What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-02-02 compared with 2021-02-11 · 194 added, 285 removed, 510 unchanged (48% of the section changed)

10 unchanged sentences

Risk Factor Summary

Risks Relating to our Acquisitions

• Our actual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results, including with respect to any cost savings and other potential synergies.

• Failure to integrate the acquired businesses successfully in the expected time-frame may adversely affect our results and financial condition.

• Our business relationships, including customer relationships, may be subject to disruption due to uncertainty associated with the acquisitions.

• We may have difficulty motivating and retaining key personnel in light of the acquisitions.

• We have incurred material secured term loan indebtedness which adversely affects our operating results and cash-flows and contains covenants that could adversely affect our operational freedom and ability to pursue strategic transactions.

Risks Related to Our Business

• Impacts of the COVID-19 pandemic could adversely affect our business, financial condition, and results of operations.

• We face intense competition expected to increase in the future, which could have an adverse effect on our revenue, revenue growth rate, if any, and market share.

• We depend on a limited number of customers, who themselves are dependent on a consolidating set of service provider customers, for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from our major customers could have a material adverse effect on our revenue and operating results.

• A significant, but declining portion of our revenue is attributable to demand for our products in markets for broadband (previously connected home) solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

• Impacts of the global semiconductor supply shortage could adversely affect our business, financial condition, and results of operations.

• Our business, financial condition and results of operations could be adversely affected by political and economic conditions and other factors related to our international operations.

• We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from our major customers could have a material adverse effect on our revenue and operating results.

• Average selling prices of our products could decrease rapidly, which would have a material adverse effect on our revenue and gross margins.

• If we fail to penetrate new applications and markets, our revenue, revenue growth rate, if any, and financial condition could be materially and adversely affected.

• A significant portion of our revenue is attributable to demand for our products in markets for broadband (previously connected home) solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

• We may be unable to make the substantial and productive research and development investments that are required to remain competitive in our business.

2 unchanged sentences

• The complexity of our products could result in unforeseen delays or expenses caused by undetected defects or bugs, which could reduce the market acceptance of our new products, damage our reputation and adversely affect our operating costs.

• Average selling prices of our products could decrease rapidly, which would have a material adverse effect on our revenue and gross margins.

• If we are unable to attract, train and retain qualified design and technical personnel, we may not be able to execute our business strategy effectively.

• If we fail to develop and introduce new or enhanced products on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed.

1 unchanged sentence

• We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly as we seek to enter new markets where we may not have prior experience.

• If we are unable to attract, train and retain qualified design and technical personnel, we may not be able to execute our business strategy effectively.

• Our business would be adversely affected by the departure of existing members of our senior management team.

3 unchanged sentences

• We are subject to the cyclical nature of the semiconductor industry.

• Our business, financial condition and results of operations could be adversely affected by political and economic conditions and other factors related to our international operations.

• Our business is subject to various governmental regulations, and if we fail to maintain compliance, we may be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.

Risks Relating to Intellectual Property

12 unchanged sentences

• Our share price may be volatile as a result of various factors.

Risks Relating to our Acquisitions

Our actual financial and operating results could differ materially from any expectations or guidance provided by us concerning future results, including (without limitation) expectations or guidance with respect to the financial impact of any cost savings and other potential synergies.

We currently expect to realize material synergies as a result of our acquisitions of the Home Gateway Platform Division of Intel Corporation, or Intel, which we refer to as the Wi-Fi and Broadband assets business, and NanoSemi, Inc., or NanoSemi, and as a result, we currently believe that the acquisitions will, in aggregate, be accretive to our free cash-flow and non-GAAP earnings per share, excluding upfront non-recurring charges, transaction related expenses, the amortization of purchased intangible assets, and inventory fair value adjustments.

The expectations and guidance we have provided with respect to the potential financial impact of the acquisitions are subject to numerous assumptions, however, including assumptions derived from our diligence efforts concerning the status of and prospects for the acquired businesses and assumptions relating to the near-term prospects for the semiconductor industry generally and the markets for the products of the acquired businesses in particular.

The integration of the acquired businesses may present substantial incremental challenges that could materially and adversely affect our ability to realize the currently anticipated financial, operational, and strategic benefits of the acquisitions.

Additional assumptions that could affect currently anticipated results relate to numerous matters, including (without limitation) the following:

• projections of the acquired businesses’ future revenues;

• the anticipated financial performance of products of the acquired businesses and products currently in development;

• anticipated cost savings and other synergies associated with the acquisitions, including potential revenue synergies;

• our capital structure after the acquisitions;

• the amount of goodwill and intangibles that resulted from the acquisitions;

• certain other purchase accounting adjustments that we recorded in our financial statements in connection with the acquisitions;

• acquisition costs, including restructuring charges and transactions costs to our financial, legal, and accounting advisors;

• our ability to maintain, develop, and deepen relationships with customers of the acquired businesses;

• other financial and strategic risks of the acquisitions, including the possible impact of reduced liquidity of MaxLinear resulting from deal-related cash outlays, the credit risk associated from the potential debt facility described below, and continued uncertainty arising from the COVID-19 pandemic.

We cannot provide any assurances with respect to the accuracy of our assumptions, including our assumptions with respect to future revenues or revenue growth rates, if any, of the acquired businesses, and we cannot provide assurances with respect to our ability to realize the cost savings that we currently anticipate.

Risks and uncertainties that could cause our actual results to differ materially from currently anticipated results include, but are not limited to, risks relating to our ability to successfully complete the integration of the acquired businesses;

currently unanticipated incremental costs that we may incur in connection with completing the integration of the acquired businesses into MaxLinear’s;

risks relating to our ability to realize incremental revenues from the acquisitions in the amounts that we currently anticipate;

risks relating to the willingness of the customers and other partners of the acquired businesses to continue to conduct business with MaxLinear;

and numerous risks and uncertainties that affect the semiconductor industry generally and the markets for our products and those of the acquired businesses specifically.

We believe the continuing pandemic enhances certain of these risks and presents additional uncertainty in our ability to achieve the financial and strategic objectives of the acquisitions.

Any failure to integrate the acquired businesses successfully and to realize the financial benefits we currently anticipate from the acquisitions would have a material adverse impact on our future operating results and financial condition and could materially and adversely affect the trading price or trading volume of our common stock.

Failure to integrate the acquired businesses with our business and operations successfully in the expected time-frame or otherwise may adversely affect MaxLinear’s operating results and financial condition.

The success of the acquisitions of the Wi-Fi and Broadband assets business and NanoSemi will depend, in substantial part, on our ability to integrate the acquired businesses with MaxLinear and to realize fully the anticipated benefits and potential synergies from the integration, including, among others, currently expected cost savings from duplicative functions;

potential operational efficiencies in our respective supply chains and in research and development investments;

and potential revenue growth resulting from the addition of the product portfolio of the acquired businesses.

Certain of the acquired products of the Wi-Fi and Broadband assets business are supplied to us on a turnkey basis under the terms of a supply agreement with Intel.

While we believe this supply agreement mitigates certain near-term integration risks, we also rely on Intel as a source of supply for these products.

Accordingly, this relationship presents similar supply risks as exist with respect to our other products as a fabless semiconductor company dependent on specific foundry relationships.

See the Risk Factor entitled “ We rely on a limited number of third parties to manufacture, assemble, and test our products, and the failure to manage our relationships with our third-party contractors successfully, or impacts from natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products.

” We expect that the completion of the integration of two acquired businesses will be complex and time consuming and will require substantial management time and attention, which may divert attention and resources from other important areas, including our existing businesses.

We may face significant challenges in consolidating our operations with the acquired businesses and addressing the different corporate cultures of MaxLinear and the acquired businesses.

Furthermore, the acquired businesses also operate in jurisdictions materially affected by the COVID-19 pandemic, which enhances integration risks, in particular risks relating to our ability to retain key employees at a time when engagement is difficult, as described in more detail under the Risk Factor entitled “ We may have difficulty motivating and retaining key personnel in light of the acquisitions.

” Additional unanticipated costs may be incurred in the course of integrating our respective businesses.

If the businesses are not successfully integrated, the anticipated benefits of the acquisitions may not be realized fully or at all or may take longer to realize than expected.

