 2018, we determined that our investment in another equity investee, Deca Technologies Inc. ("Deca"), was other-than temporarily impaired due to significant delays in Deca's commercialization and achievement of scalable production of certain key products, and consequently we recognized an impairment charge of $41.5 million to write down the carrying value of our investment in Deca to its estimated fair value as of the end of fiscal 2018.

If any of our other privately-held businesses fail to introduce new products and solutions or successfully develop new technologies, or if their customers do not successfully introduce new systems or products incorporating the products or solutions offered by these businesses, or if market demand for the products or solutions offered by these businesses is not created or sustained, or if these or any of our other privately-held businesses are not able to raise capital to fund their

operations, then we might fail to realize any benefit from our investments in such privately-held companies and our business, financial condition, and results of operations could be materially harmed as a result of impairment of the carrying value of such investments.

In particular, there is a substantial risk that the carrying value of our investment in Deca may become further impaired. Deca’s current and future revenues are dependent on a small number of significant customers. The loss of, material delay in placing orders by, or significant decrease in demand from, any of Deca's key customers would have a material adverse effect on Deca’s business, results of operations, and financial condition. Deca may need to secure additional funding to support its growth and cash needs. Failure to secure such funding, if needed, will impact its ability to continue as a going concern. Deca's management is currently working with its significant customers to secure their long-term commitment to use Deca's technology given the current downturn in the semiconductor industry, and is in the process of evaluating certain alternative strategic options. If Deca is unable to (a) secure sufficient orders from its existing significant customers or new customers, (b) raise sufficient funding, if needed, for continuing its operations, or (c) consummate a strategic transaction that allows realization of its economic value, we will be required to record an impairment charge to partially or fully write down the carrying value of our investment in Deca. As of March 31, 2019, the carrying value of our investment in Deca was $61.6 million.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The documents listed below are filed (or furnished, as noted) as exhibits to this Quarterly Report on Form 10-Q:



		Incorporated by Reference to
Exhibit	Description	Form*	Filing Date	Exhibit	Filed
Number	Description	Form*	Filing Date	Exhibit	Herewith
3.1.1	Second Restated Certificate of Incorporation of Cypress Semiconductor Corporation, dated June 12, 2000 (included in Exhibit 3.1.2 below)
3.1.2	Amendment, dated March 23, 2017, to the Second Restated Certificate of Incorporation of Cypress Semiconductor Corporation.	10-Q	2017-05-02	3.1

3.2	Amended & Restated Bylaws of Cypress Semiconductor Corporation	8-K	2017-09-25	3.1

10.2.6+	Form of LTI Program Restricted Stock Unit Agreement and related notice of grant under the 2013 Stock Plan (in use starting February 2019)				X

10.2.7+	Form of LTI Program Performance-Based Restricted Stock Unit Agreement and related notice of grant under the 2013 Stock Plan (in use starting February 2019)				X

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.1‡	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

32.2‡	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

101.INS	XBRL Instance Document.				X

101.SCH	XBRL Taxonomy Extension Schema Document.				X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.				X

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.				X

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.				X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.				X



*	Commission File Number for incorporated documents is 001-10079.
+	Management contract or compensatory plan or arrangement.
‡	Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	CYPRESS SEMICONDUCTOR CORPORATION

Date: April 26, 2019	By:	/s/ THAD TRENT
		Thad Trent
		Executive Vice President, Finance and Administration and Chief Financial Officer

Exhibit 10.2.6

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

Congratulations! You have been granted an Award of Restricted Stock Units ("RSUs") under the Cypress Semiconductor Corporation 2013 Stock Plan, as amended, and any applicable sub-plan thereto for your country (collectively, the "Plan"), as follows:

PARTICIPANT NAME: [name]

PARTICIPANT ID: [ID#]

NUMBER OF RSUs GRANTED: [number]

Each RSU is equivalent to one Share of Common Stock of Cypress Semiconductor Corporation (the "Company") for purposes of determining the number of Shares subject to this Award. The RSUs are subject to forfeiture prior to vesting. None of the RSUs will vest (nor will you have the rights of a stockholder with respect to the underlying Shares) until you satisfy the vesting conditions described below and in the Restricted Stock Unit Agreement accompanying this notice (the "RSU Agreement"). The number of unvested RSUs and underlying Shares is subject to adjustment under Section 16 of the Plan (such as in connection with a stock split or spin-off). Unless otherwise defined in this Notice of Grant of Restricted Stock Units (this "Notice of Grant"), capitalized words that are defined in the Plan or the RSU Agreement have the meanings given to them in the Plan or RSU Agreement, as applicable. Additional terms of this grant are as follows:

GRANT NUMBER: [number]

GRANT DATE: [date]

VESTING BASE DATE: [date]

VESTING SCHEDULE:



RSUs Scheduled to Vest		Vesting Date
[number of shares]		[date]
[number of shares]		[date]
[number of shares]		[date]

You acknowledge and agree that this Notice of Grant (including the vesting schedule above) does not constitute an express or implied promise of continued engagement as an Employee, Consultant or Director for the vesting period, for any period, or at all.

You will not receive any Shares upon vesting unless and until satisfactory arrangements (as determined by the Administrator) have been made with respect to the collection of all Tax-Related Items that the Company or your Employer determines must be withheld with respect to such Shares to be delivered upon the vesting of the RSUs. Currently, you can view the tax withholding collection method(s) that the Administrator has made available to you, including the default collection method (and if applicable you may be able to select an alternate method) by accessing your Plan account at www.ETRADE.com .

The Company's online acceptance procedure requires that you open each of the linked documents in order to proceed to acceptance.

Please confirm your acceptance of this Award by clicking the "Accept" (or similar wording) button on the award acceptance screen of your Plan account at www.ETRADE.com . If you wish to reject this award, you must so notify the Company's Stock Plan Administrator in writing to stockadmin@cypress.com no later than sixty (60) days after the grant date shown above. If within such sixty (60) day period you neither affirmatively accept nor affirmatively reject this Award, you will be deemed to have accepted this Award at the end of such sixty (60) day period pursuant to the terms and conditions set forth in this Notice of Grant, the RSU Agreement, and the Plan.

By your acceptance of this Award:


•	you acknowledge receiving and reviewing this Notice of Grant, the RSU Agreement, the Plan, and the Company's related Prospectus;


•	you agree that the RSUs are granted under and governed by the terms and conditions of, and you agree to be bound by the terms of, this Notice of Grant, the RSU Agreement, and the Plan;


•	you agree to accept as binding, conclusive, and final all decisions or interpretations of the Plan Administrator upon any questions relating to the Plan and this Aw ard; and


•	you consent to the collection, use and transfer, in electronic or other form, of your personal data as described in the RSU Agreement for the purpose of implementing, administering and managing your participation in the Plan.

This Notice of Grant shall be construed and determined in accordance with the laws of the U.S. State of Delaware (without giving effect to the conflict of laws principles thereof) and upon acceptance shall be deemed to have been executed and delivered by the parties hereto as of the grant date shown above.

CYPRESS SEMICONDUCTOR CORPORATION

2013 STOCK PLAN, AS AMENDED

RESTRICTED STOCK UNIT AGREEMENT

(LTI Program)

1. Grant . Cypress Semiconductor Corporation (the "Company") hereby grants to the Participant named in the Notice of Grant of Restricted Stock Units (the " Notice of Grant ") an Award of Restricted Stock Units (" RSUs "), as set forth in the Notice of Grant and subject to the terms and conditions in this Restricted Stock Unit Agreement (" Agreement "), in the Company's 2013 Stock Plan, as amended, and in any applicable sub-plan for the Participant's country (such plan and any such sub-plan, collectively, the " Plan "). A sub-plan is applicable to this Award if, but only if, the country-specific terms for the Participant's country as set forth in Appendix A state that this Award is granted under or subject to such sub-plan. Unless otherwise defined herein, capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Plan.

