What changed in this filing

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Item 1A. Risk Factors

2021-08-27 compared with 2021-06-09 · 87 added, 56 removed, 655 unchanged (18% of the section changed)

12 unchanged sentences

• risks related to the extension of lead time due to supply chain disruptions, component shortages that impact the production of our products, and constrained availability from other electronic suppliers impacting our customers' ability to ship their products, which in turn may adversely impact our sales to those customers;

• risks related to changes in general economic conditions, such as the impact of Brexit on the economy in the E.U., political conditions, such as the recent tariffs and trade restrictions with China and other foreign nations, and specific conditions in the end markets we address, including the continuing volatility in the technology sector and semiconductor industry;

• risks related to changes in general economic conditions, such as the impact of Brexit on the economy in the E.U., political conditions, such as the tariffs and trade restrictions with China and other foreign nations, and specific conditions in the end markets we address, including the continuing volatility in the technology sector and semiconductor industry;

• risks related to our debt obligations;

1 unchanged sentence

• risks related to cancellations, rescheduling or deferrals of significant customer orders or shipments, as well as the ability of our customers to manage inventory;

• risks related to the effects of any future acquisitions, divestitures or significant investments;

• risks related to the effects of any future acquisitions, divestitures or significant investments, such as our proposed acquisition of Innovium, Inc.;

• risks related to the highly competitive nature of the end markets we serve, particularly within the semiconductor and infrastructure industries;

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• risks related to our ability to maintain a competitive cost structure for our manufacturing and assembly and test processes and our reliance on our manufacturing partners to produce our products;

• risks related to our ability to realize anticipated synergies in connection with our acquisitions and our loss of synergies in connection with our divestitures;

• risks related to any current and future litigation and regulatory investigations that could result in substantial costs and a diversion of management’s attention and resources that are needed to successfully maintain and grow our business;

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• risks related to failures to protect our intellectual property, particularly outside the U.S.;

• risks related to the potential impact of a significant natural disaster, including earthquakes, fires, floods and tsunamis, particularly in certain regions in which we operate or own buildings, such as Santa Clara, California, and where our third party suppliers operate, such as Taiwan and elsewhere in the Pacific Rim;

• risks related to the potential impact of a significant natural disaster, including earthquakes, fires, floods, droughts, and tsunamis, particularly in certain regions in which we operate or own buildings, such as Santa Clara, California, and where our third party suppliers operate, such as Taiwan and elsewhere in the Pacific Rim;

• risks related to our ability to attract, retain and motivate a highly skilled workforce, especially managerial, engineering, sales and marketing personnel;

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We face risks related to the COVID-19 pandemic which currently has, and may continue in the future to, significantly disrupt and adversely impact our manufacturing, research and development, operations, sales and financial results.

Although many countries have vaccinated large segments of their population, COVID-19 continues to disrupt business activities, trade, and supply chains in many countries, particularly in Asia and India.

Although restrictions have eased in some places, the ongoing pandemic, including large

outbreaks, resurgences of COVID-19 in various regions (such as the U.S., various countries throughout Asia and India) and appearances of new variants of the virus, has resulted, and may continue to result, in their reinstitution.

In addition, although many countries have vaccinated large segments of their population, COVID-19 continues to disrupt business activities, trade, and supply chains in many countries.

We expect these impacts to continue for the foreseeable future.

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If we are unable to retain and motivate our current personnel or attract additional qualified personnel, our ability to develop and successfully market our products could be harmed .”

Our share repurchase program was temporarily suspended in late March 2020 to preserve cash during the COVID-19 pandemic and the program remains suspended as we focus on reducing our debt and de-levering our balance sheet.

See the Risk Factor entitled “ There can be no assurance that we will continue to declare cash dividends or effect share repurchases in any particular amount or at all, and statutory requirements under Delaware Law may require us to defer payment of declared dividends or suspend share repurchases.

We may become subject to claims or lawsuits by employees, customers, suppliers or other parties regarding actions we take in our operations in response to the COVID-19 pandemic.

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In connection with the transaction, Marvell Technology Group Ltd.

became as a wholly owned subsidiary of the Company and Inphi became a wholly owned subsidiary of the Company (collectively, these two transactions are referred to as the "Mergers").

became a wholly owned subsidiary of the Company and Inphi became a wholly owned subsidiary of the Company (collectively, these two transactions are referred to as the "Mergers").

