−Removed: You should carefully consider the risks and uncertainties described below and the other information in this Annual Report on Form 10-K, including “Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes.
+Added: You should carefully consider the risks and uncertainties described below and the other information in this Annual Report on Form 10-K, including “PART II – Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes.
Our business, financial condition or results of operations could be materially and adversely affected if any of these risks occurs and, as a result, the market price of our ordinary shares could decline and you could lose all or part of your investment.
+Added: As noted above in “Item 1.
+Added: Business,” the financial results and operations of SMART Brazil have been presented as discontinued operations.
+Added: While our SMART Brazil business continues to pose certain risks and uncertainties described below, unless otherwise noted, the financial results included in the risks below relate solely to our continuing operations and do not include the operations of SMART Brazil.
This Annual Report also contains forward-looking statements that involve risks and uncertainties.
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Risks Related to Our Business
−Removed: • The effects of the COVID-19 outbreak could adversely affect our business, results of operations and financial condition.
−Removed: • Our efforts to adapt to our work environment to the COVID-19 pandemic may be unsuccessful.
• Changing worldwide economic conditions could adversely affect our operating results and financial condition.
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• We compete in historically cyclical markets.
−Removed: • Volatility in average selling prices may have an adverse effect on our business, results of operations and financial condition.
−Removed: • Tariffs or other trade restrictions or taxes could have an adverse impact on our operations.
+Added: • Fluctuations in average selling prices may have a material adverse effect on our business, results of operations and financial condition.
+Added: • Tariffs or other trade restrictions or taxes have had in the past, and could have in the future, an adverse impact on our operations.
• We depend on a select number of customers for a significant portion of our revenue.
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• We depend on a small number of sole or limited source suppliers.
−Removed: • We may be unable to adapt to technological change.
−Removed: • We may not be able to maintain or improve our manufacturing efficiency.
+Added: • We may be unable to adapt to technological change or maintain or improve our manufacturing efficiency.
• Disruption of our operations at any one of our manufacturing facilities would substantially harm our business.
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• Products that fail to meet specifications, are defective or that are otherwise incompatible with end uses could impose significant costs on us.
−Removed: • Breaches of our security systems, or those of our customers, suppliers or business partners, could expose us to losses.
−Removed: • Some of our offerings utilize open source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business.
−Removed: • Open source software may make it easier for competitors, some of which may have greater resources than we have, to enter our markets and compete with us.
+Added: • Actual or perceived breaches of our security systems, or those of our customers, suppliers or business partners, could expose us to losses.
+Added: • Some of our offerings utilize open source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business or make it easier for competitors to enter our markets and compete with us.
• We could be prevented from selling or developing our software if our licenses are not enforceable or are modified so as to become incompatible with other open source licenses.
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• We may make future acquisitions and/or alliances, which involve numerous risks.
−Removed: • We may fail to realize the anticipated benefits of recent acquisitions.
+Added: • We may fail to realize the anticipated benefits of recent acquisitions or the sale of our SMART Brazil business.
+Added: • We have incurred, and may in the future incur, impairment charges related to our goodwill, which could have a material adverse effect on our business, results of operations and financial condition.
+Added: • The planned divestiture of the SMART Brazil business is subject to a number of conditions beyond our control.
+Added: Failure to complete the proposed divestiture within the expected timeframe, or at all, could materially adversely affect our business, results of operations, financial condition and the price of our ordinary shares.
+Added: • The separation and transition of our SMART Brazil business that would occur in connection with the planned divestiture may not occur in the expected timeframe or may involve unexpected costs or consequences, which could materially affect our business, results of operations, financial condition and the price of our ordinary shares.
+Added: • We may incur liabilities relating to additional Brazilian withholding tax in connection with the sale of our Brazil business.
+Added: • The completion of the sale of our Brazil business could impair our ability to protect our trademarks and brand.
• We rely on third parties to sell a portion of our products and services.
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• We may be required to pay royalties or obtain licenses to sell certain products.
−Removed: • Changes in tax laws or potential adjustments by tax authorities in key jurisdictions could materially increase our tax expense.
−Removed: • Our ability to use our net operating loss carryforwards is limited.
+Added: • Changes in tax laws or potential adjustments by tax authorities could materially increase our tax expense.
+Added: • Our ability to use our tax attributes is limited.
+Added: • We recently reversed the valuation allowance for a significant portion of our deferred tax assets, and we may not be able to realize these assets in the future.
+Added: Our deferred tax assets may also be subject to additional valuation allowances, which could have a material adverse effect on our business, results of operations and financial condition.
• We could incur substantial costs or liabilities as a result of violations of environmental laws.
−Removed: • Our worldwide operations, and those of our suppliers, business partners and customers, may be disrupted by events outside of our control, including the effects of climate change, natural disasters, man made disasters or other events, as well as societal and governmental responses to such events.
−Removed: • Hostilities in Ukraine may exacerbate certain risks we face.
+Added: • We may be unable to complete environmental, social and governance (“ESG”) initiatives, in whole or in part, which could lead to less opportunity for us to have ESG investors and partners and could negatively impact our reputation or options for capital acquisition.
+Added: • Our worldwide operations, and those of our suppliers, business partners and customers, may be disrupted by events outside of our control, including the effects of climate change, natural or man-made disasters or other events, as well as societal and governmental responses to such events, including conflicts in Ukraine and Israel.
+Added: • While the ongoing effects of COVID-19 have stabilized, it remains unpredictable and our efforts to adapt may be unsuccessful, which could adversely affect our business, results of operations and financial condition.
Risks Related to Our International Operations
−Removed: • Our business is subject to the risks generally associated with international business operations.
+Added: • Our business is subject to the risks generally associated with international business operations, including a variety of laws, regulations, or industry standards.
• We depend on Brazil markets for a significant portion of our sales.
−Removed: • Our success in part depends on incentives in Brazilian laws for local manufacturing of electronics.
−Removed: 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 our profitability for products in Brazil.
+Added: • Our success in part depends on incentives in Brazilian laws for local manufacturing of electronics, the elimination or reduction of which could significantly reduce our profitability for products in Brazil.
• We are subject to the taxation requirements of the jurisdictions in which we operate, and if we fail to qualify for certain tax incentives or to comply with local tax regulations, we may suffer financial losses.
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If enacted, exchange controls may limit our ability to receive dividends and other distributions from our foreign subsidiaries.
−Removed: • High rates of inflation in the future would adversely affect our business, results of operations and financial condition.
+Added: • High rates of inflation in the future would materially adversely affect our business, results of operations and financial condition.
• Political, economic and market conditions and the perception of risk in Brazil and emerging markets may cause the market price of our ordinary shares to decline.
−Removed: • We may have limited legal recourse under the laws of China if disputes arise under our agreements with third parties.
+Added: • We may have limited legal recourse under the laws of China if disputes arise under our agreements.
Risks Related to Our Debt
−Removed: • Our indebtedness could impair our financial condition and harm our ability to operate our business.
−Removed: • Our credit agreements may limit our flexibility in operating our business.
−Removed: • Provisions in the 2026 Notes and the Indenture could delay or prevent an otherwise beneficial takeover of us.
−Removed: • Our capped call transactions may affect the value of our publicly traded debt and ordinary shares.
+Added: • Our indebtedness could impair our financial condition and harm our ability to operate our business, including the limitations of our credit agreement, provisions in the Convertible Notes and their respective Indentures and our capped call transactions.
Risks Related to Investments in Cayman Islands Companies
• We are a Cayman Islands company and, because the rights of shareholders under Cayman Islands law differ from those under U.S.
−Removed: law, shareholders may have difficulty protecting their shareholder rights.
−Removed: • It may be difficult to enforce a judgment of U.S.
−Removed: courts for civil liabilities under U.S.
−Removed: federal securities laws against us in the Cayman Islands.
+Added: law, shareholders may have difficulty protecting their shareholder rights or enforcing a judgment of U.S.
+Added: courts against us in the Cayman Islands.
Risks Related to Our Ordinary Shares
−Removed: • The trading price of our ordinary shares has been and may continue to be volatile.
+Added: • The trading price of our ordinary shares has been and may continue to be volatile, and actual or perceived future sales of our ordinary shares could cause our share price to fall.
• If our estimates or judgments relating to our critical accounting estimates are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.
−Removed: • Future sales of our ordinary shares in the public market, or the perception that these sales may occur, could cause our share price to fall.
• Anti-takeover provisions in our organizational documents may discourage our acquisition by a third party, which could limit shareholders’ opportunity to sell their ordinary shares at a premium.
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General Risk Factors
−Removed: • Worldwide economic and political conditions as well as other factors may adversely affect our operations and cause fluctuations in demand for our products.
−Removed: • We and others are subject to a variety of laws, regulations, or industry standards that may have a material adverse effect on our business, results of operations or financial condition.
+Added: • Worldwide economic and political conditions, including terrorist attacks, as well as other factors may adversely affect our operations and cause fluctuations in demand for our products.
• Our success depends on our ability to attract, retain and motivate highly skilled employees.
−Removed: • Worldwide political conditions and threats of terrorist attacks may adversely affect our operations and demand for our products.
Risks Related to Our Business
−Removed: The effects of the COVID-19 outbreak could adversely affect our business, results of operations and financial condition.
−Removed: The COVID-19 pandemic has resulted in substantial loss of life, economic disruption and government intervention worldwide.
−Removed: As a result, we have experienced fluctuating sales volumes of certain product lines since early calendar 2020.
−Removed: It also disrupted our product development, marketing and corporate development activities.
−Removed: If these conditions continue, or if we have an outbreak in or closure of any of our facilities, such reduced sales volumes may continue or worsen and we may, among other issues, experience, in any or all product lines, delays in product development, a decreased ability to support our customers, disruptions in sales and manufacturing activities and overall reduced productivity, each of which could have a negative impact on our ability to meet customer commitments and on our revenue and profitability.
−Removed: There can be no assurance that negative impacts resulting from the wide-ranging effects of COVID-19 will be offset by increased sales in subsequent periods.
−Removed: While initially we did not experience a major disruption in our supply chain as a result of the COVID-19 pandemic, the reduction of investment in new capacity due to the pandemic, coupled with strong demand to expand delivery and logistics, internet and cloud services as well as a rebound in economic conditions and general demand at a pace faster than expected has resulted in significant supply shortages that have affected our ability to manufacture products for our customers and may result in rising prices of the materials we need to manufacture our products.
−Removed: We may not be able to pass on these rising costs to our customers which could result in a negative impact to our results of operations.
−Removed: Furthermore, if there is a significant outbreak or if travel restrictions or stay-at-home or work remote or from home conditions or other governmental or voluntary restrictions relating to the COVID-19 pandemic significantly impact our suppliers’ ability to manufacture or deliver raw materials or provide key components or services, we could experience more delays or reductions in our ability to manufacture and ship products to our customers.
−Removed: While certain segments of our customer base are experiencing strong demand, the pandemic may negatively impact the demand for other segments for our customer base or those customers’ ability to manufacture their products, which could reduce their demand for our products or services.
−Removed: While we do not know and cannot quantify specific impacts, we expect we may be negatively affected if we continue to encounter manufacturing or supply chain problems, reductions in demand due to disruptions in the operations of our customers or their end customers, disruptions in local and global economies, volatility in the global financial markets, overall reductions in demand, restrictions on the export or shipment of our products or other COVID-19 ramifications.
−Removed: The impact of the effects of COVID-19 on our business may worsen in the future.
