Global Business Risks
+Added: We rely on third parties to manufacture, assemble and test our products, which subjects us to risks of disruptions in our supply chain
+Added: We do not have our own wafer fab manufacturing facilities.
+Added: Therefore, we rely on third-party vendors to manufacture the products we design.
+Added: We also currently rely on third-party assembly subcontractors in Asia to assemble and package the silicon chips provided by the wafers for use in final products.
+Added: Additionally, we rely on these offshore subcontractors for a substantial portion of the testing requirements of our products prior to shipping.
+Added: We expect utilization of third-party subcontractors to continue in the future.
+Added: The cyclical nature of the semiconductor industry drives wide fluctuations in available capacity at third-party vendors.
+Added: On occasion, we have been unable to adequately respond to unexpected increases in customer demand due to capacity constraints and, therefore, were unable to benefit from this incremental demand.
+Added: We may be unable to obtain adequate foundry, assembly or test capacity from our third-party subcontractors to meet our customers’ delivery requirements even if we adequately forecast customer demand.
+Added: For example, foundry, assembly and test capacity is currently limited due to a spike in semiconductor demand.
+Added: As a result, we have recently experienced longer lead times at certain third-party foundry subcontractors.
+Added: This is resulting in competing demand for capacity at our suppliers.
+Added: Such conditions may adversely affect our revenue and increase our costs.
+Added: There are significant risks associated with relying on these third-party foundries and subcontractors, including:
+Added: ● Failure by us, our customers or their end customers to qualify a selected supplier;
+Added: ● Disruption to our suppliers’ operations due to geopolitical changes, including risks related to deteriorating relations between China and Taiwan;
+Added: ● Potential insolvency of the third-party subcontractors;
+Added: ● Reduced control over delivery schedules and quality;
+Added: ● Limited warranties on wafers or products supplied to us;
+Added: ● Potential increases in prices or payments in advance for capacity;
+Added: ● Increased need for international-based supply, logistics and financial management;
+Added: ● Disruption to our supply chain resulting from cyber-attacks on our suppliers’ information technology systems;
+Added: ● Their inability to supply or support new or changing packaging technologies;
+Added: ● Low test yields.
+Added: We typically do not have long-term supply contracts with our third-party vendors which obligate the vendor to perform services and supply products to us for a specific period, in specific quantities, and at specific prices.
+Added: Our third-party foundry, assembly and test subcontractors typically do not guarantee that adequate capacity will be available to us within the time required to meet demand for our products.
+Added: In the event that these vendors fail to meet our demand for whatever reason, we expect that it would take up to 12 months to transition performance of these services to new providers.
+Added: Such a transition may also require qualification of the new providers by our customers or their end customers.
+Added: If our suppliers experience closures or reductions in their capacity utilization levels in the future, we may have difficulty sourcing materials necessary to fulfill production requirements.
+Added: Public health crises, such as the COVID-19 pandemic, may affect our suppliers’ production capabilities as a result of quarantines, closures of production facilities, lack of supplies or delays caused by restrictions on travel.
+Added: Most of the silicon wafers for the products that we have sold were manufactured either by Taiwan Semiconductor Manufacturing Co.
+Added: (“TSMC”) or Semiconductor Manufacturing International Corporation (“SMIC”).
+Added: Our customers typically complete their own qualification process.
+Added: If we fail to properly balance customer demand across the existing semiconductor fabrication facilities that we utilize or are required by our foundry partners to increase, or otherwise change the number of fab lines that we utilize for our production, we might not be able to fulfill demand for our products and may need to divert our engineering resources away from new product development initiatives to support the fab line transition, which would adversely affect our operating results.
+Added: In addition, geopolitical changes in China-Taiwan relations could disrupt TSMC’s operations and impact our third-party assembly subcontractors in Asia.
+Added: Such a disruption could severely impact our ability to manufacture the majority of our products and as a result, could adversely affect our business, revenues and results of operations.
We are subject to the cyclical nature of the semiconductor industry, which has been subject to significant fluctuations
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The impact from the rapidly changing market and economic conditions due to the COVID-19 outbreak is uncertain, disrupting the business of our customers and suppliers, and could impact our business and operating results in the future.
−Removed: We are a global company, which subjects us to additional business risks including logistical and financial complexity, political instability and currency fluctuations
+Added: We are a global company, which subjects us to additional business risks including logistical and financial complexity, supply disruption, political instability and currency fluctuations
We have established international subsidiaries and have opened offices in international markets to support our activities in Asia, the Americas and Europe.