In addition, as a result of the transaction, the Company is domiciled in the United States.

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The benefits we expect to realize from the Mergers will depend, in part, on our ability to integrate the businesses successfully and efficiently.

See also, “ Failure to successfully integrate the businesses of Marvell and Inphi in the expected time frame may adversely affect our future results .”

Furthermore, uncertainties with respect to integration related to the Mergers may cause our current and prospective employees to experience uncertainty about their futures.

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• On April 20, 2021, we completed the acquisition of Inphi;

• On August 3, 2021, we announced the potential acquisition of Innovium, Inc.

(which is subject to customary closing conditions).

Mergers, acquisitions and divestitures include a number of risks and present financial, managerial and operational challenges.

Any acquired business, technology, service or product could significantly underperform relative to our expectations and may not achieve the benefits we expect on a timely basis or at all.

Given that our resources are limited, our decision to pursue a transaction has opportunity costs;

accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our strategic objectives.

Any acquired business, technology, service or product could significantly underperform relative to our expectations.

Our acquisitions may not further our business strategy as we expected, we may not integrate an acquired company or technology as successfully as we expected, we may impose our business practices that adversely impact the acquired business or we may overpay for, or otherwise not realize the expected return on our investments, each or all of which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of an acquisition including intangible assets and goodwill.

In addition, the use of our shares to finance an acquisition, such as our proposed acquisition of Innovium, will result in an increase in the number of outstanding shares and will reduce the ownership percentage of each of our outstanding stockholders.

When we decide to sell assets or a business, we may have difficulty selling on acceptable terms in a timely manner or at all.

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For all these reasons, our pursuit of an acquisition, investment, divestiture, merger or joint venture could cause our actual results to differ materially from those anticipated.

Recent or potential future acquisitions involve a number of risks, including, among others, those associated with our use of a significant portion of our cash and other financial risks and integration risks.

Recent or potential future acquisitions involve a number of risks, including, among others, those associated with our use of a significant portion of our cash and other financial risks.

We used a significant portion of our cash and incurred substantial indebtedness in connection with the financing of our acquisition of Cavium, which was completed in fiscal year 2019.

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In addition, substantially all of our third-party assembly and testing facilities are located in China, Malaysia, Singapore, Taiwan and Canada.

Because of the geographic concentration of most of these third-party foundries, as well as our assembly and test subcontractors, we are exposed to the risk that their operations may be disrupted by regional disasters including, for example, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, or by pandemics or other actual or threatened public health emergencies such as the COVID-19 pandemic, or by political, social or economic instability.

Because of the geographic concentration of most of these third-party foundries, as well as our assembly and test subcontractors, we are exposed to the risk that their operations may be disrupted by regional disasters including, for example, droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, or by pandemics or other actual or threatened public health emergencies such as the COVID-19 pandemic, or by political, social or economic instability.

In the case of such an event, our revenue, cost of goods sold and results of operations would be negatively impacted.

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The ability of each of our manufacturing partners to provide us with semiconductor devices is limited by its available capacity and existing obligations.

When demand is strong, availability of our partners' capacity may be constrained or not available, and with limited exceptions, our vendors are not obligated to perform services or supply products to us for any specific period, in any specific quantities, or at any specific price, except as may be provided in a particular purchase order.

We place our orders on the basis of our customers’ purchase orders or our forecast of customer demand, and our manufacturing partners can allocate capacity to the production of other companies’ products and reduce deliveries to us on short notice.

It is possible that their customers that are larger and better financed than we are or that have long-term agreements with our main manufacturing partners may induce our them to reallocate capacity to those customers.

Our manufacturing partners may reallocate capacity to their customers offering them a better margin or rate of return than provided by the Company.

When demand is strong, availability of our partners' capacity may be constrained or not available, and with limited exceptions such as our wafer supply capacity reservation agreement with one of our suppliers , our vendors are not obligated to perform services or supply products to us for any specific period, in any specific quantities, or at any specific price, except as may be provided in a particular purchase order.

We place our orders on the basis of our customers’ purchase orders or our forecast of customer demand, and most of our manufacturing partners can allocate capacity to the production of other companies’ products and reduce deliveries to us on short notice.