2. Company's Obligation . Each RSU represents the right of the Participant to receive a Share of Common Stock of the Company on the date on which all applicable vesting conditions established by the Notice of Grant, this Agreement, and the Plan have been satisfied (the " Vesting Date "). Unless and until RSUs vest, the Participant will have no right to receive Shares (or any other payment) in connection with such RSUs. Prior to actual distribution of Shares in settlement of any vested RSUs, such RSUs represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

3. Vesting Schedule and Vesting Conditions . Subject to Section 4 below, the RSUs awarded by this Agreement shall vest and become non-forfeitable in accordance with the vesting schedule specified in the Notice of Grant (the " Vesting Schedule "). With respect to each scheduled Vesting Date, the Participant's Continuous Status as an Employee, Consultant or Director from the grant date specified in the Notice of Grant (the " Date of Grant ") until such Vesting Date is a condition to the vesting of the RSUs scheduled to vest on such date. Employment or service for only a portion of such vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 4 below or in the Plan.

4. Forfeiture upon Termination as an Employee, Consultant or Director; Leaves of Absence .

(a) Forfeiture upon Termination of Service . Notwithstanding any contrary provision of this Agreement or the Notice of Grant (but subject to any applicable acceleration right expressly set forth in any Amended and Restated Change of Control Severance Agreement or written employment agreement between the Company and the Participant), if the Participant's Continuous Status as an Employee, Consultant or Director ceases for any or no reason after the Date of Grant but prior to a Vesting Date, any unvested RSUs awarded by this Agreement will thereupon be forfeited at no cost to the Company and, if applicable, at no cost to the Company affiliate that actually employs or otherwise engages the Participant (the " Employer "). Neither the Participant nor any of the Participant's successors, heirs, assigns or personal representatives shall have any rights or interests in any RSUs that are forfeited pursuant to any provision of this Agreement or the Plan.

(b) Unpaid Leaves of Absence . Unless otherwise provided by the Administrator (such as in a leave of absence vesting policy or otherwise) and subject to compliance with all applicable laws, in the event the Participant takes an approved but unpaid leave of absence (" LOA ") from the Company or the Employer (as applicable), each Vesting Date that has not occurred as of the commencement of such LOA shall be tolled for the number of calendar days that the Participant is on such LOA. (For example, if the next scheduled Vesting Date is July 1 and prior to that date the Grantee takes a LOA spanning 20 calendar days, that Vesting Date shall (unless otherwise provided by the Administrator) be tolled for 20 days and shall become July 21 and all future Vesting Dates shall be similarly rescheduled).

5. Settlement in Shares after Vesting . Subject to Section 17 (regarding tax matters), any RSUs that vest in accordance with this Agreement will be settled by delivery of Shares to the Participant (or in the event of the Participant's death, to his or her estate) as soon as practicable after (and in no case more than seventy-four days after) the date such RSUs vest and become non-forfeitable.

6. Payments after Death . Any distribution or delivery to be made to the Participant under this Agreement will, if the Participant is then deceased, be made to the administrator or executor of the Participant's estate. Any such administrator or executor must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

7. Rights as Stockholder . Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company (including, without limitation, voting and dividend rights) in respect of any Shares deliverable hereunder unless and until certificates (or book-entry positions) representing such Shares have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or the Participant's broker.

8. No Effect on Employment or Status .

(a) If the Participant is employed in the United States, (1) the Participant's employment or other service relationship with the Company or the Employer is on an at-will basis only and accordingly, the terms of the Participant's employment or other service relationship with the Company or the Employer will be determined from time to time by the Company or the Employer, and the Company or the Employer will have the right, which is hereby expressly reserved, to terminate or change the terms of the employment or other service relationship of the Participant at any time for any reason whatsoever, with or without good cause or notice; and (2) the Participant understands and agrees that the vesting of the RSUs subject to this Award pursuant to Section 3 above is subject to the Participant's continuing in the employ or service of the Company or the Employer through each applicable Vesting Date.

(b) This Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Company or the stockholders to remove a Director from the Board at any time in accordance with the provisions of applicable law.

9. Address for Notices . (a) Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company at 198 Champion Court, San Jose, California 95134-1599, Attn: Stock Administration, or at such other address as the Company may hereafter designate in writing or electronically. (b) Any notice to be given to the Participant under the terms of this Agreement will be addressed to the Participant's address appearing on the books of the Company or to the Participant's residence or to such other address as may be designated in writing by the Participant. Notices may also be delivered to the Participant, during his or her employment, through the Company's inter-office or electronic mail systems.

10. Grant is Not Transferable . Except to the limited extent provided in Section 6 of this Agreement, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

11. Binding Agreement . Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

12. Additional Conditions to Issuance of Stock . If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state, federal, or foreign law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to the Participant (or his or her estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company. The Company will make all reasonable efforts to meet the requirements of any such U.S. state or federal law or securities exchange and to obtain any such consent or approval of any domestic governmental authority.

13. Plan Governs . This Agreement and the Notice of Grant are subject to all terms and provisions of the Plan. The Participant has been provided a copy of the Plan and has had an opportunity to review the Plan and shall be bound by all the terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement or the Notice of Grant and one or more provisions of the Plan, the provisions of the Plan will govern.

14. Administrator Authority . The Administrator will have the power to interpret the Plan, this Agreement, and the Notice of Grant and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any RSUs have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company, and all other interested persons. No member of the Administrator will be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

15. Additional Terms for Participants Providing Services Outside the United States . To the extent the Participant provides (or provided, subsequent to the vesting base date set forth in the Notice of Grant) services to the Company or the Employer in a country other than the United States, the RSUs shall be subject to such additional or substitute terms as are set forth for such country in Appendix A attached hereto.

16. Data Privacy . The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant's personal data as described in this Agreement by and among, as applicable, the Employer and the Company and its Subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing the Participant's participation in the Plan.

The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant's name, home address and telephone number, date of birth, social insurance number, passport number, or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding in the Participant's favor, for the purpose of implementing, administering and managing the Plan (" Data ").

The Participant understands that Data may be transferred to such stock plan service provider (or providers) as may be selected by the Company which is (or are) assisting in the implementation, administration and management of the Plan and awards granted thereunder. The Participant understands that these recipients of Data may be located in the United States, or elsewhere, and that the recipients' country (e.g., the United States) may have different data privacy laws and protections than the Participant's country. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant's local human resources representative. The Participant hereby authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan and awards granted thereunder to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant's participation in the Plan.

The Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant's local human resources representative. The Participant understands, however, that refusing or withdrawing his or her consent may affect the Participant's ability to participate in the Plan and the Participant's continued eligibility for this Award or eligibility to be granted any other awards under the Plan. For more information on the consequences of the Participant's refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.

17. Responsibility for Taxes .

(a) Regardless of any action the Company or the Employer takes with respect to any and all income or withholding tax (including federal, state and local tax), social insurance, payroll tax, payment on account or other tax-related items related to the Participant's participation in the Plan and legally applicable to him or her (" Tax-Related Items "), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant's responsibility and may exceed the amount, if any, actually withheld by the Company and/or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including the grant of the RSUs, the vesting of RSUs, the issuance of Shares, the subsequent sale of any Shares acquired under the Award and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the RSUs to reduce or eliminate the Participant's liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to any relevant taxable or tax withholding event, as applicable, the Participant shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items that the Company determines it or the Employer is required to withhold under applicable laws with respect to the RSUs. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, to satisfy the obligation with regard to all Tax-Related Items by any one or a combination of the following methods: (1) by requiring the Participant to pay such amount in cash or by check; (2) by deducting such amount out of wages or any other cash compensation otherwise payable to the Participant by the Company and/or the Employer; (3) by withholding (and/or reacquiring) a number of Shares issuable (or issued) in payment of the RSUs having a Fair Market Value equal to such amount; (4) by requiring the Participant to deliver to the Company already owned shares of Common Stock having a Fair Market Value equal to such amount; and/or (5) withholding such amount from the proceeds of a sale of a sufficient number of Shares issued upon vesting of the RSUs (" Sell-To-Cover ") either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant's behalf pursuant to this authorization). For these purposes, the Fair Market Value of any Shares to be withheld or repurchased, as applicable, shall be determined on the date that Tax-Related Items are to be determined. To the extent any of the above methods involves a sale of Shares, the Participant acknowledges that neither the Company nor its designated broker is obligated to arrange for such sale of Shares at any particular price.

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested portion of the RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant's participation in the Plan.

(c) The Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Participant's receipt of RSUs, the vesting of RSUs, or the issuance of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Participant if the Participant fails to comply with the Participant's obligations in connection with Tax-Related Items as described in this Section 17.

