What changed in this filing

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Item 1A. Risk Factors

2022-10-25 compared with 2022-07-27 · 220 added, 142 removed, 770 unchanged (32% of the section changed)

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The forward-looking statements contained in this Form 10-Q involve known and unknown risks, uncertainties and situations that may cause our or our industry’s actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements.

These factors include those listed below in this Item 1A and those discussed elsewhere in this Form 10-Q.

These factors include those listed below in this Part II, Item 1A and those discussed elsewhere in this Form 10-Q.

We encourage investors to review these factors carefully.

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However, we do not undertake to update any forward-looking statement that may be made from time to time by or on behalf of us, whether as a result of new information, future events, or otherwise, except as required by law.

Before you invest in our securities, you should be aware that our business faces numerous financial and market risks, including those described below, as well as general economic and business risks.

The following discussion provides information concerning the material risks and uncertainties that we have identified and believe may adversely affect our business, our financial condition and our results of operations.

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• If the merger is completed, our actual financial and operating results could differ materially from any expectations or guidance, including with respect to any cost savings and other potential synergies.

• Failure to integrate Silicon Motion with our business successfully in the expected time-frame may adversely affect our results and financial condition if the merger is completed.

• Our business relationships may be subject to disruption due to uncertainty associated with the merger.

• We and Silicon Motion may have difficulty motivating and retaining executives and other key personnel in light of the pending merger

• Failure to integrate Silicon Motion with our business successfully in the expected timeframe may adversely affect our results and financial condition if the merger is completed.

• Our business relationships, including customer relationships, and those of Silicon Motion, may be subject to disruption due to uncertainty associated with the merger.

• Motivating and retaining senior management and other key personnel may be difficult in light of the pending merger

• The merger agreement contains provisions that could require us to pay Silicon Motion a termination fee of $160 million under certain circumstances.

• If the proposed merger is not completed, we will have incurred substantial costs.

• Our ability to complete the merger is subject to various closing conditions, including approval of Silicon Motion’s shareholders and certain required regulatory approvals, which may contain burdensome conditions, that could have an adverse effect on our operation of the business following the merger.

• If the proposed merger is not completed, we will have incurred substantial costs that may adversely affect our operating results and financial condition, as well as the market price of our common stock.

• Our ability to complete the merger is subject to various closing conditions, including regulatory approval for the People’s Republic of China’s State Administration for Market Regulation (“SAMR”), which may contain burdensome conditions, that could have an adverse effect on our operation of the business following the merger.

• As a result of the transaction, we will materially increase our secured term loan indebtedness which adversely affects our operating results and cash-flows and our new loan agreements will likely contain covenants that could adversely affect our operational freedom and ability to pursue strategic transactions.

• We may not have sufficient cash flow from our business to pay our substantial indebtedness.

• Additional shareholder lawsuits could be filed in the future challenging the merger, which may delay or prevent the consummation of the merger, cause us and/or Silicon Motion to incur substantial defense or settlement costs, or otherwise adversely affect us or Silicon Motion.

• Servicing our indebtedness will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness.

• Additional securityholder lawsuits may delay or prevent the consummation of the merger and cause us and/or Silicon Motion to incur substantial defense or settlement costs, or otherwise adversely affect us or Silicon Motion.

• The fact that there is a merger pending could materially harm us or Silicon Motion and our results of operations.

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• If the merger is consummated, the issuance of shares of our common stock to Silicon Motion securityholders will reduce the percentage interests of our stockholders.

• After completion of the merger, we will be exposed to intensified risks associated with doing business in Taiwan because of tense regional geopolitical risk with China

• After completion of the merger, we will be exposed to intensified risks associated with doing business in Taiwan.

• The COVID-19 pandemic may delay or prevent the completion of the merger.

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• We will record goodwill that could become impaired and adversely affect our future operating results.

• The market value of our common stock could decline if large amounts of our common stock are sold following the merger.

• The market value of our common stock could decline if large amounts of our common stock are sold post-merger.

Risks Related to Our Business

• We face intense and increasing competition, which could have an adverse effect on our revenue, revenue growth rate and market share.

• Intense and increasing competition could have an adverse effect on our revenue, revenue growth rate and market share.

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

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

• The loss of, or a significant reduction in orders from our major customers that comprise a substantial portion of our revenue could have a material adverse effect on our revenue and operating results.

• Average selling prices of our products could decrease rapidly.

• We will lose sales if we are unable to obtain government authorization to export certain of our products or technology and we will be subject to legal and regulatory consequences for any noncompliance with applicable export control laws and regulations.

• Our business, financial condition and results of operations could be adversely affected by geopolitical conflicts, including those involving the U.S.

and other governments such as China and Russia, 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 major customers could have a material adverse effect on our revenue and operating results.

• Despite a relatively short-term positive environment, 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.

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We may not sustain our current growth rate and/or manage future growth effectively.

• 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.

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

• Failure to timely develop and introduce new or enhanced products could impair our ability to attract and retain customers and harm our competitive position.

• Differences between our estimates of customer demand and product mix and our actual results could negatively affect our inventory levels, sales and operating results.

• We may have difficulty accurately predicting our future revenue and appropriately budgeting our expenses particularly in new markets.

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

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

• We must be able to attract and retain qualified design and technical personnel to effectively execute our strategy.

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

• We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could negatively affect our inventory levels, sales and operating results.

• 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.

• Our business would be adversely affected by the departure of our senior management team and key personnel.

• Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process which does not assure product sales.

• We incur significant expenditures to win business and customers may decide to cancel or change their product plans, which could cause us to generate no revenue from a product and adversely affect our results of operations.

• Our operating results are subject to substantial quarterly and annual fluctuations that could adversely affect our business and our stock price.

• Our operating results are subject to substantial quarterly and annual fluctuations and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price.

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

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

• 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.

• Our products must conform to industry standards in order to be accepted by end users in our market.

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

• We may still incur substantially more debt or take other actions, which would intensify the risks.

• We may, from time to time, make additional business acquisitions or investments, which involve significant risks.

