What changed in this filing

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Item 1A. Risk Factors

2021-11-24 compared with 2020-11-17 · 153 added, 96 removed, 346 unchanged (42% of the section changed)

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Additional risks not currently known to us or other factors not perceived by us as material risks could also present significant risks to our business.

Risks associated with operating a global business in many international jurisdictions

The effects of the global COVID-19 pandemic are adversely affecting our business operations.

The ongoing global COVID-19 pandemic—including both the resulting public health crisis as well as the measures being taken by governments, businesses, and individuals in an effort to limit COVID-19’s spread—has adversely affected, and continues to adversely affect, our business operations.

The impacts of the COVID-19 pandemic on our business operations and workforce, and the duration of such impacts, are uncertain, constantly evolving, and difficult to quantify, but have thus far included, or in the future may include, the following:

• We have experienced large fluctuations in the demand for our products, including a significant decrease in overall demand in the initial stages of the pandemic followed more recently by substantial increases in demand for certain of our products.

We may experience continued large fluctuations in demand or a reduction in the pricing of our products, either of which could be exacerbated by a continued or deepening global economic downturn or recession caused by the ongoing COVID-19 pandemic.

• In April 2020, we suspended our operations in Mexicali, Mexico, for approximately two weeks pursuant to an order by the government of the state of Baja California, Mexico, resulting in the temporary reduction in our production levels.

In the event that our manufacturing operations in Mexicali become subject to significant restrictions or are suspended again, or in the event that one or more of our other facilities is forced to suspend or limit its activities, including, but not limited to, as a result of such operations or activities not being considered to be an “essential” business under applicable laws, regulations, or orders (including “shelter at home” orders or other quarantine-related orders), we may experience further reductions in production levels, which would limit our ability to meet customer demand and impact our operating results.

• We have implemented certain measures at our facilities worldwide in an effort to protect our employees’ health and well-being (including social distancing, allowing many employees to work remotely, limiting the number of employees attending meetings, screening employees and visitors when entering facilities, educating employees about the virus and preventative measures, enhancing cleaning protocols, and suspending employee travel), some of which have reduced the overall efficiency of our operations and increased manufacturing costs.

The expected duration of such protective measures remains uncertain, and we may be required to implement additional measures in the future, further impacting our business operations.

Risks associated with operating a global business

The effects of the global COVID-19 pandemic continue to adversely affect our business operations.

The global COVID-19 pandemic—including the public health crisis, the measures taken by governments, businesses, and individuals in an effort to limit COVID-19’s spread, and the resulting global supply chain challenges—has adversely affected, and continues to adversely affect, our business operations.

The impacts on our business operations and workforce of the pandemic, including as a result of more contagious variants of the virus that causes COVID-19, and the duration of such impacts, are uncertain, constantly evolving, and difficult to quantify, but have thus far included, or in the future may include, the following:

• We have experienced, and may continue to experience, disruptions to our supply chain and increased costs in connection with the sourcing of materials, components, equipment, assembly and test services, engineering support, shipping and logistics services, and other services, caused in part by the pandemic.

To the extent we are unable to pass these costs on to our customers, we experience reduced profitability.

Given that our customers and suppliers are facing similar supply chain challenges, we expect continued difficulty in forecasting demand and supply needs for the foreseeable future.

As a result of these uncertainties, we have increased, and may continue to increase, our inventory levels and purchase commitments.

• We have recently experienced, and expect to continue experiencing, reduced demand for certain of our products as a result of certain customers’ difficulty to obtain materials, components, and services due to disruptions in such customers’ supply chains.

We may experience large fluctuations in demand for certain of our products, which could be exacerbated by global supply chain challenges or by a continued or deepening global economic downturn or recession caused by the pandemic.

In the event that our manufacturing operations in Mexicali become subject to significant restrictions or are suspended again, or in the event that one or more of our other facilities is forced to suspend or limit its activities, including, but not limited to, as a result of such operations or activities not being considered to be an “essential” business under applicable laws, regulations, or orders (including “shelter at home” orders or other quarantine-related orders), we may again experience reductions in production levels, which would limit our ability to meet customer demand and impact our operating results.

• Over the course of the pandemic, we have implemented certain measures at our facilities worldwide in an effort to protect our employees’ health and well-being (including social distancing, allowing many employees to work remotely, limiting the number of employees attending meetings, screening employees and visitors when entering facilities, educating employees about the virus and preventative measures, enhancing cleaning protocols, and suspending employee travel), some of which have reduced the overall efficiency of our operations and increased manufacturing costs.

The expected duration of such protective measures, many of which were still in place as of the end of fiscal 2021, remains uncertain, and we may be required to implement additional measures in the future, further impacting our business operations.

In addition, we recently required COVID-19 vaccination of all U.S.-based employees as a condition of employment, subject to certain exemptions, and we may announce additional vaccine mandates in other jurisdictions in the future.

Our implementation of these requirements may result in employee attrition, reduced employee morale, and difficulty securing future labor needs.

• We have experienced, and may continue to experience, reduced production capacity as a result of employee quarantines, absenteeism, and attrition, as well as restrictions on certain of our employees’ ability to work.

Additionally, we may experience negative impacts to our sales, marketing, research and development, and other critical business functions for similar reasons.

• Given the difficulty of forecasting demand and supply needs, and given that our suppliers are facing similar challenges as a result of the pandemic, we have experienced, and may continue to experience, disruptions to our supply chain in connection with the sourcing of materials, components, equipment, assembly and test services, engineering support, and other services.

• We have experienced, and may continue to experience, disruptions to global transportation networks, limiting or delaying our ability, and/or increasing our cost, to send or receive products and materials at one or more of our facilities, including as a result of trade restrictions, border closures, or disruptions in the operations of third-party carriers.

