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Item 1A. Risk Factors

2026-02-27 compared with 2025-03-03 · 187 added, 188 removed, 466 unchanged (45% of the section changed)

Our business involves numerous risks and uncertainties, including but not limited to the material risks described below.

This section should be read in conjunction with all of the other information in this Annual Report on Form 10-K and our other filings with the SEC.

This section should be read in conjunction with all the other information in this Annual Report on Form 10-K and our other filings with the SEC.

If any of these risks materialize from time to time, then our business, reputation, financial condition, operating results, and growth prospects could be materially and adversely affected.

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our dependence on the markets in Asia for our customer base, which may expose us to political, cultural, regulatory, economic, foreign currency and operational risks;

inherent risks associated with the operation in China, which could increase product costs or cause a delay in product shipments;

changes in general economic conditions in the countries where our products are sold or used, particularly those in China;

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changes in international trade policy, such as tariffs on imports of foreign goods and regulations restricting the export of goods and services, between the U.S.

and China or other countries;

political and other risks in Taiwan and Hong Kong due to their tense relationships with China;

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Dollar relative to other currencies, including the Renminbi;

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

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

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

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lengthy sales cycles for our products balanced against the fixed nature of a substantial portion of our expenses;

availability of adequate manufacturing capacity from our suppliers, and our ability to increase product sales in spite of capacity issues;

availability of adequate manufacturing capacity from our suppliers, and our ability to increase product sales in spite of capacity challenges;

increases in unanticipated costs as a result of increasing manufacturing capacity;

our dependency on third-party suppliers for wafer purchases and potential increases in prices for wafers due to general capacity shortages;

our dependency on third-party suppliers for wafer purchases and other key components, and potential increases in prices for such materials due to general capacity shortages;

our ability to deliver products on a timely basis despite disruptions in our relationships with assembly and test subcontractors;

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the impact of system upgrades, cyberattacks or other system security, data protection and privacy breaches on our business operations;

the impact of various U.S.

and international laws and regulations regarding data protection on our business operations;

our significant investment of resources in research and development that may not result in increased future sales;

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the impact of new tax laws and interpretations of those laws on our tax provision and tax planning;

examination of our income tax returns, which could result in changes in effective tax rates or other adverse outcomes;

the complexity of certain accounting areas;

risks in connection with our internal control over financial reporting;

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

risks in connection with our internal control over financial reporting, the identified material weakness and the restatement of our prior financial statements;

our failure to comply with various governmental laws and regulations, including anti-corruption laws, export control laws, environmental laws, regulation and reporting standards related to environmental, social and governance (“ESG”);

our ability to successfully defend ourselves in legal proceedings and protect our intellectual property, and the significant increase in legal expenses as a result of such proceedings;

risks in connection with the use of open source code software;

the loss of key personnel;

risks associated with owning our stock, including volatility in our trading price due to our business and financial performance, analyst downgrades, failure to meet our own or analyst expectations, changes to our stock repurchase or dividend program, and dilution from issuance of additional shares;

the loss of key personnel and our ability to retain key employees to maintain or upgrade our business systems and maintain internal controls;

risks associated with owning our stock, including volatility in our trading price due to our business and financial performance, analyst downgrades, failure to meet our own or analyst expectations, short positions in our common stock, changes to our stock repurchase or dividend program, and dilution from issuance of additional shares;

economy and geopolitical uncertainties and risks associated with business continuity in the event of natural or other disasters including pandemics, war, climate crises and other natural disasters.

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

For the year ended December 31, 2024, 94% of our revenue was from customers in Asia.

For the year ended December 31, 2025, 92% of our total revenue was from customers in Asia.

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

changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S., particularly those associated with the recent change in administration, and in the countries in which we manufacture or sell our products, and governmental action or restrict our ability to sell to foreign customers where sales of products may require export licenses;

changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S., and in the countries in which we manufacture or sell our products, and governmental action or restrict our ability to sell to foreign customers where sales of products may require export licenses;

trade restrictions imposed by the U.S.

related to goods imported from regions in China with records of forced labor and other human rights issues;

changes in U.S.

laws, or the interpretation and enforcement of these laws, regarding investment in China or other countries;

fluctuations in the value of the U.S.

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changes in tax regulations in China that may impact our tax status in Chengdu, Hangzhou and other regions where we have significant operations;

multi-tiered distribution channels that may diminish visibility to end customer pricing and purchase patterns;

multi-tiered distribution channels that may diminish visibility to end customer pricing and purchasing patterns;

international political relationships and acts or threats of war;

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adverse weather conditions or other natural disasters that may cause work stoppages and affect our operations in China;

work stoppages;

economic, social and political instability;

work stoppages due to economic, social and political instability;

longer accounts receivable collection cycles;

currency exchange rate fluctuations impacting intercompany transactions;

enforcing contracts generally;

enforcing contracts;

less effective protection of intellectual property and contractual arrangements.

If we fail to expand our customer base and significantly reduce the geographic concentration of our customers, we will continue to be subject to the foregoing risks, which could materially and adversely affect our business, financial condition and results of operations.

Our business has been and may be significantly impacted by worldwide economic conditions, in particular changing economic conditions in China.

Our operations and performance depend significantly on global economic conditions.

Adverse macroeconomic conditions, including inflation, slowing growth, recession, stagflation, new or increased tariffs and other barriers to trade, tighter credit, higher interest rates, currency fluctuations, higher unemployment, labor shortages, lower capital expenditures by businesses, and lower consumer confidence and spending, have in the past, and could in the future, have a material adverse effect on logistics, demand for our products, and our product and operational costs.

For example, to the extent there are economic uncertainties, some of our customers may cancel, decrease or delay their existing and future orders with us, which could impact our financial results and make our forecasting much more difficult.

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 global economic uncertainties, changes to trade laws and policies as a result in changes in the U.S.

administration, and geopolitical tensions, or the rate or magnitude of 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, resulting in excess or insufficient inventory, increased costs, inability to forecast and adverse effects on our financial condition or operating results.

These and other economic factors could have a material adverse effect on demand for our products, and on our financial condition and operating results.

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.

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 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 power shortages or water restrictions in our facilities;

natural disasters such as earthquakes, flooding, severe heatwaves or droughts, which could result in power outages, water restrictions or grid constraints that impact our facilities;

challenges to maintain appropriate and acceptable manufacturing controls;

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

Our business has been and may be significantly impacted by worldwide economic conditions, in particular changing economic conditions in China.

Our operations and performance depend significantly on global economic conditions.

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 global economic uncertainties, changes to trade laws and policies by the U.S.

administration, and current and potential global conflicts, or the rate or magnitude of economic recovery worldwide, in our industry, or in the different markets that we serve.

These and other economic factors could have a material adverse effect on demand for our products, and on our financial condition and operating results.

We and many of our manufacturing partners and suppliers are subject to extensive Chinese government regulations, and the benefit of various incentives from Chinese governments that we and many of our manufacturing partners and suppliers receive may be reduced or eliminated, which could increase our costs or limit our ability to sell products and conduct activities in China.

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Any additional regulations or the amendment, or reinterpretation of previously implemented regulations could require us and our manufacturing partners and suppliers to change our business plans, increase our costs, or limit our ability to manufacture or sell products and conduct business activities in China, which could materially and adversely affect our business and operating results.