Risks Relating to Intellectual Property

• We may face future claims of intellectual property infringement, which could be time-consuming, costly to defend or settle and result in the loss of significant rights.

• We are currently facing and may in the future face claims of intellectual property infringement, which could be time-consuming, costly to defend or settle and result in the loss of significant rights.

• If we are unable to protect our significant amount of intellectual property, our business could be adversely affected.

• We have been and may be subject to future information technology failures, including data protection breaches and cyber-attacks, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results.

• We have been and may be subject to future information technology failures, including security breaches and cyber-attacks, that could disrupt our operations and adversely affect our business, operations, and financial results.

• The use of open source software in our products, processes and technology may expose us to additional risks and harm our intellectual property.

Risks Relating to Reliance on Third Parties

• Failure to manage our third-party relationships successfully, or mitigate negative impacts from using third parties, could adversely affect our ability to market and sell our products.

• Failure to manage our relationships with third-party contractors successfully, or mitigate negative impacts from using third parties, could adversely affect our ability to market and sell our products.

• Should any of our distributors cease or be forced to stop distributing our products, our business would suffer.

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Risks Relating to Our Common Stock

• Our management team may use our available cash and cash equivalents in ways with which you may not agree or in ways which may not yield a return.

• Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

• Our senior management team may use our available cash and cash equivalents in ways with which you may not agree or in ways which may not yield a return.

• Anti-takeover provisions in our charter and under Delaware law could make an acquisition of us more difficult.

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

• Future sales of our common stock in the public market could cause our share price to decline.

• We do not intend to pay dividends for the foreseeable future.

Risks Relating to our Proposed Merger with Silicon Motion

If the merger is completed, 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 proposed merger with Silicon Motion, and as a result, we currently believe that the merger 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 and property and equipment fair value adjustments.

The expectations and guidance we have provided with respect to the potential financial impact of the merger are subject to numerous assumptions, however, including assumptions derived from our diligence efforts concerning the status of and prospects for Silicon Motion’s business, which we do not currently control, and assumptions relating to the near-term prospects for the semiconductor industry generally and the markets for Silicon Motion’s products in particular.

Although we currently expect to realize material synergies as a result of our proposed merger with Silicon Motion, the expectations and guidance we have provided with respect to the potential financial impact of the merger are subject to numerous assumptions including assumptions derived from our diligence efforts concerning the status of and prospects for Silicon Motion’s business, which we do not currently control, and assumptions relating to the near-term prospects for the semiconductor industry generally and the markets for Silicon Motion’s products in particular.

Additional assumptions we have made relate to numerous matters, including (without limitation) the following:

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• our ability to maintain, develop, and deepen relationships with customers of Silicon Motion;

• other financial and strategic risks of the merger, 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.

• other financial and strategic risks of the merger, including the possible impact of our reduced liquidity 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 Silicon Motion, and we cannot provide assurances with respect to our ability to realize the cost savings that we currently anticipate.

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risks relating to the willingness of Silicon Motion’s customers and other partners to continue to conduct business with MaxLinear;

risks related to changes in government regulations, including those related to export controls;

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

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Any failure to integrate Silicon Motion successfully and to realize the financial benefits we currently anticipate from the merger 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 our business and operations successfully with those of Silicon Motion in the expected time-frame or otherwise may adversely affect our operating results and financial condition if the merger is completed.

Failure to integrate our business and operations successfully with those of Silicon Motion in the expected timeframe or otherwise may adversely affect our operating results and financial condition if the merger is completed.

The success of the proposed merger with Silicon Motion will depend, in substantial part, on our ability to integrate Silicon Motion’s business and operations successfully with those of MaxLinear and to realize fully the anticipated benefits and potential synergies from combining our companies, including, among others, currently expected cost savings from duplicative functions;

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Our business relationships, including customer relationships, and those of Silicon Motion may be subject to disruption due to uncertainty associated with the merger.

In response to the announcement of the merger, customers, vendors, licensors, and other third parties with whom we or Silicon Motion do business or otherwise have relationships may experience uncertainty associated with the merger, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with MaxLinear or Silicon Motion while the merger is pending or with MaxLinear after the merger is consummated.

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

Customers, vendors, licensors, and other third parties with whom we or Silicon Motion do business or otherwise have relationships may experience uncertainty associated with the merger, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with MaxLinear or Silicon Motion while the merger is pending or with MaxLinear after the merger is consummated.

As a result, we are in many instances unable to evaluate the impact of the merger on certain assumed contractual 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 Silicon Motion products after the merger is consummated, or any general perceptions by customers or other third parties that impute operational or business challenges to us arising from the merger.

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These disruptions could have a material adverse effect on our business, operating results, and financial condition while the merger is pending or after it is consummated.

The adverse effect of any such disruptions could be exacerbated by a delay in the consummation of the merger for any reason, including delays associated with obtaining regulatory approvals, or termination of the merger agreement.

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 and Silicon Motion may have difficulty motivating and retaining executives and other key personnel in light of the pending merger.

We and Silicon Motion may have difficulty motivating and retaining senior management and other key personnel in light of the pending merger.

Uncertainty about the effect of the merger on our employees and those of Silicon Motion may have an adverse effect on MaxLinear or Silicon Motion while the merger is pending or on MaxLinear after the merger is consummated.

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Employee retention may be particularly challenging as our and Silicon Motion’s employees may experience frustrations during the integration process and uncertainty about their future roles with us following consummation of the merger.

For the merger to be successful, we and Silicon Motion must continue to retain and motivate executives and other key employees during the period before the merger is completed.

Furthermore, after the merger is consummated, MaxLinear must be successful at retaining and motivating key employees in order for the benefits of the transaction to be fully realized.

For the merger to be successful, we and Silicon Motion must continue to retain and motivate senior management and other key employees during the period before the merger is completed.

Furthermore, after the merger is consummated, we must be successful at retaining and motivating key employees in order for the benefits of the transaction to be fully realized.