• We have experienced, and likely will continue to experience, disruptions to global transportation networks, limiting or delaying our ability, and/or increasing our cost, to send or receive products and materials at one or more of our facilities, including as a result of trade restrictions, border closures, disruptions in the operations of third-party carriers, or carriers’ decisions to prioritize other customers’ orders over ours.

• Significant portions of our sales are concentrated among a limited number of customers.

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These effects, alone or taken together, could have a material adverse effect on our business, results of operations, customer and supplier relations, employee relations, cash flows, and financial condition.

The resumption of normal business operations after any such interruptions may be delayed or constrained by lingering effects of COVID-19 on our customers, suppliers, and other third-party service providers.

There can be no assurance that any decrease in sales resulting from COVID-19 will be offset by increased sales in subsequent periods.

The degree to which COVID-19 impacts us will depend on future developments that are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain COVID-19 or treat its impact, the timing and magnitude of the U.S.

The resumption of normal business operations after any such interruptions may be delayed or constrained by lingering effects of the pandemic on our customers, suppliers, and other third-party service providers.

There can be no assurance that any decrease in sales resulting from the pandemic will be offset by increased sales in subsequent periods.

The degree to which the pandemic continues to impact us will depend on future developments that are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain COVID-19 or treat its impact, the timing and magnitude of the U.S.

government’s economic stimulus efforts, and how quickly and to what extent normal economic and operating conditions resume.

Even after the COVID-19 pandemic has subsided as a public health matter, we may experience material adverse impacts to our business as a result of its adverse impact on the global economy.

Even after the pandemic has subsided as a public health matter, we may experience material adverse impacts to our business as a result of its adverse impact on the global economy.

The risks of doing business internationally apply to all aspects of our operations.

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We have suppliers located outside the United States, and third-party packaging, assembly, and test facilities and foundries located in the Asia-Pacific region.

We also operate our own wafer fabrication facilities in Kadoma, Japan, and Osaka, Japan, as well as packaging, assembly, and test facilities in Mexicali, Mexico, and in Singapore (with a substantial majority of our finished products being assembled and tested in our Mexicali facility).

Our international sales and operations are subject to a number of risks inherent in selling and operating abroad.

We also operate our own wafer fabrication facilities in Kadoma, Japan, and Osaka, Japan, as well as packaging, assembly, and test facilities in Singapore and in Mexicali, Mexico (with a substantial majority of our finished products being assembled and tested in our Mexicali facility).

Our international sales and operations are subject to a number of risks inherent in selling and operating in multiple jurisdictions.

These include, but are not limited to, risks regarding:

• currency exchange rate fluctuations, including increases or decreases in commodities prices related to such fluctuations,

• currency controls and currency exchange rate fluctuations, including increases or decreases in commodities prices related to such fluctuations,

• inflation, as well as changes in existing and expected rates of inflation, which may vary across the jurisdictions in which we do business,

• local economic and political conditions, including, but not limited to, social, economic, and political instability related to the uncertainty regarding the relationships between the United States and China, Russia, Mexico, North Korea, Middle Eastern countries, other foreign countries, and the international community at large, and related to the United Kingdom’s withdrawal from the European Union,

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• disruptions of capital and trading markets,

• inability to collect accounts receivable,

• difficulty in collecting, or failure to collect, accounts receivable, as well as longer collection periods,

• changes in, or non-compliance with, legal or regulatory import/export requirements, including restrictions on selling to certain customers or into certain jurisdictions,

• natural disasters, acts of terrorism, widespread illness or other deterioration of public health conditions, and war,

• natural disasters and severe weather events, including, but not limited to, earthquakes, wildfires, droughts, hurricanes, tsunamis, rising sea levels, as well as other impacts of climate change,

• acts of terrorism, widespread illness or other deterioration of public health conditions, and war,

• misappropriation or other unauthorized transfers of our electronic information and breaches of our information systems, as well as the potential lack of adequate remedies in certain jurisdictions,

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• changes in the effective tax rate as a result of our overall profitability and mix of earnings in countries with differing statutory tax rates,

• results of audits and examination of previously filed tax returns,

• the possibility of being exposed to legal proceedings and potential penalties in a foreign jurisdiction, and/or increased compliance expense, as a result of the numerous, and sometimes conflicting, legal regimes on matters as diverse as anti-corruption, anti-bribery, import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, anti-competition, data privacy and protection (including, but not limited to, the European Union’s General Data Protection Regulation), employment, and labor relations, and

• results of audits and examination of previously filed tax returns, and

• limitations on our ability under local laws to protect or enforce our intellectual property rights in a particular foreign jurisdiction.

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Some of the countries in which we operate and seek to expand are in emerging markets where legal systems may be less developed or familiar to us, potentially impacting our ability to obtain appropriate recourse in the event of a dispute.

Other jurisdictions in which we conduct business may establish legal and regulatory regimes that differ materially from United States laws and regulations.

Compliance with diverse legal requirements is costly and time-consuming and requires significant resources.

Violations of one or more of these regulations in the conduct of our business could result in significant fines or monetary damages, criminal sanctions against us or our officers, prohibitions on doing business, unfavorable publicity and other reputation damage, restrictions on our ability to process information, and allegations by our clients that we have not performed our contractual obligations.

Other jurisdictions in which we conduct business have established, or may establish, legal and regulatory regimes that differ materially from United States laws and regulations.

It is costly, time-consuming, and requires significant resources to comply with the numerous, and sometimes conflicting, legal regimes in the jurisdictions in which we conduct business on matters as diverse as anti-corruption, anti-bribery, import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, competition, data privacy and protection (including, but not limited to, the European Union’s General Data Protection Regulation), employment, and labor relations.