The Chinese government and provincial and local governments have also provided, and may continue to provide, various incentives to encourage the development of the semiconductor industry in China.

The Chinese provincial and local governments have also provided, and may continue to provide, various incentives to encourage the development of the semiconductor industry in China.

Such incentives include cash awards, tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to our manufacturing partners, suppliers and us.

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Any of such regulatory restrictions could, in turn, impact the sales of our products supporting AI applications.

There has been increasing rhetoric, in some cases coupled with legislative or executive action, from several U.S.

and foreign leaders regarding tariffs against foreign imports of certain products and materials.

Specifically, there have been several rounds of U.S.

tariffs on Chinese goods that have taken effect in the past few years, as well as additional tariffs imposed by the new U.S.

administration in January 2025, some of which prompted, and could prompt additional, retaliatory Chinese tariffs on U.S.

We are also subject to U.S.

laws restricting or prohibiting investments in certain countries, that may harm our ability to purchase from, invest in, or collaborate with, companies in those countries and could subject us to fines, penalties or other enforcement action.

There have been several rounds of U.S.

tariffs on Chinese goods that have taken effect in the past few years, as well as additional tariffs imposed by the U.S.

administration in 2025, some of which prompted, and could prompt additional, retaliatory Chinese tariffs on U.S.

The institution of trade tariffs both globally and between the U.S.

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Accordingly, although we believe our classifications of both HTS and origin are appropriate, there is no certainty that our assessment will be consistent with that of the U.S.

government, particularly under the new U.S.

administration.

government does not agree with our determinations, we could be required to pay additional amounts, our ability to sell products in the U.S.

may be restricted or eliminated and we may incur substantial additional costs or potential penalties.

may be restricted or eliminated, we may be required to change our suppliers or supply routes and we may incur substantial additional costs or potential penalties.

We face political and other risks conducting business in Taiwan and Hong Kong, particularly due to their tense relationships with China.

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Dollar relative to foreign currencies could increase the amount of foreign currency exchange losses we record, which could have an adverse and material impact on our results of operations.

A significant portion of our manufacturing, testing, assembly and packaging capacity comes from suppliers in China, which exposes us to political, cultural, regulatory, economic, foreign exchange, and operational risks.

A significant portion of our manufacturing, testing, assembly and packaging capacity comes from key suppliers located in China.

As a result, we are subject to significant political, regulatory, tax, economic, foreign exchange, and operational risks due to this geographic concentration in our business.

Although our management has established a long-term strategy to diversify capacity outside China, there is no guarantee that we will be able to identify, qualify and engage additional foundry partners and other suppliers in other regions in a timely manner or at all in order to mitigate these risks, or that the quality, price or terms of such production will be sufficient or acceptable to us, any of which could negatively and materially harm our business and results of operations.

Although we have made significant progress in diversifying capacity outside of China, there is no guarantee that our progress is sufficient or will be sufficient to mitigate these risks.

Furthermore, we cannot guarantee that our new manufacturing, testing, assembly and packaging partners will not be costlier than our legacy partners in China.

In addition, as we pivot our manufacturing, testing, assembly and packaging capacity concentration from China to another region, we will be subject to the risks of doing business in that particular region.

If we decide to further diversify our capacity, it could be costly due to lost pricing benefits from production volume, as well as the time and cost to qualify new partners.

Furthermore, there is no guarantee that the quality of the products from new suppliers will be acceptable to us, or that these suppliers will be able to meet our demand.

Risks Associated with Product Demand and Sales

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

We are subject to numerous risks and factors that could cause a decrease in our growth rates, or a decline in revenue compared to past periods, including increased competition, loss of certain of our customers, unfavorable changes in our operations, changing technologies and customer requirements and demand, reduced global electronics demand, a deterioration in market conditions including as a result of the global economic uncertainties and tariffs, end-customer market downturns, market acceptance and penetration of our current and future products, and litigation.

We are subject to numerous risks and factors that could cause a decrease in our growth rates, or a decline in revenue compared to past periods, including increased competition, loss of, or reductions in demand or the growth rate of demand from, certain of our customers, unfavorable changes in our operations, changing technologies and customer requirements and demand, reduced global electronics demand, a deterioration in market conditions including as a result of the global economic uncertainties and tariffs, end customer market downturns, market acceptance and penetration of our current and future products, and litigation.

A decrease in our rate of growth, or a decline in revenue, could materially and adversely affect our business and results of operations.

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Should our customers require integrated solutions that we do not offer, or if our products cannot be integrated effectively into changing technological requirements of our customers, demand for our products could decrease, and our business, financial condition and results of operations would be materially and adversely affected.

Due to the nature of our business as a component supplier, we may have difficulty both in accurately predicting our future revenue and appropriately managing our expenses.

Because we provide components for end products and systems, demand for our products is influenced by our customers’ end product demand.

Due to the nature of our business as a component and solution supplier, we may have difficulty both in accurately predicting our future revenue and appropriately managing our expenses.

Because we provide components and solutions for end products and systems, demand for our products is influenced by our customers’ end product demand.

As a result, we may have difficulty in accurately forecasting our revenue and expenses.

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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, decreased economic output, fluctuations in currency rates, and geopolitical tensions, such as the Russia-Ukraine conflict and the Middle East conflict.

All of these factors continue to be exacerbated by the adverse effects of macroeconomic factors, including inflation, increased interest rates, decreased economic output, fluctuations in currency rates, geopolitical tensions, global tariffs and retaliatory measures and announcements regarding the same.

If our customers reduce their orders from us, do not manage their inventory correctly or misjudge their customers’ demand, our shipments to and orders from our customers may vary significantly or decline on a quarterly basis, and we may have difficulty forecasting our expenses and inventory levels, which could reduce our revenue or revenue opportunities, result in inventory write-offs, and adversely affect our financial condition and results of operations.

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The loss of any significant distributors, value-added resellers or direct or indirect customers, or failure to collect accounts receivable from them could adversely affect our financial position and results of operations.

We market our products either through distribution arrangements and value-added resellers, or through our direct sales to customers that include OEMs and ODMs.

We market our products either through distribution arrangements and value-added resellers, or through our direct sales to customers.

A relatively small number of distributors account for a significant portion of our revenues.

Specifically, our top three customers, all of which are distributors, accounted for 61%, 55% and 52% of our revenue in each of the years ended December 31, 2024, 2023 and 2022, respectively.

Our revenue from indirect sales to one customer was 17% of our total revenue in 2024.

If we lose a major customer or a major customer changes their products or technologies or chooses to purchase our competitors’ products such that they decrease, or eliminate the amount of our products they purchase, and we are not able to replace such customers with additional orders from existing customers or new customers, this could result in a material adverse impact on our financial condition and results of operations.

Significant deterioration in the liquidity or financial condition of any of our major customers or any group of our customers could have a material adverse impact on the collectability of our accounts receivable and our future financial condition and operating results.

While we could partner with other distributors or value-added resellers to replace any of our customers, the change in business partners could interrupt our operations, cause us to have to identify and qualify new partners, and have a materially adverse impact on our business, financial condition and results of operations.

Moreover, we believe a high percentage of our products are eventually sold to a number of OEMs and ODMs.

Although we communicate with OEMs and/or ODMs in an attempt to achieve “design wins,” which are decisions by OEMs and/or ODMs to incorporate our products, we do not have purchase commitments from these customers.

