What changed in this filing

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Item 1A. Risk Factors

2024-11-15 compared with 2023-11-17 · 133 added, 115 removed, 366 unchanged (40% of the section changed)

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

• global, regional, and local economic and political conditions, including, but not limited to, social, economic, political, and supply chain instability related to the uncertainty regarding the relationships among the United States, China, Taiwan, Russia, Mexico, North Korea, Israel, other Middle Eastern countries, Japan, Singapore, other foreign countries, and the international community at large, as well as related to armed conflicts, such as the conflict between Russia and Ukraine and the conflicts in Israel and other Middle Eastern countries, that exist, or in the future could exist, in various jurisdictions around the world,

• global, regional, and local economic and political conditions, including, but not limited to, social, economic, political, and supply chain instability related to the uncertainty regarding the relationships among the United States, China, Taiwan, Russia, Mexico, North Korea, Israel, other Middle Eastern countries, Japan, Singapore, other foreign countries, and the international community at large, as well as related to armed conflicts, such as the conflict between Russia and Ukraine and the conflicts in Israel and the Middle Eastern region, that exist, or in the future could exist, in various jurisdictions around the world,

• restrictive governmental actions (such as restrictions on transfer of funds, restrictions on individuals’ movement, including travel restrictions, quarantines, lockdowns, and curfews, trade protection measures, including export duties, quotas, customs duties, border taxes, border closures, increased import or export controls, export licenses, and tariffs, and restrictions on the purchase of products made or containing technology or components from certain companies or from companies located in certain jurisdictions), or actions by non-governmental individuals and groups (such as protests, boycotts, insurgencies, organized crime, and general civil unrest), that could negatively impact trade between, or increase the cost of operating in, the countries in which we do business,

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• 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 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 or enforcement mechanisms in certain jurisdictions,

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

• acts of terrorism, widespread illness, the effects of global health crises on business conditions in our industry or in the jurisdictions in which we do business, or other deterioration of public health conditions, and war,

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

• difficulty in engaging distribution partners or obtaining sales or other business support in certain jurisdictions,

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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, intellectual property matters, internal and disclosure control obligations, securities regulation, competition, data privacy and protection, employment, and labor relations.

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, intellectual property, sustainability, internal and disclosure control obligations, securities regulation, competition, data privacy and protection, 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, penalties, or monetary damages, criminal sanctions against us or our officers, prohibitions on doing business, unfavorable publicity and other reputational damage, restrictions on our ability to process information, and allegations by our counterparties that we have not performed our contractual obligations.

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

Demand from Chinese customers may be adversely affected by China’s 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, economic environment, governmental policies, United States-China relations, or China-Taiwan 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, any of 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, the availability and cost of materials, including gallium, germanium, and rare earth minerals, and the sales of our products in China and elsewhere.

For example, the U.S.

government has recently expanded export restrictions, and might continue expanding export restrictions, by adding certain Chinese entities to the U.S.

Bureau of Industry and Security’s Entity List (the “Entity List”), which has limited, and could in the future limit, our ability to sell to certain of those entities and to third parties that do business with those entities.

These restrictions have negatively impacted, and may continue to negatively impact, sales of our products.

In the future, we may be prevented from shipping, or be required to obtain a license to ship, our products to certain customers if they are added to the Entity List.

In addition, geopolitical changes in China-Taiwan relations could disrupt the operations of several companies in Taiwan that are suppliers to, or third-party partners of, the Company, our customers, and our customers’ other suppliers.

Disruption of certain critical operations in Taiwan would adversely affect our ability to manufacture certain products and would likely have substantial negative effects on the entire semiconductor industry.

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 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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To the extent the tax laws and regulations in these various countries and localities change, our tax liability could increase.

Beginning in fiscal year 2023, for U.S.

Beginning in fiscal 2023, for U.S.

income tax purposes we were required to capitalize our research and development expenses and amortize them over five or fifteen years, rather than deduct them in the year incurred, which has increased, and which we expect will continue to increase, our taxes payable, resulting in reduced near term-cash flows.

Furthermore, on August 16, 2022, the U.S.

government enacted the Inflation Reduction Act, which imposes a corporate alternative minimum tax of 15% on adjusted financial statement income for certain corporations, as well as an excise tax on corporate stock repurchases.

We are currently evaluating the impact this law may have on our effective tax rate in fiscal year 2024.

government enacted the Inflation Reduction Act (“IRA”), which imposes a corporate alternative minimum tax (“CAMT”) of 15% on adjusted financial statement income for certain corporations, as well as an excise tax on corporate stock repurchases.