(d) The Participant understands that the Company may allow the Participant to select a tax withholding collection method and that, if no selection is made, the default collection method may be Sell-To-Cover. In that default case and/or if the Participant subsequently selects Sell-To-Cover (or the related "same-day sale" alternative), the Participant hereby agrees and instructs that a sufficient number of Shares issued in payment of RSUs that become non-forfeitable shall be sold by the Company's designated brokerage firm on the Participant's behalf and for the Participant's account pursuant to this authorization on or as soon as administratively possible after the date of issuance. This paragraph is intended as a trading plan meeting the requirements of Rule 10b5-1(c)(1)(i) under the U.S. Securities Exchange Act of 1934, as amended. The Participant hereby represents and warrants that (a) at the time of entering into this Agreement and trading plan and at the time of making any subsequent Sell-To-Cover or "same-day sale" election constituting a trading plan hereunder, he or she is not aware of any material, nonpublic information regarding the Company or its securities and (b) he or she is entering into this Agreement and any such trading plan in good faith and not as part of a plan or scheme to avoid the prohibitions of Rule 10b5-1. The Participant agrees (i) never to directly or indirectly communicate any material, non-public information regarding the Company to the Company's designated brokerage firm or any employee or affiliate thereof and (ii) at any time an above trading plan is in effect, (x) not to influence how, when, or whether the Shares are sold (other than by selecting a different tax withholding collection method that does not involve sale of Shares, which is equivalent to terminating the trading plan), and (y) not to enter into or alter a corresponding hedging transaction or position with respect to the Shares. The Participant agrees that he or she will not change the tax withholding collection method to Sell-To-Cover (or to the related "same-day sale" alternative) at a time when he or she would be prohibited from trading under the Company's Insider Trading Policy (as defined below).

18. Miscellaneous .

(a) Headings . The headings in this Agreement are provided for convenience only and are not to serve as a basis for interpretation or construction of, and shall not constitute a part of, this Agreement.

(b) Electronic Delivery and Participation . The Company may, in its sole discretion, decide to deliver any documents related to this Award or future Awards that may be made under the Plan (or other Company equity plans) by electronic means, request the Participant's consent to participate in the Plan (or other Company equity plans) by electronic means, or deliver vested Shares by book-entry to the Participant's account at a brokerage selected by the Company. The Participant hereby consents to receive such documents by electronic delivery, authorizes vested shares to be delivered to such a brokerage account by book-entry, and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third-party brokerage designated by the Company.

(c) Section 409A . This Agreement and the Award are intended to comply with or be exempt from, as the case may be, Section 409A of the Code so as to not result in any tax, penalty or interest thereunder. This Agreement and the Award shall be construed and interpreted accordingly. Except for the Company's tax withholding rights, the Participant shall be solely responsible for any and all tax liability with respect to the Award.

(d) Invalid Provision . The invalidity or unenforceability of any particular provision hereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

(e) Governing Law/Choice of Venue .


(1)	This Agreement and the rights of the Participant hereunder shall be construed and determined in accordance with the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof).

(2)

For the purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by the Award or this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the State of California where this grant is made and/or to be performed and agree that such litigation shall be conducted only in the courts of Santa Clara County, California, or the federal court of the United States for the Northern District of California, and no other courts.

(f) Imposition of Other Requirements . If the Participant relocates to another country after the Date of Grant, the Company reserves the right to impose other requirements on the Participant's participation in the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

(g) No Advice Regarding Award . The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant's participation in the Plan, or the Participant's acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

(h) Insider Trading Restrictions/Market Abuse Laws . The Participant acknowledges and agrees that he or she is subject to the Company's Amended and Restated Insider Trading Policy as may be amended from time to time (the " Insider Trading Policy ") including its restrictions that extend for a limited period of time after the Participant's termination of service. In addition, the Participant understands that he or she may be subject to insider trading restrictions under securities laws, market abuse laws, and/or other similar laws, and such restrictions may affect his or her ability to acquire or sell Shares or rights to Shares. The Participant acknowledges that it is the Participant's responsibility to comply with such Company policies and any additional restrictions that may apply under applicable laws with respect to the Participant's acquisition, holding, and any disposition of Shares or rights to Shares.

(i) Recoupment . Notwithstanding any other provision herein, any recoupment or "clawback" policies adopted by the Board or the Administrator and applicable to equity awards, as such policies are in effect from time to time, shall apply to this Award, any Shares that may be issued in respect of this Award, and any proceeds (including dividends and sale proceeds) of such Shares.

(j) Entire Agreement . This Agreement, the Notice of Grant, and the Plan, along with any Amended and Restated Change of Control Severance Agreement or written employment agreement between the Participant and the Company, contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supersede all prior communications, representations and negotiations in respect thereto.

(k) Signature and Acceptance . This Agreement shall be deemed to have been accepted and signed by the Participant and the Company as of the Date of Grant upon the Participant's online acceptance or deemed acceptance as set forth in the Notice of Grant.

(l) Modifications . The provisions of this Agreement may not be changed, modified, or waived in a manner that is adverse to the Participant's interests except by means of a writing signed by the Participant and the Company.

APPENDIX A

This Appendix A to the Company's 2013 Stock Plan, as amended (the " Plan "), Restricted Stock Unit Agreement (the " Agreement ") includes special terms and conditions applicable to Participants in the countries below. These terms and conditions are in addition to or substitute for, as applicable, those set forth in the Agreement. Any capitalized term used in this Appendix A without definition shall have the meaning ascribed to such term in the Plan or the Notice of Grant, as applicable.

Each Participant is advised to seek appropriate professional advice as to how the relevant exchange control and tax laws in the Participant's country may apply to the Participant's individual situation.

ALL COUNTRIES OUTSIDE THE UNITED STATES

The following provisions replace Section 8(a) of the Agreement:

Nature of Award . In accepting the Award, the Participant acknowledges, understands and agrees that:

(i) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

(ii) the Award of RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of RSUs, or benefits in lieu of RSUs even if RSUs have been awarded repeatedly in the past;

(iii) all decisions with respect to future awards, if any, will be at the sole discretion of the Company;

(iv) the Participant's participation in the Plan will not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant's employment relationship;

(v) the Participant's participation in the Plan is voluntary;

(vi) the Award of RSUs is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or to the Employer, and which is outside the scope of the Participant's employment contract, if any;

(vii) the Award of RSUs is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary;

(viii) in the event that the Participant is not an employee of the Company, the Award shall not be interpreted to form an employment contract or relationship with the Company; and furthermore, the Award will not be interpreted to form an employment contract with the Employer or any Subsidiary;

(ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty;

(x) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from termination of the Participant's Continuous Status as an Employee, Consultant or Director by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and in consideration of the Award of RSUs to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives the ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

(xi) in the event of termination of the Participant's Continuous Status as an Employee, Consultant or Director (whether or not in breach of local labor laws), the Participant's right to vest in the RSUs under the Plan, if any, will terminate effective as of the date that the Participant is no longer actively employed by or does no longer actively render services to the Company or any of its Subsidiaries and will not be extended by any notice period mandated under local law; the Administrator shall have the exclusive discretion to determine when the Participant is no longer actively employed for purposes of this Award of RSUs.

CANADA

Settlement of RSUs . Notwithstanding any terms or conditions of the Plan or the Agreement to the contrary, RSUs will be settled in shares of Common Stock only, not cash.

Securities Law Information . You acknowledge and agree that you will only sell shares of Common Stock acquired through participation in the Plan outside of Canada through the facilities of a stock exchange on which the Common Stock is listed. Currently, the shares of Common Stock are listed on the NASDAQ.

Termination of Employment . This provision replaces Section 4(a) of the Agreement:

In the event of your termination of employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), your right to vest in the RSUs will terminate effective as of the date that is the earlier of (1) the date you are no longer actively providing service or (2) the date you receive notice of termination of employment from the Employer, regardless of any notice period or period of pay in lieu of such notice required under applicable laws (including, but not limited to statutory law, regulatory law and/or common law); the Company shall have the exclusive discretion to determine when you are no longer actively employed for purposes of the RSUs.

The following provisions apply if you are resident in Quebec:

Language Acknowledgment . The parties acknowledge that it is their express wish that this Agreement, including this Appendix, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be provided to them in English.

Consentement relatif à la langue utilisée. Les parties reconnaissent avoir expressément souhaité que la convention («Agreement») ainsi que cette Annexe, ainsi que tous les documents, avis et procédures judiciares, éxécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention, soient rédigés en langue anglaise.

