What changed in this filing

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Item 1A. Risk Factors

2020-10-19 compared with 2019-10-17 · 207 added, 222 removed, 310 unchanged (58% of the section changed)

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Our operations could also be affected by other factors that are presently unknown to us or not considered significant.

The effects of the COVID-19 outbreak could adversely affect our business, results of operations, and financial condition.

The effects of the public health crisis caused by the COVID-19 outbreak and the measures being taken to limit COVID-19’s spread are uncertain and difficult to predict, but may include, and in some cases, have included and may continue to include:

• A decrease in short-term and/or long-term demand and/or pricing for our products and a global economic recession or depression that could further reduce demand and/or pricing for our products, resulting from actions taken by governments, businesses, and/or the general public in an effort to limit exposure to and the spreading of COVID-19, such as travel restrictions, quarantines, and business shutdowns or slowdowns;

• Negative impacts to our operations, including:

◦ reductions in production levels, R&D activities, product development, technology transitions, yield enhancement activities, and qualification activities with our customers, resulting from our efforts to mitigate the impact of COVID-19 through physical-distancing measures we have enacted at our locations around the world in an effort to protect our employees’ and contractors’ health and well-being, including working from home, limiting the number of meeting attendees, reducing the number of people in certain of our sites at any one time, quarantines of team members, contractors, or vendors who are at risk of contracting, or have contracted, COVID-19, and limiting employee travel;

◦ increased costs resulting from our efforts to mitigate the impact of COVID-19 through physical distancing measures, working from home, upgrades to our sites, enhanced cleaning measures, and the increased use of personal protective equipment at our sites;

◦ increased costs for, or unavailability of, transportation, raw materials, or other inputs necessary for the operation of our business;

◦ reductions in or cessation of operations at any site or in any jurisdiction resulting from government restrictions on movement and/or business operations or our failure to prevent and/or adequately mitigate spread of COVID-19 at one or more of our sites;

◦ our inability to continue or resume construction projects due to delays in obtaining materials, equipment, labor, engineering services, government permits, or any other essential aspect of projects, which could impact our ability to introduce new technologies, reduce costs, or meet customer demand;

◦ disruptions to our supply chain in connection with the sourcing and transportation of materials, equipment and engineering support, and services from or in geographic areas that have been impacted by COVID-19 and by efforts to contain the spread of COVID-19;

• Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our operations and capital expenditures, result in losses on our holdings of cash and investments due to failures of financial institutions and other parties, and result in a higher rate of losses on our accounts receivables due to credit defaults.

The resumption of normal business operations after such interruptions may be delayed or constrained by lingering effects of COVID-19 on our team members, contractors, suppliers, third-party service providers, customers, or distributors.

These effects, alone or taken together, could have a material adverse effect on our business, results of operations, legal exposure, or financial condition.

A sustained, prolonged, or recurring outbreak could exacerbate the adverse impact of such measures.

Volatility in average selling prices for our semiconductor memory and storage products may adversely affect our business.

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2016 from 2015 (34) % (16) %

Beginning in 2020, revenue and units for MCPs and SSDs, which contain both DRAM and NAND, are disaggregated based on the relative values of each component.

Prior periods presented in the table above have been conformed to current period presentation.

We may be unable to maintain or improve gross margins.

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In future periods, we may be unable to reduce our per gigabit manufacturing costs at sufficient levels to maintain or improve gross margins.

Factors that may limit our ability to maintain or reduce costs include, but are not limited to, strategic product diversification decisions affecting product mix, the increasing complexity of manufacturing processes, difficulties in transitioning to smaller line-width process technologies, 3D memory layers, NAND cell levels, transitioning to replacement gate technology for NAND, process complexity including number of mask layers and fabrication steps, manufacturing yield, technological barriers, changes in process technologies, and new products that may require relatively larger die sizes.

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complexity including number of mask layers and fabrication steps, manufacturing yield, technological barriers, changes in process technologies, and new products that may require relatively larger die sizes.

Many factors may result in a reduction of our output or a delay in ramping production, which could lead to underutilization of our production assets.

These factors may include, among others, a weak demand environment, industry oversupply, inventory surpluses, declining selling prices, and changes in supply agreements.

These factors may include, among others, a weak demand environment, industry oversupply, inventory surpluses, our ramp of emerging technologies, declining selling prices, and changes in supply agreements.

A significant portion of our manufacturing costs are fixed and do not vary proportionally with changes in production output.

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As a result, we may incur charges in connection with obsolete or excess inventories, which could have a material adverse effect on our business, results of operations, or financial condition.

In addition, due to the customized nature of certain of the products we manufacture, we may be unable to sell certain finished goods inventories to alternative customers or manufacture in-process inventory to different specifications, which may result in excess and obsolescence charges in future periods.

Our inability to maintain or improve gross margins could have a material adverse effect on our business, results of operations, or financial condition.

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SK Hynix Inc.;

Toshiba Memory Corporation;

Kioxia Holdings Corporation (formerly Toshiba Memory Corporation);

and Western Digital Corporation.

Some of our competitors are large corporations or conglomerates that may have greater resources to invest in technology, capitalize on growth opportunities, and withstand downturns in the semiconductor markets in which we compete.

Consolidation of industry

competitors could put us at a competitive disadvantage.

In addition, some governments have provided, and may continue to provide, significant assistance, financial or otherwise, to some of our competitors or to new entrants and may intervene in support of national industries and/or competitors.

Consolidation of industry competitors could put us at a competitive disadvantage.

In addition, some governments may provide, or have provided and may continue to provide, significant assistance, financial or otherwise, to some of our competitors or to new entrants and may intervene in support of national industries and/or competitors.

In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities that is intended to advance China’s stated national policy objectives.

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Our cash flows from operations depend primarily on the volume of semiconductor memory and storage products sold, average selling prices, and manufacturing costs.

To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, we must make significant capital investments in manufacturing technology, capital equipment, facilities, R&D, and product and process technology.

We estimate that capital expenditures in 2020 for property, plant, and equipment, net of partner contributions, will be approximately $7 billion to $8 billion, focused on technology transitions and product enablement.

To develop new product and process technology, support

future growth, achieve operating efficiencies, and maintain product quality, we must make significant capital investments in manufacturing technology, capital equipment, facilities, R&D, and product and process technology.

We estimate capital expenditures in 2021 for property, plant, and equipment, net of partner contributions, will be approximately $9 billion, focused on technology transitions and product enablement.

Investments in capital expenditures may not generate expected returns or cash flows.

Delays in completion and ramping of new production facilities could significantly impact our ability to realize expected returns on our capital expenditures, which could have a material adverse effect on our business, results of operations, or financial condition.

As a result of the corporate reorganization proceedings of MMJ initiated in 2012, and for so long as such proceedings are continuing, MMJ is prohibited from paying dividends, including any cash dividends, to us and such proceedings require that excess earnings be used in MMJ's business or to fund the MMJ creditor payments.

In addition, pursuant to an order of the Tokyo District Court, MMJ cannot make loans or advances, other than certain ordinary course advances, to us without the consent of the Tokyo District Court and may, under certain circumstances, be subject to approval of the legal trustee.

As a result, the assets of MMJ are not available for use by us in our other operations.

Furthermore, certain uses of the assets of MMJ, including certain capital expenditures of MMJ, may require consent of MMJ's trustees and/or the Tokyo District Court.

In the past we have utilized external sources of financing when needed.

