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Item 1A. Risk Factors

2025-11-25 compared with 2024-11-26 · 122 added, 105 removed, 319 unchanged (42% of the section changed)

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As a result of our international operations, our business, financial condition and results of operations could be negatively impacted by, among others, the following factors:

• political, legal and economic changes, crises or instability and civil unrest that may impact markets in which we do business, such as macroeconomic weakness related to trade and political disputes between the United States and Europe or China, tensions across the Taiwan Strait that may adversely affect our operations in Taiwan, our customers and the technology industry supply chain, and the ongoing conflicts between Russia and Ukraine and in Israel and the Middle East;

• compliance requirements of customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations;

• currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of elevated interest rates;

• instability of global credit and financial markets due to adverse macroeconomic conditions such as elevated inflation, high interest rates, bank failures and slower economic growth or recession that could, among other impacts, affect our ability to timely access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges;

• trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export classifications or other restrictions imposed by the U.S.

• political, legal and economic changes, crises or instability and civil unrest that may impact markets in which we do business, such as macroeconomic weakness related to trade and political disputes between the United States and Europe or China, tensions across the Taiwan Strait that may adversely affect our operations in Taiwan, our customers and the technology industry supply chain, and the ongoing conflict between Russia and Ukraine and tensions in Israel and the Middle East;

• trade policy, commercial, travel, export or taxation disputes or restrictions, import, export or sector-based tariffs, changes to export classifications or other restrictions imposed by the U.S.

government or by the governments of the countries in which we do business, particularly with respect to China;

• sanctions imposed by governments in countries in which we do business;

• compliance requirements of customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations;

• currency conversion risks and exchange rate and interest rate fluctuations and uncertainty;

• instability of global credit and financial markets due to uncertainty and adverse macroeconomic conditions such as inflation, tariffs and trade restrictions, high interest rates, bank failures and slower economic growth or recession that could, among other impacts, affect our ability to timely access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges;

• sanctions imposed by the U.S.

government or by the governments in countries in which we do business, which could adversely impact our business by preventing us from performing existing contracts, recognizing revenue, pursuing new business opportunities or receiving payment for products already supplied to customers;

• complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax, price protection, competition practices, export control, customs, immigration, anti-boycott, AI, data privacy, cyber and product security, sustainability, climate and other ESG matters, intellectual property, anti-corruption, including the Foreign Corrupt Practices Act, and environmental compliance;

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• greater difficulty enforcing intellectual property rights and weaker laws protecting such rights;

• natural disasters, public health emergencies, such as the COVID-19 pandemic, or other catastrophic events;

• natural disasters, public health emergencies or other catastrophic events;

• transportation disruptions and delays and increases in labor and transportation costs;

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Many of these factors and risks are present and may be exacerbated within our business operations in China.

For example, changes in U.S.-China relations, the political environment or international trade policies could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties and tariffs, restrictions on imports or exports, currency revaluations or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results.

The incoming administration has

indicated that it intends to impose or significantly increase tariffs on imports to the United States, which could exacerbate many of these issues.

In addition, expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.

These restrictions have created, and these and similar restrictions may continue to create, uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions or focus on building indigenous semiconductor capacity to reduce reliance on U.S.

additional import or export duties and tariffs, restrictions on imports or exports, currency revaluations or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results.

In addition, export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.

These restrictions, which have continued to expand over the past several years, have impacted our revenues and results of operations in China and elsewhere.

These and similar restrictions have created, and may continue to create, uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions or focus on building indigenous semiconductor capacity to reduce reliance on U.S.

Furthermore, if these export restrictions cause our current or potential customers to view U.S.

companies as unreliable, we could suffer reputational damage or lose business to foreign competitors who are not subject to such export restrictions, and our business could be materially harmed.

We are continuing to evaluate the impact of these restrictions on our business, but these actions may have direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere.

In addition, our success may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to imports and exports, antitrust, AI, cybersecurity, data protection and data privacy, the environment, indigenous innovation, the promotion of a domestic semiconductor industry, intellectual property rights and enforcement and protection of those rights.

We continue to evaluate the impact of these restrictions on our business as they are updated and expanded, and we expect that they may continue to have direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere.

In addition, our success may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to imports and exports, rare earth materials, antitrust, AI, cybersecurity, data protection and data privacy, the environment, indigenous innovation, the promotion of a domestic semiconductor industry, intellectual property rights and enforcement and protection of those rights.

Recently announced and future tariffs and other trade restrictions could materially and adversely affect our business, financial condition and results of operations.