Therefore, there can be no assurance that the OEMs and/or ODMs will continue to incorporate our ICs into their products, even if we may have secured a design win with them.

OEM technical specifications and requirements can change rapidly, and we may not have products that fit new specifications from an end customer for whom we have had previous design wins.

We cannot be certain that we will continue to achieve design wins from large OEMs, or that the OEMs will be successful in selling products that incorporate our ICs.

Specifically, our top three customers, all of which are distributors, accounted for an aggregate of 54%, 61% and 55% of our revenue in the years ended December 31, 2025, 2024 and 2023, respectively.

Concentration in a small number of distributors increases our exposure to their credit profiles, inventory practices, covenant constraints, and strategic priorities, any of which can amplify order volatility or returns.

If we lose a major customer or a major customer changes their products or technologies or chooses to purchase our competitors’ products such that they decrease, or eliminate the amount of our products they purchase, and we are not able to replace such customers with additional orders from other customers, this could result in a material adverse impact on our financial condition and results of operations.

While we could partner with other distributors or value-added resellers to replace any of our customers, the change in business partners could interrupt our operations, require us to identify and qualify new partners, and have a materially adverse impact on our business, financial condition and results of operations.

Moreover, we believe a high percentage of our products are eventually sold to a number of original equipment manufacturers (“OEMs”) and original design manufacturers (“ODMs”).

Although we communicate with OEMs and ODMs to achieve “design wins,” which are decisions by OEMs and ODMs to incorporate our products, we do not have purchase commitments from these customers.

Therefore, there can be no assurance that the OEMs and ODMs will continue to incorporate our ICs into their products, even if we may have secured a design win with them.

OEM and ODM technical specifications and requirements can change rapidly, and we may not have products that fit new specifications from an end customer for whom we have had previous design wins.

We cannot be certain that we will continue to achieve design wins from large OEMs and ODMs, or that the OEMs and ODMs will be successful in selling products that incorporate our ICs.

Furthermore, we may not be able to maintain or increase sales to our key direct or indirect customers for other reasons, including:

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our customers may be subject to investigations and litigation that could result in injunctive or other relief that negatively impacts sales of their products, which in turn would result in a decrease in demand for our products;

our customers regularly evaluate alternative sources of supply in order to diversify their supplier base, which could result in lower sales of our products, and increase their negotiating leverage with us.

our customers regularly evaluate alternative sources of supply in order to diversify their supplier base, which could result in lower sales of our products or a decrease in growth of sales of our products, and increase their negotiating leverage with us.

A material reduction in orders, or rumors or threats of same, by any of our significant direct or indirect customers, could reduce our revenue, cause a decline in our stock price, and adversely affect our financial condition and results of operations.

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Our standard warranty period is generally one or two years, which exposes us to significant risks of claims for defects and failures.

If defects and failures occur in our products, we could experience a loss of customers and/or a decrease in revenue, increased costs, including warranty expense and costs associated with customer support, cancellations or rescheduling of orders or shipments, and product returns or discounts, any of which would harm our operating results.

If defects and failures occur in our products, we could experience a loss of revenue and/or customers, increased costs, including warranty expense and costs associated with customer support, cancellations or rescheduling of orders or shipments, and product returns or discounts, any of which would harm our operating results.

In addition, product liability claims may be asserted by our customers.

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If coverage is denied, we may not have sufficient resources to pay for these claims.

Furthermore, we may experience a significant increase in premiums and therefore decide to self-insure, which may not meet the expectations or requirements of certain customers.

Furthermore, we may experience a significant increase in premiums and therefore decide to self-insure, which may not meet the expectations or requirements of certain customers, and could result in significant costs to us.

All of these factors could have a material and adverse impact on our business, financial condition and results of operations.

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The introduction of new products presents significant business challenges because product development plans and expenditures may be made up to two years or more in advance of any sales.

It generally takes us up to 12 months or more to design and manufacture a new product prototype.

It generally takes us up to 12 months or more for us to design and manufacture a new product prototype.

Only after we have a prototype do we introduce the product to the market and begin selling efforts in an attempt to achieve design wins.

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Sales cycles for our products are lengthy for a number of reasons, including:

our customers usually complete an in-depth technical evaluation of our products before they place a purchase order;

the commercial adoption of our products by OEMs and ODMs is typically limited during the initial release of their product to evaluate product performance and consumer demand;

our products must be designed into our customers’ products or systems;

the development and commercial introduction of our customers’ products incorporating our products are frequently delayed.

our products must be designed to operate with and into our customers’ products or systems, which usually includes an in-depth technical evaluation of our products by our customers before they place a purchase order;

delays attributable to the development of our customers’ products;

delays attributable to commercial adoption by our end customers upon the initial release of our products in order for our customers to evaluate product performance and consumer demand.

As a result of our lengthy sales cycles, we may incur substantial expenses before we earn associated revenue because a significant portion of our operating expenses is relatively fixed and based on expected revenue.

The lengthy sales cycles of our products also make forecasting the volume and timing of orders difficult.

In addition, the delays inherent in lengthy sales cycles raise additional risks that customers may cancel or change their orders, particularly as our customers are exposed to economic risks in connection with global economic uncertainty and political tensions, including tariffs, as well as the risks inherent in introducing new products or entering new markets.

In addition, the delays inherent in lengthy sales cycles raise additional risks that customers may cancel or change their orders, particularly as our customers are exposed to economic risks in connection with global economic uncertainty and political tensions, including tariffs, or move to another supplier, in whole or in part, as well as the risks inherent in introducing new products or entering new markets.

Our sales are made by purchase orders.

Because industry practice allows customers to reschedule or cancel orders on relatively short notice, backlog is not always a good indicator of our future sales.

If customer cancellations or purchase order changes occur, we could lose anticipated sales and not have sufficient time to reduce our inventory and operating expenses.

If customer cancellations or purchase order changes occur, we could lose anticipated sales.

Furthermore, if our customers cancel orders after we submit a committed forecast to our suppliers, we may be required to purchase supplies or materials that we are unable to resell or utilize in our other products, which could adversely affect our financial condition, results of operations and cash flows.

Risks Associated with Supply and Manufacturing

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Although we provide our suppliers with rolling forecasts of our production requirements, their ability to provide wafers to us is limited by their available capacity, particularly capacity in the geometries we require, at the facilities in which they manufacture wafers for us.

As a result, this lack of capacity has at times constrained our product sales and revenue growth.

This lack of capacity has at times constrained our product sales and revenue growth.

In addition, an increased need for capacity to meet internal demands or demands of other customers could cause our suppliers to reduce capacity available to us.

Our suppliers may also require us to pay amounts in excess of contracted or anticipated amounts for wafer deliveries or require us to make other concessions in order to acquire the wafer supply necessary to meet our customer requirements.

If our suppliers extend lead times, limit supplies or the types of capacity we require, or increase prices due to capacity constraints or other factors, our gross margin may materially and unexpectedly decline.

Such concessions can include long‑term capacity reservations, prepayments, take‑or‑pay terms, or tool funding, which may increase working capital needs and reduce flexibility across product cycles.

If our suppliers extend lead times, limit supplies or the types of capacity we require, or increase prices due to capacity constraints or other factors, our revenues and our gross margin may materially decline in the future.