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Our credit rating may also be affected by our liquidity, financial results, economic risk, or other factors, which may increase the cost of future borrowings and make it difficult for us to obtain financing on terms acceptable to us.

In 2019, we suspended the security interest in the collateral under our credit facility upon achieving specified credit ratings and the prepayment of our 2022 Term Loan B;

however, the security interest would be automatically reinstated upon a decline in our corporate credit rating below a certain level.

There can be no assurance that we will be able to generate sufficient cash flows, use cash held by MMJ to fund its capital expenditures, access capital markets or find other sources of financing to fund our operations, make debt payments, and make adequate capital investments to remain competitive in terms of technology development and cost efficiency.

In addition, if our credit rating declines below a certain level, our credit facility will be required to become secured by certain of our assets, which may limit the amount or increase the cost of future financings.

There can be no assurance that we will be able to generate sufficient cash flows, access capital or credit markets, or find other sources of financing to fund our operations, make debt payments, and make adequate capital investments to remain competitive in terms of technology development and cost efficiency.

Our inability to do any of the foregoing could have a material adverse effect on our business, results of operations, or financial condition.

A downturn in the worldwide economy may harm our business.

The health crisis caused by COVID-19 has adversely affected economic conditions and caused a downturn in the worldwide economy.

Downturns in the worldwide economy have harmed our business in the past and the current downturn has adversely affected our business.

As a result, demand for certain of our products used in smartphones, consumer electronics, and automotive, has declined.

Reduced demand for these or other products could result in significant decreases in our average selling prices and product sales.

If these adverse conditions persist or worsen, we could experience additional reduction in demand for our products and/or devices that incorporate our products.

Future downturns could also adversely affect our business.

In addition, to the extent our customers or distributors have elevated inventory levels, we may experience a decrease in short-term and/or long-term demand and/or pricing for our products.

A deterioration of conditions in worldwide credit markets could limit our ability to obtain external financing to fund our operations and capital expenditures.

In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties.

Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults.

As a result, downturns in the worldwide economy could have a material adverse effect on our business, results of operations, or financial condition.

Increases in tariffs or other trade restrictions or taxes on our or our customers’ products or equipment and supplies could have an adverse impact on our operations.

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The United States and other countries have levied tariffs and taxes on certain goods.

General trade tensions between the U.S.

and China have been escalating since 2018, with U.S.

General trade tensions between the United States and China have been escalating since 2018, with U.S.

tariffs on Chinese goods and retaliatory Chinese tariffs on U.S.

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and Chinese leaders.

Additionally, the U.S.

has threatened to impose tariffs on goods imported from other countries, which could also impact certain of our customers' or our operations.

were to impose current or additional tariffs on components that we or our suppliers source, our cost for such components would increase.

Additionally, the United States has threatened to impose tariffs on goods imported from other countries, which could also impact certain of our customers’ or our operations.

If the United States were to impose current or additional tariffs on components that we or our suppliers source, our cost for such components would increase.

We may also incur increases in manufacturing costs and supply chain risks due to our efforts to mitigate the impact of tariffs on our customers and our operations.

Additionally, tariffs on our customers’ products could impact their sales of such end products, resulting in lower demand for our products.

We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the U.S.

and other countries, what products may be subject to such actions, or what actions may be taken by other countries in retaliation.

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We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries, what products may be subject to such actions, or what actions may be taken by other countries in retaliation.

Further changes in trade policy, tariffs, additional taxes, restrictions on exports or other trade barriers, or restrictions on supplies, equipment, and raw materials including rare earth minerals, may limit our ability to produce products, increase our selling and/or manufacturing costs, decrease margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial condition.

trade regulations have restricted our ability to sell our products to a significant customer and could restrict our ability to sell our products to other customers.

On May 16, 2019, the Bureau of Industry and Security ("BIS") of the U.S.

Department of Commerce added Huawei to the BIS's Entity List, which imposes limitations on the supply of certain U.S.

items and product support to Huawei.

In 2019, our sales to Huawei accounted for 12% of our total revenue.

To ensure compliance with the Entity List restrictions, we suspended shipments of all products to Huawei, effective May 16, 2019.

We are reviewing our product portfolio to determine whether our products and related support are subject to the Export Administration Regulations, and therefore within the scope of the Entity List restrictions.

We have determined that certain products Huawei purchases from us are not subject to the Export Administration Regulations and consequently can be lawfully sold and shipped to Huawei.

Accordingly, we resumed shipping certain products to Huawei in the fourth quarter of 2019.

While Huawei remains on the Entity List, and in the absence of a license from the BIS, we may be unable to work with Huawei on future product development, which may have a negative effect on our ability to sell products to Huawei in the future.

Entity List restrictions may also encourage Huawei to seek to obtain a greater supply of similar or substitute products from our competitors that are not subject to these restrictions, thereby decreasing our long-term competitiveness as a supplier to Huawei.

Moreover, although Huawei is not prohibited from paying (and we are not restricted from collecting) accounts receivable for products we sell to Huawei, the credit risks associated with these accounts may have increased as a result of the BIS's actions.

We cannot predict what additional actions the U.S.

government may take with respect to Huawei, including modifications to, or interpretations of, Entity List restrictions, export restrictions, tariffs, or other trade limitations or barriers.

Due to the customized nature of certain of the products we manufacture, we may be unable to sell certain finished goods inventory to an alternative customer or manufacture in-process inventory to different specifications, which may result in excess and obsolescence charges in future periods.

The Entity List trade restrictions enacted during our third quarter of 2019 had an adverse effect on our business.

We are unable to predict the duration of the export restrictions imposed with respect to Huawei, whether any licenses will be issued, or the long-term effects on our business.

Other companies may be added to the Entity List and/or subject to trade restrictions.

For example, in October 2019, the U.S.

government added several additional Chinese organizations to the Entity List, effective October 9, 2019.

In addition, there may be indirect impacts to our business which we cannot reasonably quantify, including that some of our other customer's products which incorporate our solutions may also be impacted by these and other trade restrictions that may be imposed by the U.S., China, or other countries.

Trade regulations have restricted our ability to sell our products to several customers, could restrict our ability to sell our products to other customers or in certain markets, or could otherwise restrict our ability to conduct operations.

International trade disputes have led, and may continue to lead, to new and increasing trade barriers and other protectionist measures that can increase our manufacturing costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers or markets, limit our ability to procure components or raw materials, impede or slow the movement of our goods across borders, impede our ability to perform R&D activities, or otherwise restrict our ability to conduct operations.

Increasing protectionism and economic nationalism may lead to further changes in trade policy, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, some markets and/or customers.

Escalating trade tensions between the United States and China have led to increased trade restrictions, and have affected customer ordering patterns.

For example, over the last 18 months the BIS has enacted increasingly broad trade restrictions with respect to Huawei (which represented approximately 10% of our revenue in the fourth quarter of 2020 and 12% in 2019), culminating with restrictions that took effect on September 15, 2020 and that currently prevent us and many other companies from shipping products to Huawei.

We cannot predict the duration these restrictions will remain in place, whether the BIS will grant us or others licenses to ship products to Huawei, or whether the BIS or other U.S.

or foreign government entities will enact similar restrictions with respect to other customers, markets, or products.

We may not be able to replace the lost revenue opportunities associated with such restrictions.

The United States has also imposed other restrictions on the export of U.S.

regulated products and technology to certain Chinese technology companies, including certain of our customers.

