What changed in this filing

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Item 1A. Risk Factors

2025-12-03 compared with 2025-08-29 · 51 added, 48 removed, 770 unchanged (11% of the section changed)

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• risks related to our ability to maintain a competitive cost structure for our manufacturing, assembly, testing and packaging processes and our reliance on third parties to produce our products;

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

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

• risks related to any current and future litigation, regulatory investigations, or contractual disputes with customers 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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Any disruption to our manufacturing partners could result in a material decline in our revenue, net income and cash flow.

We have in the past including in the first few quarters of fiscal 2023, and may in the future, experience a number of industry-wide supply constraints affecting the type of high complexity products we provide for data infrastructure.

These supply constraints have impacted, and in the future may impact, the kitting process for our products.

We have in the past including in the first few quarters of fiscal 2023, and may in the future, experience a number of industry-wide supply constraints.

These supply challenges have in the past, and may in the future, limit our ability to fully satisfy demand for some of our products.

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Moreover, since the cost of replacing defective products is often much higher than the value of the products 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 semiconductor solutions we sell into numerous consumer products, including automobiles.

We are exposed to product liability claims if our semiconductor solutions or the consumer products integrated with our semiconductor solutions (such as automobiles), malfunction and lead to personal injury or death.

We also face exposure to potential liability resulting from the fact that our customers typically integrate the semiconductor solutions we sell into numerous consumer products.

We are exposed to product liability claims if our semiconductor solutions or the consumer products integrated with our semiconductor solutions malfunction.

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.

Recalls of our customers’ products in certain end-markets, such as with our 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.

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• writing down the inventory of defective products;

• the diversion of the attention of our engineering personnel from product development efforts;

• the diversion of the attention of our engineering employees from product development efforts;

• our having to defend against litigation related to defective products or related property damage or personal injury;

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Restrictions may also be imposed based on whether the supplier is considered unreliable or a security risk.

For example, the Chinese government adopted a law that would restrict purchases from suppliers deemed to be “unreliable suppliers”.

In May 2023, the Cyberspace Administration of China banned the sale of Micron Technology, Inc.'s products to certain entities in China and stated that such products pose significant security risks to China's critical information infrastructure supply chain and national security.

Then in July 2023, China announced restrictions on the export of gallium and geranium, both of which are used in the manufacture of semiconductors and on April 4, 2025, imposed export controls on specific medium and heavy rare earth materials including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.

China cited a desire to safeguard its national security and fulfill international nonproliferation obligations as reasons for these controls.

Then on May 14, 2025, China lifted the recent export controls on the medium and heavy rare earth materials, however, there can be no assurance that such reversal will be permanent.

For example, the Chinese government adopted a law that would restrict purchases from suppliers deemed to be “unreliable suppliers.” In May 2023, the Cyberspace Administration of China banned the sale of Micron Technology, Inc.'s products to certain entities in China and stated that such products pose significant security risks to China's critical information infrastructure supply chain and national security.

In addition, China has in the past and may in the future use export controls to restrict rare earth minerals, and access to rare earth minerals has been used in the past and could be used in the future as a geopolitical tool in trade negotiations between the United States and China.

In addition, China has responded, seemingly in retaliation to tariffs on imported goods, by announcing antitrust probes against certain U.S.

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While we are not currently the subject of such an antitrust probe, there can be no assurance that such a probe will not be initiated in the future, which may result in substantial costs and may divert our attention and resources.

While we do not expect these announced 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.

While we do not expect these announced restrictions to materially impact us, any export restrictions reducing our ability to conduct business can adversely impact our revenues, profits and results of operations.

Concerns that semiconductors are necessary for national security, manufacturing and critical infrastructure, as well as concerns of their potential use to restrict human rights, has led to increased U.S.

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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.

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

In January 2025, the AI Diffusion Rule was issued.

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

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As a result, the tariff rate on certain types of semiconductors increased from 25% to 50% in 2024.

In addition, the Trump administration announced new tariffs on imports from Canada, China and Mexico.

In addition, the Trump administration announced new tariffs on imports from many countries including Canada, China and Mexico.

These new tariffs are not expected to have a direct impact on the Company, however, any new tariffs and other changes in U.S.

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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 76% and 77% of our net revenue in the three months ended August 2, 2025 and August 3, 2024, respectively.

Sales shipped to customers with operations in Asia represented approximately 77% and 74% of our net revenue in the three months ended November 1, 2025 and November 2, 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 an all-cash transaction, which transaction was subsequently completed on August 14, 2025.

For example, on August 14, 2025, the Company sold its automotive ethernet business to Infineon Technologies AG for $2.5 billion in an all-cash transaction.

