What changed in this filing

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Item 1A. Risk Factors

2025-03-19 compared with 2024-03-06 · 257 added, 229 removed, 321 unchanged (60% of the section changed)

Risk Factors.

Risk Related to Our Business and Operations

Product Design and Selection Risks

Our success and future revenue depends on our ability to achieve design wins and to convince our current and prospective end customers to design our products into their product offerings.

If we do not continue to win designs or our products are not designed into our end customers’ product offerings, our results of operations and business will be harmed.

We sell our power chips to end customers who select our solutions for inclusion in their product offerings.

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If we fail to convince our current or prospective end customers to include our products in their product offerings or to achieve a consistent number of design wins, our business, financial condition, and results of operations will be harmed.

Even if we are awarded a design win, expected revenues typically do not result for one year or more, if ever.

Because of our extended sales cycle, our revenue in future years is highly dependent on design wins we are awarded in prior years.

It is typical that a design win will not result in meaningful revenue for one year or more or later, if at all.

If we do not continue to achieve design wins in the short term, our revenue in the following years will deteriorate.

Further, a significant portion of our revenue in any period may depend on a single product design win with a large customer.

As a result, the loss of any key design win or any significant delay in the ramp of volume production of the customer’s products into which our product is designed could adversely affect our business, financial condition, and results of operations.

After incurring significant design and development expenditures and dedicating engineering resources to achieve an initial design win for a product, a substantial period of time generally elapses before we may generate meaningful net sales relating to such product, if at all.

The reasons for this delay include, among other things, the following:

• changing end customer requirements, resulting in an extended development cycle for the product;

• delay in the ramp-up of volume production of the customer’s products into which our solutions are designed;

• delay or cancellation of the customer’s product development plans;

• competitive pressures to reduce our selling price for the product;

• the discovery of design flaws, defects, errors or bugs in the products;

• lower-than-expected end customer acceptance of the solutions designed for the customer’s products;

• lower-than-expected acceptance of our end customers’ products;

• higher manufacturing costs than anticipated.

we cannot guarantee that this will result in any sales of our products, as the end customer may ultimately change or cancel our product plans, or our end customers’ efforts to market and sell our product may not be successful.

Even if an end customer selects our products, revenues from design wins may not materialize if our customer later decides to change or cancel the selection, if our customer decides to change suppliers, if our customer decides to delay production, or if our customer’s product is not successful.

The loss of a design win, a reduction in sales to any key customer or the loss of the customer altogether, a significant delay or negative development in our end customers’ product development plans, or our inability to attract new significant end customers or secure new key design wins could seriously impact our revenue and materially and adversely affect our business, financial condition, and results of operations.

We may not be able to maintain sales to our key end customers or continue to secure key design wins for a variety of reasons, and our end customers can stop incorporating our products into their product offerings with limited notice to us and suffer little or no penalty.

If we fail to anticipate or respond to technological shifts or market demands, or to timely develop new or enhanced products or technologies in response to the same, it could result in decreased revenue and the loss of our design wins to our competitors.

Due to the interdependence of various components in the systems within which our products and the products of our competitors operate, end customers are unlikely to change to another design, once adopted, until the next generation of a technology.

As a result, if we fail to introduce new or enhanced products that meet the needs of our end customers or penetrate new markets in a timely fashion, and our designs do not gain acceptance, we will lose market share and our competitive position.

The loss of a key end customer or design win, a reduction in sales to any key customer, a significant delay or negative development in our end customers’ product development plans, or our inability to attract new significant end customers or secure new key design wins could seriously impact our revenue and materially and adversely affect our business, financial condition, and results of operations.

Product and Technology Development Risks

If we fail in a timely and cost-effective manner to develop new product features or new products that address end customer preferences and achieve market acceptance, our operating results could be adversely affected.

Our products are based on novel design technology and our future success depends on the successful development of high-voltage power switching components and systems based on design technology.

There can be no assurance that any development problems we experience in the future related to our products will not cause significant delays or unanticipated costs, or that such development problems can be solved.

There can be no assurance that any

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development problems we experience in the future related to our products will not cause significant delays or unanticipated costs, or that such development problems can be solved.

In addition, we compete in a dynamic environment characterized by rapid technology and product evolution.

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A fundamental shift in technologies, the regulatory climate or demand patterns and preferences in our existing product markets or the product markets of our end customers or end-users could make our current products obsolete, prevent or delay the introduction of new products or enhancements to our existing products or render our products irrelevant to our end customers’ needs.

users or regulatory changes, our business, financial condition and results of operations could be materially and adversely affected.

If our new product development efforts fail to align with the needs of our end customers, including due to circumstances outside of our control like a fundamental shift in the product markets of our end customers and end users or regulatory changes, our business, financial condition and results of operations could be materially and adversely affected.

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Our margins are dependent on us achieving continued yield improvement through continued technology development.

We rely on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products and on introducing new products that incorporate advanced features and other price/performance factors that enable us to increase revenues while maintaining acceptable margins.

Each of these depends on us continuing to successfully develop our technologies.

There can be no assurance that development problems we experience in the future related will not cause significant delays in expected cost reductions and corresponding margin improvements.

To the extent such cost reductions and new product introductions do not occur in a timely manner, or that our products do not achieve market acceptance, or market acceptance at acceptable pricing, our forecasts of future revenue, financial condition, and operating results could be harmed.

If we fail to accurately anticipate and respond to rapid technological change in the industries in which we operate, our ability to attract and retain end customers could be impaired and our competitive position could be harmed.

We operate in industries characterized by rapidly changing technologies as well as technological obsolescence.

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Our failure to anticipate or timely develop new or enhanced products or technologies in response to changing market demand, whether due to technological shifts or otherwise, could result in the loss of end customers and decreased revenue and have an adverse effect on our business, financial condition, and results of operations.

The success of some of our products are dependent on our end customers’ ability to develop products that achieve market acceptance, and our end customers’ failure to do so could negatively affect our business, financial condition, and results of operations.

The success of some of our products are dependent on our end customers’ ability to develop products that achieve market acceptance.

The success of some of our products are heavily dependent on the timely introduction, quality, and market acceptance of our end customers’ products incorporating our solutions, which are impacted by factors beyond our control.

Our end customers’ products are often very complex and subject to design complexities that may result in design flaws, as well as potential defects, errors, and bugs.

We have in the past been subject to delays and project cancellations as a result of design flaws in the products developed by our end customers, changing market requirements, such as the end customer adding a new feature, or because a customer’s product fails their end customer’s evaluation or field trial.

In other cases, end customer products are delayed due to incompatible deliverables from other vendors.

Such end customers have in the past, and may in the future, vary order levels significantly from period to period, request postponements of scheduled delivery dates, modify their orders or reduce lead times.

This is particularly common during periods of low demand.

We incur significant design and development costs in connection with designing our products for end customers’ products that may not ultimately achieve market acceptance.

As the company offers more products to new and existing customers, potentially expands its supply relationships, and enters new markets, the company may encounter yield, bugs and reliability issues with specific products, and any such issues could cause customer problems or adversely affect financial results.

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Furthermore, developing industry trends, including end customers’ use of outsourcing and new and revised supply chain models, may affect our revenue, costs and working capital requirements.

Even if we succeed in securing design wins for our products, we may not generate timely or sufficient net sales or margins from those wins and our financial results could suffer.

