What changed in this filing

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Item 1A. Risk Factors

2026-08-27 compared with 2025-08-28 · 90 added, 71 removed, 671 unchanged (19% of the section changed)

18 unchanged sentences

• Our lack of control over the JV Company may adversely affect our operations.

• Our recent sale of equity interest in the JV Company is subject to certain closing conditions, and if the conditions are not met, we may not receive a portion or any of the cash proceeds from the sale.

• Our reliance on distributors to sell a substantial portion of our products subjects us to a number of risks.

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and China may result in increased tariffs on imported goods from China could adversely affect our business operations.

• Our China subsidiaries’ current corporate structure and business operations may be affected by the Foreign Investment Law of the PRC.

• Our China subsidiaries’ current corporate structure and business operations may be affected by the Foreign Investment Law of the PRC and the New Company Law (defined below).

• Limitations on our ability to transfer funds to our China subsidiaries could adversely affect our ability to expand our operations, make investments that could benefit our businesses and otherwise fund and conduct our business.

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• PRC labor laws may adversely affect our results of operations.

• Our business operations in China are subject to complex and evolving PRC data security, data privacy, and cybersecurity laws, and any non-compliance could subject us to severe penalties, operational disruptions, or structural changes.

• Strict regulatory oversight and evolving laws in China regarding data security, cyber security, and cross-border data transfers may restrict our operational data flows, increase compliance costs, or subject us to administrative penalties.

• Relations between Taiwan and China could negatively affect our business, financial condition and operating results and, therefore, the market value of our common shares.

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More recently, we have observed the impact of certain government regulations, such as tariffs or other related trade regulation, that can negatively affect the global semiconductor markets and cause a decline for the demand of our products.

In addition, the broader semiconductor industry experienced a decline in calendar year 2023 with some recovery in 2024, but there is no guarantee that further recovery will occur and a prolonged and extended downturn in the semiconductor industry will have a substantial impact on our operating results and financial conditions.

In addition, the broader semiconductor industry experienced a decline in calendar year 2023 with some recovery in 2024, but there is no

guarantee that further recovery will occur and a prolonged and extended downturn in the semiconductor industry will have a substantial impact on our operating results and financial conditions.

The decline of personal computing (“PC”) markets may have a material adverse effect on our results of operations.

A significant amount of our revenue is derived from sales of products in the PC markets such as notebooks, motherboards and notebook battery packs.

Our revenue from the PC markets accounted for approximately 46.6%, 43.0% and 35.2% of our total revenue for the years ended June 30, 2025, 2024 and 2023, respectively.

Our revenue from the PC markets accounted for a significant portion of our total revenue in recent years.

The increasing popularity of smaller, mobile computing devices such as tablets and smart phones with touch interfaces is rapidly changing the PC markets both in the United States and abroad.

In the past we experienced a significant reduction in the demand for our products due to the declining PC markets, which negatively impacted our revenue, profitability and gross margin.

While we experienced a surge of demand in the PC market as a result of the COVID-19 pandemic and related events, such demand has returned to normal level and declined due to an industry-wide inventory correction and the ensuing downturn in the semiconductor industry from late 2022 to the end of 2023 and early 2024.

While we believe the negative impact of inventory correction has gradually subsided since mid-2024 and early 2025, we cannot predict how and when the market will be fully recovered.

For example, demand for PC declined due to an industry-wide inventory correction and the ensuing downturn in the semiconductor industry from late 2022 to the end of 2023 and early 2024.

While the negative impact of inventory correction gradually subsided since mid-2024 and early 2025, in the first half of 2026, the semiconductor industry experienced a severe constraint in memory supplies (DRAM and NAND flash) driven by data center AI infrastructure demand, which adversely affected the demand in the PC market.

We cannot predict when the current memory constraint will end and whether the PC market will return to a more normalized level.

We have implemented measures and strategies to mitigate the effect of such a downturn.

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Our strategy of diversification into different market segments may not succeed according to our expectations and may expose us to new risks and place significant strains on our management, operational, financial and other resources.

As part of the growth strategy to diversify our product portfolio and in response to the decline of the PC markets, we have been developing new technologies and products designed to penetrate into other markets and applications, including merchant power supplies, power supplies, flat panel TVs, smart phones, tablets, gaming consoles, lighting, datacom, telecommunications, home appliances and industrial motor controls.