This has included the establishment of a headquarters in Singapore for non-U.S.
−Removed: During the nine months ended October 1, 2022, the percentage of our revenues derived from outside of the United States was 84% (and the revenue associated with end customers in China was 15%, and revenue attributed to China based on shipped-to location was 36%).
+Added: During three months ended April 1, 2023, the percentage of our revenues derived from outside of the United States was 84% (and the revenue associated with end customers in China was 10%, and revenue attributed to China based on shipped-to location was 25%).
We may not be able to maintain or increase global market demand for our products.
6 unchanged sentences
and China, may lead customers to favor products from non-US companies which could put us at a competitive disadvantage and result in decreased customer demand for our products and our customers’ products;
+Added: ● Rising tensions and deteriorating military, political and economic relations between China and Taiwan could disrupt the operations of our third-party foundry, assembly and test subcontractors, which could severely impact our ability to manufacture the majority of our products and as a result, could adversely affect our business, revenues and results of operations;
● Restrictions or tariffs imposed on certain countries and sanctions or export controls imposed on customers or suppliers may affect our ability to sell and source our products;
1 unchanged sentence
● Public health crises, such as the COVID-19 pandemic, may affect our international operations, suppliers and customers and we may experience delays in product development, a decreased ability to support our customers and reduced design win activity if the travel restrictions or business shutdowns or slowdowns continue for an extended period of time in any of the countries in which we, our suppliers and our customers operate and do business;
−Removed: ● Multiple, conflicting and changing tax and other laws and regulations that may impact both our international and domestic tax and other liabilities and result in increased complexity and costs, including the impact of the Tax Cuts and Jobs Act, which we expect to increase our effective tax rate, in part due to the impact of the requirement to capitalize and amortize foreign research and development expenses beginning in 2022;
+Added: ● Multiple, conflicting and changing tax and other laws and regulations that may impact both our international and domestic tax and other liabilities and result in increased complexity and costs, including the impact of the Tax Cuts and Jobs Act, which increased our effective tax rate, in part due to the impact of the requirement to capitalize and amortize foreign research and development expenses beginning in 2022;
● Longer sales cycles;
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dollar could reduce our buying power with respect to international suppliers.
−Removed: Our research and development efforts are focused on a limited number of new technologies and products, and any delay in the development, or abandonment, of these technologies or products by industry participants, or their failure to achieve market acceptance, could compromise our competitive position
−Removed: Our products serve as components and solutions in electronic devices in various markets.
−Removed: As a result, we have devoted and expect to continue to devote a large amount of resources to develop products based on new and emerging technologies and standards that will be commercially introduced in the future.
−Removed: Research and development expense during the nine months ended October 1, 2022 was $245.7 million, or 32.0% of revenues.
−Removed: A number of companies are actively involved in the development of these new technologies and standards.
−Removed: Should any of these companies delay or abandon their efforts to develop commercially available products based on new technologies and standards, our research and development efforts with respect to these technologies and standards likely would have no appreciable value.
−Removed: In addition, if we do not correctly anticipate new technologies and standards, or if the products that we develop based on these new technologies and standards fail to achieve market acceptance, our competitors may be better able to address market demand than we would.
−Removed: Furthermore, if markets for these new technologies and standards develop later than we anticipate, or do not develop at all, demand for our products that are currently in development would suffer, resulting in lower sales of these products than we currently anticipate.
+Added: Most of our current manufacturers, assemblers, test service providers, distributors and customers are concentrated in the same geographic region, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could disrupt our operations or sales
+Added: Most of our foundries and several of our assembly and test subcontractors’ sites are located in Taiwan and most of our other foundry, assembly and test subcontractors are located in the Pacific Rim region.
+Added: In addition, many of our customers are located in the Pacific Rim region.
+Added: The risk of earthquakes in Taiwan and the Pacific Rim region is significant due to the proximity of major earthquake fault lines in the area.
+Added: Earthquakes, tsunamis, fire, flooding, lack of water or other natural disasters, an epidemic such as the current COVID-19 outbreak, political unrest, war, labor strikes or work stoppages in countries where our semiconductor manufacturers, assemblers and test subcontractors are located, likely would result in the disruption of our foundry, assembly or test capacity.
