Global Business Risks
−Removed: We rely on third parties to manufacture, assemble and test our products, which subjects us to risks of disruptions in our supply chain
−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: ● Disruption to our suppliers’ operations due to geopolitical changes, including risks related to deteriorating relations between China and Taiwan;
−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.
−Removed: In addition, geopolitical changes in China-Taiwan relations could disrupt TSMC’s operations and impact our third-party assembly subcontractors in Asia.
−Removed: 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
13 unchanged sentences
This downturn has negatively affected, and may continue to have an adverse effect, on our business and operating results.
−Removed: In addition, the COVID-19 pandemic has caused further global economic uncertainty.
−Removed: Any future impacts due to COVID-19,including a resurgence of infection rates or the spread of new variants or viruses is uncertain, and could include disrupting the business of our customers and suppliers, which 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, supply disruption, political instability and currency fluctuations
−Removed: We have established international subsidiaries and have opened offices in international markets to support our activities in Asia, the Americas and Europe.
−Removed: This has included the establishment of a headquarters in Singapore for non-U.S.
−Removed: During nine months ended September 30, 2023, the percentage of our revenues derived from outside of the United States was 87% (and the revenue associated with end customers in China was 11%, and revenue attributed to China based on shipped-to location was 28%).
−Removed: We may not be able to maintain or increase global market demand for our products.
−Removed: Our international operations are subject to a number of risks, including:
−Removed: ● Complexity and costs of managing international operations and related tax obligations, including our headquarters for non-U.S.
−Removed: operations in Singapore;
−Removed: ● Protectionist laws and business practices, including trade restrictions, tariffs, export controls, quotas and other trade barriers, including China-U.S.
−Removed: trade policies;
−Removed: ● Trade tensions, geopolitical uncertainty, or governmental actions, including those arising from the trade dispute between the U.S.
−Removed: 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;
−Removed: ● 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;
−Removed: ● 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;
−Removed: ● Difficulties related to the protection of our intellectual property rights in some countries;
−Removed: ● 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
−Removed: 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 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;
−Removed: ● Longer sales cycles;
−Removed: ● Greater difficulty in accounts receivable collection and longer collection periods;
−Removed: ● High levels of distributor inventory subject to price protection and rights of return to us;
−Removed: ● Political and economic instability;
−Removed: ● Risks that demand and the supply chain may be adversely affected by military conflict (including the recent events in the Middle East and the ongoing conflict between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally;
−Removed: ● Greater difficulty in hiring and retaining qualified personnel;
−Removed: ● The need to have business and operations systems that can meet the needs of our international business and operating structure.
−Removed: To date, substantially all of our sales to international customers and purchases of components from international suppliers have been denominated in U.S.
−Removed: As a result, an increase in the value of the U.S.
−Removed: dollar relative to foreign currencies could make our products more expensive for our international customers to purchase, thus rendering our products less competitive.
−Removed: Similarly, a decrease in the value of the U.S.
−Removed: dollar could reduce our buying power with respect to international suppliers.
−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 such an event significantly disrupts the manufacture, shipment and sales of our products or the products of our customers, this may materially negatively impact our operating results.
−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.
−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
−Removed: 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.
Competition within the numerous markets we target may reduce sales of our products and reduce our market share
1 unchanged sentence
We expect that the market for our products will continually evolve and will be subject to rapid technological change.
+Added: For example, new products and disruptive technologies are being developed, and companies with which we compete have implemented artificial intelligence strategies for products and service offerings.
+Added: This rapid pace of technological change can create opportunities for our competitors and harm our competitiveness in the market if our products do not evolve or
+Added: we are unable to effectively keep up with such changes.
In addition, as we target and supply products to numerous markets and applications, we face competition from a relatively large number of competitors.
4 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: 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 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
7 unchanged sentences
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: While we have dedicated resources to privacy and security incident response capabilities, our response process may not be adequate, may fail to accurately assess the severity of an incident, may not be fast enough to prevent or limit harm, or may fail to sufficiently remediate an incident.
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 phishing attacks and other security challenges as a result of new hybrid working arrangements and employees and our service providers working remotely.
−Removed: In addition, the risk of cyber-attacks has increased in connection with the conflict between Russia and Ukraine and in the Middle East.
+Added: Additionally, there is an increased risk that we may experience cybersecurity-related events such as phishing attacks and other security challenges as a result of hybrid working arrangements and employees and our service providers working remotely.