−Removed: We source our materials from parts of the world that have been significantly affected by the virus, and if the impacts of the pandemic worsen in any of these geographies, it could have an adverse impact on our supply chain and our ability to get the materials we need to build our products.
−Removed: Renewed or expanded government shutdown orders or stay-at-home directives or individual decisions to reduce work and commercial activities, or an outbreak among or quarantine of the employees in any of our facilities, could cause significant interruptions to, or temporary closures of, our operations.
−Removed: Since a large percentage of our production is done in a small number of facilities, a disruption to operations in any one facility could have a significant and material impact on our business.
−Removed: In addition, COVID-19 has in the short-term, and, together with other disease outbreaks, may over the longer term, adversely affect the economies and financial markets within many countries, such as the United States, Brazil and China, and regions, including Asia and Europe, which are the primary geographic areas in which we conduct business, resulting in a significant economic downturn in these countries and regions.
−Removed: To the extent the COVID-19 pandemic or the related global business and economic environment adversely affect our business and financial results, it may also have the effect of heightening or exacerbating many of the other risks described in these Risk Factors.
−Removed: We are unable to accurately predict the impact that COVID-19 will have in future periods due to
−Removed: various uncertainties and future developments, including the evolution and severity of the disease, the occurrence of other epidemics, the imposition of related public health measures and travel and business restrictions or other actions that may be taken by governmental authorities in an effort to contain or treat the virus, all of which, together with the disruptions and other factors discussed above, could have a material adverse effect on our customer relationships, operating results, cash flows and financial condition and have a negative impact on our share price.
−Removed: Our efforts to adapt our work environment to the COVID-19 pandemic may be unsuccessful.
−Removed: While the COVID-19 pandemic persists, we have begun to adopt and roll out return to office plans for our workforce.
−Removed: We believe that there are costs to remote work in terms of productivity, innovation and community that have adversely affected our business during the pandemic.
−Removed: At the same time, we also believe that certain of our employees have benefited from the ability to work remotely and may be resistant to calls to return to work.
−Removed: To the extent plans we adopt are more restrictive than those of others in our industry, our ability to attract and retain talent may be materially and adversely affected.
−Removed: In addition, if we do not solidify our plans in a manner that is considered timely by our employees, the resulting uncertainty may also adversely affect retention.
Changing worldwide economic conditions could adversely affect our operating results and financial condition.
−Removed: and global economies are facing growing inflation, higher interest rates and potential recession.
+Added: The United States and global economies are facing increased levels of inflation, higher interest rates and potential recession.
Adverse changes in economic conditions could harm our operating results and financial conditions in a variety of ways.
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Furthermore, we may not be able to maintain the margins we have achieved in recent periods.
−Removed: Our operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:
+Added: Our operating results in any given quarter can be and have been influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:
• the loss of, significant reduction in sales to, or demand from, one or more key customers;
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We have experienced losses in the past and may experience losses in the future.
−Removed: Our business has in the past experienced quarterly and annual operating losses.
+Added: Our business has experienced quarterly and annual operating losses.
For example, in 2023, we had a net loss of $188 million.
−Removed: Our ability to maintain profitability depends in part on revenue growth from, among other things, increased demand for our memory solutions, products and related service offerings in our current markets including Brazil, growth in our IPS and LED businesses, the performance of our acquired companies as well as our ability to expand into new markets.
+Added: Our ability to achieve or maintain profitability depends in part on revenue growth from, among other things, increased demand for our memory solutions, products and related service offerings in our current markets, including Brazil, growth in our IPS and LED businesses, the performance of our acquired companies as well as our ability to expand into new markets.
We may not be successful in achieving the revenue and revenue growth necessary to maintain profitability.
−Removed: Moreover, as we continue to expend substantial funds for research and development projects, enhancements to sales and marketing
−Removed: efforts, integration of acquisitions and to otherwise operate our business, we cannot assure you that we will achieve or maintain profitability on an annual or quarterly basis even if our revenue does grow.
+Added: Moreover, as we continue to expend substantial funds for research and development projects, enhancements to sales and marketing efforts, integration of acquisitions and to otherwise operate our business, we cannot assure you that we will achieve or maintain profitability on an annual or quarterly basis even if our revenue does grow.
We compete in historically cyclical markets.
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Reduced demand for our products could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Volatility in average selling prices may have an adverse effect on our business, results of operations and financial condition.
+Added: Fluctuations in average selling prices may have a material adverse effect on our business, results of operations and financial condition.
The markets for our Memory Solutions products have historically been characterized by declines in average selling prices.
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In addition, our net sales and gross profit may be negatively affected by shifts in our product mix during periods of declining average selling prices.
−Removed: Tariffs or other trade restrictions or taxes could have an adverse impact on our operations.
+Added: Tariffs or other trade restrictions or taxes have had in the past, and could have in the future, an adverse impact on our operations.
We source materials from and sell and manufacture products in foreign countries, including Brazil and China, making the price and availability of our merchandise susceptible to international trade risks and other international conditions.
For example, a reduction in the existing import tax rate in Brazil for products similar to those that we manufacture locally could lower prices for such products and increase competitive pressure on our business in that region.
−Removed: In addition, any economic and political uncertainty caused by the United States tariffs imposed on goods from China, among other potential countries, and any corresponding tariffs or currency devaluations from China or such other countries in response, has negatively impacted, and may in the future, negatively impact, demand and/or increase the cost for certain of our products, particularly within our LED business.
+Added: In addition, any economic and political uncertainty caused by the U.S.
+Added: tariffs imposed on goods from China, among other potential countries, and any corresponding tariffs or currency devaluations from China or such other countries in response, has negatively impacted, and may in the future, negatively impact, demand and/or increase the cost for certain of our products, particularly within our LED business.
In addition, many of our customers rely heavily on international trade.
−Removed: The imposition of tariffs, duties, border adjustment taxes or other trade restrictions by the United States could also result in the adoption of new or increased tariffs or other trade restrictions by other countries.
+Added: The imposition of tariffs, duties, border
+Added: adjustment taxes or other trade restrictions by the United States could also result in the adoption of new or increased tariffs or other trade restrictions by other countries.
Tariffs may in the future increase our cost of materials and may cause us to increase prices to our customers which we believe may reduce demand for our products.
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We are not able to predict future trade policy of the United States or of any foreign countries in which we operate or purchase goods, or the terms of any renegotiated trade agreements or their impact on our business.
−Removed: The adoption and expansion of trade restrictions and tariffs, quotas and embargoes, the occurrence of a trade
−Removed: war or other governmental action related to tariffs or trade agreements or policies, has the potential to adversely impact demand for our products, our costs, our customers, our suppliers and the world and U.S.
+Added: The adoption and expansion of trade restrictions and tariffs, quotas and embargoes, the occurrence of a trade war or other governmental action related to tariffs or trade agreements or policies, has the potential to adversely impact demand for our products, our costs, our customers, our suppliers and the world and U.S.
economies, which in turn could have a material adverse effect on our business, operating results and financial condition.
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Our principal customers include global distributors, enterprise users, government agencies and OEMs that compete in the computing, networking, communications, storage, aerospace, government, mobile, industrial automation, IoT, industrial IoT, government, military and lighting markets.
−Removed: In 2022, 2021 and 2020, sales to our ten largest end customers (including sales to contract manufacturers or original design manufacturers (“ODMs”) at the direction of such end customers) accounted for 65%, 65% and 66% of net sales, respectively.
−Removed: In each of 2022, 2021 and 2020, we had two customers account individually for over 10% of our net sales, though the two specific customers were not the same in all three periods.
−Removed: In addition, as of August 26, 2022, two customers accounted for 22% and 17% respectively, of accounts receivable.
+Added: In 2023, 2022 and 2021, sales to our ten largest end customers (including sales to contract manufacturers or ODMs at the direction of such end customers) accounted for 60%, 62% and 59% of net sales, respectively.
+Added: In 2023, 2022 and 2021, we had one, three and one customer account individually for over 10% of our net sales.
In some cases, our customers also compete with us and/or are our major suppliers.
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Although we have master agreements with some of our customers, these agreements govern the terms and conditions of the relationship and do not typically contain requirements for them to purchase minimum volumes.
+Added: Because of the uncertainty of the timing and volume of orders from our customers, sales to our customers have varied from period to period and may vary significantly in the future, and our ability to forecast our sales have been, and may in the future be, difficult.
Our customer concentration may also subject us to perceived or actual bargaining leverage that our key customers may have, given their relative size and importance to us.
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If our key customers seek to negotiate their agreements on terms less favorable to us and we accept such unfavorable terms, such unfavorable terms may have a material adverse effect on our business, results of operations and financial condition.
+Added: Additionally, our services include point-in-time services, such as design and implementation, as well as longer-term managed services that are typically subject to renewal after an initial term of a year or sometimes longer.
Accordingly, unless and until we diversify and expand our customer base, our future success will significantly depend upon the timing and volume of business from our largest customers and the financial and operational success of these customers.
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As a result, our competitors may be able to respond better to new or emerging technologies or standards and to changes in customer requirements.
−Removed: Further, some of our competitors are in a better financial and marketing position from which to influence industry acceptance of a particular product standard or competing technology than we are.
+Added: Further, some of our competitors are in a better financial and marketing positions from which to influence industry acceptance of a particular product standard or competing technology than we are.
Our competitors may also be able to devote greater resources to the development, promotion and sale of products and may be able to deliver competitive products at a lower price than we can.
−Removed: In addition to competing with certain portions of our product offerings, certain of our competitors are also our significant customers, suppliers, or both.
+Added: In addition to competing with
+Added: certain portions of our product offerings, certain of our competitors are also our significant customers, suppliers, or both.
Finally, China’s stated national policy to be a global leader in all segments of the semiconductor industry by 2030 has resulted in and may continue to cause increased competitive capability in China.
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We may not have sufficient capacity at any given time to meet our customers’ demands.
−Removed: As many of our costs and operating expenses are relatively fixed, reduction in customer demand would have an adverse effect on our operating income, results of operations and financial condition.
+Added: As many of our costs and operating expenses are relatively fixed, reduction in customer demand has had in the past, and could in the future have, an adverse effect on our operating income, results of operations and financial condition.
Additionally, we have had in the past and expect we could again have in the future, inventory write-downs and/or write-offs due to obsolescence, excess quantities (including due to decreased demand) and declines in market value below our costs.
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Additionally, we have experienced, and may experience in the future, delays and unanticipated expenses in the development and introduction of new products and services.
−Removed: A failure to develop products with required feature sets or performance standards, or delays in the development, introduction and qualification of new products or services, could significantly reduce our return on investment as well as our net sales, provide a competitor a first-to-market advantage and allow a competitor to achieve greater market share, or cause our customers to cancel their orders (generally without penalty), all of which would have a material adverse effect on our business, results of operations and financial condition.
+Added: A failure to develop products with required feature sets or performance standards, or delays in the development, introduction and qualification of new products or services, could significantly reduce our return on investment as well as our net sales, provide a competitor a first-to-market advantage and
+Added: allow a competitor to achieve greater market share, or cause our customers to cancel their orders (generally without penalty), all of which would have a material adverse effect on our business, results of operations and financial condition.
Our customers often require that our products undergo a lengthy and expensive process of evaluation and qualification without any assurance of net sales.
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Generally, our customers are not obligated to purchase our products even if we achieve a design win.