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

The merger agreement with Silicon Motion contains provisions that could require us to pay Silicon Motion a termination fee of $160 million under certain circumstances.

The consummation of the merger is subject to certain customary closing conditions such as regulatory approval in China.

The consummation of the merger is subject to certain customary closing conditions such as regulatory approval from SAMR.

Under certain circumstances, we could be required to pay Silicon Motion a termination fee if the merger agreement is terminated by MaxLinear or Silicon Motion as a result of a court or other competent authority issuing an order pursuant to regulatory law permanently prohibiting the consummation of the merger, or merger is not consummated by February 6, 2023, or the Outside Date.

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Any of these factors could have an adverse effect on our business, operating results, and financial condition or on the trading price of our common stock.

Our ability to complete the merger is subject to various closing conditions, including approval of Silicon Motion’s shareholders and certain required regulatory approvals, which may contain burdensome conditions, that could have an adverse effect on our operation of the business following the merger.

To complete the merger, Silicon Motion’s shareholders must approve the merger pursuant to the terms of the merger agreement by not less than two-thirds of the votes cast by Silicon Motion shareholders present and voting at Silicon Motion’s extraordinary general meeting.

In addition, completion of the merger is subject to the satisfaction of the remaining customary

closing conditions, including receipt of clearance from the People’s Republic of China State Administration for Market Regulation, among other things.

Even if these approvals are obtained, governmental authorities could impose conditions on the completion of the merger that could delay consummation of the acquisition or have an adverse effect on our business following the acquisition.

Our ability to complete the merger is subject to various closing conditions, including certain required regulatory approval from SAMR, which may contain burdensome conditions, that could have an adverse effect on our operation of the business following the merger.

Although the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on June 27, 2022, and Silicon Motion’s shareholders approved the merger at Silicon Motion’s extraordinary general meeting of shareholders held on August 31, 2022, completion of the merger is subject to the satisfaction of the remaining

customary closing conditions, including receipt of clearance from SAMR, among other things.

Even if this approval is obtained, governmental authorities could impose conditions on the completion of the merger that could delay consummation of the acquisition or have an adverse effect on our business following the acquisition.

If we are unable to complete the merger, we would be subject to a number of risks, including the following:

• we would not realize the anticipated benefits of the acquisition, including, among other things, increased operating efficiencies;

• the attention of our management may have been diverted to the merger rather than to our own operations and the pursuit of other opportunities that could have been beneficial to us;

• the attention of our senior management team and key personnel may have been diverted to the merger rather than to our own operations and the pursuit of other opportunities that could have been beneficial to us;

• the potential loss of key personnel during the pendency of the merger as employees and other service providers may experience uncertainty about their future roles with us following completion of the merger;

• the trading price of our common stock may decline to the extent that the current market prices reflect a market assumption that the merger will be completed.

We can provide no assurance that the various closing conditions will be satisfied, that the necessary regulatory approvals will be obtained, or that any required conditions will not materially adversely affect our business following the merger.

We can provide no assurance that the various closing conditions will be satisfied, that the necessary regulatory approval from SAMR will be obtained, or that any required conditions will not materially adversely affect our business following the merger.

If we are required to undertake divestitures or to commit to certain behavioral remedies in order to obtain any approvals required to complete the acquisition, we may be less able to realize anticipated benefits of the acquisition, and our business, operating results, and financial condition after the merger may be adversely affected.

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A portion of the proceeds from the Senior Secured Credit Facilities will be used to repay existing debt in full.

As of June 30, 2022, our aggregate indebtedness was $250.0 million.

As of September 30, 2022, our aggregate indebtedness was $175.0 million.

The material increase in our indebtedness to up to $3.5 billion will adversely affect our operating expenses through materially increased interest payment obligations and will adversely affect our ability to use cash generated from operations as we repay interest and principal under the term loans and revolving credit facility, as applicable.

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• we could be subject to substantial variable interest rate risk because our interest rate under term loans typically vary based on a fixed margin over an indexed rate or an adjusted base rate.

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

While we are mitigating the impact of rising interest rates with large amounts of prepayments on our outstanding debt, if interest rates were to further increase substantially, particularly with respect to our anticipated debt associated with the Silicon Motion merger, it would have an adverse effect our operating results and could affect our ability to service the indebtedness;

• our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, or other purposes may be limited or financing may be unavailable;

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We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the Senior Secured Credit Facilities or future indebtedness.

Stockholders of MaxLinear or Silicon Motion securityholders could file additional lawsuits in the future challenging the merger, which may delay or prevent the consummation of the merger and cause us and/or Silicon Motion to incur substantial defense or settlement costs, or otherwise adversely affect us or Silicon Motion.

As of the date of this filing of our quarterly report on Form 10-Q, there are four pending lawsuits challenging the merger with Silicon Motion.

However, potential plaintiffs may file additional lawsuits challenging the merger.

The outcome of any current or future litigation is uncertain.

MaxLinear stockholders or Silicon Motion securityholders could file additional lawsuits in the future challenging the merger, which may delay or prevent the consummation of the merger and cause us and/or Silicon Motion to incur substantial defense or settlement costs, or otherwise adversely affect us or Silicon Motion.

As of the date of this filing of our quarterly report on Form 10-Q, the four pending lawsuits challenging the merger with Silicon Motion have been dismissed.

However, Silicon Motion has received several shareholder demand letters, and potential plaintiffs may file additional lawsuits challenging the merger.

The outcome of any current demand letters or future litigation is uncertain.

Such litigation, if not resolved, could prevent or delay completion of the merger and result in substantial costs to us and/or Silicon Motion, including any costs associated with the indemnification of directors and officers.

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• We or Silicon Motion could be subject to costly litigation associated with the merger;

• current and prospective employees may be uncertain about their future roles and relationships with us or Silicon Motion following completion of the merger, which may adversely affect the ability of us or Silicon Motion to attract and retain key personnel.

• current and prospective employees may be uncertain about their roles and relationships with us or Silicon Motion following completion of the merger, which may adversely affect the ability of us or Silicon Motion to attract and retain key personnel.