In addition, if we experience supply delays or limitations, our customers may reduce their purchase levels with us and/or seek alternative solutions to meet their demand, which could materially and adversely impact our revenue and results of operations.

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The need for additional manufacturing, assembly and testing involves numerous risks, including:

the costs and expense associated with such increased capacity, including requirements to make long-term purchase commitments including upfront cash deposits to our suppliers;

the costs associated with such increased capacity, including requirements to make long-term purchase commitments including upfront cash deposits to our suppliers;

the availability of modern foundries to be developed, acquired, leased or otherwise made available to us or our third-party suppliers;

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These and other risks may affect the ultimate cost and timing of any expansion of our third-party supplier capacity.

If our manufacturing costs increase, including as a result of inflationary pressure, or we experience supply constraints, we may be required to raise the prices of our products to remain profitable, which could result in a loss of customers.

If our manufacturing costs increase, including as a result of inflationary pressure and global tariffs, or we experience supply constraints, we may be required to raise the prices of our products to remain profitable, which could result in a loss of customers or a decline in orders from customers.

If we are unable to increase or maintain our manufacturing capacity, we may be unable to meet demand, which would harm our revenue and results of operations and may result in a loss of customers as they seek supply from other sources.

We currently depend on third-party suppliers to provide us with wafers for our products.

If any of our wafer suppliers are acquired, become insolvent or capacity constrained, or are otherwise unable to provide us sufficient wafers at acceptable yields or at anticipated costs, our revenue and gross margin may decline or we may not be able to fulfill our customer orders.

Should any of our suppliers be acquired or become insolvent or capacity constrained, we may not be able to fulfill our customer orders, which would likely cause a decline in our revenue.

We currently depend on third-party suppliers to provide us with wafers and other key components for our products.

If any of our suppliers are acquired, become insolvent or capacity constrained, or are otherwise unable to provide us with sufficient wafers and other key components at acceptable yields or at anticipated costs, our revenue and gross margin may decline or we may not be able to fulfill our customer orders.

While certain aspects of our relationships with these suppliers are contractual, many important aspects of our relationships depend on our suppliers’ continued cooperation and our management of such relationships with the suppliers.

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If we are unable to increase our prices to reflect higher costs, our margins will decrease.

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.

We might not be able to deliver our products on a timely basis if our relationships with our assembly and test subcontractors are disrupted or terminated.

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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 Middle East conflict and supply chain disruptions may materially impact our assembly or testing suppliers’ ability to operate.

In addition, current and potential global conflicts and supply chain disruptions may materially impact our assembly or testing suppliers’ ability to operate.

Any future product delivery delays or disruptions in our relationships with our subcontractors could have a material adverse effect on our financial condition, results of operations and cash flows.

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In addition, a negative trend in market conditions could lead us to decrease the manufacturing volume of our products to avoid excess inventory.

If we inaccurately assess market conditions for our products, we could have insufficient inventory to meet our customer demands resulting in lost potential revenue.

If we inaccurately assess market conditions for our products, we could have insufficient inventory to meet our customer demands resulting in potential lost revenue.

In the event that we order products that we are unable to sell due to a decrease in orders, unexpected order cancellations, injunctions due to patent litigation, import/export restrictions or product returns, we may have excess inventory which, if not sold, may need to be written down or would result in a decrease in our revenue in future periods as the excess inventory at our distributors is sold.

If any of these situations were to arise, it could have a material impact on our business, financial condition and results of operations.

The price and availability of commodities, such as gold, copper and silicon, may adversely impact our ability to deliver our products in a timely and cost-effective manner, and may adversely affect our business and results of operations.

Our products incorporate commodities such as gold, copper and silicon.

An increase in the price or a decrease in the availability of these commodities and similar commodities that we use could negatively impact our business and results of operations.

The price and availability of commodities used in our products, such as gold, copper and silicon, may adversely impact our ability to deliver our products in a timely and cost-effective manner, and may adversely affect our business and results of operations.

We work with our engineers and suppliers to continuously seek opportunities to reduce our product costs.

However, the price and availability of these commodities is beyond our control.

A significant increase in pricing or a decrease in the availability of these commodities that we use could negatively impact our business and results of operations.

Risks Associated with Industry Dynamics and Competition

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Historically, the semiconductor industry has been highly cyclical and, at various times, has experienced significant downturns and wide fluctuations in supply and demand.

Certain segments of the semiconductor market may also experience significant downturns while other segments are growing.

Certain segments of the semiconductor market may experience significant downturns while other segments could be growing.

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

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

In recent years, there has been a trend toward semiconductor industry consolidation.

We expect this trend to continue as companies attempt to improve the leverage of growing research and development costs, strengthen or hold their market positions in an evolving industry, or become unable to continue operations unless they find an acquirer or consolidate with another company.

The semiconductor industry has a history of consolidation as companies attempt to improve the leverage of growing research and development costs, strengthen or hold their market positions in an evolving industry, or become unable to continue operations unless they find an acquirer or consolidate with another company.

In addition, companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.

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The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue.

Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit application engineers and design talent, introduce new products, and maintain the rate at which we introduce new products.

Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit application and design engineers, introduce new products, and maintain the rate at which we introduce new products.

We compete with domestic and foreign semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing, and distribution of their products, and, in some cases, may have broader product offerings that enable them to more effectively market and sell to customers and engage sales partners.

We are in direct and active competition, with respect to one or more of our product lines, with many manufacturers of varying size and financial strength.

We are in direct and active competition with many manufacturers of varying size and financial strength.

The number of our competitors has grown due to the expansion of the market segments in which we participate.

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enacted the CHIPS Act, which, among other things, provides funding to increase domestic production and research and development in the semiconductor industry.

Because we operate a fabless business model, we were not eligible for such investments.

Many of our competitors benefitted from the investments, which will help increase their production capacities, shorten their lead times and gain market share.

Because we operate a fabless business model, we are not eligible for such investments.

Many of our competitors benefit from these and other investments, which helps increase their production capacities, shorten their lead times and gain market share.

These competitive pressures could materially and adversely affect our business, financial condition and results of operations.

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Our customers generally have substantial technological capabilities and financial resources.

Some customers have traditionally used these resources to develop their own products internally.

Some customers have traditionally used, and continue to use, these resources to develop their own products internally.

The prospects for our products in these markets are dependent in part upon our customers’ acceptance of our products as an alternative to their internally developed products.

Future sales prospects also are dependent upon acceptance and qualification of third-party sourcing for products as an alternative to in-house development.

Our future sales prospects also are dependent upon acceptance and qualification of third-party sourcing for products as an alternative to in-house development.

Customers may continue to increase their use of internally developed components.

They may also decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products.

They may also decide to develop or acquire components, technologies or products that are similar to, or that may be substituted for, our products, or acquire companies that compete with us.

If any of these situations were to occur, our business, financial condition and results of operations could be materially and adversely affected.

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Difficulties in implementing new or upgraded information systems or any significant system failures could disrupt our operations and financial reporting, which could have a material adverse effect on our capital resources, financial condition or results of operations.

System security risks, data protection or privacy breaches, cyberattacks, systems integration issues and unauthorized use of AI tools could disrupt our internal operations and/or harm our reputation, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Experienced hackers may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns.

As AI capabilities improve, threat actors may quickly develop more sophisticated and convincing attacks.