−Removed: are unable to achieve design wins or if our customers’ systems incorporating our products are not commercially successful, it could have a material adverse effect on our business, results of operations and financial condition.
+Added: If we are unable to achieve design wins or if our customers’ systems incorporating our products are not commercially successful, it could have a material adverse effect on our business, results of operations and financial condition.
In addition, because the qualification process is both product-specific and platform-specific, our existing customers sometimes require us to requalify our products, or to qualify our new products, for use in new platforms or applications, which can be time-consuming and cause reductions in our net sales during the design and qualification period.
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Our suppliers are not required to supply us with any minimum quantities, and there is no assurance that our suppliers will supply the quantities of components we may need to meet our production goals.
−Removed: The markets in which we operate have in the past experienced, and are currently and may in the future experience, shortages in certain materials, including certain critical components, we use in manufacturing our products.
+Added: The markets in which we operate have in the past experienced, and are currently experiencing and may in the future experience, shortages in certain materials, including certain critical components, we use in manufacturing our products.
These shortages cause some suppliers to place their customers, including us, on supply allocation.
−Removed: As a result, we may not be able to obtain the materials that we need to fill customer orders.
−Removed: If any of our suppliers experience quality control or intellectual property infringement problems, we may not be able to fill customer orders.
+Added: As a result, we may not
+Added: be able to obtain the materials that we need to fill customer orders.
+Added: If any of our suppliers experience quality control or intellectual property infringement problems, this may further impact our ability to fill customer orders.
Furthermore, our products that utilize that supplier’s materials may be disqualified by one or more of our customers and we may not be able to fill their orders.
A disruption in or termination of our supply relationship with any of our significant suppliers or our inability to develop relationships with new suppliers, if required, would cause delays, disruptions or reductions in product manufacturing and shipments or require product redesigns which could damage relationships with our customers, increase our costs, reduce our margins or increase the prices we need to charge for our products and could materially and adversely affect our business, results of operations and financial condition.
+Added: Additionally, there are increasing expectations in various jurisdictions that companies monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, as well as consider a wider range of potential environmental and social matters, including the end of life considerations for products.
+Added: Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or to design supply chains to avoid certain regions altogether.
+Added: Failure to comply with such regulations can result in fines, reputational damage, or import ineligibility for our products or product components, or otherwise adversely impact our business, results of operations and financial condition.
We may be unable to adapt to technological change.
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A disruption at one of our manufacturing facilities could adversely impact our manufacturing operations and consequently our customer relations and our business.
−Removed: Such a disruption could result from, among other things, local outbreaks of COVID-19 or other infectious diseases, sustained process abnormalities, government intervention, waste disposal issues, power failures or other circumstances, or from ramp-up related challenges, such as obtaining sufficient raw materials, hiring of qualified factory personnel, installation and efficient operation of new equipment and management and coordination of our logistics networks within our global operations.
+Added: Such a disruption could result from, among other things, severe or chronic weather conditions, including in connection with climate change, local outbreaks of COVID-19 or other infectious diseases, sustained process abnormalities, government intervention, waste disposal issues, power failures or other circumstances, or from ramp-up related challenges, such as obtaining sufficient raw materials, hiring of qualified factory personnel, installation and efficient operation of new equipment and management and coordination of our logistics networks within our global operations.
We maintain insurance to protect against certain claims associated with business interruption, however, our insurance may not cover all or any part of a particular loss.
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With respect to a portion of our business, we must comply with and are affected by laws and regulations relating to the award, administration and performance of government contracts in the United States and other countries.
−Removed: contract laws and regulations affect how we do business with our customers and impose certain risks and costs on our business.
+Added: Government contract laws and regulations affect how we do business with our customers and impose certain risks and costs on our business.
A violation of specific laws and regulations by us, our employees, others working on our behalf, a supplier or a venture partner, could harm our reputation and result in the imposition of fines and penalties, the termination of our contracts, suspension or debarment from bidding on or being awarded contracts, loss of our ability to export products or services and civil or criminal investigations or proceedings.
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Accepting product returns may adversely impact our results of operations and financial condition.
−Removed: Breaches of our security systems, or those of our customers, suppliers or business partners, could expose us to losses.
+Added: Further, quality issues in customer installations have occurred in the past and could occur in the future, which
+Added: have in the past affected, and could possibly affect in the future, customer relationships, demand for products and our reputation.
+Added: Quality issues and potential impact to our reputation may adversely affect our results of operations and financial condition.
+Added: Actual or perceived breaches of our security systems, or those of our customers, suppliers or business partners, could expose us to losses.
We manage, store, transmit and otherwise process various proprietary information and sensitive personal or confidential data.
−Removed: In addition, our cloud computing businesses routinely process, store and transmit data, including sensitive and personally identifiable information, for our customers.
−Removed: We may experience data security incidents, cybersecurity events, data breaches, ransomware attacks or other compromises of the information technology systems we use for these purposes or that our vendors use to process data on our behalf, as criminal or other actors may be able to penetrate our or our service provides’ network security and misappropriate or compromise our information or that of third parties, create system disruptions or cause shutdowns.
+Added: In addition, our cloud computing businesses routinely process, store and transmit data, including sensitive and personal data, for our customers.
+Added: We have experienced, and may in the future experience, data security incidents, cybersecurity events, data breaches, ransomware attacks or other compromises of the information technology systems we use for these purposes or that our vendors use to provide services or process data on our behalf, as criminal or other actors have been able to, and may in the future be able to, penetrate our or our service providers’ network security and misappropriate or compromise our information or that of third parties, create system disruptions or cause shutdowns.
There are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error.
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The risk of such attacks includes attempted breaches not only of our own products, services and systems, but also those of customers, contractors, business partners, vendors and other third parties.
−Removed: Our products, services and systems may be used in critical company, customer, government or other third-party operations, or involve the storage, processing and transmission of sensitive data, including valuable intellectual property, classified information, other proprietary or confidential data, regulated data and personal information of employees,
−Removed: customers and others.
+Added: Our products, services and systems may be used in critical company, customer, government or other third-party operations, or involve the storage, processing and transmission of sensitive data, including valuable intellectual property, classified information, other proprietary or confidential data, regulated data and personal information of employees, customers and others.
Successful breaches, employee malfeasance or human or technological error could result in, for example, unauthorized access to, disclosure, modification, misuse, loss or destruction of company, customer, government or other third party data or systems;
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Further, hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of such systems.
+Added: Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools (including artificial intelligence) that circumvent controls, evade detection and even remove forensic evidence.
+Added: As a result, there can be no assurance that the systems we have designed to protect against cyberattacks will be sufficient to identify, detect or prevent material consequences from arising from such attacks in the future.
The costs to address product defects or any of the foregoing security problems and security vulnerabilities before or after a cyber incident could be significant.
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Further, we rely in certain limited capacities on third-party data management providers and other vendors whose possible security problems and security vulnerabilities may have similar detrimental effects on us.
+Added: Actual or perceived non-compliance with applicable data privacy and security laws, or that of our customers, suppliers or business partners, could expose us to losses.
We are subject to laws, rules and regulations in the United States and other countries relating to the collection, use, transmission, processing and security of user and other data.
−Removed: Our ability to execute transactions and to possess, process, transmit and use personal information and data in conducting our business subjects us to legislative and regulatory burdens that, among other things, may require us to notify regulators and customers, employees or other individuals of a data security breach, including in the EU and the European Economic Area where the General Data Protection Regulation (“GDPR”) took effect in May 2018, in Brazil where the Lei Geral de Proteção de Dados (“LGPD”) data privacy laws took effect in August 2021, and in the United States where the California Consumer Privacy Act (“CCPA”) recently became law and the California Privacy Rights Act (“CPRA”), Virginia Consumer Data Protection Act (“VCDPA”) and the Colorado Privacy Act (“CPA”) will come into effect in 2023.
−Removed: Additional U.S.
−Removed: states and the federal government also are considering privacy and cybersecurity legislation.
+Added: Our ability to execute transactions and to possess, process, transmit and use personal information and data in conducting our business subjects us to legislative and regulatory obligations that, among other things, may require us to expend time, financial and other resources to monitor and interpret ever-evolving and complex data privacy and security laws.
+Added: In particular, certain states have adopted new or modified privacy and security laws and regulations that may apply to our business, for example, the California Consumer Privacy Act (“CCPA”) imposes obligations on businesses that process personal information of California residents.
+Added: Among other things, the CCPA:
+Added: requires disclosures to such residents about the data collection, use and disclosure practices of covered businesses;
+Added: provides such individuals expanded rights to access, delete and correct their personal information and opt-out of certain transfers of personal information;
+Added: and provides such individuals with a private right of action and statutory damages for data breaches.
+Added: The enactment of the CCPA has prompted a wave of similar laws being passed in the United States.
+Added: Additionally, more U.S.
+Added: states and the federal government also are considering privacy and cybersecurity legislation and other jurisdictions have enacted privacy and cybersecurity laws, such as the EU and the European Economic Area where the General Data Protection Regulation (“GDPR”) took effect in May 2018 and in Brazil where the Lei Geral de Proteção de Dados (“LGPD”) data privacy laws took effect in August 2021, creating the potential for a patchwork of overlapping but different laws.
We have incurred, and will continue to incur, significant expenses to comply with mandatory privacy and security standards and protocols under applicable laws, regulations, industry standards and contractual obligations.
−Removed: Despite such expenditures, we may face regulatory and other legal actions in the event of a data security incident, cybersecurity event or data breach or perceived or actual non-compliance with such applicable obligations.
+Added: Despite such expenditures, we may face regulatory and other legal actions in the event of perceived or actual non-compliance with such applicable obligations.
+Added: Many of these laws would also require us to notify regulators and customers, employees or other individuals of any data security breach as described above.
The various data privacy enactments impose significant obligations and compliance with these requirements depends in part on how particular regulators apply and interpret them.
−Removed: In particular, if we fail to comply with the GDPR, or if regulators assert we have failed to comply with the GDPR, it may lead to regulatory enforcement actions, which can result in monetary penalties of up to 4% of worldwide revenue, private lawsuits or reputational damage.
+Added: Even though we believe we are generally in compliance with applicable laws, rules and regulations relating to privacy and data security, these laws are in some cases relatively new and the interpretation and application of these laws are uncertain.
+Added: Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other requirements could result in proceedings or actions against us by individuals, consumer rights groups, government agencies or others.
+Added: We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business.
+Added: Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
+Added: If any of these events were to occur, our business, results of operations and financial condition could be materially adversely affected.
Some of our offerings utilize open source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business.
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or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services.
−Removed: We could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could further implicate aspects of our proprietary code.
+Added: We could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could implicate aspects of our proprietary code.
These claims could result in litigation and could require us to make our software source code freely available to the public, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid an undesirable open source license or infringement, which may be costly and time-consuming.
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Increased risks arise in part because open source licensors generally do not provide updates, warranties, support, indemnities or other contractual protections regarding infringement claims or the quality of the code, including with respect to security vulnerabilities where open source software may be more susceptible.
−Removed: These third-party open source providers could experience service outages, data loss, privacy breaches, cyberattacks, ransomware and other events relating to the applications and services they provide that could diminish the utility of these
−Removed: services, which could harm our business as a result.
+Added: These third-party open source providers could experience service outages, data loss, privacy breaches, cyberattacks, ransomware and other events relating to the applications and services they provide that could diminish the utility of these services, which could harm our business as a result.