After incurring significant design and development expenditures and dedicating engineering resources to achieve a single initial design win for a product, a substantial period of time generally elapses before we may generate meaningful net sales relating to such product, if at all.

The reasons for this delay include, among other things, the following:

• changing end customer requirements, resulting in an extended development cycle for the product;

• delay in the ramp-up of volume production of the customer’s products into which our solutions are designed;

• delay or cancellation of the customer’s product development plans;

• competitive pressures to reduce our selling price for the product;

• the discovery of design flaws, defects, errors or bugs in the products;

• lower than expected end customer acceptance of the solutions designed for the customer’s products;

• lower than expected acceptance of our end customers’ products;

• higher manufacturing costs than anticipated.

If we do not achieve design wins in the short term, then we may not be able to achieve expected net sales levels associated with these design wins.

If we experience delays in achieving such sales levels, our operating results could be adversely affected.

Moreover, even if an end customer selects our products, we cannot guarantee that this will result in any sales of our products, as the end customer may ultimately change or cancel our product plans, or our end customers’ efforts to market and sell our product may not be successful.

We rely on our relationships with industry and technology leaders to enhance our product offerings and our inability to continue to develop or maintain such relationships in the future would harm our ability to remain competitive.

We develop many of our products for applications in systems that are driven by industry and technology leaders in mobile consumer electronics, enterprise, eMobility and new energy markets.

We work with distributors, resellers, ODMs, and OEMs to define industry conventions and standards within our target markets.

We believe that these relationships enhance our ability to achieve market acceptance and widespread adoption of our products.

If we are unable to continue to develop or maintain these relationships, our solutions could become less desirable to our end customers, our sales could suffer and our competitive position could be harmed.

We may not be able to effectively manage our growth and may need to incur significant expenditures to address the additional operational and control requirements of our growth, either of which could harm our business and operating results.

To continue to grow, we must continue to expand our operational, engineering, accounting and financial systems, procedures, controls and other internal management systems.

This may require substantial managerial and financial resources, and our efforts in this regard may not be successful.

Our current systems, procedures and controls may not be adequate to support our future operations.

Unless our growth results in an increase in our revenues that is proportionate to the increase in our costs associated with this growth, our operating margins and profitability will be adversely affected.

If we fail to adequately manage our growth, improve our operational, financial and management information systems, or effectively motivate and manage our new and future employees, it could adversely affect our business, financial condition and results of operations.

If we do not sustain our growth rate, we may not be able to execute our business plan and our operating results could suffer.

We have experienced significant growth in a short period of time.

Our net revenue increased from zero in fiscal year 2017, to $23.7 million in fiscal year 2021, to $37.9 million in fiscal year 2022, and to $79.5 million in fiscal year 2023.

We may not achieve similar growth rates in future periods.

You should not rely upon our revenue growth, gross margins or operating results for any prior quarterly or annual periods as an indication of Navitas’ future operating performance.

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

If our products do not conform to, or are not compatible with, existing or emerging industry standards, demand for our products may decrease, which in turn would harm our business and operating results.

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Some industry standards may not be widely adopted or implemented uniformly and competing standards may emerge that may be preferred by our distributors or our end customers.

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Our ability to compete in the future will depend on our ability to identify and ensure compliance with evolving industry standards in our target markets.

The emergence of new industry standards could render our products incompatible with products developed by third-party suppliers or make it difficult for our products to meet the requirements of certain original

equipment manufacturers.

If our end customers or our third-party suppliers adopt new or competing industry standards with which our solutions are not compatible, or if industry groups fail to adopt standards with which our solutions are compatible, our products would become less desirable to our current or prospective end customers.

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Although we believe our products are compliant with applicable industry standards, proprietary enhancements may not in the future result in conformance with existing industry standards under all circumstances.

We may have difficulties integrating the operations and business of GeneSiC with our own.

Our acquisition of GeneSiC is the first significant acquisition we have ever undertaken.

The complexities involved in the integration and expansion of GeneSiC as part of our Company are not yet fully understood.

We have devoted and expect to continue to devote a significant amount of time and attention to integrating GeneSiC into our existing operations teams.

Given our relatively small size and relative inexperience with acquisitions, we expect the challenges involved in this integration to be complex and time consuming.

Among other risks that arise from these challenges, we may not be successful in our efforts to:

(1) integrate new employees with our existing teams;

(2) integrate and align numerous business and work processes, including information technology and cybersecurity systems;

(3) demonstrate that the GeneSiC acquisition will not adversely affect our ability to address the needs of existing customers, or result in the loss of attention or focus on our existing businesses;

(4) coordinate and integrate research and development and engineering teams across technologies and product platforms;

(5) consolidate and integrate corporate, information technology, finance and administrative processes;

(6) coordinate sales and marketing efforts to effectively position our capabilities and the direction of product development;

and (7) minimize diversion of management attention from important business objectives.

Even if we are able to integrate the GeneSiC and Navitas businesses and operations successfully, we may not realize the growth and other opportunities that are anticipated from the GeneSiC acquisition.

We may not realize the growth and other opportunities that are anticipated from the GeneSiC acquisition.

The benefits that we expect to achieve as a result of the GeneSiC acquisition will depend, in part, on our ability to realize anticipated growth and profitability opportunities.

Even if we are able to integrate the GeneSiC and Navitas businesses and operations successfully, despite the risks identified in the preceding risk factor, the integration may not result in the realization of the full benefits of the growth and profitability opportunities we currently expect within the anticipated time frame or at all.

The integration of GeneSiC with our other operations may not result in the realization of the full benefits of the growth and profitability opportunities we currently expect within the anticipated time frame or at all.

For example, we may incur substantial expenses in connection with the integration of the GeneSiC business, which are difficult to estimate accurately, and may exceed current estimates.

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Such additional costs would offset the financial benefits realized from the acquisition.

Geographic and Geopolitical Risks

We are subject to risks and uncertainties associated with international operations, which may harm our business.

We maintain our operations around the world, including the U nited States, Ireland, Germany, Italy, Belgium, China, Taiwan, Thailand, South Korea, and the Philippines .

We maintain our operations around the world, including in the U nited States, China, Taiwan, Ireland, Germany, Italy, Belgium, Thailand, South Korea, and the Philippines .

For the years ended December 31, 2024 and December 31, 2023, approximately 75% and 70%, respectively, of our net sales were to end customers in Asia.

We allocate revenue among individual countries based on the location to which the products are initially billed even if our end customers’ revenue is attributable to end customers that are located in a different location.

As of December 31, 2024, approximately 67% of our workforce was located outside of the United States.

In addition, a substantial majority of our products are manufactured, assembled, tested and packaged by third parties located outside of the United States.

Our principal assembly and test facilities are located in Taiwan and the Philippines.

We also rely on several other wafer fabrication manufacturing partners located throughout Asia.

Any conflict or uncertainty in this region, inducing public health or safety concerns or natural disasters, could have a material adverse effect on our business, financial condition and results of operations.

The principal assembly and test facilities operated by our back-end manufacturing service providers are located in Taiwan and the Philippines.

We also rely on several other wafer fabrication and manufacturing service providers located throughout Asia.

Any conflict or uncertainty in this region, including those posing risks to public health or safety, such as natural disasters, could have a material adverse effect on our business, financial condition and results of operations.