Counterparties of Silicon Motion may acquire certain rights upon the merger, which could negatively affect us following the merger.

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We cannot assure you that any contentious situation between Taiwan and China will always resolve in maintaining the current status quo or remain peaceful.

Relations between Taiwan and China, potential confrontations between the United States and China and other factors affecting military, political, social or economic conditions in Taiwan and Hong Kong could have a material adverse effect on the Company’s financial condition and results of operations, as well as the market price and the liquidity of our common stock.

Relations between Taiwan and China, potential confrontations between the United States and China and other factors affecting military, political, social or economic conditions in Taiwan and Hong Kong could have a material adverse effect on our financial condition and results of operations, as well as the market price and the liquidity of our common stock.

The COVID-19 pandemic may delay or prevent the completion of the merger.

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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., 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.

Our primary merchant semiconductor competitors include Silicon Laboratories, Inc., NXP Semiconductors N.V., MediaTek, Inc., Broadcom Ltd, Rafael Microelectronics, Inc., Marvell Technology Group Ltd., MACOM 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 Incorporated, 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.

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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.

The 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 may be exacerbated by the impacts of high inflation, and we may experience increased volatility in sales and revenues in the near future, including those from local outbreaks which may cause customers to delay our order fulfillment in response to disrupted shipments.

C onsistent with the prior year, we continue to operate in a supply constrained environment and are working closely with our suppliers to mitigate the impact of such shortage.

Furthermore, we believe this supply-constrained environment may continue into 2023.

Global supply shortages, inflation, and uncertainty in customer demand and the worldwide economy has continued as a result of the COVID-19 pandemic, and we may experience continued volatility in our 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.

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We sell our products throughout the world.

Products shipped to Asia accounted for 81% of our net revenue in the six months ended June 30, 2022.

In addition, as of June 30, 2022, approximately 75% of our employees are located outside of the United States.

Products shipped to Asia accounted for 82% of our net revenue in the nine months ended September 30, 2022.

In addition, as of September 30, 2022, approximately 77% of our employees are located outside of the United States.

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

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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 will lose sales if we are unable to obtain government authorization to export certain of our products or technology related to the development or production of our products, and we will be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations.

Certain of our products and technologies are subject to export and/or import controls imposed by countries in which we do business.

In certain instances, these regulations may require pre-shipment authorization from the administering department, and, depending on the country and or entity involved a license may not be able to be obtained.

For products subject to the U.S.

Commerce Department’s Export Administration Regulations (“EAR”), administered by the Bureau of Industry and Security (“BIS”), the requirement for a license is dependent on the type and end use of the product or technology, the final destination, the identity of the end user, the identity of other companies involved in the production process, and whether a license exception might apply.

Certain of our products and technologies are subject to the EAR.

Obtaining export licenses can be difficult, costly and time-consuming and we may not always be successful in obtaining necessary export licenses, and our failure to obtain required import or export approval for our products or limitations on our ability to export or sell our products imposed by these laws may harm our international and domestic revenue.

Noncompliance with these laws could have negative consequences, including government investigations, penalties and reputational harm.

The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position.

In October 2022, the BIS issued an interim final rule (1) to implement additional export controls on advanced computing integrated circuits (ICs), computer commodities that contain such ICs and certain semiconductor manufacturing items;

(2) to implement additional export control requirements for products and/or technologies that may be destined for facilities that meet certain criteria;

and (3) to add additional export controls on transactions involving items for supercomputer and semiconductor manufacturing end uses, which resulted in expanding the scope of foreign-produced items subject to license requirements for 28 existing entities on the Entity List that are located in China, including one immaterial customer of MaxLinear.

If we determine that any of our partners’ facilities meet the criteria for an advanced semiconductor manufacturing facility, it will affect our ability to produce product in that facility and may adversely affect our ability to deliver product or manufacture products unless or until a license is granted or an alternate source of supply can be obtained.

Regulatory changes concerning the export classification of our products, changes to the applicability of the EAR to certain product offerings, or the addition of new entities to the restricted party lists can further increase the scope of export restrictions applicable to our business.

Failure to obtain export licenses for our products or having one or more of our customers be restricted from receiving exports from us could significantly reduce our revenue and harm our business.

Additionally, current and future business with parties that are subject to significant export restrictions, including those who are listed on the Entity List (a list of entities to which the transfer of EAR-controlled technology or software is generally prohibited absent a U.S.

export license) may be limited in scope or suspended entirely in order to comply with the EAR and as a result, our revenue could be adversely impacted until a license is granted.

It is possible that the US government may not grant licenses or renew licenses to transact business with entities on the Entity List.

In September 2022, we self-identified a potential violation of the EAR related to certain transactions with one of our foundry partners in China on the entity list (“Specific Foundry Partner”) in which limited technology in the form of test results

and failure analysis reports were furnished to our Specific Foundry Partner without authorization under the EAR.

Upon discovery of the potential violation of the EAR, (1) we took immediate action to help prevent recurrence and (2) our Audit Committee took action to further investigate this potential violation, in each case in conjunction with outside counsel, which investigation is ongoing.

In October 2022, we submitted an initial notification of voluntary self-disclosure to the BIS regarding the potential EAR violation described above.

Our notification submission is currently under review at BIS.

Concurrently with the filing of the initial notification, we submitted an export license application to the U.S.

Commerce Department, in order to assure that all prospective transactions with our Specific Foundry Partner are conducted in full compliance with the EAR.

We have taken and continue to take remedial measures, which includes reviewing our export compliance procedures and program to determine if any modifications or amendments are required, to help prevent similar situations from occurring in the future.

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

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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.

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 the BIS continues to add entities which may be potential customers on the Restricted Entity List.

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 BIS amended the EAR, to add such entities to the Entity List for acting contrary to the national security or foreign policy interests of the United States, other than for certain transactions for which we have an export license issued by BIS.

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

In October 2022, the BIS amended the EAR, among other things, to add 31 new entities in China to the Unverified List.

