What changed in this filing

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Item 1. Business

2022-10-14 compared with 2021-10-25 · 87 added, 79 removed, 244 unchanged (40% of the section changed)

At SGH, we power growth and expand possibilities by continually investing in our people, innovation and new opportunities.

Our diverse lines of businesses ‒ across computing, memory and LED lighting solutions ‒ all focus on serving customers by delivering engineer-driven technology solutions to specialty end markets.

SGH serves as a foundation and a support for each of our businesses, while also empowering them to deliver their own unique solutions to their customers so unlock avenues for growth and technological advancement.

Our Business Lines

Since our inception over 30 years ago, SGH has grown into a diversified group of businesses focused on the design and manufacture of specialty solutions for the computing, memory and LED markets.

Our success is based on a customer-focused approach characterized by a commitment to quality, advanced technical expertise, quick time-to-market, build-to-order flexibility and excellence in customer service.

At SGH, we strive to achieve long-term growth by investing in our people, innovation, processes and new opportunities.

Since the beginning of fiscal 2018, we have accelerated our growth through the completion of five acquisitions.

With our most recent acquisition of Cree LED in 2021, we have organized the company into three lines of business:

We have accelerated our growth by completing five acquisitions since 2018.

In connection with our acquisition of Cree LED in 2021, we reorganized the Company into three lines of business:

Memory Solutions, Intelligent Platform Solutions (“IPS”) and LED Solutions.

More recently, on August 29, 2022, we announced the completion of our acquisition of Stratus Technologies, Inc., a global leader in simplified, protected and autonomous computing solutions in the data center and at the Edge, which will operate as a part of IPS.

In addition to driving growth organically and through acquisitions, we use the SGH operating system to support and drive operational efficiency and performance.

Our employees have always played a key role in our success.

Today, SGH employs a diverse workforce of approximately 3,900 employees around the world who are focused on innovation and customer satisfaction.

Acquisition of LED Business

In March 2021, we completed the acquisition of the LED business (“LED Business”) of Cree, Inc., a corporation now known as Wolfspeed, Inc.

The acquisition of the LED Business, a leader in LED lighting technology, further enhances our growth and diversification strategy and fits well with our other specialty businesses in computing and memory.

The purchase price for the LED Business consisted of cash payments of $72.4 million, the issuance of an unsecured promissory note issued in the amount of $125 million and the potential for Cree to receive an earn-out payment of up to $125 million based on the revenue and gross profit performance of the LED Business in the twelve-month period ended in March 2022.

SGH’s Operating System incorporates best practices to ensure our business lines are empowered to deliver for our customers consistently and efficiently.

Our employees are the key to our success.

SGH has a diverse workforce of approximately 3,600 employees across the globe who are focused on innovation and customer satisfaction.

Acquisition of Stratus Technologies

On August 29, 2022, we completed the acquisition of Storm Private Holdings I Ltd., a Cayman Islands exempted company (“Stratus Holding Company” and together with its subsidiaries, “Stratus Technologies”).

At the closing, SGH paid a cash purchase price of $225 million, subject to certain adjustments.

In addition, the seller has the right to receive, and SGH will

be obligated to pay, contingent consideration (if any) of up to $50 million (the “Earn-Out”) based on the gross profit performance of the Stratus business during the first full 12 fiscal months of Stratus following the closing.

The Earn-Out, if any, will be payable in cash, ordinary shares of SGH, or a mix of cash and SGH Shares, at SGH’s election.

Stratus is a global leader in simplified, protected, and autonomous computing platforms and services in the data center and at the Edge.

For more than 40 years, Stratus has provided high-availability, fault-tolerant computing to Fortune 500 companies and small-to-medium sized businesses enabling them to securely and remotely run critical applications with minimal downtime.

See “PART II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Subsequent Events – Acquisition of Stratus Technologies.”

The outbreak of coronavirus disease 2019 (“COVID-19”) has resulted in substantial loss of life, economic disruption and government intervention worldwide.