In 2025, the U.S.

government announced a series of tariffs, including tariffs targeting a broad range of imports and targeted tariffs on goods from specific countries and industries.

In response, many countries imposed reciprocal tariffs and other trade restrictions on the United States.

Although many of these tariffs, countermeasures and other trade restrictions have since been eased or paused, their initial announcements triggered considerable volatility in global markets and heightened economic uncertainty, and the global trade situation, particularly between the United States and China, continues to be highly dynamic.

Further, throughout 2025 the U.S.

government has initiated numerous investigations into products and industries under Section 232 of the Trade Expansion Act of 1962.

For example, in April 2025, the Department of Commerce launched an investigation into the national security impacts of imported semiconductors and semiconductor manufacturing equipment.

While the results of this investigation remain unknown, it is expected to result in additional tariffs and trade restrictions that may adversely impact our business.

Similar investigations on other industries or products, including automotive, copper, steel, aluminum, critical minerals and aircraft, may also adversely impact the semiconductor industry and our business.

These changes have, and similar changes in the future may continue to, increase the cost or reduce the availability of raw materials and supplies we need to operate, cause customers to advance, delay, reduce, or cancel orders, shift buying patterns, impact demand in our end markets, complicate demand forecasting for us and our customers, increase supply chain complexity and contribute to volatility, a broader economic slowdown or recession.

Any of these impacts or changes could materially and adversely affect our business, financial condition and results of operations.

The markets for semiconductor products are cyclical, and increased production may lead to overcapacity and lower prices, and conversely, we may not be able to satisfy unexpected demand for our products.

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The demand for our products may vary based on market conditions in our major end markets.

Demand in these end markets can fluctuate significantly based upon, for example, consumer spending, consumer preferences, the development of new technologies and macroeconomic conditions.

Demand in these end markets can fluctuate significantly based upon, for example, consumer spending, consumer preferences, the development of new technologies and macroeconomic conditions, including impacts related to tariffs and other trade restrictions.

If we overbuild inventory in a period of decreased demand, or we expand our operations and workforce too rapidly or procure excessive resources in anticipation of increased demand for our products, and that demand does not materialize at the pace at which we expect, or declines, our operating results may be adversely affected as a result of underutilization of capacity, charges related to obsolete inventory, asset impairment or inventory write-downs, increased operating expenses or reduced margins.

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In addition, we may not be able to expand our workforce and operations in a sufficiently timely manner, procure adequate resources and raw materials, locate suitable third-party suppliers or respond effectively to changes in demand for our existing products or to demand for new products requested by our customers, and our current or future business could be materially and adversely affected.

Our operating results are dependent on the performance of independent distributors.

Sales to third-party distributors accounted for approximately 56% of our revenue in the year ended November 1, 2025.

These independent distributors generally represent product lines offered by several companies and thus could reduce their sales

efforts for our products.

Further, our distributors could terminate their representation of us with little advance notice or their representation of us could be negatively affected for other reasons.

For example, our distributors could be adversely impacted by additional tariffs or export controls, which could limit our ability to conduct business with such distributors, increase our costs and adversely affect our reputation and operating results.

In addition, we generally do not require letters of credit from our distributors, including our largest distributor, and are not protected against accounts receivable default or declarations of bankruptcy by these distributors.

Our inability to collect open accounts receivable could adversely affect our operating results.

Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or through consolidation in the distribution industry, or the inability of a distributor to perform its obligations, could divert management’s attention and resources, result in disputes, litigation and settlement costs, increase risk that our products may be diverted from authorized distribution channels and sold on the “gray market” and disrupt our business.

Further, if we are unable to find suitable replacements with the appropriate scale and resources, our operating results could be adversely affected.

We are required to estimate the effects of variable consideration including price protection and stock rotation provided to distributors and record revenue at the time of sale to the distributor.

If our estimates of such liabilities are materially understated, it could cause subsequent adjustments that negatively impact our revenues and gross profits in a future period.

We rely on third parties for supply of raw materials and parts, semiconductor wafer foundry services, assembly and test services and transportation, among other things, and we generally cannot control their availability or conditions of supply or services.

We rely, and plan to continue to rely, on third-party suppliers and service providers, including raw material and components suppliers, semiconductor wafer foundries, assembly and test contractors and freight carriers (collectively, vendors), in manufacturing and shipping our products.

This reliance involves several risks, including reduced control over availability, capacity utilization, delivery schedules, manufacturing yields, costs and supply chain allocations.

This reliance involves several risks, including reduced control over availability, pricing, capacity utilization, delivery schedules, manufacturing yields, costs and supply chain allocations.