In such a case, we would expect our operating results and financial condition to be materially and adversely affected, which could also have a material and adverse effect on the trading price or trading volume of our common stock.

Our business relationships, including customer relationships, and those of the acquired businesses may be subject to disruption due to uncertainty associated with the acquisitions.

In response to the announcement of the acquisitions, customers, vendors, licensors, and other third parties with whom we or the acquired businesses do business or otherwise have relationships may experience uncertainty associated with the acquisitions, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with MaxLinear.

As a result, we are in many instances unable to evaluate the impact of the acquisitions on certain assumed contract rights and obligations, including intellectual property rights.

These business relationships may be subject to disruption as customers and others may elect to delay or defer purchase or design-win decisions or switch to other suppliers due to the uncertainty about the direction of our offerings, any perceived unwillingness on our part to support existing products of the acquired businesses, or any general perceptions by customers or other third parties that impute operational or business challenges to us arising from the acquisitions.

In addition, customers or other third parties may attempt to negotiate changes in existing business relationships, which may result in additional obligations imposed on us.

These disruptions could have a material adverse effect on our business, operating results, and financial condition.

Any loss of customers, customer products, design win opportunities, or other important strategic relationships could have a material adverse effect on our business, operating results, and financial condition and could have a material and adverse effect on the trading price or trading volume of our common stock.

We may have difficulty motivating and retaining key personnel in light of the acquisitions.

Uncertainty about the effect of the acquisitions on key employees may have an adverse effect on MaxLinear or the acquired businesses.

Employee retention may be particularly challenging as our employees may experience frustrations during the integration process and uncertainty about their future roles with us following completion of integration of the acquired businesses, which also operate in jurisdictions materially affected by the COVID-19 pandemic.

Attempting to complete the integration of these acquired businesses and new personnel around the world has been and will continue to be substantially complicated by continuing restrictions on travel and social distancing.

We are taking various steps to mitigate these risks, but we cannot predict whether or to what extent the pandemic may adversely affect our ability to retain employees and successfully integrate the acquired businesses.

If key employees depart, we may incur significant costs in identifying, hiring, and retaining replacements, which could substantially reduce or delay our ability to realize the anticipated benefits of the acquisitions, which could have a material adverse effect on our business, operating results, and financial condition.

We have incurred approximately $175.0 million of incremental secured term loan indebtedness, primarily to fund our $150.0 million acquisition of the Wi-Fi and Broadband assets business.

As of December 31, 2020, our aggregate indebtedness was $369.8 million.

Such indebtedness adversely affects our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations and contains financial and operational covenants that could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.

MaxLinear financed the $150.0 million acquisition of the Wi-Fi and Broadband assets business in part with an incremental secured term loan facility in an aggregate principal amount of approximately $175.0 million, of which $157.8 million was outstanding as of December 31, 2020.

The incremental term loan has a three-year term expiring in July 2023 and bears interest, at our option, at either an Adjusted LIBOR plus a fixed applicable margin of 4.25% per annum or an Adjusted Base Rate plus a fixed applicable margin of 3.25% per annum.

The incremental term loan of $175.0 million amortizes in quarterly installments of principal equal to (i) 1.25% of the original aggregate principal amount of the incremental term loan on the last day of each of the first through fourth full fiscal quarters of the Company after July 31, 2020, (ii) 2.50% of the original aggregate principal amount of the Incremental Term Loan on the last day of each of the fifth through eighth full fiscal quarters of the Company after July 31, 2020, and (iii) 3.75% of the original aggregate principal amount of the incremental term loan on the last day of each of the ninth through the eleventh full fiscal quarters of the Company after July 31, 2020.

The incremental term loan facility is secured by a first priority security interest in MaxLinear’s assets, subject to certain customary exceptions, as well as pledges of our equity interests in certain subsidiaries.

We had previously only carried long term debt on our balance sheet from one acquisition.

We have prepaid a substantial portion of the total principal of debt from the prior acquisition and have financed the remainder of our operations principally through working capital generated from operations as well as sales and issuances of our equity securities.

MaxLinear previously financed the acquisition of Exar in part with a secured initial term loan facility in an aggregate principal amount of approximately $425.0 million, of which $212.0 million remained outstanding as of December 31, 2020.

The outstanding

principal on the initial term loan is due at maturity on May 12, 2024.

Our outstanding initial term loan debt is subject to a Adjusted LIBOR plus a 2.5% fixed applicable margin during the remainder of the term of the loan.

The existing term loan facility is secured by a first priority security interest in MaxLinear’s assets, subject to certain customary exceptions, as well as pledges of our equity interests in certain subsidiaries.

As of December 31, 2020, our aggregate indebtedness under the initial and incremental term loan facilities was $369.8 million.

Our material incremental indebtedness adversely affects our operating expenses through increased interest payment obligations and adversely affects our ability to use cash generated from operations as we repay interest and principal under the term loans.

In addition, the incremental term loan provisions include financial covenants such as an initial maximum total net leverage ratio of 3.5 to 1 which decreases to 3.0 to 1 beginning with the sixth full fiscal quarter after July 31, 2020, a requirement to maintain certain public corporate debt ratings, and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.

The initial secured term loan is only subject to operational covenants.

Lastly, our borrowing costs can be affected by periodic credit ratings from independent rating agencies.

Such ratings are largely based on our performance, which may be measured by credit metrics such as leverage and interest coverage ratios.

Accordingly, outstanding indebtedness could adversely affect our operational freedom or ability to pursue strategic transactions that we would otherwise consider to be in the best interests of stockholders, including obtaining additional indebtedness to finance such transactions.

Specifically, our combined indebtedness has important consequences to investors in our common stock, including the following:

• we are subject to substantial variable interest rate risk because our interest rate under the incremental term loan varies based on a fixed margin of 4.25% per annum over an adjusted LIBOR rate or 3.25% per annum over an adjusted base rate and our interest rate under the initial term loan varies based on a fixed margin of 2.5% over an adjusted LIBOR rate.

If interest rates were to increase substantially, it would adversely affect our operating results and could affect our ability to service the term loan indebtedness;

• a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business;

• our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;

• our high degree of indebtedness may make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations.

If we fail to make required debt payments, or if we fail to comply with financial or other covenants in our debt service agreements, which include a maximum leverage ratio, we would be in default under the terms of these agreements.

Subject to customary cure rights, any default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have, any of which could have a material adverse effect on the trading price of our common stock.

We expect to incur substantial expenses related to the integration of MaxLinear and the acquired businesses.

We expect to incur substantial expenses in connection with completion of the integration of the operations of MaxLinear and the acquired businesses.

We expect operational integration to require substantial management attention.

Numerous factors, many of which are beyond our control, could affect the total cost or the timing of expected integration expenses.

Moreover, many of the expenses that will be incurred are by their nature difficult to estimate accurately at the present time.

These expenses could, particularly in the near term, reduce the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses.

These integration expenses may result in MaxLinear’s taking significant charges against earnings.

We have recorded additional goodwill and other intangible assets in connection with the acquired businesses.

Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.

The acquisitions of the Wi-Fi and Broadband assets business and NanoSemi are accounted for as business combinations under the acquisition method of accounting by MaxLinear in accordance with accounting principles generally accepted in the United States.

Under the acquisition method of accounting, the assets and liabilities of acquired businesses are recorded, as of

completion, at their respective fair values and added to our assets and liabilities.

Our reported financial condition and results of operations reflect the balances and results of the acquired businesses but are not restated retroactively to reflect the historical financial position or results of operations of acquired businesses for periods prior to the acquisitions.

As a result, comparisons of future results against prior period results will be more difficult for investors.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible assets and identifiable intangible assets of acquired businesses based on their fair values as of the date of completion of the acquisition.

The excess of the purchase price over those fair values is recorded as goodwill.

Our acquisitions have resulted in the creation of goodwill and recording of a large amount of intangible assets based upon the application of the acquisition method of accounting.

To the extent the value of goodwill or other intangible assets become impaired, we may be required to incur material charges relating to such impairment.

We conduct our annual goodwill and indefinite-lived intangible asset impairment analysis on October 31 each year, or more frequently if we believe indicators of impairment exist.