+Added: There can be no assurance that alternate capacity could be obtained on favorable terms, if at all.
+Added: A natural disaster, epidemic, labor strike, war or political unrest where our customers’ facilities are located would likely reduce our sales to such customers.
+Added: In addition, a significant portion of the assembly and testing of our products occurs in South Korea.
+Added: Any disruption resulting from these events, including the COVID-19 pandemic, could also cause significant delays in shipments of our products until we are able to shift our manufacturing, assembling or testing from the affected subcontractor to another third-party vendor.
+Added: If the COVID-19 pandemic significantly disrupts the manufacture, shipment and sales of our products or the products of our customers, this may materially negatively impact our operating results for subsequent periods.
+Added: For example, if travel restrictions or business shutdowns or slowdowns occur for an extended period of time in Taiwan, South Korea or the other countries in which our current manufacturers, assemblers, test service providers, distributors and customers are located, we may experience delays in product production, a decreased ability to support our customers, reduced design win activity, and overall lack of productivity.
+Added: Our customers may also experience closures of their manufacturing facilities or inability to obtain other components, either of which could negatively impact demand for our solutions.
+Added: We have limited resources compared to some of our current and potential competitors and we may not be able to compete effectively and increase market share
+Added: Some of our current and potential competitors have longer operating histories, significantly greater resources and name recognition and a larger base of customers than we have.
+Added: As a result, these competitors may have greater credibility with our existing and potential customers.
+Added: They also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion and sale of their products than we can to ours.
+Added: In addition, some of our current and potential competitors have already established supplier or joint development relationships with the decision makers at our current or potential customers.
+Added: These competitors may be able to leverage their existing relationships to discourage their customers from purchasing products from us or persuade them to replace our products with their products.
+Added: Our competitors may also offer bundled solutions offering a more complete product despite the technical merits or advantages of our products.
+Added: These competitors may elect not to support our products which could complicate our sales efforts.
+Added: We also face increased competition as a result of China actively promoting its domestic semiconductor industry through policy changes and investment.
+Added: These actions, as well as China-U.S.
+Added: trade barriers, may restrict our participation in the China market or may prevent us from competing effectively with Chinese companies or companies from other countries that China favors over the United States.
+Added: Furthermore, our current or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition, which may include price concessions, delayed payment terms, financing terms, or other terms and conditions that are more enticing to potential customers.
+Added: These and other competitive pressures may prevent us from competing successfully against current or future competitors, and may materially harm our business.
+Added: Competition could decrease our prices, reduce our sales, lower our gross profit and/or decrease our market share.
Competition within the numerous markets we target may reduce sales of our products and reduce our market share
7 unchanged sentences
In addition, large companies may restructure their operations to create separate companies or may acquire new businesses that are focused on providing the types of products we produce or acquire our customers.
−Removed: We rely on third parties to manufacture, assemble and test our products and the failure to successfully manage our relationships with our manufacturers and subcontractors would negatively impact our ability to sell our products
−Removed: We do not have our own wafer fab manufacturing facilities.
−Removed: Therefore, we rely on third-party vendors to manufacture the products we design.
−Removed: We also currently rely on third-party assembly subcontractors in Asia to assemble and package the silicon chips provided by the wafers for use in final products.
−Removed: Additionally, we rely on these offshore subcontractors for a substantial portion of the testing requirements of our products prior to shipping.
−Removed: We expect utilization of third-party subcontractors to continue in the future.
−Removed: The cyclical nature of the semiconductor industry drives wide fluctuations in available capacity at third-party vendors.
−Removed: On occasion, we have been unable to adequately respond to unexpected increases in customer demand due to capacity constraints and, therefore, were unable to benefit from this incremental demand.
−Removed: We may be unable to obtain adequate foundry, assembly or test capacity from our third-party subcontractors to meet our customers’ delivery requirements even if we adequately forecast customer demand.
−Removed: For example, foundry, assembly and test capacity is currently limited due to a spike in semiconductor demand.
−Removed: As a result, we have recently experienced longer lead times at certain third-party foundry subcontractors.
−Removed: This is resulting in competing demand for capacity at our suppliers.
−Removed: Such conditions may adversely affect our revenue and increase our costs.