While the IRA did not have a material impact to the Company’s financial statements for fiscal 2024, it could have a material impact in future periods depending on various factors, including the amount and frequency of our stock repurchases and the applicability of the CAMT to the Company.

Because the changes in U.S.

tax law require a number of complex calculations that previously were not required, our actual tax liability may differ materially from our income tax provisions, estimates, and accruals.

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.

In addition, it is uncertain if and to what extent various states will conform to changes to federal tax law.

Future changes in tax laws, regulations, and treaties, or the interpretation thereof, in addition to initiatives related to the Base Erosion and Profit Shifting Project of the Organisation for Economic Co-Operation and Development;

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

Future changes in tax laws, regulations, and treaties, or the interpretation thereof, in addition to initiatives related to the Base Erosion and Profit Shifting (“BEPS”) Project of the Organisation for Economic Co-Operation and Development (“OECD”), including Pillar One and Pillar Two;

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.

and other developments could have an adverse effect on the taxation of our business, including reducing the availability of tax credits and payment of higher income taxes.

Furthermore, countries where we are subject to taxes, including the United States, are evaluating their tax policies and rules on a regular basis, and we may see significant changes in legislation and regulations concerning taxation.

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.

The effects of the COVID-19 pandemic may adversely affect our business operations, results of operations and financial condition.

The global COVID-19 pandemic—including the measures taken to limit the spread of the virus and its variants, and the resulting global supply chain challenges—has adversely affected, and may continue to adversely affect, our business operations.

The pandemic’s impacts 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, 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.

Our business operations would also be negatively impacted if one or more of our major customers were to significantly decrease its orders for our products due to disruptions to its business operations or other pandemic-related issues.

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 existence of new variants of the virus that causes COVID-19, the duration and spread of the pandemic, its severity, the actions to contain COVID-19 or treat its impact, and how quickly and to what extent normal economic and operating conditions resume.

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

The Company operates under a tax holiday in Singapore and is subject to the Company’s compliance with certain conditions, including maintaining certain employment and investment thresholds in Singapore.

If we cannot, or elect not to, comply with the conditions for the tax holiday, we could be required to refund certain previously realized tax benefits for fiscal years 2021 through 2024, over which period we enjoyed a tax holiday that decreased our taxes by a cumulative $329.8 million, and we may lose the benefits of the tax holiday earlier than scheduled.

For a discussion of the impact the tax holiday has on Singapore taxes owed by us, see Note 8 to Item 14 of this Annual Report on Form 10-K.

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

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, economic environment, governmental policies, United States-China relations, or China-Taiwan relations could result in revisions to laws or regulations or their interpretation and enforcement, exposure of our intellectual property, increased taxation, restrictions on imports, import duties, or currency revaluations, any of 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, the availability and cost of materials, including gallium, germanium, antimony, and rare earth metals, and the sales of our products in China and elsewhere.

For example, the U.S.

government has expanded export restrictions, and might continue expanding export restrictions, including by adding certain Chinese entities to the U.S.

Bureau of Industry and Security’s Entity List (“Entity List”) or other entity lists, which has limited, and could in the future limit, our ability to sell to certain of those entities and to third parties that do business with those entities.

These restrictions have negatively impacted, and may continue to negatively impact, sales of our products.

In the future, we may be prevented from shipping, or be required to obtain a license to ship, our products to certain customers if they are added to the Entity List.

Risks Associated with the Development, Manufacturing, and Sale of Our Products

Our operating results may be adversely affected by quarterly and annual fluctuations, market downturns, and recessions.

Our operating results may be adversely affected by quarterly and annual fluctuations.

Our revenues, earnings, and other operating results may fluctuate significantly on a quarterly and annual basis.

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These factors include, among others:

• delays in the widespread deployment of commercial 5G networks and other new technologies,

• delays in the widespread deployment or adoption of commercial 5G networks, AI and other new technologies,

• changes in end-user demand for the products manufactured and sold by our customers,

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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 customers’ 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, such as AI,

• new product and technology introductions by competitors,

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We employ certain methods, assumptions, estimates, and other subjective judgments in order to apply our accounting policies and to project future performance, and such projections may be publicly disclosed from time to time.

Changes to such methods, assumptions, estimates, and judgments, combined with other factors that are difficult to forecast, including the factors listed above, could materially and adversely affect our quarterly or annual operating results and could produce actual operating results that differ significantly from previous estimates and projections.

that differ significantly from previous estimates and projections.