In addition, there can be no guarantee that acquired intangible assets, particularly in-process research and development, will generate revenues or profits that we include in our forecast that is the basis for their fair values as of the acquisition date.

Any such impairment charges relating to goodwill or other intangible assets could have a material impact on our operating results in future periods, and the announcement of a material impairment could have an adverse effect on the trading price and trading volume of our common stock.

As of December 31, 2020, our balance sheet reflected goodwill of $302.8 million and other intangible assets of $207.3 million.

Consequently, we could recognize material impairment charges in the future.

In addition to our acquisitions of the Wi-Fi and Broadband assets business and NanoSemi, we may, from time to time, make additional business acquisitions or investments, which involve significant risks.

We have completed multiple acquisitions in the past four years.

We may also enter into alliances or make investments in other businesses to complement our existing product offerings, augment our market coverage or enhance our technological capabilities.

Any such transactions could result in:

• issuances of equity securities dilutive to our existing stockholders;

• substantial cash payments;

• the incurrence of substantial debt and assumption of unknown liabilities;

• large one-time write-offs;

• amortization expenses related to intangible assets;

• a limitation on our ability to use our net operating loss carryforwards;

• the diversion of management's time and attention from operating our business to acquisition integration challenges;

• stockholder or other litigation relating to the transaction;

• adverse tax consequences;

• the potential loss of key employees, customers and suppliers of the acquired businesses.

Integrating acquired organizations and their products and services, including the integration of completed acquisitions, may be expensive, time-consuming and a strain on our resources and our relationships with employees, customers, distributors and suppliers, and ultimately may not be successful.

The benefits or synergies we may expect from the acquisition of complementary or supplementary businesses may not be realized to the extent or in the time frame we initially anticipate.

Some of the risks that may affect our ability to successfully integrate acquired businesses include those associated with:

• failure to successfully further develop the acquired products or technology;

• conforming the acquired company’s standards, policies, processes, procedures and controls with our operations;

• coordinating new product and process development, especially with respect to highly complex technologies;

• loss of key employees or customers of the acquired business;

• hiring additional management and other critical personnel;

• in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;

• increasing the scope, geographic diversity and complexity of our operations;

• consolidation of facilities, integration of the acquired businesses' accounting, human resource and other administrative functions and coordination of product, engineering and sales and marketing functions;

• the geographic distance between the businesses;

• liability for activities of the acquired businesses before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

• litigation or other claims in connection with the acquired businesses, including claims for terminated employees, customers, former stockholders or other third parties.

We have in the past been and may in the future be party to ligation related to acquisitions.

Any adverse determination in litigation resulting from acquisitions could have a material adverse effect on our business and operating results.

Risks Related to Our Business

Impacts of the COVID-19 pandemic could adversely affect our business, financial condition, and results of operations.

In late January 2020 and early February 2020, in response to a severe outbreak of the novel coronavirus disease, or COVID-19, the government of China instituted mandatory quarantines in Wuhan, China, extended lunar new year holiday closures, and restricted shipments out of the country.

This resulted in a temporary delay in our product shipments in the first quarter of 2020.

On March 11, 2020, the World Health Organization declared a global pandemic regarding COVID-19.

The COVID-19 pandemic has reached all of the countries and states in which we operate, including in California where our headquarters and central engineering team are located, as well as Spain, India, Singapore, Taiwan, Canada, Japan, South Korea, Hong Kong, Israel, Germany, and Austria, where additional engineering, sales, and administrative personnel are located.

In many of these jurisdictions, local authorities have instituted stay-at-home or shelter-in-place orders.

To protect the health and safety of our employees, we adopted social distancing policies including suspending employee travel and implementing remote work arrangements for substantially all of our workforce worldwide.

As of December 31, 2020, some of our workforce have returned to the office at reduced capacity adhering to local health authority guidelines.

While we experienced some negative impact to our net revenue and gross profits in the first half of 2020 due to several industry-wide dynamics related to COVID-19, including supply constraints described above, as well as certain customer push-out requests, we are currently benefiting from the work-from-home environment that is driving an increase in demand for certain of our products.

Further, global financial markets reacted negatively to the COVID-19 pandemic’s impacts causing significant declines in the stock price and market capitalization of many companies across all industries, although some have recovered.

Heightened volatility and uncertainty in customer demand and the worldwide economy in general has continued as a result of the COVID-19 pandemic, and we may experience increased volatility in sales and revenues in the near future.

However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time.

Other areas of our business which could be disrupted or subject to negative impacts may include, but may not be limited to, the following:

• Decreased demand in geographic locations more severely impacted by the outbreak, particularly in the U.S.

• Further supply constraints, including delays in production from temporary facility closures, supply shortages, and foundry, assembly or test capacity limitations;

• Disruptions in product shipments from travel and shipping restrictions imposed in response to local outbreaks;

• Slow down in the pace of integration of our acquisitions resulting from remote work arrangements and/or governmental closures beyond our control;

• Reduced ability to accurately predict our future revenue and budget future expenses;

• Inefficiencies, delays and additional costs in design win, product development, production and fulfillment which may be exacerbated by remote work arrangements;

• Accounts receivable collection issues should any of our limited and significant customers experience liquidity concerns;

• Material impacts to the value of our common stock, which may result in impairment of our goodwill;

• Material impairment of our assets, if recoverability thereof becomes a concern;

• Decreased availability of capital or access thereto in the United States and from other jurisdictions in which we operate;

• Increased data security risks from remote working arrangements of our employees and those of our customers and vendors.

Although we currently expect that our present cash and cash equivalent balances and cash flows that are generated from operations will be sufficient to meet our operating requirements for at least the next twelve months, a material adverse impact from COVID-19 could result in a need to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if we pursue additional acquisitions.

Additional funds may not be available on terms favorable to us or at all.

If we are unable to raise additional funds when needed, we may not be able to sustain our operations or execute our strategic plans.

We face intense competition and expect competition to increase in the future, which could have an adverse effect on our revenue, revenue growth rate, if any, and market share.

6 unchanged sentences

As our products are integrated into a variety of communications and industrial platforms, our competitors range from large, international merchant semiconductor companies offering a wide range of semiconductor products to smaller companies specializing in narrow markets, to internal or vertically integrated engineering groups within certain of our customers.

Our primary merchant semiconductor competitors include Silicon Laboratories, Inc., NXP Semiconductors N.V., MediaTek, Inc., Broadcom Ltd, Rafael Microelectronics, Inc., Inphi Corporation, M/A-COM Technology Solutions Holdings, Inc., Semtech Corporation, Qorvo Inc., Texas Instruments Incorporated, HiSilicon Technologies Co., Ltd., Analog Devices, Inc., Renesas Electronics Corporation, Maxim Integrated Products, Inc.

(which recently entered into a definitive agreement to be acquired by Analog Devices), Monolithic Power Systems, Inc., Microchip Technology, Inc., Ambarella, Inc., and Infineon Technologies AG.

Our primary merchant semiconductor competitors include Silicon Laboratories, Inc., NXP Semiconductors N.V., MediaTek, Inc., Broadcom Ltd, Rafael Microelectronics, Inc., Marvell Technology Group Ltd., M/A-COM Technology Solutions Holdings, Inc., Semtech Corporation, Qorvo Inc., Texas Instruments Incorporated, HiSilicon Technologies Co., Ltd., Analog Devices, Inc., Renesas Electronics Corporation, Monolithic Power Systems, Inc., Microchip Technology, Inc., Ambarella, Inc., and Infineon Technologies AG.

It is quite likely that competition in the markets in which we participate will increase in the future as existing competitors improve or expand their product offerings.

2 unchanged sentences

If we cannot offer an attractive solution for applications where our competitors offer more fully integrated products, we may lose significant market share to our competitors.

Some of our targeted customers for our optical interconnect solutions are module makers who are vertically integrated, where we compete with internally supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.

Some of our targeted customers for our optical interconnect solutions are module makers who are vertically

integrated, where we compete with internally supplied components, and we compete with much larger analog and mixed-signal catalog competitors in the multi-market high-performance analog markets.

Our ability to compete successfully depends on factors both within and outside of our control, including industry and general economic trends.

1 unchanged sentence

Many of our competitors have substantially greater financial and other resources with which to withstand similar adverse economic or market conditions in the future.