These restrictions have reduced our sales, and continuing or future restrictions could adversely affect our financial results, result in reputational harm to us due to our relationship with such companies, or lead such companies to develop or adopt technologies that compete with our products.

It is difficult to predict what further trade-related actions governments may take, and we may be unable to quickly and effectively react to such actions.

For example, U.S.

legislation has expanded the power of the U.S.

Department of Commerce to restrict the export of “emerging and foundational technologies” yet to be identified, which could impact our current or future products.

Trade disputes and protectionist measures, or continued uncertainty about such matters, could result in declining consumer confidence and slowing economic growth or recession, and could cause our customers to reduce, cancel, or alter the timing of their purchases with us.

Sustained trade tensions could lead to long-term changes in global trade and technology supply chains, which could adversely affect our business and growth prospects.

Trade restrictions that may be imposed by the United States, China, or other countries may impact our business in ways we cannot reasonably quantify, including that some of our customers’ products which incorporate our solutions may also be impacted.

Restrictions on our ability to sell and ship our products to Huawei have had, and may continue to have, an adverse effect on our business, results of operations, or financial condition.

In addition, restrictions on our ability to sell and ship our products to other organizations added to the Entity List may have a further adverse effect on our business, results of operations, or financial condition.

In addition, further increases in trade restrictions or barriers may negatively impact our revenue with Huawei or other customers, and any licenses we have received or could receive in the future could be rendered ineffective.

Any such changes may have a further adverse effect on our business, results of operations, or financial condition.

Although we have policies, controls, and procedures designed to help ensure compliance with applicable laws, there can be no assurance that our employees, contractors, suppliers, or agents will not violate such laws or our policies.

Violations of trade laws, restrictions, or regulations can result in fines;

criminal sanctions against us or our officers, directors, or employees;

prohibitions on the conduct of our business;

and damage to our reputation.

The technology industry is subject to intense media, political, and regulatory scrutiny, which can increase our exposure to government investigations, legal actions, and penalties.

Our future success depends on our ability to develop and produce competitive new memory and storage technologies.

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There is no assurance that our efforts to develop and market new product technologies will be successful.

Unsuccessful efforts to develop new semiconductor memory and storage technologies could have a material adverse effect on our business, results of operations, or financial condition.

Unsuccessful efforts to develop new memory and storage technologies could have a material adverse effect on our business, results of operations, or financial condition.

A significant portion of our revenue is concentrated with a select number of customers.

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We could experience fluctuations in our customer base or the mix of revenue by customer as markets and strategies evolve.

In addition, any consolidation of our customers could reduce the number of customers to whom our products could be sold.

In addition, any consolidation of our customers could reduce the number of customers to whom our products may be sold.

Our inability to meet our customers’ requirements or to qualify our products with them could adversely impact our revenue.

The loss of one or more of our major customers or any significant reduction in orders from, or a shift in product mix by, these customers could have a material adverse effect on our business, results of operations, or financial condition.

Meaningful change in the inventory strategy of our customers, particularly those in China, could impact our industry bit demand growth outlook.

The loss of, or restrictions on our ability to sell to, one or more of our major customers, such as those relating to Huawei described above, or any significant reduction in orders from, or a shift in product mix by, customers could have a material adverse effect on our business, results of operations, or financial condition.

We face risks associated with our international sales and operations that could materially adversely affect our business, results of operations, or financial condition.

In 2019, 53% of our revenue was to customers who have headquarters located in the United States.

In 2020, 52% of our revenue was from sales to customers who have headquarters located outside the United States.

We ship our products to the locations specified by our customers.

Customers with global supply chains and operations may request we deliver products to countries where they own or operate production facilities or to countries where they utilize third-party subcontractors or warehouses.

As a result, 89% of our revenue was from products shipped to customer locations outside the United States.

In addition, a substantial portion of our manufacturing operations are located outside the United States.

In particular, a significant portion of our manufacturing operations are concentrated in Singapore, Taiwan, Japan, and China.

Many of our customers, suppliers, and vendors operate internationally and are also subject to the risks described below.

As a result, 88% of our revenue in 2020 was from products shipped to customer locations outside the United States.

A substantial portion of our operations are conducted in Taiwan, Singapore, Japan, and China, and many of our customers, suppliers, and vendors also operate internationally.

Our operations, and the global supply chain of the technology industry, are subject to a number of risks, including the effects of actions and policies of various governments across our global operations and supply chain.

For example, political, economic, or other actions from China could impact Taiwan and its economy, and may adversely affect our operations in Taiwan, our customers, and the technology industry supply chain.

In addition, the U.S.

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These restrictions may not prohibit our competitors from selling similar products to our customers, which may result in our loss of sales and market share.

Even when such restrictions are lifted, financial or other penalties or continuing export restrictions imposed with respect to our customers could have a continuing negative impact on our future revenue and results of operations, and we may not be able to recover any customers or market share we lose while complying with such restrictions.

We have experienced restrictions on our ability to sell products to certain foreign customers where sales of products require export licenses or are prohibited by government action.

Possible future U.S.

government actions could lead to additional or enhanced controls on exports from the United States to China or other countries, bans on sales to other key customers, or other similar restrictions.

Trade-related government actions, by China or other countries, that impose barriers or restrictions that would impact our ability to sell or ship products to Huawei or other customers may have a negative impact on our financial condition and results of operations.

We cannot predict the actions government entities may take in this context and may be unable to quickly offset or

effectively react to government actions that restrict our ability to sell to certain customers or in certain jurisdictions.

Government actions that affect our customers' ability to sell products or access critical elements of their supply chains may result in a decreased demand for their products, which may consequently reduce their demand for our products.

Even when such restrictions are lifted, financial or other penalties or continuing export restrictions imposed with respect to our

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customers could have a continuing negative impact on our future revenue and results of operations, and we may not be able to recover any customers or market share we lose while complying with such restrictions.

Our international sales and operations are subject to a variety of risks, including:

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• imposition of bans on sales of goods or services to one or more of our significant foreign customers;

• public health issues (for example, an outbreak of a contagious disease such as COVID-19, Severe Acute Respiratory Syndrome (“SARS-CoV”), avian and swine influenza, measles, or Ebola);

• compliance with U.S.

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• theft of intellectual property;

political and economic instability;

• political and economic instability, including the effects of disputes between China and Taiwan;

• government actions or civil unrest preventing the flow of products, including delays in shipping and obtaining products, cancellation of orders, or loss or damage of products;

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• contractual and regulatory limitations on the ability to maintain flexibility with staffing levels;

disruptions to manufacturing operations as a result of actions imposed by foreign governments;

• disruptions to manufacturing or R&D activities as a result of actions imposed by foreign governments;

• changes in economic policies of foreign governments;

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Any of the foregoing could have a material adverse effect on our business, results of operations, or financial condition.

(See "Part II.

Financial Information – Item 8.

(See “Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Contingencies.”)

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Subsequently, two substantially identical cases were filed in the same court.

The lawsuits purport to be on behalf of a nationwide class of indirect purchasers of DRAM products.

The complaints assert claims based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 to February 1, 2018, and seek treble monetary damages, costs, interest, attorneys' fees, and other injunctive and equitable relief.

On September 3, 2019, the District Court granted Micron's motion to dismiss and allowed plaintiffs the opportunity to file an amended complaint.

