What changed in this filing

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Item 1A. Risk Factors

2023-11-08 compared with 2023-08-04 · 38 added, 39 removed, 608 unchanged (11% of the section changed)

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our reliance on key suppliers in China, which may expose us to political, cultural, regulatory, economic, foreign currency, operational and capacity shortage risks;

our ability to experience growth rates comparable to past years;

our ability to achieve growth rates or financial performance comparable to past years;

changes in general demand for electronic products in the end markets that we serve;

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our ability to realize the anticipated benefits of any business acquisitions and other strategic investments;

risks associated with financial reporting, including the impact of new tax laws on our tax provision and tax planning;

financial reporting, including the impact of new tax laws on our tax provision and tax planning;

our failure to comply with various governmental laws and regulations, including those related to environmental, social and governance (“ESG”) initiatives or our failure to meet our own ESG goals and targets;

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health risks, climate crises and other natural disasters;

risks associated with financial market, economy and geopolitical uncertainties, including the recent banking collapse and the Russia-Ukraine conflict.

financial market, economy and geopolitical uncertainties.

Risks Associated with Our Significant Operations in Asia, Particularly in China

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As a result, we are subject to significant risks due to this geographic concentration of business and operations.

For the three months ended June 30, 2023, 85% of our revenue was from customers in Asia.

For the six months ended June 30, 2023, 84% of our revenue was from customers in Asia.

For the three and nine months ended September 30, 2023, 89% and 86% of our revenue was from customers in Asia, respectively.

There are risks inherent in doing business in Asia, and internationally in general, including:

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Demand for our products is a function of the health of the economies in the U.S., Europe, China and the rest of Asia.

We cannot predict the timing, strength or duration of any economic disruptions, such as those resulting from the global economic downturn or the Russia-Ukraine conflict, or subsequent economic recovery worldwide, in our industry, or in the different markets that we serve.

We cannot predict the timing, strength or duration of any economic disruptions, such as those resulting from the global economic downturn, the Russia-Ukraine conflict, the Israel-Gaza conflict or subsequent economic recovery worldwide, in our industry, or in the different markets that we serve.

We also may not accurately assess the impact of changing market and economic conditions on our business and operations.

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In particular, since we have significant operations in China, our business development plans, results of operations and financial condition may be materially and adversely affected by significant political, social and economic developments in China.

A slowdown in economic growth in China could adversely impact our customers, prospective customers, suppliers, distributors and partners in China, which could have a material adverse effect on our operating results and financial condition.

There is no guarantee that economic downturns, whether actual or perceived, any further decrease in economic growth rates or an otherwise uncertain economic outlook in China will not occur nor persist in the future, that they will not be protracted, or that governments will respond adequately to control and reverse such conditions, any of which could materially and adversely affect our business, financial condition and results of operations.

The current stagnation in China’s economy has adversely impacted, and could further adversely impact our customers, prospective customers, suppliers, distributors and partners in China, which could have a material adverse effect on our operating results and financial condition.

There is no guarantee that the current economic downturn, whether actual or perceived, any further decrease in economic growth rates or an otherwise uncertain economic outlook in China will not continue nor persist in the future, that they will not be protracted, or that governments will respond adequately to control and reverse such conditions, which has adversely affected, and could materially and adversely continue to affect, our business, financial condition and results of operations.

There are inherent risks associated with the operation of our manufacturing and testing facilities in China, which could increase product costs or cause a delay in product shipments.

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challenges to hire and maintain a qualified workforce;

natural disasters such as earthquakes, flooding, severe heatwaves or droughts, which could result in prolonged power shortages or water restrictions in our facilities;

natural disasters such as earthquakes, flooding, severe heatwaves or droughts, which could result in power shortages or water restrictions in our facilities;

challenges to maintain appropriate and acceptable manufacturing controls;

higher than anticipated overhead and other operational costs.

If we are unable to maintain our facilities in China at full operational status with qualified workers, appropriate manufacturing controls and reasonable cost levels, we may incur higher costs than our current expense levels, which would affect our gross margins.

If we are unable to maintain our facilities in China at full operational status with qualified workers, appropriate manufacturing controls and reasonable cost levels, we may incur costs higher than our current expense levels, which would affect our gross margins.

In addition, if capacity restraints result in significant delays in product shipments, our business and results of operations would be materially and adversely affected.

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In addition, our sales are primarily denominated in the U.S.

If the value of the U.S Dollar rises against other currencies, it may adversely affect the demand for our products in international markets, which could negatively and materially impact our business and results of operations.

If the value of the U.S.

Dollar rises against other currencies, it may adversely affect the demand for our products in international markets, which could negatively and materially impact our business and results of operations.

We incur foreign currency exchange gains or losses related to certain transactions, including intercompany transactions between the U.S.

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Risks Associated with Product Demand and Sales

We may not experience growth rates comparable to past years.

We may not achieve growth rates or financial performance comparable to past years.