Violations of one or more of these legal regimes’ laws and regulations in the conduct of our business could result in significant fines or monetary damages, criminal sanctions against us or our officers, prohibitions on doing business, unfavorable publicity and other reputation damage, restrictions on our ability to process information, and allegations by our clients that we have not performed our contractual obligations.

We are subject to the risks of doing business in China.

Although we intend to expand our business and operations in China, our success in the Chinese markets may be adversely affected by China’s continuously evolving laws and regulations, including those relating to taxation, import and export tariffs and restrictions, currency controls, environmental regulations, indigenous innovation, and intellectual property rights and enforcement of those rights.

Our success in the Chinese markets may be adversely affected by China’s continuously evolving laws and regulations, including those relating to taxation, import and export tariffs and restrictions, currency controls, environmental regulations, information security, indigenous innovation, and intellectual property rights and enforcement of those rights.

Enforcement of existing laws or agreements may be inconsistent, and the potential issuance of new laws and regulations creates uncertainty.

In addition, changes in the political environment, governmental policies, or United States-China relations could result in revisions to laws or regulations or their interpretation and enforcement, exposure of our proprietary intellectual property, increased taxation, restrictions on imports, import duties, or currency revaluations, which could have an adverse effect on our business plans and operating results.

In particular, the imposition by the United States of tariffs on goods imported from China or deemed to be of Chinese origin and other government actions that restrict our ability to sell our products to Chinese customers or to manufacture or source components in China, and countermeasures imposed by China in response, could directly or indirectly adversely impact our manufacturing costs and the sales of our products in China and elsewhere.

In particular, the imposition by the United States of tariffs on goods imported from China, or deemed to be of Chinese origin, and other government actions that restrict our ability to sell our products to Chinese customers or to manufacture or source components in China, and countermeasures imposed by China in response, could directly or indirectly adversely impact our manufacturing costs, the availability and cost of materials, and the sales of our products in China and elsewhere.

For example, during fiscal 2019, the U.S.

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Department of Commerce placed Huawei Technology Co., Ltd., and certain of its affiliates (collectively, “Huawei”), on the Bureau’s Entity List (the “Entity List”), which resulted in our temporarily suspending shipments to Huawei.

During fiscal 2020, the addition of other entities to the Entity List (with the prospect of more entities to be added in the future), together with changes to rules regarding the shipment of foreign direct products, again resulted in the suspension of shipments to Huawei.

Since then, the addition of other entities to the Entity List, together with changes to rules regarding the shipment of foreign direct products, resulted in the renewed suspension of shipments to Huawei as well as the suspension of shipments to other customers.

In the future, we may be prevented from shipping our products to other customers if they are added to the Entity List.

In the absence of further changes to applicable export laws and regulations, we will only be able to sell our products to Huawei and potentially other companies named on the Entity List pursuant to limited export licenses from the U.S.

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Further, the evolving labor market and increasing labor unrest in China may have a negative impact on our customers, which would result in a negative impact on our business, results of operations, and financial condition.

Finally, China’s stated policy of reducing its dependence on foreign semiconductor manufacturers and other technology companies could result in reduced demand for our products in China and other key markets as well as reduced supply of critical materials for our products.

Finally, China’s investments in technology development and manufacturing capability in support of its stated policy of reducing its dependence on foreign semiconductor manufacturers and other technology companies has likely already resulted, and we expect will continue to result, in reduced demand for our products in China and other key markets as well as reduced supply of critical materials for our products.

Changes in tax laws and regulations could have an adverse impact on our operating results.

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Changes in our interpretations and assumptions, as well as additional guidance issued under these laws, could increase income tax liabilities and/or reduce certain tax benefits.

It is also possible that Congress will enact legislation in connection with the COVID-19 pandemic in addition to the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act enacted in March 2020, some of which could have an impact on our operations.

In addition, it is uncertain if and to what extent various states will conform to the Tax Reform Act or other changes to tax law.

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the European Commission’s “state aid” investigations;

enactment of a global corporate minimum tax;

and other developments could have an adverse effect on the taxation of international businesses, including our own.

Furthermore, countries where we are subject to taxes, including the United States, evaluate their tax policies and rules on a regular basis, and we may see significant changes in legislation and regulations concerning taxation (including as a result of any changes proposed during the next U.S.

presidential administration).

presidential administration, such as increases in the U.S.

federal corporate income tax rate and in the U.S.

taxation of foreign earnings).

We are unable to predict what tax changes may be enacted in the future or what effect such changes would have on our business, but such changes could affect our effective tax rates in countries where we have operations and could have an adverse effect on our overall tax position in the future, along with increasing the complexity, burden, and cost of tax compliance.

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• our ability to develop, introduce, and market new products and technologies on a timely basis,

• market acceptance of our products and our customer’s products (including, but not limited to, market acceptance of new, emerging technologies),

• market acceptance of our products and our customers’ products (including, but not limited to, market acceptance of new, emerging technologies),

• new product and technology introductions by competitors,

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Significant portions of our sales are concentrated among a limited number of customers.

If we lost one or more of these major customers, or if one or more major customers significantly decreased its orders for our products, our business, results of operations, and financial condition could be materially and adversely impacted, which could adversely affect our stock price.

If we lost one or more of these major customers, or if one or more major customers significantly decreased its orders for our products, our business, results of

operations, and financial condition could be materially and adversely impacted, which could adversely affect our stock price.

In each of fiscal 2021, fiscal 2020, and fiscal 2019, one customer accounted for greater than ten percent of our net revenue.

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If a manufacturer designs another supplier’s product into one of its product platforms, it is more difficult for us to achieve future design wins with that platform because changing suppliers involves significant cost, time, effort, and risk on the part of that manufacturer.

achieving a design win with a customer does not ensure that we will receive revenue from that customer.