In addition, on December 2, 2025, the Company announced its intent to acquire Celestial AI Inc.

as discussed in more detail in “Note 13 – Subsequent Events” in the Notes to Unaudited Condensed Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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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We routinely collect and store sensitive data in our information systems, including intellectual property and other proprietary information about our business and that of our customers, suppliers and manufacturing and other business partners.

These information technology systems are subject to damage or interruption from several potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, nation state advanced persistent threats, vendor errors causing operational interruptions, insider threats or other events.

Cyber-attacks may include phishing or other forms of social engineering attacks, exploits of code or system configurations, malicious code, such as viruses and worms, ransomware attacks, zero day vulnerabilities and undisclosed security flaws exploited by threat actors, nation-state cyber warfare attacks, supply chain and third-party cyber-attacks, denial-of-service attacks and other actions granting unauthorized access to our technology infrastructure or information systems or those of our customers, suppliers and manufacturing and other business partners.

These information technology systems are subject to damage or interruption from several potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, nation state advanced persistent threats, misconfigurations, third-party cloud or SaaS outages, vendor errors causing operational interruptions, insider threats or other events.

Cyber-attacks may include phishing or other forms of social engineering attacks, exploits of code or system configurations, malicious code, such as viruses and worms, ransomware attacks, zero day vulnerabilities and undisclosed security flaws exploited by threat actors, nation-state cyber attacks, supply chain and third-party cyber-attacks, denial-of-service attacks and other actions granting unauthorized access to our technology infrastructure or information systems or those of our customers, suppliers and manufacturing and other business partners.

In addition, we have in the past and may in the future be the target of email phishing attacks that attempt to acquire personal information or Company assets.

As AI capabilities improve and become increasingly commonplace, we may see cyberattacks leveraging AI technology.

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

In addition, a vulnerability could be introduced from the result of our or our customers and business partners incorporating the output of an AI tool, such as AI generated source code, that includes a threat.

These attacks could be crafted with an AI tool to directly attack information systems with increased speed and/or efficiency compared to a human threat actor, accelerate reconnaissance and exploit development, or create more effective phishing emails.

We have implemented cybersecurity processes taking guidance from recognized cybersecurity frameworks to mitigate risks;

however, we cannot guarantee that those risk mitigation measures will be effective.

however, we cannot guarantee that those risk mitigation measures will be effective across all environments, including those operated under shared-responsibility models with certain cloud and SaaS providers.

See Item 1C, “Cybersecurity” of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 for additional information about our cybersecurity processes.

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Cyber-attacks have become increasingly more prevalent and much harder to detect, defend against or prevent.

The risk of state-sponsored or geopolitical-related cybersecurity incidents has also increased recently due to geopolitical tensions or incidents, such as the Russian invasion of Ukraine and the armed conflict in Israel and the Gaza Strip.

While we have historically been successful in defending against the cyber-attacks and breaches mentioned above, given the frequency of cyber-attacks and resulting breaches reported by other businesses and governments, it is likely we will experience one or more material breaches of some extent in the future.

Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures.

We have incurred and may in the future incur significant costs to implement, maintain and/or update security systems we believe are necessary to protect our information systems, to recover and restore operations and after an incident, and to meet legal, regulatory, contractual, and disclosure obligations, or we may miscalculate the level of investment necessary to protect our systems adequately.

Our business also requires us to work with and in some cases to share confidential information with manufacturing partners, suppliers, customers and other third parties.

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Data breaches, losses or other unauthorized access to or releases of confidential information have in the past occurred with these third parties and material data breaches, losses or other unauthorized access to, or releases of, our confidential information may in the future occur in connection with third-party breaches that could materially adversely affect our reputation, financial condition and operating results and could result in liability or penalties under data privacy laws.

In addition, we may be subject to losses of access to all or part our systems because of our use of third-party services or software, which losses may not always be the result of malicious activity, and we cannot guarantee that any such future outages will not materially impact the Company.

In addition, we may be subject to losses of access to all or part of our systems because of our use of third-party services or software, which losses may not always be the result of malicious activity, and we cannot guarantee that any such future outages will not materially impact the Company.

To the extent that any system failure, accident or security breach results in material disruptions or interruptions to our operations, or those of our customers, suppliers and manufacturing and other business partners, or the theft, loss or disclosure of, or damage to our data or confidential information, including our intellectual property, our reputation, business, results of operations and/or financial condition could be materially adversely affected.

Such events could also trigger regulatory inquiries, notification and disclosure obligations, contractual penalties, or delays in product development, tape-out, or shipments.

WE ARE SUBJECT TO RISKS RELATED TO OUR DEBT OBLIGATIONS

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 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.

As of November 1, 2025, we had a total of $4.5 billion debt outstanding, which consisted of senior notes outstanding.

Our Revolving Credit Facility was amended and restated in June 2025 (the “2025 Revolving Credit Facility” or the “2025 Credit Agreement”).

We may borrow up to $1.5 billion under the 2025 Revolving Credit Facility.

As of November 1, 2025, the 2025 Revolving Credit Facility was undrawn.

Our indebtedness could have important consequences to us including:

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• placing us at a competitive disadvantage compared to our competitors with less indebtedness;

• exposing us to interest rate risk to the extent of our variable rate indebtedness, particularly in the current environment of high or rising interest rates;

• exposing us to interest rate risk to the extent of our variable rate indebtedness, particularly in the event of high or rising interest rates;

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

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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.

Our tax provision for the November 1, 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.

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corporations after December 31, 2022.

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.

As a result of the ASR Agreement, the Company anticipates paying additional federal taxes in fiscal 2026 due to the 1% excise tax on net share repurchases.

While we are not generally subject to significant taxes under the IRA, it is possible that in the future, they 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 subject to legislation based on the Organization for Economic Cooperation and Development’s 15% global minimum tax regime which applies to the majority of countries in which we operate.

On June 28, 2025, the G7 released a joint statement that it had reached an understanding with the U.S.

on a side-by-side system that would exempt U.S.

parented multinational businesses from certain provisions of Pillar Two;

however, no agreement regarding implementation of the proposal has yet been reached.

We will continue to monitor countries’ laws with respect to the OECD model rules and the Pillar Two global minimum tax.

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We are exposed to potential impairment charges on certain assets.

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.

We had approximately $11.1 billion of goodwill and $2.0 billion of acquired intangible assets on our unaudited condensed consolidated balance sheets as of November 1, 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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GENERAL RISK FACTORS

We depend on highly skilled personnel to support our business operations.

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.

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

We typically do not enter into employment agreements with any of our key personnel and the loss of such personnel could harm our business, as their knowledge of our business and industry would be extremely difficult to replace.

The competition for qualified personnel with significant experience in the management, design, development, manufacturing, marketing and sales of semiconductor solutions has been intense over the last few years, both in the Silicon Valley and in global markets in which we operate.

Our inability to attract and retain qualified personnel, including executive officers, hardware and software engineers and sales and marketing personnel, could delay the development and introduction of, impact our ability to fulfill commitments to customers for, and harm our ability to sell, our products.

We depend on highly skilled employees to support our business operations.

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

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

The loss of such employees could harm our business, as their knowledge of our business and industry would be extremely difficult to replace.

The competition for qualified employees with significant experience in the management, design, development, manufacturing, marketing and sales of semiconductor solutions particularly those with emerging expertise in AI-related technologies and persistent demand for analog engineering experience has been intense over the last few years, both in the Silicon Valley and in global markets in which we operate.

Our inability to attract and retain qualified employees, including executive officers, hardware and software engineers and sales and marketing employees, could delay the development and introduction of, impact our ability to fulfill commitments to customers for, and harm our ability to sell, our products.

In addition, if we are unable to fulfill our customer commitments in a timely manner, we may also lose future business relationships or otherwise experience negative consequences.

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Changes to U.S.

immigration and export policies that restrict our ability to attract and retain technical personnel may negatively affect our research and development efforts.

immigration and export policies that restrict our ability to attract and retain technical employees may negatively affect our research and development efforts.

In addition, changes in employment-related laws applicable to our workforce practices may also result in increased expenses and less flexibility in how we meet our changing workforce needs.

In addition, as a result of our past and any future acquisitions and related integration activities, 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.

We previously adopted a hybrid work policy for our employees, but more recently adopted a policy requiring employees to return to working full time in the office as of June 2, 2025.

Many companies, including companies that we compete with for talent, have adopted 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.

In addition, as a result of our current hybrid and future full time in the office work environments, we expect to face challenges in retention of personnel who prefer work from home policies.

We adopted a policy requiring employees to return to working full time in the office as of June 2, 2025.

Many companies, including companies that we compete with for talent, have adopted 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 employees if potential or current employees prefer these policies.

In addition, as a result of our full time in the office work environments, we expect to face challenges in retention of employees who prefer work from home policies.

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

In the first quarter of fiscal 2025, our Board of Directors increased our stock repurchase program to add an additional $3.0 billion to that program.

On September 24, 2025, we announced that our Board of Directors authorized a $5.0 billion addition to the balance of its existing stock repurchase program.

Future payment of a regular quarterly cash dividend on our common stock and future stock repurchases are subject to, among other things:

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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 August 2, 2025, there was $2.0 billion remaining available for future stock repurchases under the prior authorization.

As of November 1, 2025, there was $5.7 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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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