To the extent that IPS offerings depend upon the successful operation and continued updates and support of the open source software it uses, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of IPS offerings, delay the release of new product solutions, result in a failure of our offerings and injure our reputation.
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Indemnification obligations could require us to expend significant amounts of money to defend claims and/or to pay damages or settlement amounts.
−Removed: We maintain insurance to protect against certain claims associated with the use of our products;
+Added: We maintain insurance to protect against certain claims associated with the use of our
however, our insurance may not cover all or any part of a claim asserted against us.
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In the third quarter of 2021, we closed our acquisition of Cree’s LED business.
−Removed: The consideration for this acquisition consisted of approximately $200 million in the form of cash and an unsecured promissory note, plus an earn-out of up to $125 million based on the revenue and gross profit performance of the LED business in the four fiscal quarters of Cree following the closing.
+Added: The consideration for this acquisition consisted of approximately $200 million in the form of cash and an unsecured promissory note, plus an earnout of up to $125 million based on the revenue and gross profit performance of the LED business in the four fiscal quarters of Cree following the closing.
Just after the end of our fiscal year 2022, we closed our acquisition of Stratus Technologies, Inc.
−Removed: The consideration for this acquisition consisted of approximately $225 million in cash, plus an earn-out of up to $50 million based on the gross profit performance of the Stratus business during the first full 12 fiscal months of Stratus following the closing of the acquisition.
+Added: The consideration for this acquisition consisted of approximately $225 million in cash, plus an earnout of up to $50 million based on the gross profit performance of the Stratus business during the first full 12 fiscal months of Stratus following the closing of the acquisition.
We plan to continue exploring additional acquisition opportunities in the future.
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If we make any future acquisitions, we could issue ordinary shares that would dilute our existing shareholders’ percentage ownership, incur substantial additional debt (such as the Purchase Price Note we issued in connection with the acquisition of Cree’s LED Business), expend cash and reduce our cash reserves or assume additional liabilities.
−Removed: Furthermore, acquisitions may require material charges and could result in adverse tax consequences, substantial depreciation, deferred compensation charges, liabilities under earn-out provisions, including under the Earnout Note we issued in connection with the acquisition of Cree’s LED Business, the amortization of amounts related to deferred compensation and identifiable purchased intangible assets or impairment of goodwill or other intangibles, any of which could negatively impact our business, results of operations and financial condition.
+Added: Furthermore, acquisitions may require material charges and could result in adverse tax consequences, substantial depreciation, deferred compensation charges, liabilities under earnout provisions, including under the LED
+Added: Earnout Note we issued in connection with the acquisition of Cree’s LED Business, the amortization of amounts related to deferred compensation and identifiable purchased intangible assets or impairment of goodwill or other intangibles, any of which could negatively impact our business, results of operations and financial condition.
We are unable to predict whether or when any prospective acquisition candidate will become available or the likelihood that any acquisition will be completed.
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We may fail to realize the anticipated benefits of recent acquisitions.
−Removed: We closed on the acquisition of Cree’s LED business in March 2021 and the acquisition of Stratus Technologies just after the end of our most recent fiscal year in August 2022.
+Added: We closed on the acquisition of Cree’s LED business in March 2021 and the acquisition of Stratus Technologies in August 2022.
As we continue to integrate these businesses into our operations and portfolio, our ability to realize some or all of the anticipated benefits of the acquisition may be impacted by the following:
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Any of these risks or other risks arising from the integration of Stratus or Cree’s LED business into our operations could have a material adverse effect on our business, financial condition or results of operations and could cause the impact of one or both of the acquisitions to be dilutive to our company.
+Added: We have incurred, and may in the future incur, impairment charges related to our goodwill, which could have a material adverse effect on our business, results of operations and financial condition.
+Added: We have a significant amount of goodwill.
+Added: As of August 25, 2023, we had goodwill of $162.0 million, which represented 11% of our total assets as of such date.
+Added: The carrying value of goodwill may be reduced if we determine that goodwill is impaired.
+Added: We test goodwill for impairment in the fourth quarter of each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
+Added: The testing of goodwill for impairment requires us to make significant estimates about future performance and cash flows, as well as other assumptions.
+Added: These estimates can be affected by numerous factors, including potential changes in economic, industry or market conditions;
+Added: changes in business operations;
+Added: changes in competition or changes in the price of our ordinary shares and market capitalization and other relevant events and factors affecting the fair value of the reporting unit.
+Added: Changes in these factors, or changes in actual performance compared with estimates of our future performance, may affect the fair value of goodwill and could result in an impairment charge.
+Added: The planned divestiture of the Brazil business is subject to a number of conditions beyond our control.
+Added: Failure to complete the planned divestiture within the expected timeframe, or at all, could materially adversely affect our business, results of operations, financial condition and the price of our ordinary shares.
+Added: The completion of the purchase by Lexar Europe of 81% of our Brazil business remains subject to customary closing conditions, including, among other things:
+Added: (i) completion of filings for outbound direct investment with the Division of Development and Reform in the China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area Administration and the
+Added: Division of Finance and Trade Development in the China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area Administration, and completion of foreign exchange registration with a qualified bank authorized by the Municipal Administration of Foreign Exchange in Shanghai and (ii) approval of the transactions contemplated by the stock purchase agreement by the shareholders of Shenzhen Longsys Electronics Co., Ltd.
+Added: We cannot predict whether and when these remaining conditions will be satisfied.
+Added: If one or more of these conditions is not satisfied, and as a result, we do not complete the planned divestiture, we would remain liable for significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the planned divestiture.
+Added: Certain costs associated with the planned divestiture have already been incurred or may be payable even if the planned divestiture is not completed.
+Added: Finally, disruptions to our business resulting from the pendency of the planned divestiture, including adverse changes in our relationships with our customers, partners, suppliers and employees, could continue or accelerate in the event that we fail to complete the planned divestiture.
+Added: The price of our ordinary shares may also fluctuate significantly based on announcements by Lexar Europe and other third parties or us regarding the divestiture or based on market perceptions of the likelihood of us satisfying the closing conditions related to the divestiture.
+Added: Such announcements may lead to perceptions in the market that the divestiture may not be completed, which could cause our stock price to fluctuate or decline.
+Added: If we do not complete the divestiture, the price of our ordinary shares may decline significantly from the current market price.
+Added: Any of these events could materially adversely affect our business, results of operations and financial condition and could cause a decline in the price of our ordinary shares.
+Added: The separation and transition of our SMART Brazil business that would occur in connection with the planned divestiture may not occur in the expected timeframe or may involve unexpected costs or consequences, which could materially adversely affect our business, results of operations, financial condition and the price of our ordinary shares.
+Added: We have experienced and may continue to experience changes in our business in connection with the divestiture of our Brazil business.
+Added: These changes may not occur in the expected timeframe or may involve unexpected costs or consequences, such as impacts to employee morale as a result of management turnover.
+Added: Changes of this type can be disruptive, which may result in loss of focus that in turn may make execution on our business strategies more difficult.
+Added: Further, we have made commitments to Lexar Europe to provide certain transition services which may also involve unexpected costs or consequences.
+Added: If we do not succeed in these efforts, or if these efforts are more costly or time-consuming than expected, our business, results of operations and financial condition may be materially adversely affected, which could limit our ability to invest in and grow our business.
+Added: We may incur liabilities relating to additional Brazilian withholding tax in connection with the sale of our Brazil business.
+Added: In connection with the sale of a majority of our interest in SMART Brazil to Lexar Europe, Lexar Europe would be required to withhold (from the purchase price otherwise payable to us) Brazilian capital gains tax ( Iposto de Renda na Fonte Sobre Ganho de Capital ), with such tax being imposed on the excess of the purchase price over our tax basis in the SMART Brazil equity interests sold by us.
+Added: The calculation of tax basis is based on our interpretation of current Brazilian law.
+Added: We believe our interpretation and calculations are correct, but if the Brazilian tax authorities were to successfully challenge our determination of the amount of withholding tax due, we would be required to indemnify Lexar Europe in respect of any additional withholding taxes (together with any interest and penalties imposed).
+Added: The amount of such additional withholding taxes and our liability in respect of such taxes could be substantial.
+Added: We may not achieve the intended benefits of the sale of our Brazil business.
+Added: We may not realize some or all of the anticipated benefits from the sale of our Brazil business.
+Added: The resource constraints as a result of our focus on completing the transaction, which include the loss of employees, could have a continuing impact on the execution of our business strategy and our overall operating results.
+Added: Further, our remaining employees may become concerned about the future of our remaining operations and lose focus or seek other employment.
+Added: The completion of the sale of our Brazil business could impair our ability to protect our trademarks and brand.
+Added: In connection with the sale of our SMART Brazil business, we will permit Lexar Europe and the divested businesses to use of the word “SMART” in combination with pre-approved words and logos in trademarks, domain names, logos and other source identifiers solely in Brazil (the “New Marks”).
+Added: To prevent potential consumer confusion and protect our brands, and as a closing condition to the sale of our SMART Brazil business, we will enter into an agreement with Lexar Europe and the divested subsidiaries that includes a number of restrictions on Lexar Europe’s and the divested business’ use of the New Marks, including that:
+Added: (i) the New Marks may not be used outside of Brazil or in connection with products that will be consumed or exported outside of Brazil, (ii) the New Marks may only be used in connection with certain business and products, (iii) the word “SMART” may not be used alone as a brand name or source identifier and (iv) the New Marks must comply with certain font, style, format and color restrictions to avoid similarity with our logos.
+Added: While we will have the foregoing contractual protections, there are no assurances (i) that Lexar Europe and the divested businesses will adhere to the contract or (ii) that customers or potential customers of our products and of Lexar Europe’s and its affiliates’ products will not have confusion as to source given the joint use of “SMART,” which could lead to dilution of our rights in our “SMART” marks and/or reputational harm.
+Added: If disputes arise in the future with respect to the contractual restrictions, we may not be able to successfully resolve these types of conflicts to our satisfaction.
+Added: The “SMART” brand is critical to our business and any consumer confusion, tarnishing or dilution of the “SMART” brand, may have a material impact on our business.
We rely on third parties to sell a portion of our products and services.
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Our third-party sales representatives and distributors may terminate their relationships with us at any time on short or no notice.
−Removed: Our future performance may also depend, in part, on our ability to attract and retain additional third-party sales representatives and distributors that will be
−Removed: able to market and support our products effectively, especially in markets in which we have not previously sold our products.
+Added: Our future performance may also depend, in part, on our ability to attract and retain additional third-party sales representatives and distributors that will be able to market and support our products effectively, especially in markets in which we have not previously sold our products.
If we cannot retain our current third-party sales representatives and distributors or recruit additional or replacement third-party sales representatives and distributors or if these sales representatives or distributors are not effective, it could have a material adverse effect on our business, results of operations and financial condition.
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Our success is dependent, in part, upon protecting our intellectual property rights.
−Removed: We rely on a combination of trade secrets, know-how, trademarks, copyright and patents.
+Added: We rely on a combination of trade secrets, trademarks, copyright, patents and other forms of intellectual property, contractual restrictions and confidentiality procedures to establish and protect our proprietary rights.
Much of the intellectual property created in our Memory Solutions and IPS groups exists in the form of know-how and trade secrets.
As such, few patents are sought or procured on products created in these business areas.
−Removed: The absence of patent protection for these products means that we cannot prevent our competitors from reverse-engineering and duplicating them, which could harm our competitive position, sales and results of operations.