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Our Products and Services

In connection with our acquisition of the LED Business in 2021, we reorganized SGH into three business units:

Memory Solutions, IPS and LED Solutions.

Memory Solutions

Our Memory Solutions group provides high performance and reliable memory solutions through the design, development and advanced packaging of leading-edge to extended lifecycle products.

These specialty products are tailored to meet customer-specific requirements across networking and communications, enterprise storage, computing, including desktop, notebook and server applications, smartphones and other vertical markets.

These products are marketed to OEMs and to commercial and government customers.

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We collaborate closely with our global OEM customers throughout their design process and across multiple projects to create solutions for demanding applications with differentiated requirements, such as specific form factors, higher density, lower power, specific firmware or greater durability and reliability compared to standard solutions.

We target opportunities where we believe we can be a primary supplier of longer-lifecycle solutions to OEM customers for diverse and growing end markets within the industrial, government, networking and communications and enterprise storage and computing markets as well as other vertical markets.

In this business, we offer an extensive portfolio of over 2,000 products available in standard and rugged formats.

We offer an extensive lineup of dynamic random access memory (“DRAM”) modules utilizing a wide range of DRAM technologies from legacy synchronous DRAM to double data rate (“DDR”), DDR2, DDR3 and leading-edge, high-performance DDR4 DRAM devices.

as well as other vertical markets.

In this business, we offer an extensive portfolio of approximately 2,000 products available in standard and rugged formats.

These technologies are incorporated into standard memory, enterprise memory and hybrid memory solutions in standard and rugged formats.

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These memory modules come in configurations of up to 288 pins and densities of up to 128 gigabytes.

We support leading-edge and emerging interconnect standards such as Gen-Z and OpenCAPI with our Gen-Z Memory module (ZMM) and Differential DIMM (DDIMM).

We support leading-edge and emerging interconnect standards such as OpenCAPI with our Differential DIMM (“DDIMM”).

We utilize advanced printed circuit board and device packaging and stacking technologies to achieve cost-effective, high-density solutions.

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Intelligent Platform Solutions

Our Intelligent Platform Solutions group (“IPS”) consists of Penguin Computing and Penguin Edge.

Our Intelligent Platform Solutions group (“IPS”) operates under the Penguin Solutions™ umbrella brand and includes the Penguin Computing™ and Penguin Edge™ product brands.

Penguin Computing offers specialized platform solutions for high-performance computing (“HPC”), artificial intelligence (“AI”), machine learning (“ML”) and advanced modeling for technology research.

We provide these leading-edge solutions to customers in the government, hyper-scale, energy, financial services and education markets.

Penguin Edge offers solutions for embedded and wireless applications, specializing in high-reliability products for a wide range of customers in government, telecommunications, health care, smart city, network edge and industrial applications.

We provide these leading-edge solutions to customers in the government, hyperscale, energy, financial services and education markets.

Penguin Edge offers edge computing solutions for embedded and wireless applications, specializing in high-performance products for a wide range of customers in retail, government, telecommunications, health care, smart city and industrial applications.

IPS had net sales of $441.0 million, $344.8 million and $265.1 million in 2022, 2021 and 2020, respectively.

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Through Penguin Computing, we provide a robust portfolio of hardware (including solutions based on the Open Compute Project (“OCP”)) and software products and services offerings.

Our solutions are comprised of:

servers, software, integrated turn-key clusters, enterprise-grade storage and networking, all available in hardware or cloud-based solutions via Penguin-On-Demand (POD).

Our solutions are comprised of servers, software, integrated turn-key clusters, enterprise-grade storage and networking, all available as hardware and software or cloud-based solutions via Penguin-On-Demand (“POD”).

Our product offering includes our Open Compute Tundra Extreme Scale products to solve technical and density challenges.

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These products provide advanced capabilities for management of HPC clusters from department-level systems to supercomputers.

In addition, our products and services enable customers to provide their own HPC cloud with remote access via our proprietary browser-based VDI solution.