+Added: In addition, the risk of cyber-attacks has increased in connection with the conflicts between Russia and Ukraine and in the Middle East.
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.
8 unchanged sentences
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.
+Added: 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.
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.
1 unchanged sentence
Additionally, a successful cyber-attack against one of these third-parties’ information technology systems may disrupt our supply chain.
+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.
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
25 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.
+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.
+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 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, 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 such an event significantly disrupts the manufacture, shipment and sales of our products or the products of our customers, this may materially negatively impact our operating results.
+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 are a global company, which subjects us to additional business risks including logistical and financial complexity, supply disruption, political instability and currency fluctuations
+Added: We have established international subsidiaries and have opened offices in international markets to support our activities in Asia, the Americas and Europe.
+Added: This has included the establishment of a headquarters in Singapore for non-U.S.
+Added: During the three months ended March 30, 2024, the percentage of our revenues derived from outside of the United States was 95% (and the revenue associated with end customers in China was 16%, and revenue attributed to China based on shipped-to location was 27%).
+Added: We may not be able to maintain or increase global market demand for our products.
+Added: Our international operations are subject to a number of risks, including:
+Added: • Complexity and costs of managing international operations and related tax obligations, including our headquarters for non-U.S.
+Added: operations in Singapore;
+Added: • Protectionist laws and business practices, including trade restrictions, tariffs, export controls, quotas and other trade barriers, including China-U.S.
+Added: trade policies;
+Added: • Trade tensions, geopolitical uncertainty, or governmental actions, including those arising from the trade dispute between the U.S.
+Added: and China, may lead customers to favor products from non-US companies which could put us at
+Added: 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;
+Added: • 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;
+Added: • Difficulties related to the protection of our intellectual property rights in some countries;
+Added: • Public health crises 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;
+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;
+Added: • Longer sales cycles;
+Added: • Greater difficulty in accounts receivable collection and longer collection periods;
+Added: • High levels of distributor inventory subject to price protection and rights of return to us;
+Added: • Political and economic instability;
+Added: • Risks that demand and the supply chain may be adversely affected by military conflict (including the ongoing conflicts in the Middle East and between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally;
+Added: • Greater difficulty in hiring and retaining qualified personnel;
+Added: • The need to have business and operations systems that can meet the needs of our international business and operating structure.
+Added: To date, substantially all of our sales to international customers and purchases of components from international suppliers have been denominated in U.S.
+Added: As a result, an increase in the value of the U.S.
+Added: dollar relative to foreign currencies could make our products more expensive for our international customers to purchase, thus rendering our products less competitive.
+Added: Similarly, a decrease in the value of the U.S.
+Added: dollar could reduce our buying power with respect to international suppliers.
+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.
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
1 unchanged sentence
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 nine months ended September 30, 2023 was $254.3 million, or 36.6% of revenues.
+Added: Research and development expense during the three months ended March 30, 2024 was $80.7 million, or 75.8% of revenues.
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.
+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
+Added: with respect to these technologies and standards likely would have no appreciable value.
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.
30 unchanged sentences
Any acquisitions we make could disrupt our business and harm our financial condition
−Removed: As part of our growth and product diversification strategy, we continue to evaluate opportunities to acquire other businesses, intellectual property or technologies that would complement our current offerings, expand the breadth of our markets or enhance our technical capabilities.
+Added: As part of our growth and product diversification strategy, we continue to evaluate opportunities to acquire other businesses, intellectual property or technologies that would complement our current offerings, expand the breadth of our
+Added: markets or enhance our technical capabilities.
The acquisitions that we have made and may make in the future entail a number of risks that could materially and adversely affect our business and operating results, including:
10 unchanged sentences
• Potential impairment of related goodwill and intangible assets.
−Removed: In particular, the extent of the impact of the COVID-19 pandemic on our ability to complete and integrate any future acquisition into our business is unpredictable and 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.
Future acquisitions also could cause us to incur debt or contingent liabilities or cause us to issue equity securities that could negatively impact the ownership percentages of existing shareholders.
7 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 nine months ended September 30, 2023, 80% of our revenue was derived from distributors (and 52% of our revenue was derived from our two largest distributors).
+Added: During the three months ended March 30, 2024, 66% of our revenue was derived from distributors (and 43% 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.
18 unchanged sentences
A resulting write-off of unusable or excess inventories would adversely affect our operating results.
−Removed: The COVID-19 pandemic could adversely affect our business, results of operations, and financial condition
−Removed: 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 our risk factors, all of which are uncertain and cannot be predicted.