Also, achieving a design win with a customer does not ensure that we will receive revenue from that customer.

Even after a design win, the customer is not obligated to purchase our products and can choose at any time to reduce or cease use of our products, for example, if its own products are not commercially successful, or for any other reason.

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Additionally, our operations may be affected by lengthy or recurring disruptions of operations at any of our production facilities, as well as disruptions at facilities operated by our subcontractors or customers.

These disruptions may result from electrical power outages, fire, earthquake, flooding, war, acts of terrorism, health advisories or risks, or other natural or man-made disasters, as well as equipment maintenance, repairs, and/or upgrades.

These disruptions may result from electrical power outages, water shortages, fire, earthquake, flooding, war, acts of terrorism, health advisories or risks, or other natural or man-made disasters, as well as equipment maintenance, repairs, and/or upgrades.

Disruptions of our manufacturing operations, or those of our subcontractors and customers, could cause significant delays in shipments until we are able to shift production of the impacted products from an affected facility or subcontractor to another facility or subcontractor, or until the affected customer resumes operations and accepts shipments from us.

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The difficulty of accurately forecasting manufacturing yields and maintaining cost competitiveness through improving manufacturing yields will continue to be magnified by the increasing process complexity of manufacturing semiconductor products.

Our manufacturing operations may also face pressures arising from the compression of product life cycles, which may require us to manufacture new products faster and for shorter periods while maintaining acceptable manufacturing yields and quality without, in many cases, reaching the longer-term, high-volume manufacturing conducive to higher manufacturing yields and declining costs.

manufacturing yields and quality without, in many cases, reaching the longer-term, high-volume manufacturing conducive to higher manufacturing yields and declining costs.

We are dependent upon third parties for the manufacture, assembly, and testing of our products.

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• the lack of wafer supply, potential wafer shortages, and higher wafer prices,

• required minimum purchase commitments,

• limited ability to respond to unanticipated changes in customer demand,

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If we choose to use a new foundry to replace either existing or backup capacity, it will typically take an extended period of time for us to complete our qualification process for that foundry, which will result in a significant passage of time before we can begin shipping products from that new foundry.

Further, the third-party foundries may experience financial difficulties or changes in control, be unable to deliver products to us in a timely manner, be unwilling to invest in processes that meet our needs, or suffer damage or destruction to their facilities, particularly since some of them are located in areas prone to natural disasters.

If any disruption of manufacturing capacity occurs, we may not have alternative manufacturing sources immediately available.

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Although we own and operate assembly and test facilities, we still depend on subcontractors to package, assemble, and test certain of our products at cost-competitive rates.

For those assembly and test subcontractors with whom we do not have long-term agreements, we typically procure services from these suppliers on a per-order basis.

For those assembly and test subcontractors with whom we do not have long-term agreements, we typically procure services on a per-order basis.

If any of our subcontractors experiences capacity constraints or financial difficulties, suffers any damage to its facilities, experiences power outages or any other disruption of assembly or testing capacity, we may not be able to obtain alternative assembly and testing services in a timely manner and/or at cost-competitive rates.

Due to the amount of time that it usually takes us to qualify assembly and test subcontractors, we could experience significant delays and/or costs in product shipments if we are required to find alternative assembly and test subcontractors for our components.

Due to the amount of time that it usually takes us to qualify assembly and test subcontractors, we could experience significant delays and/or increased costs in product shipments if we are required to find alternative assembly and test subcontractors for our components.

Any problems that we may encounter with the delivery, quality, or cost of our products could damage our customer relationships and materially and adversely affect our business, results of operations, and financial condition.

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Although we maintain relationships with suppliers located around the world with the objective of ensuring that we have adequate sources for the supply of raw materials and components for our manufacturing needs, increases in demand from the semiconductor industry for such raw materials and components (including, but not limited to, precious and rare earth metals), as well as increased demand for commodities in general, can result in tighter supplies and higher costs.

Our suppliers may not be able to meet our delivery schedules, we may lose a significant or sole supplier, a supplier may not be able to meet performance and quality specifications and we may not be able to purchase such supplies or material at a competitive cost.

If a supplier were unable to meet our delivery schedules or if we lost a supplier or a supplier were unable to meet performance or quality specifications, our ability to satisfy customer obligations would be materially and adversely affected.

Our suppliers may not be able to meet our delivery schedules;

we may lose a significant or sole supplier;

a supplier may not be able to meet performance and quality specifications;

shipments of precious metals may be subject to theft;

and we may not be able to purchase such supplies or materials at a competitive cost.

If a supplier were unable to meet our delivery schedules, if we lost a supplier, or if a supplier were unable to meet performance or quality specifications, our ability to satisfy customer obligations would be materially and adversely affected because the time required to identify and qualify an alternative supply source, where available, is typically lengthy.

In part as a result of the COVID-19 pandemic, we have experienced supply constraints for certain materials and components, which has impacted, and could continue to impact, production lead times, the cost of such materials and components, and our ability to meet customer demand for our products.

In addition, we review our relationships with suppliers of raw materials and components for our manufacturing needs on an ongoing basis.

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To the extent we enter into additional sole supplier arrangements for any of our raw materials or components, the risks associated with our supply arrangements would be exacerbated.

Furthermore, our entry into capacity

commitments in an attempt to ensure sufficient supply of raw materials and components may result in our obligation to pay above-market prices in the event of a future downward price correction.

We may not be able to effectively operate our business if we are unable to attract and retain qualified personnel.

As the source of our technological and product innovations, our key technical personnel represent a significant asset.

Our success depends on our ability to continue to attract, retain, and motivate qualified personnel, including executive officers and other key management and technical personnel.