Moreover, the global nature of our business subjects us to a number of additional risks and uncertainties, which could harm our business, financial condition and results of operations, including:

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• unexpected changes in, or impositions of, legislative or regulatory requirements, including changes in tax laws;

• restrictions on cross-border investment, including enhanced oversight by the Committee on Foreign Investment in the United States (“CFIUS”) and substantial restrictions on investment from China;

persons in China;

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• differing legal standards with respect to protection of intellectual property and employment practices;

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• disruptions of capital and trading markets and currency fluctuations;

• increased costs and supply chain adjustments for semiconductor companies due to recent U.S.

tariffs on Chinese imports.

Since we have significant operations and revenues in China, our business development plans, results of operations and financial condition may be materially and adversely affected by significant political, social and economic developments in China.

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The Chinese government and provincial and local governments also have provided, and continue to provide, various incentives to encourage the development of the semiconductor industry in China.

Such incentives include tax rebates, reduced tax rates,

favorable lending policies and other measures, some or all of which may be available to our manufacturing partners in China.

Such incentives include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to our manufacturing partners in China.

Any of these incentives could be reduced or eliminated by governmental authorities at any time.

Any such reduction or elimination of incentives currently provided to our manufacturing partners could adversely affect our business and operating results.

Because we do not have long-term purchase commitments with our end customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in turn exposes us to inventory risk, and may cause our business, financial results and future prospect to be harmed.

We sell our products primarily through distributors and resellers, with no long-term or minimum purchase commitments from them or their end customers.

Substantially all of our sales to date have been made on a purchase order basis, which orders may be cancelled, changed, or rescheduled with little or no notice or penalty.

In addition, even when distributors or end customers may not have the contractual right to cancel or reschedule orders, it is customary business practice in the semiconductor industry for suppliers like us to permit such cancellations or rescheduling in order to retain a customer’s good will or for other business reasons.

As a result, our revenue and operating results could fluctuate materially and could be materially and disproportionately impacted by purchasing decisions of our end customers, including our larger end customers.

In the future, our distributors or their end customers may decide to purchase fewer units than they have in the past, may alter their purchasing patterns at any time with limited or no notice, or may decide not to continue to purchase our power semiconductor chips at all, any of which could cause our revenue to decline materially and materially harm our business, financial condition, and results of operations.

Cancellations of, reductions in, or rescheduling of end customer orders could also result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses, as a substantial portion of our expenses are fixed at least in the short term.

In addition, changes in forecasts or the timing of orders expose Navitas to the risks of inventory shortages or excess inventory.

As we no longer intend to acquire inventory to pre-build custom products, we may not be able to fulfill increased demand, at least in the short term.

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

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Commercial Risks

We maintain a backlog of customer orders that is subject to cancellation, reduction or delay in delivery schedules, which may result in lower than expected revenues.

We sell our products primarily pursuant to purchase orders for current delivery or to forecast, rather than pursuant to long-term supply contracts.

As a result, we may produce, or commit resources to producing, products without binding purchase commitments from customers.

Even in cases where our standard terms and conditions of sale or other contractual arrangements do not permit a customer to cancel an order without penalty, we may accept cancellations to maintain customer relationships or because of industry practice, custom or other factors.

Although we take these factors into consideration in our planning, our planning processes are still qualified by the risk that our backlog may deteriorate as a result of customer cancellations.

We depend on a few key distributors and the loss of one or more of these distributors could have a material adverse effect on our business, financial condition and results of operations.

We cannot assure that any of our current or future distributors will not cease purchasing products from us in favor of products of other suppliers, significantly reduce orders or seek price reductions in the future, and any such event could have a material adverse effect on our revenue, profitability, and results of operations.

A downturn in the industry or lower sales could materially adversely affect our business and results of operations.

Our business is subject to seasonal fluctuations, which could materially impact our revenue, profitability, and results of operations.

Certain end markets, including Mobile, Solar, EV, and Industrial, experience typical seasonal trends that affect demand, particularly in the first quarter.

Additionally, broader market weaknesses and inventory corrections in these sectors may further exacerbate seasonal declines.

We cannot assure that these seasonal trends will not intensify or that additional market factors will not further impact our financial performance.

Any prolonged or greater-than-expected seasonal downturns could have a material adverse effect on our business and operating results.

Product Quality and Reliability Risks

We may face product warranty or product liability claims that are disproportionately higher than the value of the products involved.

Our products are typically sold at prices that are significantly lower than the cost of the equipment or other goods into which they are incorporated.

For example, our products that are incorporated into a customer’s product may be sold for several dollars, whereas the customer product might be sold for several hundred dollars.

Although we maintain quality control systems, in the ordinary course of our business we receive warranty claims for some products that are defective, or are alleged to be defective, or that do not perform, or are alleged not to perform, to published specifications.

Additionally, while we attempt to contractually limit our customers’ use of our products, we cannot be certain that our distributors will not sell our products to customers who intend to use them in applications for which we did not intend them to be used.

Since a defect or failure in one of our products could give rise to failures in the goods that incorporate them (and consequential claims for damages against our customers from their customers), we may face claims for damages that are disproportionate to the revenues and profits we receive from the products involved.

Furthermore, even though we attempt, through our standard terms and conditions of sale and other customer contracts, to contractually limit our liability to replace the defective goods or refund the purchase price, we cannot be certain that these claims will not expose us to potential product liability, warranty liability, personal injury or property damage claims relating to the use of those products.

In the past, we have received claims for charges, such as for labor and other costs of replacing defective parts or repairing the products into which the defective products are incorporated, lost profits and other damages.

In addition, our ability to reduce such liabilities, whether by contracts or otherwise, may be limited by the laws or the customary business practices of the countries where we do business.

And, even in cases where we do not believe we have legal liability for such claims, we may choose to pay for them to retain a customer’s business or goodwill or to settle claims to avoid protracted litigation.

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Our results of operations and business could be adversely affected as a result of a significant quality or performance issue in our products, if we are required or choose to pay for the damages that result.

Our competitive position could be adversely affected if we are unable to meet end customers’ or device manufacturers’ quality requirements.

Semiconductor device suppliers must meet increasingly stringent quality standards of end customers.

While our quality performance to date has generally met these requirements, we may experience problems in achieving acceptable quality results in the manufacture of our products, particularly in connection with the production of new products or adoption of a new manufacturing process.

This risk is greater for products used in applications with higher quality and reliability standards, such as applications in the automotive industry, an important market in which we expect to introduce new products and increase our revenues in response to expected growing demand for electric vehicles.

The quality standards we will be expected to achieve in new markets we hope to penetrate, and which are critical to our future growth plans, Our failure to achieve acceptable quality levels for products intended for such applications, or generally, could adversely affect our business results.

Warranty claims, product liability claims and product recalls could harm our business, results of operations and financial condition.

We face an inherent business risk of exposure to warranty and product liability claims if products fail to perform as expected or are alleged to result in bodily injury, death, and/or property damage.

In addition, if any of our designed products are alleged to be defective, we may be required to participate in their recall.

We carry various commercial liability policies, including umbrella/excess policies which provide limited protection against product liability exposure.

However, we do not maintain separate insurance against product liability risks.

As a result, a successful warranty or product liability claim against us, or a requirement that we participate in a product recall, could have adverse effects on our business results.