−Removed: There are significant risks associated with relying on these third-party foundries and subcontractors, including:
−Removed: ● Failure by us, our customers or their end customers to qualify a selected supplier;
−Removed: ● Potential insolvency of the third-party subcontractors;
−Removed: ● Reduced control over delivery schedules and quality;
−Removed: ● Limited warranties on wafers or products supplied to us;
−Removed: ● Potential increases in prices or payments in advance for capacity;
−Removed: ● Increased need for international-based supply, logistics and financial management;
−Removed: ● Disruption to our supply chain resulting from cyber-attacks on our suppliers’ information technology systems;
−Removed: ● Their inability to supply or support new or changing packaging technologies;
−Removed: ● Low test yields.
−Removed: We typically do not have long-term supply contracts with our third-party vendors which obligate the vendor to perform services and supply products to us for a specific period, in specific quantities, and at specific prices.
−Removed: Our third-party foundry, assembly and test subcontractors typically do not guarantee that adequate capacity will be available to us within the time required to meet demand for our products.
−Removed: In the event that these vendors fail to meet our demand for whatever reason, we expect that it would take up to 12 months to transition performance of these services to new providers.
−Removed: Such a transition may also require qualification of the new providers by our customers or their end customers.
−Removed: If our suppliers experience closures or reductions in their capacity utilization levels in the future, we may have difficulty sourcing materials necessary to fulfill production requirements.
−Removed: Public health crises, such as the COVID-19 pandemic, may affect our suppliers’ production capabilities as a result of quarantines, closures of production facilities, lack of supplies or delays caused by restrictions on travel.
−Removed: Most of the silicon wafers for the products that we have sold were manufactured either by Taiwan Semiconductor Manufacturing Co.
−Removed: (TSMC) or Semiconductor Manufacturing International Corporation (SMIC).
−Removed: Our customers typically complete their own qualification process.
−Removed: If we fail to properly balance customer demand across the existing semiconductor fabrication facilities that we utilize or are required by our foundry partners to increase, or otherwise change the number of fab lines that we utilize for our production, we might not be able to fulfill demand for our products and may need to divert our engineering resources away from new product development initiatives to support the fab line transition, which would adversely affect our operating results.
+Added: Our inability to manage growth could materially and adversely affect our business
+Added: Our past growth has placed, and any future growth of our operations will continue to place, a significant strain on our management personnel, systems and resources.
+Added: We anticipate that we will need to implement a variety of new and upgraded sales, operational and financial enterprise-wide systems, information technology infrastructure, procedures and controls, including the improvement of our accounting and other internal management systems to manage this growth and maintain compliance with regulatory guidelines, including Sarbanes-Oxley Act requirements.
+Added: To the extent our business grows, our internal management systems and processes will need to improve to ensure that we remain in compliance.
+Added: We also expect that we will need to continue to expand, train, manage and motivate our workforce.
+Added: All of these endeavors will require substantial management effort, and we anticipate that we will require additional management personnel and internal processes to manage these efforts and to plan for the succession from time to time of certain persons who have been key management and technical personnel.
+Added: If we are unable to effectively manage our expanding global operations, including our international headquarters in Singapore, our business could be materially and adversely affected.
+Added: We may be the victim of business disruptions and security breaches, including cyber-attacks, which could lead to liability or could damage our reputation and financial results
+Added: Information technology system and/or network disruptions, regardless of the cause, but including acts of sabotage, error, or other actions, could harm the company’s operations.
+Added: Failure to effectively prevent, detect, and recover from security breaches, including cyber-attacks, could result in the misuse of company assets, disruption to the company, diversion of management resources, regulatory inquiries, legal claims or proceedings, reputational damage, loss of sales and other costs to the company.
+Added: We routinely face attacks that attempt to breach our security protocols, gain access to or disrupt our computerized systems or steal proprietary company, customer, partner or employee information.
+Added: These attacks are sometimes successful.
+Added: These attacks may be due to security breaches, employee error, theft, malfeasance, phishing schemes, ransomware, faulty password or data security management, or other irregularities.
+Added: The theft, loss, destruction, unavailability or misuse of personal or business data collected, used, stored or transferred by us to run our business could result in increased security costs or costs related to defending legal claims.
+Added: Industrial espionage, theft or loss of our intellectual property data could lead to counterfeit products or harm the competitive position of our products and services.
+Added: Costs to implement, test and maintain measures to promote compliance with applicable privacy and data security laws as well as to protect the overall security of our system have been and are expected to continue to be significant.
+Added: Attempted or successful attacks against our products and services could damage our reputation with customers or users and reduce demand for our products and services.