The competition for management and technical personnel is intense in the semiconductor industry, and therefore we may not be able to continue to attract and retain the qualified management and other personnel necessary for the design, development, manufacture, and sale of our products.

As the source of our technological and product innovations, our key engineering and technical personnel represent a significant asset.

Our success depends on our ability to continue to attract, retain, and motivate qualified personnel, including executive officers and other key management, engineering, and technical personnel.

The competition for management, engineering, and technical personnel is intense in the semiconductor industry, particularly in the locations in which we operate, and therefore we may not be able to continue to attract and retain the qualified personnel necessary for the design, development, manufacture, and sale of our products.

Our employees are highly sought after by our competitors and other companies, which in some cases may be able to offer compensation opportunities in excess of what we offer.

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If we are unable to obtain required stockholder approval for future increases in the number of shares available under our long-term incentive plans, we may be limited in granting equity-based incentive awards, which may impair our efforts to attract and retain necessary personnel.

Further, existing immigration laws, together with any changes to immigration policies or regulations in the United States, make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the United States, limiting the pool of available talent.

Further, existing immigration laws, together with any changes to immigration policies or regulations in the United States, make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities (in the United States or abroad), limiting the pool of available talent.

Travel bans, difficulties obtaining visas, and other restrictions on international travel make it more difficult to effectively manage our international operations, collaborate as a global company, and service our international customer base.

The increased ability for employees in our industry to work from home or in other remote work arrangements could increase employee mobility and turnover, potentially making it more difficult for us to

compete in the job market.

The increased ability of employees in our industry to work from home or in other remote work arrangements has impacted, and may continue to impact, the mobility and turnover of our employees, potentially making it more difficult for us to compete in the job market.

We continue to anticipate increases in human resource needs, particularly in engineering.

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Additionally, we sell a portion of our products through third-party distributors, some of whom have rights to return products if the product is nonconforming.

We may purchase and manufacture inventory based on estimates of customer demand for our products, which is difficult to predict.

We may purchase and manufacture inventory based on estimates of customer demand for our products, which is difficult to predict and may not be accurate.

This difficulty may be compounded when we sell to OEMs indirectly through distributors or contract manufacturers, or both, as our forecasts of demand will then be based on estimates provided by multiple parties.

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In addition, if a customer or distributor encounters financial difficulties of its own as a result of a change in demand or for any other reason, the customer’s or distributor’s ability to make timely payments against our accounts receivable could be impaired.

Furthermore, our dependence on third-party carriers and logistics firms, many of which have been adversely affected by the COVID-19 pandemic, has resulted in, and could continue to result in, delays, increased costs, and expedite fees related to our product shipments.

We face a risk that capital needed for our business will not be available when we need it.

To the extent that our existing cash and cash equivalents and cash generated from operations are insufficient to fund our future activities (including, but not limited to, capital expenditures), we may need to raise additional funds through public or private equity or debt financing.

equity or debt financing.

If unfavorable capital market conditions exist in the event we were to seek additional financing, we may not be able to raise sufficient capital on favorable terms and on a timely basis, if at all.

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The capital required to fund these investments may not be available in the future.

Risks Related to Acquisitions

We may not achieve the anticipated benefits of the acquisition of the Infrastructure and Automotive business of Silicon Labs.

On July 26, 2021, the Company completed the acquisition of certain assets, rights, and properties, and assumed certain liabilities, comprising Silicon Labs’ Infrastructure and Automotive business.

Achieving the anticipated benefits of the Acquisition is subject to a number of uncertainties, including the Company’s ability to successfully integrate the assets acquired and employees transferred in connection with the Acquisition, as well as the Company’s ability to maintain and/or secure relationships with third-party manufacturing partners in order to meet customer demand for the products acquired in the Acquisition.

Failure to achieve the anticipated benefits of the Acquisition in the expected timeframe or at all could result in increased costs and diversion of management’s time and energy and could materially adversely affect our business, financial condition, and results of operations.

We incurred significant indebtedness in connection with the Acquisition, which could reduce our flexibility to operate our business.

On May 21, 2021, the Company, as borrower, entered into a term credit agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $1.0 billion Term Loan Facility.

Additionally, on May 26, 2021, the Company issued $500 million of its 0.900% 2023 Notes, $500 million of its 1.800% 2026 Notes, and $500 million of its 3.000% 2031 Notes in a public offering.

The proceeds of the Term Loan Facility and the issuance of Notes were used to finance a portion of the purchase price for the Acquisition.

Additionally, on May 21, 2021, the Company entered into the Revolving Credit Agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $750 million Revolver.

Borrowings under the Revolving Credit Facility will be used for general corporate purposes and working capital needs of the Company and its subsidiaries.

This indebtedness could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions.

We also have incurred, and will continue to incur, various costs and expenses associated with our indebtedness.

Our ability to make payments of principal and interest on our indebtedness when due depends upon our future performance, which will be subject to general economic conditions, industry cycles, and financial, business, and other factors affecting our operations, many of which are beyond our control.

The incurrence of this or any additional indebtedness could reduce funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes and may create competitive disadvantages relative to other companies with lower debt levels.

Further, if we do not achieve the anticipated benefits from the Acquisition, our ability to service our indebtedness may be adversely impacted.

Even if we achieve the anticipated benefits from the Acquisition, we may be required to raise substantial additional financing to fund working capital, capital expenditures, acquisitions, or other general corporate purposes.

Our ability to arrange additional financing and make payments of principal and interest on our indebtedness will depend on our future performance, which will be subject to general economic, financial, and business conditions as well as other factors affecting our operations, many of which are beyond our control.

In addition, our credit ratings affect the cost and availability of future borrowings and, accordingly, our cost of capital.