Additionally, in the event that our products fail to perform as expected or such failure of our products results in a recall, our reputation may be damaged, which could make it more difficult for us to sell our products to existing and prospective end customers and could materially and adversely affect our business, results of operations and financial condition.

Furthermore, end customers may recall their end products if they prove to be defective or they may make compensatory payments in accordance with industry or business practice or in order to maintain good end customer relationships.

If such a recall or payment is caused by a defect in one of our products, end customers may seek to recover all or a portion of their losses from us.

If any of these risks materialize, our reputation would be harmed and there could be a material adverse effect on our business, financial condition and results of operations.

Reliability is especially critical in the power semiconductor industry, and any adverse reliability result by us with any of our end customers could negatively affect our business, financial condition, and results of operations .

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Our standard warranty period is generally one to two years.

We recently announced a warranty period of 20 years for our GaN IC products.

In 2023, we announced a warranty period of 20 years for our GaN IC products.

Although we believe this warranty represents a differentiating feature of our GaN IC products and is justified by the reliability our products have demonstrated, our product warranties expose us to significant risks of claims for defects and failures.

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Furthermore, we may incur costs to investigate customer warranty claims even when those claims prove to be unfounded, such as when a claimed defect results from a customer’s improper system design.

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Further, the manufacture of our products, including the fabrication of semiconductor wafers, and the assembly and testing of products, involve highly complex processes.

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From time to time, we have experienced problems achieving acceptable yields at our third-party wafer fabrication partner, resulting in delays in the availability of components.

Moreover, an increase in the rejection rate of products during the

quality control process before, during or after manufacture and/or shipping of such products, results in lower yields and margins.

Moreover, an increase in the rejection rate of products during the quality control process before, during or after manufacture and/or shipping of such products, results in lower yields and margins.

In addition, changes in manufacturing processes required as a result of changes in product specifications, changing end customer needs and the introduction of new product lines have historically significantly reduced manufacturing yields, resulting in low or negative margins on those products.

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These problems may also result in claims against us by our end customers or others.

Warranty claims, product liability claims and product recalls could harm our business, results of operations and financial condition.

In addition, if any of our designed products are alleged to be defective, we may be required to participate in their recall.

We carry various commercial liability policies, including umbrella/excess policies which provide some protection against product liability exposure.

However, a successful warranty or product liability claim against us in excess of our available insurance coverage and established reserves, or a requirement that we participate in a product recall, could have adverse effects on our business results.

Further, it is possible that, in the future, we will not be able to obtain insurance coverage in the amounts and for the risks we seek at policy costs and terms we desire.

If such a recall or payment is caused by a defect in one of our products, end customers may seek to recover all or a portion of their losses from us.

If any of these risks materialize, our reputation would be harmed and there could be a material adverse effect on our business, financial condition and results of operations.

Our competitive position could be adversely affected if we are unable to meet end customers’ or device manufacturers’ quality requirements.

Semiconductor IC suppliers must meet increasingly stringent quality standards of end customers.

Our failure to achieve

acceptable quality levels for products intended for such applications, or generally, could adversely affect our business results.

We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs.

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We may not be able to achieve higher levels of design integration or deliver new integrated solutions on a timely basis.

If our foundry vendor does not achieve satisfactory yields or quality, our reputation and end customer relationships could be harmed.

The fabrication of our GaN power ICs is a complex and technically demanding process.

Minor deviations in the manufacturing process can cause substantial decreases in yields, and in some cases, cause production to be suspended.

Our foundry vendor, from time to time, experience manufacturing defects and reduced manufacturing yields.

Changes in manufacturing processes or the inadvertent use of defective or contaminated materials by our foundry vendors could result in lower than anticipated manufacturing yields or unacceptable performance of our ICs.

Many of these problems are difficult to detect at an early stage of the manufacturing process and may be time consuming and expensive to correct.

Poor yields from our foundry vendor, or defects, integration issues or other performance problems in our solutions, could cause us significant end customer relations and business reputation problems, harm our financial results and give rise to financial or other damages to our end customers.

Our end customers might consequently seek damages from us for their losses.

A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend.

Our margins are dependent on us achieving continued yield improvement.

To the extent such cost reductions and new product introductions do not occur in a timely manner, or that our products do not achieve market acceptance or market acceptance at acceptable pricing, our forecasts of future revenue, financial condition, and operating results could be harmed.

We rely on a single third-party wafer fabrication facility for the fabrication of semiconductor wafers and on a limited number of suppliers of other materials, and the failure of this facility or any of these suppliers or additional suppliers to continue to produce wafers or other materials on a timely basis could harm our business and our financial results.

We rely on a single supplier to supply and fabricate silicon wafers used in the manufacture of our IC products and purchases a number of key materials and components used in the manufacture of our products from single or limited sources which means that any disruption in their supply (including ceasing or suspending operations entirely), may require us to transfer manufacturing processes to a new location or facility.

Our success is dependent upon our ability to successfully partner with our suppliers and our ability to produce wafers with competitive performance attributes and

prices, including smaller process geometries.

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Supplier Risks

We rely on single sources of supply for front-end manufacturing (wafer fabrication) of our products, and on a limited number of suppliers of other materials.

We rely on a single third-party manufacturer (wafer foundry) to fabricate our gallium nitride (GaN) products, and on a separate, single wafer foundry to fabricate our silicon carbide (SiC) products.

We also purchase a number of key materials and components used in the manufacture of our products from single or limited sources.

As a result, any disruption in the supply to or from these third parties (including ceasing or suspending operations entirely), may require us to transfer manufacturing processes to a new location or facility.

Our success is dependent upon our ability to successfully partner with our suppliers and our ability to produce wafers with competitive performance attributes and prices, including smaller process geometries.

We do not have long-term contractual supply commitments from our suppliers of wafer fabrication services.

In addition, terms with respect to the volume and timing of wafer production and the pricing of wafers produced by the semiconductor foundries are determined through periodic negotiations with wafer foundries, which usually result in short-term agreements that do not provide for long-term supply or allocation commitments for end customers, including us.

We cannot guarantee that the foundry that supplies our wafers will offer us competitive pricing terms or other commercial terms important to our business.

We cannot guarantee that our suppliers will not experience manufacturing problems, including delays in the realization of advanced manufacturing process technologies or difficulties due to limitations of new and existing process technologies.

We also cannot guarantee that our suppliers will not experience manufacturing problems, including delays in the realization of advanced manufacturing process technologies or difficulties due to limitations of new and existing process technologies.

For example, we may experience supply shortages due to the difficulties our supplier and other foundries may encounter if they must rapidly increase their production capacities from low utilization levels to high utilization levels because of an unexpected increase in demand.

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We could also experience supply shortages due to very strong demand for our products, or a surge in demand for semiconductors in general, which may lead to tightening of foundry capacity across the industry.

We do not have long-term contracts with some of our suppliers and third-party manufacturers.

As a result, such supplier or third-party manufacturer can discontinue supplying components or materials to us at any time without penalty.

Because we do not have long-term contracts with some of our suppliers and third-party manufacturers, those suppliers or third-party manufacturers can discontinue supplying components or materials to us at any time without penalty.

Converting or transferring such fabrication processes from one of our primary facilities to an alternative or backup facility due to a disruption would likely be expensive and could take substantial time, given our highly complex manufacturing and fabrication processes, which incorporate our proprietary technologies.

