What changed in this filing

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Item 1A. Risk Factors

2023-04-26 compared with 2022-10-25 · 391 added, 327 removed, 663 unchanged (52% of the section changed)

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Risks Relating to the Proposed Merger with Silicon Motion

• 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.

• If the merger is completed, our actual 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 timeframe may adversely affect our results and financial condition if the merger is completed.

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• 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.

• 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.

• Our ability to complete the merger is subject to various closing conditions, including antitrust approval by SAMR in China, which may contain burdensome conditions that could have a material adverse effect on our operation of the business following the merger.

• As a result of the transaction, we will materially increase our 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.

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

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

• 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.

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

• If the merger is consummated, the ownership percentage interests of our stockholders will be reduced.

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

• We expect to incur substantial expenses related to the merger of MaxLinear and Silicon Motion.

• 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 post-merger.

Risks Related to Our Business

• 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.

• 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.

• Intense and increasing competition could have a material adverse effect on our revenue growth and market share.

• Global economic conditions, including factors such as high inflation and recession, could adversely affect our revenues, margins, and operating results.

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

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

• Increased tariffs or the imposition of other trade barriers could have a material adverse effect on our revenues and operating results.

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

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

and other governments.

For example, as more entities are added to restricted export control lists, our need to seek authorizations from the U.S.

government may impact our ability to do business.

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

• Average selling prices of our products could decrease rapidly, which could have a material adverse effect on our profit.

• 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.

• Development delays and consolidation trends among cable and satellite Pay-TV and broadband operators could adversely affect our future revenues and operating results.

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

• Development delays and consolidation trends in our industry could adversely affect our future revenues and results.

• We may be unable to make the substantial R&D investments that are required to remain competitive.

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

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

• 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 may not sustain our current level of revenue and/or manage future growth effectively.

The impact of excess inventory in the channel could continue to influence our customers’ expected demand for certain of our products.

• Unforeseen delays or expenses caused by undetected defects or bugs in 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, train and retain qualified personnel and senior management, or our business, financial conditions, results of operations and prospects could suffer.

• If we fail to timely develop and introduce new or enhanced products, our ability to attract and retain customers and compete 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 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.

• 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.

• Customers require us to undergo a lengthy and expensive qualification process which does not assure product sales.

• We incur significant expenditures to win business and customer product plan cancellations may adversely affect our results of operations.

• Our operating results may fluctuate significantly from factors that could adversely affect our business and stock price.

• A failure to maintain compliance with governmental regulations could have a material adverse effect on our business.

• 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.

Risks Relating to Intellectual Property

• 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.

• We have settled in the past intellectual property litigation, and 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.

• 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 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.

• Failure to manage our relationships with, or negative impacts from, 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.

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

• Any failure of third parties to provide services and technology necessary for the operation of our business could have a material adverse effect on our business.

• A lack of long-term supply contracts, and any supply disruption could have a material adverse effect on our business.

• Any failure of third parties to provide services and technology could have a material adverse effect on our business.

Risks Relating to Our Common Stock

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• 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

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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 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.

Risks and uncertainties that could cause our actual results to differ materially from currently anticipated results include, but are not limited to, risks relating to our ability to integrate Silicon Motion successfully;

Risks and uncertainties that could potentially impact our future operating results and cause our actual results to differ materially from currently anticipated results include, but are not limited to, risks relating to our ability to integrate Silicon Motion successfully;

currently unanticipated incremental costs that we may incur in connection with integrating the two companies;

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

risks relating to our ability to realize incremental revenues from the merger in the amounts that we currently anticipate including a decline in Silicon Motion’s revenues as a result of a global economic downturn and its impacts on customer demand for their products;

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

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

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

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.

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

We may face significant challenges in consolidating our operations with Silicon Motion, integrating the two companies’ technologies, and addressing the different corporate cultures of the two companies.

We may face significant challenges in consolidating our operations with Silicon Motion, integrating the two companies’ business processes, technologies, operations and addressing the different corporate cultures of the two companies.

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

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

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

If the companies are not successfully integrated, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected and there could be increased compliance risks.

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

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

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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.

In addition, customers or other third parties may attempt to negotiate changes in existing business relationships, which may result

in additional obligations imposed on us.

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

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

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 antitrust approval from SAMR, or termination of the agreement and plan of merger, or the Merger Agreement, with Silicon Motion.

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 adverse effect on the trading price or trading volume of our common stock.

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.

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

This uncertainty may impair our or Silicon Motion’s ability to retain and motivate key personnel in the months leading up to the consummation of the merger and our ability to retain and motivate them following the merger.

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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 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.

The Outside Date will be automatically extended to May 5, 2023 and further to August 7, 2023, if all conditions to closing have been met, other than certain exceptions related to regulatory matters.

The consummation of the merger is subject to certain customary closing conditions such as antitrust 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 the merger is not consummated by May 5, 2023, or the current extended Outside Date.

The Outside Date will be automatically extended to August 7, 2023, if all conditions to closing have been met, other than certain exceptions related to regulatory matters.

However, in certain circumstances, the right to terminate the Merger Agreement would not be available to a party in material breach of the Merger Agreement.

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Furthermore, if the merger is not consummated, we may experience negative reactions from the financial markets and our suppliers, customers, customer prospects, and employees.

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 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.

Any of these factors could have a material 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 certain required antitrust approval from SAMR, which may contain burdensome conditions that could have a material adverse effect on our operation of the business following the merger.

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 a material adverse effect on our business following the acquisition.

MaxLinear and Silicon Motion cannot predict with certainty the length of review by SAMR but expect a final determination in the second or third quarter of 2023, or even later.

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 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 attention of our senior management team and other 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 approval from SAMR 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 antitrust 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.