We currently source more than half of our wafer requirements annually from third-party wafer foundries, including Taiwan Semiconductor Manufacturing Company (TSMC) and others.

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Limited or delayed access to these items, including as a result of global trade issues, supply chain constraints, difficulties obtaining import or export licenses, natural disasters, public health emergencies or changes in or new laws or regulations, could adversely affect our results of operations.

Further, the imposition of tariffs or other trade restrictions may significantly increase the costs, and otherwise adversely impact the availability, of certain raw materials and supplies that we need to operate.

In certain instances, one of our vendors may be the sole source of highly specialized processing services or materials.

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If additional or replacement vendors are not available, we may also experience delays in product development or shipment which could, in turn, result in reputational harm or the temporary or permanent loss of customers, and as a result could adversely affect our business and results of operations.

A prolonged disruption of our or our third parties’ manufacturing operations could have a material adverse effect on our business, financial condition and results of operations.

In addition to leveraging an outsourcing model for certain manufacturing operations, we also rely on our internal manufacturing operations located in the United States, Ireland, the Philippines, Thailand and Malaysia.

A prolonged disruption, shut-down or inability to utilize one or more of our or our third parties’ manufacturing facilities due to natural or man-made disasters, cybersecurity incidents, civil unrest or other events outside of our control, such as loss of raw materials or damage to our or our third parties’ manufacturing equipment, widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer demand.

As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, reputation, financial condition and results of operations.

Our industry faces challenges associated with products diverted from authorized distribution channels, which could result in reputational harm and have a material adverse effect on our business and results of operations.

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In the past, certain of our products have been, and there is a risk that our products may continue to be, diverted from our authorized distribution channels and sold on the “gray market” in ways that are not in accordance with our established agreements, controls, policies and procedures.

Purchasers that acquire our products via the gray market or through other unauthorized channels may resell or otherwise use our products for purposes for which they were not intended or that may be contrary to our ethical, legal and regulatory obligations.

Purchasers that acquire our products via the gray market or through other unauthorized channels may resell or otherwise use our products

for purposes for which they were not intended or that may be contrary to our ethical, legal and regulatory obligations.

Organizations may also purchase counterfeit or substandard products, including products that have been altered, mishandled or damaged, or purchase used products presented as new, each of which could result in damage to property or persons and adversely affect our reputation and customer satisfaction.

In addition, governments and regulatory bodies may inquire into our processes to mitigate risks related to product diversion.

For example, during 2024, we participated in an inquiry from the U.S.

Senate Permanent Subcommittee on Investigations related to the unauthorized misuse of U.S.

chips in Russian weapon systems.

As new challenges and information arise, our processes and policies will evolve, and we may be required to incur additional costs to continue to enhance our compliance efforts, which may include costs associated with distributor audits or responding to inquiries from governments and regulatory bodies.

These situations could have a material adverse effect on our reputation and business and operating results.

A prolonged disruption of our or our third parties’ manufacturing operations could have a material adverse effect on our business, financial condition and results of operations.

A prolonged disruption at, or inability to utilize, one or more of our or our third parties’ manufacturing facilities, loss of raw materials or damage to our or our third parties’ manufacturing equipment for any reason, including due to natural or man-made disasters, civil unrest or other events outside of our control, such as widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer demand.

Our operating results are dependent on the performance of independent distributors.

Sales to third-party distributors accounted for approximately 58% of our revenue in the year ended November 2, 2024.

These independent distributors generally represent product lines offered by several companies and thus could reduce their sales efforts for our products.

Further, our distributors could terminate their representation of us with little advance notice.

Our inability to collect open accounts receivable could adversely affect our operating results.

Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or through consolidation in the distribution industry, could disrupt our business, and if we are unable to find suitable replacements with the appropriate scale and resources, our operating results could be adversely affected.

We are required to estimate the effects of returns and allowances provided to distributors and record revenue at the time of sale to the distributor.

If our estimates of such credits and rights are materially understated, it could cause subsequent adjustments that negatively impact our revenues and gross profits in a future period.

Our future success depends upon our ability to execute our business strategy, continue to innovate, improve our existing products, design, develop, produce and market new products and identify and enter new markets.

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Further, there can be no assurance that the markets we serve and target based on our business strategy will grow in the future, that our existing and new products will meet the requirements of these markets, that our products, or the end-products in which our products are used, will achieve customer acceptance in these markets, that competitors will not force price reductions or take market share from us or that we can achieve or maintain adequate gross margins or profits in these markets.

We may not be able to compete successfully in markets within the semiconductor industry in the future.