If our operating results fail to meet the expectations of analysts or investors, it could materially and adversely affect the price of our common stock.

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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, if one or more major customers significantly decreased its orders for our products, or if one or more major customers delay or do not make payments in a timely manner, 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 2024, fiscal 2023, and fiscal 2022, one customer accounted for greater than ten percent of our net revenue.

For further discussion see Note 14 to Item 8 of this Annual Report on Form 10-K.

As of September 27, 2024, three customers represented 80 % of our aggregate gross accounts receivable.

For further discussion on customer concentration, see Note 14 to Item 8 of this Annual Report on Form 10-K.

We rely on Original Equipment Manufacturers (“OEMs”) and Original Design Manufacturers (“ODMs”) to design our products into their end products.

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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.

We may not continue to achieve design wins or to convert design wins into actual sales, and failure to do so could materially and adversely affect our operating results.

We do not obtain design wins on everything that we compete for, and we may not continue to achieve design wins or to convert design wins into actual sales.

Failure to achieve design wins or to convert design wins into sales could materially and adversely affect our operating results.

Furthermore, as a result of our lengthy product development and sales cycle, we may incur significant research and development expenses, and selling, general, and administrative expenses, without generating the anticipated revenue associated with these products.

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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 or fluctuations, water shortages, fire, earthquake, flooding, war, acts of terrorism, health advisories or risks, or other natural or man-made disasters, outages or disruptions to our information technology infrastructure, including those portions provided by third parties, as well as equipment or software maintenance, repairs, updates, 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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Likewise, lower-than-expected demand, could lead to underutilized manufacturing facilities, which could negatively impact our financial results.

Our key facilities include, but are not limited to, our semiconductor wafer fabrication facilities in Newbury Park, California, and Woburn, Massachusetts;

our SAW, TC-SAW, and BAW filter wafer processing facilities in Osaka, Japan;

and our packaging, assembly and test facilities in Mexicali, Mexico, and in Singapore (“Singapore Filter Manufacturing Facility”).

Several of our key facilities are leased or subleased.

If we are unable to renew existing leases or subleases on terms acceptable to us, we may be required to relocate our affected operations.

We operate under a sublease for our Singapore Filter Manufacturing Facility that expires in July 2025.

Because the owner of the site for our Singapore Filter Manufacturing Facility has decided to redevelop it for other uses, the potential maximum amount of time we may be able to extend our sublease is five additional years.

We have been engaged in discussions with the owner of the site and intend to request an extension of the sublease for five years, which request we will be permitted to make in February 2025.

However, there is no guarantee that we will be able to secure an extension.

In any event, we will need to relocate our Singapore Filter Manufacturing Facility, and we

have been exploring alternative sites in other locations.

Relocation would be complex and could require, among other things, the transfer of equipment and process nodes and qualification of new or transferred production lines.

This or any relocation or consolidation of facilities could result in disruptions to our business, including potential production interruptions or delays, quality problems, difficulties forecasting our production capabilities, challenges retaining employees or hiring new employees, and the incurrence of significant capital and other expenses, which could have a material adverse effect on our financial condition, results of operations or cash flow.

While we maintain insurance coverage to mitigate business continuity risks, among other risks, such coverage may be insufficient to cover all losses or all types of claims that may arise.

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These disruptions could have a material adverse effect on our business, results of operations, and financial condition.

Our key facilities include, but are not limited to, our semiconductor wafer fabrication facilities in Newbury Park, California, and Woburn, Massachusetts, our SAW, TC-SAW, and

BAW filter wafer processing facilities in Osaka, Japan, and our assembly and test facilities in Mexicali, Mexico, and in Singapore.

We may not be able to maintain and improve manufacturing yields that contribute positively to our gross margin and profitability.

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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 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.

If any of our subcontractors experiences capacity constraints or financial difficulties, suffers any damage to its facilities, experiences 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 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.

During fiscal 2022, we entered into long-term capacity reservation and supply agreements with certain third-party foundries, under which we agreed to certain minimum purchase commitments.

As a result of reduced overall market demand, we recorded impairment charges during fiscal 2023.

These long-term capacity reservation agreements may have an additional adverse effect on our operating results in the event our future supply needs are reduced below the minimum purchase commitments as a result of further reduction in overall market demand.

As a result of reduced overall market demand, we recorded impairment charges during fiscal 2023 and renegotiated certain of these agreements in fiscal 2024.