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As a result, we may not be able to meet our end customers’ needs during such a transition, which would negatively impact our net sales, potentially damage our end customer relationships and our reputation and may have a material adverse effect on our business, financial condition and results of operations.

Further, public health crises such as an outbreak of contagious diseases like Covid-19 have negatively affected the supply chain for silicon wafers, resulting in shortages, and may affect the operations of our supplier and other foundries.

In addition, weak economic conditions may adversely impact the financial health and viability of the supplier and result in its insolvency or its inability to meet its commitments to us.

The insolvency of our supplier or any significant manufacturing problem or insufficient foundry capacity would disrupt our operations and negatively impact our financial condition and results of operations.

If we fail to maintain our supplier relationships, if our suppliers do not provide facilities and support for our development efforts, if our suppliers are insolvent or experience financial difficulty, or if we elect or are required to change foundry, we may incur significant costs and delays.

If our suppliers are unable to, or do not, manufacture sufficient quantities of our products at acceptable yields, we may be required to allocate the affected products among our end customers, prematurely limit or discontinue the sales of certain products, or incur significant costs to transfer products to another foundry, which could harm our end customer relationships and operating results.

If our foundry vendor does not achieve satisfactory yields or quality, our reputation and end customer relationships could be harmed.

The fabrication of our products is complex and technically demanding.

Minor deviations in the manufacturing process can cause substantial decreases in yields, and in some cases, cause production to be suspended.

Our foundry vendors, from time to time, experience manufacturing defects and reduced manufacturing yields.

Many of these problems are difficult to detect at an early stage of the manufacturing process and may be time consuming and expensive to correct.

Poor yields from our foundry vendor, or defects, integration issues or other performance problems in our solutions, could cause us significant

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end customer relations and business reputation problems, harm our financial results and give rise to financial or other damages to our end customers.

Our end customers might consequently seek damages from us for their losses.

A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend.

See “Product Quality and Reliability Risks”, above.

We rely on the timely supply of materials and new technologies and could suffer if suppliers fail to meet their delivery obligations or raise prices.

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Our business, financial condition and results of operations could be harmed if we are unable to obtain adequate supplies of materials in a timely manner or if there are significant increases in the costs of materials.

In addition, our next-generation technology depends on other new technologies supplied by third-party vendors.

We depend on these third parties to supply us with new technology in a timely manner that meets our performance, cost and quality needed by our end customers.

We do not have any long-term supply agreements with any of our suppliers.

If these new technologies are not available in the future or if we encounter any problems with the delivery, quality, cost or performance of these new technologies, our business could be materially impacted and our financial condition and results of operation could be harmed.

Increased costs of wafers and materials, or shortages in wafers and materials, could increase our costs of operations and our business could be harmed.

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If we are unable to purchase wafers at favorable prices or at all, or we face supply shortages, our financial condition and results of operations will be harmed.

Raw material price fluctuations can increase the cost of our products, impact our ability to meet end customer commitments, and may adversely affect our results of operations.

The cost of raw materials is a key element in the cost of our products.

Our inability to offset material price inflation through increased prices to end customers, suppliers, productivity actions, or through commodity hedges could adversely affect our results of operations.

Many major components, product equipment items, and raw materials, are procured or subcontracted on a single or sole-source basis.

Although we maintain a qualification and performance surveillance process and believe that sources of supply for raw materials and components are generally adequate, it is difficult to predict what effects shortages or price increases may have in the future.

Our inability to fill our supply needs would jeopardize our ability to fulfill obligations under our contracts, which could, in turn, result in reduced sales and profits, contract penalties or terminations, and damage to our end customer relationships.

Furthermore, increases in the price of wafers, testing costs, and commodities, which may result in increased production costs, mainly assembly and packaging costs, may result in a decrease in our gross margins.

Moreover, our suppliers may pass the increase in raw materials and commodity costs onto us which would further reduce the gross margin of our products.

In addition, as we are a fabless company, global market trends such as a shortage of capacity to fulfill our fabrication needs also may increase our raw material costs and thus decrease our gross margin.

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Regulatory Risks

Our business is affected by new U.S.

government regulations restricting outbound investments in China.

government has implemented new regulations, effective January 2, 2025, that establish an Outbound Investment Security Program which prohibits or requires notification of certain investments by U.S.

companies in entities involved in specific technologies, including semiconductor design, development, fabrication and assembly in China, Hong Kong and Macau.

The scope of the new regulations includes investments in existing wholly owned Chinese subsidiaries as well as investments in unaffiliated third parties and joint ventures.

These regulations affect our company and may adversely affect our business, financial condition and results of operations in the following ways:

• Investment Restrictions :

The regulations prohibit investments in entities engaged in activities related to advanced semiconductors, including the fabrication of integrated circuits from gallium-based compound semiconductors such as gallium nitride (GaN).

Although we do not believe this materially limits our ability to enter into or continue customary commercial relationships with Chinese suppliers and customers, this restriction does limit our ability to pursue strategic investments or partnerships in the area of GaN device fabrication, potentially affecting our growth and competitive positioning.

• Notification Requirement s:

Even when investments are not prohibited by the new regulations, we may be required to notify the U.S.

government of certain transactions, including investment transactions involving semiconductor device design, development, fabrication (from materials other than GaN) and packaging, in each case which our Chinese subsidiary was not engaged in before the new regulations became effective.

This could result in delays, increased compliance costs, and potential scrutiny of our investment activities.

• Competitive Disadvantage:

These regulations apply specifically to U.S.

companies and entities they control.

This may place us at a competitive disadvantage compared to non-U.S.

companies not subject to these restrictions.

• Penalties for Non-Compliance :

Violations of these regulations can result in substantial civil penalties, and willful violations may lead to criminal penalties.

The potential for such penalties could increase our compliance costs and increases our legal and financial risks associated with international investments.

The implementation of these regulations may contribute to increased geopolitical tensions, potentially affecting our broader business relationships and operations in China and other affected regions.

We are closely monitoring the implementation of these regulations and developing compliance strategies.

However, the full impact of this new regulatory regime on our business remains uncertain and could be material.

Investments in or by us may be subject to foreign investment regulation and review in the United States and elsewhere, which may result in material restrictions, conditions, prohibitions or penalties on us or our investors related to any such investments.

Semiconductor technologies generally, and GaN and SiC semiconductors specifically, may be subject to heightened regulatory scrutiny.

Our industry is subject to foreign direct investment (“FDI”) regulations in many countries, including the United States.

Our ability to invest in companies or operations in, and our ability to raise capital from investors affiliated with, those jurisdictions may be subject to review or approval requirements, restrictions, conditions, or prohibitions.

Any review and approval of an investment or transaction by an FDI regulator may have disproportionate impacts on transaction certainty, timing, feasibility, and cost, among other effects.

FDI regulatory policies and practices are rapidly evolving, and in the event that an FDI regulator reviews one or more proposed or existing investments, there can be no assurance that we will be able to maintain, or proceed with, such investments on terms acceptable to us.

We may be unable to complete commercially desirable acquisitions in such jurisdictions or be subject to material costs or restrictions in connection with such acquisitions.

While we strive to comply with all applicable laws and regulations, the application of FDI regulations could also in some circumstances result in financial or other penalties or require divestments, any of which could have a material impact on us.