These attacks could be crafted with an AI tool to directly attack information systems with increased speed and efficiency or create more effective phishing emails.

Cybersecurity risks, data protection or privacy breaches, cyberattacks, systems integration issues and unauthorized use of AI tools could disrupt our internal operations and/or harm our reputation, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Threat actors may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns, among other things.

Further, as AI capabilities improve, threat actors may quickly develop more sophisticated and convincing attacks.

Cybersecurity incidents, attacks and threats are increasingly sophisticated, constantly evolving and originate from many sources globally and often cannot be recognized or understood until the target has already been attacked.

The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution, financial reporting or other critical functions.

In the ordinary course of business, we store sensitive data on our internal systems, network and servers, such as proprietary business and financial information, and confidential data pertaining to our customers, suppliers and business partners.

Maintaining security of sensitive information on our networks and the protection features of our solutions are both critical to our operations and business strategy.

We devote significant resources to network security, data encryption, and other security measures to protect our systems and data.

Despite our efforts to prevent these threats and disruptions to our information technology systems, these systems and those of our third-party providers may be affected by damage or interruption resulting from, among other causes, cybersecurity incidents, attacks, security breaches, power outages, system or operational failures or malware (including ransomware and other programs that operate with malicious intent).

In the ordinary course of business, we store data on our internal systems, network and servers, such as proprietary intellectual property, business and financial information, and confidential data pertaining to our customers, suppliers and business partners.

In addition, we also use third-party cloud services.

Maintaining security of information on our and third-party networks and the protection features of the solutions and services we use are both critical to our operations and business strategy.

We devote significant resources to network security, data encryption, and other security measures to protect the systems and data.

However, these security measures cannot provide absolute security.

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, the Middle East 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.

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

Remote working arrangements, current and potential global conflicts, and AI-powered cybersecurity threats have also heightened our potential exposure to cyberattacks, which could put the data we store on our internal or third-party systems at risk.

If any of these types of cybersecurity incidents, security breaches, or other attacks were to occur and we were unable to protect our 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.

Portions of our IT infrastructure may also experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.

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Failure to manage data effectively and to aggregate data in an accurate and timely manner may limit our ability to manage current and emerging risks, as well as to manage changing business needs.

While we restrict the use of third-party and open-source AI tools, such as ChatGPT, our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses risks relating to the potential exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.

While we attempt to restrict the use of third-party and open source AI tools, such as ChatGPT, our employees and consultants may use these tools on an unauthorized basis and our partners may also use these tools.

Such use of AI tools poses potential risks relating to intellectual property and data protection, including cybersecurity risks, exposure of our proprietary information to unauthorized recipients, the misuse of our or third-party intellectual property, and the inability to claim ownership of intellectual property rights in outputs of AI tools.

AI tools may also produce inaccurate responses that could lead to errors in our decision-making, product development or other business activities, which could have a negative impact on our business, operating results and financial condition.

Our ability to mitigate these risks will depend on our continued effective maintaining, training, monitoring and enforcement of appropriate policies and procedures governing the use of AI tools, and the results of any such use, by us or our partners.

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 in our operations.

While the incoming U.S.

Our ability to mitigate these risks will depend on our continued effective maintenance, training, monitoring and enforcement of appropriate policies and procedures governing the use of AI tools, the results of any such use by us or our partners, and the compliance with such policies and procedures by our workforce.

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

Governments around the world have adopted, and may continue to adopt, laws and regulations related to AI, including the European Union’s (“EU”) Artificial Intelligence Act.

Federal and state agencies in the U.S.

have enacted or are considering enacting new laws and regulations regarding the use of AI, and there are increased investigations and enforcement efforts related to the use of AI technology, all of which could increase our compliance costs and affect our ability to use AI in the development of our products and in our operations.

In addition to AI regulations under general consumer protection and privacy laws, legislations specifically aimed at regulating the development, deployment and use of AI have been enacted in several states and have also been proposed at the federal level.

Recent Executive Orders have further addressed federal regulation and policies related to AI.

These laws, proposed laws, and Executive Orders may create inconsistent and evolving compliance obligations, which may be costly and difficult to resolve.

While the current U.S.

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

Any failure or perceived failure by us to comply with any legal or regulatory requirement could subject us to legal liability, damage our reputation or otherwise adversely affect our business.

We are subject to various U.S.

and international laws, policies and other regulations regarding data protection.

Privacy, cyber security, and data protection are becoming increasingly significant issues.

To address these issues, the Standing Committee of the National People’s Congress promulgated the Cyber Security Law of the People’s Republic of China (the “Cyber Security Law”), which took effect on June 1, 2017.

The Cyber Security Law sets forth various requirements relating to the collection, use, storage, disclosure and security of data, among other things.

On June 10, 2021, the National People’s Congress passed the Data Security Law of the People’s Republic of China (the “Data Security Law”), which became effective on September 1, 2021.

The Data Security Law is the first comprehensive data security legislation in China, which becomes a key supplement to the Cyber Security Law and aims to regulate a wide range of issues in relation to the collection, storage, processing, use, provision, transaction and publication of any kind of data.

Various Chinese agencies are expected to issue additional regulations in the future to define these requirements more precisely.

For example, the Personal Information Protection Law (“PIPL”), took effect on November 1, 2021.

PIPL is aimed at protecting and controlling the use and transfer of personal data in China.

There is significant uncertainty in how regulators will interpret and enforce the law, and it contains provisions that allow substantial government oversight and include fines for failure to obtain required approval from China’s cyber and data protection regulators for cross-border transfers of personal data.

Effective May 25, 2018, the European Union (“EU”) implemented the General Data Protection Regulation (“GDPR”), a broad data protection framework that expands the scope of EU data protection law to non-European Union entities that process, or control the processing of, the personal data of EU subjects.

The GDPR allows for the imposition of fines and corrective action on entities that improperly use, disclose or secure the personal data of EU subjects, including through a data security breach.

In addition, an increasing number of states in the U.S.

have enacted laws containing similar requirements to the GDPR for businesses collecting or processing personal data.

For example, the State of California enacted the California Consumer Privacy Act of 2018 (“CCPA”), which was significantly amended by the California Privacy Rights Act, and sets forth comprehensive privacy and security obligations regarding the collection and processing of personal data of eligible California residents.

Other states have, or are expected to, enact similar or more expansive legislation regarding the collection and processing of personal data.

These regulatory requirements may increase our costs of compliance.

Any failure to fully comply with the Cyber Security Law, the Data Security Law, PIPL, GDPR, CCPA, and other applicable laws and regulations could lead to significant fines and regulatory corrective actions, along with reputational damage or third-party lawsuits, which could adversely affect our business and results of operations.

In addition, data security breaches experienced by us could result in the loss of trade secrets or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personal data (including sensitive personal data) of our employees, customers, suppliers and others.

Such incidents could subject us to significant monetary damages, regulatory enforcement actions and/or criminal prosecution, and cause us to lose customers and their related revenue in the future.

Risks Associated with Strategic Investments and Initiatives

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Increased investments in research and development will increase our operating expenses and may divert investment from other areas of our business, which may negatively impact our operating results, and we may not achieve the return on these investments that we anticipate, or be able to reduce such expenses in a timely manner if we experience a downturn in sales.

Also, if we are unable to properly manage and effectively utilize our research and development resources, we could see material adverse effects on our business, financial condition and operating results.