+Added: Additionally, there is an increased risk that we may experience cybersecurity-related events such as COVID-19 themed phishing attacks and other security challenges as a result of most of our employees and our service providers working remotely from non-corporate managed networks during the ongoing COVID-19 pandemic and potentially continuing working remotely even after the COVID-19 pandemic has subsided.
+Added: In addition, the risk of cyber-attacks has increased in connection with the military conflict between Russia and Ukraine and the resulting geopolitical conflict.
+Added: In light of those and other geopolitical events, nation-state actors or their supporters may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both.
+Added: Nation-state actors have in the past carried out, and may in the future carry out, cyber-attacks to achieve their aims and goals, which may include espionage, information operations, monetary gain, ransomware, disruption, and destruction.
+Added: In 2022, the U.S.
+Added: Cybersecurity and Infrastructure Security Agency issued a “Shields Up” alert for American organizations noting the potential for Russia’s cyber-attacks on Ukrainian government and critical infrastructure organizations to impact organizations both within and beyond the United States, particularly in the wake of sanctions imposed by the United States and its allies.
+Added: These circumstances increase the likelihood of cyber-attacks and/or security breaches.
+Added: We may be subject to information technology failures that could damage our reputation, business operations and financial condition
+Added: We rely on information technology for the effective operation of our business.
+Added: Our systems are subject to damage or interruption from a number of potential sources, including natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, theft, physical or electronic break-ins, cyber-attacks, sabotage, vandalism, or similar events or disruptions.
+Added: Our security measures may not detect or prevent such security breaches.
+Added: Any such compromise of our information security could result in the theft or unauthorized publication or use of our confidential business or proprietary information, result in the unauthorized release of customer, supplier or employee data, result in a violation of privacy or other laws, expose us to a risk of litigation or damage our reputation.
+Added: In addition, our inability to use or access information systems at critical points in time could unfavorably impact the timely and efficient operation of our business, which could negatively affect our business and operating results.
+Added: Third parties with which we conduct business, such as foundries, assembly and test contractors, distributors and customers, have access to certain portions of our sensitive data.
+Added: In the event that these third parties do not properly safeguard our data that they hold, security breaches could result and negatively impact our reputation, business operations and financial results.
+Added: Additionally, a successful cyber-attack against one of these third-parties’ information technology systems may disrupt our supply chain.
We may not be able to maintain our historical growth and may experience significant period-to-period fluctuations in our revenues and operating results, which may result in volatility in our stock price
26 unchanged sentences
Due to the various factors mentioned above, the results of any prior quarterly or annual periods should not be relied upon as an indication of our future operating performance.
−Removed: We may be the victim of business disruptions and security breaches, including cyber-attacks, which could lead to liability or could damage our reputation and financial results
−Removed: Information technology system and/or network disruptions, regardless of the cause, but including acts of sabotage, error, or other actions, could harm the company’s operations.
−Removed: Failure to effectively prevent, detect, and recover from security breaches, including cyber-attacks, could result in the misuse of company assets, disruption to the company, diversion of management resources, regulatory inquiries, legal claims or proceedings, reputational damage, loss of sales and other costs to the company.
−Removed: We routinely face attacks that attempt to breach our security protocols, gain access to or disrupt our computerized systems or steal proprietary company, customer, partner or employee information.
−Removed: These attacks are sometimes successful.
−Removed: These attacks may be due to security breaches, employee error, theft, malfeasance, phishing schemes, ransomware, faulty password or data security management, or other irregularities.
−Removed: The theft, loss, destruction, unavailability or misuse of personal or business data collected, used, stored or transferred by us to run our business could result in increased security costs or costs related to defending legal claims.
−Removed: Industrial espionage, theft or loss of our intellectual property data could lead to counterfeit products or harm the competitive position of our products and services.
−Removed: Costs to implement, test and maintain measures to promote compliance with applicable privacy and data security laws as well as to protect the overall security of our system have been and are expected to continue to be significant.
−Removed: Attempted or successful attacks against our products and services could damage our reputation with customers or users and reduce demand for our products and services.
−Removed: Additionally, there is an increased risk that we may experience cybersecurity-related events such as COVID-19 themed phishing attacks and other security challenges as a result of most of our employees and our service providers working remotely from non-corporate managed networks during the ongoing COVID-19 pandemic and potentially continuing working remotely even after the COVID-19 pandemic has subsided.