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In the United States, certain investments that involve the acquisition of, or investment in, a U.S.

business by an investor subject to foreign control (a “foreign person”) may be subject to review and approval by the Committee on Foreign Investment in the United States (“CFIUS”).

Whether CFIUS has jurisdiction to review an acquisition or investment transaction depends on, among other factors, the nature and structure of the transaction, including the level of beneficial ownership interest and the nature of any information or governance rights involved, and the nature of the technology possessed by the U.S.

For example, investments that result in “control” of a U.S.

business, which may include governance rights falling well short of majority control, by a foreign person are always subject to CFIUS jurisdiction.

CFIUS’s jurisdiction also extends to investments that do not result in control of a U.S.

business by a foreign person, if they afford foreign investors with information or governance rights in a U.S.

business that has a nexus to, among other things, “critical technologies.” Transactions involving companies that develop, produce, or test critical technologies may be subject to mandatory filing requirements.

In addition, U.S.

regulatory initiatives over the past several years have classified certain semiconductor technologies as “critical to national security,” including compound semiconductors and wide-bandgap semiconductors.

Both gallium nitride (GaN) and silicon carbide (SiC) are compound semiconductors and wide-bandgap semiconductors.

As a result, our company’s focus on GaN- and SiC-based products, together with our global presence in rapidly growing markets, including China, may subject our company to additional regulatory restrictions or scrutiny, including by CFIUS, in connection with past or future transactions that involve investments in us or by us.

Although we believe all of our GaN and SiC products are generally not subject to export controls under the U.S.

Export Administration Regulations (EAR), CFIUS could choose to review proposed or past investments in us by foreign persons whether or not our business is deemed to involve “critical technologies.” In the case of such review, CFIUS could prohibit or impose conditions on the relevant investment.

Such conditions might include limitations or obligations on our operations that could result in material costs or disruptions of our current or future operations.

The prospect of CFIUS review, or any such prohibitions or conditions, could result in material costs or disruptions in our current or future operations or plans, and could also have a negative impact on our stock price.

Furthermore, we have had communications with CFIUS with respect to our products, investors and acquisitions, and may have additional communications in the future with respect to these or other matters.

Any future communications with CFIUS or other similar regulatory agency with authority over FDI, if not satisfactorily resolved, may result in material restrictions, conditions, prohibitions or penalties on us or our investors.

We are subject to export restrictions and laws affecting trade and investments that could materially and adversely affect our business and results of operations.

Since the beginning of 2018, there have been several instances of U.S.

tariffs on Chinese goods, some of which prompted retaliatory Chinese tariffs on U.S.

In May 2019, the U.S.

President issued an executive order that invoked national emergency economic powers to implement a framework to regulate the acquisition or transfer of information communications technology in transactions that imposed undue national security risks.

These actions could lead to additional restrictions on the export of products that include or enable certain technologies, including products we provide to China-based end customers.

The institution of trade tariffs both globally and between the U.S.

and China specifically carries the risk of negatively affecting China’s overall economic condition, which could have negative repercussions on our business.

Furthermore, the imposition of tariffs could cause a decrease in the sales of products to end customers located in China or other end customers selling to Chinese end users, which could materially and adversely affect our business, financial condition and results of operations.

We are subject to U.S.

laws and regulations that could limit and restrict the export of some products and services and may restrict transactions with certain end customers, business partners and other persons, including, in certain cases, dealings with or between our employees and subsidiaries.

In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products, services and technologies and in other circumstances we may be required to obtain an export license before exporting the controlled item.

Compliance with these laws and regulations could materially limit operations or sales, which would materially and adversely affect our business and results of operations.

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In addition, U.S.

laws and regulations and sanctions, or threat of sanctions, that could limit and restrict the export of some of our products and services to end customers, may also encourage end customers to develop their own solutions to replace our products, or seek to obtain a greater supply of similar or substitute products from competitors that are not subject to these restrictions, which could materially and adversely affect our business, financial condition and results of operations.

Further, our sales may be adversely affected by the current and future political environment in China and the policies of the China Central Government.

China’s government has exercised and continues to exercise substantial control over nearly all sectors of the Chinese economy through regulation and state ownership.

Our ability to ship products to China may be adversely affected by changes in Chinese laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters.

Under its current leadership, China’s government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization.

There is no assurance, however, that China’s government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

The United States government has called for substantial changes to foreign trade policy with China and has raised (as well as has proposed to further raise in the future), tariffs on several Chinese goods.

China has retaliated with increased tariffs on United States goods.

Any further changes in United States trade policy could trigger retaliatory actions by affected countries, including China, resulting in trade wars.

Any changes in United States and China relations, including through changes in policies by the Chinese government could adversely affect our financial condition and results of operations, including:

changes in laws, regulations or the interpretation thereof, confiscatory taxation, governmental royalties, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises.

In addition, there may be circumstances where we may have to incur premium freight charges to expedite the delivery of our products to end customers or as a result of being required to ship to alternative ports due to local Chinese government regulations or delays at the ports that we typically utilize.

If we incur a significant amount of freight charges, our gross profit will be negatively affected if we are unable to pass on those charges to end customers.

Financial and Accounting Risks

Our working capital needs are difficult to predict.

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If we are unable to obtain adequate financing or financing on satisfactory terms when required, our ability to continue to support business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.

Raw material price fluctuations can increase the cost of our products, impact our ability to meet end customer commitments, and may adversely affect our results of operations.

The cost of raw materials is a key element in the cost of our products.

Many major components, product equipment items, and raw materials, are procured or subcontracted on a single or sole-source basis.

Our inability to fill our supply needs would jeopardize our ability to

fulfill obligations under our contracts, which could, in turn, result in reduced sales and profits, contract penalties or terminations, and damage to our end customer relationships.

Moreover, our suppliers may pass the increase in raw materials and commodity costs onto us which would further reduce the gross margin of our products.

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We have in the past identified material weaknesses in our internal control over financial reporting.

If we identify such material weaknesses in the future and are unable to remedy these material weaknesses, or if we fail to establish and maintain effective internal controls, we may be unable to produce timely and accurate financial statements, and we may conclude that our internal control over financial reporting is not effective, which could adversely impact our investors’ confidence and our stock price.

As previously disclosed in our annual report on Form 10-K for the year ended December 31, 2021 and 2022, in connection with the audit of our consolidated financial statements for the years then ended, we identified material weaknesses in our internal control over financial reporting, as described in Part II, Item 9A, Controls and Procedures.

In 2022 and into 2023, we began implementing and are continuing to implement measures designed to improve our internal control over financial reporting to remediate these material weaknesses, specifically by hiring additional accounting personnel to augment existing technical expertise as well as to provide the staffing necessary to maintain effective segregation of duties.

In 2023, we hired an external consulting firm to act as our internal audit department and to assist us with the Company’s SOX 404(b) requirements.

As part of the Company’s SOX 404(b) requirements, we have identified and implemented additional internal controls to mitigate the material weaknesses identified from the prior year.

As disclosed in Part II, Item 9A, we have tested our controls related to the material weaknesses identified from the prior year for a sufficient period of time and have concluded through testing that as of December 31, 2023, these controls were operating effectively.

Therefore, we have concluded that the material weaknesses previously identified have been remediated at December 31, 2023.