Also, if we are unable to properly manage and effectively utilize our research and development resources, we could experience material adverse effects on our business, financial condition and operating results.

In addition, if new competitors, technological advances by existing competitors, our entry into new markets, or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses would increase further.

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Such actions could impact our financial condition, operating results and the price of our common stock.

In addition, we may be unable to identify or complete prospective acquisitions for various reasons, including competition from other companies in the semiconductor industry, the valuation expectations of acquisition candidates and applicable antitrust or other policies, laws or regulations.

In addition, we may be unable to identify or complete prospective acquisitions for various reasons, including competition from other companies or financial investors, the valuation expectations of acquisition candidates and applicable antitrust or other policies, laws or regulations.

If we are unable to identify and complete acquisitions, we may not be able to successfully expand our business and product offerings.

In January 2024, we completed the acquisition of Axign B.V.

(“Axign”), a fabless semiconductor company located in the Netherlands that specializes in the development of consumer audio applications.

We cannot guarantee that this or any future acquisitions will improve our results of operations or that we will otherwise realize the anticipated benefits of any acquisitions.

If we are unsuccessful in integrating any acquired company or business into our operations, or if integration is more difficult than anticipated, we may experience disruptions that could harm our business and result in our failure to realize the anticipated benefits of the acquisitions.

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integrating the acquired company’s standards, processes, procedures and controls with our operations;

integrating the acquired company’s technology or products into our products or product offerings;

coordinating new product and process development;

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Risks Associated with Financial Reporting

Our future worldwide tax rates, financial position and operating results may be affected by changes in the relevant tax laws, interpretation of such tax laws or the influence of certain tax policy efforts.

The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% under the Pillar Two framework.

Our worldwide tax rates, financial position and operating results may be affected by changes in the relevant tax laws, interpretation of such tax laws or the influence of certain tax policy efforts.

We conduct our international operations through wholly-owned subsidiaries, branches and representative offices and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions.

Such corporate structures are subject to complex transfer pricing, permanent establishment challenges and other global and local regulations administered by taxing authorities in various jurisdictions.

Our provision for income taxes and cash tax liabilities in the future could be adversely affected by numerous factors, including changes in the geographic mix of our earnings and corporate tax rates among jurisdictions, challenges by tax authorities to our tax positions and intercompany transfer pricing arrangements, failure to meet performance obligations with respect to tax incentive agreements, expanding our operations in various countries, fluctuations in foreign currency exchange rates, adverse resolution of audits and examinations of previously filed tax returns, and changes in tax laws and regulations.

The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.

If such a disagreement were to occur, and our positions were not sustained, we could be required to pay additional taxes, interest and penalties, resulting in higher effective tax rates, reduced cash flows and lower overall profitability of our operations.

The Organization for Economic Co-operation and Development (“OECD”) has created the framework of a global minimum tax of 15% under the Pillar Two framework.

Many countries have already implemented or are taking steps to implement Pillar Two.

It is under each country’s own discretion to adopt Pillar Two.

Many aspects of Pillar Two are effective for tax years beginning in January 2024, with certain impacts to be effective in 2025.

Many aspects of Pillar Two were effective for tax years 2024 and 2025.

Pillar Two could result in additional tax liability over the regular corporate tax liability in a particular jurisdiction to the extent that the effective tax rate is less than the minimum rate.

The potential impact, if any, to our provision for income taxes, net income, and cash flows could be materially impacted by the implementation of the Pillar Two in our international jurisdictions where we have significant business operations.

In 2024, one of our foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025.

A deferred tax benefit of approximately $1.3 billion, net of $0.1 billion of valuation allowance, was recorded in the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive.

The impact on our provision for income taxes, net income, and cash flows could be materially impacted by the global minimum tax of 15% in jurisdictions where we have significant business operations.

In January 2025, the OECD released new Administrative Guidance on the application of the Global Anti-Base Erosion Model Rules affecting Pillar Two.

If the new Administrative Guidance is adopted by the jurisdiction that granted the tax incentive, it may materially impact our global tax provision.

In June 2025, the Group of Seven agreed to exclude U.S.

Multi-National Entities from certain aspects of the global minimum tax (the “G7 Statement”).

We will continue to monitor developments of the new Administrative Guidance and the G7 Statement.

We cannot predict the timing or manner in which we would adopt the new Administrative Guidance, the G7 Statement, or whether the OECD will release additional guidance in the future.

The potential impact could materially and adversely our future global tax provision and results of operations.

In 2024, one of our foreign subsidiaries was granted a ten-year tax incentive, beginning in tax year 2025.

A deferred tax benefit of $1.1 billion, net of $0.2 billion of deferred tax liability and $0.1 billion of valuation allowance, was recorded in the year ended December 31, 2024 to reflect the estimated future reductions in cash tax paid in that jurisdiction associated with the incentive.

If the new Administrative Guidance released by the OECD in January 2025 is adopted by the jurisdiction that granted the tax incentive, it may materially impact our global tax provision.

We cannot predict the timing and how that foreign jurisdiction would adopt the new Administrative Guidance, or whether the OECD will release additional guidance in the future.

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There can be no assurance that the outcomes from any examinations will not have an adverse effect on our financial condition and results of operations.

Our international operations subject us to potentially significant tax consequences, which could adversely affect our results of operations.

Such corporate structures are subject to complex transfer pricing, permanent establishment challenges and other local regulations administered by taxing authorities in various jurisdictions.

The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.

The challenging, subjective or complex judgments of certain accounting areas may result in errors that could result in restatements of our financial statements.

Certain areas of our accounting, including but not limited to our income tax provision and inventory reserves, require a significant amount of management judgments or could be complex.

The challenging, subjective or complex judgments of certain accounting areas may not be accurate, and could result in restatements of our financial statements.

Certain areas of our accounting, including but not limited to our income tax provision and inventory valuation require a significant amount of management judgment and are complex.

We base our management judgements on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled Item 7.

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

For example, due to the complexity associated with the calculation of our tax provision, including the effects of the enactment of new tax laws, we engage third-party tax advisors to assist us in the calculation.

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Restatements are generally costly and could adversely impact our results of operations, damage our reputation, and/or have a negative impact on the trading price of our common stock.

We face risks in connection with our internal control over financial reporting.

Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.

The restatement of our 2024 annual financial statements and our 2025 quarterly financial statements may affect investor confidence and raise reputational issues and may subject us to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings and regulatory inquiries.

As discussed in Notes 2 and 17 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, we restated our audited consolidated financial statements for the fiscal year ended December 31, 2024 and our unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2025, June 30, 2025 and September 30, 2025 after we determined that we had not appropriately accounted for deferred income taxes associated with a one-time tax incentive granted by a certain foreign jurisdiction.

As a result of this error and the resulting restatement of our audited consolidated financial statements and unaudited condensed consolidated financial statements for the impacted periods, we have incurred, and may continue to incur, unanticipated accounting and legal fees in connection with or related to the restatement, and are subject to a number of additional risks and uncertainties, including the increased possibility of litigation and regulatory inquiries.

The restatement may adversely affect investor confidence in the accuracy of our financial disclosures, may harm our reputation and our business and could cause our stock price to decline.

We face risks in connection with our internal control over financial reporting and the identified material weakness.

Effective internal control over financial reporting is necessary for us to provide reliable and accurate financial reports.