It is possible that entities currently on the Unverified List may be added to the Entity List if certain conditions are not met.

As noted above, our ability to manufacture or distribute projects or technology will be limited as additional entities are added to restricted list.

The BIS may continue to add entities which are or may be customers to the Entity List or the Unverified List.

This also raises an additional risk that China may enact retaliatory legislation or regulations that may raise similar adverse risks.

We are required to obtain special licenses to conduct business with entities on the Entity List and to conduct additional diligence and recordkeeping including obtaining user statements from entities on the Unverified List.

Failure to obtain any required license would likely result in a loss of business and a corresponding negative impact on our financial position and results of operations.

We believe direct impacts of the economic sanctions against Russia and the military conflict in Ukraine are currently limited to volatility in the prices of metals used by our outsourced semiconductor assembly and test, or OSAT, supply chain, in particular around the supply of palladium, for which Russia is the top producer in the world, as well as increased fuel costs, which has global impact on transportation costs, including the shipping and delivery of our products.

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

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

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

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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 six months ended June 30, 2022, our top two customers accounted for 28% of our net revenue, and our ten largest customers collectively accounted for 71% of our net revenue, of which distributor customers accounted for 30% of our net revenue.

In the nine months ended September 30, 2022, one customer accounted for 22% of our net revenue, and our ten largest customers collectively accounted for 68% of our net revenue, of which distributor customers accounted for 24% 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.

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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.

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, as described in the section “Risks Related to Our Business” under the risk factor “ We are also subject to risks associated with international geopolitical conflicts involving the U.S.

and other governments such as China and Russia ”, and by tariffs and other trade barriers that may be implemented by governmental authorities.

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.

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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.

We sell a significant portion of our products to manufacturers of cable broadband voice and data modems and gateways, Pay-TV set-top boxes and gateways into cable and satellite operator markets, satellite outdoor units or LNB’s, optical modules for long-haul and metro telecommunications markets, and RF transceivers and modem solutions for wireless infrastructure markets.

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.

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.

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.

Each of these markets presents distinct and substantial risks.

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Broadband data modems and gateways and Pay-TV and satellite set-top boxes and video gateways continue to represent a significant North American and European revenue generator.

The North American and European Pay-TV market is dominated by only a few OEMs, including Technicolor, Commscope Holding Company, Inc., Hitron Technologies, Inc., Compal Broadband Networks, Humax Co., Ltd., and Samsung Electronics Co., Ltd.

The North American and European Pay-TV market is dominated by only a few OEMs, including Technicolor SA, Commscope Holding Company, Inc., Hitron Technologies, Inc., Compal Broadband Networks Inc., Humax Co., Ltd., and Samsung Electronics Co., Ltd.

These OEMs are large multinational corporations with substantial negotiating power relative to us and are undergoing significant consolidation.

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.

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.

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A significant portion of our revenue is attributable to demand for our products in markets for broadband 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 six months ended June 30, 2022 and 2021, revenue directly attributable to broadband applications accounted for approximately 50% and 57% of our net revenue, respectively.

For the nine months ended September 30, 2022 and 2021, revenue directly attributable to broadband applications accounted for approximately 47% and 56% 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.

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Many of our products originated with our research and development efforts, which we believe have provided us with a significant competitive advantage.

For the six months ended June 30, 2022 and 2021, our research and development expense was $146.3 million and $137.6 million, respectively.

For the nine months ended September 30, 2022 and 2021, our research and development expense was $222.7 million and $205.1 million, respectively.

We monitor such expenditures as part of our strategy of devoting focused research and development efforts on the development of innovative and sustainable product platforms.

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

Our net revenue increased from $414.7 million in the six months ended June 30, 2021 to $543.9 million in the six months ended June 30, 2022 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 in our broadband market.

Our net revenue increased from $644.5 million in the nine months ended September 30, 2021 to $829.7 million in the nine months ended September 30, 2022 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 in our broadband market.

Impacts from the COVID-19 pandemic, such as global supply shortages, uncertainty in customer demand, as well as the global economy could result in increased volatility in our sales and revenues.

You should not rely on our operating results for any prior quarterly or annual periods as an indication of our future operating performance.

Please refer to the Risk Factor entitled “ Our operating results are subject to substantial

quarterly and annual fluctuations and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth.

Please refer to the Risk Factor entitled “ Our operating results are subject to substantial quarterly and annual fluctuations and may fluctuate significantly due to a number of factors that could adversely affect our business and our stock price ” for a discussion of factors contributing to variances in our operating results or rates of growth.

If we are unable to sustain adequate revenue growth, our financial results could suffer and our stock price could decline.

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

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.

We do not know whether we will be able to attract and retain the required and desirable 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.

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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.

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 and other 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.

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Conversely, if we were to underestimate customer demand or if sufficient manufacturing capacity were unavailable, we could forego revenue opportunities, potentially lose market share and damage our customer relationships.

In addition, any significant future cancellations or deferrals of product orders or the return of previously sold products due to manufacturing defects could materially and adversely impact our profit margins, increase our write-offs due to product obsolescence and restrict our ability to fund our operations.

In addition, any significant future cancellations or deferrals of product

orders or the return of previously sold products due to manufacturing defects could materially and adversely impact our profit margins, increase our write-offs due to product obsolescence and restrict our ability to fund our operations.

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.

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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 SoCs, ASICs, and 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 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.

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

Our success depends, in large part, on the continued contributions of our senior management team.

None of our senior management team is bound by written employment contracts to remain with us for a specified period.

In addition, we have not entered into non-compete agreements with members of our senior management team.

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.

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

Our success depends, in large part, on the continued contributions of our senior management team and other key personnel.

None of our senior management team or other key personnel is bound by written employment contracts to remain with us for a specified period.

In addition, we have not entered into non-compete agreements with members of our senior management team or other key personnel, except in limited circumstances (e.g., in connection with the acquisition of other companies)..

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

With respect to recruitment and retention of senior management, we need to ensure that our compensation programs provide sufficient recruitment and retention incentives as well as incentives to achieve our long-term 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.