In addition, we can provide no assurance that these conditions will not result in the abandonment or delay of the merger.

In addition, we can provide no assurance

that these conditions will not result in the abandonment or delay of the merger.

The occurrence of any of these events individually or in combination could have a material adverse effect on our business, financial condition, and results of operations and on the trading price of our common stock.

In order to consummate the merger and distribute the cash consideration payable to Silicon Motion securityholders, we will incur material indebtedness of up to $3.5 billion and we may also use a portion of Silicon Motion’s and our cash resources.

This material increase in our indebtedness will adversely affect our operating results and cash-flows as we satisfy our underlying interest and principal payment obligations.

Issuing additional shares of our common stock, if material, will result in dilution of existing shares outstanding.

The loan agreement is also expected to contain financial and operational covenants that would 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 previously disclosed, MaxLinear will finance the merger in part with the Senior Secured Credit Facilities, which will provide funding of up to $3.5 billion.

We may also use a portion of Silicon Motion’s and our cash resources, and we may decide to issue additional shares of common stock to reduce our overall leverage ratio.

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

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.

In addition, the loan agreements will likely contain financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.

As of March 31, 2023, our aggregate indebtedness was $125.0 million.

The material increase in our indebtedness to up to $3.5 billion will adversely affect our 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.

Issuing additional shares of common stock, if material, will result in dilution of existing shares outstanding.

In addition, the loan agreements will contain financial and operational covenants that may adversely affect our ability to engage in certain activities, including certain financing and acquisition transactions, stock repurchases, guarantees, and similar transactions, without obtaining the consent of the lenders, which may or may not be forthcoming.

Such financial and operational covenants will include compliance with a secured net leverage ratio test.

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

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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.

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;

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

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.

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

Under the Senior Secured Credit Facilities, we may incur up to $3.5 billion in aggregate principal amount of senior indebtedness.

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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.

As of the date of this filing of our quarterly report on Form 10-Q, four 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.

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

While the merger is pending, we and Silicon Motion are subject to a number of risks that may harm either business and results of operations, including:

While the merger is pending, we and Silicon Motion are subject to a number of risks that may harm our business and results of operations, including:

• the diversion of management and employee attention from implementing growth strategies in existing markets or in new markets we or Silicon Motion are targeting;

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We and Silicon Motion cannot presently predict the effects, if any, if the merger is deemed to constitute an assignment or change in control under certain of Silicon Motion’s contracts and other arrangements, including the extent to which cancellation rights or other rights would be exercised, if at all, or the effect on our financial condition, results of operations or cash flows following the merger, but such effect could be material.

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

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

At the completion of the proposed merger with Silicon Motion, we expect to issue shares of our common stock to former Silicon Motion securityholders entitled to receive consideration pursuant to the Merger Agreement.

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The issuance of shares of our common stock to Silicon Motion securityholders in the acquisition and the assumption by us of Silicon Motion restricted stock units will cause a reduction in the relative percentage voting and economic interests of our current 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 additional risks associated with doing business in Taiwan because of tense regional geopolitical risk with China.

Following the merger, the revenue and operations of Silicon Motion will form a substantial portion of our revenue and operations, and since most of Silicon Motion’s business operations are in Taiwan and its principal executive offices are in Hong Kong, risks of conducting business in Taiwan and Hong Kong, 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 ” will be further intensified.

As the United States tightens export controls on China, Hong Kong and Taiwan are also affected and given Silicon Motion’s prevalence of operations in these regions, our potential regulatory compliance risks will increase.

Past and recent developments in relations between Taiwan and China have on occasion depressed the market prices of the securities of companies with significant business activities in Taiwan.

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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.

Given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict its future impact on our or Silicon Motion’s business, and there is no guarantee that efforts by us or Silicon Motion to address any adverse impacts will be effective.

The merger may also be delayed or adversely affected by the COVID-19 pandemic, or become more costly due to our or Silicon Motion’s respective policies or government policies and actions to protect the health and safety of individuals, or government policies or actions to maintain the functioning of national or global economies and markets could delay or prevent the completion of the merger.

We and Silicon Motion may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect our or Silicon Motion’s financial condition or results of operations.

We expect to incur substantial expenses related to the merger of MaxLinear and Silicon Motion.

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

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

Following the merger with Silicon Motion, our stockholders and former securityholders of Silicon Motion will own interests in a company operating an expanded business with more assets and a different mix of liabilities.

Our current stockholders (and the securityholders of Silicon Motion who will receive our common stock in connection with the merger) may not wish to continue to invest in us, or may wish to reduce their investment in us, in order to comply with institutional investing guidelines, to increase diversification or to track any rebalancing of stock indices in which our common stock and Silicon Motion ADS are or were included.

If, following the merger, large amounts of our common stock are sold, the price of our common stock could decline.

We will record goodwill in connection with the Silicon Motion merger that could become impaired and adversely affect our future operating results.

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To the extent the value of goodwill or intangibles becomes impaired, we may be required to incur material charges relating to such impairment.

Any such impairment charge 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.

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

If, following the merger, large amounts of our common stock are sold, the price of our common stock could decline.

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

Risks Related to Our Business

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

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

The global semiconductor market in general, and the broadband, wired and wireless infrastructure, and broader industrial and communications analog and mixed-signal markets in particular, are highly competitive.

We compete in different target markets to various degrees on the basis of a number of principal competitive factors, including our products’ performance, features and functionality, energy efficiency, size, ease of system design, customer support, product roadmap, reputation, reliability and price.

We expect competition to increase and intensify as a result of industry consolidation and the resulting

creation of larger semiconductor companies.

Large semiconductor companies resulting from industry consolidation could enjoy substantial market power, which they could exert through, among other things, aggressive pricing that could adversely affect our customer relationships and revenues.

