What changed in this filing

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Item 1A. Risk Factors

2024-07-24 compared with 2024-04-24 · 22 added, 24 removed, 433 unchanged (10% of the section changed)

19 unchanged sentences

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.

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

we are unable to effectively keep up with such changes.

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 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.

3 unchanged sentences

These companies may enter the mixed-signal semiconductor market by introducing their own products or by entering into strategic relationships with or acquiring other existing providers of semiconductor products.

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.

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.

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

21 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.

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.

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.

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.

75 unchanged sentences

Our customers typically complete their own qualification process.

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.

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.

In addition, geopolitical changes in China-Taiwan relations could disrupt TSMC’s operations and impact our third-party assembly subcontractors in Asia.

15 unchanged sentences

This has included the establishment of a headquarters in Singapore for non-U.S.

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%).

During the six months ended June 29, 2024, the percentage of our revenues derived from outside of the United States was 94% (and the revenue associated with end customers in China was 15%, and revenue attributed to China based on shipped-to location was 30%).

We may not be able to maintain or increase global market demand for our products.

5 unchanged sentences

• Trade tensions, geopolitical uncertainty, or governmental actions, including those arising from the trade dispute between the U.S.

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;

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;

• 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;

25 unchanged sentences

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.

Research and development expense during the three months ended March 30, 2024 was $80.7 million, or 75.8% of revenues.

Research and development expense during the six months ended June 29, 2024 was $85.9 million, or 59.1% of revenues.

A number of companies are actively involved in the development of these new technologies and standards.

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.

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.

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

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.

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:

19 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.

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).

During the six months ended June 29, 2024, 68% of our revenue was derived from distributors (and 44% 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.

13 unchanged sentences

In order to ensure availability of our products for some of our largest customers, we start the manufacturing of our products in advance of receiving purchase orders based on forecasts provided by these customers.

However, these forecasts do not represent binding purchase commitments and we do not recognize sales for these products until they are shipped to the customer.

However, these forecasts do not represent binding purchase commitments and we do not recognize sales for these products until they are shipped to

the customer.

As a result, we incur inventory and manufacturing costs in advance of anticipated sales.

15 unchanged sentences

• Investment-related risks, including difficulties in liquidating investments due to current market conditions and adverse investment performance.

There can be no assurance that any decrease in sales resulting any public health crisis will be offset by increased sales in subsequent periods.

There can be no assurance that any decrease in sales resulting from any public health crisis will be offset by increased sales in subsequent periods.

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.

24 unchanged sentences

We derive a substantial portion of our revenues from a limited number of products, and we expect these products to continue to account for a large percentage of our revenues in the near term.

Continued market acceptance of these products, is therefore, critical to our future success.

Continued market acceptance of these products is critical to our future success.

In addition, substantially all of our products that we have sold include technology related to one or more of our issued U.S.

50 unchanged sentences

For example, the IoT market is relatively new and is continuously evolving.

Furthermore, products in the IoT market frequently require

interoperability across multiple standards.

Furthermore, products in the IoT market frequently require 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.

32 unchanged sentences

Despite these efforts, unauthorized parties may attempt to copy or otherwise obtain and use our proprietary technology.

Monitoring unauthorized use of our technology is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

United States.

We cannot be certain that patents will be issued as a result of our pending applications nor can we be certain that any issued patents would protect or benefit us or give us adequate protection from competing products.

26 unchanged sentences

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

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.

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.

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.

However, we may not be able to obtain additional funds on favorable terms, or at all, particularly during periods of financial market instability.

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.

13 unchanged sentences

• Departures of key personnel.

• The required expensing of stock awards;

• Reporting revenue under ASC Topic 606, Revenue from Contracts with Customers .

The stock market has experienced extreme volatility that often has been unrelated to the performance of particular companies.

11 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.

What changed 10-Q

Item 1A. Risk Factors