As part of the growth strategy to diversify our product portfolio and in response to the decline of the PC markets, we have been developing new technologies and products designed to penetrate into other markets and applications, including merchant power supplies, power supplies, flat panel TVs, smart phones, tablets, AI datacenters, servers, graphics cards, gaming consoles, datacom, telecommunications, home appliances, power tools, and industrial motor controls.

However, there is no guarantee that these diversification efforts will be successful.

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• changes in costs associated with manufacturing of our products, including pricing of wafer, raw materials and assembly services;

• announcement of significant share repurchase programs;

• our concentration of sales in consumer applications and changes in consumer purchasing patterns and confidence;

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government may enact new and more restrictive export control regulations that may reduce our ability to ship and sell products to certain customers in China and Asia and increase our cost to implement additional measures to comply with such new regulations.

In addition, disagreements between the United States and China with respect to their political, military or economic policies toward Taiwan may contribute to further controversies.

Disagreements between the United States and China with respect to their political, military or economic policies toward Taiwan may contribute to further controversies.

These controversies and trade frictions could have a material adverse effect on our business by, among other things, making it more difficult for us to coordinate our operations between the United States and China, causing a reduction in the demand for our products by customers in the United States or China, and reducing our profitability due to increasing cost of compliance.

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As a result, distributors adjust their purchase orders placed with us in response to changing channel inventory levels, as well as their assessment of the latest market demand trends.

A significant decrease in our distributors’ channel inventory in one period may lead to a significant rebuilding of channel inventory in subsequent periods, or vice versa, which may cause our quarterly revenue and operating results to fluctuate significantly.

A significant

decrease in our distributors’ channel inventory in one period may lead to a significant rebuilding of channel inventory in subsequent periods, or vice versa, which may cause our quarterly revenue and operating results to fluctuate significantly.

In addition, because our power semiconductors are used in consumer electronics products, our revenue is subject to seasonality.

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In addition, we have expanded our business model to include more OEMs in our direct customer base.

The failure of our OEM end customers to achieve or maintain commercial success for any reason could harm our business, results of operations, and financial condition and prospects.

The failure of our OEM

end customers to achieve or maintain commercial success for any reason could harm our business, results of operations, and financial condition and prospects.

The operation of our Oregon Fab subjects us to additional risks and the need for additional capital expenditures which may negatively impact our results of operations.

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We manufacture our products according to our estimates of customer demand.

This process requires us to make numerous forecasts and assumptions relating to the demand of our end customers, channel inventory, and general market

This process requires us to make numerous forecasts and assumptions relating to the demand of our end customers, channel inventory, and general market conditions.

Because we sell most of our products to distributors, who in turn sell to our end customers, we have limited visibility as to end customer demand.

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Our inventory write-down provisions are subject to adjustment based on events that may not be known at the time the provisions are made, and such adjustments could be material and impact our financial results negatively.

Our customers’ products often incorporate third-party memory components.

The memory market has in the past experienced supply imbalances, capacity constraints, and pricing volatility, and the industry is currently experiencing a global shortage of certain memory components as a result of AI-driven demand.

These conditions are likely to impact our customers and may limit their ability to manufacture their end products or may cause them to adjust production schedules, delay product launches, or revise demand forecasts, which in turn could lead them to reduce, delay, or cancel orders for our products, even when demand for their end products remains strong.

The current shortage and resulting price increase for memory components also may lead our customers to increase prices of their end products, which could lead to decreased demand for those products, negatively impacting orders for our products in the longer term.

In addition, uncertainty regarding the availability or pricing of memory components or other key components may impair our ability to accurately forecast demand, manage inventory levels, or plan production.

Any of these factors could adversely affect our business, financial condition, and results of operations.

If we underestimate demand, we may not have sufficient inventory to meet end-customer demand, and we may lose market share and damage relationships with our distributors and end customers and we may have to forego potential revenue opportunities.

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Our lack of control over the JV Company may adversely affect our operations.

We formed the JV Company in 2016 which consists of a power semiconductor packaging, testing and 12-inch wafer fabrication facility in Chongqing.