It is possible that their customers that are larger and better financed than we are or that have long-term agreements with our main manufacturing partners may induce them to reallocate capacity to those customers.

Most of our manufacturing partners may reallocate capacity to their customers offering them a better margin or rate of return than provided by the Company.

This reallocation could impair our ability to secure the supply of components that we need.

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In addition, our testing and assembly partners may be single sourced and it may be difficult for us to transition to other partners for these services.

In order to secure sufficient capacity when demand is high and to mitigate the risks described in the foregoing paragraph, we may enter into various arrangements with our manufacturing partners or other suppliers that could be costly and harm our results of operations, such as nonrefundable deposits with, or loans to, such parties in exchange for capacity commitments, or contracts that commit us to purchase specified quantities of integrated circuits over extended periods.

We may not be able to make any such arrangement in a timely fashion or at all, and any arrangements may be costly, reduce our financial flexibility, and not be on terms favorable to us.

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These penalties may be expensive and could harm our financial results.

Recent supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity and fab constraints have resulted in increased lead times, inability to meet demand, and increased costs during 2020, and these supply constraints are currently expected to continue throughout calendar 2021.

For example, on July 13, 2021, the Company entered into a wafer supply capacity reservation agreement with a supplier to reserve manufacturing supply capacity due to the current global supply shortage environment.

Under the agreement, the Company has agreed to pay certain fees as well as to meet an annual wafer purchase commitment in exchange for the supplier's guarantee to produce a specific minimum quantity of wafers for each of the calendar years from 2022 through 2025.

In addition, subsequent to quarter end the Company entered into a capacity reservation agreement with another supplier to reserve additional materials, assembly, and test capacity.

Under the agreement, the Company is required to make certain refundable deposits and to meet annual purchase commitments for calendar years from 2022 through 2026 in exchange for the supplier’s guarantee to produce material and reserve capacity for a minimum quantity of devices.

Recent supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity and fab constraints have resulted in increased lead times, inability to meet demand, and increased costs during calendar 2020, and these supply constraints are currently expected to continue throughout calendar 2021 and into calendar 2022 .

Of these shortages, ABF substrates are the most constrained at this time and most of these suppliers are located in Japan and Taiwan.

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Uncertain Yields and Quality

The fabrication of integrated circuits is a complex and technically demanding process.

The fabrication of our products is a complex and technically demanding process.

Our technology is transitioning from planar to FINFET transistors.

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As a result, we may be unable to accurately forecast the volume and timing of our orders and revenues associated with any new product introductions.

We have in the past, and may continue to, make custom or semi-custom products on an exclusive basis for some of our customers for a negotiated period of time.

The percentage of our sales related to custom or semi-custom products has been increasing over the last few years.

Any revenue from sales of our custom or semi-custom products is directly related to sales of the third-party customer’s products and reflective of their success in the market.

We have no control over the marketing efforts of these third-party customers and can't make any assurances that sales of their products will be successful in current or future years.

In addition, if these customers are bought by our competitors or other third parties, they may terminate agreements related to these custom or semi-custom products or otherwise limit our access to technology necessary for the production of these products.

As a result, there may be no other customers for these products due to their custom or semi-custom nature.

Consequently, we may not fully realize our expectations for custom or semi-custom product revenue and our operating results may be adversely affected.

Additionally, failure of our customers to agree to pay for NRE (non-recurring engineering) costs or failure to pay enough to cover the costs we incur in connection with NREs may harm our financial results.

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Our future success will depend on our ability to develop and introduce new products and enhancements to our existing products that address customer requirements, in a timely and cost-effective manner and are competitive as to a variety of factors.

For example, for our products addressing the 5G market, we must successfully identify customer requirements and design, develop and produce products on time that compete effectively as to price, functionality and performance.

For example, we must successfully identify customer requirements and design, develop and produce products on time that compete effectively as to price, functionality and performance.

We sell products in markets that are characterized by rapid technological change, evolving industry standards, frequent new product introductions, and increasing demand for higher levels of integration and smaller process geometries.

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Costs related to defective products could have a material adverse effect on us.

From time to time, we have experienced hardware and software defects and bugs associated with the introduction of our highly complex products.