We face intense competition in the semiconductor industry, and we expect this competition to increase in the future, including from companies located outside of the United States.

Competition is generally based on innovation, design, quality and reliability of products, product performance, features and functionality, product pricing, availability and capacity, technological service and support and the availability of integrated system solutions, with the relative importance of these factors varying among products, markets and customers.

Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products.

Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers.

Our competitors also include both emerging companies selling specialized products in markets we serve and companies outside of the United States, including entities associated with well-funded efforts by foreign governments to create indigenous semiconductor industries.

From time to time, governments around the world may provide incentives or make other investments that could benefit and give competitive advantages to our competitors.

For example, in August 2022, the CHIPS and Science Act of 2022 (CHIPS Act) was signed into law to provide financial incentives to the U.S.

semiconductor industry.

Government incentives, including any that may be offered in connection with the CHIPS Act, may not be available to us on acceptable terms or at all.

Further, such programs typically require companies to adhere to various performance obligations, which we may not achieve.

If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors’ relative position and have a material adverse effect on our reputation and business.

Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets with enhanced performance, features and functionality, lower power requirements, greater levels of integration or lower cost, which may increase our obsolete or excess inventory and result in inventory write-offs.

In addition, as we seek to expand our business, including the design and production of products and services for developing and emerging markets, we may encounter increased competition from our current and new competitors.

Increased competition in certain markets has resulted in and may continue to result in declining average selling prices, reduced gross margins and loss of market share in those markets.

There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that our operating results will not be adversely affected by increased competition.

In addition, the semiconductor industry has experienced significant consolidation over the past several years.

Consolidation among our competitors could lead to a changing competitive landscape, which could negatively impact our competitive position and market share and harm our results of operations.

Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may materially fluctuate.

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• changes in geographic, product or customer mix;

• changes in our effective tax rates, adverse tax decisions or new or revised tax legislation in the United States, Ireland or worldwide;

• the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions;

• changes in our effective tax rates, adverse tax decisions or new or revised tax legislation in the United States, Ireland or worldwide, including changes related to the One Big Beautiful Bill Act;

• the effects of issued, threatened or retaliatory government sanctions or economic restrictions;

changes in law, regulations or other restrictions, including executive orders;

and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, or duties and tariffs, including with respect to China;

and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, tariffs, duties or trade barriers, including with respect to China;

• the timing of new product announcements or introductions, including products that may incorporate, or are based upon, software or AI technology, by us, our customers or our competitors and the market acceptance of such products;

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• a decline in infrastructure spending by foreign governments, including China;

• political changes in the United States, including those related to the incoming administration and executive offices of the U.S.

• political changes in the United States, including those related to the current U.S.

administration and executive offices of the U.S.

government, a decline in the U.S.

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In addition, the semiconductor market has historically been cyclical and subject to significant economic upturns and downturns.

Our business and certain of the end markets we serve are also subject to rapid technological changes and material fluctuations in demand based on end-user preferences.

Our business and certain of the end markets we serve are also subject to rapid technological changes and material

fluctuations in demand based on end-user preferences.

There can be no assurance that products stocked in our inventory will not be rendered obsolete before we ship them or that we will be able to design, develop and produce products in a timely fashion to accommodate changing customer demand.

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In addition, if our revenue, gross margins, operating results, net income and earnings per share results or expectations do not meet the expectations of securities analysts or investors, the market price of our common stock may decline.

We may not be able to compete successfully in markets within the semiconductor industry in the future.

We face intense competition in the semiconductor industry, and we expect this competition to increase in the future, including from companies located outside of the United States.

Many companies have sufficient financial, manufacturing, technical, sales and marketing resources to develop and market products that compete with our products.

Some of our competitors may have more advantageous supply or development relationships with our current and potential customers or suppliers.

From time to time, governments around the world may provide incentives or make other investments that could benefit and give competitive advantages to our competitors.

For example, in August 2022, the CHIPS and Science Act of 2022 (CHIPS Act) was signed into law to provide financial incentives to the U.S.

semiconductor industry.

Government incentives, including any that may be offered in connection with the CHIPS Act, may not be available to us on acceptable terms or at all, and to the extent that the incoming administration modifies or repeals the CHIPS Act, the availability of any such incentives may be even less certain.

Further, such programs typically require companies to adhere to various performance obligations, which we may not achieve.

Increased competition in certain markets has resulted in and may continue to result in declining average selling prices, reduced gross margins and loss of market share in those markets.

In addition, the semiconductor industry has experienced significant consolidation over the past several years.

Consolidation among our competitors could lead to a changing competitive landscape, which could negatively impact our competitive position and market share and harm our results of operations.

