What changed in this filing

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Item 1A. Risk Factors

2023-07-27 compared with 2023-04-26 · 219 added, 228 removed, 826 unchanged (35% of the section changed)

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Our risk factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.

For the risks relating to our pending merger with Silicon Motion, please refer to the section of these risk factors captioned “Risks Relating to the Proposed Merger with Silicon Motion.”

For the risks relating to our previously pending merger with Silicon Motion, please refer to the section of these risk factors captioned “Risks Relating to the Previously Pending Merger with Silicon Motion.”

Risk Factor Summary

Risks Relating to the Proposed Merger with Silicon Motion

• 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.

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

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

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

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

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

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

Risks Relating to the Previously Pending Merger with Silicon Motion

• Although we terminated the merger, Silicon Motion could challenge the validity of our termination, including by commencing a dispute proceeding pursuant to the terms of the agreement and plan of merger, or the Merger Agreement, requiring us to consummate the merger.

• If we are required to consummate the merger, our actual results could differ materially from any expectations or guidance, including with respect to any cost savings and other potential synergies.

• If we are required to consummate the merger, failure to integrate Silicon Motion with our business successfully in the expected timeframe may adversely affect our results and financial condition.

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

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

• If we are required to consummate the merger, we will be required to seek and obtain debt financing and/or equity financing, which may not be available, given that the prior commitments from Wells Fargo Bank and other lenders have been terminated and 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.

• If we are required to consummate the merger and we finance such merger through the incurrence of additional 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 such indebtedness.

• Any dispute proceedings with Silicon Motion or additional securityholder lawsuits may cause us and/or Silicon Motion to incur substantial defense or settlement costs, or otherwise adversely affect us or Silicon Motion.

• 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.

• Counterparties of Silicon Motion may acquire certain rights which could negatively affect us following the merger, if we are required to consummate 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.

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

• If we are required to consummate the merger, we will be exposed to additional risks associated with doing business in Taiwan.

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

• The market value of our common stock could decline if large amounts of our common stock are sold if we are required to consummate the merger.

Risks Related to Our Business

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

• 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 level of revenue, which has declined, and/or manage future growth effectively.

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

• 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.

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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.

• The loss of, or a significant reduction in orders from major customers has had and could continue to 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.

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• 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 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.

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• 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.

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

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

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

• We may become involved in litigation as a result of our intellectual property, including patents we have divested.

Any such litigation may be time consuming, costly, and a distraction to key engineers and management.

Risks Relating to Reliance on Third Parties

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

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

• A lack of long-term supply contracts, and any supply disruption, including as a result of government restrictions, 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.

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

Risks Relating to our Proposed Merger with Silicon Motion

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

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

Risks Relating to our Previously Pending Merger with Silicon Motion

Although we terminated the merger, Silicon Motion could challenge the validity of our termination, including by commencing a dispute proceeding pursuant to the terms of the agreement and plan of merger, or the Merger Agreement, requiring us to consummate the merger.

We intend to vigorously defend against any legal proceedings related to the merger, but due to the uncertainties inherent in any legal proceedings, we cannot predict the outcome of any legal proceedings and could be required to consummate the merger according to the terms of the Merger Agreement and/or pay certain costs to Silicon Motion.

If we are required to consummate the merger, we will be required to obtain new debt financing and/or equity financing to finance the merger and we may be unable to secure financing related to the merger.

Legal proceedings are expensive and time-consuming, and may divert management’s attention from our business.

If we are required to consummate the merger, we will need to re-file under the HSR Act.

In addition, if we are required to consummate the merger, we could be required to obtain approval from Silicon Motion’s shareholders to approve the merger.

In such an event, 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.

In addition, 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.

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.

We have incurred and will incur substantial costs in connection with the previously pending merger.

These costs are primarily associated with the fees of our financial advisors, accountants, lenders, and legal counsel and, with limited exceptions relating to a portion of our financial advisor fees, will be payable regardless of whether the merger is completed.

In addition, we have diverted significant management resources in an effort to complete the merger and are subject to restrictions contained in the Merger Agreement on the conduct of our business during the pendency of the merger.