Despite our testing procedures, we cannot ensure that errors will not be found in new products or releases after commencement of commercial shipments in the future.

We make highly complex electronic components and, accordingly, there is a risk of defects in any of our products.

Such defects can give rise to the significant costs noted below.

Moreover, since the cost of replacing defective semiconductor devices is often much higher than the value of the devices themselves, we are subject to damage claims from customers in excess of the amounts they pay us for our products, including consequential damages.

We also face exposure to potential liability resulting from the fact that our customers typically integrate the semiconductors we sell into numerous consumer products, including automobiles.

We are exposed to product liability claims if our semiconductors.

or the consumer products integrated with our semiconductors (such as automobiles), malfunction and lead to personal injury or death.

In addition, our customers may issue recalls on their products if they prove to be defective or make compensatory payments in accordance with industry or business practice or in order to maintain good customer relationships.

If such recalls or payments are the result of a defect in one of our products, our customers may seek to recover all or a portion of their losses from us.

Recalls of our customers’ products in certain end-markets, such as with our automotive and base station customers, may cause us to incur significant costs.

In addition, despite our testing procedures, we cannot ensure that errors will not be found in new products or releases after commencement of commercial shipments in the future.

Such errors could result in:

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there can be no assurances that such licenses will be approved by the U.S.

For example, we have recently received notices from the U.S.

For example, we have received notices from the U.S.

government that it intends to deny some of our requests for licenses.

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presidential administration also focused on policy reforms that discouraged corporations from outsourcing manufacturing and production activities to foreign jurisdictions, including through tariffs or penalties on goods manufactured outside the U.S., which required us to change the way we conduct business.

The current U.S.

presidential administration’s policy goals are not fully understood yet, but such policies may include some changes to the status quo, which may cause damage to our business.

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In addition, many of our customers are located outside of the United States, primarily in Asia, which further exposes us to foreign risks.

Sales shipped to customers with operations in Asia represented approximately 80% and 79% of our net revenue in the three months ended May 1, 2021 and May 2, 2020, respectively.

Sales shipped to customers with operations in Asia represented approximately 80% and 79% of our net revenue in the three months ended July 31, 2021 and August 1, 2020, respectively.

We also have substantial operations outside of the United States.

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For example, during fiscal 2021, there was one distributor, whose revenue as a percentage of our net revenue was 10% or greater of total net revenues.

In addition, net revenue from our two largest customers, including this distributor, represented 22% of our net revenue for the year ended January 30, 2021.

In addition, net revenue from our ten (10) largest customers, including distributors, represented 66% of our net revenue for the fiscal year ended January 30, 2021.

Sales to our largest customers have fluctuated significantly from period to period and year to year and will likely continue to fluctuate in the future, primarily due to the timing and number of design wins with each customer, the continued diversification of our customer base as we expand into new markets, and natural disasters or other issues that may divert a customer’s operations.

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• customers may be subject to severe business disruptions, including, but not limited to, those driven by financial instability, actual or threatened pandemics, such as the COVID-19 pandemic, or public health emergencies or other global or regional macroeconomic developments.

• customers may consolidate (for example, Western Digital acquired SanDisk in 2017, and Toshiba Corporation sold control of a portion of its semiconductor business in 2018), which could lead to changing demand for our products, replacement of our products by the merged entity with those of our competitors and cancellation of orders.

In addition, there has been a trend toward customer consolidation in the semiconductor industry through business combinations, including mergers, asset acquisitions and strategic partnerships.

(for example, Western Digital acquired SanDisk in 2017, and Toshiba Corporation sold control of a portion of its semiconductor business in 2018).

Mergers or restructuring among our customers, or their end customers, could increase our customer concentration with a particular customer or reduce total demand as the combined entities reevaluate their business and consolidate their suppliers.

Such future developments, particularly in those end markets that account for more significant portions of our revenues, could harm our business and our results of operations.

We are subject to order and shipment uncertainties.

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In many cases, they design their products to use components from multiple suppliers.

This creates the risk that our customers may decide to cancel or change product plans for products incorporating our integrated circuits prior to completion, which makes it even more difficult to forecast customer demand.

This creates the risk that our customers may decide to cancel or change product plans for products incorporating our semiconductor solutions prior to completion, which makes it even more difficult to forecast customer demand.

Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies.

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The semiconductor industry, and specifically the storage, networking and infrastructure markets, is extremely competitive.

We currently compete with a number of large domestic and international companies in the business of designing integrated circuits and related applications, some of which have greater financial, technical and management resources than us.

We currently compete with a number of large domestic and international companies in the business of designing semiconductor solutions and related applications, some of which have greater financial, technical and management resources than us.

Our efforts to introduce new products into markets with entrenched competitors will expose us to additional competitive pressures.

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In addition, some of these competitors may use their market power to dissuade our customers from purchasing from us.

For example, certain U.S.

regulators are currently investigating whether a competitor may have abused its dominant market position to harm competition by forcing customers to deal with it exclusively, bundling its various semiconductors with other products, or by distorting the market by using illegal rebates.

In addition, many of our competitors operate and maintain their own fabrication facilities and have longer operating histories, greater name recognition, larger customer bases, and greater sales, marketing and distribution resources than we do.

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As a result of the closing of the transaction with Inphi, the Company is now domiciled in the United States.

Therefore, the income from all foreign subsidiaries is now subject to the US provisions applicable to Global Intangible Low Taxed Income (“GILTI”), which generally requires for GILTI income to be included in the taxable income of US entities.

The US currently has a federal tax rate of 21%, and that federal income tax rate could be increased in the future by the current Congress and presidential administration, which has proposed raising it to as high as 28%.

Therefore, the income from all foreign subsidiaries is now subject to the U.S.

provisions applicable to Global Intangible Low Taxed Income (“GILTI”), which generally requires for GILTI income to be included in the taxable income of U.S.

currently has a federal tax rate of 21%, and that federal income tax rate could be increased in the future by the current Congress and presidential administration, which has proposed raising it to as high as 28%.

This proposed increased tax rate could cause our overall effective tax rate to increase significantly versus our effective tax rate when we were a Bermuda-domiciled company, which could materially impact our financial results, including our earnings and cash flow.

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To the extent that we are required to maintain more of a presence in Bermuda or the Cayman Islands, such requirements will increase our costs either directly in those locations or indirectly as a result of increased costs related to moving our operations to other jurisdictions.

In addition, in a prior period, the Company transferred certain intellectual property to a related entity in Singapore.

In addition, both in the current period and in a prior period, the Company transferred certain intellectual property to a related entity in Singapore.

The impact to the Company was determined based on our determination of the fair value of this property, which required management to make significant estimates and to apply complex tax regulations in multiple jurisdictions.

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In addition to the 2020 Term Loan Agreement, on December 7, 2020, we entered into a revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and a lender, and the other lenders from time to time party thereto (“Revolving Credit Agreement” and together with the 2020 Term Loan Agreement, the “Credit Agreements”), which provides for a $750 million revolving credit facility.

The commitments for the $2.5 billion senior 364-day bridge term loan facility (the “Bridge Facility”), as evidenced by a commitment letter (the “Bridge Commitment Letter”) dated as of October 29, 2020, with JPMorgan Chase Bank, N.A.

(“JPMorgan”), and the other financial institutions that have joined thereto, terminated in full on the closing date of the Mergers.

The commitments for the $2.5 billion senior 364-day bridge term loan facility, as evidenced by a commitment letter dated as of October 29, 2020, with JPMorgan Chase Bank, N.A., and the other financial institutions that have joined thereto, terminated in full on the closing date of the Mergers.

On June 22, 2018, we completed a public offering of (i) $500.0 million aggregate principal amount of the Company’s 4.200% Senior Notes due 2023 (the “2023 Notes”) and (ii) $500.0 million aggregate principal amount of the Company’s 4.875% Senior Notes due 2028 (the “2028 Notes” and, together with the 2023 Notes, the “Senior Notes”).

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Liquidity, asset quality, cost structure, reserve mix and commodity pricing levels could also be considered by the rating agencies.

The applicable margins with respect to the Term Loan will vary based on the applicable public ratings assigned to the collateralized, long-term indebtedness for borrowed money by Moody’s Investors Service, Inc., Standard & Poor’s Financial Services LLC, Fitch’s and any successor to each such rating agency business.

The applicable margins with respect to the loans incurred under the Credit Agreements will vary based on the applicable public ratings assigned to the senior unsecured long-term indebtedness by Moody’s Investors Service, Inc., Standard & Poor’s Financial Services LLC, Fitch’s and any successor to each such rating agency business.

A ratings downgrade could adversely impact our ability to access debt markets in the future and increase the cost of current or future debt and may adversely affect our share price.

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We are exposed to potential impairment charges on certain assets.

We had approximately $11.0 billion of goodwill and $6.6 billion of acquired intangible assets on our unaudited condensed consolidated balance sheet as of May 1, 2021.

We had approximately $11.0 billion of goodwill and $6.3 billion of acquired intangible assets on our unaudited condensed consolidated balance sheet as of July 31, 2021.

Under generally accepted accounting principles in the United States, we are required to review our intangible assets including goodwill for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

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As a result of the assessment, we determined the carrying amount of certain impacted assets are not recoverable, which have resulted in recognition during the quarter of $119.0 million of restructuring related charges associated with the server processor product line.

We have determined that our business operates as a single operating segment with two primary components (Storage and Networking), which we have concluded can be aggregated into a single reporting unit for purposes of testing goodwill impairment.

We have determined that our business operates as a single operating segment with five primary components, which we have concluded can be aggregated into a single reporting unit for purposes of testing goodwill impairment.

The fair value of the reporting unit is determined by taking our market capitalization as determined through quoted market prices and as adjusted for a control premium and other relevant factors.

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In connection with some of our acquisitions, we have been subject to regulatory conditions imposed by the Committee on Foreign Investment in the United States (CFIUS) where we have agreed to implement certain cyber security, physical security and training measures and supply agreements to protect national security.

As a result of the Mergers pursuant to which we became a U.S.

domiciled company, these CFIUS regulatory conditions recently terminated.

A portion of the business we acquired in the Avera acquisition requires facility security clearances under the National Industrial Security Program.

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As a result of the transaction with Inphi, we are now domiciled in the United States.

As a result, we are requesting to be released from some of the above obligations.

As a result, we are requesting to be released from some of the above FOCI-related obligations.

We can offer no assurance that such a request will be granted in a timely manner or at all.

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These information technology systems are subject to damage or interruption from a number of potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, internal malfeasance or other events.

Cyber-attacks on us may include viruses and worms, phishing attacks, and denial-of-service attacks.

Cyber-attacks on us may include viruses and worms, ransomware attacks, phishing attacks, and denial-of-service attacks.

In addition, we may be the target of email scams that attempt to acquire personal information or company assets.

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We believe our future success will depend in large part upon our ability to attract and retain highly skilled managerial, engineering, sales and marketing personnel.

The competition for qualified technical personnel with significant experience in the design, development, manufacturing, marketing and sales of integrated circuits is intense, both in the Silicon Valley where our U.S.

The competition for qualified technical personnel with significant experience in the design, development, manufacturing, marketing and sales of semiconductor solutions is intense, both in the Silicon Valley where our U.S.

operations are based and in global markets in which we operate.

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In addition, as a result of our acquisitions and divestiture, our current and prospective employees may experience uncertainty about their futures that may impair our ability to retain, recruit or motivate key management, engineering, technical and other personnel.

In response the COVID-19 pandemic, we modified our workplace practices globally, which has resulted in many of our employees working remotely for extended periods of time.

As a result, many of our employees have expressed a preference to continue to work from home two to three days a week post-pandemic.

In response, we recently announced a hybrid work policy for most of our U.S.

based employees, where employees may split their time between home and the office.

However, certain types of activities such as new product innovation, critical business decision making, brainstorming sessions, providing sensitive employee feedback, and onboarding new employees may be less effective in a hybrid work environment.

Our hybrid work environment may also negatively impact social interactions between employees that build camaraderie and may, therefore, negatively impact our office culture.

Many companies, including companies that we compete with for talent, have announced plans to adopt full time remote work arrangements or hybrid work arrangements more flexible than ours, which may impact our ability to attract and retain qualified personnel if potential or current employees prefer these policies.

There can be no assurance that we will continue to declare cash dividends or effect share repurchases in any particular amount or at all, and statutory requirements under Delaware Law may require us to defer payment of declared dividends or suspend share repurchases.

In May 2012, we declared our first quarterly cash dividend and in October 2018, we announced that our board of directors had authorized a $700 million addition to our previously existing $1.0 billion share repurchase program.

An aggregate of $1.1 billion of shares have been repurchased under that program as of May 1, 2021.

An aggregate of $1.1 billion of shares have been repurchased under that program as of July 31, 2021.

Future payment of a regular quarterly cash dividend on our common shares and future share repurchases will be subject to, among other things:

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A reduction in, a delay of, or elimination of our dividend payments or share repurchases could have a negative effect on our share price.

Although share repurchases were temporarily suspended during this time, as of May 1, 2021, there was $564.5 million remaining available for future share repurchases of the authorization.

We will continue to evaluate business conditions to decide when we can restart the share repurchase program.

As of July 31, 2021, there was $564.5 million remaining available for future share repurchases of the authorization.

Our indemnification obligations and limitations of our director and officer liability insurance may have a material adverse effect on our financial condition, results of operations and cash flows.

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Our insurance policies may not be adequate to fully offset losses from covered incidents, and we do not have coverage for certain losses.

For example, there is very limited coverage available with respect to the services provided by our third-party foundries and assembly and test subcontractors.

For example, there is very limited coverage available with respect to the services provided by our third-party manufacturing partners and assembly and test subcontractors.

In the event of a natural disaster (such as an earthquake or tsunami), political or military turmoil, widespread public health emergencies including pandemics, including the COVID-19 pandemic, or other significant disruptions to their operations, insurance may not adequately protect us from this exposure.

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If our insurance coverage is insufficient to protect us against unforeseen catastrophic losses, any uncovered losses could adversely affect our financial condition and results of operations.

If we were classified as a passive foreign investment company, there would be adverse tax consequences to U.S.

holders of our ordinary shares.

If we were classified as a “passive foreign investment company” or “PFIC” under section 1297 of the Internal Revenue Code, of 1986, as amended (the “Code”), for any taxable year during which a U.S.

holder holds ordinary shares, such U.S.

holder generally would be taxed at ordinary income tax rates on any gain realized on the sale or exchange of the ordinary shares and on any “excess distributions” (including constructive distributions) received on the ordinary shares.

If any of our non-U.S.

based subsidiaries were classified as a passive foreign investment company, there would be adverse tax consequences.

If any of our non-U.S.

based subsidiaries were classified as a “passive foreign investment company” or “PFIC” under section 1297 of the Internal Revenue Code, of 1986, as amended, for any taxable year during which a U.S.

holder holds common shares, such U.S.

holder generally would be taxed at ordinary income tax rates on any gain realized on the sale or exchange of the shares and on any “excess distributions” (including constructive distributions) received on the shares.

holder could also be subject to a special interest charge with respect to any such gain or excess distribution.

We would be classified as a PFIC for U.S.

federal income tax purposes in any taxable year in which either (i) at least 75% of our gross income is passive income or (ii) on average, the percentage of our assets that produce passive income or are held for the production of passive income is at least 50% (determined on an average gross value basis).

We were not classified as a PFIC for fiscal year 2020 or in any prior taxable year.

Whether we will, in fact, be classified as a PFIC for any subsequent taxable year depends on our assets and income over the course of the relevant taxable year and, as a result, cannot be predicted with certainty.

In particular, because the total value of our assets for purposes of the asset test will be calculated based upon the market price of our ordinary shares, a significant and sustained decline in the market price of our ordinary shares and corresponding market capitalization relative to our passive assets could result in our being classified as a PFIC.

There can be no assurance that we will not be classified as a PFIC in the future or the Internal Revenue Service will not challenge our determination concerning PFIC status for any prior period.

An entity would be classified as a PFIC for U.S.

federal income tax purposes in any taxable year in which either (i) at least 75% of its gross income is passive income or (ii) on average, the percentage of its assets that produce passive income or are held for the production of passive income is at least 50% (determined on an average gross value basis).

Whether an entity will, in fact, be classified as a PFIC for any taxable year depends on its assets and income over the course of the relevant taxable year and, as a result, cannot be predicted with certainty.

There can be no assurance that any of our foreign based subsidiaries will not be classified as a PFIC in the future or the Internal Revenue Service will not challenge our determination concerning PFIC status for any prior period.

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

What changed 10-Q

Item 1A. Risk Factors