If we are unable to recruit or retain our key personnel, our ability to execute our business strategy will be adversely affected.

Our continued success depends to a significant extent upon the recruitment, retention and effective succession of our key personnel, including our leadership team, management and technical personnel, particularly our experienced engineers.

The competition for these employees is intense and the labor market is tight.

The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, and the increased uncertainty surrounding such policies in light of the incoming administration’s expected immigration agenda, could cause business disruptions, increased expenses to address any disruptions and could have a material adverse effect on our business.

We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster innovation, teamwork and employee satisfaction.

As we grow, including from the integration of employees and businesses

acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success.

The competition for these employees is intense and the labor market is tight, which may be exacerbated by changes to U.S.

immigration policies.

The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business disruptions, increased expenses to comply with such policies and address any disruptions and could have a material adverse effect on our business.

We do not maintain any key person life insurance policy on any of our officers or other employees.

The loss of one or more of our key employees, and any failure to have in place and execute an effective succession plan for key executives, could seriously harm our business and results of operations.

The loss of members of our leadership team, and failure to successfully execute succession plans for our leadership team, could also harm our business and results of operations.

We believe that a critical contributor to our success to date has been our corporate culture, which we have built to foster innovation, teamwork and employee satisfaction.

As we grow, including from the integration of employees and businesses acquired in connection with previous or future acquisitions, we may find it difficult to maintain important aspects of our corporate culture, which could negatively affect our ability to retain and recruit personnel who are essential to our future success.

Our customers typically do not make long-term product purchase commitments, and incorrect forecasts or reductions, cancellations or delays in orders for our products could adversely affect our operating results.

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In certain markets where end-user demand may be particularly volatile and difficult to predict, some customers place orders that require us to manufacture product and have it available for shipment, even though the customer is unwilling to make a binding commitment to purchase all, or even any, of the product.

In other instances, we manufacture product based on non-binding forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be inaccurate.

In other instances, we manufacture products based on non-binding forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be inaccurate.

Additionally, our U.S.

government contracts and subcontracts may be funded in increments over a number of government budget periods and typically can be terminated by the government for its convenience.

As a result, we may incur inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower-than-expected orders or cancellations of orders, leading to a sharp reduction of sales and backlog.

As a result of these and other factors, we often incur inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower-than-expected orders or cancellations of orders, leading to a sharp reduction in sales and backlog.

Further, if orders or forecasts for products that meet a customer’s unique requirements are canceled or unrealized, we may be left with an inventory of unsaleable products, causing potential inventory write-offs, and hindering our ability to recover our costs.

The foregoing risks may be exacerbated in times of macroeconomic uncertainty, including as a result of elevated inflation, high interest rates, bank failures and slower economic growth or recession.

The foregoing risks may be exacerbated in times of macroeconomic uncertainty, including as a result of tariffs, elevated inflation, high interest rates, bank failures and slower economic growth or recession.

Incorrect forecasts, or reductions, cancellations or delays in orders for our products, could adversely affect our operating results.

Our semiconductor products are complex and we may be subject to warranty, indemnity or product liability claims, which could result in significant costs and damage to our reputation and adversely affect customer relationships, the market acceptance of our products and our operating results.

Our products are complex and we may be subject to warranty, indemnity or product liability claims, which could result in significant costs and damage to our reputation and adversely affect customer relationships, the market acceptance of our products and our operating results.

Semiconductor products are highly complex and may contain defects that affect their quality or performance.

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These problems may divert our technical and other resources from other product development efforts and could result in claims against us by our customers or others, including liability for costs and expenses associated with product defects, including recalls, which may adversely impact our reputation and operating results.

We may also be subject to customer intellectual property indemnity claims.

We may also be subject to customer intellectual

property indemnity claims.

Our customers have on occasion been sued, and may be sued in the future, by third parties alleging infringement of intellectual property rights, or damages resulting from use of our products.

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In certain cases, our potential indemnification liability may be significant.

Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense and healthcare, where failure of the systems in which our products are integrated could cause damage to property or persons.

Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense, healthcare and industrial, where failure of the systems in which our products are integrated could cause damage to property or persons.

We may be subject to product liability claims if our products, or the integration of our products, cause system failures.

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Acquisitions, investments and technology licenses are challenging to complete for a number of reasons, including difficulties in identifying potential targets, the cost of potential transactions, competition among prospective buyers and licensees, the need for regulatory approvals, and difficulties related to integration efforts.

In addition, investments in companies are subject to a risk of a partial or total loss of our investment.