Our ratings reflect each rating organization’s opinion of our financial strength, operating performance, and ability to meet our debt obligations.

There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future.

An inability to obtain or maintain a rating could increase the cost of future borrowings or refinancings of our indebtedness, limit our access to sources of financing in the future, or lead to other potentially adverse consequences.

The agreements that govern our indebtedness contain various covenants that impose restrictions that may affect our ability to operate our businesses.

The agreements that govern the Term Loan Facility, the Notes, and the Revolver contain various affirmative and negative covenants that, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, change the nature of our business, and/or merge or consolidate with any other person or sell or convey certain assets to any one person.

In addition, some of the agreements contain a financial covenant consisting of a limitation on leverage.

Our ability to

comply with these provisions may be affected by events beyond our control.

Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations.

Any such acceleration of our repayment obligations could have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or stock price.

To be successful we may need to make additional investments and acquisitions, integrate companies we acquire, and/or enter into strategic alliances.

Although we have invested in the past, and intend to continue to invest, significant resources in internal research and development activities, the complexity and rapidity of technological changes and the significant expense of internal research and development make it impractical for us to pursue development of all technological solutions on our own.

On an ongoing basis, we review investment, alliance, and acquisition prospects that would complement our product offerings, augment our market coverage, or enhance our technological capabilities.

We may not be able to identify and consummate suitable investment, alliance, or acquisition transactions in the future.

Moreover, if such transactions are consummated, they could result in:

• issuances of equity securities dilutive to our stockholders,

• restructuring or other impairment write-offs,

• the incurrence of substantial debt and assumption of unknown liabilities,

• the potential loss of key employees from the acquired company,

• recognition of additional liabilities known or unknown at the time of acquisition,

• amortization expenses related to intangible assets, and

• the diversion of management’s attention from other business concerns.

Moreover, integrating acquired organizations and their products and services may be difficult, expensive, time-consuming, and a strain on our resources and our relationship with employees and customers and ultimately may not be successful.

Additionally, in periods following an acquisition, we will be required to evaluate goodwill and acquisition-related intangible assets for impairment.

If such assets are found to be impaired, they will be written down to estimated fair value, with a charge against earnings.

Risks associated with our industry

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Uncertain worldwide economic and political conditions, together with other factors such as the volatility of the financial markets, continue to make it difficult for our customers and for us to accurately forecast and plan future business activities.

For example, it is difficult to predict what impact the outcomes of the U.S.

presidential and congressional elections in November 2020 may have on economic conditions, consumer confidence, geopolitical turmoil, civil unrest, and future legislation and regulation.

In addition, the rapid increase in consumer demand for certain devices and technologies that enable remote work, education, and entertainment as a result of the COVID-19 pandemic could limit future consumer demand for such products.

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The wireless communications semiconductor industry, in general, and the other analog markets in which we compete are very competitive, which may cause pricing pressures, decreased gross margins, and rapid loss of market share.

We compete with international and United States semiconductor manufacturers of all sizes in terms of resources and market share, including, but not limited to, Analog Devices, Broadcom, Cirrus Logic, Maxim Integrated Products, Murata Manufacturing, NXP Semiconductors, Qorvo, and Qualcomm.

We compete with international and United States semiconductor manufacturers of all sizes in terms of resources and market share, including, but not limited to, Analog Devices, Broadcom, Cirrus Logic, Murata Manufacturing, NXP Semiconductors, Qorvo, and Qualcomm.

We currently face significant competition in our markets and expect that intense price and product competition will continue.

This competition has resulted in, and is expected to continue to result in, declining average selling prices for many of our products and increased challenges in maintaining or increasing revenue, gross margin, and market share.

Furthermore, additional competitors may enter our markets as a result of growth opportunities in communications electronics, the trend toward global expansion by foreign and domestic competitors and technological and public policy changes (including national or regional policies intended to develop and support localized competitors).

Furthermore, additional competitors may enter our markets as a result of growth opportunities in communications electronics, the trend toward global expansion by foreign and domestic competitors, and technological and public policy changes (including national or regional policies, and/or state-sponsored investments, intended to develop and support localized competitors).

We believe that the principal competitive factors for semiconductor suppliers in our markets include, among others:

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These relationships may affect customers’ purchasing decisions.

Accordingly, it is possible that new competitors or alliances among competitors could emerge and rapidly acquire significant market share.

Accordingly, it is possible that new competitors or alliances among competitors could emerge, causing such competitors to rapidly acquire significant market share.

We may not be able to compete successfully against current and potential competitors.

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Remaining competitive in the semiconductor industry depends upon our ability to constantly innovate.

The semiconductor industry generally and, in particular, many of the markets into which we sell our products, are highly cyclical and characterized by constant and rapid technological change, continuous product evolution, price erosion, evolving technical standards, short product life cycles (including annual product refreshes in some cases), increasing demand for higher levels of

integration, increased miniaturization, reduced power consumption, and wide fluctuations in product supply and demand.

Our operating results depend largely on our ability to continue to cost-effectively introduce new and enhanced products on a timely basis.

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The verification and reporting requirements, in addition to customer demands for conflict-free sourcing, impose additional costs on us and on our suppliers, and may limit the sources or increase the prices of materials used in our products.

Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which could place us at a competitive disadvantage, and our reputation may be harmed.

Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which could place us at a competitive

disadvantage, and our reputation may be harmed.

In addition, our customers may begin to require reports on our sourcing of other minerals or substances, which may impact our ongoing operations and increase our operating costs.

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We expect increased worldwide regulatory activity relating to climate change in the future.

Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition, or competitive position.

Furthermore, environmental regulations often require parties to fund remedial action for violations of such regulations regardless of fault.