The JV Company is our subcontractor that provides us with foundry capacity to develop and manufacture our products and to enhance our market position in China.

While we retained control over the JV Company from inception to 2021, we lost control over the JV Company in December 2021 as our equity interest in the JV Company has been diluted through the issuances of additional equity securities by the JV Company and other transactions.

In July 2025, we entered into an equity transfer agreement with a strategic investor to sell approximately 20.3% of outstanding equity interest in the JV Company.

As of June 30, 2025, our interest in the JV Company was 39.2%.

Because we no longer have a controlling interest in the JV Company, the JV Company is operating and will continue to operate more independently, and our influence on all aspects of the JV Company’s business operations will be diminished.

As of June 30, 2026, our equity interest in the JV Company was approximately 18.9%.

Because we no longer have a controlling interest in the JV Company, the JV Company is operating and will continue to operate independently, and our influence on all aspects of the JV Company’s business operations will be diminished.

Accordingly, we might not be able to prevent the JV Company from taking actions adverse to our interests.

while we remain a major customer of the JV Company, the JV Company may decide to enter into business relationships with other customers and allocate foundry capacities to such customers, which may prevent us from securing a desirable or sufficient level of manufacturing capacity for our products.

For example, while we remain a major customer of the JV Company, the JV Company may decide to enter into business relationships with other customers and allocate foundry capacities to such customers, which may prevent us from securing a desirable or sufficient level of manufacturing capacity for our products.

Although the JV Company has agreed to provide us with a specified level of monthly wafer production capacity, there is no guarantee that such capacity will be sufficient, which may adversely affect our results of operations.

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Any of the foregoing risks could materially reduce the expected return of our investment in the JV Company and adversely affect our business operations, our financial performance and the trading price of our shares.

Our recent sale of equity interest in the JV Company is subject to certain closing conditions, and if the conditions are not met, we may not receive a portion or any of the cash proceeds under the equity transfer agreement and we may be required to unwind the transaction, which will adversely affect our financial results and reputation.

On July 14, 2025, we entered into an equity transfer agreement with a third-party strategic investor to sell approximately 20.3% of outstanding equity interest in the JV Company for an aggregate cash consideration of $150 million to be paid in four installments, subject to satisfaction of certain conditions.

Such conditions include, among other things, shareholder approval by the JV Company and certain registrations, approvals by government authorities and closing of additional investment by the strategic investor in the JV Company’s equity, which are outside of our control.

For a more detailed description of the installment payments and related conditions, please see Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview .

We cannot be certain that these conditions will be satisfied on a timely basis, including those conditions that are outside of our control.

If these conditions are not met by the deadlines as set forth in the equity transfer agreement, we may be exposed to significant risks, including failure to receive a portion or any of the cash proceeds from the sale, which may adversely affect our ability to continue investment in technology, R&D projects and acquisition of assets complimentary to our business operations.

Furthermore, failure to meet these conditions may require the parties to terminate and unwind the transaction, which will adversely affect our reputation, business operations and stock price.

Our reliance on distributors to sell a substantial portion of our products subjects us to a number of risks.

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Furthermore, there is no guarantee that we will be able to identify viable targets for strategic acquisition.

Also we may incur significant costs in efforts that may not result in a successful acquisitions.

Also we may incur significant costs in efforts that may not result in a successful acquisition.

In addition, we may also issue equity securities to pay for future acquisitions or alliances, which could be dilutive to existing shareholders.

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Our estimated allowances for price adjustments, which we offset against accounts receivable from distributors, were $38.7 million and $40.8 million at June 30, 2026 and 2025, respectively.

Our accruals for stock rotation are estimated based on historical returns and individual distributor agreement, and stock rotation rights, which are recorded as accrued liabilities on our consolidated balance sheets, are contractually capped based on

the terms of each individual distributor agreement.

Our estimated liabilities for stock rotation at June 30, 2026 and 2025 were $6.9 million and $6.2 million, respectively.

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If we subsequently determine that any allowance and accrual based on our estimates is insufficient, we may be required to increase the size of our allowances and accrual in future periods, which would adversely affect our results of operations and financial condition.