Maternity and Paternity Leave . For the avoidance of doubt, Section 4(b) of the Agreement shall not apply to any maternity or paternity leave to which employees in Canada are entitled by law.

CHINA

Mandatory Sale Restriction

Due to regulatory requirements in China, the Company reserves the right to require the sale of any shares of the Company's Common Stock acquired under the Plan within 30 days following the termination of the Participant's employment or service with the Company (including its subsidiaries and affiliates). The Participant authorizes the Company, in its sole discretion, to instruct its designated broker to assist with the mandatory sale of shares of Common Stock issued upon vesting of RSUs following the Participant's termination of employment or service with the Company (including its subsidiaries and affiliates) and, in this regard, the Participant authorizes the Company's designated broker to complete the sale of such Common Stock on the Participant's behalf pursuant to this authorization upon receipt of the Company's instructions. The Participant acknowledges that neither the Company nor its designated broker is obligated to arrange for the sale of the Shares at any particular price and that, upon the sale of the Shares, the proceeds from the sale of the Shares, less any brokerage fees or commissions and subject to any obligation to satisfy any applicable taxes or other tax-related items, will be remitted to the Participant in accordance with applicable exchange control laws and regulations.

Exchange Control Restrictions

The Participant understands and agrees that, pursuant to local exchange control requirements, the Participant (i) is not permitted to transfer any Shares acquired under the Plan out of the account established by the Participant with the Company's designated broker, and (ii) will be required to repatriate all cash proceeds resulting from the Participant's participation in the Plan, including cash dividends paid by the Company on Shares acquired under the Plan and/or the sale of such Shares (together, the "cash proceeds"). The Participant further understands that, under local law, such repatriation may need to be effectuated through a special exchange control account established by the Company or one of its subsidiaries and the Participant hereby consents and agrees that all cash proceeds may be transferred to such special account prior to being delivered to the Participant and that any interest earned on the cash proceeds prior to distribution to the Participant will be retained by the Company to partially offset the cost of administering the Plan. The Participant understands that the cash proceeds may be paid to the Participant from this special account in U.S. dollars or in local currency, at the Company's discretion. If the cash proceeds are paid in U.S. dollars, the Participant understands that he or she will be required to establish a U.S. dollar bank account in China so that the cash proceeds may be deposited into this account. If the cash proceeds are converted to local currency, the Participant acknowledges that the Company is under no obligation to secure any exchange conversion rate, and the Company may face delays in converting the cash proceeds to local currency due to exchange control restrictions in China. The Participant agrees to bear the risk of any exchange conversion rate fluctuation between the date the cash dividend is paid and/or the Shares are sold, as applicable, and the date of conversion of the cash proceeds to local currency. The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.

FINLAND

No country-specific Agreement terms apply.

FRANCE

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information, including the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, employment history and status, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company, its affiliates and Participant's employer will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder). Currently, the third party is E*Trade Financial Corporate Services, Inc., 4005 Windward Plaza Drive, Alpharetta, GA 30005, however the Company may retain additional or different third parties for any of the purposes mentioned. The Company may also make the Data available to public authorities where required under locally applicable law. These recipients may be located in the United States, the European Economic Area, or elsewhere, which the Participant separately and expressly consents to, accepting that outside the European Economic Area, data protection laws may not be as protective as within. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder), including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company through its local H.R. Director; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement. Data will only be held as long as necessary to implement, administer and manage the Participant's participation in the Plan and any subsequent claims or rights.

French Language Provision . By accepting this Agreement, Participant confirms having read and understood the documents relating to the Plan which were provided to Participant in the English language. Participant accepts the terms of those documents accordingly.

French translation: En acceptant ce Contrat vous confirmez ainsi avoir lu et compris les documents relatifs au Plan qui vous ont été communiqués en langue anglaise. Vous en acceptez les termes en connaissance de cause.

Exchange Control Information . If you import or export cash ( e.g. , sales proceeds received under the Plan) with a value equal to or exceeding €10,000 and do not use a financial institution to do so, you must submit a report to the customs and excise authorities.

Tax Reporting . If you hold shares of Common Stock outside of France or maintain a foreign bank account, you are required to report such to the French tax authorities when filing your annual tax return. Failure to comply could trigger significant penalties.

GERMANY

Acceptance of Agreement . Notwithstanding the terms of the Agreement, a Participant must acknowledge and accept the Agreement by signing a copy of the Agreement and returning the original signed document within 30 days after the date of the electronic mail notification of the Agreement. For the avoidance of doubt, this Agreement may be accepted electronically or please sign and return the Agreement to: Cypress Semiconductor GmbH, Attn: Human Resources, Willy-Brandt-Allee 4, 81829 Munich , Germany.

No Impact on Other Rights . The grant of RSUs under the Plan is a one-time benefit and does not create any contractual or other right to receive any other grant of RSUs or other awards under the Plan in the future.

Exchange Control Information . Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. In the event that you make or receive a payment in excess of this amount, you are responsible for obtaining the appropriate form from the remitting bank and complying with applicable reporting requirements.

Consent to Personal Data Processing and Transfer .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company and the Participant's employer hold certain personal information, including the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company and the Participant's employer will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder), at the time being E*Trade Financial Corporate Services, Inc., 4005 Windward Plaza Drive, Alpharetta, GA 30005. These recipients are located in the European Economic Area, but also outside and in so-called insecure third-party countries that do not guarantee the data privacy protection level of the European Economic Area, for example the United States. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder), including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

HONG KONG

WARNING: The RSUs and Shares do not constitute a public offering of securities under Hong Kong law and are available only to Employees. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a "prospectus" for a public offering of securities under the applicable securities legislation in Hong Kong. Nor have the documents been reviewed by any regulatory authority in Hong Kong. The RSUs are intended only for the personal use of each Employee and may not be distributed to any other person. If the Employee is in any doubt about any of the contents of the Agreement, including this Appendix or the Plan, the Employee should obtain independent professional advice.

Manner of Payment . This provision supplements Section 5 of the Agreement:

Notwithstanding any discretion in the Plan or the Agreement to the contrary, upon vesting of the RSUs, the award will be settled in Shares. In no event will the Award be settled in the form of cash.

Sale of Shares . To facilitate compliance with securities laws in Hong Kong, in the event the Employee's RSUs vest and Shares are issued to the Employee within six months of the Date of Grant, the Employee agrees that he or she will not dispose of any Shares acquired prior to the six-month anniversary of the Date of Grant.

Nature of Scheme . The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (" ORSO "). Notwithstanding the foregoing, if the Plan is deemed to constitute an occupational retirement scheme for the purposes of ORSO, then the Employee's grant shall be void.

INDIA

Exchange Control Notification . The Participant understands that he or she must repatriate any proceeds from the sale of Shares acquired under the Plan and any dividends received in relation to the Shares to India and convert the funds into local currency within 90 days of receipt. The Participant must obtain a foreign inward remittance certificate (" FIRC ") from the bank where the Participant deposits the foreign currency and maintains the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Company requests proof of repatriation. It is your responsibility to comply with applicable exchange control laws in India.

Effective April 1, 2012, you are required to declare in your annual tax return (a) any foreign assets held by you or (b) any foreign bank accounts for which you have signing authority.

IRELAND

Manner of Payment . This provision supplements Section 5 of the Agreement:

Notwithstanding any discretion in the Plan or the Agreement to the contrary, upon vesting of the RSUs, the Award will be settled in Shares. In no event will the Award be settled in the form of cash.

Exclusion from Termination Indemnities and Other Benefits . This provision supplements Section 8 of the Agreement:

By accepting the RSUs, the Participant acknowledges, understands, and agrees that the benefits received under the Plan will not be taken into account for any redundancy or unfair dismissal claim.

Director Notification . If the Participant is a director, shadow director or secretary of an Irish subsidiary of the Company, the Participant is subject to certain notification requirements under Section 53 of the Companies Act, 1990. Among these requirements is an obligation to notify the Irish affiliate in writing within five (5) business days when the Participant receives an interest (e.g., RSUs, Shares) in the Company and the number and class of shares or rights to which the interest relates. In addition, the Participant must notify the Irish subsidiary within five (5) business days when the Participant sells Shares acquired under the Plan. This notification requirement also applies to any rights or Shares acquired by the Participant's spouse or children (under the age of 18).