In the past, our revenue increased significantly in certain years due to increased sales of certain of our products.

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We believe that the application of our products in the storage and computing, enterprise data, automotive and consumer markets will continue to account for the majority of our revenue.

If we are not able to accurately predict new end markets to serve or if the demand for our products continues to decline in certain of our current major end markets, our revenue would continue to decrease compared to prior year periods and our results of operations and financial condition would be materially and adversely affected.

If we are not able to accurately predict new end markets to serve or if the demand for our products declines in certain of our current major end markets, our revenue would decrease compared to prior year periods and our results of operations and financial condition would be materially and adversely affected.

In addition, as technology evolves, the requirement to integrate the functionalities of various components, including our discrete semiconductor products, onto a single chip and/or onto other components of systems containing our products increases.

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ability to manage their inventory.

Our sales to distributors are also subject to higher volatility because they service demand from multiple levels of the supply chain which, in itself, is inherently difficult to forecast. All of these factors continue to be exacerbated by the adverse effects of macroeconomic factors, including inflation, increased interest rates, supply chain disruptions, decreased economic output, fluctuations in currency rates and the Russia-Ukraine conflict.

If our customers, including distributors, reduce their orders from us, do not manage their inventory correctly or misjudge their customers’

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Some of our new product lines require us to re-equip our labs to test parameters we have not tested in the past.

If we are unable to adapt rapidly to these new and additional conditions, we may not be able to successfully penetrate new markets.

If we are unable to adapt rapidly to these new conditions, we may not be able to successfully penetrate new markets.

The success of a new product depends on accurate forecasts of long-term market demand and future technological developments, as well as on a variety of specific implementation factors, including:

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product performance;

product availability;

product availability and pricing;

product quality and reliability;

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As a result of the increased costs, we have raised, and may be required to further raise the prices of our products in order to remain profitable, which could result in a loss of customers and reduced revenue.

Further, as is common in the semiconductor industry, our customers may reschedule or cancel orders on relatively short notice.

Further, as is common in the semiconductor industry, our customers may reschedule or cancel orders on relatively short notice.

If our customers cancel orders after we submit a committed forecast to our suppliers for the corresponding wafers, we may be required to purchase wafers that we may not be able to resell, which would adversely affect our financial condition, results of operations and cash flows.

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Also, due to the amount of time typically required to qualify assembly and test subcontractors, we could experience delays in the shipment of our products if we were forced to find alternate third parties to assemble or test our products.

In addition, events such as the Russia-Ukraine conflict, the recent uncertainties on the banking sector and supply chain disruptions may materially impact our assembly suppliers’

In addition, events such as the Russia-Ukraine conflict, the Israel-Gaza conflict and supply chain disruptions may materially impact our assembly suppliers’

ability to operate.

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These conditions have caused significant variances in product demand and production capacity, as well as rapid erosion of average selling prices.

The industry may again experience severe or prolonged downturns in the future, which could result in lower demand for our products, downward pressure on the price of our products, and/or increased inventory due to our customers’

The industry is currently experiencing a downturn, and may again experience severe or prolonged downturns in the future, which has resulted, and could in the future result, in lower demand for our products, downward pressure on the price of our products, and/or increased inventory due to our customers’

delayed production schedule.

Because significant portions of our expenses are fixed in the short term or incurred in advance of anticipated sales, we may not be able to decrease our expenses in a timely manner to offset any sales shortfall.

Any significant or prolonged downturns could have a material adverse effect on our business, financial condition and results of operations.

Any significant or prolonged downturns would have a material adverse effect on our business, financial condition and results of operations.

Industry consolidation may lead to increased competition and may harm our operating results.

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Although we make significant efforts to maintain the security and integrity of our systems and solutions, any destructive or intrusive breach could compromise our networks, creating system disruptions or slowdowns, and the information stored on our networks could be accessed, publicly disclosed, lost or stolen.

Remote working arrangements, the Russia-Ukraine conflict, and AI-powered cybersecurity threats have also heightened our potential exposure to cyberattacks, which could put the sensitive data we store on our internal systems at risk.

Remote working arrangements, the Russia-Ukraine conflict, the Israel-Gaza conflict, and AI-powered cybersecurity threats have also heightened our potential exposure to cyberattacks, which could put the sensitive data we store on our internal systems at risk.

If any of these types of security breaches were to occur and we were unable to protect sensitive data, our reputation and relationships with our business partners and customers could be materially harmed, and we could be exposed to risks of litigation and possible significant liability.

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We are subject to increasing regulatory and reporting standards related to ESG matters, which could increase our expenses.

In recent years, there has been an increase in public awareness from regulators, investors, customers and other key stakeholders focusing on ESG compliance efforts, including those related to environmental sustainability and social responsibility.

For example, the SEC has proposed new rules that require public companies to provide detailed disclosures of their climate-related risks, greenhouse gas emissions data, and net-zero transition plans, and many of our customers increasingly include stringent environmental and other non-standard compliance requirements in their contracts with us or request significant amount of data from us for their Scope 3 emissions reporting.