Our operations of one wholly-owned packaging and testing facility are subject to risks that could adversely affect our business and financial results.

Our operations of a packaging and testing facility are subject to risks that could adversely affect our business and financial results.

We have one wholly-owned packaging and testing facility located in Shanghai, China that handles the majority of our packaging and testing requirements.

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Our industry is characterized by high demand and intense competition for talent and the pool of qualified candidates is limited.

We have entered into employment agreements with certain senior executives, but we do not have employment agreements with most of our employees.

In addition, we have dedicated significant resources and effort to retain and recruit talents in the semiconductor industry, but there is no guarantee that we will be able to successfully compete with our peer companies in attracting qualified talents.

We have entered into employment agreements with certain senior executives, but

we do not have employment agreements with most of our employees.

Many of these employees could leave our company with little or no prior notice and would be free to work for a competitor.

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As is typical in the semiconductor industry, we or our customers have received and may continue to receive claims of infringement from time to time or otherwise become aware of potentially relevant patents or other intellectual property rights held by other parties that may cover some of our technology, products and services or those of our end customers.

semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights which has resulted in protracted and expensive arbitration and litigation for many companies.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights which has resulted in protracted and expensive arbitration and litigation for many companies.

Patent litigation has increased in recent years due to increased assertions made by intellectual property licensing entities or non-practicing entities and increasing competition and overlap of product functionality in our markets.

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We have in the past and may from time to time in the future become involved in litigation that requires our management to commit significant resources and time.

In addition, as part of our strategy to diversify our serviceable markets, we launched several key product families and technologies to enable high efficiency power conversion solutions and we plan to develop and commercialize new products in other power semiconductor markets.

addition, as part of our strategy to diversify our serviceable markets, we launched several key product families and technologies to enable high efficiency power conversion solutions and we plan to develop and commercialize new products in other power semiconductor markets.

Our entry into the commercial markets for high-voltage power semiconductors and other markets as a result of our diversification strategy may subject us to additional and increased risk of disputes or litigation relating to these products.

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We are not currently covered by insurance against business disruption caused by earthquakes.

In addition, we

currently do not have redundant, multiple site capacity in the event of a natural disaster or other catastrophic event.

In the event of such an occurrence, our business would suffer.

In addition, we have manufacturing facilities in Oregon and Shanghai, which may be subject to disruption due to natural disasters such as flood and fire.

In August 2026, our packaging and testing facilities in Shanghai were flooded due to a strong typhoon, which caused us to suspend production temporarily, and we also incurred additional costs relating to cleanup and outsourcing packaging capacity.

We currently do not have redundant, multiple site capacity in the event of a natural disaster or other catastrophic event, and we may not be able to locate suitable replacement capacity in the event we suspend production.

In the event of such an occurrence, our business and financial performance would be adversely affected.

Our business could be adversely affected by natural disasters such as epidemics, outbreaks or other health crisis.

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We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the tax laws of the various countries in which we have assets or conduct activities.

However, our tax position is subject to review and possible challenge by tax authorities and to possible changes in law, which may have a retroactive effect.

However, our tax position is subject to review and possible challenge by tax authorities

and to possible changes in law, which may have a retroactive effect.

In particular, various proposals over the years have been made to change certain U.S.

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In December 2017, the European Union (“EU”) identified certain jurisdictions (including Bermuda and Cayman Islands) which it considered had a tax system that facilitated offshore structuring by attracting profits without commensurate economic activity.

In order to avoid EU “blacklisting”, both Bermuda and Cayman Islands introduced new legislation in December 2018, which came into force on January 1, 2019.

These new laws require Bermuda and Cayman companies carrying on one or more “relevant activity” (including:

In order to avoid EU “blacklisting”, both Bermuda and Cayman Islands enacted laws that require Bermuda and Cayman companies carrying on one or more “relevant activity” (including:

banking, insurance, fund management, financing, leasing, headquarters, shipping, distribution and service center, intellectual property or holding company) to maintain a substantial economic presence in Bermuda and Cayman Islands in order to comply with the economic substance requirements.

Effective from December 31, 2019, we have structured our activities to comply with the new law.

However, there is no experience yet as to how the Bermuda and Cayman Islands authorities will interpret and enforce these new rules.