We expect competition to increase and intensify as a result of industry consolidation and the resulting creation of larger semiconductor companies.

In addition, we expect the internal resources of large, integrated original equipment manufacturers, or OEMs, may continue to enter our markets.

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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., 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.

Our primary merchant semiconductor competitors include Broadcom Inc., Qualcomm Incorporated, Realtek Semiconductor Corp., Nokia Corp., Skyworks Solutions, Inc., Xilinx, Inc., Altera Corporation, Credo Semiconductor Inc., MediaTek, Inc., Marvell Technology Group Ltd., MACOM Technology Solutions Holdings, Inc., Texas Instruments Incorporated, Analog Devices, Inc., Renesas Electronics Corporation, and Microchip Technology Inc.

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.

In addition, it is quite likely that a number of other public and private companies are in the process of developing competing products for our current and target markets.

Because our products often are building block semiconductors which provide functions that in some cases can be integrated into more complex integrated circuits, we also face competition from manufacturers of integrated circuits, some of which may be existing customers or platform partners that develop their own integrated circuit products.

In addition, a number of other public and private companies are in the process of developing competing products for our current and target markets.

Because our products often are building block semiconductors which provide functions that in some cases can be integrated into

more complex integrated circuits, we also face competition from manufacturers of integrated circuits, some of which may be existing customers or platform partners that develop their own integrated circuit products.

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

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

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

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

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

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

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

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

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

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.

Global economic conditions, including factors such as high inflation or a recession could adversely affect our business, financial condition, and results of operations.

Inflation and uncertainty in customer demand and the worldwide economy has continued, and we have experienced and may experience continued volatility in our sales and revenues in the near future.

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

Many of these purchases are discretionary.

Global economic volatility and economic volatility in the specific markets in which the devices that incorporate our products are ultimately sold, including the impacts of current high rates of inflation and recession, can cause extreme difficulties for our customers and third-party vendors in accurately forecasting and planning future business activities.

For example, on March 10, 2023, Silicon Valley Bank, or SVB was placed into receivership with the Federal Deposit Insurance Corporation, or FDIC, which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers.

If banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.

In addition, a government shutdown or the U.S.

government’s failure to raise the debt ceiling, which increases the possibility of a default by the U.S.

government on its debt obligations, or related credit-rating downgrades could have adverse effects on the broader global economy and contribute to, or worsen, an economic recession.

This unpredictability could cause our customers to delay or reduce their capital expenditures and spending on our products, which would delay and lengthen sales cycles and negatively affect the overall demand for our products.

Worsening economic instability could result in a cancellation of such orders or otherwise adversely affect spending for information technology and limit our ability to forecast future demand for our products, which could reduce expected revenues or result in a write-down of any excess or obsolete inventory.

Furthermore, during challenging economic times, our customers may face challenges in gaining timely access to sufficient credit, which could impact their ability to make timely payments to us.

These events, together with economic volatility that may face the broader economy and, in particular, the semiconductor and communications industries, may adversely affect, our business, particularly to the extent that consumers decrease their discretionary spending for devices deploying our products.

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

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

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

• Disruptions in product shipments from travel and shipping restrictions imposed in response to local outbreaks, or from customer postponement requests;

• Governmental closures beyond our control;

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

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

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

• Inefficiencies, delays and additional costs in design win, product development, production and fulfillment;

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

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

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

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

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

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

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 and demand.

The current downturn, or any future downturns, may result in diminished product demand, production overcapacity, high inventory levels and accelerated erosion of our average selling prices.

Furthermore, any future upturn in the semiconductor industry could result in increased competition for access to third-party foundry and assembly capacity.

We are dependent on the availability of this capacity to manufacture and assemble all of our products.

None of our third-party foundry or assembly contractors has provided assurances that adequate capacity will be available to us in the future.

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

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

We sell our products throughout the world.

Products shipped to Asia accounted for 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.

Products shipped to Asia accounted for 77% of our net revenue in the three months ended March 31, 2023.

In addition, as of March 31, 2023, approximately 79% 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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• changes in political, regulatory, legal or economic conditions;

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

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

• disruptions of capital and trading markets;

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

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

• public health emergencies, such as an outbreak of COVID-19;

• differing employment practices and labor standards;

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

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.

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.

Changes in trade policies among the United States and other countries, in particular the imposition of new or higher tariffs, could place pressure on our average selling prices as our customers seek to offset the impact of increased tariffs on their own products.

Increased tariffs or the imposition of other barriers to international trade could have a material adverse effect on our revenues and operating results.

The United States has imposed or proposed new or higher tariffs on certain products exported by a number of U.S.

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.

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

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

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

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

In addition, tariffs could make our OEM and ODM customers’ products less attractive relative to products offered by their competitors, which may not be subject to similar tariffs.

Some OEM and ODMs in our industry have already implemented short-term price adjustments to offset such tariffs and transitioned their production and supply chain to locations outside of China.

We believe that increases in tariffs on imported goods or the failure to resolve current international trade disputes could have a material adverse effect on our business and operating results.

We will lose sales if we are unable to obtain or retain government authorization to export certain of our products or technology related to the development or production of our products or if such authorizations are revoked, 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.

In certain instances, these regulations may require pre-shipment authorization approval from a government authority;

depending on the country and/or individual or entity involved, approval may not be granted.

For products subject to the Export Administration Regulations, or EAR, administered by the U.S.

Department of Commerce’s Bureau of Industry and Security, or BIS, a license may be required, depending on one or more factors including the type of product or technology at issue, the intended end use, 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.

Obtaining export licenses can be difficult, costly and time-consuming and we may not always be successful in obtaining necessary export licenses.

Our failure to obtain required import or export approval for our products may adversely affect our business, and other limitations imposed on our ability to export or sell our products may also harm our international and domestic revenue.

In addition, it is possible that BIS can revoke licenses that have been granted or decline to re-issue such licenses upon their expiration.

Although our policies, controls, and procedures are designed to maintain ongoing compliance with applicable export controls laws, we cannot assure you that we have been or will be at all times in complete compliance with such laws and regulations.

For example, our products could be diverted to bad actors.

If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions.

In addition, if our customers fail to comply with these regulations and laws, we may be required to suspend sales to these customers, which could damage our reputation and negatively impact our results of operations.

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

To the extent that we do business with parties on the Entity List under export licenses, our business could be affected if the government does not grant or renew required licenses.

We currently have a license from BIS that permit our transactions with a restricted party, but that license may be revoked at any time or denied for renewal when the license expires.

In October 2022, the BIS issued an interim final rule to implement (1) 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.

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

and (3) additional export controls on transactions involving items for supercomputer and semiconductor manufacturing

The additional export controls on certain manufacturing end-uses resulted in an expansion of the scope of foreign-produced items subject to license requirements for 28 Chinese entities already 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), which includes one immaterial customer of MaxLinear located in China.

Export control laws, regulations, and orders are complex, change frequently and with limited or no notice, have generally become more stringent over time and have intensified as U.S.-China geopolitical tensions worsen.

The addition of new entities to restricted party lists can further increase the scope of export restrictions applicable to our business.

Failure to obtain required export licenses for our products or the placement of one or more of our customers on any restricted parties lists could significantly reduce our revenue and harm our business.

Additionally, current and future business with parties subject to significant export restrictions, including those named on the Entity List may be limited in scope or suspended entirely in order to comply with the EAR or other applicable laws or regulations and, as a result, our revenue could be adversely impacted until a license is granted or renewed.

It is possible that the U.S.

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, or 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, (1) we took immediate action to remediate, including by preventing recurrence and (2) our Audit Committee engaged outside counsel to conduct a privileged investigation.

This investigation has been completed.

On March 3, 2023, we submitted a comprehensive voluntary self-disclosure to BIS regarding the potential EAR violation described above and other potential export control violations for which we have taken actions to remediate the infractions.

Our voluntary self-disclosure is currently under review at BIS, and it is unknown when such review will be completed.

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.

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.

Beginning in May 2019 and subsequently, other than for certain transactions for which we have a valid export license issued by BIS, we ceased business operations with entities affiliated with Huawei Technologies Co., Ltd., or Huawei and certain other entities, following an amendment to the EAR adding such entities to the Entity List for acting contrary to the national security or foreign policy interests of the United States.

As noted above, the export license that is currently issued can be revoked or BIS could choose not to renew this license, which would halt the currently-approved licensed activities.

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

The BIS has been adding many new entities to the Entity List and 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.

As noted above, our ability to sell or distribute products or technology will be limited if BIS further amends the EAR to add restrictions against parties who are or may be our customers.

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

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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 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.

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

However, the magnitude

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

The Company does not currently sell product in Russia, or sell product to distributors for resale in Russia.

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, further sanctions on Russia or other countries, and/or increases in costs of certain raw materials and transportation will not also adversely affect our revenues and operating results.

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

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

In the 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.

In the three months ended March 31, 2023, one customer accounted for 15% of our net revenue, and our ten largest customers collectively accounted for 62% of our net revenue, of which distributor customers accounted for 16% 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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Our relationships with some customers may deter other potential customers who compete with these customers from buying our products.

To attract new customers or retain existing customers, we may offer these customers favorable prices on our products.

In that event, our average selling prices and gross margins would decline.

To attract new customers or retain existing customers, we sometimes offer customers favorable prices on our products which results in a decline in our average selling prices and, if material, a decline in our gross margins.

The loss of a key customer, a reduction in sales to any key customer or our inability to attract new significant customers could seriously impact our revenue and materially and adversely affect our results of operations.

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Our agreements with certain of these distributors provide protection against price reduction on their inventories of our products.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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 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.

For the three months ended March 31, 2023 and 2022, revenue directly attributable to broadband applications accounted for approximately 33% and 51% of our net revenue, respectively.

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

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

In addition, consolidation trends among Pay-TV and broadband operators may continue, which could delay or lead to cancellations of major spending programs and have a material adverse effect on our future operating results and financial condition.

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

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

For three months ended March 31, 2023 and 2022, our research and development expense was $67.3 million and $65.9 million, respectively.

We expect our research and development expenses to increase in future years when we expand our product portfolio and enhance existing products.

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

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

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

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

Our net revenue increased 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.

We may not sustain our current level of revenue and/or manage future growth effectively.

The impact of excess inventory in the channel could continue to influence our customers’ expected demand for certain of our products.

Our net revenue decreased from $263.9 million in the three months ended March 31, 2022 to $248.4 million in the three months ended March 31, 2023.

Prior to 2023, our net revenues grew to $1.1 billion for the year ended December 31, 2022.

Continued uncertainty in customer demand as well as the global economy could continue to result in increased volatility in our sales and revenues, and we may not sustain our current level of revenue.

Further, the impact of excess inventory in the channel could continue to influence our customers’ expected demand for certain of our products.

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.

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

To sustain and manage any future growth successfully, we believe we must effectively, among other things:

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

To manage any future growth successfully, we believe we must effectively, among other things:

• successfully develop new products and penetrate new applications and markets;

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• enhance our information technology support for enterprise resource planning and design engineering by adapting and expanding our systems and tool capabilities, and properly training new hires as to their use.

If we are unable to sustain and manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we may fail to satisfy customer requirements, maintain product quality, execute our business plan, or respond to competitive pressures.

If we are unable to resume and manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products and we may fail to satisfy customer requirements, maintain product quality, execute our business plan, or respond to competitive pressures.

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 with current or prospective customers and adversely affect our operating costs.

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The process of identifying a recalled product in devices that have been widely distributed may be lengthy and require significant resources, and we may incur significant replacement costs, contract damage claims from our customers and reputational harm.

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

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

Costs or payments made in connection with warranty and product liability claims and product recalls could materially affect our financial condition and results of operations, and ability to obtain future coverage.

Although we purchase insurance to mitigate certain losses, any uninsured losses could negatively affect our operating results.

Although we maintain reserves for reasonably estimable liabilities and purchase product liability insurance, if a catastrophic product liability claim were to occur, our reserves may be inadequate to cover the uninsured portion of such claims.

Further, our business liability insurance may be inadequate, may not cover the claims, and future coverage may be unavailable on acceptable terms, which could adversely impact our financial results.

If we are unable to attract, train and retain qualified personnel and senior management, our business, financial condition, results of operations and prospects could suffer.

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.

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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 and other personnel, could have a material adverse effect on our business, financial condition and results of operations.

In addition, in making employment decisions, particularly in the high-technology industry, job candidates often consider the value of the stock-based compensation they are to receive in connection with their employment.

We have recently experienced fluctuations, including declines, in the market price of our stock, and a reduction in force which could adversely affect our ability to attract, motivate or retain key employees.

In addition, our future performance also depends on the continued services and continuing contributions of our senior management to execute our business plan and to identify and pursue new opportunities and product innovations.

Our employment arrangements with our employees do not generally require that they continue to work for us for any specified period, and therefore, they could terminate their employment with us at any time.

The loss of the services of one or more of our key employees, especially our management and 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.

Our future success also depends 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 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.

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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however, we cannot provide any assurances that we will accurately predict the direction in which our markets will evolve or that we will be able to develop, market, or sell new products that respond to such changes successfully or in a timely manner, if at all.

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 are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results which has negatively affected our inventory levels, sales and operating results.

Our revenue is generated on the basis of shipments of products under purchase orders with our customers rather than long-term purchase commitments.

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Our products are manufactured using a silicon foundry according to our estimates of customer demand, which requires us to make separate demand forecast assumptions for every customer, each of which may introduce significant variability into our aggregate estimate.

We have limited visibility into future customer demand and the product mix that our customers will require, which could adversely affect our revenue forecasts and operating margins.

We have limited visibility into future customer demand and the product mix that our customers will require, which has in the past affected and could in the future adversely affect our revenue forecasts and operating margins.

Moreover, because our target markets are relatively new, many of our customers have difficulty accurately forecasting their product requirements and estimating the timing of their new product introductions, which ultimately affects their demand for our products.

Historically, because of this limited visibility, actual results have been different from our forecasts of customer demand.

Some of these differences have been material, leading to excess inventory or product shortages and revenue and margin forecasts above those we were actually able to achieve.

Some of these differences have been material which has led to and could continue to lead to excess inventory or product shortages and revenue and margin forecasts above those we were actually able to achieve.

These differences may occur in the future, and the adverse impact of these differences between forecasts and actual results could grow if we are successful in selling in and expanding the customer base for our products.

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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.

Our operating history has historically focused on developing integrated circuits for specific terrestrial, cable and satellite television, and broadband voice and data applications, satellite set-top and gateway boxes and outdoor units and physical medium devices for the optical interconnect markets.

However, as part of our growth strategy, we seek to expand our addressable market into new product categories.

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.

Our operating history had historically focused on developing integrated circuits for specific applications and more recently, the wired whole-home broadband connectivity market and 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.

As part of our growth strategy, we seek to expand our addressable market into new product categories.

For example, we 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 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.

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.

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

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.

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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These factors include, among others:

• seasonality or cyclical fluctuations in our markets;

• changes in end-user demand for the products manufactured and sold by our customers;

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• incurrence of research and development and related new product expenditures;

• seasonality or cyclical fluctuations in our markets;

• government actions, by the United States, China or other countries, that impose barriers or restrictions that would impact our ability to sell or ship products to customers;

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• changes in our product mix or customer mix;

• potential indemnification claims, including those arising as a result of our contractual arrangements or intellectual property disputes;

• intellectual property disputes;

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

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

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

• the effects of competitive pricing pressures, including decreases in average selling prices of our products.

• uncertainties arising from the impact of the COVID-19 pandemic on the market and our business operations.

These factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly or annual operating results.

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Any failure to adjust spending or our operations quickly enough to compensate for a revenue shortfall could magnify its adverse impact on our results of operations.

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

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

Furthermore, any upturn in the semiconductor industry could result in increased competition for access to third-party foundry and assembly capacity.

We are dependent on the availability of this capacity to manufacture and assemble all of our products.

None of our third-party foundry or assembly contractors has provided assurances that adequate capacity will be available to us in the future.

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

Our business is subject to various international and U.S.

laws and governmental regulations, and compliance with these laws and regulations may cause us to incur significant expenses.

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

Our business is subject to various international and U.S.

laws, regulations and other legal requirements, including those related to packaging, product content, labor, import/export control regulations, anticorruption laws such as the Foreign Corrupt Practices Act, privacy, cybersecurity, competition and antitrust and others.

These laws and regulations are complex, change frequently, occasionally are conflicting or ambiguous, and have generally become more stringent over time.

A failure to maintain compliance with applicable laws and regulations could result in a material adverse effect on our business and operating results, and we could be subject to civil or criminal penalties.

Our business is subject to various laws and regulations in the United States and other jurisdictions where we do business, including but not limited to laws, regulations and other legal requirements related to packaging;

product content;

labor and employment;

export controls;

anti-corruption;

personal and data privacy;

cybersecurity;

human rights;

conflict minerals;

environment, health and safety;

competition and antitrust;

and intellectual property ownership and infringement.

These laws and regulations are complex, change frequently and with little or no notice, occasionally are conflicting or ambiguous, and have generally become more stringent over time.

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

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.

Although our policies, controls, and procedures are designed to maintain ongoing compliance with applicable laws, we cannot assure you that we have been or

will be at all times in compliance with such laws and regulations.

The costs of complying with these laws (including the costs of any investigations, auditing and monitoring) could adversely affect our current or future business.

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

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, including a semiconductor foundry and OSAT providers.

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.

At times, we may discover issues that we bring to the attention of the relevant government agencies, as we did on March 3, 2023.

We could incur increased administrative and legal costs in order to respond to any inquiries or prepare voluntary self-disclosures to the appropriate government agency.

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 with respect to applicable export control laws, but there can be no assurance that our policies and procedures will prove effective.

The Company has adopted a new Code of Ethics and Business Conduct and will be implementing an enhanced Global Compliance and Ethics Program overseen by the Chief Compliance Officer.

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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If we fail to adequately address any of these rules or regulations, our business could be harmed.

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

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.

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 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 have been and may in the future be subject to information technology failures, including security breaches, cyber-attacks, design defects or system failures, 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.

In June 2020, we announced a security incident resulting from a Maze ransomware attack affecting certain but not all operational systems within our information technology infrastructure.

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.

Since that time, our internal information technology team, supplemented by a leading cyber defense firm, took steps aimed at containing and assessing this incident, including implementing enhanced security controls aimed at protecting our information technology systems.

Since that event, security breaches and incidents, computer malware and computer hacking attacks have continued to become more prevalent and sophisticated.

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

We experience cyber-attacks of varying degrees on our technology infrastructure and systems and notwithstanding our defensive measures, experienced programmers, hackers or state actors may be able to penetrate our security controls through attacks such as phishing, impersonating authorized users, ransomware, viruses, worms and other malicious software programs, exploitation of design flaws, bugs and other security weaknesses and vulnerabilities, covert introduction of malware to computers and networks, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event or that may continue undetected for an extended period of time.

Geopolitical tensions or conflicts may create heightened risk of cyber-attacks and attackers have used artificial intelligence and machine learning to launch more automated, targeted and coordinated attacks against targets.

Businesses we acquire may increase the scope and complexity of our information technology systems, and this may increase our risk exposure to cyber-attack when there are difficulties integrating diverse legacy systems that support operations for the acquired businesses.

Our information technology infrastructure also includes products and services provided by third parties, and these providers can experience breaches of their systems and products, or provide inadequate updates or support, which can impact the security of our systems and our proprietary or confidential information.

A cybersecurity incident or other compromise of our information technology systems could result in unauthorized publication of confidential business or proprietary information belonging to us, a customer, supplier, employee or other third party, including personal data, result in violations of privacy or other laws, expose us to a risk of litigation, cause us to incur

direct losses if attackers initiate wire transfers or access our bank or investment accounts, or damage our reputation.

More generally, any theft, loss, misuse, or other unauthorized processing of any confidential business or proprietary information, including personal data, collected, used, stored, transferred, or otherwise processed by us or on our behalf could result in significantly increased costs, expenses, damage to our reputation, and claims, litigation, demands, and regulatory investigations or other proceedings.

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

In addition, our inability to use or access our information systems at critical points in time could adversely affect the timely and efficient operation of our business.

Any delayed sales, significant costs or lost customers resulting from these technology failures could adversely affect 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.

From time-to-time, we upgrade software that we use in our business, including our enterprise resource planning, or ERP, system.

Our business may be disrupted if our software does not work as planned or if we experience issues relating to any implementation, or accessing our software as has happened in a previous cybersecurity attack, in which case we may be unable to timely or accurately prepare financial reports, make payments to our suppliers and employees, or ship to, invoice and collect from our customers.

We may be subject to supply chain attacks where threat actors attempt to inject malicious code into our products thus infecting our products and the systems of our customers.

Any such supply chain attack could have magnified damages to our business as a direct result of the attack as well as due to a loss of credibility or reputation with our customers.

Such attempts are increasing in number and in technical sophistication, and if successful, expose us and the affected parties to risk of loss or misuse of proprietary or confidential information or disruptions of our business operations, including our manufacturing operations.

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 information security systems of these third parties and they face substantial security risks similar to those outlined above.

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, payments to fraudulent bank accounts, and expose us to a risk of loss, misappropriation, unavailability and other unauthorized processing of information.

Any of the foregoing, or the perception any of them has occurred, could have a material adverse impact on 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 any of the security breaches or incidents outlined above, 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, potentially in a material manner.

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.

The legislative, enforcement policy and regulatory framework for privacy, data protection and cybersecurity issues worldwide is rapidly evolving and complex 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.

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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.

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 personal data, 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.

These laws may require that our overall information technology security environment meet certain standards and/or be certified.

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.

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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.

California has adopted a new law, the California Privacy Rights Act of 2020, or CPRA, that substantially expands the CCPA and was effective as of 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.

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

In 2021, the National People’s Congress

passed the Data Security Law of the People’s Republic of China, or the Data Security Law.

The Data Security Law is the first comprehensive data security legislation in the People's Republic of China, or 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.

The laws outlined above are only a sample of the governmental laws, regulations and other legal obligations related to privacy, data protection, and cybersecurity to which we are subject.

Various aspects of these laws, including their interpretation and enforcement, 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 such laws and regulations, remain uncertain and continue to evolve, 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, all of which could have a material 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 have a material adverse effect on 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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Our pursuit of necessary technological advances may require substantial time and expense.

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

As of March 31, 2023, our aggregate indebtedness was $125.0 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 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.

As of March 31, 2023, our aggregate indebtedness was $125.0 million from an initial secured term B loan facility, or the Initial Term Loan under the June 23, 2021 Credit Agreement.

The June 23, 2021 Credit Agreement also provides for a revolving credit facility of up to $100.0 million, or the Revolving Facility, which remains undrawn as of March 31, 2023.

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.

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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.

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%.

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.

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

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

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

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

The Initial Term Loan under the June 23, 2021 Credit Agreement is only subject to operational covenants.

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

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

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

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

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

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

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

• our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate, including limiting our future investments or ability to enter into acquisitions and strategic partnerships;

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

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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.

In connection with entering into the Merger Agreement, we entered into a commitment letter, dated as of May 5, 2022, and amended on June 17, 2022 and October 24, 2022 with Wells Fargo Bank, N.A.

and Wells Fargo Securities, LLC, or 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

$2.7375 billion, (ii) a senior secured term A loan facility in an aggregate principal amount of up to $512.5 million, and (iii) 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.

We have completed multiple acquisitions in the past eight years.

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

Any such transactions could result in:

Any such transactions has resulted and could result in:

• issuances of equity securities dilutive to our existing stockholders;

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• 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.

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 adverse effect on our business and financial condition.

If the purchase price is paid with our stock, it would be dilutive to our stockholders.

In addition, we may assume liabilities associated with a business acquisition or investment, including unrecorded liabilities that are not discovered at the time of the transaction, and the repayment of those liabilities may have a material and adverse effect on our financial condition.

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

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

We may not be able to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary regulatory approvals or complete such transactions on terms that are favorable to us.

We may not be able to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary antitrust approvals or complete such transactions on terms that are favorable to us.

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

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

Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome

We may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, including intellectual property, product liability, employment, class action, whistleblower and other litigation claims, and governmental and other regulatory investigations and proceedings.

Such matters can be time-consuming, divert management's attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices.

we have implemented a reduction in force and the attendant layoffs has resulted and could result in the risk of claims being made by or on behalf of affected employees.

In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect our financial condition and results of operations.

Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements.

Any of the foregoing could adversely affect our business, financial condition, and results of operations.

Risks Relating to Intellectual Property

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.

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

The semiconductor industry is characterized by companies that hold large numbers of patents and other intellectual property rights and that vigorously pursue, protect and enforce intellectual property rights.

Third parties have in the past and may in the future assert against us and our customers and distributors their patent and other intellectual property rights to technologies that are important to our business.

In particular, from time to time, we receive correspondence from competitors and other third parties seeking to engage us in discussions concerning potential claims against us, and we receive correspondence from customers seeking indemnification for potential claims related to infringement claims asserted against down-stream users of our products.

We investigate these requests and claims as received and could be required to enter license agreements with respect to third party intellectual property rights or indemnify third parties, either of which could have an adverse effect on our future operating results.

For example, we were recently involved in a litigation with Bell Semiconductor, which has since been settled pursuant to a Settlement and Patent License Agreement.

In addition, from time to time, we receive correspondence from competitors and other third parties seeking to engage us in discussions concerning potential claims against us, and we receive correspondence from customers seeking indemnification for potential claims related to infringement claims asserted against down-stream users of our products.

Claims that our products, processes or technology infringe third-party intellectual property rights, regardless of their merit or resolution are costly to defend or settle and could divert the efforts and attention of our management and technical personnel.

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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.

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

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 of our current or future proceedings result in an adverse outcome, we could be required to:

• cease the manufacture, use or sale of the infringing products, processes or technology;

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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.

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

We cannot assure you that these contractual

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

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

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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 security breaches and cyber-attacks, that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results.

In June 2020, we announced a security incident resulting from a Maze ransomware attack affecting certain but not all operational systems within our information technology infrastructure.

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.

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.

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

In addition, our inability to use or access our information systems at critical points in time could adversely affect the timely and efficient operation of our business.

Any delayed sales, significant costs or lost customers resulting from these technology failures could adversely affect 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.

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.

We face risks related to security vulnerabilities in our products.

We regularly are subject to security vulnerabilities with respect to our products as well as intellectual property that we purchase or license from third parties for use in our products.

Our products are used in application areas that create new or increased cybersecurity and privacy risks, including applications that gather and process large amounts of data, such as the cloud or Internet of Things, and critical infrastructure, payment card applications, and automotive applications.

Security features in our products cannot make our products entirely secure, and security vulnerabilities identified in our products have resulted in, and are expected to continue to result in, attempts by third parties to identify and exploit additional vulnerabilities.

Vulnerabilities are not always mitigated before they become known.

We, our customers, and the users of our products do not always promptly learn of or have the ability to fully assess the magnitude or effects of a vulnerability, including the extent, if any, to which a vulnerability has been exploited.

Mitigation techniques designed to address security vulnerabilities, including software and firmware updates or other preventative measures, are not always available on a timely basis, or at all, and at times do not operate as intended or effectively resolve vulnerabilities for all applications.

In addition, we are often required to rely on third parties, including hardware, software, and services vendors, as well as our customers and end users, to develop and/or deploy mitigation techniques, and the availability, effectiveness, and performance impact of mitigation techniques can depend solely or in part on the actions of these third parties in determining whether, when, and how to develop and deploy mitigations.

We and such third parties make prioritization decisions about which vulnerabilities to address, which can delay, limit, or prevent development or deployment of a mitigation and harm our reputation.

Subsequent events or new information can develop that changes our assessment of the impact of a security vulnerability, which can cause certain claims or customer satisfaction considerations, as well as result in litigation or regulatory inquiries or actions over these matters.

Security vulnerabilities and/or mitigation techniques can result in adverse performance or power effects, reboots, system instability or unavailability, loss of functionality, non-compliance with standards, data loss or corruption, unpredictable system behavior, decisions by customers, regulators and end users to limit or change the applications in which they use our products or product features, and/or the misappropriation of data by third parties.

Security vulnerabilities and any limitations or adverse effects of mitigation techniques can adversely affect our results of operations, financial condition, customer relationships, prospects, and reputation in a number of ways, any of which may be material.

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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We do not have our own manufacturing facilities and rely on a limited number of third parties to manufacture, assemble, and test our products.

The failure to manage our relationships with our third-party contractors successfully, or impacts from global supply shortages, natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products.

The failure to manage our relationships with our third-party contractors successfully, or impacts from volatility in global supply, natural disasters, public health crises, or other labor stoppages in the regions where such contractors operate, could adversely affect our ability to market and sell our products.

We operate an outsourced manufacturing business model that utilizes third-party foundry and assembly and test capabilities.

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 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.

Currently, the majority of our products are manufactured by 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.

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

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

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

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

• capacity shortages during periods of high demand or from events beyond our control or inventory oversupply during periods of decreased demand.

For example, we have experienced inventory oversupply in certain of our products due to changes in customer demand which has added to volatility in managing the business.

Inventory oversupply could also lead to inventory write-downs, including charges for any excess or obsolete inventory which, if material, could negatively impact our gross margins;

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

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• potential increases in prices;

• our use of SMIC, which is currently a restricted party on the BIS entity list, to manufacture certain of our products may be impaired if one or more of the following were to occur:

(1) we are unable to obtain U.S.

export licenses authorizing its interactions and technology exchanges with SMIC, or (2) if BIS increases export control restrictions to SMIC without the ability for us to obtain a U.S.

export license, or (3) U.S.

providers of semiconductor manufacturer equipment are unable to export such equipment or related spare or replacement parts used in the manufacture of our products, or obtain a license to export such equipment and parts, to SMIC.

The ability and willingness of our third-party contractors to perform is largely outside our control.

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

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

region, principally in China, Taiwan, and Singapore.

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

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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.

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

Any disruption resulting from similar events on a larger scale or over a prolonged period could cause significant delays in shipments of our products until we are able to resume such shipments, or shift our manufacturing, assembly, or test from the affected contractor to another third-party vendor, if needed.

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

There can be no assurance that alternative capacity could be obtained on favorable terms, if at all.

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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 44% and 46% of our net revenue in the nine months ended September 30, 2022 and 2021, respectively.

Sales to distributors accounted for approximately 43% and 47% of our net revenue in the three months ended March 31, 2023 and 2022, 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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We do not have any long-term supply contracts with our contract manufacturers or suppliers, and any disruption in our supply of products or materials could have a material adverse effect on our business, revenue and operating results.

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

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

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

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

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

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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 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.

For example, in the three months ended March 31, 2023, the trading price of our common stock ranged from a low of $32.00 to a high of $43.66.

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

• any developments related to our pending merger with Silicon Motion;

• actual or anticipated fluctuations in our financial condition and operating results;

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• sales of our common stock by us or our stockholders;

• general economic and market conditions, including the impacts from sanctions against Russia and the military conflict in Ukraine, increased inflationary pressures and the global COVID-19 pandemic.

• general economic and market conditions, including the impacts from sanctions against Russia and the military conflict in Ukraine, increased inflationary pressures, interest rate changes, and the global COVID-19 pandemic.

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

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Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

We have adopted a stock repurchase program to repurchase shares of our common stock;

however, any future decisions to reduce or discontinue purchasing our common stock pursuant to our stock repurchase programs could cause the market price for our common stock to decline.

Our share repurchase program has been temporarily suspended since July 2022 due to our pending merger with Silicon Motion.

Although our board of directors has authorized a stock repurchase program, any determination to resume our stock repurchase program and execute our stock repurchase program will be subject to, among other things, our financial position and results of operations, available cash and cash flow, capital requirements, and other factors, as well as our board of director’s continuing determination that the repurchase program are in the best interests of our shareholders and is in compliance with all laws and agreements applicable to the repurchase program.

Our stock repurchase program does not obligate us to acquire any common stock.

If we fail to meet any expectations related to stock repurchases, the market price of our common stock could decline, and could have a material adverse impact on investor confidence.

Additionally, price volatility of our common stock over a given period may cause the average price at which we repurchase our common stock to exceed the stock’s market price at a given point in time.

We may further increase or decrease the amount of repurchases of our common stock in the future.

Any reduction or discontinuance by us of repurchases of our common stock pursuant to our current stock repurchase program could cause the market price of our common stock to decline.

Moreover, in the event repurchases of our common stock are reduced or discontinued, our failure or inability to resume repurchasing common stock at historical levels could result in a lower market valuation of our common stock.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.

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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 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.

As of March 31, 2023, we had approximately 80.0 million shares of common stock outstanding.

All shares of our common stock are freely tradable without restrictions or further registration under 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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We issued 0.9 million shares of our common stock for the 2022 performance period in February 2023.

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

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

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

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General Risk Factors

Global economic conditions, including factors such as high inflation that adversely affect consumer spending for the products that incorporate our integrated circuits, could adversely affect our revenues, margins, and operating results.

Many of these purchases are discretionary.

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

This unpredictability could cause our customers to reduce spending on our products, which would delay and lengthen sales cycles.

Furthermore, during challenging economic times our customers may face challenges in gaining timely access to sufficient credit, which could impact their ability to make timely payments to us.