If we cannot provide reliable financial reports or prevent fraud or other financial misconduct, our business and operating results could be harmed.

Our failure to implement and maintain effective internal control over financial reporting could result in a material misstatement of our financial statements or otherwise cause us to fail to meet our financial reporting obligations.

This, in turn, could result in a loss of investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our results of operations and/or have a negative impact on our reputation and the trading price of our common stock, and could subject us to stockholder litigation.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

As more fully disclosed in Item 9A.

Controls and Procedures of this Annual Report, a material weakness was identified in the audit of our fiscal year ended December 31, 2023, which has been subsequently remediated as of December 31, 2024.

We cannot provide assurance that we will not in the future identify new material weaknesses in our internal control over financial reporting, which may impact the reliability of our financial reporting and financial statements.

Controls and Procedures of this Annual Report, a material weakness was identified in internal control over financial reporting related to the accounting for deferred income taxes.

Due to this finding of a material weakness, we concluded that our internal control over financial reporting was not effective as of December 31, 2024 and December 31, 2025.

Until this material weakness is remediated, there is a reasonable possibility that a material misstatement of our interim or annual financial statements will not be prevented or detected on a timely basis.

In addition, we may experience delays in satisfying our reporting obligations to comply with SEC rules and regulations, which could result in investigations and sanctions by regulatory authorities.

Furthermore, we may in the future identify additional material weaknesses in our internal control over financial reporting, which may impact the reliability of our financial reporting and financial statements.

Any of these results could adversely affect our business and the value of our common stock.

Risks Associated with Regulatory Compliance, Intellectual Property Protection and Litigation

We are subject to anti-corruption laws in the jurisdictions in which we operate.

Our failure to comply with these laws could result in penalties which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

Our failure to comply with these laws could result in penalties that could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

We are subject to the U.S.

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Bribery Act and various anti-corruption laws of other jurisdictions, which generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits.

While the new U.S.

While the U.S.

administration has suspended the commencement of new investigations and enforcement actions under the FCPA, the FCPA remains in effect and it is uncertain whether enforcement actions and investigations will re-commence or whether the law will be changed or re-interpreted.

Moreover, non‑U.S.

enforcement authorities may continue investigations or actions irrespective of U.S.

policy, resulting in multi‑jurisdictional inquiries, duplicative penalties, or heightened remediation costs.

Although we have implemented policies and procedures designed to ensure that we, our employees and other intermediaries comply with anti-corruption laws to which we are subject, there is no assurance that such policies or procedures will work effectively all the time or protect us against liability under these laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire.

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or foreign authorities could harm our reputation and have an adverse impact on our business, financial condition and results of operations.

Our business is subject to various governmental laws and regulations, and compliance with these regulations may impact our revenue and cause us to incur significant expense.

Our business is subject to various governmental laws and regulations, and compliance with these regulations may impact our revenue and cause us to incur significant expenses.

If we fail to maintain compliance with applicable regulations or obtain government licenses and approvals for our desired international trading activities or technology transfers, we may be forced to recall products and cease their distribution, and we could be subject to civil or criminal penalties.

Our business is subject to various significant laws and other legal requirements imposed by the U.S.

and other countries we conduct business in, including export control laws such as the Export Administration Act, the Export Administration Regulations and other laws, regulations and requirements governing international trade and technology transfer.

These laws and regulations are complex, change frequently and have generally become more stringent over time.

We may be required to incur significant expense to comply with these regulations or to remedy violations of these regulations.

In addition, if our customers fail to comply with these regulations, we may be required to suspend sales to these customers, which could negatively impact our results of operations.

We may be required to incur significant expenses to comply with these regulations or to remedy violations of these regulations.

In addition, if our customers fail to comply with these regulations, we may be required to suspend sales to these customers, which could negatively affect our results of operations.

We must conform the manufacture and distribution of our products to various laws and adapt to regulatory requirements in many countries as these requirements change.

If we fail to comply with these requirements in the manufacture or distribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products commercially until the products are brought into compliance.

Environmental laws and regulations could cause a disruption in our business and operations.

Compliance with environmental laws and regulations could cause disruptions in our business and operations.

We are subject to various foreign, federal, state and local laws and regulations that govern the environment, including those restricting the presence of certain substances in electronic products and making manufacturers of those products financially responsible for the collection, treatment, recycling and disposal of certain products.

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There can be no assurance that similar laws and regulations will not be implemented in other jurisdictions resulting in additional costs, possible delays in delivering products, and even the discontinuance of existing and planned future products if the costs were to become prohibitive.

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

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

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, in October 2023 and September 2024, California passed several bills that will require companies to disclose greenhouse gas emissions data and climate-related financial risks.

For example, California passed several bills that require companies to disclose greenhouse gas emissions data and climate-related financial risks.

We are also subject to increasing regulatory and compliance requirements related to labor and human rights within our supply chain, including the responsible sourcing of conflict minerals and the prohibition of conducting business with certain suppliers under the U.S.

Uyghur Forced Labor Prevention Act.

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 and supply chain compliance.

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

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 and efforts will be deemed sufficiently robust by regulators, stockholders, customers and other key stakeholders.

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It is difficult for us to forecast our legal expenses for any given quarter, which adversely affects our ability to forecast our expected results of operations, and the ultimate outcome of such legal proceedings, including any damages we might incur is difficult to predict.

We may also be subject to unanticipated legal proceedings, which would result in us incurring unexpected legal expenses.

We have been, and may continue to be, subject to unanticipated legal proceedings, which would result in us incurring unexpected legal expenses.

If we fail to meet the expectations of securities or industry analysts as a result of unexpected changes in our legal expenses or we are found liable for significant damages or other expenses, our stock price and results of operations could be materially and adversely affected.

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If our legal expenses materially increase or exceed anticipated amounts, our capital resources and financial condition could be adversely affected.

If we are not successful in any of our intellectual property defenses, we may have to cease production of certain products, design around such technologies, or pay royalty payments to license technology, any of which could harm our financial condition and our business.

If we are not successful in any intellectual property litigation or claims against us, we may have to cease production and sale of certain products, design around such technologies, or pay royalty payments to license technology, any of which could harm our financial condition and our business.

Our management team may also be required to devote a great deal of time and effort to these legal proceedings, which could divert management’s attention from focusing on our operations, which could adversely affect our business.

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From time to time, we are a party to various legal proceedings.

If we are not successful in litigation that could be brought against us or our customers, we could be ordered to pay monetary fines and/or damages, including expenses and damages against our customers.

If we are found liable for willful patent infringement, damages could be significant.

If we are not successful in litigation that has been or could be brought against us or our customers, we could be ordered to pay monetary fines and/or damages, including expenses and damages incurred by our customers.

If we are found liable for patent infringement, damages could be significant, particularly if our actions are found to be willful.

We and/or our customers could also be prevented from selling some or all of our products.

Moreover, our customers and end users could decide not to use our products, and our products and our customers’ accounts payable to us could be seized.

Finally, interim developments in these proceedings could increase the volatility in our stock price as the market assesses the impact of such developments on the likelihood that we will or will not ultimately prevail in these proceedings.

Moreover, our customers and end users could decide not to use our products due to the threat of infringement claims, even if unfounded and, if we are found to infringe, our products and our customers’ accounts payable to us could be seized.