Moreover, the competitive landscape is changing as a result of intense

consolidation within our industry as some of our competitors have merged with or been acquired by other competitors, and other competitors have begun to collaborate with each other.

Moreover, the competitive landscape is changing as a result of intense consolidation within our industry as some of our competitors have merged with or been acquired by other competitors, and other competitors have begun to collaborate with each other.

In addition, changes in government trade policies, including the imposition of tariffs and export restrictions, could limit our ability to sell our products to certain customers and adversely affect our ability to compete successfully.

These developments may materially and adversely affect our current and future target markets and our ability to compete successfully in those markets.

We depend on a limited number of customers, that have undergone or are undergoing consolidation and who themselves are dependent on a consolidating set of service provider customers, for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from one or more of our major customers could have a material adverse effect on our revenue and operating results.

For fiscal 2020, our top two customers, which were both direct customers, accounted for 28% of our net revenue, and our ten largest customers collectively accounted for 68% of our net revenue, of which distributor customers accounted for 41% of our net revenue.

Impacts of the global semiconductor supply shortage could adversely affect our business, financial condition, and results of operations.

On March 11, 2020, the World Health Organization declared a global pandemic regarding COVID-19.

During the pandemic, which is still ongoing, various COVID-19 restrictions were put in place causing a temporary decline in demand for certain items such as automobiles.

As restrictions began easing across the world, a sudden increase in demand for electronics containing semiconductor chips and stockpiling of chips by certain firms in China blacklisted by the U.S.

has exacerbated bottlenecks in the supply chain, resulting in a global semiconductor supply shortage impacting our industry.

Some chip manufacturers are estimating this supply shortage may continue into 2023.

While these chip manufacturers are working to increase capacity in the future, and we are continuing to work closely with our suppliers and customers to minimize the potential adverse impacts of the supply shortage, such shortage may have a near-term impact on our ability to meet increased demand on certain products and have a negative impact on our operating results, which may continue into 2023.

Heightened volatility, global supply shortages, and uncertainty in customer demand and the worldwide economy in general has continued as a result of the COVID-19 pandemic, and we may experience increased volatility in sales and revenues in the near future.

However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time.

In many of these jurisdictions, local authorities have instituted various COVID-19 restrictions.

As of December 31, 2021, much of our workforce has received COVID-19 vaccinations and subsequently, most of our employees have returned to the office at full or reduced capacity adhering to local health authority guidelines in the jurisdictions in which we operate.

Other areas of our business which could be disrupted or subject to negative impacts may include, but may not be limited to, the following:

• Further supply constraints, including prolonged global semiconductor supply shortages, foundry, assembly or test capacity limitations, and delays in production from temporary facility closures;

• Disruptions in product shipments from travel and shipping restrictions imposed in response to local outbreaks;

• Governmental closures beyond our control;

• Reduced ability to accurately predict our future revenue and budget future expenses;

• Inefficiencies, delays and additional costs in design win, product development, production and fulfillment which may be exacerbated by measures against the spread of COVID-19;

• Accounts receivable collection issues should any of our limited and significant customers experience liquidity concerns;

• Material impacts to the value of our common stock, which may result in impairment of our goodwill;

• Material impairment of our assets, if recoverability thereof becomes a concern;

• Decreased availability of capital or access thereto in the United States and from other jurisdictions in which we operate;

• Increased data and system security risks from remote working arrangements of our customers and vendors.

Although we currently expect that our present cash and cash equivalent balances and cash flows that are generated from operations will be sufficient to meet our operating requirements for at least the next twelve months, a material adverse impact from the global semiconductor supply shortages could result in a need to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if we pursue additional acquisitions.

Additional funds may not be available on terms favorable to us or at all.

If we are unable to raise additional funds when needed, we may not be able to sustain our operations or execute our strategic plans.

Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business and other factors related to our international operations.

We sell our products throughout the world.

Products shipped to Asia accounted for 83% of our net revenue in the year ended December 31, 2021.

In addition, as of December 31, 2021, approximately 73% of our employees are located outside of the United States.

The majority of our products are manufactured, assembled and tested in Asia, and all of our major distributors are located in Asia.

Multiple factors relating to our international operations and to particular countries in which we operate could have a material adverse effect on our business, financial condition and results of operations.

These factors include:

• changes in political, regulatory, legal or economic conditions;

• restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments and trade protection measures, including export duties and quotas and customs duties and tariffs;

• disruptions of capital and trading markets;

• changes in import or export licensing requirements;

• transportation delays;

• civil disturbances or political instability;

• geopolitical turmoil, including terrorism, war or political or military coups;

• public health emergencies, including the COVID-19 pandemic;

• differing employment practices and labor standards;

• limitations on our ability under local laws to protect our intellectual property;

• local business and cultural factors that differ from our customary standards and practices;

• nationalization and expropriation;

• changes in tax laws;

• currency fluctuations relating to our international operating activities;

• difficulty in obtaining distribution and support.

In addition to a significant portion of our wafer supply coming from Taiwan, Singapore, and China, substantially all of our products undergo packaging and final testing in Taiwan, Singapore, China, South Korea, and Thailand.

Any conflict or uncertainty in these countries, including due to natural disaster or public health or safety concerns, could have a material adverse effect on our business, financial condition and results of operations.

require manufacturers in that country to manufacture products with different technical standards and disrupt cross-border manufacturing relationships which, in each case, could have a material adverse effect on our business, financial condition and results of operations.

We also are subject to risks associated with international political conflicts involving the U.S.

and potentially other governments.

In recent years, diplomatic and trade relationships between the U.S.

government and China have been frayed.

Events in Hong Kong and the threat of a takeover of Taiwan by China have also prompted other governments such as that of the United Kingdom to reconsider its trade and business relationships with China and with certain Chinese companies.

Difficulties in these relationships have in a number of cases required us to take actions adverse to our business to comply with governmental restrictions on business and trade with China.

In May 2019 and subsequently, we ceased business operations that were prohibited with entities affiliated with Huawei Technologies Co., Ltd., or Huawei and certain other entities, when the Bureau of Industry and Security at the U.S.

Department of Commerce, or BIS, amended the Export Administration Regulations, or EAR, to add such entities to the Restricted Entity List for acting contrary to the national security or foreign policy interests of the United States.

In September 2020, we further ceased business operations that were prohibited with additional entities affiliated with Huawei when the BIS again amended the EAR to add such entities to the Restricted Entity List.

We are required to obtain special licenses to conduct business with Restricted Entities, and in 2021 the BIS continues to add entities which may be potential customers on the Restricted Entity List.

Similarly, we ceased business operations with entities affiliated with ZTE Corp.

when the BIS imposed an export licensing requirement, which was subsequently suspended through March 28, 2017.

Such suspension was lifted as of March 29, 2017, however on April 17, 2018 the U.S.

Department of Commerce imposed a seven-year export ban on ZTE, which was subsequently lifted as of July 13, 2018.

Although we have not had significant sales to ZTE and certain other entities, we did have increasing sales to Huawei in the prior year, and we believe the imposition of governmental prohibitions on selling our products to Huawei will adversely affect our revenues and operating results in the near term.

We cannot provide assurances that similar disruptions of distribution arrangements in the future or the imposition of governmental prohibitions on selling our products to particular customers will not also adversely affect our revenues and operating results.

Loss of a key distributor or customer under similar circumstances could have an adverse effect on our business, revenues and operating results.

We depend on a limited number of customers for a substantial portion of our revenue, and the loss of, or a significant reduction in orders from one or more of our major customers could have a material adverse effect on our revenue and operating results.

In the year ended December 31, 2021, our top two customers accounted for 26% of our net revenue, and our ten largest customers collectively accounted for 69% of our net revenue, of which distributor customers accounted for 27% of our net revenue.

We expect that our operating results for the foreseeable future will continue to show a substantial percentage of sales dependent on a relatively small number of customers.

15 unchanged sentences

The loss of certain distributors could have a material adverse effect on our business and results of operations, and price reductions associated with their inventories of our products could have a substantial adverse effect on our operating results in the event of a dramatic decline in selling prices for these products.

In addition, the current situation relating to trade with China and governmental and regulatory concerns relating to specific Chinese companies remain fluid and unpredictable.