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The amount of expense and capital expenditures that might be required to satisfy environmental liabilities, to complete remedial actions, and to continue to comply with applicable environmental laws may have a material adverse effect on our business, results of operations, and financial condition.

To be successful we may need to make investments and acquisitions, integrate companies we acquire, and/or enter into strategic alliances.

On an ongoing basis, we review investment, alliance, and acquisition prospects that would complement our product offerings, augment our market coverage, or enhance our technological capabilities.

We may not be able to identify and consummate suitable investment, alliance, or acquisition transactions in the future.

Moreover, if such transactions are consummated, they could result in:

• issuances of equity securities dilutive to our stockholders,

• restructuring or other impairment write-offs,

• the incurrence of substantial debt and assumption of unknown liabilities,

• the potential loss of key employees from the acquired company,

• recognition of additional liabilities known or unknown at the time of acquisition,

• amortization expenses related to intangible assets, and

• the diversion of management’s attention from other business concerns.

Additionally, in periods following an acquisition, we will be required to evaluate goodwill and acquisition-related intangible assets for impairment.

If such assets are found to be impaired, they will be written down to estimated fair value, with a charge against earnings.

In addition, increasing governmental and societal attention to environmental, social, and governance (“ESG”) matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on ESG topics such as climate change, carbon emissions, water usage, waste management, human capital, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.

We expect that these and other rapidly changing laws, regulations, policies, interpretations, and expectations, as well as increased enforcement actions by various governmental and regulatory agencies, will continue to increase the cost of our compliance and internal risk management programs and to alter the environment in which we do business, which could have a material adverse effect on our business, results of operations, and financial condition.

Risks associated with cybersecurity and intellectual property protection

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These incidents, which might be related to industrial, state-sponsored, and/or economic espionage, or financial cyber extortion or fraud, include covertly introducing malware and spyware to our computers and networks (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.

We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude, duration, and effects.

The theft, unauthorized use, transfer, or publication of our intellectual property, our confidential business and/or technical information, or the personal data of our employees and customers by third parties or by our employees could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect our business and technology development.

To the extent that any security breach or other cybersecurity incident results in inappropriate disclosure of our customers’, suppliers’, licensees’, or employees’ confidential information, we may incur liability, face contractual and regulatory fines and penalties, and sustain significant financial resources to remediate such breach.

Such an incident could, among other things, also damage our reputation, impair our ability to attract and retain our customers, impact our stock price, and materially damage supplier relationships.

If such incident impedes our inability to use or access our information systems for an extended period of time, this could adversely affect our business operations and financial results.

In addition, certain suppliers and other third parties with whom we conduct business, including foundries, assembly and test contractors, and distributors, have been, and are likely to continue to be, subject to cybersecurity incidents or network disruptions that could jeopardize our proprietary or sensitive data, impact such third parties’ ability to meet their obligations to us, or otherwise negatively impact our ongoing business operations.

We seek to prevent, detect, and investigate all security incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude, duration, and effects.

The theft, unauthorized use, transfer, or publication of our intellectual property, our confidential business, financial, and/or technical information, or the personal data of our employees and customers by third parties or by our employees could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives, or otherwise adversely affect our business and technology development.

To the extent that any security breach or other cybersecurity incident results in inappropriate disclosure of our customers’, suppliers’, licensees’, or employees’ confidential or personal information, we may incur liability, face contractual and regulatory fines and penalties, and sustain significant financial resources to remediate such breach.

Such an incident could, among other things, also damage our reputation, impair our ability to attract and retain our customers, impact our stock price, and materially damage our supplier relationships.

If a ransom-style cyberattack or similar incident impedes our ability to use or access our information systems for an extended period of time, this could adversely affect our business operations and financial results.

In addition, certain suppliers and other third parties with whom we conduct business, including foundries, assembly and test contractors, and distributors, have been, and are likely to continue to be, subject to cybersecurity incidents, misappropriation efforts, or network disruptions that could jeopardize our proprietary or sensitive data, impact such third parties’ ability to meet their obligations to us, or otherwise negatively impact our ongoing business operations.

We expect to continue devoting significant resources to the security of our information technology systems, networks, and databases, including through the training of our employees and monitoring the security posture of critical third parties who have access to our systems or sensitive data.

However, we cannot ensure that these security measures and monitoring efforts will be sufficient to prevent or mitigate the damage caused by a cybersecurity incident or network disruption, and our systems may be vulnerable to hacking, insider threats, employee error or manipulation, system malfunctions or other adverse events.

While we maintain insurance coverage to mitigate some of these risks, such coverage may be insufficient to cover all losses or all types of claims that may arise.

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We rely on patent, copyright, trademark, trade secret, and other intellectual property rights and laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our confidential and proprietary technologies, inventions, information, data, devices, algorithms, processes, and other intellectual property.

In addition, we often incorporate the intellectual property of our customers, suppliers, or other third parties into our designs, and we have obligations with respect to the non-use and non-disclosure of such third-party intellectual property.

In addition, we often incorporate the intellectual property of our customers, suppliers, or other third parties into our designs, and we have obligations with respect to the non-use and non-

disclosure of such third-party intellectual property.

From time to time, it may be necessary to engage in litigation or like activities to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity, enforceability, and scope of proprietary rights of others, including our customers.

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• we may be contractually prohibited, or otherwise discouraged, by certain customers from pursuing remedies for third parties’ violations of our intellectual property.

A third party could copy, misappropriate, or otherwise obtain and use our technology without authorization, develop similar technology independently, or design around or invalidate our patents.

A third party could potentially copy, misappropriate, or otherwise obtain and use our technology without authorization, develop similar technology independently, or design around or invalidate our patents.

If any of our intellectual property protection mechanisms fails to protect our technology, it would make it easier for our competitors to offer similar competitive products, potentially resulting in loss of market share and price erosion.