The lawsuits purported to be on behalf of a nationwide class of indirect purchasers of DRAM products.

On September 3, 2019, the District Court granted Micron’s motion to dismiss and allowed plaintiffs the opportunity to file a consolidated, amended complaint.

On October 28, 2019, the plaintiffs filed a consolidated amended complaint that purports to be on behalf of a nationwide class of indirect purchasers of DRAM products.

The amended complaint asserts claims based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 to at least February 1, 2018, and seeks treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S.

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Subsequently, four substantially identical cases were filed in the same court.

The lawsuits purport to be on behalf of a nationwide class of direct purchasers of DRAM products.

On October 28, 2019, the plaintiffs filed a consolidated, amended complaint.

The consolidated complaint purports to be on behalf of a nationwide class of direct purchasers of DRAM products.

The consolidated complaint asserts claims

based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 through at least February 1, 2018, and seeks treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.

Additionally, six cases have been filed in the following Canadian courts:

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Certain materials are primarily available in certain countries, including rare earth elements, minerals, and metals available primarily from China.

Trade disputes or other political or economic conditions may limit our availability to obtain such materials.

Trade disputes or other political conditions, economic conditions, or public health issues, such as COVID-19, may limit our ability to obtain such materials.

Although these rare earth and other materials are generally available from multiple suppliers, China is the predominant producer of certain of these materials.

If China were to stop exporting these materials, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost.

If China were to restrict or stop exporting these materials, our suppliers’ ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost.

Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China.

We and/or our suppliers and service providers could be affected by tariffs, embargoes or other trade restrictions, as well as laws and regulations enacted in response to concerns regarding climate change, conflict minerals, and responsible sourcing practices, which could limit the supply of our materials and/or increase the cost.

We and/or our suppliers and service providers could be affected by tariffs, embargoes, or other trade restrictions, as well as laws and regulations enacted in response to concerns regarding climate change, conflict minerals, responsible sourcing practices, public health crises, contagious disease outbreaks, or other matters, which could limit the supply of our materials and/or increase the cost.

Environmental regulations could limit our ability to procure or use certain chemicals or materials in our operations or products.

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Lead times for the supply of materials have been extended in the past.

Our ability to procure components to repair equipment essential for our manufacturing processes could also be negatively impacted by various restrictions or disruptions in supply chains, among other items.

The disruption of our supply of materials, components, services, or the extension of our lead times could have a material adverse effect on our business, results of operations, or financial condition.

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Our inability to obtain equipment on a timely basis could adversely affect our ability to transition to next generation manufacturing processes and reduce our costs.

Delays in obtaining equipment could also impede our ability to ramp production at new facilities and could increase our overall costs of a ramp.

Delays in obtaining equipment could also impede our ability to ramp production at

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new facilities and could increase our overall costs of a ramp.

Our inability to obtain advanced semiconductor manufacturing equipment in a timely manner could have a material adverse effect on our business, results of operations, or financial condition.

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We have made significant investments in product and process technology and anticipate expending significant resources for new semiconductor product and system-level solution development over the next several years.

Additionally, we are increasingly differentiating our products and solutions to meet the specific demands of our customers, which increases our reliance on our customer's ability to accurately forecast the

end-customer's needs and preferences.

Additionally, we are increasingly differentiating our products and solutions to meet the specific demands of our customers, which increases our reliance on our customers’ ability to accurately forecast the needs and preferences of their customers.

As a result, our product demand forecasts may be impacted significantly by the strategic actions of our customers.

For certain of our markets, it is important that we deliver products in a timely manner with increasingly advanced performance characteristics at the time our customers are designing and evaluating samples for their products.

If we do not meet their product design schedules, our customers may excluded us from further consideration as a supplier for those products.

If we do not meet their product design schedules, our customers may exclude us from further consideration as a supplier for those products.

The process to develop new products requires us to demonstrate advanced functionality and performance, often well in advance of a planned ramp of production, in order to secure design wins with our customers.

The effects of the public health crisis caused by the COVID-19 outbreak and the measures being taken to limit COVID-19’s spread could negatively impact our ability to meet anticipated timelines and/or expected or required quality standards with respect to the development of certain of our products.

In addition, some of our components have long lead-times, requiring us to place orders several months in advance of anticipated demand.

Such long lead-times increase the risk of excess inventory or loss of sales in the event our forecasts vary substantially from actual demand.

There can be no assurance of the following:

that our product development efforts will be successful;

that we will be able to cost-effectively manufacture new products;

that we will be able to successfully market these products;

that we will be able to establish or maintain key relationships with customers, or that we will not be prohibited from working with certain customers, for specific chip set or design requirements;

that we will be able to introduce new products into the market and qualify them with our customers on a timely basis;

• that margins generated from sales of these products will allow us to recover costs of development efforts.

There can be no assurance that:

• our product development efforts will be successful;

• we will be able to cost-effectively manufacture new products;

• we will be able to successfully market these products;

• we will be able to establish or maintain key relationships with customers, or that we will not be prohibited from working with certain customers, for specific chip set or design requirements;

• we will be able to introduce new products into the market and qualify them with our customers on a timely basis;

• margins generated from sales of these products will allow us to recover costs of development efforts.

Our unsuccessful efforts to develop new products and solutions could have a material adverse effect on our business, results of operations, or financial condition.

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Our development of system-level memory and storage products is dependent, in part, upon successfully identifying and meeting our customers’ specifications for those products.

Developing and manufacturing system-level products with specifications unique to a customer increases our reliance upon that customer for purchasing our products in sufficient volume, quantity, and in a timely manner.

If we fail to identify or develop products on a timely basis, or at all, that comply with our customers' specifications or achieve design wins with our customers, we may experience a significant adverse impact on our revenues and margins.

Developing and manufacturing system-level products with specifications unique to a customer increases our reliance upon that customer for purchasing our products at sufficient volumes and prices in a timely manner.

If we fail to identify or develop products on a timely basis, or at all, that comply with our customers’ specifications or achieve design wins with our customers, we may experience a significant adverse impact on our revenue and margins.

Even if our products meet customer specifications, our sales of system-level solutions are dependent upon our customers choosing our products over those of our competitors and purchasing our products at sufficient volumes and prices.

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Manufacturing system-level solutions to customer specifications requires a longer development cycle, as compared to discrete products, to design, test, and qualify, which may increase our costs.

Additionally, some of our system solutions are increasingly dependent on sophisticated firmware that may require significant customization to meet customer specifications, which increases our costs and time to market.

Additionally, some of our system solutions are

increasingly dependent on sophisticated firmware that may require significant customization to meet customer specifications, which increases our costs and time to market.

Additionally, we may need to update our firmware or develop new firmware as a result of new product introductions or changes in customer specifications and/or industry standards, which increases our costs.

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In recent periods, we have further diversified and expanded our product offerings, which could potentially increase the chance that one or more of our products could fail to meet specifications in a particular application.

Our products and solutions may be deemed fully or partially responsible for functions in our customers' products and may result in sharing or shifting of product or financial liability from our customers to us for

costs incurred by the end user as a result of our customers' products failing to perform as specified.

Our products and solutions may be deemed fully or partially responsible for functionality in our customers’ products and may result in sharing or shifting of product or financial liability from our customers to us for costs incurred by the end user as a result of our customers’ products failing to perform as specified.