ISRAEL

Securities Law Notice . This RSU Award is granted pursuant to an exemption issued by the Israeli Securities Authority under Section 15D of the Securities Law of 1968. The grant of this RSU Award and the issuance of its underlying shares are registered with the U.S. Securities and Exchange Commission on Form S-8. The Company will make available to any interested Israeli offeree, at his or her workplace, the Form S-8 and all documents attached to the Form S-8, including any document directly or indirectly referred to in the Form S-8 or in its exhibits. To request any such documents, please contact stockadmin@cypress.com.

Sub-Plan and Tax-Based Restrictions . If on the Date of Grant the Holder is an employee of the Company's subsidiary in Israel, Cypress Semiconductors Ltd., then this Award is granted under and subject to the terms of the Cypress Semiconductor Corporation 2013 Stock Plan Sub-Plan for Israeli Taxpayers (the " Israeli Sub-Plan ") and the Participant acknowledges and agrees to the following: This Agreement is granted under and governed by the Plan, the Israeli Sub-Plan, Section 102(b)(2) of the Israeli Income Tax Ordinance (New Version) – 1961 and the Rules promulgated in connection therewith (" Section 102 "), and the trust agreement (the " Trust Agreement ") between the Company and the Trustee (as defined in the Israeli Sub-Plan).


•	The proceeds of any shares of Common Stock issued upon vesting of the RSUs will be remitted by the Company or its designated broker to the Trustee to administer on Participant's behalf, pursuant to the terms of Section 102 and the Trust Agreement.

•

Participant is familiar with the terms and provisions of Section 102, particularly the Capital Gains Track (as defined in the Israeli Sub-Plan) described in subsection (b)(2) thereof, and agrees that Participant will not release or sell (or require the Trustee to release or sell) the RSUs or underlying shares of Common Stock during the Restricted Holding Period (as defined in the Israeli Sub-Plan), unless permitted to do so by applicable law.

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information, including the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company, its affiliates and the Participant's employer will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder). These recipients may be located in the United States, the European Economic Area, or elsewhere. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder), including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan, including transfers outside of Israel and further transfers thereafter. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

ITALY

Data Privacy Notice and Consent .

This provision replaces the "Data Privacy" section of the Agreement.

Participant hereby explicitly and unambiguously consents to the collection, use, processing and transfer, in electronic or other form, of personal data as described in this section of Appendix A by and among, as applicable, the Company and any Subsidiary for the exclusive purpose of implementing, administering and managing Participant's participation in the Plan (and grants of awards made thereunder) .

Participant understands that the Company and any Subsidiary may hold certain personal information about Participant, including but not limited to, Participant's name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, details of the RSUs or any other entitlement to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in Participant's favor, for the exclusive purpose of managing and administering the Plan (" Personal Data ").

Participant also understands that providing the Company with Personal Data is necessary for the performance of the Plan and that Participant's denial to provide Personal Data would make it impossible for the Company to perform its contractual obligations and may affect Participant's ability to participate in the Plan. The Controller of Personal Data processing is Cypress Semiconductor Corporation, with its principal offices at 198 Champion Court, San Jose, California 95134, United States of America, and, pursuant to Legislative Decree no. 196/2003, its representative is Cypress Semiconductor GmbH (a subsidiary of Cypress Semiconductor Corporation) - Willy-Brandt-Allee 4, 81829 Munich , Germany.

Participant understands that Personal Data will not be publicized, but it may be transferred to banks, other financial institutions or brokers involved in the management and administration of the Plan (and grants of awards made thereunder) . Participant further understands that the Company and/or a Subsidiary will transfer Personal Data amongst themselves as necessary for the purpose of implementation, administration and management of Participant's participation in the Plan (and grants of awards made thereunder) , and that the Company and/or a Subsidiary may each further transfer Personal Data to third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder) , including any requisite transfer of Personal Data to a broker or other third party with whom Participant may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain and transfer Personal Data in electronic or other form, for the purposes of implementing, administering and managing Participant's participation in the Plan (and grants of awards made thereunder) . Participant understands that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Personal Data as soon as it has accomplished all the necessary legal obligations connected with the management and administration of the Plan.

Participant understands that Personal Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Personal Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

The processing activity, including communication, the transfer of Personal Data abroad, including outside of the European Economic Area as specified herein and pursuant to applicable laws and regulations, does not require Participant's consent thereto as the processing is necessary to performance of contractual obligations related to implementation, administration and management of the Plan (and grants of awards made thereunder) . Participant understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, Participant has the right to, including but not limited to, access, delete, update, correct or stop, for legitimate reason, the Personal Data processing. Furthermore, Participant is aware that Personal Data will not be used for direct marketing purposes. In addition, Personal Data provided can be reviewed and questions or complaints can be addressed by contacting Participant's human resources department.

Plan Document Acknowledgment . In accepting the RSU, the Participant acknowledges that a copy of the Plan was made available to the Participant and that the Participant has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan, the Agreement and this Appendix.

The Participant further acknowledges that he or she has read and specifically and expressly approves the following provisions in the Agreement: Vesting Schedule and Vesting Conditions and Nature of Award, as well as the following provision in the Plan: Restricted Stock/Restricted Stock Units.

Additional Tax/Exchange Control Information . You are required to report in your annual tax return: (a) any transfers of cash or Common Stock to or from Italy exceeding €10,000 or the equivalent amount in U.S. dollars; (b) any foreign investments or investments (including proceeds from the sale of Common Stock acquired under the Plan) held outside of Italy exceeding €10,000 or the equivalent amount in U.S. dollars, if the investment may give rise to taxable income in Italy; and (c) the amount of the transfers to and from abroad which have had an impact during the calendar year on your foreign investments or investments held outside of Italy. Under certain circumstances, you may be exempt from requirement under (a) above if the transfer or investment is made through an authorized broker resident in Italy.

JAPAN

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold the following personal information for the purpose of managing and administering the Plan (" Data "): the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor. From time to time, the Company may change the scope of its affiliates that hold, use or process Participant's personal information or the scope of Participant's personal information to be held, used or processed by the Company, its affiliates and the Participant's employer, by providing, or making easily accessible, information about such change to the Participant. The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder) . These recipients may be located in the United States, the European Economic Area, Japan or elsewhere. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder) , including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

KOREA

Exchange Control Information . Korean residents who realize US$500,000 or more from the sale of shares of Common Stock or receipt of dividends in a single transaction are required to repatriate the proceeds to Korea within 18 months of receipt.

MALAYSIA

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information from the Participant's Participant records, including the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder) and will disclose certain Data to the Inland Revenue Board and other relevant authorities as required by law. These recipients may be located in the United States, the European Economic Area, Malaysia or elsewhere. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder) , including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Data will be retained by the Company, its affiliates and the Participant's employer for the entire duration of the Participant's employment or service and for a further seven years after cessation of employment or service. The holder may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting Zauyah Kechik (or other authorized individual), at Sdn. Bhd. (613545-T), Phase II, Free Industrial Zone, Bayan Lepas, 11900 Penang, Malaysia; site phone no: +60 4 888 2000.

Disclosure of Data is obligatory for the implementation, administration and management of the Plan (and grants of awards made thereunder) ; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

Director Notification . If the Participant is a director of a subsidiary or other related company in Malaysia, then the Participant is subject to certain notification requirements under the Malaysian Companies Act, 1965. Among these requirements is an obligation to notify the Malaysian subsidiary in writing when the Participant receives an interest (e.g., RSUs, Shares) in the Company or any related companies. In addition, the Participant must notify the Malaysian subsidiary when he or she sells Shares of the Company or any related company (including when the Participant sells Shares acquired under the Plan). These notifications must be made within 14 days of acquiring or disposing of any interest in the Company or any related company.

Securities Law Information . Malaysian insider-trading rules may impact the acquisition or disposal of Shares or rights to Shares under the Plan. Under such rules, the Participant is prohibited from acquiring Shares or rights to Shares (e.g., RSUs) or selling Shares when he or she possesses information that is not generally available and which the Participant knows or should know will have a material effect on the price of the Shares once such information is generally available. By accepting this grant, the Participant acknowledges that he or she is not in possession of any material, non-publicly disclosed information regarding the Company at the time of grant and will not acquire or sell Shares when in possession of any material, non-publicly disclosed information regarding the Company.