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In such instances, we could also incur substantial unanticipated costs or scheduling delays to develop substitute technology to deliver competitive products.

Risks associated with claims, litigation, and legal compliance

We may be subject to warranty claims, product recalls, and liability claims.

These risks are heightened with respect to certain of our products that incorporate increasing amounts of digital circuit content that is subject to third-party intellectual property rights.

Risks associated with claims and litigation

We may be subject to warranty claims, product recalls, liability claims, and risks of litigation.

Although we invest significant resources in the testing of our products, from time to time we become aware of alleged defects in our products after they have been shipped, and we may be required to incur additional development and remediation costs, or cash payments to settle claims pursuant to warranty and indemnification provisions in our customer contracts and purchase orders.

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The potential liabilities associated with these, and similar, provisions in certain of our customer contracts are in some cases capped at significant amounts, and in other cases are uncapped.

In addition, because we do not always have a direct relationship with the end customers of our products, our products may be used in applications for which they were not necessarily designed or tested, and they may not perform as anticipated in such applications.

In addition, because our customers typically integrate our products into other devices, and because we typically do not have a direct relationship with the end customers of our products, our products may be used in applications for which they were not necessarily designed or tested, and they may not perform as anticipated in such applications.

Depending on the nature of any product defect claims, we may not be able to recoup our losses from our third-party suppliers.

Investigating, analyzing, and/or remediating alleged product defects may divert our technical and other resources from other product development efforts and could result in claims against us by our customers or third parties, including liability for costs associated with product recalls, indemnification claims, product redesigns, or obligations under customer contracts.

If any of our products contain defects, or have reliability, quality, or compatibility problems, our reputation may be damaged, and we could be subject to liability claims, which could make it more difficult for us to sell our products to existing and prospective customers and could adversely affect our operating results.

If any of our products contain defects, or have reliability, quality, or compatibility problems, our reputation

may be damaged, and we could be subject to liability claims, which could make it more difficult for us to sell our products to existing and prospective customers and could adversely affect our operating results.

Furthermore, such losses would not be covered under our existing corporate insurance programs.

In addition, from time to time, we are, and may become, involved in litigation.

We are the plaintiff in some of these actions and the defendant in others.

Such actions could result in the imposition of various remedies such as injunctions or monetary damages, which if awarded could materially harm our business.

From time to time, we are, and may become, the subject of inquiries, requests for information, or investigations by government and regulatory agencies regarding our business.

Any such matters, regardless of their merit or resolution, could be costly and divert the efforts and attention of our management, damage our reputation, or otherwise adversely affect our business.

We may be subject to claims of infringement of third-party intellectual property rights or demands that we license third-party technology.

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From time to time, third parties have asserted and may in the future assert patent, copyright, trademark, and other intellectual property rights against technologies that are important to our business and manufacturing operations and have demanded and may in the future demand that we license their technology or refrain from using it.

Any litigation to determine the validity of any allegations that our products infringe or may infringe or misappropriate the intellectual property rights of another party, including indemnification claims arising from our contractual obligations of our customers, regardless of their merit or resolution, could be costly and divert the efforts and attention of our management and technical personnel.

Regardless of the merits of any specific claim, we may not prevail in litigation because of the complex technical issues and inherent uncertainties in intellectual property litigation.

Any litigation to determine the validity of any allegations that our products infringe or may infringe or misappropriate the intellectual property rights of another party, including indemnification claims arising from our contractual obligations to our customers, regardless of their merit or resolution, could be costly and divert the efforts and attention of our management and technical personnel.

Regardless of the merits of any specific claim, we may not prevail in litigation because of the complex technical issues and inherent uncertainties in intellectual property litigation or the assessment of these claims.

If litigation were to result in an adverse ruling, we could be required to:

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Such fluctuations may be influenced by many factors, including:

• the extent of the impact and duration of the COVID-19 pandemic,

• the volatility of the financial markets,

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• instability in global credit and financial markets,

• our performance and prospects,

• the performance and prospects of our major customers and competitors,

• our performance and prospects, and the performance and prospects of our major customers and competitors,

• our revenue concentrations with relatively few customers,

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• investor perception of us and the industry in which we operate,

• changes in the market valuations of other companies, including, but not limited to, those in our industry,

• changes in earnings estimates, price targets, or buy/sell recommendations by analysts,

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• our ability to generate sufficient earnings and cash flows,

• use of cash to consummate various acquisition transactions,

• our use of cash to consummate various acquisition transactions,

• our repayment of principal and interest on our indebtedness,

• capital requirements related to cash dividends and stock repurchase programs,

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• a requirement that the affirmative vote of at least 80% of our shares be obtained to amend or repeal the provisions of our certificate of incorporation relating to the election and removal of directors or the right to act by written consent,

• a requirement that the affirmative vote of at least 80% of our shares be obtained for business combinations unless approved by a majority of the members of the Board of Directors and, in the event that the other party to the business combination is the beneficial owner of 5% or more of our shares, a majority of the members of the Board of Directors in office prior to the time such other party became the beneficial owner of 5% or more of our shares,

• a fair price provision, and

• a requirement that the affirmative vote of at least 90% of our shares be obtained to amend or repeal the fair price provision.

• a fair price provision, as well as a requirement that the affirmative vote of at least 90% of our shares be obtained to amend or repeal the fair price provision.

In addition to the provisions in our certificate of incorporation and by-laws, Section 203 of the Delaware General Corporation Law generally provides that a corporation may not engage in any business combination with any interested stockholder during the three-year period following the time that such stockholder becomes an interested stockholder, unless a majority of the directors then in office approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder or specified stockholder approval requirements are met.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors