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Risks Related to Our Business
−Removed: We face a tight labor market, competition for employees, and wage inflation.
−Removed: In the past two fiscal years, we have experienced increased competition for employees, increased employee turnover, and increased wage inflation.
−Removed: The labor market has been especially tight in Minnesota.
−Removed: We have significantly increased the wages we pay to remain competitive and attract new workers, especially production workers.
−Removed: Labor shortages could impact our revenue and profitability, and increases in labor costs could adversely affect our profit margins and results of operations.
The loss of supply from any of our key single-source wafer suppliers could substantially impact our ability to produce and deliver products and seriously harm our business and financial condition.
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We maintain inventory of some critical wafers, but we have not identified or qualified alternate suppliers for many of the wafers now being obtained from single sources.
−Removed: In the past fiscal year, there were industry-wide semiconductor wafer shortages.
−Removed: We purchase some wafers from manufacturers in China, which have been subject to tariffs and could be subject to further tariffs or restrictions in the future.
−Removed: Wafer supply could be affected by acts of God such as floods, typhoons, cyclones, earthquakes, or pandemics, and risks related to extreme weather may be exacerbated by the effects of climate change.
+Added: Most of the dollar volume of our wafer purchases are from foreign manufacturers, some of which have been subject to tariffs and could be subject to larger tariffs or restrictions in the future.
+Added: Wafer supplies could be affected by acts of God such as floods, typhoons, cyclones, earthquakes, or pandemics, and risks related to extreme weather may be exacerbated by the effects of climate change.
Wafer supply interruptions for any reason could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.
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We maintain inventory of critical chemicals and materials, but in many cases, we are dependent on single sources, and some of the materials could be subject to shortages or be discontinued by their suppliers at any time.
−Removed: The Russia-Ukraine crisis could cause or exacerbate shortages.
−Removed: Sanctions against Russia could affect supplies or prices of materials supplied by Russia, including materials we use such as aluminum, copper, helium, magnesium, manganese, nickel, palladium, platinum, and titanium.
−Removed: Materials supplied by Ukraine include neon, which may be used to produce some of our foundry wafers.
Supply interruptions or shortages for any reason could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.
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Furthermore, we may not be able to recover work in process or finished goods at a packaging vendor in the event of a disruption.
−Removed: Additionally, certain of our packaging vendors are in flood-susceptible areas.
−Removed: Flooding risks to such vendors may increase in the future due to possible higher ocean levels, extreme weather, and other potential effects of climate change.
Supply delays, interruptions, or loss of inventory could seriously jeopardize our ability to provide products that are critical to our business and operations and may cause us to lose revenue.
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We are subject to risks inherent in doing business in foreign countries that could impair our results of operations.
−Removed: Foreign sales are a significant portion of our revenue and we rely on suppliers in China, India, Malaysia, Taiwan, Thailand, and other foreign countries.
+Added: Foreign sales are a significant portion of our revenue and we rely on foreign suppliers, especially in Asia.
Risks relating to operating in foreign markets that could impair our results of operations include economic and political instability;
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and other uncertainties relating to the administration of, or changes in, or new interpretations of, the laws, regulations, and policies of jurisdictions where we do business.
+Added: Current or future U.S.
+Added: tariffs on imports could lead to supply-chain disruptions or increase our cost of imported materials, which could negatively impact our profitability.
+Added: Additionally, foreign tariffs on our exported products could increase the price of our products in international markets, which could reduce revenues.
Public health crises could have an adverse effect on our operations and financial results.
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Future public health crises could have a material adverse effect on our results of operations or our financial condition.
−Removed: We are subject to risks associated with the availability of natural resources and energy.
−Removed: We use significant resources such as electricity, natural gas, and water in our operations.
−Removed: New or increased climate change regulation could increase our energy costs, for example, due to carbon pricing impacts on natural gas or electrical utilities.
−Removed: Furthermore, environmental regulations or the impacts of climate change could curtail the availability of electricity we need for production or increase the incidence of power outages.
−Removed: Increased natural resource or energy costs, or decreased availability, could have adverse effects on our results of operations by increasing our costs and expenses or requiring us to change our production processes.
Our business could be negatively impacted by cybersecurity events or information technology disruptions.
−Removed: We face various cyber security threats, including threats to our information technology infrastructure and attempts to gain access to our proprietary or classified information, and denial-of-service attacks.
+Added: We face various cybersecurity threats, including threats to our information technology infrastructure and attempts to gain access to our proprietary or classified information, and denial-of-service attacks.
Additionally, there is a risk of disruptions due to failures of our information technology infrastructure or service provider outages.
We maintain policies and procedures for the mitigation of information technology risks, and we maintain data backups, backup hardware, and some redundant systems.
−Removed: Our risk mitigation measures may not be effective in all scenarios, however.
−Removed: We have experienced cyber security events and disruptions such as viruses, ransomware, hacker attacks, and limited server, Website, and e-mail outages.
−Removed: Although these events did not materially impact our business, future events could disrupt our operations, harm our reputation, expose us to liability, compromise our eligibility for research and development contracts involving sensitive or classified information, or have other effects.
+Added: Our risk mitigation measures may not be effective in all scenarios, however, and any cybersecurity events could disrupt our operations, harm our reputation, expose us to liability, compromise our eligibility for research and development contracts involving sensitive or classified information, or have other effects.
We face the risk of credit losses
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2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements requires us to measure our allowance for credit losses based on the expected credit losses over the life of our receivables.
−Removed: In the past fiscal year, we recorded significant expenses under this standard, although most of these expenses were later reversed.
−Removed: Any future increases in our allowance for credit losses would have a negative impact on our financial results, including reducing our net income and net income per share.
+Added: Any increases in our allowance for credit losses would have a negative impact on our financial results, including reducing our net income and net income per share.
We could incur losses on our marketable securities.
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We face an uncertain economic environment in the industries we serve, which could adversely affect our business.
−Removed: We sell our products in the semiconductor market, which has been highly cyclical.
−Removed: We cannot predict the timing, strength, or duration of any economic slowdown, recession, semiconductor-industry slowdown, or subsequent recovery.
The economic environment could have a material adverse impact on our business and revenue.
+Added: An international “trade war” could negatively impact the economic environment.
+Added: We sell products in the semiconductor market, which has been especially cyclical.
+Added: We cannot predict the timing, strength, or duration of any economic slowdown, recession, semiconductor-industry slowdown, or subsequent recovery.
Our business and our reliance on intellectual property exposes us to litigation risks.
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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.