PHILIPPINES

Securities Law Information . The sale or disposal of Shares acquired under the Plan may be subject to certain restrictions under Philippines securities laws. Those restrictions should not apply if the offer and resale of Shares takes place outside of the Philippines through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the NASDAQ. The Company's designated broker should be able to assist the Participant in the sale of Shares on the NASDAQ. If the Participant has questions with regard to the application of Philippines securities laws to the disposal or sale of Shares acquired under the Plan the Participant should consult with his or her legal advisor.

SINGAPORE

Securities Law Information . The RSUs were granted to the Participant pursuant to the "Qualifying Person" exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (" SFA "). The Agreement and the Plan have not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that the Participant's RSUs are subject to section 257 of the SFA and the Participant will not be able to make any subsequent sale in Singapore, or any offer of such subsequent sale of the Shares unless such sale or offer in Singapore is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).

Director Notification . If the Participant is a director, associate director or shadow director of a subsidiary or other related company in Singapore, the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singapore subsidiary in writing when the Participant receives an interest (e.g., RSUs, Shares) in the Company or any related company. In addition, the Participant must notify the Singapore subsidiary when the Participant sells Shares of the Company or any related company (including when the Participant sells Shares acquired under the Plan). These notifications must be made within two business days of acquiring or disposing of any interest in the Company or any related company. In addition, a notification must be made of the Participant's interests in the Company or any related company within two business days of becoming a director.

Insider Trading Notification . You should be aware of the Singapore insider trading rules, which may impact the acquisition or disposal of shares or rights to shares of Common Stock under the Plan. Under the Singapore insider trading rules, you are prohibited from acquiring or selling shares of Common Stock or rights to shares of Common Stock ( e.g. , RSUs under the Plan) when you are in possession of information which is not generally available and which you know or should know will have a material effect on the price of Common Stock once such information is generally available.

SWEDEN

No country-specific Agreement terms apply.

TAIWAN

Exchange Control Information . You may remit foreign currency (including proceeds from the sale of Common Stock) into or out of Taiwan up to US$5,000,000 per year without special permission. If the transaction amount is TWD500,000 or more in a single transaction, you must submit a Foreign Exchange Transaction Form to the remitting bank and provide supporting documentation to the satisfaction of the remitting bank.

THAILAND

No country-specific Agreement terms apply.

THE NETHERLANDS

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information, including the Participant's name, home address and telephone number, date of birth, citizen service number ( burgerservicenummer ) (former social security number) or other Participant tax identification number (insofar as allowed), salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder). Currently, the third parties are E*Trade Financial Corporate Services, Inc., 4005 Windward Plaza Drive, Alpharetta, GA 30005., however the Company may retain additional or different third parties for any of the purposes mentioned. These recipients may be located in the United States, the European Economic Area, or elsewhere. Countries outside the European Economic Area do not provide for a similar level of data protection as within the European Economic Area pursuant to the European Data Protection Directive 95/46/EC. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder), including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement. The holder understands that he or she may request a list of the names and addresses of the third party recipients of Data by contacting the Company through its local H.R. Representative at Cypress Semiconductor GmbH, Attn: Human Resources, Willy-Brandt-Allee 4, 81829 Munich , Germany.

UNITED KINGDOM

Eligible Individual . For the purpose of RSUs awarded in the UK, Consultants and Outside Directors are not eligible to receive awards.

Tax Withholding .

The following is added to the "Responsibility for Taxes" section of the Agreement.

The Participant will be liable for and agrees to indemnify and keep indemnified the Company, any subsidiary and his/her employing company, if different, from and against any liability for or obligation to pay any Tax Liability (a " Tax Liability " being any liability for income tax, Participant's National Insurance contributions and employer's National Insurance Contributions) that is attributable to (i) the grant or vesting of, or any benefit derived by the Participant from, the RSUs, (ii) the acquisition by the Participant of the Common Stock on the settlement of the RSUs, or (iii) the disposal of any Common Stock.

The RSUs will not vest until the Participant has made such arrangements as the Company may require for the satisfaction of any Tax Liability that may arise in connection with the vesting or settlement of the RSUs and/or the acquisition of the Common Stock by the Participant. The Company shall not be required to issue, allot or transfer Common Stock until the Participant has satisfied this obligation.

No Right to Continued Employment .

This provision supplements the "Nature of Award" section of the Agreement.

Neither the RSUs nor this Agreement:


(i)	confers upon the Participant any right to continue to be an Employee, Consultant or Director of the Company or any of its subsidiaries or interferes in any way with the right of the Company or any of its subsidiaries to terminate the Participant's employment at any time; or


(ii)	forms part of the Participant's entitlement to remuneration and benefits in terms of his/her employment, or affects the Participant's terms and conditions of employment.

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information (including sensitive personal information) such as the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). By participating in the Plan, the Participant agrees that the Company, its affiliates and the Participant's employer may hold and process such Data, and may transfer Data to any third parties assisting the Company or its affiliates in the implementation, administration and management of the Plan (and grants of awards made thereunder). These recipients may be located in the United States, the European Economic Area, or elsewhere. The Participant hereby authorizes them to receive, possess, process, use, hold, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder) and in the course of the Company's business, including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

Manner of Payment . This provision supplements Section 5 of the Agreement:

Notwithstanding any discretion in the Plan or this Agreement to the contrary, upon vesting of the RSUs, the Award will be settled in Shares. In no event will the Award be settled in the form of cash.

Joint Election . As a condition of the grant of RSUs, the Participant agrees to accept any liability for secondary Class 1 National Insurance contributions (the " Employer NICs ") which may be payable by the Company or the Employer with respect to the vesting of the RSUs or otherwise payable with respect to a benefit derived in connection with the RSUs.

Without limitation to the foregoing, if requested by the Company, the Participant agrees to execute a joint election between the Company and/or the Employer and Participant (the " Joint Election "), the form of such Joint Election being formally approved by Her Majesty's Revenue & Customs (" HMRC "), and any other consent or election required to accomplish the transfer of the Employer NICs to the Participant. The Participant further agrees to execute such other joint elections as may be required between the Participant and any successor to the Company and/or the Employer. If the Participant does not enter into a Joint Election in response to a Company request, no Shares shall be issued to the Participant (and neither the Company nor the Employer shall have any liability with respect to such non-issuance of shares). The Participant further agrees that the Company and/or the Employer may collect the Employer NICs from the Participant by any means.

If the Participant has signed a Joint Election in the past with respect to an RSU award granted to him or her by the Company and that Joint Election applies to all grants made under the Plan, the Participant need not sign another Joint Election in connection with this RSU grant.

Responsibility for Taxes . This provision supplements the Agreement:

You agree that, if you do not pay or the Employer or the Company does not withhold from you the full amount of Tax-Related Items that you owe at vesting and settlement of the RSUs, or the release or assignment of the RSUs for consideration, or the receipt of any other benefit in connection with the RSUs (the " Taxable Event ") within 90 days after the Taxable Event, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, then the amount of income tax that should have been withheld shall constitute a loan owed by you to the Employer, effective 90 days after the Taxable Event. You agree that the loan will bear interest at the HMRC official rate and will be immediately due and repayable by you, and the Company and/or the Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any other funds due to you by the Employer, by withholding in shares of Common Stock issued upon vesting of your RSUs or from the cash proceeds from the sale of shares of Common Stock or by demanding cash or a cheque from you. You also authorize the Company to delay the issuance of any shares of Common Stock unless and until the loan is repaid in full.

Notwithstanding the foregoing, if you are a director or executive officer (as within the meaning of Section 13(k) of the U.S. Securities Exchange Act of 1934, as amended), the terms of the immediately foregoing provision will not apply. In the event that you are such a director or executive officer and the income tax that is due is not collected from or paid by you within 90 days of the Taxable Event, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and national insurance contributions may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to the HMRC under the self-assessment regime and for reimbursing the Company or the Employer (as appropriate) for the value of any Participant national insurance contributions due on this additional benefit.