+Added: The absence of patent protection for these products means that we cannot prevent our competitors from reverse-engineering, independently developing, or duplicating them, which could harm our competitive position, sales and results of operations.
We seek to protect our confidential proprietary information, in part, by confidentiality and non-disclosure agreements and invention assignment agreements with our employees, consultants, advisors, contractors and collaborators.
However, we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.
−Removed: If any of our confidential proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.
−Removed: We also protect our intellectual property through patent protection, particularly in our LED Solutions group.
+Added: In addition, our trade secrets, know-how and other proprietary information may be stolen, used in an unauthorized manner, or compromised through a direct intrusion by private parties or foreign actors, including those affiliated with or controlled by state actors, through cyber intrusions into our computer systems, physical theft through corporate espionage or other means or through more indirect routes, including by our collaborators, licensees that do not honor the terms of the license, potential licensees that were ultimately not licensed or other parties reverse engineering our solutions.
+Added: See also “Actual or perceived breaches of our security systems, or those of our customers, suppliers or business partners, could expose us to losses.” If any of our confidential proprietary information were to be lawfully obtained or independently developed by a
+Added: competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.
+Added: We also protect our intellectual property through patent protection, particularly in our LED Solutions group, but our patents do not cover all of our technologies, methods and systems and our competitors or others may design around our patented technologies.
If any of our issued patents are found to be invalid or if any of our patent applications are rejected, our ability to exclude competitors from making, using, importing or selling the same or similar products as us could be compromised.
+Added: Further, when we seek patent protection for a particular technology, there is no assurance that the applications we file will result in issued patents or that if patents do issue as a result that they will allow us to effectively block competitors creating competing technology.
+Added: We also rely on trademark registrations and have registered, or have applied to register, those trademarks that we believe are important to our business with the United States Patent and Trademark Office and in many foreign jurisdictions.
+Added: We cannot assure that our applications will be approved or that these registrations will prevent imitation, counterfeiting or other infringement of our name or the infringement of our other intellectual property rights by others.
+Added: Third parties may also oppose our trademark applications and registrations or otherwise challenge our use of the trademarks.
+Added: Imitation, unauthorized use, or misuse of our name or trademarks in a manner that projects lesser quality or carries a negative connotation of our brand image or services could have a material adverse effect on our business, financial condition and results of operations.
+Added: To assert control over the use of our trademarks, we rely on contractual protections with our customers and we implement quality control measures and monitoring techniques intended to protect our trademarks from unauthorized use or other misuse.
+Added: However, no assurances can be given that those contracts will not be breached, and we cannot be certain that the actions we have taken to establish, police and protect our trademarks or our resources will be adequate to prevent or detect infringing use by others.
+Added: If disputes arise in the future, we may not be able to successfully resolve these types of conflicts to our satisfaction.
In addition, because we conduct a substantial portion of our operations and sell a large percentage of our products outside the United States, our ability to protect our intellectual property may be constrained.
The laws of certain countries in which we operate our business or sell products may not protect proprietary rights to the same extent or in the same ways as the laws in the United States.
−Removed: As such, we may not be able to effectively leverage or defend our intellectual property rights against competitors in these countries, which could undermine our business interests.
+Added: As such, we may not be able to effectively leverage or defend our intellectual property rights in foreign countries and markets due to applicable intellectual property laws and procedures, which could undermine our business interests.
It is also possible that certain of our suppliers or other partners will either not protect or not respect our intellectual property rights, and that we may have difficulty enforcing our intellectual property rights while maintaining our business relationships with those partners.
+Added: Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property may be difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak.
+Added: Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights.
+Added: Our inability to secure or enforce our intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.
Legal proceedings and claims could have a material adverse effect on our business, results of operations or financial condition.
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In addition, litigation or other actions may be necessary to protect our intellectual property rights, to determine the validity and scope of the proprietary rights of others or to defend against third party claims of infringement and/or invalidity.
+Added: The steps we take to prevent misappropriation, infringement or other violation of the intellectual property of others may not be successful.
Litigation and other legal and administrative processes, whether as plaintiff, defendant or otherwise, could result in substantial costs and diversion of resources and management attention and could have a material adverse effect on our business, results of operations and financial condition, whether or not such litigation or other processes are ultimately determined in our favor.
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From time to time, third parties may claim that we are infringing upon technology to which they have proprietary rights and that we require a license to manufacture and/or sell certain of our products.
−Removed: If we are unable to supply certain products at competitive prices due to royalty payments we are required to make or at all because we were unable to secure a required
−Removed: license, our customers might make claims against us, cancel orders or seek other suppliers to replace us, all of which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Changes in tax laws or potential adjustments by tax authorities in key jurisdictions could materially increase our tax expense.
−Removed: Our future effective tax rates could be unfavorably affected by the resolution of issues arising from tax audits with various tax authorities in the United States and abroad;
+Added: If we are unable to supply certain products at competitive prices due to royalty payments we are required to make or at all because we were unable to secure a required license, our customers might make claims against us, cancel orders or seek other suppliers to replace us, all of which could have a material adverse effect on our business, results of operations and financial condition.
+Added: Changes in tax laws or potential adjustments by tax authorities could materially increase our tax expense.
+Added: We are a multinational company subject to tax in multiple tax jurisdictions.
+Added: Our future effective tax rates could be unfavorably affected by the resolution of issues arising from a variety of sources, including:
+Added: tax audits with various tax authorities in the United States and abroad;
adjustments to income taxes upon finalization of various tax returns;
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changes in exemptions from taxes in certain jurisdictions or in connection with certain transactions;
−Removed: or by changes in the valuation of our deferred tax assets and liabilities.
−Removed: In addition, taxable income in any jurisdiction is dependent upon acceptance of our operational practices and intercompany transfer pricing by local tax authorities as being on an arm’s length basis.
+Added: or changes in the valuation of our deferred tax assets and liabilities.
+Added: Taxable income in any jurisdiction is dependent in part upon acceptance of our operational practices and intercompany transfer pricing by local tax authorities as being on an arm’s length basis.
Due to inconsistencies in application of the arm’s length standard among taxing authorities, as well as lack of adequate treaty-based protection, transfer pricing challenges by tax authorities could, if successful, substantially increase our income tax expense.
While we enjoy beneficial tax treatment in certain foreign jurisdictions, most notably Brazil and Malaysia, we are subject to meeting specific conditions in order to receive the beneficial treatment, and such beneficial treatment is subject to change.
+Added: Further changes in tax laws could arise as a result of the base erosion and profit shifting project that was undertaken by the Organization for Economic Co-operation and Development (“OECD”).
+Added: For example, the OECD Pillar 2 initiative contemplates a 15% global minimum tax with respect to earnings in each separate country.
+Added: EU member states are required to adopt the OECD Pillar 2 rules in 2023, some countries have already adopted and other non-U.S.
+Added: countries are expected to follow suit.
+Added: Under these rules, we may be required to pay a “top-up” tax to the extent that our effective tax rate in any given country is below 15%.
+Added: The United States is not expected to pass Pillar 2 legislation in the near term, but the top-up tax can be collected by other countries.
+Added: We are evaluating developments to determine whether Pillar 2 will materially impact our financial position in the future.
+Added: Any material change in tax laws or policies, or their interpretation, resulting from BEPS, BEPS 2.0, or other legislative proposals or inquiries may offset the beneficial tax treatment in certain foreign jurisdictions, increase tax uncertainty and could have a material adverse effect on our provision for income taxes, business, results of operations and financial condition.
Additionally, we regularly assess the likelihood of outcomes resulting from tax examinations in the United States and abroad to determine the adequacy of our provision for taxes and have reserved for potential adjustments that may result from current examinations.
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Any significant variance in the results of an examination as compared to our estimates, any failure to continue to receive any beneficial tax treatment in any of our foreign locations or any increase in our future effective tax rates due to any of the factors set forth above or otherwise could reduce net income and have a material adverse effect on our business, results of operations and financial condition.
−Removed: Our ability to use our net operating loss carryforwards is limited.
+Added: Our ability to use our tax attributes is limited.
As of August 25, 2023, we had U.S.
federal and state net operating loss carryforwards of $32.1 million and $41.9 million, respectively.
−Removed: Federal net operating loss carryforwards of $71.2 million will expire in fiscal 2028 through fiscal 2038, if not utilized, and the remaining $15.7 million is indefinite lived.
−Removed: The state net operating loss carryforwards will expire in fiscal 2024 through fiscal 2040.
+Added: If not utilized, the federal net operating loss carryforwards will begin to expire in 2025 and the state net operating loss carryforwards will begin to expire in 2028.
In addition, we have U.S.
−Removed: federal and state research and development credit carryforwards of approximately $7.4 million and $1.1 million, respectively, and $1.4 million of foreign tax credit carryforward.
−Removed: Federal and state carryforwards prior to fiscal 2018 are subject to an annual limitation under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended (“Code”).
−Removed: Further, under Section 382 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards to offset its post-change taxable income may be limited.
−Removed: In general, an “ownership change” will occur if there is a cumulative change in our ownership by certain “5-percent shareholders” (including groups of shareholders) that exceeds 50 percentage points over a rolling three-year period.
+Added: federal and state research and development credit carryforwards of $17.5 million and $5.4 million, respectively, and $2.1 million of foreign tax credit carryforwards.
+Added: If not utilized, the federal research and foreign tax credits will begin to expire in 2032.
+Added: If not utilized $2.0 million of state credits will begin to expire in 2029, while $3.4 million of state credits do not expire.
+Added: In addition, we also have Section 163(j) interest expense carryforwards of $101.0 million from the acquisition of Stratus, which do not expire.
+Added: Lastly, we had net operating loss carryforwards in Hong Kong of $18.6 million, which do not expire.
+Added: Federal and state carryforwards prior to fiscal 2018 are subject to an annual limitation under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).
+Added: Further, under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change taxable income may be limited.
+Added: In general, an “ownership change” will occur if there is a cumulative change in our ownership by certain “5-percent shareholders” (including groups of shareholders) that exceeds 50 percentage points (by value) over a rolling three-year period.
Similar rules may apply under state tax laws.
−Removed: Our net operating loss and tax credit carryforwards prior to 2018 are subject to limitations per Section 382 of the Code.
+Added: Our net operating loss, tax credit and Section 163(j) interest expense carryforwards are subject to limitations per Sections 382 and 383 of the Code.
We have experienced ownership changes in the past, and we may experience ownership changes in the future as a result of future transactions in our ordinary shares, some changes of which may be outside our control.
−Removed: As a result, our ability to use our pre-change net operating loss and tax credit carryforwards to offset post-change U.S.
+Added: As a result, our ability to use our pre-change net operating loss, tax credit and Section 163(j) interest expense carryforwards to offset post-change U.S.
federal and state taxable income may be subject to additional limitations.
−Removed: Further, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, (“Tax Act”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) changed the federal rules governing net operating loss carryforwards.
−Removed: For net operating loss carryforwards arising in tax years beginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize such carryforwards to 80% of taxable income.
+Added: Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (“Tax Act”), as modified in 2020 by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), changed the federal rules governing net operating loss carryforwards.
+Added: For net operating loss carryforwards arising in tax years beginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize such carryforwards to 80% of taxable income in tax years beginning after December 31, 2020.
In addition, net operating loss carryforwards arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited, with the exception of carrybacks reinstated by the CARES Act.
−Removed: Net operating loss carryforwards generated before January 1, 2018 will not be subject to the Tax Act’s taxable income limitation and will continue to have a twenty-year carryforward period.