In addition, the current situation relating to trade with China and governmental and regulatory concerns relating to specific Chinese companies continue to remain fluid and unpredictable.

Our current and future operating results could be materially and adversely affected by limitations on our ability to sell to one or more Chinese customers and by tariffs and other trade barriers that may be implemented by governmental authorities.

A significant, but declining portion of our revenue is attributable to demand for our products in markets for broadband (previously connected home) solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

For fiscal 2020 and 2019, revenue directly attributable to broadband (previously connected home) applications accounted for approximately 51% and 38% of our net revenue, respectively.

Delays in the development of, or unexpected developments in the broadband markets could have an adverse effect on order activity by original equipment manufacturers in these markets and, as a result, on our business, revenue, operating results and financial condition.

In addition, consolidation trends among Pay-TV and broadband operators may continue, which could have a material adverse effect on our future operating results and financial condition.

Despite a relatively short-term positive pricing environment, average selling prices of our products could decrease rapidly, which would have a material adverse effect on our revenue and gross margins.

We may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices.

From time to time, we have reduced the average unit price of our products due to competitive pricing pressures, new product introductions by us or our competitors, and for other reasons, and we expect that we will have to do so again in the future, despite a relatively short-term positive pricing environment.

In particular, we believe that industry consolidation has provided a number of larger semiconductor companies with substantial market power, which has had an adverse impact on selling prices in some of our markets.

If we are unable to offset any reductions in our average selling prices by increasing our sales volumes or introducing new products with higher margins, our revenue and gross margins will suffer.

To support our gross margins, we must develop and introduce new products and product enhancements on a timely basis and continually reduce our and our customers’ costs.

Our inability to do so would cause our revenue and gross margins to decline.

In addition, under certain of our agreements with key distributors, we provide protection for reductions in selling prices of the distributors’ inventory, which could have a significant adverse effect on our operating results if the selling prices for those products fell dramatically.

If we fail to penetrate new applications and markets, our revenue, revenue growth rate, if any, and financial condition could be materially and adversely affected.

1 unchanged sentence

Our product offerings also include broadband data access, power management and interface technologies which are ubiquitous functions in new and existing markets such as wireless and wireline communications infrastructure, broadband access, industrial, enterprise network, and automotive applications.

We have further expanded our product offerings to include Wi-Fi, ethernet and broadband gateway processor systems-on-chip, or SoCs, and intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in SoCs, application-specific integrated circuits, or ASICs, and field-programmable gate arrays, or FPGAs, used in next-generation communication and artificial intelligence systems.

We have further expanded our product offerings to include Wi-Fi, ethernet and broadband gateway processor SoCs and intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in SoCs, ASICs, and field-programmable gate arrays, or FPGAs, used in next-generation communication and artificial intelligence systems.

Our future revenue growth, if any, will depend in part on our ability to further penetrate into, and expand beyond, these markets with analog, digital and mixed-signal solutions targeting the markets for Wi-Fi and broadband, high-speed optical interconnects for data center, metro, and long-haul optical modules, telecommunications wireless infrastructure, and cable DOCSIS 3.1 network infrastructure products.

5 unchanged sentences

Securing design wins with any of these companies requires a substantial investment of our time and resources.

Even if we succeed, additional testing and operational certifications will be required by the OEMs’ customers, which include large Pay-TV television companies such as Comcast Corporation, Liberty Global plc, Spectrum, Sky, AT&T and EchoStar Corporation.

Even if we succeed, additional testing and operational certifications will be required by the OEMs’ customers, which include large Pay-TV television

companies such as Comcast Corporation, Liberty Global plc, Spectrum, Sky, AT&T and EchoStar Corporation.

In addition, our products will need to be compatible with other components in our customers’ designs, including components produced by our competitors or potential competitors.

1 unchanged sentence

If we fail to penetrate these or other new markets upon which we target our resources, our revenue and revenue growth rate, if any, likely will decrease over time and our financial condition could suffer.

A significant portion of our revenue is attributable to demand for our products in markets for broadband (previously connected home) solutions, and development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

For the year ended December 31, 2021 and 2020, revenue directly attributable to broadband (previously connected home) applications accounted for approximately 55% and 51% of our net revenue, respectively.

In addition, consolidation trends among Pay-TV and broadband operators may continue, which could have a material adverse effect on our future operating results and financial condition.

We may be unable to make the substantial and productive research and development investments that are required to remain competitive in our business.

6 unchanged sentences

In addition, we cannot assure you that the technologies that are the focus of our research and development expenditures will become commercially successful.

We are currently benefiting from an uptick in demand for certain products due to the work-from-home environment caused by the COVID-19 pandemic.

A significant variance in our operating results or rates of growth, if any, could lead to

substantial volatility in our stock price.

We are currently benefiting from an uptick in demand for certain products due in part to the work-from-home environment caused by the COVID-19 pandemic.

A significant variance in our operating results or rates of growth, if any, could lead to substantial volatility in our stock price.

We may not sustain our current growth rate, and we may not be able to manage future growth effectively.

Our net revenue increased in 2020 to $478.6 million from $317.2 million in 2019 due to market strength attributed to the work-from-home environment that is driving an increase in demand for certain of our products, particularly those from our acquisition of the Wi-Fi and Broadband assets business.

Our net revenue increased from $478.6 million in the year ended December 31, 2020 to $892.4 million in the year ended December 31, 2021 due in part to full year contribution from our 2020 acquisitions and also from market strength attributed to the work-from-home environment that is driving an increase in demand for certain of our products, particularly those in our broadband market.

The COVID-19 pandemic could result in increased volatility in our sales and revenues.

22 unchanged sentences

Costs or payments made in connection with warranty and product liability claims and product recalls could materially affect our financial condition and results of operations.

Average selling prices of our products could decrease rapidly, which would have a material adverse effect on our revenue and gross margins.

We may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices.

If we are unable to offset any reductions in our average selling prices by increasing our sales volumes or introducing new products with higher margins, our revenue and gross margins will suffer.

To support our gross margins, we must develop and introduce new products and product enhancements on a timely basis and continually reduce our and our customers’ costs.

Our inability to do so would cause our revenue and gross margins to decline.

If we are unable to attract, train and retain qualified personnel, especially our design and technical personnel, we may not be able to execute our business strategy effectively.

Our future success depends on our ability to retain, attract and motivate qualified personnel, including our management, sales and marketing and finance, and especially our design and technical personnel.

We do not know whether we will be able to attract and retain all of these personnel as we continue to pursue our business strategy.

Historically, we have encountered difficulties in hiring and retaining qualified engineers because there is a limited pool of engineers with the expertise required in our field.

Competition for these personnel is intense in the semiconductor industry.

As the source of our technological and product innovations, our design and technical personnel represent a significant asset.

The loss of the services of one or more of our key employees, especially our key design and technical personnel, or our inability to retain, attract and motivate qualified design and technical personnel, could have a material adverse effect on our business, financial condition and results of operations.

If we fail to develop and introduce new or enhanced products on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed.

24 unchanged sentences

For example, we expanded into the markets for the wired whole-home broadband connectivity market and entered the markets for wireless telecommunications infrastructure and power management and interface technologies which are ubiquitous functions in wireless and wireline communications infrastructure, broadband access, industrial, enterprise network, and automotive applications.

We have also expanded into the markets for Wi-Fi, Ethernet and Broadband Gateway Processor SoCs and intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in systems-on-chip, or SoCs, application-specific integrated circuits, or ASICs, and field-programmable gate arrays, or FPGAs, used in next-generation communication and artificial intelligence systems.

We have also expanded into the markets for Wi-Fi, Ethernet and Broadband Gateway Processor SoCs and intellectual property that utilizes patented machine learning techniques to improve signal integrity and power efficiency in SoCs, ASICs, and FPGAs used in next-generation communication and artificial intelligence systems.

Our limited operating experience in these new markets or potential markets we may enter, combined with the rapidly evolving nature of our markets in general, substantial uncertainty concerning how these markets may develop and other factors beyond our control reduces our ability to accurately forecast quarterly or annual revenue.

If our revenue does not increase as anticipated, we could incur significant losses due to our higher expense levels if we are not able to decrease our expenses in a timely manner to offset any shortfall in future revenue.