−Removed: 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:
+Added: Public health crises could adversely affect our business, results of operations, and financial condition
+Added: The COVID-19 pandemic negatively impacted the global economy, disrupted our operations, global supply chains and the operations of our customers.
+Added: The impacts of any future public health crises on our business, customers, suppliers, employees, markets and financial results and condition are uncertain and dependent on numerous unpredictable factors outside of our control, including:
• The duration and impact of a global economic recession or depression that could reduce demand and/or pricing for our products;
8 unchanged sentences
• Investment-related risks, including difficulties in liquidating investments due to current market conditions and adverse investment performance.
−Removed: There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic or a similar public health crisis will be offset by increased sales in subsequent periods.
−Removed: Even after the COVID-19 pandemic or a similar public health crisis has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession, economic downturn or increased unemployment that has occurred or may occur in the future.
+Added: There can be no assurance that any decrease in sales resulting any public health crisis will be offset by increased sales in subsequent periods.
+Added: Even after any public health crisis has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession, economic downturn or increased unemployment that has occurred or may occur in the future.
An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition.
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For example, the IoT market is relatively new and is continuously evolving.
−Removed: Furthermore, products in the IoT market frequently require interoperability across multiple standards.
+Added: Furthermore, products in the IoT market frequently require
+Added: interoperability across multiple standards.
We may need to adjust our portfolio to meet the needs of this evolving market through acquisitions or significant new investments in research and development.
2 unchanged sentences
If our products fail to achieve market acceptance, our growth prospects, operating results and competitive position could be adversely affected.
+Added: We have identified a material weakness in our internal control over financial reporting and if we are unable to implement and maintain effective internal control over financial reporting, or our independent registered public accounting firm is unable to provide an unqualified report thereon, we could be materially adversely effected
+Added: As more fully disclosed in Item 9A.
+Added: Controls and Procedures in our Annual Report on Form 10-K for the year ended December 30, 2023 filed with the SEC on February 20, 2024, we have identified a material weakness that existed as of the end of our fiscal 2023 regarding our internal controls over inventory valuation, primarily the undue reliance on forecasted inventory demand which was not subjected to a sufficient level of management review.
+Added: As a result of this material weakness, management concluded that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 30, 2023.
+Added: Unless and until this material weakness has been remediated, or should new material weaknesses arise or be discovered in the future, material misstatements could occur and go undetected in our interim or annual consolidated financial statements and we may be required to restate our financial statements.
+Added: In addition, we may experience delays in satisfying our reporting obligations or to comply with SEC rules and regulations, which could result in investigations and sanctions by regulatory authorities.
+Added: Any of these results could adversely affect our business and the value of our common stock.
Intellectual Property Risks
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Our debt could adversely affect our operations and financial condition
−Removed: We believe we have the ability to service our debt, but our ability to make the required payments thereunder when due depends upon our future performance, which will be subject to general economic conditions, industry cycles and other factors affecting our operations, including risk factors described herein, such as the potential implications of the COVID-19 pandemic, many of which are beyond our control.
+Added: We believe we have the ability to service our debt, but our ability to make the required payments thereunder when due depends upon our future performance, which will be subject to general economic conditions, industry cycles and other factors affecting our operations, including risk factors described herein, many of which are beyond our control.
Our credit facility also contains covenants, including financial covenants.
1 unchanged sentence
We could seek to raise additional debt or equity capital in the future, but additional capital may not be available on terms acceptable to us, or at all
−Removed: We believe that our existing cash, cash equivalents, investments and credit under our credit facility will be sufficient to meet our working capital needs, capital expenditures, investment requirements and commitments for at least the next 12 months.
+Added: We believe that our existing cash, cash equivalents, and investments will be sufficient to meet our working capital needs, capital expenditures, investment requirements and commitments for at least the next 12 months.
However, our ability to borrow further under the credit facility is dependent upon our ability to satisfy various conditions, covenants and representations.
2 unchanged sentences
In addition, even though we may not need additional funds, we may still elect to sell additional equity or debt securities or obtain credit facilities for other reasons.
−Removed: However, we may not be able to obtain additional funds on favorable terms, or at all, particularly during financial market instability related to the COVID-19 pandemic.
+Added: However, we may not be able to obtain additional funds on favorable terms, or at all, particularly during periods of financial market instability.
If we decide to raise additional funds by issuing equity or convertible debt securities, the ownership percentages of existing shareholders would be reduced.
28 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.