In addition, if our products and solutions perform critical functions in our customers’ products or are used in high-risk consumer end products, such as autonomous driver assistance programs, home and enterprise security, smoke and noxious gas detectors, medical monitoring equipment, or wearables for child and elderly safety, our potential liability may increase.

We could be adversely affected in several ways, including the following:

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• we could incur a decrease in revenue or adjustment to pricing commensurate with the reimbursement of such costs or alleged damages;

we may encounter adverse publicity, which could cause a decrease in sales of our products or harm our relationships with existing or potential customers.

• we may encounter adverse publicity, which could cause a decrease in sales of our products or harm our reputation or relationships with existing or potential customers.

Any of the foregoing items could have a material adverse effect on our business, results of operations, or financial condition.

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Our inability to protect our intellectual property or retain key employees who are knowledgeable of and develop our intellectual property could have a material adverse effect on our business, results of operations, or financial condition.

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Claims that our products or manufacturing processes infringe or otherwise violate the intellectual property rights of others, or failure to obtain or renew license agreements covering such intellectual property, could materially adversely affect our business, results of operations, or financial condition.

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We may not be able to take any of the actions described above on commercially reasonable terms and any of the foregoing results could have a material adverse effect on our business, results of operations, or financial condition.

(See "Part II.

Financial Information – Item 8.

(See “Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Contingencies.”)

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We may need to obtain additional licenses or renew existing license agreements in the future.

unable to predict whether these license agreements can be obtained or renewed on terms acceptable to us.

We are unable to predict whether these license agreements can be obtained or renewed on terms acceptable to us.

The failure to obtain or renew licenses as necessary could have a material adverse effect on our business, results of operations, or financial condition.

Litigation could have a material adverse effect on our business, results of operations, or financial condition.

Legal proceedings and claims could have a material adverse effect on our business, results of operations, or financial condition.

From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business or otherwise, both domestically and internationally.

Any claim, with or without merit, could result in significant legal fees that could negatively impact our financial results, disrupt our operations, and require significant attention from our management.

Legal Proceedings.” Any claim, with or without merit, could result in significant legal fees that could negatively impact our financial results, disrupt our operations, and require significant attention from our management.

We could be subject to litigation or arbitration disputes arising from our relationships with vendors or customers, supply agreements, or contractual obligations with our subcontractors or business partners.

We may also be associated with and subject to litigation arising from the actions of our subcontractors or business partners.

We may also be subject to litigation as a result of indemnities we issue, primarily with our customers, the terms of our product warranties, and from product liability claims.

We may also be associated with and subject to litigation arising from the actions of our vendors, subcontractors, or business partners.

We may also be subject to litigation or claims as a result of our indemnification obligations, including obligations to defend our customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, trademarks, copyrights, or trade secrets.

We may also be subject to claims or litigation arising from the terms of our product warranties or from product liability claims.

As we continue to focus on developing system solutions with manufacturers of consumer products, including autonomous driving, augmented reality, and others, we may be exposed to greater potential for personal liability claims against us as a result of consumers’ use of those products.

We, our officers, or our directors could also be subject to claims of alleged violations of securities laws.

There can be no assurance that we are adequately insured to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain matters.

Exposures to various litigation could lead to significant costs and expenses as we defend claims, are required to pay damage awards, or enter into settlement agreements, any of which could have a material adverse effect on our business, results of operations, or financial condition.

We are subject to allegations of securities violations and related wrongful acts.

On March 5, 2019, a shareholder derivative complaint was filed in the U.S.

District Court for the District of Delaware, allegedly on behalf of and for the benefit of Micron, against certain current and former officers and directors of Micron for alleged breaches of their fiduciary duties and other violations of law.

The allegations are based on, among other things, purported false and misleading statements regarding anticompetitive behavior in the DRAM industry.

The complaint seeks damages, fees, interest, costs, and other appropriate relief.

Similar shareholder derivative complaints have subsequently been filed in the U.S.

District Court for the District of Delaware and the U.S.

District Court for the District of Idaho.

We are unable to predict the outcome of these matters and therefore cannot estimate the range of possible loss.

The final resolution of these matters could result in significant liability and could have a material adverse effect on our business, results of operations, or financial condition.

Exposures to various legal proceedings and claims could lead to significant costs and expenses as we defend claims, are required to pay damage awards, or enter into settlement agreements, any of which could have a material adverse effect on our business, results of operations, or financial condition.

If our manufacturing process is disrupted by operational issues, natural disasters, or other events, our business, results of operations, or financial condition could be materially adversely affected.

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Difficulties in the manufacturing process or the effects from a shift in product mix can reduce yields or disrupt production and may increase our per gigabit manufacturing costs.

We and our subcontractors maintain operations and continuously implement new product and process technology at manufacturing facilities, which are widely dispersed in multiple locations in several countries including the United States, Singapore, Taiwan, Japan, Malaysia, and China.

Additionally, until we complete our acquisition of Intel's noncontrolling interest in IMFT, our control over operations at IMFT is limited by our agreements with Intel.

We and our subcontractors maintain operations and continuously

implement new product and process technology at manufacturing facilities, which are widely dispersed in multiple locations in several countries including the United States, Singapore, Taiwan, Japan, Malaysia, and China.

From time to time, there have been disruptions in the manufacturing process as a result of power outages, improperly functioning equipment, disruptions in supply of raw materials or components, or equipment failures.

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In addition, our suppliers and customers also have operations in such locations.

Additionally, other events including political or public health crises, such as an outbreak of contagious diseases like COVID-19, SARS-CoV, avian and swine influenza, measles, or Ebola, may affect our production capabilities or that of our suppliers, including as a result of quarantines, closures of production facilities, lack of supplies, or delays caused by restrictions on travel or shipping.

For example, in March 2020, the government of Malaysia announced measures to restrict movement in that country in an effort to suppress the number of COVID-19 cases.

Those restrictions temporarily limited our ability to fully operate our manufacturing facilities in that country.

The events noted above have occurred from time to time in the past and may occur in the future.

As a result, in addition to disruptions to operations, our insurance premiums may increase or we may not be able to fully recover any sustained losses through insurance.

If production is disrupted for any reason, manufacturing yields may be adversely affected, or we may be unable to meet our customers’ requirements and they may purchase products from other suppliers.

This could result in a significant increase in manufacturing costs, loss of revenues, or damage to customer relationships, any of which could have a material adverse effect on our business, results of operations, or financial condition.

A downturn in the worldwide economy may harm our business.

Downturns in the worldwide economy have harmed our business in the past and future downturns could also adversely affect our business.

Adverse economic conditions affect demand for devices that incorporate our products, such as personal computers, mobile devices, SSDs, and servers.

Reduced demand for these products could result in significant decreases in our average selling prices and product sales.

A deterioration of current conditions in worldwide credit markets could limit our ability to obtain external financing to fund our operations and capital expenditures.

In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties.

Difficult economic conditions

may also result in a higher rate of losses on our accounts receivables due to credit defaults.

As a result, a downturn in the worldwide economy could have a material adverse effect on our business, results of operations, or financial condition.

This could result in a significant increase in manufacturing costs, loss of revenue, or damage to customer relationships, any of which could have a material adverse effect on our business, results of operations, or financial condition.

Breaches of our security systems, or those of our customers, suppliers, or business partners, could expose us to losses.

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The foregoing could have a material adverse effect on our business, results of operations, or financial condition.

Our joint ventures and strategic relationships involve numerous risks.