In addition, our products and services enable customers to provide their own HPC cloud with remote access via our proprietary browser-based Virtual Desktop Infrastructure (“VDI”) solution.

Our services offering include solution design, deployment services, software automation and managed services.

Penguin Edge encompasses the operations of two businesses, SMART Embedded Computing (“SMART EC”) and SMART Wireless Computing (“SMART Wireless”).

SMART EC provides advanced embedded computing solutions including high-end application-ready platforms, single-board computers (“SBCs”), enclosures, blades, edge servers, network accelerator cards and enabling software.

SMART EC’s advanced computing board and system solutions include ATCA, VME, PCIe and rackmount server products.

Target markets for SMART EC solutions and products include network edge computing, government, telecommunications infrastructure, industrial and transportation applications.

Our SMART Wireless business provides computing products such as system-on-a-module (“SOMs”), SBCs and integrated systems for wireless computing endpoint applications.

Available in standard and custom configurations, our boards, systems and services meet the needs of connected devices used in Internet of Things (“IoT”) endpoint applications such as smart city, digital health and smart office.

The Penguin Edge product portfolio is a combination of SMART Embedded Computing (“SMART EC”) and SMART Wireless Computing (“SMART Wireless”) operating under the unified Penguin Edge product brand.

Penguin Edge products include system-on-modules (“SoMs”), single board computers (“SBCs”), peripheral component interconnect express (“PCIe”) accelerators and application-ready platforms including bladed edge servers.

These solutions extend insight, intelligence and analytical capabilities closer to where the data is generated, optimizing a range of use cases across industries and rugged environments.

Target markets for Penguin Edge solutions include network edge computing, government, telecommunications infrastructure and manufacturing applications, as well as Internet of Things (“IoT”) endpoint applications such as smart city, digital health, digital signage and smart buildings.

LED Solutions

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Backed by expert design assistance and superior sales support, our LED products enable our customers to develop and market LED-based products for lighting, video screens and specialty lighting applications.

Our LED Solutions group had net sales of $224.6 million in the second half of 2021.

Our LED Solutions group was formed after the closing of our acquisition of the LED Business from Cree in March 2021, and our products are offered to customers under the brand CreeLED.

Our LED Solutions group had net sales of $403.2 million in 2022 and $224.6 million in the second half of 2021.

Our LED Solutions group was formed after the closing of our acquisition of the LED Business from Cree in March 2021 offers products under the CreeLED® brand.

For over 30 years, CreeLED has been a leader in LED lighting technology, offering new and differentiated LED solutions to a broad base of customers across multiple market segments.

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Our CreeLED chip products include blue and green LED chips based on gallium nitride (“GaN”) and related materials.

LED chips or die are used in a number of applications and are currently available in a variety of brightness levels, wavelengths (colors) and sizes.

Products using our blue and green LED chips are featured in a variety of applications including video screens, gaming displays and function indicator lights.

Customers also combine our blue LED chips with phosphors to create white LEDs, which are used in various applications for indoor and outdoor illumination and backlighting, full-color display screens, liquid crystal display (“LCD”) backlighting, white keypads, automotive backlights, headlamps and directional indicators.

Our CreeLED components include packaged LED products, from our XLamp and J Series LED components and LED modules for lighting applications to our high-brightness LED components.

Our XLamp LED components and LED modules are designed to meet a broad range of market needs for lighting applications, including general illumination (both indoor and outdoor applications), portable, architectural, signal and transportation lighting.

LED chips are used in a number of applications and are currently available in a range of brightness levels, wavelengths (colors) and sizes.

Products using our blue and green LED chips are featured in a variety of applications including automotive, video screens, gaming displays, heart rate monitor and function indicator lights.

Customers also combine our blue LED chips with phosphors to create white LEDs, which are used in various applications for indoor and outdoor illumination, full-color display screens, liquid crystal display (“LCD”) backlighting, a variety of medical and industrial applications, automotive interior lighting and indicators, headlamps, daytime running lights and directional indicators.