−Removed: In addition, the risk of cyber-attacks has increased in connection with the military conflict between Russia and Ukraine and the resulting geopolitical conflict.
−Removed: In light of those and other geopolitical events, nation-state actors or their supporters may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both.
−Removed: Nation-state actors have in the past carried out, and may in the future carry out, cyber-attacks to achieve their aims and goals, which may include espionage, information operations, monetary gain, ransomware, disruption, and destruction.
−Removed: In February 2022, the U.S.
−Removed: Cybersecurity and Infrastructure Security Agency issued a “Shields Up” alert for American organizations noting the potential for Russia’s cyber-attacks on Ukrainian government and critical infrastructure organizations to impact organizations both within and beyond the United States, particularly in the wake of sanctions imposed by the United States and its allies.
−Removed: These circumstances increase the likelihood of cyber-attacks and/or security breaches.
+Added: Our research and development efforts are focused on a limited number of new technologies and products, and any delay in the development, or abandonment, of these technologies or products by industry participants, or their failure to achieve market acceptance, could compromise our competitive position
+Added: Our products serve as components and solutions in electronic devices in various markets.
+Added: As a result, we have devoted and expect to continue to devote a large amount of resources to develop products based on new and emerging technologies and standards that will be commercially introduced in the future.
+Added: Research and development expense during three months ended April 1, 2023 was $89.4 million, or 36.2% of revenues.
+Added: A number of companies are actively involved in the development of these new technologies and standards.
+Added: Should any of these companies delay or abandon their efforts to develop commercially available products based on new technologies and standards, our research and development efforts with respect to these technologies and standards likely would have no appreciable value.
+Added: In addition, if we do not correctly anticipate new technologies and standards, or if the products that we develop based on these new technologies and standards fail to achieve market acceptance, our competitors may be better able to address market demand than we would.
+Added: Furthermore, if markets for these new technologies and standards develop later than we anticipate, or do not develop at all, demand for our products that are currently in development would suffer, resulting in lower sales of these products than we currently anticipate.
We depend on our key personnel to manage our business effectively in a rapidly changing market, and if we are unable to retain our current personnel and hire additional personnel, our ability to develop and successfully market our products could be harmed
52 unchanged sentences
The future growth of our business will depend in large part on our ability to manage our relationships with current and future distributors and sales representatives, develop additional channels for the distribution and sale of our products and manage these relationships.
−Removed: During the nine months ended October 1, 2022, 81% of our revenue was derived from distributors (and 49% of our revenue was derived from our two largest distributors).
+Added: During three months ended April 1, 2023, 83% of our revenue was derived from distributors (and 53% of our revenue was derived from our two largest distributors).
As we execute our indirect sales strategy, we must manage the potential conflicts that may arise with our direct sales efforts.
20 unchanged sentences
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.
−Removed: The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, severity and spread of the pandemic, related restrictions on travel and transportation and other actions that may be taken by governmental authorities, the impact to the business of our suppliers or customers and other items identified in the risk factors below, all of which are uncertain and cannot be predicted.
+Added: The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, severity and spread of the pandemic, related restrictions on travel and transportation and other actions that may be taken by governmental authorities, the impact to the business of our suppliers or customers and other items identified in our risk factors, all of which are uncertain and cannot be predicted.
The impacts of the COVID-19 pandemic, or a similar public health crisis, on our business, customers, suppliers, employees, markets and financial results and condition are uncertain, evolving and dependent on numerous unpredictable factors outside of our control, including:
26 unchanged sentences
There can be no assurance that any insurance we maintain will sufficiently protect us from such claims.
−Removed: We may be subject to information technology failures that could damage our reputation, business operations and financial condition
−Removed: We rely on information technology for the effective operation of our business.
−Removed: Our systems are subject to damage or interruption from a number of potential sources, including natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, theft, physical or electronic break-ins, cyber-attacks, sabotage, vandalism, or similar events or disruptions.
−Removed: Our security measures may not detect or prevent such security breaches.
−Removed: Any such compromise of our information security could result in the theft or unauthorized publication or use of our confidential business or proprietary information, result in the unauthorized release of customer, supplier or employee data, result in a violation of privacy or other laws, expose us to a risk of litigation or damage our reputation.
−Removed: In addition, our inability to use or access information systems at critical points in time could unfavorably impact the timely and efficient operation of our business, which could negatively affect our business and operating results.