+Added: Net operating loss carryforwards generated before January 1, 2018 are not subject to the Tax Act’s taxable income limitation and will continue to have a twenty-year carryforward period.
Nevertheless, our net operating loss carryforwards and other tax assets could expire before utilization and could be subject to limitations.
+Added: We recently reversed the valuation allowance for a significant portion of our deferred tax assets, and we may not be able to realize these assets in the future.
+Added: Our deferred tax assets may also be subject to additional valuation allowances, which could have a material adverse effect on our business, results of operations and financial condition.
+Added: Determining whether a valuation allowance for deferred tax assets is appropriate requires judgment and an evaluation of all positive and negative evidence.
+Added: At each reporting period, we assess the need for, or the sufficiency of a valuation allowance against, deferred tax assets.
+Added: During the fourth quarter of 2023, based on the weight of all the positive and negative evidence, we concluded that it was more likely than not that we will realize certain federal and state net deferred tax assets based on three significant pieces of positive evidence occurring during the year ended August 25, 2023:
+Added: (1) achieving three-year cumulative earnings, (2) recent use of deferred tax assets including available tax attribute carryforwards and (3) forecasted growth and profitability.
+Added: Therefore, we reversed the valuation allowance on those deferred tax assets during 2023.
+Added: Our conclusion that it is more likely than not that we will realize certain federal and state net deferred tax assets considers our estimate of future taxable income.
+Added: Our estimate of future taxable income is based on internal projections which primarily consider historical performance, but also include various internal estimates and assumptions as well as certain external data.
+Added: We believe all of these inputs to be reasonable, although inherently subject to judgment.
+Added: If actual results differ significantly from these estimates of future taxable income, we may need to reestablish a valuation allowance for some or all of our deferred tax assets.
+Added: Establishing an allowance on our net deferred tax assets could have a material adverse effect on our business, results of operations and financial condition.
We could incur substantial costs or liabilities as a result of violations of environmental laws.
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While we did not cause the contamination, we may be held responsible if remediation is required, although we may be entitled to seek indemnification from responsible parties under Brazilian law and from our lessor under our lease.
−Removed: In addition, as part of the acquisition of Cree’s LED business, we acquired facilities in China, which could present similar issues.
+Added: In addition, as part of the acquisition of
+Added: Cree’s LED business, we acquired facilities in China, which could present similar issues.
The identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations or other unanticipated events may arise in the future and give rise to material environmental liabilities and related costs.
The occurrence of any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.
+Added: We may be unable to complete environmental, social and governance (“ESG”) initiatives, in whole or in part, which could lead to less opportunity for us to have ESG investors and partners and could negatively impact our reputation or options for capital acquisition.
+Added: We are increasingly facing more stringent ESG standards, policies and expectations, and expect to continue to do so as a listed company with growing operations.
+Added: While we may at times engage in voluntary initiatives and disclosures to improve our ESG profile or to respond to stakeholder expectations, such initiatives and disclosures may be costly and may not have the desired effect.
+Added: Our management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control.
+Added: For example, we may ultimately be unable to complete certain initiatives or reach certain targets or goals, either on the timelines initially announced or at all, due to technological, cost, or other constraints, which may be within or outside of our control.
+Added: Moreover, our ESG actions or statements may be on based on expectations, assumptions, or third-party information that we currently believe to be reasonable, but which may subsequently be determined to be erroneous or be subject to misinterpretation.
+Added: If we fail to, or are perceived to fail to, comply with certain ESG initiatives or reach our ESG targets or goals, we may be subject to various adverse impacts, including reputational damage and potential stakeholder engagement and/or litigation, even if such initiatives are currently voluntary.
+Added: Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions.
+Added: Unfavorable ESG ratings could lead to increased negative investor sentiment towards us, which could negatively impact our share price as well as our access to and cost of capital.
+Added: We also note that divergent views regarding ESG principles are emerging in the United States, and in particular, in U.S.
+Added: state-level regulation and enforcement efforts.
+Added: In the future, various U.S.
+Added: regulators, state actors and other stakeholders may have views on ESG matters that are less favorable to our business or operations, or such stakeholders may seek to impose additional regulation and restrictions on us or our business.
+Added: Any such events could have material adverse effects on our business, financial condition, results of operations, cash flow and prospects.
+Added: We also expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters.
+Added: Increased regulation and increased stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks we face associated with environmental, social and regulatory matters.
+Added: Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
Our worldwide operations, and those of our suppliers, business partners and customers, may be disrupted by events outside of our control, including the effects of climate change, natural disasters, man-made disasters or other events, as well as societal and governmental responses to such events.
−Removed: Our operations in different parts of the world could be subject to natural disasters, including earthquakes, monsoons, cyclones and floods.
+Added: Our operations in different parts of the world could be subject to natural disasters or severe weather conditions, including earthquakes in connection with climate change, or an accident that damages or otherwise adversely affects any of our operations, assets or infrastructure, or the operations, assets or infrastructure of one or more of our suppliers, business partners or customers.
+Added: Earthquakes, monsoons, cyclones, droughts, extreme wind conditions, severe storms, heatwaves, wildfires and floods could damage our property and assets, require us to shut down operations or have either of those effects on third parties on whom we rely.
For example, our U.S.
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Since a large percentage of our production is done in a small number of facilities, a disruption to operations could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Hostilities in Ukraine may exacerbate certain risks we face.
−Removed: Russia’s invasion of Ukraine in February 2022 and the global response, including the imposition of sanctions by the United States and other countries, could create or exacerbate risks facing our business.
+Added: Climate change may also contribute to various chronic changes in the physical environment, such as sea-level rise or changes in ambient temperature or precipitation patterns, which may also adversely impact our or our third-parties’
+Added: While we may take various actions to mitigate our business risks associated with climate change and other natural and catastrophic events, this may require us to incur substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk.
+Added: For example, to the extent catastrophic events become more frequent, it may adversely impact the availability or cost of insurance.
+Added: Additionally, we may be subject to risks associated with societal efforts to mitigate or otherwise respond to climate change, including but not limited to increased regulations and evolving stakeholder expectations.
+Added: Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations.
+Added: Armed conflicts around the world, such as those in Ukraine and Israel, may exacerbate certain risks we face.
+Added: Armed conflicts around the world, such as those in Ukraine and Israel, as well as the global response to such conflicts, including the imposition of sanctions by the United States and other countries, could create or exacerbate risks facing our business.
We have evaluated our operations, vendor contracts and customer arrangements, and at present we do not expect the hostilities to directly have a material and adverse effect on our financial condition or results of operations.
However, if the hostilities persist, escalate or expand, risks we have identified in this report may be exacerbated.
−Removed: For example, if our supply or customer arrangements are disrupted due to expanded sanctions, involvement of countries where we have operations or relationships or rising energy prices, our business could be materially disrupted.
+Added: For example, if our supply or customer arrangements are disrupted due to sanctions or expanded sanctions, involvement of countries where we have operations or relationships or rising energy prices, our business could be materially disrupted.
Further, the use of state-sponsored cyberattacks could expand as part of the conflict, which could adversely affect our ability to maintain or enhance our cybersecurity and data protection measures.
+Added: While the ongoing effects of the COVID-19 outbreak have stabilized, it remains unpredictable and could adversely affect our business, results of operations and financial condition.
+Added: While the ongoing effects of the COVID-19 outbreak have stabilized, COVID-19 has resulted in substantial loss of life, economic disruption and government intervention worldwide.
+Added: As a result, we have experienced fluctuating sales volumes of certain product lines since early calendar 2020.
+Added: It also disrupted our product development, marketing and corporate development activities.
+Added: We are unable to accurately predict the full impact that COVID-19 will continue to have.
+Added: For example, such reduced sales volumes may continue or worsen and we may, among other issues, experience, in any or all product lines, delays in product development, a decreased ability to support our customers, disruptions in sales and manufacturing activities and overall reduced productivity, each of which could have a negative impact on our ability to meet customer commitments and on our revenue and profitability.
+Added: While initially we did not experience a major disruption in our supply chain as a result of COVID-19, we cannot guarantee that such downstream effects will not impact us in the future.
+Added: There can be no assurance that negative impacts resulting from the wide-ranging effects of COVID-19 will be offset by increased sales in subsequent periods.
+Added: In addition, COVID-19 has in the short-term, and, together with other disease outbreaks, may over the longer term, adversely affect the economies and financial markets within many countries, such as the United States, Brazil and China, and regions, including Asia and Europe, which are the primary geographic areas in which we conduct business, resulting in a significant economic downturn in these countries and regions.
+Added: We are unable to accurately predict the impact that COVID-19 will have in future periods due to various uncertainties and future developments, including the evolution and severity of the disease, the occurrence of other epidemics, the imposition of related public health measures and travel and business restrictions or other actions that may be taken by governmental authorities in an effort to contain or treat the virus, all of which, together with the disruptions and other factors discussed above, could have a material adverse effect on our customer relationships, operating results, cash flows and financial condition and have a negative impact on our share price.
+Added: Our efforts to adapt our work environment to the COVID-19 pandemic may be unsuccessful.
+Added: While the COVID-19 pandemic persists, we have begun to adopt and roll out return to office plans for our workforce.
+Added: We believe that there are costs to remote work in terms of productivity, innovation and community that have adversely affected our business during the pandemic.
+Added: At the same time, we also believe that certain of our employees have benefited from the ability to work remotely and may be resistant to calls to return to work.
+Added: To the extent plans we adopt are more restrictive than those of others in our industry, our ability to attract and retain talent may be materially and adversely
+Added: In addition, if we do not solidify our plans in a manner that is considered timely by our employees, the resulting uncertainty may also adversely affect retention.
Risks Related to Our International Operations
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As a result, our business is and will continue to be subject to the risks generally associated with international business operations in Brazil, Malaysia, China, Taiwan, India and other foreign countries, including:
−Removed: • compliance with numerous changing, and sometimes conflicting legal regimes on matters as diverse as tax, anticorruption, import/export controls and quotas, local manufacturing requirements, trade restrictions, tariffs,
−Removed: taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, anti-competition, data privacy, employment regulations and labor relations;
+Added: • compliance with numerous changing, and sometimes conflicting legal regimes on matters as diverse as tax, anticorruption, import/export controls and quotas, local manufacturing requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, anti-competition, data privacy, employment regulations and labor relations, and labor and human rights laws and expectations;
• changes in social, political and economic conditions;
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A significant portion of our sales and operations is focused on Brazil.
−Removed: Sales to customers in Brazil accounted for 23%, 30% and 35% of our net sales in 2022, 2021 and 2020, respectively.
+Added: Sales to customers in Brazil accounted for 12%, 23% and 30% of our consolidated net sales (including discontinued operations) in 2023, 2022 and 2021, respectively.
Demand for our products in Brazil is dependent upon, among other things, demand in the markets served by our customers, including the Brazil computing and mobile markets.
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A decline or significant shortfall in demand in any of the markets that we serve could have a significant negative impact on the demand for our products.
−Removed: In addition, a prolonged economic downturn in Brazil, even absent a worldwide economic downturn, may lead to higher interest rates or significant changes in currency exchange rates, the rate of inflation in Brazil or an inability of our Brazil customers and suppliers to access capital on acceptable terms.