Risks Related to Taxes

As disclosed in this annual report for the year ended December 31, 2024, and as previously disclosed in our amended annual report on Form 10-K/A for the year ended December 31, 2023, in connection with the audit of our consolidated financial statements for the years then ended, we identified material weaknesses in our internal control over financial reporting (see Part II, Item 9A (Controls and Procedures) of this annual report on Form 10-K for the year ended December 31, 2024, and our amended annual report on Form 10-K/A for the year ended December 31, 2023, filed with the SEC on July 23, 2024).

We have begun implementing and continue to implement measures to improve our internal control over financial reporting and remediate these material weaknesses.

These efforts include engaging an external advisor to evaluate and document the design and effectiveness of our internal controls, as well as to assist with remediation as needed.

Additionally, we are hiring accounting and finance personnel to support our remediation efforts, leveraging third-party resources with relevant expertise to supplement our internal team, and assessing training needs for both new and existing personnel to strengthen our internal controls.

As a result of these efforts, we have strengthened our internal controls and made meaningful progress compared to the prior year.

We employ modeling techniques to support the valuation of our accounts receivable and to project the timing and amount of expected collections.

While these models are designed to provide reliable insights, they involve certain inherent risks, especially if any assumptions or inputs prove inaccurate, incomplete, or less indicative of future outcomes than anticipated.

As part of our risk management efforts, we use a discounted cash flow model for accounts receivable as necessary, informed by historical trends and robust assumptions.

However, should these assumptions or historical patterns deviate from actual results, there is potential for variance in the model’s accuracy, which could affect decisions based on these forecasts.

Cybersecurity Risks

We face significant and evolving cybersecurity risks that could adversely affect our operations, financial condition, and reputation.

We are subject to a growing number of sophisticated cyber attacks, including ransomware attacks and the exfiltration of proprietary and confidential information.

Despite our ongoing efforts to enhance our cybersecurity measures, we may not be able to prevent, detect, or mitigate all such attacks.

A successful cyber attack could result in the theft, destruction, or unauthorized disclosure of our intellectual property, trade secrets, or customer data.

In 2024 we experienced at least two attempted cyber attacks that we are aware of, one of which resulted in unauthorized access to non-critical systems.

While these incidents did not materially affect our operations, future breaches could lead to significant financial losses, operational disruptions, and reputational damage.

We could be subject to domestic or international changes in tax laws, tax rates or the adoption of new tax legislation, or we could otherwise have exposure to additional tax liabilities, which could adversely affect our business, results of operations, financial condition or future profitability.

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We, through our foreign subsidiaries, are subject to income taxes in other foreign jurisdictions as a result of foreign operations in such jurisdictions.

Thus, new laws and policy relating to either U.S., Irish or other applicable foreign jurisdiction taxes may have an adverse effect on our business and future profitability.

Thus, new laws and policy relating to either U.S., Irish or other applicable foreign jurisdiction taxes may have an adverse effect on our

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business and future profitability.

Further, existing U.S., Irish or other foreign tax laws, statutes, rules, regulations, ordinances or treaties could be interpreted, changed, modified or applied adversely to us, possibly with retroactive effect.

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domestic corporation under Section 7874 of the Code.

Therefore, if the expansive guidance issued by the IRS and Treasury Department were viewed as interpretive for purposes of the definition of “inverted domestic corporation” in the Homeland Security Act (or similar state or local rules), it is expected that Legacy Navitas will be treated as an inverted domestic corporation for such purposes.

Any adjustment to the purchase price of the assets that were transferred pursuant to the restructuring of Legacy Navitas in 2020 could adversely impact our tax position.

In connection with the restructuring of Legacy Navitas in 2020, substantially all of the intellectual property and other intangible assets of Legacy Navitas were sold from a subsidiary of the Legacy Navitas group to Navitas Ireland.

Legacy Navitas has recently obtained a third-party valuation of the transferred assets to support the purchase price paid for such assets.

However, there can be no assurance that the relevant taxing authorities will agree with the purchase price ascribed to the transferred assets, and an adjustment to the purchase price could adversely impact Legacy Navitas’ tax position.

Therefore, if the expansive guidance issued by the IRS and Treasury Department were viewed as interpretive for purposes of the definition of “inverted

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domestic corporation” in the Homeland Security Act (or similar state or local rules), it is expected that Legacy Navitas will be treated as an inverted domestic corporation for such purposes.

As a result of the plans to expand our business operations, including to jurisdictions in which tax laws may not be favorable, our obligations may change or fluctuate, become significantly more complex or become subject to greater risk of examination by taxing authorities, any of which could adversely affect our after-tax profitability and financial results.

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federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of our common stock.

Under Section 382 of the Code, if a corporation experiences an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards to offset its post-change income may be limited.

Under Section 382 of the Code, if a corporation experiences an “ownership

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change,” the corporation’s ability to use its pre-change net operating loss carryforwards to offset its post-change income may be limited.

An ownership change pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5 percent of a corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

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federal net operating loss carryforwards or other U.S.

federal tax attributes would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of our common stock at the time of the ownership change by the applicable long-term tax-

exempt rate, and then could be subject to additional adjustments, as required.

Any limitation may result in expiration of a portion of our U.S.

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We have recorded a valuation allowance related to our net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

Risks Related to Our Intellectual Property

Intellectual Property Risks

We may not be able to adequately protect our intellectual property rights.

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Our ability to obtain additional patents is uncertain and the legal protection afforded by these patents may not adequately protect our rights or permit us to gain or keep competitive advantage.

In addition, the specific content required of patents and patent applications that are necessary to support and interpret patent claims can be uncertain due to the complex nature of the relevant legal, scientific and factual issues.

In addition, the specific content required of patents and patent applications that are necessary to support and interpret patent claims can be uncertain due to the complex nature

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of the relevant legal, scientific and factual issues.

Changes in either patent laws or interpretations of patent laws in the United States or elsewhere may diminish the value of our intellectual property or narrow the scope of our patent protection.

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The semiconductor industry is characterized by frequent litigation regarding patent and other intellectual property rights.

From time to time, we may receive communications from third parties that allege that our products or technologies infringe their patent or other intellectual property rights.

We have received communications, and we expect to receive additional communications from time to time, that allege or imply that our products or technologies infringe the patent or other intellectual property rights of third parties.

Lawsuits or other proceedings resulting from allegations of infringement could subject us to significant liability for damages, invalidate our proprietary rights and adversely affect our business.

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Any significant impairments of intellectual property rights from any litigation we face could materially and adversely impact our business, financial condition, results of operations and our ability to compete.

Even when we believe we do not infringe the intellectual property rights of a third party, we may decide to enter into a settlement agreement with the third party in order to avoid the risks and costs resulting from protracted litigation.

Such settlement agreements may require us to make fixed or recurring payments to the third party, which could materially and adversely impact our business, financial condition and results of operations.

In addition, we could be subject to claims that our employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of third parties.

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Furthermore, certain product features rely on intellectual property acquired from third parties, including hardware and software tools and products.

The design requirements necessary to meet future consumer demands for more features and greater functionality from semiconductor products may exceed the capabilities of the third-party intellectual property or development tools that are available to us.

The design requirements necessary to meet future consumer demands for more features and greater functionality from semiconductor products may

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exceed the capabilities of the third-party intellectual property or development tools that are available to us.

In addition, hardware and software tools and products procured from third parties may contain design or manufacturing defects that such third parties are unable to resolve, including flaws that could unexpectedly interfere with the operation of our products.