Finally, interim developments in these proceedings could harm our relationships with our customers and increase the volatility in our stock price as the market assesses the impact of such developments on the likelihood that we will or will not ultimately prevail in these proceedings.

Even if resolved favorably, such proceedings can be very expensive and time consuming, and may divert management’s attention from other business operations.

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We use open source software in connection with certain of our products and services, and we intend to continue to use open source software in the future.

From time to time, there have been claims challenging the ownership of open-source software against companies that incorporate open-source software into their products or services or alleging that these companies have violated the terms of an open-source license.

As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open-source software or alleging that we have violated the terms of an open-source license.

Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our solutions.

In addition, if we were to combine our proprietary software solutions with open-source software in certain circumstances, we could, under certain open-source licenses, be required to publicly release the source code of our proprietary software solutions, which could harm our business and ability to compete.

If we inappropriately use open-source software, we may be required to re-engineer our solutions, discontinue the sale of our solutions, release the source code of our proprietary software to the public at no cost or take other remedial actions, which could increase our costs, harm our ability to compete and have a material adverse effect on our business, operating results and financial condition.

There is also a risk that open-source licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions, which could adversely affect our business, operating results and financial condition.

Some open source software licenses require the source code of derivative works of the open source software be made available to the public and modifications of the open source software be licensed under the same restrictive terms.

If we combine our proprietary software with open source software in certain ways, we could, under certain open source licenses, be required to release the source code of our proprietary software, and make our proprietary software available under the same open source licenses, which could harm our business and ability to compete.

In the event that potions of our proprietary software are determined to be subject to an open source license, we could be required to release the affected portions of our source code to the public at no cost, re-engineer all or a portion of our software solutions, discontinue the sale of our solutions, or otherwise be limited in the commercial licensing of our solutions, each of which could reduce or eliminate the value of our intellectual property, increase our costs, harm our ability to compete and have a material adverse effect on our business, operating results and financial condition.

There is also a risk that open source licenses could be construed by the courts in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our software solutions, which could adversely affect our business, operating results and financial condition.

Risks Associated with Human Capital Management

The loss of any of our key personnel or the failure to attract or retain specialized technical and management personnel could affect our operations or impair our ability to grow our business.

Our future success depends upon our ability to attract and retain highly qualified technical and managerial personnel.

Our future success depends, in part, upon our ability to attract and retain highly qualified technical and managerial personnel.

We are particularly dependent on the continued services of our key executives, including Michael Hsing, our President and Chief Executive Officer, who founded our company and developed our proprietary process technology.

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If we are unable to retain the services of existing key employees or are unsuccessful in attracting new highly qualified employees quickly enough to meet the demands of our business, including design cycles, our business could be harmed.

Furthermore, if we lose key personnel, the search for a qualified replacement and the transition could interrupt our operations as the search could take us longer than expected and divert management resources, and the newly hired employee could take longer than expected to effectively integrate into the team.

Furthermore, if we lose key personnel, the search for a qualified replacement and the transition could interrupt our operations as the search could take longer than expected and divert management resources, and the newly hired employee could take longer than expected to effectively integrate into the team.

If we fail to retain key employees in our sales, engineering, finance and legal functions or to make continued improvements to our internal systems, our business may suffer.

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actual or anticipated manufacturing capacity limitations;

our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and successfully secure manufacturing capacity;

our ability to develop new products, enter new markets, gain market share, manage litigation risk, diversify our customer base and successfully secure manufacturing capacity;

our ability to maintain or increase our gross margins;

costs of increasing wafer capacity and qualifying additional third-party wafer fabrication facilities;

costs of increasing manufacturing capacity and qualifying additional third-party wafer fabrication facilities;

the loss of, or a material reduction in sales to, our key customers, or rumors with respect thereto;

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cyberattacks or other system security, data protection and privacy breaches;

the inclusion, exclusion or deletion of our common stock from any major trading indices, such as the S&P 500 Index;

the inclusion, exclusion or deletion of our common stock from any major trading indices, such as the S&P 500 or NASDAQ 100 Indices;

our sale of common stock or other securities in the future;

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our ability to meet or exceed the guidance that we provide to our investors and analysts;

the extent to which we execute the stock repurchase program and continue payment of quarterly cash dividends to stockholders;

the extent to which we continue to execute the stock repurchase program and continue payment of quarterly cash dividends to stockholders;

our ability to meet or exceed our investors’ or analysts’ expectations;

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developments generally affecting the semiconductor industry or specific segments of the industry in which we compete;

terrorist acts or acts of war, including the ongoing Ukraine-Russia and Middle East conflicts;

terrorist acts or acts of war, including ongoing and potential global conflicts;

epidemics and pandemics;

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government policies and regulations on international trade policies and restrictions, including tariffs on imports of foreign goods;

export controls, trade and economic sanctions and regulations, and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China;

ratings published by third-party organizations with respect to our ESG compliance efforts;

export controls, trade and economic sanctions and regulations, and other regulatory or contractual limitations on our ability to sell or develop our products or invest in certain foreign markets, particularly in China;

our compliance with regulatory mandates focusing on ESG issues, including climate risks and social initiatives;

our performance against the ESG guidelines set by institutional stockholders and customers, and our ability to meet or exceed their expectations;

our ability to timely and adequately remediate our material weakness.

In addition, the stock market often experiences substantial volatility that may be unrelated to the operating performance of particular companies.

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Short positions in our stock could have a substantial impact on the trading price of our stock.

Historically, there have been “short” positions in our common stock.

There are “short” positions in our common stock.

The anticipated downward pressure on our stock price due to actual or anticipated sales of our stock by some institutions or individuals who engage in short sales of our common stock could cause our stock price to decline.

Such stock price decreases could encourage further short-sales that could place additional downward pressure on our stock price.

This could lead to further increases in the existing short position in our common stock and cause decreases and volatility in our stock price.

Such stock price decreases could encourage further short sales and cause additional declines and volatility in our stock price.

The volatility of our stock may cause the value of a stockholder’s investment to decline rapidly.

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Such concentration increases the risk that earthquakes or other natural disasters, labor strikes, epidemics and pandemics, and/or health advisories could disrupt our operations and have a material adverse impact on our business and results of operations.

For example, in 2022, China experienced a severe heatwave during the summer months in the Sichuan province, which resulted in widespread power shortages, rolling backouts and temporary business shutdowns imposed by the local governments.

Although we were able to successfully execute our contingency plan and our operations were not materially and adversely disrupted by the events, we cannot guarantee that we will be able to mitigate the operational risks caused by extreme weather conditions or other events.

We cannot guarantee that we will be able to mitigate the operational risks caused by extreme weather conditions or other events.

In addition, we rely heavily on our internal information and communications systems and on systems or support services from third parties to manage our operations efficiently and effectively.

Any of these are subject to failure due to a natural disaster or other disruptions.

Any of these are subject to failure due to a natural disaster, intentional acts, technical or power outages or other disruptions.

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

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and other countries have imposed economic sanctions and export control measures on Russia due to the conflict in Ukraine.

Although such measures have not significantly affected our business or operations, future developments could adversely affect our operating results and financial condition.

Although such measures have not significantly affected our business or operations, future developments in this conflict or in other global conflicts could adversely affect our operating results and financial condition.

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What changed 10-K

Item 1A. Risk Factors