−Removed: Third parties with which we conduct business, such as foundries, assembly and test contractors, distributors and customers, have access to certain portions of our sensitive data.
−Removed: In the event that these third parties do not properly safeguard our data that they hold, security breaches could result and negatively impact our reputation, business operations and financial results.
−Removed: Additionally, a successful cyber-attack against one of these third-parties’ information technology systems may disrupt our supply chain.
Our customers require our products to undergo a lengthy and expensive qualification process without any assurance of product sales
6 unchanged sentences
If we are unsuccessful or delayed in qualifying any of our products with a customer, such failure or delay would preclude or delay sales of such product to the customer, which may impede our growth and cause our business to suffer.
−Removed: Our inability to manage growth could materially and adversely affect our business
−Removed: Our past growth has placed, and any future growth of our operations will continue to place, a significant strain on our management personnel, systems and resources.
−Removed: We anticipate that we will need to implement a variety of new and upgraded sales, operational and financial enterprise-wide systems, information technology infrastructure, procedures and controls, including the improvement of our accounting and other internal management systems to manage this growth and maintain compliance with regulatory guidelines, including Sarbanes-Oxley Act requirements.
−Removed: To the extent our business grows, our internal management systems and processes will need to improve to ensure that we remain in compliance.
−Removed: We also expect that we will need to continue to expand, train, manage and motivate our workforce.
−Removed: All of these endeavors will require substantial management effort, and we anticipate that we will require additional management personnel and internal processes to manage these efforts and to plan for the succession from time to time of certain persons who have been key management and technical personnel.
−Removed: If we are unable to effectively manage our expanding global operations, including our international headquarters in Singapore, our business could be materially and adversely affected.
We are subject to risks relating to product concentration
24 unchanged sentences
● Disposition-related disputes, including disputes over earn-outs and escrows.
−Removed: Most of our current manufacturers, assemblers, test service providers, distributors and customers are concentrated in the same geographic region, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could disrupt our operations or sales
−Removed: Most of our foundries and several of our assembly and test subcontractors’ sites are located in Taiwan and most of our other foundry, assembly and test subcontractors are located in the Pacific Rim region.
−Removed: In addition, many of our customers are located in the Pacific Rim region.
−Removed: The risk of earthquakes in Taiwan and the Pacific Rim region is significant due to the proximity of major earthquake fault lines in the area.
−Removed: Earthquakes, tsunamis, fire, flooding, lack of water or other natural disasters, an epidemic such as the current COVID-19 outbreak, political unrest, war, labor strikes or work stoppages in countries where our semiconductor manufacturers, assemblers and test subcontractors are located, likely would result in the disruption of our foundry, assembly or test capacity.
−Removed: There can be no assurance that alternate capacity could be obtained on favorable terms, if at all.
−Removed: A natural disaster, epidemic, labor strike, war or political unrest where our customers’ facilities are located would likely reduce our sales to such customers.
−Removed: In addition, a significant portion of the assembly and testing of our products occurs in South Korea.
−Removed: Any disruption resulting from these events, including the COVID-19 pandemic, could also cause significant delays in shipments of our products until we are able to shift our manufacturing, assembling or testing from the affected subcontractor to another third-party vendor.
−Removed: If the COVID-19 pandemic significantly disrupts the manufacture, shipment and sales of our products or the products of our customers, this may materially negatively impact our operating results for subsequent periods.
−Removed: For example, if travel restrictions or business shutdowns or slowdowns occur for an extended period of time in Taiwan, South Korea or the other countries in which our current manufacturers, assemblers, test service providers, distributors and customers are located, we may experience delays in product production, a decreased ability to support our customers, reduced design win activity, and overall lack of productivity.
−Removed: Our customers may also experience closures of their manufacturing facilities or inability to obtain other components, either of which could negatively impact demand for our solutions.
The semiconductor manufacturing process is highly complex and, from time to time, manufacturing yields may fall below our expectations, which could result in our inability to satisfy demand for our products in a timely manner and may decrease our gross profit due to higher unit costs
9 unchanged sentences
These customers may find it advantageous to support their own offerings in the marketplace in lieu of promoting our products.
−Removed: We have limited resources compared to some of our current and potential competitors and we may not be able to compete effectively and increase market share
−Removed: Some of our current and potential competitors have longer operating histories, significantly greater resources and name recognition and a larger base of customers than we have.