The loss of any member of our senior management team could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.

The loss of any member of our senior management team or other key personnel could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.

Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process which does not assure product sales.

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Even if we begin a product design, customers may decide to cancel or change their product plans, which could cause us to generate no revenue from a product and adversely affect our results of operations.

We are focused on securing design wins to develop RF receivers and RF receiver SoCs, MoCA and G.hn SoCs, DBS-ODU SoCs, physical medium devices for optical modules, interface and power management devices, and SoC solutions targeting infrastructure opportunities within the telecommunications, wireless, industrial and multimarket and Wi-Fi and broadband operator markets for use in our customers’ products.

broadband operator markets for use in our customers’ products.

These selection processes typically are lengthy and can require us to incur significant design and development expenditures and dedicate scarce engineering resources in pursuit of a single customer opportunity.

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In addition, any delay or cancellation of a customer’s plans could materially and adversely affect our financial results, as we may have incurred significant expense and generated no revenue.

Finally, our customers’ failure to successfully market and sell their products could reduce demand for our products and materially and adversely affect

our business, financial condition and results of operations.

Finally, our customers’ failure to successfully market and sell their products could reduce demand for our products and materially and adversely affect our business, financial condition and results of operations.

If we were unable to generate revenue after incurring substantial expenses to develop any of our products, our business would suffer.

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• intellectual property disputes;

• loss of key personnel or the shortage of available skilled workers;

• loss of key personnel or inability to attract and retain qualified skilled workers;

• impairment of long-lived assets, including masks and production equipment;

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

The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards, short product life cycles and wide fluctuations in product supply

Any future downturns may result in diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices.

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

Any failure by us to comply with applicable laws and 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.

Any actual or perceived failure by us to comply with applicable laws and regulations could result in cessation of our operations or portions of our operations, product recalls, private claims and litigation, regulatory investigations and other proceedings, reputational harm, and 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.

Our products and operations are also subject to the rules of industrial standards bodies, like the International Standards Organization, as well as regulation by other agencies, such as the U.S.

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

In prior 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.

In 2022 and prior years, there has been a substantial focus by regulators in the United States and Europe on the business practices of certain major Chinese technology companies.

In October 2022, we restricted shipments and exports to certain major Chinese technology companies and semiconductor foundry and OSAT providers in China due to increased export control restrictions.

While we intend to continue to conduct our businesses in compliance with all applicable laws, including laws relating to export controls and anti-corruption, it is possible that the nature of our business and customers could result in a review of our relationships and practices by regulatory authorities.

We could incur increased administrative and legal costs in order to respond to any inquiries, and any failure to comply with applicable laws could adversely affect our business and operating results.

We have implemented policies and procedures, including adoption of an anti-corruption policy and procedures to ensure compliance with applicable export control laws, but there can be no assurance that our policies and procedures will prove effective.

We have implemented policies and procedures, including adoption of an anti-corruption policy and procedures with respect to applicable export control laws, but there can be no assurance that our policies and procedures will prove effective.

We must conform the manufacture and distribution of our semiconductors to various laws and adapt to regulatory requirements in all countries as these requirements change.

If we fail to comply with these requirements in the manufacture or distribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products in commerce until the products or component substances are brought into compliance.

If we fail to comply with these requirements in the manufacture or

distribution of our products, we could be required to pay civil penalties, face criminal prosecution and, in some cases, be prohibited from distributing our products in commerce until the products or component substances are brought into compliance.

We are subject to governmental laws, regulations and other legal obligations related to privacy, data protection, and cybersecurity.

The legislative and regulatory framework for privacy, data protection and cybersecurity issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

We collect and otherwise process personal data and other data as part of our business processes and activities.

This data is subject to a variety of U.S.

and international laws and regulations, including oversight by various regulatory or other governmental bodies.

Many foreign countries and governmental bodies, including China, the European Union and other relevant jurisdictions where we conduct business, have laws and regulations concerning the collection and use of Personally Identifiable Information, or PII, and other data obtained from their residents or by businesses operating within their jurisdictions that are currently more restrictive than those in the U.S.

For example, effective May 2018, the European Union adopted the General Data Protection Regulation, or GDPR, that imposed stringent data protection requirements and provided for greater penalties for noncompliance.

The United Kingdom has adopted legislation that substantially implements the GDPR and provides for a similar penalty structure.

Similarly, California has adopted the California Consumer Privacy Act of 2018, or CCPA, which took effect in 2020.

The CCPA gives California residents the right to access, delete and opt out of certain sharing of their information, and imposes penalties for failure to comply.

California has adopted a new law, the California Privacy Rights Act of 2020, or CPRA, that will substantially expand the CCPA effective January 1, 2023.

Additionally, other U.S.

states continue to propose, and in certain cases adopt, privacy-focused legislation such as Colorado, Virginia, Utah, and Connecticut.

In 2021, the National People’s Congress passed the Data Security Law of the People’s Republic of China (Data Security Law).

The Data Security Law is the first comprehensive data security legislation in China and aims to regulate a wide range of issues in relation to the collection, storage, processing, use, provision, transaction and publication of any kind of data.

There is significant uncertainty in how regulators will interpret and enforce the law, but it contains provisions that allow substantial government oversight and include fines for failure to obtain required approval from China’s cyber and data protection regulators for cross-border personal data-related data transfers.

Aspects of these laws remain unclear, resulting in further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.

Because the interpretation and application of many laws and regulations relating to privacy, data protection, and data security, along with industry standards, are uncertain, it is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our data management practices or the features of our products or solutions, and we could face fines, lawsuits, regulatory investigations, and other claims and penalties, and we could be required to fundamentally change our products or our business practices, which could have an adverse effect on our business.

Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, damage our reputation, inhibit sales and adversely affect our business, results of operations, and financial condition.

Our products must conform to industry standards in order to be accepted by end users in our markets.

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If our products are not in compliance with prevailing industry standards for a significant period of time, we could miss opportunities to achieve crucial design wins.