We have entered into strategic relationships to develop new manufacturing process technologies and products and to manufacture certain products, including our joint development partnership and our IMFT joint venture with Intel.

In January 2019, we exercised our option to acquire Intel's interest in IMFT.

Subsequently, Intel set the closing date to occur on October 31, 2019.

In the first quarter of 2020, we expect to pay Intel approximately $1.4 billion in cash for Intel's noncontrolling interest in IMFT and IMFT member debt.

As of August 29, 2019, current debt included $693 million of IMFT member debt.

Our joint ventures and strategic relationships are subject to various risks that could adversely affect the value of our investments and our results of operations, including the following:

• diverging interests between us and our partners and disagreements on the following:

ongoing or future development, manufacturing, or operational activities;

the amount, timing, or nature of further investments;

commercial terms in our joint ventures or strategic relationships;

• competition from our partners;

• access by our partners to our proprietary product and process technology which they may use;

• difficulties in transferring technology to joint ventures;

• difficulties and delays in ramping production at joint ventures;

• limited control over the operations of our joint ventures;

• inability of our partners to meet their commitments to us or our joint ventures;

differences in participation on funding capital investments in our joint ventures due to differing business models or long-term business goals;

• inadequate cash flows to fund increased capital requirements of our joint ventures;

• difficulties or delays in collecting amounts due to us from our joint ventures and partners;

disputes with partners regarding the terms of arrangements, including the termination or discontinuance of our joint ventures, or that terms of such arrangements are unfavorable;

• changes in tax, legal, or regulatory requirements that necessitate changes in the agreements with our partners.

Our pending acquisition of Intel's noncontrolling interest in IMFT may involve additional risks, including, but not limited to, an inability to sell the product IMFT produces, increases in underutilization charges, increase in R&D expenses, retention of key employees, and successful integration of IMFT.

Our joint ventures and strategic relationships, if unsuccessful, could have a material adverse effect on our business, results of operations, or financial condition.

We face risks associated with our former IMFT joint venture with Intel.

On October 31, 2019, we purchased Intel’s noncontrolling interest in the IMFT joint venture, now known as MTU.

Our acquisition involves risks including, but not limited to, continued underutilization of the MTU facility.

We also face risks from our arbitration proceeding with Intel, in which we and Intel have made claims against each other for damages relating to the joint venture.

For information regarding the arbitration proceeding, see “Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Contingencies.” The foregoing could have a material adverse effect on our business, results of operations, or financial condition.

Debt obligations could adversely affect our financial condition.

We have incurred in the past, and expect to incur in the future, debt to finance our capital investments, business acquisitions, and restructuring of our capital structure.

As of August 29, 2019 , we had debt with a carrying value of $5.85 billion .

As of August 29, 2019 , we also had an undrawn credit facility totaling $3.75 billion consisting of (1) an undrawn revolving credit facility that matures in July 2023 and provides for borrowings of up to $2.50 billion and (2) a term loan facility

for up to $1.25 billion available to be drawn in a single advance prior to November 9, 2019.

As of August 29, 2019 , the conversion value in excess of principal of our convertible notes was $654 million , based on the trading price of our common stock of $44.67 per share on such date.

We have incurred in the past, and expect to incur in the future, debt to finance our capital investments, business acquisitions, and restructure of our capital structure.

As of September 3, 2020, we had debt with a carrying value of $6.64 billion.

As of September 3, 2020, $2.50 billion of our Revolving Credit Facility was available to us.

As of September 3, 2020, the conversion value in excess of principal of our convertible notes was $486 million, based on the trading price of our common stock of $46.33 per share on such date.

25 | 2020 10-K

Our debt obligations could adversely impact us.

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• require us to continue to pay cash amounts substantially in excess of the principal amounts upon settlement of our convertible notes to minimize dilution of our earnings per share.

Our ability to meet our payment obligations under our debt instruments depends on our ability to generate significant cash flows in the future.

Our ability to meet our payment obligations under our debt instruments depends on our ability to generate significant cash flows or obtain external financing in the future.

This, to some extent, is subject to market, economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control.

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Additionally, events and circumstances may occur which would cause us to not be able to satisfy applicable draw-down conditions and utilize our revolving credit facility.

In 2019, we suspended the security interest in the collateral under our credit facility upon achieving a specified credit rating and prepaying the 2022 Term Loan B;

however, if our corporate credit rating were to decline below a certain level, the security interest would be automatically reinstated.

In 2019, we suspended the security interest in the collateral under our credit facility upon achieving a specified credit rating and prepaying our Senior Secured Term Loan B due in 2022;

however, if our corporate credit rating were to decline below a certain level, the security interest would be automatically reinstated, which may limit the amount or increase the cost of future financings.

If we are unable to generate sufficient cash flows to service our debt payment obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital.

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We must attract, retain, and motivate highly skilled employees.

To remain competitive, we must attract, retain, and motivate executives and other highly skilled employees.

Competition for experienced employees in our industry can be intense and hiring and retaining qualified executives, engineers, technical staff, and sales representatives are critical to our business.

Our inability to attract and retain key employees may inhibit our ability to maintain or expand our business operations.

Additionally, changes to immigration policies in the numerous countries in which we operate, including the United States, may limit our ability to hire and/or retain talent in specific locations.

To remain competitive, we must attract, retain, and motivate executives and other highly skilled employees, as well as effectively manage or plan for succession for key employees.

Competition for experienced employees in our industry can be intense.

Hiring and retaining qualified executives, engineers, technical staff, and sales representatives is critical to our business.

Our inability to attract, retain, or effectively manage or plan for succession of key employees may inhibit our ability to maintain or expand our business operations.

Additionally, changes to immigration policies in the numerous countries in which we operate, including the United States, as well as restrictions on global travel as a result of local or global public health crises requiring quarantines or other precautions to limit exposure to infectious diseases, may limit our ability to hire and/or retain talent in, or transfer talent to, specific locations.

If our total compensation programs and workplace culture cease to be viewed as competitive, our ability to attract, retain, and motivate employees could be weakened, which could have a material adverse effect on our business, results of operations, or financial condition.

The acquisition of our ownership interest in Inotera from Qimonda has been challenged by the administrator of the insolvency proceedings for Qimonda.

On January 20, 2011, Dr.

In January 2011, Dr.

Michael Jaffé, administrator for Qimonda’s insolvency proceedings, filed suit against Micron and Micron Semiconductor B.V.

(“Micron B.V.”), in the District Court of Munich, Civil Chamber.

The complaint seeks to void, under Section 133 of the German Insolvency Act, a share purchase agreement between Micron B.V.

and Qimonda signed in fall 2008, pursuant to which Micron B.V.

purchased substantially all of Qimonda's shares of Inotera (the "Inotera Shares"), representing approximately 18% of Inotera's outstanding shares as of August 29, 2019 , and seeks an order requiring us to re-transfer those shares to the Qimonda estate.

The complaint also seeks, among other things, to recover damages for the alleged

value of the joint venture relationship with Inotera and to terminate, under Sections 103 or 133 of the German Insolvency Code, a patent cross-license between us and Qimonda entered into at the same time as the share purchase agreement.

Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court issued judgments:

(1) ordering Micron B.V.

to pay approximately $1 million in respect of certain Inotera Shares sold in connection with the original share purchase;

(2) ordering Micron B.V.

to disclose certain information with respect to any Inotera Shares sold by it to third parties;

(3) ordering Micron B.V.

to disclose the benefits derived by it from ownership of the Inotera Shares, including in particular, any profits distributed on the Inotera Shares and all other benefits;

(4) denying Qimonda's claims against Micron for any damages relating to the joint venture relationship with Inotera;

and (5) determining that Qimonda's obligations under the patent cross-license agreement are canceled.

In addition, the Court issued interlocutory judgments ordering, among other things:

(1) that Micron B.V.

transfer to the Qimonda estate the Inotera Shares still owned by Micron B.V.

and pay to the Qimonda estate compensation in an amount to be specified for any Inotera Shares sold to third parties;

and (2) that Micron B.V.

pay the Qimonda estate as compensation an amount to be specified for benefits derived by Micron B.V.

from ownership of the Inotera Shares.

The interlocutory judgments have no immediate, enforceable effect on us, and, accordingly, we expect to be able to continue to operate with full control of the Inotera Shares subject to further developments in the case.

On April 17, 2014, Micron and Micron B.V.

filed a notice of appeal with the German Appeals Court challenging the District Court's decision.

After opening briefs, the Appeals Court held a hearing on the matter on July 9, 2015, and thereafter appointed two independent experts to perform an evaluation of Dr.

Jaffé's claims that the amount Micron paid for Qimonda was less than fair market value.

On January 25, 2018, the court-appointed experts issued their report concluding that the amount paid by Micron was within an acceptable fair-value range.

The Appeals Court held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court remanded the case to the experts for supplemental expert opinion.

The complaint seeks to void a share purchase agreement between Micron B.V.

and Qimonda signed in 2008, pursuant to which Micron B.V.

purchased substantially all of Qimonda’s shares of Inotera, representing approximately 18% of Inotera’s outstanding shares at that time, and seeks an order requiring us to re-transfer those shares to the Qimonda estate.

The complaint also seeks, among other things, to recover damages for the alleged value of the joint venture relationship with Inotera and to terminate a patent cross-license between us and Qimonda entered into at the same time as the share purchase agreement.

See “Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Contingencies” for further information regarding the matter.

We are unable to predict the outcome of the matter and, therefore, cannot estimate the range of possible loss.

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A change in tax laws in key jurisdictions could materially increase our tax expense.

We are subject to income taxes in the U.S.

and many foreign jurisdictions.

Changes to income tax laws and regulations in any of the jurisdictions in which we operate, or in the interpretation of such laws, could significantly increase our effective tax rate and ultimately reduce our cash flow from operating activities and otherwise have a material adverse effect on our financial condition.

For example, our effective tax rate increased from 1.2% for 2018 to 9.8% for 2019 primarily as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 by the United States.

Treasury Department continues to issue interpretive guidance on the Tax Act, including foreign tax credits, foreign minimum tax, foreign derived intangible income, and interest expense deduction limitations.

It is anticipated that the guidance will be finalized over the next several months.

We are subject to income taxes in the United States and many foreign jurisdictions.

Changes to income tax laws and regulations in any of the jurisdictions in which we operate, or in the interpretation of such laws, could significantly increase our effective tax rate and ultimately reduce our cash flows from operating activities and otherwise have a material adverse effect on our financial condition.

For example, our effective tax rate increased from 1.2% for 2018 to 9.8% for 2019 primarily as a result of the Tax Cuts and Jobs Act enacted in December 2017 by the United States.

Additionally, various levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project undertaken by the Organization for Economic Co-operation and Development, which represents a coalition of member countries and recommended changes to numerous long-standing tax principles.

If adopted by countries, such changes, as well as changes in U.S.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project undertaken by the Organisation for Economic Co-operation and Development, which represents a coalition of member countries and recommended changes to numerous long-standing tax principles.

If implemented by taxing authorities, such changes, as well as changes in U.S.

federal and state tax laws or in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on our business, results of operations, or financial condition.

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We cannot guarantee that we will successfully achieve performance obligations required to qualify for these incentives or that the granting agencies will provide such funding.

These incentive arrangements typically provide the granting agencies with rights to audit our performance with the terms and obligations.

These incentive arrangements typically provide the granting agencies with rights to audit our performance with their terms and obligations.

Such audits could result in modifications to, or termination of, the applicable incentive program.

The incentives we receive could be subject to reduction, termination, or clawback, and any decrease or clawback of government incentives could have a material adverse effect on our business, results of operations, or financial condition.

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We may make future acquisitions and/or alliances, which involve numerous risks.

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• hiring and retaining key employees;

requirements imposed by governmental authorities in connection with the regulatory review of a transaction, which may include, among other things, divestitures or restrictions on the conduct of our business or the acquired business;

• requirements imposed by government authorities in connection with the regulatory review of a transaction, which may include, among other things, divestitures or restrictions on the conduct of our business or the acquired business;

• inability to realize synergies or other expected benefits;

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• impairment of acquired intangible assets, goodwill, or other assets as a result of changing business conditions, technological advancements, or worse-than-expected performance of the acquired business.

In previous years, supply of memory and storage products has significantly exceeded customer demand resulting in significant declines in average selling prices.

The global memory and storage industry has experienced consolidation and may continue to consolidate.

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dollar (our reporting currency), primarily the euro, Singapore dollar, New Taiwan dollar, and yen.

Although we hedge our primary exposures to changes in currency exchange rates from our monetary assets and liabilities, the effectiveness of these hedges is dependent upon our ability to accurately forecast our monetary assets and liabilities.

In addition, a significant portion of our manufacturing costs are denominated in foreign currencies.

Exchange rates for some of these currencies against the U.S.

dollar, particularly the yen, have been volatile in recent periods.

dollar have been volatile and may be volatile in future periods.

If these currencies strengthen against the U.S.

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dollar that adversely change against our foreign currency exposures could have a material adverse effect on our business, results of operations, or financial condition.

We may incur additional restructuring charges in future periods.

We may incur restructuring charges in future periods.

From time to time, we have, and may in the future, enter into restructure initiatives in order to, among other items, streamline our operations, respond to changes in business conditions, our markets or product offerings, or to centralize certain key functions.

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Some of our customers may elect to disqualify us as a supplier or reduce purchases from us if we are unable to verify that our products meet the specifications of their responsible sourcing programs.

Meeting customer requirements may limit the sourcing and availability of some of the materials, supplies, and services we use, particularly when the availability of such is concentrated to a limited number of suppliers.

This in turn may affect our ability and/or the cost to obtain materials, supplies, and services necessary for the manufacture of our products in sufficient quantities.

Meeting customer requirements may limit the sourcing and availability of some of the materials, supplies, and services we use, particularly when the availability of such materials, supplies, and services is concentrated to a limited number of suppliers.

This in turn may affect our ability and/or the cost to obtain in sufficient quantities materials, supplies, and services necessary for the manufacture of our products.

This increased focus on environmental protection and social responsibility initiatives led to the passage of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and its implementing SEC regulations.

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These conflict minerals are commonly found in materials used in the manufacture of semiconductors.

Our inability to comply with customers' requirements for responsible sourcing or with regulations could have a material adverse effect on our business, results of operations, or financial condition.

We and others are subject to a variety of laws and regulations that may result in additional costs and liabilities.

Our inability to comply with customers’ requirements for responsible sourcing or with related regulations could have a material adverse effect on our business, results of operations, or financial condition.

We and others are subject to a variety of laws, regulations, or industry standards that may have a material adverse effect on our business, results of operations, or financial condition.

The manufacturing of our products requires the use of facilities, equipment, and materials that are subject to a broad array of laws and regulations in numerous jurisdictions in which we operate.

Additionally, we are subject to a variety of other laws and regulations relative to the construction, maintenance, and operations of our facilities.

Any of these laws or regulations could cause us to incur additional direct costs, as well as increased indirect costs related to our relationships with our customers and suppliers, and otherwise harm our operations and financial condition.

Any failure to comply with these laws or regulations could adversely impact our reputation and our financial results.

Additionally, we engage various third parties to represent us or otherwise act on our behalf and we partner with other companies in our joint ventures, all of whom are also subject to a broad array of laws and regulations.

Our engagement with these third parties and our ownership in these joint ventures may also expose us to risks associated with their respective compliance with these laws and regulations.

Any changes in laws, regulations, or industry standards could cause us to incur additional direct costs, as well as increased indirect costs related to our relationships with our customers and suppliers, and otherwise harm our operations and financial condition.

Any failure to comply with laws, regulations, or industry standards could adversely impact our reputation and our financial results.

Additionally, we engage various third parties as sales channel partners or to represent us or otherwise act on our behalf who are also subject to a broad array of laws, regulations, and industry standards.

Our engagement with these third parties may also expose us to risks associated with their respective compliance with laws and regulations.

As a result of these items, we could experience the following:

suspension of production;

• suspension of production or sales of our products;

• remediation costs;

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• reputational challenges.

Our failure, or the failure of our third-party agents or joint ventures, to comply with these laws and regulations could have a material adverse effect on our business, results of operations, or financial condition.

Compliance with, or our failure, or the failure of our third-party sales channel partners or agents, to comply with, laws, regulations, or industry standards could have a material adverse effect on our business, results of operations, or financial condition.

We are subject to counterparty default risks.

We have numerous arrangements with financial institutions that subject us to counterparty default risks, including cash deposits, investments, capped call contracts on our common stock, and derivative instruments.

As a result, we are subject to the risk that the counterparty to one or more of these arrangements will default on its performance obligations.

A counterparty may

not comply with their contractual commitments which could then lead to their defaulting on their obligations with little or no notice to us, which could limit our ability to take action to mitigate our exposure.

We have numerous arrangements with financial institutions that subject us to counterparty default risks, including cash deposits, investments, and derivative instruments.

Additionally, we are subject to counterparty default risk from our customers for amounts receivable from them.

As a result, we are subject to the risk that the counterparty will default on its performance obligations.

A counterparty may not comply with its contractual commitments which could then lead to its defaulting on its obligations with little or no notice to us, which could limit our ability to mitigate our exposure.

Additionally, our ability to mitigate our exposures may be constrained by the terms of our contractual arrangements or because market conditions prevent us from taking effective action.

If one of our counterparties becomes insolvent or files for bankruptcy, our ability to recover any losses suffered as a result of that counterparty's default may be limited by the liquidity of the counterparty or the applicable laws governing the bankruptcy proceedings.

If one of our counterparties becomes insolvent or files for bankruptcy, our ability to recover any losses suffered as a result of that counterparty’s

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default may be limited by the liquidity of the counterparty or the applicable laws governing the bankruptcy proceedings.

In the event of such default, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.

The operations of MMJ are subject to continued oversight by the Tokyo District Court during the pendency of the corporate reorganization proceedings.

Because MMJ's plan of reorganization provides for ongoing payments to creditors following the closing of the MMJ acquisition, the reorganization proceedings in Japan (the "Japan Proceedings") are continuing and MMJ remains subject to the oversight of the Tokyo District Court and of the trustees (including a trustee designated by us, who we refer to as the business trustee, and a trustee designated by the Tokyo District Court, who we refer to as the legal trustee), pending completion of the reorganization proceedings.

The business trustee is responsible for overseeing the operation of the business of the MMJ Companies, other than oversight in relation to acts that need to be carried out in connection with the Japan Proceedings, which are the responsibility of the legal trustee.

The final creditor payment under MMJ's plan of reorganization is scheduled to occur in December 2019.

Following distribution of the final payment and the Tokyo District Court's approval and issuance of an order concluding the reorganization proceedings, MMJ's reorganization proceedings in Japan and oversight of the Tokyo District Court will terminate.

During the pendency of the reorganization proceedings in Japan, MMJ is obligated to provide periodic financial reports to the Tokyo District Court and may be required to obtain the consent of the Tokyo District Court prior to taking a number of significant actions relating to its businesses, including transferring or disposing of, or acquiring, certain material assets, incurring or guaranteeing material indebtedness, settling material disputes, or entering into certain material agreements.

The consent of the legal trustee may also be required for matters that would likely have a material impact on the operations or assets of MMJ or for transfers of material assets, to the extent the matters or transfers would reasonably be expected to materially and adversely affect execution of MMJ's plan of reorganization.

Accordingly, during the pendency of the reorganization proceedings in Japan, our ability to operate MMJ as part of our global business or to cause MMJ to take certain actions that we deem advisable for its business could be adversely affected if the Tokyo District Court or the legal trustee is unwilling to consent to various actions that we may wish to take with respect to MMJ.

The operations of MMJ being subject to the continued oversight by the Tokyo District Court during the pendency of the corporate reorganization proceedings could have a material adverse effect on our business, results of operations, or financial condition.

The trading price of our common stock has been and may continue to be volatile.

Our common stock has experienced substantial price volatility in the past and may continue to do so in the future.

Additionally, we, the technology industry, and the stock market as a whole have on occasion experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to the operating performance of the specific companies.

The trading price of our common stock may fluctuate widely due to various factors, including, but not limited to, actual or anticipated fluctuations in our financial condition and operating results, changes in financial estimates by us or financial estimates and ratings by securities analysts, changes in our capital structure, including issuance of additional debt or equity to the public, interest rate changes, regulatory changes, news regarding our products or products of our competitors, and broad market and industry fluctuations.

For these reasons, investors should not rely on recent or historical trends to predict future trading prices of our common stock, financial condition, results of operations, or cash flows.

Investors in our common stock may not realize any return on their investment in us and may lose some or all of their investment.

Volatility in the trading price of our common stock could also result in the filing of securities class action litigation matters, which could result in substantial costs and the diversion of management time and resources.

The amount and frequency of our share repurchases may fluctuate, and we cannot guarantee that we will fully consummate our share repurchase authorization, or that it will enhance long-term shareholder value.

Share repurchases could also increase the volatility of the trading price of our stock and will diminish our cash reserves.

The amount, timing, and execution of our share repurchases pursuant to our share repurchase authorization may fluctuate based on our operating results, cash flows, and priorities for the use of cash for other purposes.

These purposes include, but are not limited to, operational spending, capital spending, acquisitions, and repayment of debt.

Other factors, including changes in tax laws, could also impact our share repurchases.

Although our Board of Directors has authorized share repurchases of up to $10 billion of our outstanding common stock, the authorization does not obligate us to repurchase any common stock.

We cannot guarantee that our share repurchase authorization will be fully consummated or that it will enhance long-term shareholder value.

The repurchase authorization could affect the trading price of our stock and increase volatility, and any announcement of a pause in, or termination of, this program may result in a decrease in the trading price of our stock.

In addition, this program will diminish our cash reserves.

UNRESOLVED STAFF COMMENTS

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What changed 10-K

Item 1A. Risk Factors