In addition, investments in companies are subject to risk of a partial or total loss of our investment.

Both in the United States and abroad, governmental regulation of acquisitions, including antitrust and other regulatory reviews and approvals, has become more complex, increasing the costs and risks of undertaking, and may prevent us from consummating, significant acquisitions.

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Because the tactics and techniques used by threat actors to obtain unauthorized access to or sabotage systems change frequently and, in some cases, are not recognized until they are launched or even later, we may be unable to anticipate these techniques or to implement adequate preventative measures in advance, and security breaches may remain undetected for an extended period of time.

Our use of AI may also increase vulnerability to cybersecurity risks, including through unauthorized use or misuse of AI tools and bad inputs or logic or the introduction of malicious code incorporated into AI

generated code.

AI and machine learning also may be used for certain cybersecurity attacks, improving or expanding the existing capabilities of threat actors in manners we cannot predict at this time, resulting in greater risks of security incidents and breaches.

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We face risks related to the use of AI in our business operations, products and services.

We are increasingly incorporating AI capabilities into the development of technologies and our business operations and into our products and services.

We incorporate AI capabilities across our technologies, business operations, products and services to enhance performance and drive smarter, more efficient solutions.

The development and deployment of AI involves significant competitive, legal, regulatory and other risks.

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AI technology is complex and rapidly evolving, and if we are unable to innovate quickly enough to keep pace with these rapid technological developments, our business could be harmed.

AI technology may also give rise to significant legal and regulatory liability.

Governments around the world have adopted, and may continue to adopt, laws and regulations related to AI, including the European Union’s AI Act, and several U.S.

government agencies have increased investigations and enforcement efforts related to the use of AI technology, which could increase our compliance costs and limit our ability to use AI in the development of our products and services.

While the incoming administration has signaled that AI policy will be a priority, the scope and impact of any such policies cannot yet be determined.

In addition, the use of AI in the development of our products and services, or by our customers in end products that incorporate our products, could cause loss of intellectual property, or subject us to risks related to intellectual property infringement or misappropriation, data privacy or cybersecurity.

AI technology may also give rise to significant legal and regulatory compliance risk.

Evolving rules, regulations and industry standards governing AI may require us to incur greater compliance costs and restrict the use of AI in our products or

technologies.

Several jurisdictions where we operate are considering or have proposed or enacted legislation and policies regulating AI, including the European Union’s AI Act, and lack of consistency among different regulatory regimes may increase our regulatory and compliance burdens.

Investigations and enforcement efforts related to the use of AI technology could increase our compliance costs and restrict our ability to use AI in the development of our products and services.

As the use of AI in our products, technologies or our business operations changes, we may become subject to new rules, regulations and industry standards, which may exacerbate these risks.

In addition, the use of AI in the development of our products and services, in our business operations or by our customers in end products that incorporate our products, could cause loss of intellectual property, or subject us to risks related to intellectual property infringement or misappropriation, data privacy or cybersecurity.

AI algorithms or training methodologies may also be flawed, and datasets may contain irrelevant, insufficient or biased information.

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Our future success depends, in part, on our ability to protect our intellectual property.

We primarily rely on patent, mask work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices and other methods, to protect our proprietary information, technologies and processes.

We primarily rely on patent, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices and other methods, to protect our proprietary information, technologies and processes.

Despite our efforts to protect our intellectual property, it is possible that competitors or other unauthorized parties may obtain or disclose our confidential information, reverse engineer or copy our technologies, products or processes, make unlicensed copies or engage in unapproved distributions of our technology for unauthorized uses, or otherwise misappropriate our intellectual property.

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Even if patents are granted, we may not be able to effectively enforce our rights.

If our patents and mask works do not adequately protect our technology, or if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours.

If our patents do not adequately protect our technology, or if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours.

Our competitors may also be able to develop similar technology independently or design around our patents.

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The California Privacy Rights Act expands the CCPA and establishes the California Privacy Protection Agency to enforce Californians’ privacy rights under the CCPA.

Since the CCPA was enacted, other states, including Virginia and Colorado, have enacted or are in the process of enacting comprehensive privacy schemes.

Since the CCPA was enacted, several other states, including Oregon and Texas, have enacted or are in the process of enacting comprehensive privacy schemes.

The costs of compliance with, and other burdens imposed by, the GDPR, CCPA and similar laws may limit the use and adoption of our products and services and require us to incur substantial compliance costs, which could have an adverse impact on our business.

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We are occasionally involved in litigation, administrative proceedings, and regulatory proceedings, which could be costly to resolve and could require us to redesign products, pay significant royalties or fines or refrain from engaging in specific conduct.