We may not be successful in developing

or using new technologies or in developing new products or product enhancements that achieve market acceptance.

We may not be successful in developing or using new technologies or in developing new products or product enhancements that achieve market acceptance.

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

As of June 30, 2022, our aggregate indebtedness was $250.0 million.

As of September 30, 2022, our aggregate indebtedness was $175.0 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.

As of June 30, 2022, our aggregate indebtedness was $250.0 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 June 30, 2022.

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.

As of September 30, 2022, our aggregate indebtedness was $175.0 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 September 30, 2022.

The credit agreement also permits us 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.

We are 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%.

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

Such obligations, including the guaranties, are secured by substantially all of our assets and those of 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.

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If we incur any additional debt, the related risks that we and our subsidiaries face could intensify.

In addition to pending merger with Silicon Motion, we may, from time to time, make additional business acquisitions or investments, which involve significant risks.

We plan to finance the cash portion of the purchase price of the merger with Silicon Motion with approximately $3.5 billion of cash on hand and new debt.

In connection with entering into the merger agreement, we entered into a commitment letter, dated as of May 5, 2022, with Wells Fargo Bank, N.A.

and Wells Fargo Securities, LLC (collectively, “Wells Fargo”), pursuant to which, subject to the terms and conditions set forth therein, Wells Fargo has committed to provide us (i) a senior secured term B loan facility in an aggregate principal amount of up to $3.25 billion and (ii) a senior secured revolving credit facility in an aggregate principal amount of up to $250.0 million.

The funding of these secured credit facilities provided for in the commitment letter is contingent on the satisfaction of customary conditions, including (i) the execution and delivery of definitive documentation with respect to such credit facilities in accordance with the terms sets forth in the commitment letter and (ii) the consummation of the merger in accordance with the merger agreement.

In addition to our pending merger with Silicon Motion, we may, from time to time, make additional business acquisitions or investments, which involve significant risks.

We have completed multiple acquisitions in the past six years.

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• costs and expenses associated with any undisclosed or potential liabilities;

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

• the potential loss of, or ability to attract, key personnel, customers and suppliers of the acquired businesses.

To the extent we pay the purchase price of any acquisition or investment in cash or through borrowings under our Revolving Facility, it would reduce our cash balances and/or result in indebtedness we must service, which may have a material and adverse effect on our business and financial condition.

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

• hiring additional management and other critical personnel;

• hiring additional management and other key 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;

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Risks Relating to Intellectual Property

We have settled in the past intellectual property litigation and may face additional claims of intellectual property infringement.

We have settled in the past intellectual property litigation, are currently facing, and may in the future face additional claims of intellectual property infringement.

Any future litigation could be time-consuming, costly to defend or settle and result in the loss of significant rights.

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Claims of this sort also could harm our relationships with our customers or distributors and might deter future customers from doing business with us.

In order to maintain our relationships with existing customers and secure business from new customers, we have been required from time to time to provide additional assurances beyond our standard terms.

In order to maintain our relationships with existing customers and secure business from new customers, we

have been required from time to time to provide additional assurances beyond our standard terms.

If any future proceedings result in an adverse outcome, we could be required to:

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Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.

Moreover, if we are required to commence litigation, whether as a plaintiff or defendant as has occurred in the past, not only will this be time-consuming, but we will also be forced to incur significant costs and divert our attention and efforts of our employees, which could, in turn, result in lower revenue and higher expenses.

Moreover, if we are required to commence litigation, whether as a plaintiff or defendant as has occurred in the

past, not only will this be time-consuming, but we will also be forced to incur significant costs and divert our attention and efforts of our employees, which could, in turn, result in lower revenue and higher expenses.

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.

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We may continue to use “MAXLINEAR” as a corporate identifier, including to advertise our products and services, but may not use that mark on our products.

The agreement does not affect our ability to use our registered trademark “MxL”, which we use on our products.

Due to our agreement not to register the “MAXLINEAR” mark, our ability to effectively prevent third parties from using the “MAXLINEAR” mark in connection with similar products or technology may be affected.

If we are unable to protect our trademarks, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty.

We have been and may in the future be subject to information technology failures, including data protection breaches and cyber-attacks, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results.

We have been and may in the future be subject to information technology failures, including security breaches and cyber-attacks, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results.

We rely on our information technology systems for the effective operation of our business and for the secure maintenance and storage of confidential data relating to our business and third-party businesses.

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Because we did not satisfy the attacker’s monetary demands, on June 15, 2020, the attacker released online certain proprietary information obtained from our network.

Although our internal information technology team, supplemented by a leading cyber defense firm, has been actively taking steps to contain and assess this incident, including implementing enhanced security controls to protect our information technology systems, experienced programmers or hackers may further be able to penetrate our security controls, and develop and deploy viruses, worms and other malicious software programs that compromise our confidential information or that of third parties and cause another disruption or failure of our information technology systems.

O ur internal information technology team, supplemented by a leading cyber defense firm, took steps to contain and assess this incident, including implementing enhanced security controls to protect our information technology systems.

Security breaches and incidents, computer malware and computer hacking attacks have, however, become more prevalent and sophisticated.

These threats are constantly evolving, making it increasingly difficult to successfully defend against or implement adequate preventive measures.

Experienced programmers or hackers may be able to penetrate our security controls, and viruses, worms and other malicious software programs may be introduced or deployed by their programmers, hackers or others that compromise our confidential information or that of third parties and cause another disruption or failure of our information technology systems.

In addition, we have in the past and may in the future be subject to “phishing” attacks in which third parties send emails purporting to be from reputable companies in order to obtain personal information and infiltrate our systems to initiate wire transfers or otherwise obtain proprietary or confidential information.

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

Moreover, as we continue to allow our employees to have partial flexible remote work arrangements, remote access to our systems continues, which has also increased our cybersecurity risk profile.

We also face the risk of willful or accidental acts or omissions by our employees and contractors that result in a risk of loss, misappropriation, and other unauthorized processing of proprietary and confidential information.

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.

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Any delayed sales, significant costs or lost customers resulting from these technology failures could adversely affect our business, operations and financial results.

Third parties with which we conduct business, such as foundries, assembly and test contractors, and distributors, have access to certain portions of our sensitive data.

In the event that these third parties do not properly safeguard our data that they hold, security breaches could result and negatively impact our business, operations and financial results.

We also may face difficulties or delays in identifying and remediating and otherwise responding to any security breach or incident.

Third parties with which we conduct business, such as foundries, assembly and test contractors, and distributors, have access to certain portions of our sensitive data, and we rely on third parties to store and otherwise process data for us.

We are dependent on the security systems of these third parties and they face substantial security risks.

There have been significant supply chain attacks, and we face the risk of security vulnerabilities being introduced or otherwise exploited through our supply chain.

Any security breaches or incidents or other unauthorized access by third parties to the systems of our suppliers, service providers, or other third parties with access to our sensitive data, or the existence of computer viruses, ransomware or other malicious code in their data, software, or hardware, could result in disruptions or failures of systems used in our business and expose us to a risk of loss, misappropriation, unavailability and other unauthorized processing of information.

Any of the foregoing could negatively impact our business, operations and financial results.

Additionally, we cannot be certain that our insurance coverage will be adequate or otherwise protect us with respect to claims, expenses, fines, penalties, business loss, data loss, litigation, regulatory actions, or other impacts arising from security breaches or incidents, or that such coverage will continue to be available on acceptable terms or at all.

Any of these results

could adversely affect our business, operations and financial results.

The use of open source software in our products, processes and technology may expose us to additional risks and harm our intellectual property.

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This can subject previously proprietary software to open source license terms.

While we monitor the use of all open source software in our products, processes and technology and try to ensure that no open source software is used in such a way as to require us to disclose the source code to the related product, processes or

technology when we do not wish to do so, such use could inadvertently occur.

Additionally, if a third party software provider has incorporated certain types of open source software into software we license from such third party for our products, processes or technology, we could, under certain circumstances, be required to disclose the source code to our products, processes or technology.

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As a result, we rely on third-party foundry wafer fabrication, including sole sourcing for many components or products.

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.

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

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.

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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.

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 in the first quarter of 2020.

Although we continue to monitor impacts from COVID-19 globally on our business, including the supply shortage, 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.

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We currently sell a large portion of our products to customers through our distributors, who maintain their own inventories of our products.

Sales to distributors accounted for approximately 46% and 45% of our net revenue in the six months ended June 30, 2022 and 2021, respectively.

Sales to distributors accounted for approximately 44% and 46% of our net revenue in the nine months ended September 30, 2022 and 2021, respectively.

Upon shipment of product to these distributors, title to the inventory transfers to the distributor and the distributor is invoiced, generally with 30 to 60 day terms.

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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.

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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 the first six months of 2022, the trading price of our common stock ranged from a low of $32.87 to a high of $77.57 and in 2021, the trading price of our common stock ranged from a low of $30.47 to a high of $77.89.

For example, in the first nine months of 2022, the trading price of our common stock ranged from a low of $30.17 to a high of $77.57 and 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 Quarterly Report on Form 10-Q and others such as:

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• addition or loss of significant customers;

• changes in laws or regulations applicable to our products;

• changes in laws or regulations applicable to our products, including export controls;

• geopolitical changes impacting our business, including with respect to China and Taiwan;

• actual or anticipated changes in our growth rate relative to our competitors;

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• announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments;

• additions or departures of key personnel;

• departures of, and inability to attract, qualified key personnel;

• competition from existing products or new products that may emerge;

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If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline.

If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

If one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

Future sales of our common stock in the public market could cause our share price to decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.

As of June 30, 2022, we had approximately 78.3 million shares of common stock outstanding.

All shares of common stock are freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, unless held by our “affiliates,” as that term is defined under Rule 144 of the Securities Act.

As of September 30, 2022, we had approximately 78.6 million shares of common stock outstanding.

All shares of our common stock are freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, unless held by our “affiliates,” as that term is defined under Rule 144 of the Securities Act.

Our Executive Incentive Bonus Plan permits the settlement of awards under the plan in the form of shares of our common stock.

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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.

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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 June 30, 2022, our balance sheet reflected goodwill of $306.7 million and other intangible assets of $127.9 million.

As of September 30, 2022, our balance sheet reflected goodwill of $306.7 million and other intangible assets of $122.1 million.

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

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Changes in current or future laws or regulations, the imposition of new or changed tax laws or regulations or new interpretations by taxing authorities or courts could affect our results of operations and lead to volatility with respect to tax expenses and liabilities from period to period.

For example, beginning in 2022, the Tax Cuts and Jobs Act eliminates the option to deduct research and

development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to

Internal Revenue Code Section 174.

Although there is proposed legislation that would defer the capitalization requirement to

later years, we have no assurance that the provision will be repealed or otherwise modified.

If the requirement to capitalize Section 174 expenditures is not modified, it may impact our effective tax rate and our cash tax liability in 2022.

Further, the Inflation Reduction Act of 2022, enacted on August 16, 2022, imposes a one-percent non-deductible excise tax on repurchases of stock that are made by U.S.

publicly traded corporations on or after January 1, 2023, which may affect our share repurchase program once we resume such stock repurchases.

The application of tax laws and related regulations is subject to legal and factual interpretation, judgment and uncertainty.

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

Based upon our review of all positive and negative evidence, as of June 30, 2022, 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.

Based upon our

review of all positive and negative evidence, as of September 30, 2022, 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.

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

These plans were underfunded by $4.3 million as of June 30, 2022 based on current projections and plan assets.

These plans were underfunded by $4.0 million as of September 30, 2022 based on current projections and plan assets.

We had previously never managed defined benefit plans in our operating history.

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The net benefit obligation and cost are 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, 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.

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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 Nasdaq Stock Market LLC, or Nasdaq, or other regulatory authorities or in stockholder litigation.

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.

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

What changed 10-Q

Item 1A. Risk Factors