−Removed: As a result, these competitors may have greater credibility with our existing and potential customers.
−Removed: They also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion and sale of their products than we can to ours.
−Removed: In addition, some of our current and potential competitors have already established supplier or joint development relationships with the decision makers at our current or potential customers.
−Removed: These competitors may be able to leverage their existing relationships to discourage their customers from purchasing products from us or persuade them to replace our products with their products.
−Removed: Our competitors may also offer bundled solutions offering a more complete product despite the technical merits or advantages of our products.
−Removed: These competitors may elect not to support our products which could complicate our sales efforts.
−Removed: We also face increased competition as a result of China actively promoting its domestic semiconductor industry through policy changes and investment.
−Removed: These actions, as well as China-U.S.
−Removed: trade barriers, may restrict our participation in the China market or may prevent us from competing effectively with Chinese companies or companies from other countries that China favors over the United States.
−Removed: Furthermore, our current or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition, which may include price concessions, delayed payment terms, financing terms, or other terms and conditions that are more enticing to potential customers.
−Removed: These and other competitive pressures may prevent us from competing successfully against current or future competitors, and may materially harm our business.
−Removed: Competition could decrease our prices, reduce our sales, lower our gross profit and/or decrease our market share.
Changes in the privacy and data security/protection laws could have an adverse effect on our operations
1 unchanged sentence
Complying with these laws and the possibility of proceedings against us by governmental entities or others in relation to these laws could increase operational costs.
−Removed: In May 2018, the European Union’s General Data Protection Regulation (“GDPR”) went into effect, replacing the EU’s 1995 Data Protection Directive.
+Added: In 2018, the European Union’s General Data Protection Regulation (“GDPR”) went into effect, replacing the EU’s 1995 Data Protection Directive.
The costs of compliance with the GDPR and the potential for fines and penalties in the event of a breach of the GDPR may have an adverse effect on our operations.
51 unchanged sentences
Liquidity and Credit Risks
+Added: Disruptions in the financial services industry could adversely affect our operations and financial condition
+Added: In March 2023, banking regulators closed two U.S.
+Added: banks and appointed the Federal Deposit Insurance Corporation (“FDIC”) to act as receiver.
+Added: Although we have no direct exposure to the closed banks, uncertainty remains over the broader financial services industry.
+Added: If other financial institutions enter receivership or become insolvent in the future, our ability to access our cash and investments or to draw on our existing lines of credit could be impacted.
+Added: Concerns regarding the financial services industry may result in less favorable financing terms, including higher interest rates, tighter financial covenants or systemic limitations on access to credit sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
+Added: In addition, inflation and rapid increases in interest rates have led to a decline in the market value of debt securities issued with interest rates below current market interest rates.
+Added: Sales of such securities prior to their maturity would result in the recognition of losses previously unrealized.
We are subject to credit risks related to our accounts receivable
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On January 2, 2022, we irrevocably elected cash settlement for the principal amount of the 2025 Notes.
+Added: On March 22, 2023, we issued a notice of redemption for the 2025 Notes.
+Added: The redemption will occur on June 20, 2023 for any of the 2025 Notes outstanding that have not been previously converted.
If we do not have adequate cash available to settle the principal amount of the 2025 Notes, we could seek to raise additional funds through debt or equity capital.
However, additional funds may not be available on terms acceptable to us, or at all.
−Removed: We intend to settle any excess value in shares in the event of a conversion.
+Added: We intend to settle any excess value in shares in the event of a conversion or redemption.
Shares issued to settle any excess value may result in immediate, and potentially material, dilution to the ownership interests of our existing stockholders.
Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
−Removed: The principal balance of the convertible senior notes was separated into liability and equity components, which were recorded initially at fair value.
−Removed: The excess of the principal amount of the liability component over its carrying amount represents the debt discount, which was accreted to interest expense over the term of the notes using the effective interest method.
−Removed: Accordingly, we have reported higher interest expense because of the recognition of both the debt discount amortization and the notes’ coupon interest.
−Removed: With our adoption of ASU 2020-06 in fiscal 2022, the principal balance of the 2025 Notes is no longer separated between liability and equity components.
−Removed: This resulted in an increase to the carrying value of our convertible debt, representing the unamortized debt discount, with an offsetting reduction in stockholders’ equity.
Our debt could adversely affect our operations and financial condition
39 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.