The legislation remains subject to further clarification and, accordingly, there is no guarantee that we will be deemed to be compliant.

However, the legislation remains subject to further clarification and interpretation by Bermuda and Cayman Islands authorities and, accordingly, there is no guarantee that we will be deemed to be compliant.

Furthermore, this legislation may require us to make additional changes to the activities we carry on in Bermuda or Cayman Islands, which could increase our costs either directly in those locations or indirectly as a result of increased costs related to moving our operations to other jurisdictions.

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As we continue to grow our business and expand our operations, we expect to incur additional indebtedness, including loan agreement or equipment leases, in order to fund such capital expenditures.

These restrictions may limit our ability to pursue business and financial opportunities that are available or beneficial to us in response to changing and competitive economic environment, which may have an adverse effect on our

financial conditions.

In addition, a breach of any of these financial covenants, if not waived by the lenders, could trigger an event of default under the debt agreements, which may result in the acceleration of our indebtedness or the loss of our collateral used to secure such indebtedness.

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Changes in tariffs and international trade policies affecting imports and exports may have a material adverse effect on our business operations and financial performance.

recently proposed the implementation of a range of new tariffs and significant increases to existing tariffs.

In response to such tariffs announced by the U.S., a number of other countries, including Japan and Korea, entered into new trade deals with the United States, which set certain reduced tariff rates.

The specific terms of these deals still need to be further defined and implemented.

Other countries, like China, are still in ongoing negotiations with the U.S.

regarding tariffs, and it is unclear what the final tariff rate may be.

Additionally, there is a pending investigation in the United States into the national security impact of imports of semiconductors and semiconductor manufacturing equipment, which may result in tariffs on such imports from all countries.

There is thus still significant uncertainty about future U.S.

tariff rates, and we cannot predict whether, and to what extent, current tariffs will continue or U.S.

trade policies will change in the future.

Such uncertainties and risks may negatively affect our ability to enter into new business transactions with partners, vendors and

customers because of the lack of clarity on the economic benefits of such transactions.

has implemented, proposed, and continues to evaluate changes to tariffs and other international trade measures affecting imports and exports.

Although the tariffs imposed in 2025 under the International Emergency Economic Powers Act (IEEPA) on U.S.

imports from virtually all countries were ultimately invalidated by the U.S.

Supreme Court in 2026, a global tariff regime was largely preserved through alternative tariff authorities, including Section 122 and Section 301 of the Trade Act of 1974.

In response to tariffs announced by the U.S., certain U.S.

trading partners including Japan, Taiwan, and Korea, have entered into agreements with the U.S.

establishing revised tariff frameworks, while negotiations with other countries, including China, remain ongoing, and it is unclear what the final tariff rate may be.

has also undertaken actions under Section 232 of the Trade Expansion Act relating to semiconductor imports and continues to evaluate additional trade measures affecting semiconductors and semiconductor manufacturing equipment, the scope and impact of which remain uncertain.

Such uncertainties and risks may negatively affect our ability to enter into new business transactions with partners, vendors and customers because of the lack of clarity on the economic benefits of such transactions.

Significant increase in U.S.

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for similar materials, goods and components at comparable qualities or more favorable prices.

Furthermore, tariffs, or the threat of tariffs or increased tariffs, could have a significant negative impact on our business relationships with customers, suppliers and partners in Asia, including China, Hong Kong, Taiwan, Korea and Japan.

Furthermore, tariffs, or the threat of tariffs or increased tariffs, could have a significant negative impact on our business

relationships with customers, suppliers and partners in Asia, including China, Hong Kong, Taiwan, Korea and Japan.

In addition to tariffs, evolving export controls, import restrictions, sanctions, licensing requirements and other trade measures may increase compliance costs, disrupt supply chains, restrict customer access or otherwise adversely affect our business.

Any significant changes in trade policies and tariffs may also affect the business operations of our customers, suppliers and partners, which may cause them to take actions or make decisions that adversely affect our business operations and results of operations.

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In addition, the Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, that may have a retroactive effect.

As a result, we may not be aware of our violation of these policies and rules

until sometime after the violation.

As a result, we may not be aware of our violation of these policies and rules until sometime after the violation.