Exhibit 10.2.7

NOTICE OF GRANT OF PERFORMANCE-BASED RESTRICTED STOCK UNITS

(LTI Program)

Congratulations! You have been granted an Award of Performance-Based Restricted Stock Units ("RSUs") under the Cypress Semiconductor Corporation 2013 Stock Plan, as amended, and any applicable sub-plan thereto for your country (collectively, the "Plan"), as follows:

PARTICIPANT NAME: [name]

PARTICIPANT ID: [ID#]

TARGET NUMBER OF RSUs GRANTED: [number]

Each RSU is equivalent to one Share of Common Stock of Cypress Semiconductor Corporation (the "Company") for purposes of determining the number of Shares subject to this Award. The RSUs are subject to forfeiture prior to vesting. None of the RSUs will vest (nor will you have the rights of a stockholder with respect to the underlying Shares) until you satisfy the vesting conditions described below and in the Performance-Based Restricted Stock Unit Agreement accompanying this notice (the "RSU Agreement"). The number of unvested RSUs and underlying Shares is subject to adjustment under Section 16 of the Plan (such as in connection with a stock split or spin-off). Unless otherwise defined in this Notice of Grant of Milestone-Based Restricted Stock Units (this "Notice of Grant"), capitalized words that are defined in the Plan or the RSU Agreement have the meanings given to them in the Plan or the RSU Agreement, as applicable. Additional terms of this grant are as follows:

GRANT NUMBER: [number]

GRANT DATE: [date]

VESTING BASE DATE: [date]

VESTING SCHEDULE:



Target Number of RSUs		Vesting Date
[number of shares]		[date]
[number of shares]		[date]
[number of shares]		[date]

You acknowledge and agree that this Notice of Grant (including the vesting schedule above) does not constitute an express or implied promise of continued engagement as an Employee or Consultant for the vesting period, for any period, or at all.

The Company's online acceptance procedure requires that you open each of the linked documents in order to proceed to acceptance.

By your acceptance of this Award:


•	you acknowledge receiving and reviewing this Notice of Grant, the RSU Agreement, the Plan, and the Company's related Prospectus;


•	you agree that the RSUs are granted under and governed by the terms and conditions of, and you agree to be bound by the terms of, this Notice of Grant, the RSU Agreement, and the Plan;


•	you agree to accept as binding, conclusive, and final all decisions or interpretations of the Plan Administrator upon any questions relating to the Plan and this Award; and


•	you consent to the collection, use and transfer, in electronic or other form, of your personal data as described in the RSU Agreement for the purpose of implementing, administering and managing your participation in the Plan.

CYPRESS SEMICONDUCTOR CORPORATION

2013 STOCK PLAN, AS AMENDED

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

(LTI Program)

1. Grant . Cypress Semiconductor Corporation (the "Company") hereby grants to the Participant named in the Notice of Grant of Performance-Based Restricted Stock Units (the " Notice of Grant ") an Award of Restricted Stock Units (" RSUs "), as set forth in the Notice of Grant and subject to the terms and conditions in this Performance-Based Restricted Stock Unit Agreement (" Agreement "), in the Company's 2013 Stock Plan, as amended, and in any applicable sub-plan for the Participant's country (such plan and any such sub-plan, if applicable, collectively, the " Plan "). A sub-plan is applicable to this Award if, but only if, the country-specific terms for the Participant's country as set forth in Appendix A state that this Award is granted under or subject to such sub-plan. Unless otherwise defined herein, capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Plan (the " Agreement ").

2. Company's Obligation . Each performance-based RSU represents the right to receive a Share of Common Stock of the Company on the Vesting Date (as defined below) if and to the extent that the vesting conditions established by or pursuant to the Notice of Grant, this Agreement and the Plan have been satisfied. Unless and until RSUs vest, the Participant will have no right to receive Shares (or any other payment) in connection with such RSUs. Prior to actual distribution of Shares in settlement of any vested RSUs, such RSUs represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

3. Vesting Conditions and Procedure .

(a) Vesting Conditions . Subject to Section 4 below, the vesting of RSUs on each scheduled vesting date set forth in the Notice of Grant (each, a " Vesting Date ") shall be subject to (i) the Participant's Continuous Status as an Employee, Consultant or Director from the grant date specified in the Notice of Grant (the " Date of Grant ") to such Vesting Date (the " Service-Based Condition ") and (ii) satisfaction of the applicable performance conditions prior to such Vesting Date as described below. Employment or service for only a portion of the vesting period described in clause (i) above, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 4 below or in the Plan. For each scheduled Vesting Date, the Administrator shall designate one or more associated performance period (each, a " Performance Period ") that ends no later than such Vesting Date and shall establish performance targets applicable to such Performance Period(s). The Administrator shall also establish a methodology for determining the percentage of the target number of RSUs set forth opposite such Vesting Date in the Vesting Schedule (the " Target Number of RSUs ") that will vest based on relative achievement of such performance targets (" Performance-Based Criteria "). Performance-Based Criteria (1) shall be established by the Administrator not later than thirty (30) days after the start of a quarterly or semi-annual Performance Period to which they relate, and no later than ninety (90) days after the start of an annual (or longer) Performance Period to which they relate and (2) shall be communicated to the Participant promptly after being established by the Administrator. Within sixty (60) days following the end of the final Performance Period relating to each Vesting Date, the Administrator shall determine whether and the extent to which the performance targets applicable to such Vesting Date were met and will confirm the vesting percentage (the " Vesting Percentage ") that applies pursuant to the previously established methodology. Such determination shall be final and binding absent manifest error. In no event shall the Vesting Percentage be greater than 225 percent. For the avoidance of doubt, unless the Participant is an executive officer, the responsibilities allocated to the Administrator in this paragraph may be performed by an officer of the Company if the Administrator has delegated appropriate authority to such officer.

(b) Vesting Procedure . On each Vesting Date, if the Participant has satisfied the Service-Based Condition, the number of RSUs that shall vest and become non-forfeitable shall be equal to the Target Number of RSUs for such Vesting Date multiplied by the applicable Vesting Percentage, rounded down to the nearest whole share. Any of the Target Number of RSUs for a particular Vesting Date that do not vest on such Vesting Date in accordance with this Section 3 shall terminate as of the last day of the final Performance Period associated with such Vesting Date.

4. Forfeiture upon Termination as an Employee, Consultant or Director; Leaves of Absence .

(a) Forfeiture upon Termination of Service . Subject to any acceleration right expressly set forth in the Performance-Based Criteria communicated to the Participant, if the Participant's Continuous Status as an Employee, Consultant or Director ceases for any or no reason after the Date of Grant but prior to vesting, any unvested RSUs awarded by this Agreement will thereupon be forfeited at no cost to the Company and, if applicable, at no cost to the Company affiliate that actually employs or otherwise engages the Participant (the " Employer "). Neither the Participant nor any of the Participant's successors, heirs, assigns or personal representatives shall have any rights or interests in any RSUs that are forfeited pursuant to any provision of this Agreement or the Plan.

(b) [reserved]

8. No Effect on Employment or Status .

(a) If the Participant is employed in the United States, (1) the Participant's employment or other service relationship with the Company or the Employer is on an at-will basis only; and accordingly, the terms of the Participant's employment or other service relationship with the Company or the Employer will be determined from time to time by the Company or the Employer, and the Company or the Employer will have the right, which is hereby expressly reserved, to terminate or change the terms of the employment or other service relationship of the Participant at any time for any reason whatsoever, with or without good cause or notice; and (2) the Participant understands and agrees that the vesting of the RSUs subject to this Award pursuant to Section 3 is subject to performance conditions, as may be determined pursuant to the terms of this Agreement, and to the Participant's continuing in the employ or service of the Company or the Employer through each applicable Vesting Date.

14. Administrator Authority . The Administrator will have the power to interpret the Plan, this Agreement, the Notice of Grant, and the Performance-Based Criteria and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any RSUs have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company, and all other interested persons. No member of the Administrator will be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

17. Responsibility for Taxes .

18. Miscellaneous .

(e) Governing Law/Choice of Venue .


(1)	This Agreement and the rights of the Participant hereunder shall be construed and determined in accordance with the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof).

(2)

APPENDIX A

This Appendix A to the Company's 2013 Stock Plan, as amended (the " Plan "), Performance-Based Restricted Stock Unit Agreement (the " Agreement ") includes special terms and conditions applicable to Participants in the countries below. These terms and conditions are in addition to or substitute for, as applicable, those set forth in the Agreement. Any capitalized term used in this Appendix A without definition shall have the meaning ascribed to such term in the Plan or the Notice of Grant, as applicable.