From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations, which may result in claims, fines or penalties with respect to commercial, product liability, intellectual property, AI, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters.

From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations, which may result in claims, fines or penalties with respect to commercial, trade, product liability, intellectual property, AI, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters.

We could also be subject to litigation or arbitration disputes arising under our contractual obligations, customer indemnity, warranty or product liability claims, or other matters that could lead to significant costs and expenses as we defend those claims or pay damage awards.

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An adverse outcome in litigation or arbitration could have a material adverse effect on our financial position or on our operating results or cash flows.

Environmental, social and governance matters may have an adverse effect on our business, financial condition and results of operations, and damage our brand and reputation.

There is an increasing focus from regulators, investors, customers, employees and potential talent, as well as other stakeholders, concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of Directors’ and employee diversity, human capital management, employee health and safety practices, product quality, worker rights, supply chain management and corporate governance and transparency.

If our ESG practices fail to meet our or the evolving expectations of investors, customers, employees or other stakeholders, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to do business with us.

Current and prospective investors are increasingly utilizing ESG data to inform their decisions, including investment and voting decisions, using a multitude of evolving score and rating frameworks.

Further, customers utilize ESG data to inform their purchasing decisions.

Additionally, public interest and legislative and regulatory pressure related to companies’ ESG practices, including those related to sourcing practices, carbon emissions and human rights protections, continue to grow.

This will require us to align our programs to such expectations and disclose an increasing amount of information and data to illustrate our position and progress and to support our customers to comply with regulations and other requirements.

If we do not adapt our strategy or execution quickly enough to meet evolving regulatory requirements or the expectations of our investors, customers, employees, regulators or other stakeholders, or if our ESG disclosures, including data input, processing and reporting, are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected.

Expectations, requirements and attention to environmental, social and governance matters may have an adverse effect on our business, financial condition and results of operations, and damage our brand and reputation.

ESG matters, including climate change and sustainability, human rights, support for local communities, workforce diversity, human capital management, employee health and safety practices, product quality, workers’ rights, supply chain management and corporate governance and transparency, continue to receive significant attention from a wide range of stakeholders, including regulators, investors, customers, employees and potential talent.

If our ESG practices fail to meet our or the evolving and sometimes differing expectations of investors, customers, employees or other stakeholders, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may not continue to do business with us.

Certain current and prospective investors continue to utilize ESG data to inform their strategies, including investment and voting decisions, using a multitude of evolving scoring and rating frameworks.

Further, certain customers utilize ESG data to inform their purchasing decisions.

Additionally, public interest and legislative and regulatory pressure related to companies’ ESG practices continue to evolve.

This may require us to align our programs to such expectations and disclose specific qualitative and quantitative information to demonstrate our position and progress and support our customers’ regulatory compliance.

If we do not adapt our strategy or execute quickly enough to meet changing regulatory requirements or the expectations of our investors, customers, employees, regulators or other stakeholders, or if our ESG disclosures, including data input, processing and reporting, are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected.

We are subject to environment, health and safety standards and hazards which have the potential to adversely affect our business, increase our expenses and adversely affect our reputation.

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Further, public attention to environmental and social responsibility remains high, and our customers routinely include stringent environmental and other standards in their contracts with us.

It is expected that there will be changes to EHS laws or regulations by the incoming administration, but the impacts of any such changes on us are not currently known.

Changes in EHS laws or regulations, uncertainties about those laws or regulations, or customer requirements may require us to invest in equipment, make manufacturing process or material changes or re-assess current and planned expenditures and initiatives, any of which could adversely affect our business, financial condition and results of operations.

In addition, we use hazardous and other regulated materials that subject us to risks of liability for damages caused by potential or actual releases of such materials.

Any failure to control such materials adequately or to comply with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the following, each of which could have a material adverse effect on our business and operating results:

Any failure to control these materials adequately or to comply with existing or future EHS statutory or regulatory standards, requirements or contractual obligations could result in any of the following, each of which could have a material adverse effect on our business and operating results:

• liability for damages and remediation;

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• changes to our manufacturing processes or a need to substitute materials that may cost more or be less available;

• disruption to our operations and our ability to generate revenues;

• damage to our reputation;

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any adverse resolution of ongoing tax audits or adverse rulings from taxing authorities worldwide;

in the valuation of our deferred tax assets and liabilities;

changes in the valuation of our deferred tax assets and liabilities;

adjustments to income taxes upon finalization of various tax returns;

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Further, we are subject to, and are under tax examination and audit in various jurisdictions, including an IRS income tax audit for the fiscal years ended October 30, 2021, November 2, 2019 (fiscal 2019) and November 3, 2018;

a pre-Acquisition IRS income tax audit for Maxim Integrated Products, Inc.’s (Maxim) fiscal years ended June 27, 2015 through August 26, 2021;

an IRS income tax audit for Maxim Integrated Products, Inc.’s fiscal years ended June 27, 2015 through August 26, 2021;

and various U.S.

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In the United States, for example, the Inflation Reduction Act (IRA) imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement income exceeding $1 billion.

We do not believe that the IRA will materially impact our effective tax rate.

We do not believe that the minimum tax provided by the IRA will materially impact our effective tax rate.

Corporate tax reform, anti-base-erosion rules and tax transparency continue to be high legislative or regulatory priorities in many jurisdictions.

Changes in laws and regulations regarding these matters could impact the jurisdictions where we are deemed to earn income, which could in turn adversely affect our tax liability and results of operations.

For example, the Organization for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Sharing Plans, which implement a minimum global effective tax rate of 15%, will apply to us beginning in fiscal year 2025.

We continue to monitor potential impacts related to this legislation as countries implement it and the OECD provides additional guidance.

As additional jurisdictions enact such legislation, our effective tax rate and cash tax payments could increase.

Risks Related to Financial Markets, Indebtedness and Capital Return

Risks Related to Indebtedness, Financial Markets and Capital Return

We have substantial existing indebtedness and the ability to incur significant additional indebtedness, which could limit our operations and our use of our cash flow and negatively impact our credit ratings.

As of November 2, 2024, we had approximately $7.6 billion in outstanding indebtedness, including $0.5 billion of short-term commercial paper.

As of November 1, 2025, we had approximately $8.6 billion in outstanding indebtedness, including $446.6 million of short-term commercial paper.

In addition, we had the ability to incur approximately $2.6 billion of additional indebtedness in direct borrowings under our outstanding commercial paper facility based on amounts available under our unsecured revolving credit facility that were not being used to backstop our outstanding commercial paper balance.

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From time to time, we may enter into “green” financing arrangements that require us to use proceeds for environmental sustainability purposes or have targets related to environmental sustainability.

For example, we entered into a revolving credit agreement on June 23, 2021, which, as amended, contains a sustainability-linked pricing component, which provides for interest rate and facility fee reductions or increases based on meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions and renewable energy usage.

For calendar year 2023, we exceeded the target thresholds for greenhouse gas emissions and renewable energy usage related to this sustainability-linked pricing component, which resulted in immaterial adjustments to administrative and interest fees due under the facility.

On October 5, 2021, we issued $750 million sustainability-linked senior notes (Sustainability-Linked Senior Notes).

For example, on October 5, 2021, we issued $750 million sustainability-linked senior notes (Sustainability-Linked Senior Notes).

Our Sustainability-Linked Senior Notes initially bear interest at a rate of 1.7% per annum and are subject to an increase of an additional 30 basis points per annum from April 1, 2026 to their maturity on October 1, 2028 unless the Sustainability Performance Target (as defined in the Sustainability-Linked Senior Notes) has been satisfied.

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Our insurance may not adequately cover losses resulting from such disruptions.

Any prolonged inability to utilize one of our manufacturing facilities, or those of our subcontractors or third-party wafer fabrication foundries, or to access key raw materials, utilities and equipment as a result of fire, flood, natural disaster, unavailability of utilities or otherwise, could result in a temporary or permanent loss of customers for affected products, which could have a material adverse effect on our results of operations and financial condition.

In addition, global climate change may result in certain natural disasters or other severe weather events occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, extreme temperatures and flooding, and could disrupt the availability of water necessary for the operation of our fabrication

The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear, but could be severe.

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• global economic conditions generally;

and foreign government actions, including with respect to trade, travel, export and taxation;

• crises in global credit, debt and financial markets;

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• financial results and prospects of our customers;

and foreign government actions, including with respect to trade, travel, export and taxation;

• changes in market valuations of other semiconductor companies;

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• negative media publicity targeting us or our suppliers, customers or competitors.

The stock market has historically experienced volatility, especially within the semiconductor industry, that often has been unrelated to the performance of particular companies, such as the response to elevated inflation and high interest rates.

These market fluctuations may cause our stock price to fall regardless of our operating results.

These market fluctuations have, and may in the future, cause our stock price to fall regardless of our operating results.

Our directors and executive officers periodically buy or sell shares of our common stock in the market, including pursuant to Rule 10b5-1 trading plans.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors