What changed in this filing

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Item 1A. Risk Factors

2025-08-29 compared with 2025-05-30 · 48 added, 28 removed, 770 unchanged (9% of the section changed)

60 unchanged sentences

The loss of any of our large customers or a significant reduction in sales we make to them would likely harm our financial condition and results of operations.

For example, s ome of our large customers depend on rapid and continuous innovation and will select partners who can help them deliver innovation at their pace and if we are unable to deliver on these timelines we may miss significant business opportunities .

For example, some of our large customers depend on rapid and continuous innovation and will select partners who can help them deliver innovation at their pace and if we are unable to deliver on these timelines we may miss significant business opportunities.

To the extent one or more of our large customers experience financial challenges, bankruptcy or insolvency, this could have a material adverse effect on our sales and our ability to collect on receivables, which could harm our financial condition and results of operations.

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In addition, we may face lower manufacturing yields and reduced quality in the process of ramping up and diversifying our manufacturing partners.

Poor yields from our partners, or defects, integration issues or other performance problems with our products could cause us significant customer relations and business reputation problems, harm our financial performance and result in financial or other damages to our customers.

Poor yields from our manufacturing partners, or defects, integration issues or other performance problems with our products could cause us significant customer relations and business reputation problems, harm our financial performance and result in financial or other damages to our customers.

Our customers could also seek damages in connection with product liability claims, which would likely be time consuming and costly to defend.

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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.

If we do not accurately predict which new product features or requirements our customers will want in the future and adjust our business ahead of time, we could lose market share, face unexpected costs, and accumulate excess inventory, which would negatively affect our business and results of operations.

See also, “ We rely on our customers to design our products into their systems, and the nature of the design process requires us to incur expenses prior to customer commitments to use our products or recognizing revenues associated with those expenses which may adversely affect our financial results .”

In addition, the development of new semiconductor solutions is highly complex and, due to a variety of factors, including supply chain cross-dependencies, dependencies on EDA and similar tools, dependencies on the use of third-party, business partner or customer intellectual property, collaboration and synchronization requirements with business partners and customers, requirements to establish new manufacturing, testing, assembly and packing processes, and other factors, we may experience delays in completing the design, development, production and introduction of our new products.

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Software and firmware updates and/or other mitigation efforts may result in performance issues, system instability, data loss or corruption, unpredictable system behavior, or the theft of data by third parties, any of which could significantly harm our business and reputation.

We may depend on our business partners or on other third parties, such as customers and end users, to deploy our mitigations alone or as part of their own mitigations, and they may delay, decline or modify the implementation of such mitigations.

See also, “Cybersecurity risks could adversely affect our business and disrupt our operations.”

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For example, the addition of certain companies to the Entity List, which places export restrictions on certain foreign persons or entities by the U.S.

Department of Commerce’s Bureau of Industry and Security, has dampened demand for our products.

Department of Commerce’s Bureau of Industry and Security (the “BIS”), has dampened demand for our products.

Due to the U.S.

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national security, which could result in more stringent export controls or a greater number of our products requiring a license for export to China.

In addition, the U.S.

Department of Commerce Bureau of Industry and Security (the “BIS”) recently released new controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China with the aim of addressing U.S.

In addition, the BIS released new controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China with the aim of addressing U.S.

national security and foreign policy concerns.

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persons with respect to activities that are not subject to the Export Administration Regulations (“EAR”), which differs from the agency’s historical approach of controlling items that are subject to the EAR, and the regulations published in October 2023 impose additional licensing requirements for exports to China (and certain other countries) of integrated circuits exceeding certain performance thresholds.

Export restrictions reducing our sales of products to China, have in the past and may in the future adversely impact our revenues, profits and results of operations.

In January 2025, the AI Diffusion Rule and the Foundry Due Diligence Rule were issued.

While we do not expect these January 2025 restrictions to materially impact us, any export restrictions reducing our ability to manufacture our products can adversely impact our revenues, profits and results of operations.

Then in May 2025, the BIS said it intends to cancel the AI Diffusion Rule and release new rules.

While we do not currently expect these new rules to materially impact us due to the fact that we were not materially impacted by the prior AI Diffusion Rule, the BIS announcement creates uncertainty about what products, technologies, or software might be covered by future rules.

Export restrictions reducing our sales of products to China, have in the past and may in the future adversely impact our revenues, profits and results of operations.

government has recently reached out to certain U.S.

semiconductor companies implying that as a condition to obtaining and maintaining export licenses for certain products and technologies destined for China, they remit to the U.S.

government a fee equal to fifteen percent (15%) of the gross revenue derived from such China-related sales.

Historically, restrictions on sales to China were implemented by the U.S.

government as national security measures that did not include revenue-sharing arrangements.

If such a payment requirement were to be imposed on our China-derived revenue, it could erode our gross margins, reduce our pricing flexibility, and potentially prompt us to curtail or discontinue sales in China.

In addition to direct impacts on our products there may be indirect impacts to our business that we cannot easily quantify such as the fact that export restrictions may also impact some of our other customers’ products that incorporate ours as a component, or that may cause customers to develop their own products or solutions instead of purchasing from us or to acquire products or solutions from our competitors or other third-party sources.

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See also, “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business” and “Changes in existing taxation benefits, tax rules or tax practices may adversely affect our financial results.”

On May 1, 2025, we received notification that our application for government incentives in a foreign jurisdiction in which we operate has been approved by the necessary government agencies.

On May 1, 2025, we received notification that our application for government incentives in a foreign jurisdiction in which we operate had been approved by the necessary government agencies.

Receipt of benefits under incentive agreements may depend on several factors, including but not limited to, our ability to fulfill commitments regarding employment of personnel, investment, or performance of specified activities in the applicable jurisdictions as well as changes in foreign laws.

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In addition, many of our customers have operations 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 74% and 73% of our net revenue in the three months ended May 3, 2025 and May 4, 2024, respectively.

Sales shipped to customers with operations in Asia represented approximately 76% and 77% of our net revenue in the three months ended August 2, 2025 and August 3, 2024, respectively.

We also have substantial operations outside of the United States.

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In particular, over time, we may acquire, make investments in, or merge with providers of product offerings that complement our business or may terminate or dispose of business lines, assets or activities if they are no longer in alignment with our operational strategy and priorities.

For example, on April 7, 2025, the Company entered into a definitive agreement to sell its automotive ethernet business to Infineon Technologies AG for $2.5 billion in cash.

For example, on April 7, 2025, the Company entered into a definitive agreement to sell its automotive ethernet business to Infineon Technologies AG for $2.5 billion in an all-cash transaction, which transaction was subsequently completed on August 14, 2025.

This strategy, and our willingness to use cash to pay for acquisitions, may be adversely impacted by high or increasing interest rates.

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In addition, such transactions are increasingly being subjected to regulatory review and other burdens, which could delay the closing of any transaction and greatly increase the costs related to such transaction.

For example, the U.S.

Federal Trade Commission recently announced new HSR rules that are expected to greatly expand disclosure requirements and require significantly more time to prepare filings.

For example, in October 2024, the U.S.

Federal Trade Commission announced new HSR rules that greatly expand disclosure requirements and require significantly more time to prepare filings.

If we fail to complete a transaction, we may nonetheless have incurred significant expenses in connection with such transaction.

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Our indebtedness could adversely affect our financial condition and our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry.

As of May 3, 2025, we had a total of $4.3 billion debt outstanding, which consisted of $3.5 billion of senior notes outstanding, $557.8 million outstanding under our 2026 Term Loan and $200.0 million outstanding under our 2023 Revolving Credit Facility.

We also had $800.0 million of remaining availability under our 2023 Revolving Credit Facility.

As of August 2, 2025, we had a total of $4.5 billion debt outstanding, which consisted of senior notes outstanding.

$557.8 million outstanding under our 2026 Term Loan was repaid in full and the loan was terminated in June 2025.

$200.0 million outstanding under our 2023 Revolving Credit Facility was repaid (which 2023 Revolving Credit Facility was amended and restated in June 2025 (the “2025 Revolving Credit Facility” or the “2025 Credit Agreement”)).

The 2025 Revolving Credit Facility increases our borrowing capacity from $1.0 billion to $1.5 billion.

As of August 2, 2025, the 2025 Revolving Credit Facility was undrawn.

Our indebtedness could have important consequences to us including:

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• making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other purposes.

Although the Credit Agreements contain restrictions on our ability to incur additional indebtedness and the indentures governing the Notes (together, the “Notes Indentures”) contain restrictions on creating liens and entering into certain sale-leaseback transactions, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness, liens or sale-leaseback transactions incurred in compliance with these restrictions could be substantial.

The Credit Agreements, the Notes Indentures and the indenture governing the MTI Senior Notes contain customary events of default upon the occurrence of which, after any applicable grace period, the lenders would have the ability to immediately declare the loans due and payable in whole or in part.

Although the 2025 Credit Agreement contains restrictions on our ability to incur additional indebtedness and the indentures governing the Notes (together, the “Notes Indentures”) contain restrictions on creating liens and entering into certain sale-leaseback transactions, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness, liens or sale-leaseback transactions incurred in compliance with these restrictions could be substantial.

The 2025 Credit Agreement, the Notes Indentures and the indenture governing the MTI Senior Notes contain customary events of default upon the occurrence of which, after any applicable grace period, the lenders would have the ability to immediately declare the loans due and payable in whole or in part.

In such event, we may not have sufficient available cash to repay such debt at the time it becomes due, or be able to refinance such debt on acceptable terms or at all.

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The restrictions, among other things, restrict our ability and our subsidiaries’ ability to create or incur certain liens, incur or guarantee additional indebtedness, merge or consolidate with other companies, pay dividends, transfer or sell assets and make restricted payments.

These restrictions are subject to a number of limitations and exceptions set forth in the Credit Agreements and the Notes Indentures.

Our ability to meet the leverage ratio set forth in the Credit Agreements may be affected by events beyond our control.

These restrictions are subject to a number of limitations and exceptions set forth in the 2025 Credit Agreement and the Notes Indentures.

Our ability to meet the leverage ratio set forth in the 2025 Credit Agreement may be affected by events beyond our control.

The foregoing restrictions could limit our ability to plan for, or react to, changes in market conditions or our capital needs.

We do not know whether we will be granted waivers under, or amendments to, our Credit Agreements or to the Notes Indentures if for any reason we are unable to meet these requirements, or whether we will be able to refinance our indebtedness on terms acceptable to us, or at all.

We do not know whether we will be granted waivers under, or amendments to, our 2025 Credit Agreement or to the Notes Indentures if for any reason we are unable to meet these requirements, or whether we will be able to refinance our indebtedness on terms acceptable to us, or at all.

We may be unable to generate the cash flow to service our debt obligations.

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If we are unable to generate sufficient cash flow from operations or to borrow sufficient funds in the future to service our debt, we may be required to sell assets, reduce capital expenditures, refinance all or a portion of our existing debt (including the Notes) or obtain additional financing.

In addition, if our credit ratings are downgraded, the cost of current or future borrowings under our Credit Agreements may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected.

In addition, if our credit ratings are downgraded, the cost of current or future borrowings under our 2025 Credit Agreement may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected.

We cannot assure you that we will be able to refinance our debt, sell assets or borrow more money on terms acceptable to us, if at all.

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However, we may not have sufficient funds to repurchase the Notes in cash at the time of any change of control repurchase event.

Our failure to repurchase the Notes upon a change of control repurchase event would be an event of default under the Notes Indentures and could cause a cross-default or acceleration under the Credit Agreements and certain future agreements governing our other indebtedness.

Our failure to repurchase the Notes upon a change of control repurchase event would be an event of default under the Notes Indentures and could cause a cross-default or acceleration under the 2025 Credit Agreement and certain future agreements governing our other indebtedness.

The repayment obligations under the Notes may have the effect of discouraging, delaying or preventing a takeover of our company.

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Changes in existing taxation benefits, tax rules or tax practices may adversely affect our financial results.

As a United States domiciled company, the income from all of our foreign subsidiaries is subject to the U.S.

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

currently has a federal corporate tax rate of 21%.

The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025.

The 2025 Tax Act makes permanent key elements of the 2017 Tax Cuts and Jobs Act, including domestic research cost expensing, 100% bonus depreciation and makes modifications to the U.S.

International tax framework.

As such, the income from all of our foreign subsidiaries continues to be subject to the U.S.

tax provisions applicable to Global Intangible Low Taxed Income (“GILTI”) regime (which has been recharacterized as the Net Controlled Foreign Corporation (“CFC”) Tested Income regime, beginning in fiscal 2027).

Our tax provision for the August 2, 2025 period includes the estimated impact of the 2025 Tax Act.

This legislation could significantly affect our future financial results, including our earnings and cash flows.

President Biden signed into law the Inflation Reduction Act of 2022 (the “IRA”) on August 16, 2022 and the CHIPS and Science Act of 2022 on August 9, 2022.

These laws implement new tax provisions and provide for various incentives and tax credits.

The IRA applies to tax years beginning after December 31, 2022 and introduces a 15% alternative minimum tax for corporations whose average annual adjusted financial statement income for any consecutive three-tax-year period preceding the tax year exceeds $1 billion and a 1% excise tax on certain stock repurchases made by publicly traded U.S.

The IRA applies to tax years beginning after December 31, 2022 and introduced a 15% alternative minimum tax for corporations whose average annual adjusted financial statement income for any consecutive three-tax-year period preceding the tax year exceeds $1 billion and a 1% excise tax on certain stock repurchases made by publicly traded U.S.

corporations after December 31, 2022.

While we are not currently subject to additional taxes under the IRA, if in the future, we become subject to these taxes it could significantly affect our financial results, including our earnings and cash flows.

While we are not currently subject to significant taxes under the IRA, if in the future, we become subject to these taxes it could significantly affect our financial results, including our earnings and cash flows.

The Organization for Economic Cooperation and Development (the “OECD”) has been working on a Base Erosion and Profit Shifting Project, and since 2015 has been issuing guidelines and proposals with respect to various aspects of the existing framework under which our tax obligations are determined in countries in which we do business.

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We are exposed to potential impairment charges on certain assets.

We had approximately $11.1 billion of goodwill and $2.5 billion of acquired intangible assets on our unaudited condensed consolidated balance sheets as of May 3, 2025.

We had approximately $11.1 billion of goodwill and $2.2 billion of acquired intangible assets on our unaudited condensed consolidated balance sheets as of August 2, 2025.

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

As of May 3, 2025, there was $2.2 billion remaining available for future stock repurchases under the prior authorization.

As of August 2, 2025, there was $2.0 billion remaining available for future stock repurchases under the prior 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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If other banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.

We are exposed to risks related to our receivables factoring arrangements.

We enter into factoring arrangements with financial institutions to sell certain of our trade receivables from customers without recourse.

If we were to stop entering into these factoring arrangements, our operating results, financial condition and cash flows could be adversely impacted by delays or failures in collecting certain trade receivables.

If the financial institutions we utilize become financially non-viable, it could cause us to cease such factoring arrangements.

If any of our non-U.S.

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

What changed 10-Q

Item 1A. Risk Factors