Our CreeLED components include packaged LED products, from our XLamp®, J Series® and high brightness product lines.

Our XLamp and J series LED components are designed to meet a broad range of market needs for lighting applications, including general illumination (both indoor and outdoor applications), portable, architectural, signal and transportation lighting.

Our high-brightness LED components consist of surface mount device (“SMD”) and through-hole packaged LED products.

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ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018.

We also have a manufacturing facility in Huizhou, China, which is ISO/TS16949 certified and where products for our LED Solutions group are packaged.

We also have a manufacturing facility in Huizhou, China, which is ISO9001:2015, ISO14001:2015, and IATF16949:2016 certified.

In addition, in early fiscal 2022, we began manufacturing operations in our Manaus, Brazil facility.

We also have a test and integration facility in Tempe, Arizona for SMART EC and other products.

Additionally, we are a member of the Responsible Business Alliance (“RBA”) and our manufacturing facilities are compliant with the RBA Code of Conduct which is increasingly a business requirement of our customers.

We also have a test and integration facility in Tempe, Arizona for our Penguin Edge portfolio of products.

Additionally, we are a member of the Responsible Business Alliance (“RBA”) and our manufacturing facilities in Brazil, Malaysia and California are compliant with the RBA Code of Conduct, which is increasingly a business requirement of our customers.

We believe that our manufacturing operations for Memory Solutions have benefited from our many years of design experience and our existing library of proven designs which stress high manufacturability and quality.

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We have made significant capital investments to further expand our manufacturing and test capabilities and operate at an even higher level of efficiency.

In our IPS group, we have utilized two primary methods of fulfilling demand for products:

Within IPS, we have utilized two primary methods of fulfilling demand for products:

building products to order and configuring products to order, in each case using components and subassemblies we acquire from a wide range of vendors.

At Penguin Computing, we have developed capabilities for design and development of large scale systems and dense HPC and AI clusters that have significant power and cooling requirements with manufacturing and test for our HPC products being done in Fremont, California.

At SMART EC and SMART Wireless, we have developed capabilities for design and development of a wide range of embedded and wireless computing products which we manufacture, assemble and/or test in our manufacturing facilities in Newark, California;

For Penguin Computing products, we have developed capabilities for design and development of large scale systems and dense HPC and AI clusters that have significant power and cooling requirements with manufacturing and test for our HPC products being done in Fremont, California.

For our Penguin Edge product brand, we have developed capabilities for design and development of a wide range of embedded and wireless computing products which we manufacture, assemble and/or test in our manufacturing facilities in Newark, California;

Penang, Malaysia;

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These practices enable us to reduce the occurrence of early life failures and weak module fallout which can save our customers from the often significant expenses associated with replacing products that fail after their field deployment.

We believe our customers rely on us as a strategic supplier due to our application-specific products, quality and technical support, our global footprint and our ability to provide locally manufactured products.

We believe our customers rely on us as a strategic supplier due to our application-specific products, quality, technical support;

our global footprint;

and our ability to provide locally manufactured products.

We also provide customized, integrated supply chain services to certain customers to assist them in the management and execution of their procurement and distribution processes.

We believe our close collaboration with customers, customer-specific designs, long-lifecycle solutions and proprietary supply chain services create significant customer attachment.

We believe our close collaboration with customers, customer-specific designs, long-lifecycle solutions and proprietary supply chain services create significant customer value.

Our products are generally manufactured on a build-to-order basis.

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In our Memory Solutions group, we sell to OEM customers in industrial, government, networking and communications, enterprise storage, computing and mobile, as well as other vertical markets.

In IPS, we sell Penguin Computing products to enterprise and government customers in financial services, energy, government, hyper-scale and education end markets.

As part of Penguin Edge, we sell SMART EC and SMART Wireless products to OEM customers in government, telecommunications infrastructure, industrial, network edge computing and transportation markets as well as in IoT endpoint applications such as smart city, digital health and smart office markets.

Our LED Solutions group sells LED chips and components to manufacturers, distributors and other customers.

Our LED products and solutions are sold on a channel and direct basis to a diversified base of local and global OEM and contract manufactures supporting a broad range of customers.

We also utilize third-party sales representatives who generally do not maintain a product inventory.

In IPS, we sell Penguin Computing products to government and enterprise customers in financial services, energy, hyperscale and education markets.

We sell Penguin Edge products to OEM customers, system integrators and through distribution to government, telecommunications infrastructure, industrial, network edge computing and transportation markets as well as in IoT endpoint applications such as smart city, digital health, digital signage and smart buildings markets.

Our LED Solutions group sells LED chips and components to manufacturers and electronic component distributors.

Our LED products and solutions are sold on a channel and direct basis to a diverse base of local and global OEM and contract manufactures supporting a broad range of customers.

We also utilize third-party sales representatives who generally do not maintain product inventory.

A substantial portion of our LED Solutions products are sold to distributors, who stock inventory and sell our products to their customer base, which includes value added resellers, manufacturers who incorporate our products into their own manufactured goods and ultimate end users of our products.

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In our Memory Solutions and IPS businesses, we purchase a significant portion of our materials from suppliers on a purchase order basis and generally do not have long-term commitments from our suppliers.

Our LED Solutions business has a number of supply agreements with third-party providers for LED chips in wafer or discret e form.

The COVID-19 pandemic, as well as a rebound in general economic conditions, has resulted in significant supply shortages in the overall supply chain.

Our LED Solutions business has a number of supply agreements with third-party providers for LED chips in wafer or discrete form.

The COVID-19 pandemic, as well as general economic conditions, has resulted in significant supply shortages in the overall supply chain.

These shortages may impact our ability to manufacture products for our customers and may result in rising prices of the materials we need to manufacture our products.

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Our on-site FAEs work closely with our sales team to provide product design support to our customers.

Our FAEs collaborate closely with our customers, providing us with insight into their business models and product roadmaps and allowing us to identify opportunities at an early stage to help grow our business.

Our FAEs collaborate with our customers, providing us insight into their business models and product roadmaps and allowing us to identify opportunities at an early stage to help grow our business.

The combination of our integrated sales network with our FAEs enables us to be more responsive and successful in navigating through each customer’s unique and oftentimes complex design qualification or bid proposal processes.

Our marketing activities include advertising in technical journals, publishing articles in leading industry periodicals, hyper-scale, periodic webinars, publishing white papers, electronic newsletters, blogs and utilizing direct email solicitation.

Our marketing activities include advertising in technical journals, publishing articles in leading industry periodicals, hyperscale, periodic webinars, publishing white papers, electronic newsletters, blogs and utilizing direct email solicitation.

In addition, we participate in many industry trade shows worldwide and have active memberships in various industry organizations, including the Joint Electron Device Engineering Council (“JEDEC”), SD Card Association:

Storage Networking Industry Association, Gen-Z Consortium, OpenCAPI Consortium, CXL Consortium, Trusted Computing Group, OCP;

Sensor Open Systems Architecture and Peripheral Component Interconnect Special Interest Group.

Sensor Open Systems Architecture, Peripheral Component Interconnect Special Interest Group and Illuminating Engineering Society (“IES”).

Research and Development

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Huizhou, China;

India (Bangalore and Kochin);

Bangalore and Kochi, India;

New Taipei City, Taiwan;

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Our research and development activities are focused on driving innovation in our products and services as well as continuous process improvement for our procurement, test and manufacturing.

Our product development in Memory Solutions includes innovations for next generation DRAM products, including DDR5, mobile DRAM, hybrid memories such as hybrid volatile and non-volatile DRAM (“NVDIMM”), enterprise memory and Flash-based products, such as eMMC and eMCP, as well as associated firmware development.

Our product development in Memory Solutions includes innovations for next generation DRAM products, including DDR5, mobile DRAM, hybrid memories such as hybrid volatile and non-volatile DRAM (“NVDIMM”), emerging interconnect standards such as Compute Express Link (CXL), enterprise memory and Flash-based products, such as eMMC and eMCP, as well as associated firmware development.

Our research and product development for IPS includes server selection and occasional design;

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and embedded computer boards and systems.

In our LED Solutions group our research and development includes innovations for next generation LED products including chips, packages for high power general illumination, packages for next generation direct view video displays and packages for specialty applications such as horticulture lighting, architectural, torch, emergency vehicle and other applications.

Research and development in our LED Solutions group includes innovations for next generation LED products including chips, packages for high power general illumination, packages for next generation direct view video displays and packages for specialty applications such as horticulture lighting, architectural, torch, emergency vehicle and other applications.

We plan to continue to devote research and development efforts to the innovation and design of these and other new products which address the requirements of our customers, with a focus on the faster growing markets.

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In addition, in order to take advantage of local regulations and government incentive programs for the growing mobile memory market in Brazil, we have invested substantial financial and management resources to expand our Brazil research and development capabilities to enable us to develop a broad offering of Flash-based products for the local market.

We are also working on expanding our offering for IoT and IIoT products and, through our acquisition of SMART Wireless, we now have over 40 design engineers combined in our two locations in India.

Our advanced engineering and design capabilities allow us to address our customers’ increasingly complex needs.

We design our products to be compatible with existing industry standards and, where appropriate, develop and promote new standards or provide custom solutions to meet customers’ requirements.

An important aspect of our research and development effort is understanding the challenges presented by our customers’ requirements and addressing them by utilizing our industry knowledge, proprietary technologies and technical expertise.

An important aspect of our research and

development effort is understanding the challenges presented by our customers’ requirements and addressing them by utilizing our industry knowledge, proprietary technologies and technical expertise.

By working closely with our customers and suppliers, we are able to deliver technically advanced products designed to meet customer-specific needs with competitive solutions to satisfy our customers’ memory, storage;

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As of August 26, 2022, we had 440 research and development personnel worldwide.

Within our diversified Memory Solutions, IPS and LED Solutions businesses, we compete with numerous global and local companies.

Our diversified businesses compete with numerous global and local companies.

The principal competitive factors in our markets include the ability to meet customer-specific requirements and provide high product quality, strong technical support, technologically advanced products and services, advanced testing capabilities, flexible and global delivery options, reliable supply and reasonable pricing.

In our Memory Solutions business, we primarily compete against memory module providers, and to a lesser extent, large memory semiconductor manufacturers that utilize a portion of their capacity to manufacture memory modules.

Within Memory Solutions, we compete against memory module providers, and to a lesser extent, large memory semiconductor manufacturers that utilize a portion of their capacity to manufacture memory modules.

In Brazil, other than the large, global semiconductor manufacturers, our competitors are generally much smaller in scale than we are in terms of revenue and capabilities for manufacturing and for research and development.

To a lesser degree, we compete with companies that import DRAM and Flash components and products.

Within IPS, Penguin Computing competes primarily with global manufacturers of HPC products and services.

In SMART EC products, we primarily compete with makers of ruggedized computer boards and systems as well as makers of edge computing devices.

In SMART Wireless products, we primarily compete with providers of SOMs and SBCs.

Within LED, we compete with companies that manufacture and/or sell nitride-based LED chips and those manufacturers of LED components concentrated primarily in indoor and outdoor commercial lighting;

specialty lighting, including torch lamps (flashlights);

color changing architectural lighting;

Within our IPS Penguin Computing business, we compete primarily with global manufacturers of HPC and AI products and services.

For Penguin Edge products, we primarily compete with makers of ruggedized computer boards and systems as well as makers of edge computing devices, SoMs and SBCs.

Within our LED Solutions business, we compete with companies that manufacture and/or sell nitride-based LED chips and those manufacturers of LED components concentrated primarily in indoor and outdoor commercial lighting;

specialty lighting, including torch lamps (flashlights), horticulture, color-changing architectural lighting;

signs and signals;

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Intellectual property is an important aspect of our business, and we actively seek to protect and leverage our intellectual property to promote our business interests.

For example, as of August 27, 2021, we own or exclusively license approximately 1900 patents that expire from 2021 to 2039.

For example, as of August 26, 2022, we owned or exclusively licensed

approximately 1,858 patents that expire from 2022 to 2040 and had 220 pending patent applications.

We continually review our development efforts to assess the existence and patentability of new intellectual property, which we actively seek to protect as appropriate.

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At SGH, we put people first, nurturing a culture that supports creativity and growth.

We value our employees, and we understand the importance of their development and enhancement.

We value our employees, and we understand the importance of their development.

We believe that at the best workplaces, employees feel inspired, engaged, valued and included.

As part of our “people first” mindset, we invest in key initiatives including, but not limited to, talent development, diversity and inclusion and physical and mental health.

As of August 27, 2021, we employed 3,926 employees in locations across the globe, including, among others, the United States, China, Malaysia and Brazil.

As of August 26, 2022, we had approximately 3,600 full-time employees (excluding contractors) in locations across the globe, including, among others, the United States, China, Malaysia and Brazil.

We have never experienced a work stoppage in any of our locations worldwide, and we consider our employee relations to be good.

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Diversity, Equity and Inclusion

We are committed to diversity, equity and inclusion, and we believe that it starts at the top, where half of our executive team has been reorganized to include leaders from diverse backgrounds.

We are committed to diversity, equity and inclusion, and we believe that it starts at the top, where our executive team includes leaders from diverse backgrounds.

We value diversity and inclusion and are proud that our employees represent various races, religious beliefs, genders, ages, national origins and points of view.

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We strive to provide and maintain a safe work environment, as well as to promote overall wellness among employees.

We prioritize employee wellbeing throughout our operations as well as through physical fitness programs.

We prioritize employee wellbeing throughout our operations as well as through wellness programs.

We also support mental health and wellness through our Employee Assistance Program, which offers free and confidential counseling and support for our employees and members of their households.

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Compensation and Benefits

We offer compensation and benefits programs designed to inspire and reward our employees.

We offer compensation and benefits programs designed to motivate and reward our employees.

Our bonus program both links employee compensation to SGH’s business performance and includes a focus on individual performance.

We also offer an Employee Stock Purchase Plan, equity compensation, retirement benefits and, in the U.S., a 401(k) match program.

We also offer an Employee Stock Purchase Plan, equity compensation, retirement benefits and, in the United States, a 401(k) match program.

Brazil Local Manufacturing Requirements and Incentives

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In connection with these programs, we have recognized financial credits as a reduction of certain research and development expenses.

In 2021 and 2020, we reduced our operating expenses as a result of these incentive programs by $30.0 million and $6.4 million, respectively.

The financial credits available through the incentive program are currently set to expire in January 2022.

The elimination of or a reduction in the incentives for local manufacturing, or our inability to secure the benefits of these regulations, could significantly reduce the demand for, and the profit marg ins on, our products in Brazil.

In 2022, 2021 and 2020, we reduced our operating expenses as a result of these incentive programs by $17.3 million, $30.0 million and $6.4 million, respectively.

The financial credits available through the incentive program are currently set to expire in December 2026.

See “Item 1A.

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In addition, as part of the acquisition of Cree’s LED business, we acquired facilities in China, which could present similar issues.

We cannot be certain that identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations or other unanticipated events will not arise in the future and give rise to material environmental liabilities and related costs which could have a material adverse effect on our business, financial condition and results of operations.

unanticipated events will not arise in the future and give rise to material environmental liabilities and related costs which could have a material adverse effect on our business, financial condition and results of operations.

Available Information

Our address in the Cayman Islands is c/o Maples Corporate Services Limited, P.O.

Box 309, Ugland House, Grand Cayman, Cayman Islands, KY1-1104, Cayman Islands.

Our address in the Cayman Islands is c/o Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman, Cayman Islands, KY1-9008.

Our principal U.S.

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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 1. Business