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If the third-party intellectual property that we use becomes unavailable or fails to produce designs that meet consumer demands, our business could be harmed.

Risks Related to Regulatory Compliance

Semiconductor technologies generally, and GaN and SiC semiconductors specifically, may be subject to heightened regulatory scrutiny.

Our industry is subject to foreign direct investment (“FDI”) regulations in many countries, including the United States.

Any review and approval of an investment or transaction by an FDI regulator may have outsized impacts on transaction certainty, timing, feasibility, and cost, among other things.

We may be unable to complete commercially desirable acquisitions in such jurisdictions or be subject to material costs or restrictions in connection with such acquisitions.

In the United States, certain investments that involve the acquisition of, or investment in, a U.S.

business by an investor subject to foreign control (a “foreign person”) may be subject to review and approval by the Committee on Foreign Investment in the United States (“CFIUS”).

For example, investments that result in “control” of a U.S.

business, which may include governance rights falling well short of majority control, by a foreign person are always subject to CFIUS jurisdiction.

CFIUS’s jurisdiction also extends to investments that do not result in control of a U.S.

business by a foreign person, if they afford foreign investors with information or governance rights in a U.S.

In addition, recent U.S.

regulatory initiatives have classified certain semiconductor technologies as “critical to national security,” including compound semiconductors and wide-bandgap semiconductors.

Both gallium nitride (GaN) and silicon carbide (SiC) are compound semiconductors and wide-bandgap semiconductors.

As a result, our company’s exclusive focus on GaN- and SiC-based products, together with our global presence in rapidly growing markets, including China, may subject our company to additional regulatory restrictions or scrutiny, including by CFIUS, in connection with past or future transactions that involve investments in us or by us.

Although we believe all of our GaN and SiC products are generally not subject to export controls under the U.S.

Such conditions might include limitations or obligations on our operations that could result in material costs or disruptions of our current or future operations.

Finally, U.S.

authorities have publicly announced plans to institute an outbound investment review regime, and various legislative proposals to implement such a regime are also pending.

For example, on August 9, 2023, the U.S.

Treasury Department issued an Advance Notice of Proposed Rulemaking announcing a proposed program that would prohibit certain types of investments by U.S.

companies into certain Chinese entities with capabilities or activities related to specified semiconductor technologies, including integrated circuits manufactured from a gallium-based compound

semiconductor.

The final scope and content of this program remain to be defined through public comment and further rule-making.

There can be no assurance that any such regime will not restrict our ability to engage in commercially desirable investments in jurisdictions outside the United States, particularly China, or that any such restrictions will not impose material costs or competitive disadvantages on us.

We are subject to export restrictions and laws affecting trade and investments that could materially and adversely affect our business and results of operations.

Since the beginning of 2018, there have been several instances of U.S.

tariffs on Chinese goods, some of which prompted retaliatory Chinese tariffs on U.S.

In May 2019, the U.S.

These actions could lead to additional restrictions on the export of products that include or enable certain technologies, including products we provide to China-based end customers.

The institution of trade tariffs both globally and between the U.S.

and China specifically carries the risk of negatively affecting China’s overall economic condition, which could have negative repercussions on our business.

We are subject to U.S.

Compliance with these laws and regulations could materially limit operations or sales, which would materially and adversely affect our business and results of operations.

In addition, U.S.

Further, our sales may be adversely affected by the current and future political environment in China and the policies of the China Central Government.

China’s government has exercised and continues to exercise substantial control over nearly all sectors of the Chinese economy through regulation and state ownership.

Under its current leadership, China’s government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization.

There is no assurance, however, that China’s government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

China has retaliated with increased tariffs on United States goods.

Any further changes in United States trade policy could trigger retaliatory actions by affected countries, including China, resulting in trade wars.

Any changes in United States and China relations, including through changes in policies by the Chinese government could adversely affect our financial condition and results of operations, including:

regulations or delays at the ports that we typically utilize.

If we incur a significant amount of freight charges, our gross profit will be negatively affected if we are unable to pass on those charges to end customers.

Risks Related to Ownership of Our Common Stock

Risks of Owning Our Common Stock

Our business and operations could be impacted by stockholder activism, which could negatively affect our business and cause disruptions.

We value constructive input from our stockholders and regularly engage in dialogue with our stockholders regarding strategy and performance.

While our board of directors and management team welcome their views and opinions with the goal of enhancing value for all of our stockholders, we may be subject to actions or proposals from activist stockholders that may not align with our business strategies or the best interests of all of our stockholders.

In the event such stockholders pursue any proposals concerning these matters or we otherwise become the subject of stockholder activism, this may create a significant distraction for our management and employees.

This could negatively impact our ability to execute our business plans and may require our management to expend significant time, resources and costs, including legal fees and other expenses incurred in connection with any proxy contest that may result from any such stockholder activism.

Furthermore, when individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value for our stockholders, and could lead us to adopt other plans that we cannot predict which could focus on short-term benefits with longer-term costs or that may not be in the best interests of the company.

Such stockholder activism may also create uncertainties with respect to our business development plans, financial position and operations, may result in changes to our senior management team, may adversely affect our ability to attract and retain key employees and may result in loss of potential business opportunities with our current and potential customers and business partners, any of which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

In addition, such stockholder activism may cause significant fluctuations in the market value of our Class A common stock based on temporary or speculative market perceptions, uncertainties or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business, and could cause the market value of our Class A common stock to decline.

Concentration of ownership among existing executive officers, directors and their affiliates, including the investment funds they represent, may prevent new investors from influencing significant corporate decisions.

At December 31, 2023, executive officers, directors and their affiliates, including the investment funds they represent, as a group beneficially owned approximately 32.5% of our outstanding Class A Common Stock.

At December 31, 2024, executive officers, directors and their affiliates, including the investment funds they represent, as a group beneficially owned approximately 30.6% of our outstanding common stock.

As a result, these stockholders are able to exercise a significant level of influence over matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions.

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The issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise by us could dilute the ownership and voting power of our stockholders.

At December 31, 2023, we had 540,991,421 shares of Class A Common Stock authorized but unissued.

At December 31, 2024, we had approximately 534 million shares of Class A common stock authorized but unissued.

In addition, our certificate of incorporation authorizes us to issue up to 10,000,000 shares of Class B common stock and 1,000,000 shares of preferred stock.

The preferred stock can be issued with such rights and preferences as may be determined by our board.

Our certificate of incorporation authorizes us to issue shares of Class A Common Stock or other securities convertible into or exercisable or exchangeable for shares of Class A Common Stock from time to time, for the consideration and on the terms and conditions established by our board in its sole discretion, whether in connection with a financing, an acquisition, an investment, stock incentive plans or otherwise.

Our certificate of incorporation authorizes us to issue shares of Class A common stock or other

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securities convertible into or exercisable or exchangeable for shares of Class A common stock from time to time, for the consideration and on the terms and conditions established by our board in its sole discretion, whether in connection with a financing, an acquisition, an investment, stock incentive plans or otherwise.

Such additional shares of Class A common stock or such other securities may be issued at a discount to the market price of Class A common stock at the time of issuance.

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• may significantly dilute the equity interests of our investors;

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• may subordinate the rights of holders of Class A common stock if preferred stock is issued with rights senior to those afforded our Class A common stock;

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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-K

Item 1A. Risk Factors