ALL COUNTRIES OUTSIDE THE UNITED STATES

The following provisions replace Section 8(a) of the Agreement:

Nature of Award . In accepting the Award, the Participant acknowledges, understands and agrees that:

(i) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time;

(iii) all decisions with respect to future awards, if any, will be at the sole discretion of the Company;

(v) the Participant's participation in the Plan is voluntary;

(ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty;

CANADA

Settlement of RSUs . Notwithstanding any terms or conditions of the Plan or the Agreement to the contrary, RSUs will be settled in shares of Common Stock only, not cash.

Termination of Employment . This provision replaces Section 4(a) of the Agreement:

The following provisions apply if you are resident in Quebec:

Maternity and Paternity Leave . For the avoidance of doubt, any leave of absence proration shall not apply to any maternity or paternity leave to which employees in Canada are entitled by law.

CHINA

Mandatory Sale Restriction

Exchange Control Restrictions

FINLAND

No country-specific Agreement terms apply.

FRANCE

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

GERMANY

Consent to Personal Data Processing and Transfer .

This provision replaces the "Data Privacy" section of the Agreement.

HONG KONG

Manner of Payment . This provision supplements Section 5 of the Agreement:

Notwithstanding any discretion in the Plan or the Agreement to the contrary, upon vesting of the RSUs, the Award will be settled in Shares. In no event will the Award be settled in the form of cash.

INDIA

Effective April 1, 2012, you are required to declare in your annual tax return (a) any foreign assets held by you or (b) any foreign bank accounts for which you have signing authority.

IRELAND

Manner of Payment . This provision supplements Section 5 of the Agreement:

Notwithstanding any discretion in the Plan or the Agreement to the contrary, upon vesting of the RSUs, the Award will be settled in Shares. In no event will the Award be settled in the form of cash.

Exclusion from Termination Indemnities and Other Benefits . This provision supplements Section 8 of the Agreement:

By accepting the RSUs, the Participant acknowledges, understands, and agrees that the benefits received under the Plan will not be taken into account for any redundancy or unfair dismissal claim.

ISRAEL

Sub-Plan and Tax-Based Restrictions . If on the Date of Grant, the Holder is an employee of the Company's subsidiary in Israel, Cypress Semiconductors Ltd., then this Award is granted under and subject to the terms of the Cypress Semiconductor Corporation 2013 Stock Plan Sub-Plan for Israeli Taxpayers (the " Israeli Sub-Plan ") and the Participant acknowledges and agrees to the following: This Agreement is granted under and governed by the Plan, the Israeli Sub-Plan, Section 102(b)(2) of the Israeli Income Tax Ordinance (New Version) – 1961 and the Rules promulgated in connection therewith (" Section 102 "), and the trust agreement (the " Trust Agreement ") between the Company and the Trustee (as defined in the Israeli Sub-Plan).


•	The proceeds of any shares of Common Stock issued upon vesting of the RSUs will be remitted by the Company or its designated broker to the Trustee to administer on Participant's behalf, pursuant to the terms of Section 102 and the Trust Agreement.

•

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information, including the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company, its affiliates and the Participant's employer will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder). These recipients may be located in the United States, the European Economic Area, or elsewhere. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder), including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan, including transfers outside of Israel and further transfers thereafter. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

ITALY

Data Privacy Notice and Consent .

This provision replaces the "Data Privacy" section of the Agreement.

JAPAN

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold the following personal information for the purpose of managing and administering the Plan (" Data "): the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor. From time to time, the Company may change the scope of its affiliates that hold, use or process Participant's personal information or the scope of Participant's personal information to be held, used or processed by the Company, its affiliates and the Participant's employer, by providing, or making easily accessible, information about such change to the Participant. The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder) . These recipients may be located in the United States, the European Economic Area, Japan or elsewhere. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder) , including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

KOREA

MALAYSIA

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information from the Participant's Participant records, including the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder) and will disclose certain Data to the Inland Revenue Board and other relevant authorities as required by law. These recipients may be located in the United States, the European Economic Area, Malaysia or elsewhere. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder) , including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Data will be retained by the Company, its affiliates and the Participant's employer for the entire duration of the Participant's employment or service and for a further seven years after cessation of employment or service. The holder may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting Zauyah Kechik (or other authorized individual), at Sdn. Bhd. (613545-T), Phase II, Free Industrial Zone, Bayan Lepas, 11900 Penang, Malaysia; site phone no: +60 4 888 2000.

PHILIPPINES

SINGAPORE

SWEDEN

No country-specific Agreement terms apply.

TAIWAN

THAILAND

No country-specific Agreement terms apply.

THE NETHERLANDS

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information, including the Participant's name, home address and telephone number, date of birth, citizen service number ( burgerservicenummer ) (former social security number) or other Participant tax identification number (insofar as allowed), salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan (and grants of awards made thereunder). Currently, the third parties are E*Trade Financial Corporate Services, Inc., 4005 Windward Plaza Drive, Alpharetta, GA 30005., however the Company may retain additional or different third parties for any of the purposes mentioned. These recipients may be located in the United States, the European Economic Area, or elsewhere. Countries outside the European Economic Area do not provide for a similar level of data protection as within the European Economic Area pursuant to the European Data Protection Directive 95/46/EC. The Participant hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder), including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement. The holder understands that he or she may request a list of the names and addresses of the third party recipients of Data by contacting the Company through its local H.R. Representative at Cypress Semiconductor GmbH, Attn: Human Resources, Willy-Brandt-Allee 4, 81829 Munich , Germany.

UNITED KINGDOM

Eligible Individual . For the purpose of RSUs awarded in the UK, Consultants and Outside Directors are not eligible to receive awards.

Tax Withholding .

The following is added to the "Responsibility for Taxes" section of the Agreement.

No Right to Continued Employment .

This provision supplements the "Nature of Award" section of the Agreement.

Neither the RSUs nor this Agreement:


(i)	confers upon the Participant any right to continue to be an Employee, Consultant or Director of the Company or any of its subsidiaries or interferes in any way with the right of the Company or any of its subsidiaries to terminate the Participant's employment at any time; or


(ii)	forms part of the Participant's entitlement to remuneration and benefits in terms of his/her employment, or affects the Participant's terms and conditions of employment.

Data Privacy .

This provision replaces the "Data Privacy" section of the Agreement.

By acceptance of this Agreement, the Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Participant's employer hold certain personal information (including sensitive personal information) such as the Participant's name, home address and telephone number, date of birth, social security number or other Participant tax identification number, salary, nationality, job title, and information regarding equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Participant's favor, for the purpose of managing and administering the Plan (" Data "). By participating in the Plan, the Participant agrees that the Company, its affiliates and the Participant's employer may hold and process such Data, and may transfer Data to any third parties assisting the Company or its affiliates in the implementation, administration and management of the Plan (and grants of awards made thereunder). These recipients may be located in the United States, the European Economic Area, or elsewhere. The Participant hereby authorizes them to receive, possess, process, use, hold, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan (and grants of awards made thereunder) and in the course of the Company's business, including any requisite transfer of such Data as may be required for the administration of the Plan (and grants of awards made thereunder) on behalf of the Participant to a third party with whom the Participant may have elected to have payment made pursuant to the Plan. The Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Participant's ability to participate in the Plan and receive the benefits intended by this Agreement.

Manner of Payment . This provision supplements Section 5 of the Agreement:

Notwithstanding any discretion in the Plan or this Agreement to the contrary, upon vesting of the RSUs, the Award will be settled in Shares. In no event will the Award be settled in the form of cash.

Responsibility for Taxes . This provision supplements the Agreement:

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Hassane El-Khoury, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Cypress Semiconductor Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Dated:	April 26, 2019	By:	/s/ HASSANE EL-KHOURY
			HASSANE EL-KHOURY
			President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Thad Trent, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Cypress Semiconductor Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Dated:	April 26, 2019	By:	/s/ THAD TRENT
			Thad Trent
			Executive Vice President, Finance and Administration and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Hassane El-Khoury, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Cypress Semiconductor Corporation for the quarter ended March 31, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Cypress Semiconductor Corporation.



Dated:	April 26, 2019	By:	/s/ HASSANE EL-KHOURY
			HASSANE EL-KHOURY
			President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Thad Trent, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Cypress Semiconductor Corporation for the quarter ended March 31, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Cypress Semiconductor Corporation.



Dated:	April 26, 2019	By:	/s/ THAD TRENT
			Thad Trent
			Executive Vice President, Finance and Administration and Chief Financial Officer