While we are committed to making our business sustainable and keeping our stakeholders engaged by maintaining strong ESG strategies, practices, policies and disclosures, there can be no assurance that we will be able to achieve our goals, or that our compliance initiatives will be deemed sufficiently robust by regulators, stockholders, customers and other key stakeholders.

In recent years, there has been an increase in public awareness and requirements from regulators, investors, customers and other key stakeholders focusing on ESG compliance efforts, including those related to environmental sustainability and social responsibility.

For example, the SEC has proposed new rules that require public companies to provide detailed disclosures of their climate-related risks, greenhouse gas emissions data, and net-zero transition plans, and in October 2023, California passed two bills that will require companies to disclose greenhouse gas emissions data and climate-related financial risks.

In addition, many of our customers increasingly include stringent environmental and other non-standard compliance requirements in their contracts with us or request significant amount of data from us for their Scope 3 emissions reporting.

While we are committed to maintaining strong ESG strategies, practices, policies and disclosures, there can be no assurance that we will be able to achieve our goals, or that our compliance initiatives will be deemed sufficiently robust by regulators, stockholders, customers and other key stakeholders.

The achievement of our goals and initiatives may be impacted by factors that are outside our control.

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The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors.

The future trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, many of which are beyond our control, including:

The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, many of which are beyond our control, including:

actual or anticipated results of operations and financial performance, including our ability to accurately forecast future demand for our products;

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introduction of new products by us or our competitors;

general economic, industry and market conditions worldwide, including the global economic downturn and the recent banking crisis;

general economic, industry and market conditions worldwide, including the global economic downturn;

developments generally affecting the semiconductor industry;

terrorist acts or acts of war, including the ongoing conflict between Ukraine and Russia;

terrorist acts or acts of war, including the ongoing Russia-Ukraine conflict and the Israel-Gaza conflict;

epidemics and pandemics;

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Additionally, if our stock price declines, it may be more difficult for us to raise capital and may have other adverse effects on our business.

There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts.

There can be no assurance that we will continue to declare cash dividends in any particular amounts or at all.

We have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.

The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions, and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders.

Our dividend payments may change from time to time, and we cannot provide assurance that we will continue to declare dividends at all or in any particular amounts.

Our dividend payments may change from time to time, and we cannot provide assurance that we will continue to declare dividends in any particular amounts or at all.

A reduction in or elimination of our dividend payments could have a negative effect on the price of our common stock and on the return achieved by our stockholders.

We cannot guarantee that our stock repurchase program will enhance long-term stockholder value.

In October 2023, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $640 million in the aggregate of our common stock.

The repurchase program will expire on October 29, 2026.

 The amount, timing and execution of our stock repurchase program may fluctuate based on market conditions and our priorities for the use of our cash.

We are not obligated to repurchase a specified number or dollar value of shares, on any particular timetable, or at all.

Furthermore, there can be no assurance that any stock repurchased under this program will be at favorable prices.

The repurchase program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value. 

If we issue additional shares of stock in the future, it may have a dilutive effect on our stockholders.

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General Risk Factors

Our worldwide operations are subject to health risks, climate crises and other natural disasters, which could have a material adverse effect on our business operations.

Our worldwide operations are subject to economic and geopolitical uncertainty, health risks, climate crises and other natural disasters, which could have a material adverse effect on our business operations.

Our offices in California and Washington, the production facilities of our third-party wafer suppliers, our IC testing and manufacturing facilities, a portion of our assembly and research and development activities, and certain other critical business operations are located in or near seismically active regions and are subject to periodic earthquakes.

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System-wide or local failures that affect our information processing could have material adverse effects on our business, financial condition and results of operations.

Our operations and performance could be materially affected by the financial market, economic and geopolitical uncertainties.

Uncertainties with the financial market could harm our business and operating results.

Recently, Silicon Valley Bank, Credit Suisse and other banks have experienced failures or near failures that have disrupted the global financial and credit markets.

Although we have not been directly affected by such events or developments because we did not have any cash deposited at any of these banks nor did we hold investments that have been exposed to bank failure, these events could have an extensive ripple effect on the economy that would directly or indirectly affect our business.

It is also possible that one or more banks in which we do have deposits or to which our investments are exposed, could fail or have financial difficulty in the future, which could harm our business, liquidity and financial condition.

Bank failures, the risk of additional bank failures and government actions in connection therewith, have sparked additional global recession fears, and may result in continuing higher interest rates, decreased credit availability and further global macroeconomic decline.

This could significantly decrease customer demand, which would materially and adversely affect our business, operating results and financial condition.

Furthermore, all these factors have increased the difficulties in accurately predicting our future revenue and expenses.

We are also unable to predict the timing, strength or duration of any such potential impact.

Furthermore, worldwide political conditions may create uncertainties that could adversely affect our business.

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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-Q

Item 1A. Risk Factors