Since the merger has been terminated, we will have received little or no benefit in respect of such costs incurred.

Since the merger has been terminated, we may experience negative reactions from the financial markets and our suppliers, customers, customer prospects, and employees.

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.

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

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

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

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• our capital structure after the merger;

• the amount of goodwill and intangibles that will result from the merger;

• certain other purchase accounting adjustments that we expect to record in our financial statements in connection with the merger;

• the amount of goodwill and intangibles that would have resulted from the merger;

• certain other purchase accounting adjustments that we expected to record in our financial statements in connection with the merger;

• merger costs, including restructuring charges and transaction costs payable to our financial, legal, and accounting advisors;

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• 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 global economic downturn.

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 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;

Silicon Motion has recently experienced a decline in its financial results and 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 anticipated.

If we are required to consummate the merger, 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 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 our ability to realize incremental revenues from the merger in the amounts that we anticipated 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.

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.

If we are required to consummate the merger, any failure to integrate Silicon Motion successfully and to realize the financial benefits we anticipated from the merger would have a material adverse impact on our future operating results and financial condition and could materially and adversely affect the trading price or trading volume of our common stock.

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

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

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

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

and potential revenue growth resulting from the addition of Silicon Motion’s product portfolio.

Historically, we and Silicon Motion have been independent companies, and we will continue to operate as such until the consummation of the merger.

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’ business processes, technologies, operations and addressing the different corporate cultures of the two companies.

Historically, we and Silicon Motion have been independent companies, and we would have continued to operate as such until the consummation of the merger.

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

If we are required to consummate the merger, 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 and there could be increased compliance risks.

If we are required to consummate the merger and 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.

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

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

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

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

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

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

These business relationships may be subject to disruption as customers and others may elect to delay or defer purchase or design-win decisions or switch to other suppliers due to the uncertainty about the direction of our offerings, any perceived unwillingness on our part to support existing Silicon Motion products if 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 previously pending 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.

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

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

The adverse effect of any such disruptions could be exacerbated as a result of us providing notice of termination to 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 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.

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

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

This uncertainty may impair our or Silicon Motion’s ability to retain and motivate key personnel and our ability to retain and motivate them if the merger is consummated.

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

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

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

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

The consummation of the merger is subject to certain customary closing conditions such as 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.

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.

If the merger is not consummated, the price of our common stock may decline to the extent that such market price reflects a market assumption that the merger will be completed.

In addition, we have incurred and will incur substantial costs in connection with the proposed merger.

If the merger is not completed, we will have received little or no benefit in respect of such costs incurred.

If the merger is not completed under certain circumstances specified in the Merger Agreement, we may be required to pay a termination fee to Silicon Motion of $160 million, as described above.

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 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.

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 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 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 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 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, and we may decide to issue additional shares of our common stock to reduce our overall leverage ratio.

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.

If key employees depart, we may incur significant costs in identifying, hiring, and retaining replacements, which could have a material adverse effect on our business, operating results, and financial condition.

If we are required to consummate the merger and distribute the cash consideration payable to Silicon Motion securityholders, we will be required to seek and obtain debt financing and/or equity financing and we may also use a portion of Silicon Motion’s and our cash resources, and we may decide to issue additional shares of our common stock to reduce our overall leverage ratio.

If we finance the merger through the incurrence of additional indebtedness, 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 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.

If we are required to consummate the merger and we finance the merger through the incurrence of additional indebtedness, the material increase in our indebtedness 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.

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.

Specifically, our materially increased indebtedness could have important consequences to investors in our common stock, including the following:

Specifically, if we are required to consummate the merger and we finance the merger through the incurrence of additional indebtedness, our materially increased indebtedness could have important consequences to investors in our common stock, including the following:

• 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 a material adverse effect our operating results and could affect our ability to service the indebtedness;

While we may mitigate 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 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.

Our substantial indebtedness may increase our vulnerability to any generally adverse economic and industry conditions.

Our ability to make scheduled payments of the principal and interest when due, or to refinance our borrowings under the Senior Secured Credit Facilities, will depend on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.

Our business may not continue to generate cash flow from operations in the future sufficient to satisfy our obligations under our indebtedness, and any future indebtedness we may incur and to make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance the term loans or existing or future indebtedness will depend on the capital markets and our financial condition at such time.

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

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, 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.

MaxLinear stockholders or Silicon Motion securityholders could file additional lawsuits in the future related to the previously contemplated merger, which could 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, we are aware of four lawsuits challenging the merger with Silicon Motion that have been dismissed.

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

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

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

One of the conditions to the closing is the absence of any provision of applicable law or order by any court or governmental entity (subject to certain limited exceptions) that has the effect of restraining, enjoining or otherwise prohibiting the consummation of the merger.

Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the merger on the agreed-upon terms, then such injunction may prevent the merger from being completed, or from being completed within the expected timeframe.

The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect our or Silicon Motion’s business, financial conditions, results of operations and cash flows.

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 our business and results of operations, including:

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

If we are required to consummate the merger, one of the conditions to the closing is the absence of any provision of applicable law or order by any court or governmental entity (subject to certain limited exceptions) that has the effect of restraining, enjoining or otherwise prohibiting the consummation of the merger.

Therefore, if we are required to consummate the merger and a plaintiff were successful in obtaining an injunction prohibiting the consummation of the merger on the agreed-upon terms, then such injunction may prevent the merger from being completed, or from being completed within the expected timeframe.

If we are required to consummate the merger, the defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect our or Silicon Motion’s business, financial conditions, results of operations and cash flows.

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 antitrust approval from SAMR, and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

If we cannot demonstrate that we validly terminated the merger agreement, we could be required to pay Silicon Motion a termination fee.

In addition, under the merger agreement, 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 the Outside Date, which, under the terms of the Merger Agreement, would have been automatically extended to August 7, 2023, if, as of May 5, 2023, all conditions to closing were 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.

Although we have terminated the merger, any uncertainty could materially harm our or Silicon Motion’s businesses and results of operations.

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;

• potential diversion of public attention from positioning of our or Silicon Motion’s independent brand and products in a manner that appeals to customers;

• the fact that we and Silicon Motion have and will continue to incur expenses related to the merger prior to its closing;

• the potential inability to respond effectively to competitive pressures, industry developments and future opportunities, in particular, given the restrictions on the conduct of our or Silicon Motion’s business during the interim period between signing and closing due to the pre-closing covenants in the Merger Agreement;

• the fact that we and Silicon Motion have and will continue to incur expenses related to the merger;

• the potential inability to respond effectively to competitive pressures, industry developments and future opportunities;

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

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

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

If the merger is consummated, counterparties of Silicon Motion may acquire certain rights upon the merger, which could negatively affect us following the merger.

Silicon Motion is party to numerous contracts, agreements, licenses, permits, authorizations and other arrangements that contain provisions giving counterparties certain rights (including, in some cases, termination rights) in the event of an “assignment” of such agreement or a “change in control” of Silicon Motion or its subsidiaries.

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Whether a counterparty exercises any cancellation rights or other rights it has would depend on, among other factors, such counterparty’s views with respect to our financial strength and business reputation following the merger, prevailing market conditions and the business implications of exercising any such rights.

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 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.

We and Silicon Motion cannot presently predict the effects, if any, if the previously pending 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 we are required to consummate the merger with Silicon Motion, the issuance of shares of our common stock to Silicon Motion securityholders will reduce the ownership percentage interests of our stockholders.

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

If the merger is consummated, we expect that our stockholders will own approximately 86% and that Silicon Motion stockholders will own approximately 14% of our outstanding capital stock following completion of the merger.

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 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.

If we are required to consummate the merger with Silicon Motion, we will be exposed to additional risks associated with doing business in Taiwan because of tense regional geopolitical risk with China.

If the merger is required to be consummated, 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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We expect to incur substantial expenses related to the merger of MaxLinear and Silicon Motion.

We expect to incur substantial expenses in connection with the pending merger and subsequent integration of Silicon Motion’s business with MaxLinear.

We expect to incur substantial expenses in connection with the pending merger and if the merger is required to be consummated, subsequent integration of Silicon Motion’s business with MaxLinear.

We expect operational integration to require substantial management attention.

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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.

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

If the merger is consummated, 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.

The merger with Silicon Motion will be accounted for as a business combination using the acquisition method of accounting by MaxLinear in accordance with accounting principles generally accepted in the United States.

If we are required to consummate the merger, we will record goodwill in connection with the Silicon Motion merger that could become impaired and adversely affect our future operating results.

If we are required to consummate the merger, the merger with Silicon Motion will be accounted for as a business combination using the acquisition method of accounting by MaxLinear in accordance with accounting principles generally accepted in the United States.

Under the acquisition method of accounting, the assets and liabilities of Silicon Motion will be recorded, as of completion, at their respective fair values and added to our assets and liabilities.

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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 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.

Our primary merchant semiconductor competitors include Broadcom Inc., Qualcomm Incorporated, Realtek Semiconductor Corp., Nokia Corp., Skyworks Solutions, 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, 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.

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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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.

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

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

Our revenue has declined, and we may not sustain our current level of revenue, which has declined, and/or manage future growth effectively.

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

Our net revenue decreased from $280.0 million in the six months ended June 30, 2022 to $183.9 million in the six months ended June 30, 2023 and the decline in net revenue could continue in future periods.

The decrease is as a result of macroeconomic conditions impacting customer demand.

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 has continued 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 have fluctuated in the past 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 any.

If we are unable to resume adequate revenue growth and manage our operating expenses, 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;

• recruit, hire, train and manage additional qualified engineers for our research and development activities, especially in the positions of design engineering, product and test engineering and applications engineering;

• add sales personnel and expand customer engineering support offices;

• implement and improve our administrative, financial and operational systems, procedures and controls;

• 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 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.

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 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.

Products shipped to Asia accounted for 74% of our net revenue in the six months ended June 30, 2023.

In addition, as of June 30, 2023, approximately 78% 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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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.

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.

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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.

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.

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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) 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.

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

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.

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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.

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 in which limited technology was 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.

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.

On June 8, 2023, BIS closed out its review of our voluntary self-disclosure without monetary or other penalties and with the issuance of a “warning letter.”

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

and other governments such as China and Russia.

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

government and China have been frayed.

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

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

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.

Our business has been impacted and may continue to be impacted by geopolitical conditions such as international trade wars (including between the United States and China), the Russia-Ukraine conflict, and increased political tensions in Russia, Europe and Asia.

Currently, significant uncertainty surrounds the future trade relationship between the United States, China, and Russia.

government continues to make significant changes in U.S.

trade policies that could negatively affect our business.

Additionally, policies made by other countries, such as China and Russia, could also negatively impact our business.

In a number of cases, compliance with these policies has required us to take actions adverse to our business.

Beginning in May 2019, we ceased normal business operations with entities affiliated with Huawei Technologies Co., Ltd., and certain other entities following an amendment to the EAR which added these entities to the Entity List for acting contrary to the national security or foreign policy of the United States.

We obtained export licenses for certain transactions with these entities.

As noted above, export licenses can be revoked or BIS could choose not to renew such licenses, 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.

The BIS continues to add many new entities to the Entity List and 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.

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

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

Failure to obtain any

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

(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 end uses.

The additional export controls on certain manufacturing end-uses expanded the scope of items subject to license requirements for 28 Chinese entities already on the Entity List, which includes one immaterial customer of MaxLinear located in China and one customer of Silicon Motion.

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

In response to the United States tightening export controls on China, China has instituted restrictions of its own that affect U.S.

companies and may impact MaxLinear and related entities.

Such future developments related to U.S.-China relations may have an impact on our supply chain.

Additionally, the geopolitical developments in relations between Taiwan and China could affect the supply of our products from Taiwan, including from Taiwan Semiconductor Manufacturing Company, Limited, or TSMC.

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.

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.

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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 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 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 has had and could continue to have a material adverse effect on our revenue and operating results.

In the six months ended June 30, 2023, one customer accounted for 11% of our net revenue, and our ten largest customers collectively accounted for 58% of our net revenue, of which distributor customers accounted for 10% of our net revenue.