+Added: In addition, a prolonged economic downturn in Brazil, even absent a worldwide economic downturn, may lead to higher interest rates or significant changes in currency exchange rates, the rate of inflation in Brazil or an inability of our Brazil customers and suppliers to access capital on acceptable
Our customers and suppliers in Brazil could experience cash flow problems, credit defaults or other financial hardships.
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Two such programs incentivize the manufacture and sale of certain information technology and consumer electronics products within Brazil:
−Removed: 1) Lei da Informática – Processo Produtivo Básico (aka Informatics Law – Basic Productive Process Program) (“PPB/IT”) and 2) Programa de Apoio ao Desenvolvimento Tecnológico da Indústria de Semicondutores (aka Program of Support of the Development of the Semiconductor Industry) (“PADIS”).
+Added: (1) Lei da Informática – Processo Produtivo Básico (aka Informatics Law – Basic Productive Process Program) (“PPB/IT Program”) and (2) Programa de Apoio ao Desenvolvimento Tecnológico da Indústria de Semicondutores (aka Program of Support of the Development of the Semiconductor Industry) (“PADIS”).
The PPB/IT Program is enacted via a law that is currently legislated to remain in force through the end of 2029.
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We are subject to the taxation requirements of the jurisdictions in which we operate, and if we fail to qualify for certain tax incentives or to comply with local tax regulations, we may suffer financial losses.
−Removed: We are subject to changes in tax laws, treaties and regulations or the interpretation or enforcement thereof in the Cayman Islands, United States, Brazil, Malaysia and jurisdictions in which we or any of our subsidiaries operate or are resident.
+Added: We are subject to changes in tax laws, treaties and regulations or the interpretation or enforcement thereof in the Cayman Islands, United States, Brazil, Malaysia, Ireland and other jurisdictions in which we or any of our subsidiaries operate or are resident.
We have structured our operations in a manner designed to maximize our benefit from various government incentives and/or tax holidays extended to manufacturers in Brazil and Malaysia to encourage investment and employment, and to minimize our tax liability in other jurisdictions such as the United States to the extent permitted by law.
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if tax laws or regulations are substantially modified or rescinded;
−Removed: if the tax incentives from which we benefit in the jurisdictions in which we operate, including the PPB/IT Program, PADIS and Lei do Bem in Brazil, are substantially modified or rescinded;
+Added: if the tax incentives from which we benefit in the jurisdictions in which we operate, including the PPB/IT Program, PADIS and Lei do Bem in Brazil, are
+Added: substantially modified or rescinded;
if we fail to meet the conditions of any of the tax incentives;
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Volatility of currencies in countries where we conduct business, most notably the U.S.
−Removed: dollar, Chinese renminbi, Brazilian real, Malaysian ringgit, Japanese yen, Euro, British pound, South Korean won, New Taiwan dollar, Hong Kong dollar and Indian rupee have had and may in the future have an effect on our liquidity and operating results.
+Added: dollar, Chinese renminbi, Brazilian real, Malaysian ringgit, Japanese yen, Euro, British pound, South Korean won, New Taiwan dollar, Hong Kong dollar, Indian rupee and South African rand have had and may in the future have an effect on our liquidity and operating results.
Gains and losses on the conversion to U.S.
1 unchanged sentence
We also have costs and expenses that are denominated in foreign currencies, and decreases in the value of the U.S.
−Removed: dollar could result in increases in such costs that could have a
−Removed: significant negative impact on our results of operations.
+Added: dollar could result in increases in such costs that could have a significant negative impact on our results of operations.
In addition, fluctuating values between the U.S.
10 unchanged sentences
In addition, an increase in the existing tax rates applicable to the remittance of dividends or any other intercompany transfer of funds, as well as the enactment of any new tax related to such transfers, may either affect our ability to transfer funds from our subsidiaries or significantly reduce the amounts subject to transfer.
−Removed: High rates of inflation in the future would adversely affect our business, results of operations and financial condition.
+Added: High rates of inflation in the future would materially adversely affect our business, results of operations and financial condition.
In the past, Brazil has experienced extremely high rates of inflation, and in the future, we may experience substantial inflation or deflation in Brazil or elsewhere.
Inflation and some of the measures taken by governments in response to inflation can have significant negative effects on the economy generally.
−Removed: If Brazil or other countries where we operate experience substantial inflation or deflation in the future, our business may be adversely affected.
+Added: If Brazil or other countries where we operate experience substantial inflation or deflation in the future, our business may be materially adversely affected.
In addition, we may not be able to adjust the prices we charge our customers to offset the impact of inflation on our expenses, leading to an increase in our expenses and a reduction in our net operating margin.
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The market value of securities of companies with substantial operations in Brazil and in other jurisdictions is affected to varying degrees by political, economic and market conditions in other countries, including other Latin American and emerging market countries.
−Removed: Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to the Brazil economy and resulted in considerable outflows of funds from Brazil and decreases in the amount of foreign investments in Brazil.
+Added: Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to the Brazil economy and resulted in considerable outflows of funds from
+Added: Brazil and decreases in the amount of foreign investments in Brazil.
Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries, such as the 2008-2009 developments in the global financial markets, may have an adverse effect on the market value of Brazilian companies or companies with significant operations in Brazil.
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The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government.
−Removed: Any rights we may have to specific performance, or to seek an injunction under Chinese law, in either of these cases, may be limited, and without a means of
−Removed: recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring.
+Added: Any rights we may have to specific performance, or to seek an injunction under Chinese law, in either of these cases, may be limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring.
The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations.
1 unchanged sentence
Our indebtedness could impair our financial condition and harm our ability to operate our business.
−Removed: We have a significant amount of debt outstanding as of August 26, 2022, including the debt described in “Item 8.
+Added: We have a significant amount of debt outstanding as of August 25, 2023, including the debt described in “PART II – Item 8.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.” Our indebtedness may have important consequences, including, but not limited to, the following:
• increasing our vulnerability to general economic downturns and adverse industry conditions;
+Added: • limiting our ability to obtain additional financing;
• requiring us to dedicate a significant portion of our cash flows from operations to the payment of interest and principal on our debt, which would reduce the funds available to us for our working capital, capital expenditures or other general corporate requirements;
+Added: • increasing our exposure to rising interest rates from variable rate indebtedness;
+Added: • diluting the interests of our existing shareholders to the extent ordinary shares are issued upon conversion of our convertible notes;
• limiting our flexibility in planning for, or reacting to, changes in our business and industry;
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This, to a certain extent, is subject to prevailing economic and competitive conditions, including general conditions prevailing in the financial markets and global economy, and to certain financial, business, regulatory and other factors beyond our control, including the risks described herein.
−Removed: Our business may not generate sufficient cash flows from operations, and future borrowings may not be available to us under our debt arrangements, including our Amended Credit Facility (as defined below), in an amount sufficient to enable us to service our debt or to fund our other liquidity needs.
+Added: Our business may not generate sufficient cash flows from operations, and future borrowings may not be available to us under our debt arrangements, including our Amended Credit Agreement (as defined below), in an amount sufficient to enable us to service our debt or to fund our other liquidity needs.
In addition, certain of our debt is subject to terms that may require the use of significant cash in the future under certain circumstances.
−Removed: For example, holders of the 2026 Notes (as defined below), may, subject to a limited exception, require us to repurchase their 2026 Notes following a “fundamental change,” as described in more detail in “Item 8.
−Removed: Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes.” In addition, upon conversion, we may satisfy part or all of our conversion obligation in cash.
−Removed: We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2026 Notes or pay the cash amounts due upon conversion.
−Removed: Applicable law, regulatory authorities and the agreements governing our other indebtedness, including our Amended Credit Agreement, may restrict our ability to repurchase the 2026 Notes or pay the cash amounts due upon conversion.
−Removed: Our failure to repurchase 2026 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the Indenture.
+Added: For example, holders of the 2.25% Convertible Senior Notes due 2026 (“2026 Notes”) and 2.00% Convertible Senior Notes due 2029 (“2029 Notes” and, together with the 2026 Notes, the “Convertible Notes”), may, subject to a limited exception, require us to repurchase their Convertible Notes following a “fundamental change,” as described in more detail in “PART II – Item 8.
+Added: Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes.” In addition, all conversions of the Convertible Notes will be settled partially or entirely in cash.
+Added: We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Convertible Notes or pay the cash amounts due
+Added: upon conversion.
+Added: Applicable law, regulatory authorities and the agreements governing our other indebtedness, including our Amended Credit Agreement, may restrict our ability to repurchase the Convertible Notes or pay the cash amounts due upon conversion.
+Added: Our failure to repurchase the Convertible Notes or to pay the cash amounts due upon conversion when required will constitute a default under the Indenture.
A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full.
−Removed: We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the 2026 Notes.
+Added: We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Convertible Notes.
If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance all or a portion of our debt or sell certain of our assets on or before the maturity of our debt.
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Any refinancing of our indebtedness will likely be at higher interest rates in the current environment and may require us to comply with more onerous covenants that could further restrict our business operations.
−Removed: If we are not able to refinance or restructure our debt obligations before they become due, this could cause us to default on our debt obligations and impair our liquidity.
+Added: If we are not able to repay our debt obligations as they become due, or if we are not able to refinance or restructure our debt obligations before they become due, this could cause us to default on our debt obligations and impair our liquidity.
In addition, if our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets or seek additional capital.
These alternative measures may not be available to us, may not be successful and may not permit us to meet our scheduled debt service obligations, which could result in substantial liquidity problems.
−Removed: Our Amended Credit Facility restricts our ability to dispose of our assets and use the proceeds from the disposition.
−Removed: We may not be able to consummate those dispositions or to obtain the proceeds which we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.
+Added: Our Amended Credit Agreement restricts our ability to dispose of our assets and use the proceeds from the disposition.
+Added: We may not be able to consummate any such disposition or dispositions or to obtain the proceeds which we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.
Any of these circumstances could have a material adverse effect on our business, results of operations and financial condition.
Our credit agreements may limit our flexibility in operating our business.
−Removed: We and certain of our subsidiaries are party to the credit agreements, as described in more detail in “Item 8.
−Removed: Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt” and “Item 8.
−Removed: Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Subsequent Events.” These or future credit agreements may contain restrictive covenants that limit our ability to engage in specified transactions and prohibit us from voluntarily prepaying certain of our other indebtedness.
−Removed: For instance, the covenants in our Amended Credit Facility limit the ability of the applicable loan subsidiaries to, among other things:
+Added: We and certain of our subsidiaries are party to credit agreements, as described in more detail in “PART II – Item 8.
+Added: Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.” These or future credit agreements may contain restrictive covenants that limit our ability to engage in specified transactions and prohibit us from voluntarily prepaying certain of our other indebtedness.
+Added: For instance, the covenants in our Amended Credit Agreement limit the ability of the applicable loan subsidiaries to, among other things:
• incur additional indebtedness;
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• amend material agreements governing our subordinated debt and fundamentally change our business.
−Removed: Under the Amended Credit Facility, in certain circumstances we also are required to satisfy and maintain specified financial ratios if we have outstanding debt under the revolver.
+Added: Under the Amended Credit Agreement, in certain circumstances we also are required to satisfy and maintain specified financial ratios if we have outstanding debt under the revolver.
Our ability to meet those financial ratios could be affected by events beyond our control, and there can be no assurance that we will meet those ratios.
The failure to comply with any of these covenants would cause a default under the relevant credit agreement.
−Removed: A default, if not waived, could result in acceleration of the outstanding indebtedness under the Amended Credit Facility as well as under the 2026 Notes, in which case such indebtedness would become immediately due and payable.