If we are unable to attract, train and retain qualified personnel, especially our design and technical personnel, we may not be able to execute our business strategy effectively.

We do not know whether we will be able to attract and retain all of these personnel as we continue to pursue our business strategy.

Historically, we have encountered difficulties in hiring and retaining qualified engineers because there is a limited pool of engineers with the expertise required in our field.

Competition for these personnel is intense in the semiconductor industry.

As the source of our technological and product innovations, our design and technical personnel represent a significant asset.

Our business would be adversely affected by the departure of existing members of our senior management team.

3 unchanged sentences

We are fortunate that many members of our executive management team have long tenures with us, but from time to time we also have been required to recruit new executive officers.

With respect to executive officer recruitment and retention, we need to ensure that our executive compensation programs provide sufficient recruitment and retention incentives as well as incentives to achieve our long-term strategic business and financial objectives.

strategic business and financial objectives.

We expect competition for individuals with our required skill sets, particularly technical and engineering skills, to remain intense even in weak global macroeconomic environments.

7 unchanged sentences

Despite these uncertainties, we devote substantial resources, including design, engineering, sales, marketing and management efforts, to qualifying our products with customers in anticipation of sales.

are unsuccessful or delayed in qualifying any of our products with a customer, sales of this product to the customer may be precluded or delayed, which may result in a decrease in our revenue and cause our business to suffer.

If we are unsuccessful or delayed in qualifying any of our products with a customer, sales of this product to the customer may be precluded or delayed, which may result in a decrease in our revenue and cause our business to suffer.

Winning business is subject to lengthy competitive selection processes that require us to incur significant expenditures.

4 unchanged sentences

These risks are exacerbated by the fact that some of our customers’ products likely will have short life cycles.

Failure to obtain a design win could prevent us from offering an entire generation of a product, even though this has not occurred to date.

Although this has not occurred to date, failure to obtain a design win could prevent us from offering an entire generation of a product.

This could cause us to lose revenue and require us to write off obsolete inventory, and could weaken our position in future competitive selection processes.

42 unchanged sentences

A significant downturn or upturn could have a material adverse effect on our business and operating results.

We sell our products throughout the world.

Products shipped to Asia accounted for 82% of our net revenue in the year ended December 31, 2020.

In addition, as of December 31, 2020, approximately 72% of our employees are located outside of the United States.

The majority of our products are manufactured, assembled and tested in Asia, and all of our major distributors are located in Asia.

These factors include:

• changes in political, regulatory, legal or economic conditions;

• disruptions of capital and trading markets;

• changes in import or export licensing requirements;

• transportation delays;

• civil disturbances or political instability;

• geopolitical turmoil, including terrorism, war or political or military coups;

• public health emergencies, including the COVID-19 pandemic;

• differing employment practices and labor standards;

• limitations on our ability under local laws to protect our intellectual property;

• local business and cultural factors that differ from our customary standards and practices;

• nationalization and expropriation;

• changes in tax laws;

• currency fluctuations relating to our international operating activities;

• difficulty in obtaining distribution and support.

In addition, if the government of any country in which our products are manufactured or sold sets technical standards for products manufactured in or imported into their country that are not widely shared, it may lead some of our customers to suspend imports of their products into that country, require manufacturers in that country to manufacture products with different technical standards and disrupt cross-border manufacturing relationships which, in each case, could have a material adverse effect on our business, financial condition and results of operations.

We also are subject to risks associated with international political conflicts involving the U.S.

and potentially other governments.

In recent years, diplomatic and trade relationships between the U.S.

government and China have been frayed.

Recent events in Hong Kong have also prompted other governments such as that of the United Kingdom to reconsider its trade and business relationships with China and with certain Chinese companies.

Difficulties in these relationships have in a number of cases required us to take actions adverse to our business to comply with governmental restrictions on business and trade with China.

Similarly, we ceased business operations with entities affiliated with ZTE Corp.

when the BIS imposed an export licensing requirement, which was subsequently suspended through March 28, 2017.

Such suspension was lifted as of March 29, 2017, however on April 17, 2018 the U.S.

Department of Commerce imposed a seven-year export ban on ZTE, which was subsequently lifted as of July 13, 2018.

Although we have not had significant sales to ZTE and certain other entities, we did have increasing sales to Huawei in the past year, and we believe the imposition of governmental prohibitions on selling our products to Huawei will adversely affect our revenues and operating results in the near term.

Loss of a key distributor or customer under similar circumstances could have an adverse effect on our business, revenues and operating results.

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

4 unchanged sentences

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

Any failure by us to comply with applicable government regulations could result in cessation of our operations or portions of our operations, product recalls or impositions of fines and restrictions on our ability to conduct our operations.

Any failure by us to comply with applicable government regulations could result in cessation of our operations or portions of our operations, product recalls or impositions

of fines and restrictions on our ability to conduct our operations.

In addition, because many of our products are regulated or sold into regulated industries, we must comply with additional regulations in marketing our products.

3 unchanged sentences

For example, as indicated elsewhere in this report, we do a substantial portion of our business in Asia and particularly in China.

In recent years, there has been a substantial focus by regulators in the United States and Europe on the business practices

of major Chinese technology companies such as Huawei and ZTE.

In recent years, there has been a substantial focus by regulators in the United States and Europe on the business practices of major Chinese technology companies such as Huawei and ZTE.

ZTE is our current customer, but in May 2019 and subsequent months, and again in September 2020 with additional affiliated entities, we ceased prohibited business operations with Huawei and its affiliates and certain other restricted entities.

18 unchanged sentences

Our pursuit of necessary technological advances may require substantial time and expense.

As of December 31, 2021, our aggregate indebtedness was $310.0 million.

As of December 31, 2021, our aggregate indebtedness was $310.0 million from an initial term loan under the June 23, 2021 Credit Agreement.

The June 23, 2021 Credit Agreement also provides for the Revolving Facility of up to $100.0 million, which remains undrawn as of December 31, 2021.

The credit agreement also permits the Company to request incremental loans in an aggregate principal amount not to exceed the sum of an amount equal to the greater of (x) $175.0 million and (y) 100% of “Consolidated EBITDA” (as defined in such agreement), plus the amount of certain voluntary prepayments, plus an unlimited amount that is subject to pro forma compliance with certain first lien net leverage ratio, secured net leverage ratio and total net leverage ratio tests.

The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest at either an Adjusted LIBOR plus a fixed applicable margin of 2.25% or an Adjusted Base Rate plus a fixed applicable

margin of 1.25%, at our option.

Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement will amortize in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable on June 23, 2028.

The Company is subject to commitment fees ranging from 0.175% to 0.25% on the undrawn portion of the revolving facility, and any outstanding loans under the revolving facility will bear interest at either an Adjusted LIBOR plus a margin of 1.00% to 1.75% or an Adjusted Base Rate plus a margin of 0% to 0.75%.

The Company’s obligations under the June 23, 2021 Credit Agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the credit agreement.

Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the subsidiary guarantors.

Our material indebtedness adversely affects our operating expenses through increased interest payment obligations and adversely affects our ability to use cash generated from operations as we repay interest and principal under the term loans.

In addition, the revolving credit facility provisions under the June 23, 2021 Credit Agreement include financial covenants such as an initial maximum secured net leverage ratio of 3.5 to 1, which temporarily increases to 3.75 to 1 following the consummation of certain material permitted acquisitions, and operational covenants that may adversely affect our ability to engage in certain activities, including obtaining additional financing, granting liens, undergoing certain fundamental changes, or making investments or certain restricted payments, and selling assets, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.

The initial secured term loan under the June 23, 2021 Credit Agreement is only subject to operational covenants.

Lastly, our borrowing costs can be affected by periodic credit ratings from independent rating agencies.

Such ratings are largely based on our performance, which may be measured by credit metrics such as leverage and interest coverage ratios.

Specifically, our indebtedness has important consequences to investors in our common stock, including the following:

• we are subject to variable interest rate risk because our interest rate under Initial Term Loan under the June 23, 2021 Credit Agreement varies based on a fixed margin of 2.25% per annum over an adjusted LIBOR rate or 1.25% per annum over an adjusted base rate and our interest rate for any outstanding principal under the revolving credit facility varies based a margin of 0% to 0.75% over adjusted base rate or a margin of 1.00% to 1.75% over an adjusted LIBOR rate, and we are also subject to commitment fees ranging from 0.175% to 0.25% on the undrawn portion of the revolving facility.

If interest rates were to increase substantially, it would adversely affect our operating results and could affect our ability to service our indebtedness;

• a portion of our cash flows is dedicated to the payment of interest and when applicable, principal, on our indebtedness and other obligations and will not be available for use in our business;

• our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;

Risks Relating to Intellectual Property

32 unchanged sentences

In addition, our competitors or others may design around our protected patents or technologies.

Effective intellectual property protection may be unavailable or more limited in one or more relevant jurisdictions relative to those protections available in the United States, or may not be applied for in one or more relevant jurisdictions.

Effective intellectual property protection may be unavailable or more limited in one or more relevant jurisdictions relative to those protections

available in the United States, or may not be applied for in one or more relevant jurisdictions.

If we pursue litigation to assert our intellectual property rights, an adverse decision in any of these legal actions could limit our ability to assert our intellectual property rights, limit the value of our technology or otherwise negatively impact our business, financial condition and results of operations.

4 unchanged sentences

We also rely on customary contractual protections with our customers, suppliers, distributors, employees and consultants, and we implement security measures to protect our trade secrets.

We cannot assure you that these contractual

protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts.

We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts.

In addition, we have a number of third-party patent and intellectual property license agreements.

16 unchanged sentences

A number of large, public companies have recently experienced losses based on phishing attacks and other cyber-attacks.

The recent security incident and any future compromise of our information technology systems could result in the further unauthorized publication of our confidential business or proprietary information, result in the further unauthorized release of customer, supplier or employee data, result in violations of privacy or other laws, expose us to a risk of litigation, cause us to incur direct losses if attackers access our bank or investment accounts, or damage our reputation.

Any future security incident or compromise of our information technology systems could result in unauthorized publication of our confidential business or proprietary information, result in the unauthorized release of customer, supplier or employee data, result in violations of privacy or other laws, expose us to a risk of litigation, cause us to incur direct losses if attackers access our bank or investment accounts, or damage our reputation.

The cost and operational consequences of implementing further data protection measures either as a response to specific breaches or as a result of evolving risks could be significant.

13 unchanged sentences

Risks Relating to Reliance on Third-Parties

We rely on a limited number of third parties to manufacture, assemble, and test our products, and the failure to manage our relationships with our third-party contractors successfully, or impacts from natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products.

We rely on a limited number of third parties to manufacture, assemble, and test our products, and the failure to manage our relationships with our third-party contractors successfully, or impacts from global supply shortages, natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products.

We do not have our own manufacturing facilities.

2 unchanged sentences

Currently, the majority of our products are manufactured by Global Foundries, Semiconductor Manufacturing International Corporation, or SMIC, Taiwan Semiconductor Manufacturing Corp, or TSMC, and United Microelectronics Corporation, or UMC, at foundries located in Taiwan, Singapore, and China.

We also rely on Intel Corporation for certain products under a supply agreement as described in the risk factor “ Failure to integrate the acquired businesses with our business and operations successfully in the expected time-frame or otherwise may adversely affect MaxLinear’s operating results and financial condition.

We also rely on Intel Corporation, or Intel, for certain products on a turnkey basis under a supply agreement with an initial term of five years.

Foundries and other third-parties we rely upon are currently experiencing bottlenecks caused by a sudden increase in demand for electronics containing semiconductor chips and stockpiling of chips by certain firms in China blacklisted by the U.S., resulting in a global semiconductor chip shortage impacting our industry.

We also use third-party contractors for all of our assembly and test operations.

Relying on third party manufacturing, assembly and testing presents significant risks to us, including the following:

• capacity shortages during periods of high demand or from events beyond our control, including from the current global semiconductor chip shortage;

• failure by us, our customers, or their end customers to qualify a selected supplier;

• capacity shortages during periods of high demand or from events beyond our control;

• reduced control over delivery schedules and quality;

5 unchanged sentences

If one or more of our contract manufacturers or other outsourcers fails to perform its obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer.

For example, in the event that manufacturing capacity is reduced or eliminated at one or more facilities, manufacturing could be disrupted, we could have difficulties fulfilling our customer orders and our net revenue could decline.

For example, in the event that manufacturing capacity is

reduced or eliminated at one or more facilities, manufacturing could be disrupted, we could have difficulties fulfilling our customer orders and our net revenue could decline.

In addition, if these third parties fail to deliver quality products and components on time and at reasonable prices, we could have difficulties fulfilling our customer orders, our net revenue could decline and our business, financial condition and results of operations would be adversely affected.

Additionally, our product shipment and manufacturing capacity may be similarly reduced or eliminated at one or more facilities due to the fact that the majority of our fabrication and assembly and test contractors are all located in the Pacific Rim region, principally in China, Taiwan, and Singapore.

The risk of earthquakes in these geographies is significant due to the proximity of major earthquake fault lines, and Taiwan in particular is also subject to typhoons and other Pacific storms.

Earthquakes, fire, flooding, or other natural disasters in Taiwan or the Pacific Rim region, or political unrest, war, labor strikes, work stoppages or public health crises, such as the outbreak of COVID-19, in countries where our contractors’ facilities are located could result in the disruption of our product shipments, foundry, assembly, or test capacity.

The risk of earthquakes in these geographies is significant due to the proximity of major earthquake fault lines, and Taiwan in particular is also subject to typhoons and other Pacific storms, and more recently, a drought impacting the water supply which chip manufacturers rely upon to fabricate chip products.

Earthquakes, fire, flooding, drought, or other natural disasters in Taiwan or the Pacific Rim region, or political unrest, war, labor strikes, work stoppages or public health crises, such as the outbreak of COVID-19, in countries where our contractors’ facilities are located could result in the disruption of our product shipments, foundry, assembly, or test capacity.

For example, as a result of the extension of the lunar new year holidays due to the outbreak of COVID-19, certain of our product shipments from China were temporarily delayed earlier in the first quarter of 2020.

Although we continue to monitor the situation, it is currently

unknown whether any resurgence of the outbreak will occur and disrupt our product shipments or impact manufacturing in the region over future periods.

Although we continue to monitor the situation, it is currently unknown whether any resurgence of the outbreak will occur and disrupt our product shipments or impact manufacturing in the region over future periods.

If such disruption were to recur over a prolonged period, it could have a material impact on our revenues and our business.

14 unchanged sentences

We do not have any long-term supply contracts with our contract manufacturers or suppliers, and any disruption in our supply of products or materials could have a material adverse effect on our business, revenue and operating results.

We currently do not have long-term supply contracts with any of our third-party vendors, including but, not limited to Global Foundries, SMIC, TSMC, and UMC.

While certain products are supplied to us by Intel on a turnkey basis under the terms of a supply agreement with an initial term of five years, currently we do not have long-term supply contracts with any other third-party vendors, including but, not limited to Global Foundries, SMIC, TSMC, and UMC.

We make substantially all of our purchases on a purchase order basis, and our contract manufacturers are not required to supply us products for any specific period or in any specific quantity.

5 unchanged sentences

We generally place orders for products with some of our suppliers approximately four to five months prior to the anticipated delivery date, with order volumes based on our forecasts of demand from our customers.

Accordingly, if we inaccurately forecast demand for our products, we may be unable to obtain adequate and cost-effective foundry or assembly capacity from our third-party contractors to meet our customers’ delivery requirements, or we may accumulate excess inventories.

Accordingly, if we inaccurately forecast demand for our products, we may be

unable to obtain adequate and cost-effective foundry or assembly capacity from our third-party contractors to meet our customers’ delivery requirements, or we may accumulate excess inventories.

On occasion, we have been unable to adequately respond to unexpected increases in customer purchase orders and therefore were unable to benefit from this incremental demand.

5 unchanged sentences

The ability of these third-party vendors to successfully provide reliable and high quality services is subject to technical and operational uncertainties that are beyond our control.

While we may be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limit

the amount of damages we may receive.

While we may be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limit the amount of damages we may receive.

In addition, we do not know whether we will be able to collect on any award of damages or that these damages would be sufficient to cover the actual costs we would incur as a result of any vendor’s failure to perform under its agreement with us.

10 unchanged sentences

We use our cash and cash equivalents for general corporate purposes, including working capital and for repayment of outstanding long-term debt.

We used a portion of these assets to acquire the Wi-Fi and Broadband assets business and NanoSemi in the third quarter of 2020.

In the year ended December 31, 2021, we used a portion of cash assets to make $35 million in payments to NanoSemi shareholders, which were previously deferred under the merger agreement, and acquire a business using cash proceeds of $5 million.

We may also, in the future, use a portion of our assets to acquire other complementary businesses, products, services or technologies.

15 unchanged sentences

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors, which is responsible for appointing the members of our management.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally restricts a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

Our share price may be volatile as a result of various factors.

The trading price of our common stock is highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.

For example, in 2021, the trading price of our common stock ranged from a low of $30.47 to a high of $77.89.

These factors include those discussed in this “Risk Factors” section of the Annual Report on Form 10-K and others such as:

11 unchanged sentences

• disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain intellectual property protection for our technologies;

• acquisitions may not be accretive and may cause dilution to our earnings per shares;

• acquisitions may not be accretive and may cause dilution to our earnings per share;

• announcement or expectation of additional financing efforts;

1 unchanged sentence

• general economic and market conditions, including the global COVID-19 pandemic.

Furthermore, the stock markets recently have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.

Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies.

These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.

14 unchanged sentences

We have issued shares of our common stock to settle such bonus awards for our employees, including executives, for the 2014 to 2021 performance periods, and we intend to continue this practice in the foreseeable future.

We issued 0.2 million shares of our common stock for the 2019 performance period in March 2020.

We issued 0.5 million shares of our common stock for the 2020 performance period in February 2021.

If we issue additional shares of our common stock to settle bonus awards in the future, such shares may be freely sold in the public market immediately following the issuance of such shares, subject to the applicable conditions of Rule 144 and our insider trading policy, and the issuance of such shares may have an adverse effect on our share price once they are issued.

7 unchanged sentences

Our products are incorporated in numerous consumer devices, and demand for such products will ultimately be driven by consumer demand for products such as televisions, personal computers, automobiles, cable modems, and set-top boxes.

Many of these purchases are discretionary.

of these purchases are discretionary.

Global economic volatility and economic volatility in the specific markets in which the devices that incorporate our products are ultimately sold can cause extreme difficulties for our customers and third-party vendors in accurately forecasting and planning future business activities.

6 unchanged sentences

trading partners, including China, Europe, Canada, and Mexico.

In response, many of those trading partners, including China,

have imposed or proposed new or higher tariffs on American products.

In response, many of those trading partners, including China, have imposed or proposed new or higher tariffs on American products.

Continuing changes in government trade policies create a heightened risk of further increased tariffs that impose barriers to international trade.

Our business and operating results are substantially dependent on international trade.

Many of our manufacturers sell products incorporating our semiconductors into international markets.

Many of our manufacturers sell products incorporating our integrated circuits into international markets.

Tariffs on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products.

3 unchanged sentences

If we suffer losses to our facilities or distribution system due to catastrophe, our operations could be seriously harmed.

Our facilities and distribution system, and those of our third-party contractors, are subject to risk of catastrophic loss due to fire, flood or other natural or man-made disasters.

Our facilities and distribution system, and those of our third-party contractors, are subject to risk of catastrophic loss due to fire, flood, drought or other natural or man-made disasters.

A number of our facilities and those of our contract manufacturers are located in areas with above average seismic activity.

4 unchanged sentences

Our operations and financial condition could be seriously harmed in the event of a major earthquake, fire, or other natural or man-made disaster.

We have recorded goodwill and other intangible assets in connection with business acquisitions.

Goodwill and other acquired intangible assets could become impaired and adversely affect our future operating results.

We account for business acquisitions as business combinations under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States.

The excess of the purchase price over those fair values is recorded as goodwill.

Our acquisitions have resulted in the creation of goodwill and recording of a large amount of intangible assets based upon the application of the acquisition method of accounting.

To the extent the value of goodwill or other intangible assets become impaired, we may be required to incur material charges relating to such impairment.

We conduct our annual goodwill and indefinite-lived intangible asset impairment analysis on October 31 each year, or more frequently if we believe indicators of impairment exist.

As a result, comparisons of future results against prior period results will be more difficult for investors.

Any such impairment charges relating to goodwill or other intangible assets could have a material

impact on our operating results in future periods, and the announcement of a material impairment could have an adverse effect on the trading price and trading volume of our common stock.

As of December 31, 2021, our balance sheet reflected goodwill of $306.7 million and other intangible assets of $152.5 million.

Consequently, we could recognize material impairment charges in the future.

Unanticipated changes in our tax rates or unanticipated tax obligations could affect our future results.

15 unchanged sentences

Realization of our deferred tax assets is dependent primarily upon future taxable income in the applicable jurisdiction.

Based upon our review of all positive and negative evidence, we concluded that a full valuation allowance should continue to be recorded against our state and certain federal and foreign net deferred tax assets at December 31, 2020.

On a periodic basis we evaluate our deferred tax assets for realizability.

During the quarter ended December 31, 2021, we released the beginning of the year valuation allowance of $8.3 million against Singapore deferred tax assets.

This release is a result of our Singapore operations showing cumulative profits for the prior three years, use of prior year carry forward attributes in the current period, as well as profits going forward.

Based upon our review of all positive and negative evidence, as of December 31, 2021, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.

The impact of releasing some or all of such valuation allowance in a future period could be material in the period in which such release occurs.

9 unchanged sentences

Additionally, in the future, we may fail to qualify for renewal of our favorable tax incentives or such incentives may not be available to us, which could also cause our future taxable income to increase and be taxed at higher statutory rates.

Loss of one more of our tax incentives could cause us to modify our tax strategies and our operational structure, which could cause disruption in our business and have a material adverse impact on our results of operations.

Loss of one more of our tax incentives could cause us to modify our tax strategies and our operational structure, which could cause disruption in our business and have a material adverse impact on

our results of operations.

Further, there can be no guarantee that such modification in our tax strategy will yield tax incentives as favorable as those we have negotiated with Singapore.

3 unchanged sentences

We assumed an obligation associated with certain defined benefit retirement plans, including a pension plan, which cover certain employees of the Wi-Fi and Broadband assets business and generally provide benefits based on negotiated amounts for each year of service.

These plans were underfunded by $6.4 million as of December 31, 2020.

These plans were underfunded by $4.5 million as of December 31, 2021 based on current projections and plan assets.

We have never managed defined benefit plans in our operating history.

3 unchanged sentences

The net benefit obligation and cost is materially affected by the discount rate used to measure pension obligations, level of plan assets available to fund such obligations and long-term rate of return on plan assets.

While such plans have not had a material impact on our results of operations for the year ended December 31, 2020, future changes in the discount rate used to measure the defined benefit obligation could result in a significant increase or decrease in the valuation of such obligations, affecting the reported funded status of our defined benefit plans as well as the net periodic pension cost in the following years.

While such plans have not had a material impact on our results of operations, future changes in the discount rate used to measure the defined benefit obligation could result in a significant increase or decrease in the valuation of such obligations, affecting the reported funded status of our defined benefit plans as well as the net periodic pension cost in the following years.

Similarly, changes in the expected return on plan assets, which may be significantly impacted by changes in investment performance or a change in portfolio mix, can result in significant changes in the net periodic pension cost in the subsequent years.

3 unchanged sentences

Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud.

Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our consolidated financial statements and could result in investigations or sanctions by the SEC, the New York Stock Exchange, or NYSE, or other regulatory authorities or in stockholder litigation.

Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our consolidated financial statements and could result in investigations or sanctions by the SEC, the Nasdaq Stock Market LLC, or NASDAQ, or other regulatory authorities or in stockholder litigation.

Any of these factors ultimately could harm our business and could negatively impact the market price of our securities.

Ineffective control over financial reporting

could also cause investors to lose confidence in our reported financial information, which could adversely affect the trading price of our common stock.

Ineffective control over financial reporting could also cause investors to lose confidence in our reported financial information, which could adversely affect the trading price of our common stock.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

5 unchanged sentences

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-K

Item 1A. Risk Factors