In the six months ended June 30, 2023, we have experienced a decrease in customer demand, and consequently a reduction in orders, primarily due to macroeconomic factors and excess inventory in the channel following the industry-wide supply shortage in 2021 and 2022.

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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If that happens, our sales would decline and our business, financial condition and results of operations could be materially and adversely affected.

Our relationship with customers could also be impaired by our sale of patents.

For example, our customers could be subject to patent infringement based on patents we divested to the extent that our customers also source components from our competitors.

Our relationships with some customers may deter other potential customers who compete with these customers from buying our products.

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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.

long-haul optical modules, telecommunications wireless infrastructure, and cable DOCSIS 3.1 network infrastructure products.

Each of these markets presents distinct and substantial risks.

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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 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.

For the six months ended June 30, 2023 and 2022, revenue directly attributable to broadband applications accounted for approximately 31% and 50% of our net revenue, respectively.

We have experienced a decrease in broadband net revenue of $138.4 million for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, and the decline in revenue could continue in future periods.

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

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

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

For six months ended June 30, 2023 and 2022, our research and development expense was $137.9 million and $146.3 million, respectively.

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

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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.

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 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 any.

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;

• add sales personnel and expand customer engineering support offices;

• implement and improve our administrative, financial and operational systems, procedures and controls;

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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Where any of our products, including legacy acquired products, contain defects or bugs, or have reliability, quality or compatibility problems, we may not be able to successfully correct these problems.

Consequently, our reputation may be damaged and customers may be reluctant to buy our products, which could materially and adversely affect our ability to retain existing customers and attract new customers, and our financial results.

Consequently, our reputation may be damaged and customers may be

reluctant to buy our products, which could materially and adversely affect our ability to retain existing customers and attract new customers, and our financial results.

In addition, these defects or bugs could interrupt or delay sales to our customers.

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To compete successfully, we must design, develop, market and sell new or enhanced products that provide increasingly higher levels of performance and reliability and meet the cost expectations of our customers.

The introduction of new products by our competitors, the market acceptance of products based on new or alternative technologies, or the emergence of new industry standards could render our existing or future products obsolete.

Our failure to anticipate or timely develop new or enhanced products or technologies in response to technological shifts could result in decreased revenue and our competitors winning more competitive bid processes, known as “design wins.” In particular, we may experience difficulties with product design, manufacturing, marketing or certification that could delay or prevent our development, introduction or marketing of new or enhanced products.

The introduction of new products by our competitors, the market acceptance of products based on new or alternative technologies,

or the emergence of new industry standards could render our existing or future products obsolete.

Our failure to anticipate or timely develop new or enhanced products or technologies in response to technological shifts has resulted, and could in the future, result in decreased revenue and our competitors winning more competitive bid processes, known as “design wins.” In particular, we may experience difficulties with product design, manufacturing, marketing or certification that could delay or prevent our development, introduction or marketing of new or enhanced products.

If we fail to introduce new or enhanced products that meet the needs of our customers or penetrate new markets in a timely fashion, we will lose market share and our operating results will be adversely affected.

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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.

Also, as customer lead times improve more broadly, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual return to a somewhat shorter demand-planning horizon.

While inventory and working capital levels may continue to increase and remain elevated in the near term, we expect that purchase commitments will continue to decline as supplier lead times begin to shorten, and we are closely monitoring our inventory in channel.

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.

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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 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.

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.

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

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.

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

Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future.

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• our ability to develop, introduce, and market new products and technologies on a timely basis;

• the timing and extent of product development costs;

• the timing and extent of operating expenses, including product development costs;

• new product announcements and introductions by us or our competitors;

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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.

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.

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.

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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.

At times, we may discover issues that we bring to the attention of the relevant government agencies, as we did on March 3, 2023, when we submitted a comprehensive voluntary self-disclosure to BIS regarding the potential EAR violation described above and other potential export control violations.

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.

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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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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.

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, software supply chain attacks, 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.

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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.

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.

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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.

We collect and otherwise process data, including personal data and other regulated or sensitive data, as part of our business processes and activities.

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

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Additionally, other U.S.

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.

states continue to propose privacy-focused legislation, and such legislation has recently been adopted in Colorado, Virginia, Utah, Connecticut, Iowa and Texas.

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.

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.

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.

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

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

As of June 30, 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 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.

As of June 30, 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 June 30, 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.

The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest at either an Adjusted LIBOR plus a fixed applicable margin of 2.25% or an Adjusted Base Rate plus a fixed applicable margin of 1.25%, at our option.

The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement.

The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest at either an Adjusted Term SOFR plus a fixed applicable margin of 2.25% or an Adjusted Base Rate plus a fixed applicable margin of 1.25%, at our option.

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

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.

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 Term SOFR plus a margin of 1.00% to 1.75% or an Adjusted Base Rate plus a margin of 0% to 0.75%.

Our obligations under the

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

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

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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 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.

• 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 Term SOFR 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 Term SOFR 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;

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

We and our subsidiaries may, subject to any limitations in the terms of our existing loan facilities or the Senior Secured Credit Facilities, incur additional debt, secure existing or future debt, recapitalize our debt or take a number of other actions that are not limited by the terms of our term loans that could have the effect of diminishing our ability to make payments under the indebtedness when due.

We and our subsidiaries may, subject to any limitations in the terms of our existing loan facilities, incur additional debt, secure existing or future debt, recapitalize our debt or take a number of other actions that are not limited by the terms of our term loans that could have the effect of diminishing our ability to make payments under the indebtedness when due.

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

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.

If we are required to consummate the merger, we will be required to seek and obtain debt financing and/or equity financing, which may not be available.

We had intended to finance the cash portion of the purchase price of the merger with Silicon Motion with cash on hand and a portion of new debt of up to $3.5 billion.

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.

and Wells Fargo Securities, LLC, or collectively, Wells Fargo, pursuant to which, subject to the terms and conditions set forth therein, Wells Fargo 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 was 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.

The commitments under the second amended and restated commitment letter terminated concurrently with the termination of the Merger Agreement.

In connection with the termination of the merger agreement, the second amended and restated commitment letter with Wells Fargo Bank and other lenders was terminated.

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

We have completed multiple acquisitions in the past eight years.

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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.

We are subject to legal proceedings and claims that arise in the ordinary course of business, including intellectual property, product liability, employment, class action, customer claims, 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.

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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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Certain open source software licenses require a user who intends to distribute the open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software.

In addition, certain open source software licenses require the user of such software to make any derivative works of the open source code available to others on unfavorable terms or at no cost.

In addition, certain open source software licenses require the user of such

software to make any derivative works of the open source code available to others on unfavorable terms or at no cost.

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

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

Currently, the majority of our products are manufactured by 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, a large portion of our products are manufactured by Advanced Semiconductor Engineering, or ASE, TSMC, and United Microelectronics Corporation, or UMC, at foundries located in Taiwan, Singapore, and China.

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

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• 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;

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

Inventory oversupply has also led and could continue to 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:

• our use of ASE, 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 licenses authorizing its interactions and technology exchanges with ASE, or (2) if BIS increases export control restrictions to ASE 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.

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

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

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

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.

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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 43% and 47% of our net revenue in the three months ended March 31, 2023 and 2022, respectively.

Sales to distributors accounted for approximately 47% and 46% of our net revenue in the six months ended June 30, 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 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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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 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.

For example, in the six months ended June 30, 2023, the trading price of our common stock ranged from a low of $23.05 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;

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

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

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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.

Our share repurchase program has been temporarily suspended since July 2022 due to our previously 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.

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

As of June 30, 2023, we had approximately 80.9 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.

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

As of March 31, 2023, our balance sheet reflected goodwill of $318.9 million and other intangible assets of $96.4 million.

As of June 30, 2023, our balance sheet reflected goodwill of $318.5 million and other intangible assets of $91.2 million.

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

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

Based upon our review of all positive and negative evidence, as of March 31, 2023, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.

Based upon our review of all positive and negative evidence, as of June 30, 2023, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes.

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

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

What changed 10-Q

Item 1A. Risk Factors