+Added: A default, if not waived, could result in acceleration of the outstanding indebtedness under the Amended Credit Agreement as well as under the 2026 Notes, in which case such indebtedness would become immediately due and payable.
If any default occurs, we may not be able to pay our debt or borrow sufficient funds to refinance it.
1 unchanged sentence
Complying with these covenants may cause us to take actions that we otherwise would not take or not take actions that we otherwise would take.
−Removed: Provisions in the 2026 Notes and the Indenture could delay or prevent an otherwise beneficial takeover of us.
−Removed: Certain provisions in the 2026 Notes and the Indenture could make a third-party attempt to acquire us more difficult or expensive.
−Removed: For example, if a takeover constitutes a “fundamental change”, then noteholders will have the right to require us to repurchase their 2026 Notes for cash.
+Added: Provisions in the Convertible Notes and their respective Indentures could delay or prevent an otherwise beneficial takeover of us.
+Added: Certain provisions in the Convertible Notes and their respective Indentures could make a third-party attempt to acquire us more difficult or expensive.
+Added: For example, if a takeover constitutes a “fundamental change”, then noteholders will have the right to require us to repurchase their Convertible Notes for cash.
In addition, if a takeover constitutes a “make-whole fundamental change” (as defined in the Indenture), then we may be required to temporarily increase the conversion rate.
−Removed: In either case, and in other cases, our obligations under the 2026 Notes and the Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us, including in a transaction that noteholders or holders of our ordinary shares may view as favorable.
+Added: In either case, and in other cases, our obligations under the Convertible Notes and their respective Indentures could increase the cost of acquiring us or otherwise discourage a third party from acquiring us, including in a transaction that noteholders or holders of our ordinary shares may view as favorable.
Our capped call transactions may affect the value of our publicly traded debt and ordinary shares.
−Removed: In connection with the pricing of the 2026 Notes, we have entered into privately negotiated capped call transactions (“Capped Calls”), with certain financial institutions.
−Removed: The Capped Calls are expected generally to reduce the potential economic dilution to holders of our ordinary shares upon any conversion of the 2026 Notes, with such reduction and/or offset subject to a cap.
−Removed: In connection with establishing their initial hedges of the Capped Calls, the Capped Call counterparties or their respective affiliates likely entered into various derivative transactions with respect to our ordinary shares and/or purchased ordinary shares concurrently with or shortly after the pricing of the 2026 Notes.
−Removed: In addition, the Capped Call counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our ordinary shares and/or purchasing or selling our ordinary shares or other securities of ours in secondary market transactions prior to the maturity of the 2026 Notes (and are likely to do so during any Observation Period (as defined in the Indenture) related to a conversion of 2026 Notes).
−Removed: This activity could also cause or avoid an increase or a decrease in the market price of our ordinary shares or the 2026 Notes.
+Added: In connection with the pricing of the Convertible Notes, we entered into privately negotiated capped call transactions (“Capped Calls”), with certain financial institutions.
+Added: The Capped Calls are expected generally to reduce the potential dilution to our ordinary shares upon any conversion of the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap.
+Added: In connection with establishing their initial hedges of the Capped Calls, the Capped Call counterparties or their respective affiliates likely purchased our ordinary shares concurrently with the pricing of the Convertible Notes.
+Added: In addition, the Capped Call counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our ordinary shares and/or purchasing or selling our ordinary shares or other securities of ours in secondary market transactions and prior to the maturity of the Convertible Notes (and are likely to do so during any Observation Period (as defined in the Indenture) related to a conversion of Convertible Notes).
+Added: This activity could cause or avoid an increase or a decrease in the market price of our ordinary shares or the Convertible Notes.
The potential effect, if any, of these transactions and activities on the trading price of our ordinary shares or the 2026 Notes will depend in part on market conditions.
−Removed: Any of these activities could adversely affect the trading price of our ordinary shares or the 2026 Notes.
+Added: Any of these activities could adversely affect the trading price of our ordinary shares or the Convertible Notes.
Risks Related to Investments in Cayman Islands Companies
23 unchanged sentences
Broad market and industry factors may adversely affect the market price of our ordinary shares regardless of our actual operating performance.
−Removed: The market price of our ordinary shares could be subject to wide fluctuations in response to the risk factors listed in this section and others beyond our control, including those risks described herein as well as:
+Added: The market price of our ordinary shares has been in the past and could be in the future subject to wide fluctuations in response to the risk factors listed in this section and others beyond our control, including those risks described herein as well as:
• the failure of financial analysts to cover our company;
12 unchanged sentences
The preparation of financial statements in conformity with U.S.
−Removed: GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in “Item 7.
+Added: GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in “PART II – Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
2 unchanged sentences
inventory valuation;
−Removed: impairment of long-lived assets, including property and equipment;
−Removed: goodwill and identified intangible assets;
−Removed: revenue recognition and share-based compensation.
+Added: impairment of long-lived assets,;
+Added: goodwill and identified intangible assets and revenue recognition.
If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations may be adversely affected and may fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.
8 unchanged sentences
Anti-takeover provisions in our organizational documents may discourage our acquisition by a third party, which could limit shareholders’ opportunity to sell their ordinary shares at a premium.
−Removed: Our amended and restated memorandum and articles of association include provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change of control transactions.
+Added: Our amended and restated memorandum and articles of association includes provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change of control transactions.
These provisions include, among other things:
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Uncertainty in global economic and political conditions poses a risk to the overall economy, as consumers and businesses have made it difficult for customers, suppliers and us to accurately forecast and plan future business activities.
−Removed: Declines in the worldwide semiconductor market, economic conditions or consumer confidence would likely decrease the overall demand for our products.
+Added: the worldwide semiconductor market, economic conditions or consumer confidence would likely decrease the overall demand for our products.
Other factors that could cause demand for our products to fluctuate include:
8 unchanged sentences
• exchange rates and currency controls and restrictions on the movement of capital out of country;
+Added: • recent and potential bank failures;
• changes to tax and regulatory policies.
1 unchanged sentence
In addition, if product demand decreases or we fail to forecast demand accurately, we could be required to write-off inventory or record underutilization charges, which would have a negative impact on our profitability.
−Removed: If product demand increases more or faster than anticipated, we may not be able to add
−Removed: manufacturing or assembly and test capacity fast enough to meet market demand.
+Added: If product demand increases more or faster than anticipated, we may not be able to add manufacturing or assembly and test capacity fast enough to meet market demand.
These changes in demand for our products, and changes in our customers’ product needs, could have a variety of negative effects on our competitive position and our financial results, and in certain cases, may reduce our net sales, increase our costs, lower our profit margins or require us to recognize impairments of our assets.
7 unchanged sentences
We are also subject to a variety of U.S.
−Removed: federal and state employment and labor laws and regulations, including, without limitation, the Americans with Disabilities Act, the Federal Fair Labor Standards Act, the Worker Adjustment and Restructuring Notification Act and other regulations related to working conditions, wage-hour pay, overtime pay, employee benefits, antidiscrimination and termination of employment.
−Removed: Like other companies operating or selling internationally, we are subject to the Foreign Corrupt Practices Act (the “FCPA”) and other laws which generally prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S.
−Removed: companies and their intermediaries for the purpose of obtaining or retaining business or otherwise obtaining favorable treatment.
−Removed: We are also subject to similar or even more restrictive anticorruption laws imposed by the governments of other countries where we do business, including the UK Bribery Act, the Malaysian Anticorruption Act and the Brazil Clean Company Act.
−Removed: We make sales and operate in countries known to experience corruption that are rated as high-risk nations.
−Removed: Our business activities in such countries create the risk of unauthorized conduct by one or more of our employees, consultants, customs brokers, freight forwarders, sales agents or distributors that could be in violation of various laws including the FCPA or similar local regulations.
−Removed: In addition, we may be held liable for actions taken by such parties even though such parties are not subject to the FCPA or similar laws.
−Removed: Any determination that we have violated the FCPA or similar laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities that could have a material adverse effect on our business, results of operations and financial condition.
+Added: federal and state employment and labor laws and regulations, including, without limitation, the Americans with Disabilities Act, the Federal Fair Labor Standards Act, the Worker Adjustment and Restructuring Notification Act and other regulations related to working conditions, wage-hour pay, overtime pay, employee benefits, anti-discrimination and termination of employment.
+Added: Like other companies operating or selling internationally, we face risks of non-compliance with the U.S.
+Added: Foreign Corrupt Practices Act (the “FCPA”) and other laws which generally prohibit direct and indirect improper payments to foreign government officials and political parties for the purpose of securing an unfair business advantage.
+Added: In addition, because we have operations and suppliers in China and adjacent jurisdictions, we have exposure and risks associated with the Uyghur Forced Labor Prevention Act (“UFLPA”) and other global laws against forced labor.
+Added: The UFLPA prohibits the importation of articles, merchandise, apparel and goods mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (Xinjiang) of the People’s Republic of China (PRC), or by entities identified by the U.S.
+Added: government on the UFLPA Entity List.
+Added: Forced labor concerns have rapidly become a global area of interest and is a topic that will likely be subject to new regulations in the markets we operate within.
+Added: If we fail to comply with these laws and regulations, the company may be subject to detention, seizure and exclusion of imports, as well as penalties, costs and restrictions on export and import privileges that could have an adverse effect on our business, financial condition and operating results.
+Added: We are also subject to similar or even more restrictive anticorruption laws imposed by the governments of other countries where we do business, such as laws that prohibit commercial bribery, including the UK Bribery Act, the Malaysian Anticorruption Act and the Brazil Clean Company Act.
+Added: We make sales, are subject to government regulation and operate in countries known to present heightened risks of public corruption.
+Added: Although we have implemented policies and controls to mitigate risks of non-compliance, our business activities create the risk of unauthorized conduct by one or more of our employees, consultants, customs brokers, freight forwarders, third party representatives or distributors that could be in violation of various laws including the FCPA or similar local regulations.
+Added: In addition, we may be held liable for actions taken by such parties even if such parties themselves are not subject to the FCPA or similar laws.
+Added: Investigations into allegations of such misconduct can be costly, and any determination that we have violated the FCPA or similar laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities that could have a material adverse effect on our business, results of operations and financial condition.
Our Brazil operations are subject to periodic and regular investigations by labor officials and governmental bodies, including the Brazilian Ministry of Labor and the Brazilian Labor Public Prosecutor’s Office, with respect to our compliance with labor rules and regulations.
7 unchanged sentences
If any governmental sanctions were to be imposed, or if we were not to prevail in any civil action or criminal proceeding, our business, results of operations and financial condition could be materially adversely affected.
−Removed: In addition, responding to
−Removed: any litigation or action would likely result in a significant diversion of management’s attention and resources and a significant increase in professional fees.
+Added: In addition, responding to any litigation or action would likely result in a significant diversion of management’s attention and resources and a significant increase in professional fees.
Our success depends on our ability to attract, retain and motivate highly skilled employees.
10 unchanged sentences
Worldwide political conditions and threats of terrorist attacks may adversely affect our operations and demand for our products.
−Removed: Armed conflicts around the world could have an impact on our sales, our supply chain and our ability to deliver products to our customers.
+Added: Armed conflicts around the world, including those in Ukraine and Israel, could have an impact on our sales, our supply chain and our ability to deliver products to our customers.
Political and economic instability in some regions of the world could also have a negative impact on our business.
6 unchanged sentences
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.