If any of our past operations are deemed to be non-compliant with Chinese law, we may be subject to penalties and our business and operations may be adversely affected.

If we cannot obtain approval from relevant authorities to engage in businesses which become prohibited or restricted for foreign investors, we may be forced to sell or restructure a business which has become restricted or prohibited for foreign investment.

If we cannot obtain approval from relevant authorities to engage in businesses which become prohibited or restricted for foreign investors, we may be forced to

sell or restructure a business which has become restricted or prohibited for foreign investment.

Furthermore, the Chinese government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance.

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The Foreign Investment Law embodies a PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments.

The Foreign Investment Law establishes the basic framework for the access, promotion, protection and administration of foreign

investments in China in view of investment protection and fair competition.

The Foreign Investment Law establishes the basic framework for the access, promotion, protection and administration of foreign investments in China in view of investment protection and fair competition.

For example, treatment of foreign investors on a national level will be no less favorable than the treatment received by domestic investors unless such investments fall within a “negative list”.

Crucially, the five-year transitional period mandated by the Foreign Investment Law for foreign-invested

enterprises (FIEs) to rectify and align their corporate governance structures with the domestic company law officially expired on December 31, 2024.

Consequently, all FIEs in China must now fully comply with the new PRC Company Law (the “New Company Law”), which came into effect on July 1, 2024.

On June 28, 2018, the National Development and Reform Commission (the “NDRC”) and the Ministry of Commerce of the PRC (the “MOC”) published the Special Administrative Measures for Market Access of Foreign Investment (Negative List) (2018 Edition), which identifies specific sectors where foreign investors will be subject to special administrative measures.

The Negative List has been updated a few times since its enactment in 2018 and the current effective Negative List (2024 Edition) took effect on November 1, 2024.

The PRC Foreign Investment Law provides that foreign-invested entities operating in “restricted” or “prohibited” industries will require market entry clearance and other approvals from relevant PRC government authorities.

Under this unified regime, FIEs face dual layers of compliance friction.

First, the PRC Foreign Investment Law provides that foreign-invested entities operating in “restricted” or “prohibited” industries will require market entry clearance and other approvals from relevant PRC government authorities.

As the Negative List is updated from time to time, there can be no assurance that the China government will not change its policies in a manner that would render part or all of our business to fall within the restricted or prohibited categories.

If future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to our business operation, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all.

Second, under the New Company Law, FIEs are subject to rigorous new corporate governance and capital maintenance mandates.

If future laws, administrative regulations or provisions, particularly evolving statutory interpretations under the New Company Law or foreign investment information reporting obligations, mandate further actions to be taken by companies with respect to our business operation, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all.

Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, corporate governance and business operations.

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Such restricted portion amounted to approximat ely $94.0 million, or 11.8% of our total consolidated net assets attributed to the Company as of June 30, 2026.

We have no assurance

that the relevant Chinese governmental authorities in the future will not limit further or eliminate the ability of our China subsidiaries to purchase foreign currencies and transfer such funds to us to meet our liquidity or other business needs.

We have no assurance that the relevant Chinese governmental authorities in the future will not limit further or eliminate the ability of our China subsidiaries to purchase foreign currencies and transfer such funds to us to meet our liquidity or other business needs.

Any inability to access funds in China, if and when needed for use by the Company outside of China, could have a material and adverse effect on our liquidity and our business.

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The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in August 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some instances that the Ministry of Commerce (“MOC”) be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise.

Moreover, the Anti-Monopoly Law requires that the MOC shall be notified in advance of any concentration of undertaking if certain thresholds are triggered.

In addition, the security review rules issued by the MOC that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOC, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.

Moreover, the Anti-Monopoly Law requires that the State Administration for Market Regulation (“SAMR”), the anti-monopoly enforcement agency of the PRC, shall be notified in advance of any concentration of undertaking if certain thresholds are triggered.

In addition, under the Measures for the Security Review of Foreign Investments jointly issued by the NDRC and the MOC, any foreign investment, including mergers and acquisitions, joint ventures, or greenfield investments, that raise “national defense and security” concerns, or those through which foreign investors may acquire de facto control over domestic enterprises in key sectors (such as critical technology and semiconductors) that raise “national security” concerns, are subject to strict review by the working mechanism office led by the NDRC.

These rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.

On July 1, 2015, the National Security Law of China took effect, which provided that China would establish rules and mechanisms to conduct national security review of foreign investments in China that may impact national security.

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In the future, we may grow our business by acquiring complementary businesses.

Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the MOC or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the competent Chinese authorities or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Our results of operations may be negatively impacted by fluctuations in foreign currency exchange rates between U.S.

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Further, it requires that certain termination decisions be based upon seniority and not merit.

In the event our subsidiaries decide to significantly change or decrease their workforce in China, the Labor Contract Law could adversely affect their ability to effect such changes in a manner that is most advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results of operations.

advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results of operations.

In recent years, compensation in various industries in China has increased and may continue to increase in the future.

In order to attract and retain skilled personnel, we may need to increase the compensation of our employees.

may, also, increase as inflationary pressure increases in China.

Compensation may, also, increase as inflationary pressure increases in China.

In addition, under the Regulations on Paid Annual Leave for Employees, which became effective on January 1, 2008, employees who have served more than one year for a specific employer are entitled to a paid vacation ranging from 5 to 15 days, depending on length of service.

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This mandated paid-vacation regulation, coupled with the trend of increasing compensation, may result in increase in our employee-related costs and expenses and decrease in our profit margins.

Our business operations in China are subject to complex and evolving PRC data security, data privacy, and cybersecurity laws, and any non-compliance could subject us to severe penalties, operational disruptions, or structural changes.

In recent years, the PRC government has significantly tightened its regulatory framework governing cybersecurity, data security, and personal information protection.

The PRC Data Security Law and the PRC Personal Information Protection Law (“PIPL”), impose stringent compliance requirements on data processing activities, including data collection, storage, usage, and particularly the cross-border transfer of data.

Under the Data Security Law, data is categorized based on its importance to national security and public interests.

Companies handling “Important Data” (which may include critical operational, supply chain, or technical data within the semiconductor sector) are subject to heightened security obligations and must undergo mandatory security assessments before transferring such data outside of China.

Furthermore, the Cyberspace Administration of China (“CAC”) enforces regulations regarding the cross-border transfer of personal information, requiring companies that meet certain thresholds to execute standard contracts formulated by the CAC or undergo a formal security assessment.

Because we operate through our subsidiaries in China, our daily operations involve continuous cross-border data flows, including the transmission of engineering data, customer order details, financial records, and employee personal information between China, the U.S., and other global jurisdictions.

While the PRC regulatory authorities have introduced certain data facilitation measures for foreign-invested enterprises, the interpretation and enforcement of what constitutes “Important Data” or “critical infrastructure data” in the semiconductor industry involve significant uncertainties.

If our data processing and cross-border data transfer practices are deemed non-compliant with these evolving regulations, we could face severe administrative penalties, including:

• Substantial fines and monetary sanctions levied against our subsidiaries and executive officers;

• The suspension or revocation of our operating licenses and permits in China;

• Mandatory rectification orders that could force us to isolate our China-based IT systems and networks from our global corporate infrastructure;

• Temporary or permanent restrictions on transferring necessary technical and operational data out of China, which would severely disrupt our global supply chain management, design collaborations, and financial reporting capabilities.

Additionally, the PRC Cybersecurity Review Measures require certain operators of critical information infrastructure or data processors to undergo a cybersecurity review when engaging in data processing activities that affect or may affect national security.

Any future regulatory determination that places our operations, customers, or suppliers within the scope of these restrictive measures could materially and adversely affect our business, financial condition, results of operations, and the market value of our common shares.

Relations between Taiwan and China could negatively affect our business, financial condition and operating results and, therefore, the market value of our common shares.

37 unchanged sentences

If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the market price of our common shares or its trading volume to decline.

Moreover, if one or more of the analysts who cover our company downgrade our common shares or if our operating results or prospects do not meet their expectations, the market price of our common shares could decline significantly.

Moreover, if one or more of the

analysts who cover our company downgrade our common shares or if our operating results or prospects do not meet their expectations, the market price of our common shares could decline significantly.

Anti-takeover provisions in our bye-laws could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management.

19 unchanged sentences

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