These long-term capacity reservation agreements may have an additional adverse effect on our operating results in the event our future supply needs are reduced below the minimum purchase expectations as a result of further reduction in overall market demand.

We are dependent upon third parties for the supply of raw materials and components.

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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 part as a result of the COVID-19 pandemic, we experienced supply constraints for certain materials and components, which impacted 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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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 in high demand, and our competitors and other companies may be able to offer compensation opportunities in excess of what we offer.

Our employees are in high demand, and our competitors and other companies may be able to offer compensation or other opportunities in excess of what we offer.

We may have particular difficulty attracting and retaining key personnel during periods of poor operating performance and/or declines in the price of our common stock, given, among other factors, the use of equity-based compensation by us and our competitors.

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 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.

Further, existing immigration laws and difficulties obtaining visas, 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.

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.

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Our success depends, in large part, on the continued contributions of our senior management team, none of whom is bound by a written employment contract to remain with us for a specified period.

The loss of any member of our senior management team could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.

In addition, the loss of certain members of our senior management team could harm our relationships with key customers, which could negatively impact our future revenue, results of operations, and financial condition.

The loss of any member of our senior management team could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we

In addition, the loss of certain members of our senior management team could harm our relationships with key customers and negatively impact our future revenue, results of operations, and financial condition.

We are subject to uncertainties involving the ordering and shipment of, and payment for, our products.

Our sales are typically made pursuant to standard purchase orders and/or specified customer contracts for delivery of products and not under long-term supply arrangements with our customers.

Our sales are typically made pursuant to standard purchase orders and/or specified customer contracts, or both, for delivery of products and not under long-term supply arrangements with our customers.

Our customers may seek to cancel or defer orders before shipment.

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.

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

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.

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In addition, our customers and distributors may change their inventory practices on short notice for any reason.

Many of our products are customized to the needs or specifications of a specific customer or have a limited number of potential buyers.

The cancellation or deferral of product orders, the return of previously sold products, overproduction due to a change in anticipated order volumes could result in us holding excess or obsolete inventory, which could result in inventory write-downs and, in turn, could have a material adverse effect on our financial condition.

Many of our products are customized to the needs or specifications of a specific customer or have a limited number of potential alternative buyers.

The cancellation or deferral of product orders, the return of previously sold products, over-production due to a change in anticipated order volumes could result in us holding excess or obsolete inventory, which could result in inventory write-downs and, in turn, could have a material adverse effect on our financial condition.

On the other hand, customers may require rapid increases in production on short notice, which could result in damaged customer relationships, increased manufacturing costs, increased liabilities, or harm to our reputation if we are unable to meet such increases in demand.

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.

In addition, if a customer or distributor encounters financial difficulties of its own because 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 a few third-party carriers and logistics firms could 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.

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Failure to obtain capital when required by our business circumstances would have a material adverse effect on us.

In addition, the future growth of our business is likely to require the expansion of our manufacturing facilities, the upgrade of our manufacturing equipment, strategic investments, and/or corporate acquisitions.

In addition, the future growth of our business is likely to require the expansion or improvement of our manufacturing facilities, the upgrade of our manufacturing equipment, strategic investments, and/or corporate acquisitions.

Due in part to our repayment obligations on our outstanding indebtedness, the capital required to fund these investments may not be available in the future.

We are exposed to risks related to the use of AI tools by us and others.

Although we are evaluating, and where we believe appropriate, incorporating AI tools into our operations, our use of AI tools may subject us to significant competitive, legal, regulatory and other risks, and there can be no assurance that our use of AI tools will enhance our business operations or result in a benefit to us.

Our competitors may be more successful in their use of AI tools, including by developing superior products or improving their operations with the assistance of AI.

Additionally, there could be adverse impacts from inaccurate or flawed algorithms.

Our use of AI tools could also result in the loss of confidential information or intellectual property or an inability to claim or enforce intellectual property rights, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy, cybersecurity, and the unauthorized use of Company data.

The jurisdictions in which we conduct business have and may adopt laws and regulations related to AI, which could cause us to incur greater compliance costs, limit our use of AI tools, or subject us to legal liabilities.

We may encounter problems upgrading, enhancing, and improving our enterprise applications.

We have been and are engaging in activities to upgrade, enhance and improve various Company enterprise applications and information technology systems, including relating to demand management, enterprise management, quality, sales and marketing, and sourcing.

These activities may not result in the benefits we expect and could cause disruptions to our operations, including interruptions or delays in sales or purchasing processes, business continuity, and maintaining effective internal controls, which could have a material adverse effect on our business.

Risks Related to Acquisitions

We incurred significant indebtedness in connection with the acquisition of the Infrastructure and Automotive business of Silicon Labs, 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 (the “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 “Notes”).

The proceeds of the Term Loan Facility and the issuance of Notes were used to finance a portion of the purchase price for the Company’s acquisition of certain assets, rights, and properties, and its assumption of certain liabilities, comprising Silicon Labs’ Infrastructure and Automotive business, on July 26, 2021 (the “Acquisition”).

Since May 2021, the Company has repaid certain amounts of indebtedness under the Term Loan Facility and the Notes, including as discussed in Note 16 to Item 8 of this Annual Report on Form 10-K.

Additionally, on May 21, 2021, the Company entered into a revolving credit agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $750 million revolving credit facility (the “Revolving Credit Facility”).

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

Indebtedness under our Term Loan Facility, Revolving Credit Facility, or the Notes 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 arrange additional financing and 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.

We are exposed to interest rate risk through our Term Loan Facility and Revolving Credit Facility, both of which are subject to variable interest rates, and interest rate increases have led to increased interest payments.

Our existing indebtedness or incurrence of 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.

In addition, our credit ratings, combined with fluctuating interest rates, 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 Revolving Credit Facility 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 or expand our product offerings, augment our market coverage, or enhance our technological capabilities.

On an ongoing

basis, we review investment, alliance, and acquisition prospects that would complement or expand 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.

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

We incurred indebtedness in connection with the acquisition of the Infrastructure and Automotive business of Silicon Labs, which could reduce our flexibility to operate our business.

In May 2021, the Company issued in a public offering $500 million of 1.80% Senior Notes due 2026 and $500 million of 3.00% Senior Notes due 2031 (collectively, the “Notes”), which Notes remain outstanding.

The proceeds from the issuance of Notes were used to finance a portion of the purchase price for the Company’s acquisition of certain assets, rights, and properties, and its assumption of certain liabilities, comprising Silicon Labs’ Infrastructure and Automotive business, on July 26, 2021 (the “Acquisition”).

For further discussion, see Note 16 to Item 8 of this Annual Report on Form 10-K.

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

Indebtedness under our Revolving Credit Facility or the Notes 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.

We are exposed to interest rate risk through our Revolving Credit Facility, which is subject to variable interest rates, and interest rate increases have led to increased interest payments.

In addition, our credit ratings, combined with fluctuating interest rates, 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.

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 Notes and the Revolving Credit Facility 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 stock price.

Risks Associated with Our Industry

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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, Murata Manufacturing, NXP Semiconductors, Qorvo, Qualcomm, and Texas Instruments.

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, Qualcomm, and Texas Instruments.

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.

From time to time, we have lost market share as a result of competition, and we could lose market share in the future.

Also, 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 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).

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• maintaining access to manufacturing capacity, raw materials, supplies, and services at a competitive cost, and

• the ability to secure government incentives and grants, such as funding available to U.S.

semiconductor manufacturers under the CHIPS and Science Act of 2022.

• the ability to secure government incentives and grants, such as funding available under the CHIPS and Science Act of 2022.

We might not be able to successfully address these factors.

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• strong financial, sales and marketing, manufacturing, distribution, technical, or other resources.

As a result, certain competitors may be able to adapt more quickly than we can to new or emerging technologies and changes in customer requirements or may be able to devote greater resources to the development, promotion, and sale of their products than we can.

As a result, certain competitors may be able to adapt more quickly than we can to new or emerging technologies, such as AI, and changes in customer requirements or may be able to devote greater resources to the development, promotion, and sale of

their products than we can.

As a result of industry consolidation, certain competitors may be able to further exploit such benefits to strengthen their competitive position.

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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, both within our traditional markets and in new, expanded, or adjacent markets.

Our operating results depend largely on our ability to continue to cost-effectively introduce new and enhanced products on a timely basis, both within our traditional markets and in new, expanded, or adjacent markets.

The successful development and commercialization of semiconductor devices and modules is highly complex and depends on numerous factors, including the ability:

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We may face similar difficulties, delays, and expenses as we continue to transition our products to smaller geometry processes in the future.

In some instances, we depend on our relationships with our third-party foundries and packaging subcontractors to transition to smaller geometry processes successfully.

In some instances, we depend on

our relationships with our third-party foundries and packaging subcontractors to transition to smaller geometry processes successfully.

Our manufacturing partners may not be able to effectively manage the transition, or we may not be able to maintain our relationships with certain manufacturing partners.

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Eliminating such substances from our manufacturing processes requires the expenditure of additional research and development funds to seek alternative substances for our products, as well as increased testing by third parties to ensure the quality of our products and compliance with the RoHS Directive.

While we have implemented a compliance program to ensure our product offering meets these regulations, there may be instances where alternative substances will not be available or commercially feasible, or may only be available from a single source, or may be significantly more expensive than their restricted counterparts.

While we have implemented a compliance program intended to ensure our product offering meets these regulations, there may be instances where alternative substances will not be available or commercially feasible, or may only be available from a single source, or may be significantly more expensive than their restricted counterparts.

Additionally, if we were found to be non-compliant with any such rule or regulation, we could be subject to fines, penalties, and/or restrictions imposed by government agencies that could adversely affect our operating results.

Regulations in the United States require that we determine whether certain materials used in our products, referred to as conflict minerals, originated in the Democratic Republic of the Congo or adjoining countries, or were from recycled or scrap sources.

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.

The verification and reporting requirements, in addition to any 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.

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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.

In addition, increasing governmental, investor, and societal attention on 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, forced labor, 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.

If our ESG practices and disclosures do not meet the expectations and standards of our stockholders, customers, and other industry stakeholders, our reputation and business activities may be negatively impacted and our appeal to certain investors may be reduced.

In addition, increasing governmental, investor, and societal attention on sustainability matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on sustainability topics such as climate change, carbon emissions, water usage, waste management, human capital, forced labor, and risk oversight, have expanded and could further 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.

If our sustainability practices and disclosures do not meet the expectations and standards of our stockholders, customers, and other industry stakeholders, our reputation and business activities may be negatively impacted and our appeal to certain investors may be reduced.

Risks Associated with Cybersecurity and Intellectual Property Protection

We may not be able to prevent, or timely detect, information technology security breaches.

Security breaches, phishing, spoofing, attempts by others to gain unauthorized access to our information technology systems, networks, and databases, and other cyberattacks continue to become more sophisticated and persistent and are sometimes successful.

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, networks, and products (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.

We have been subject to these attacks and expect to continue to be subject to these attacks.

Further, 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, networks, and products (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.

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.

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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.

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.

Geopolitical tensions or conflicts, such as the ongoing conflict involving Russia and Ukraine, the conflicts in Israel and other Middle Eastern countries and the tensions involving China and Taiwan, may create a heightened risk of cybersecurity incidents.

Geopolitical tensions or conflicts, such as the ongoing conflict involving Russia and Ukraine, the conflicts in Israel and the Middle Eastern region and the tensions involving China and Taiwan, may create a heightened risk of cybersecurity incidents.

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, theft, 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.

However, we cannot ensure that our cybersecurity program or 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, theft, system malfunctions, or other adverse events.

Further, China has implemented, and other countries or regions may implement, cybersecurity and privacy laws that require companies’ overall information disclosure, processing practices, and technology security environment to meet certain standards and/or be certified.

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As a result, our efforts to comply with such laws, to the extent applicable, may be expensive and may fail, which could adversely affect our business, results of operations, and cash flows.

In addition, certain of our products contain firmware that incorporates or is derived from “open source” software that generally is made publicly available by its developers or other third parties.

In addition, certain of our products that we use contain firmware that incorporates or is derived from “open source” software that generally is made publicly available by its developers or other third parties.

Risks related to the use of open source software include, but are not limited to, the introduction of cybersecurity vulnerabilities into our products or development platforms, our compliance with applicable licensing terms, subjecting certain of our derivative works or software enhancements to public disclosure and/or unfavorable licensing conditions, potential restrictions on our ability to market the firmware associated with our products, and enhanced governmental or other third-party scrutiny of our products.

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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-usage 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.

From time to time, we have engaged in and it may be necessary to continue to engage in litigation, administrative actions 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.

This could require us to expend significant resources and to divert the efforts and attention of our management and technical personnel from our business operations.

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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.

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

In addition, in the event we are unable to fulfill our contractual obligations, lawsuits may be threatened or filed against us by customers or other third parties.

Furthermore, force majeure clauses in our contracts could limit our ability to pursue remedies for certain third-party disruptions and delays.

From time to time, we are, and may become, involved in litigation.

Furthermore, force majeure clauses in our contracts could limit our ability to pursue remedies for certain third-party disruptions

From time to time, we have been, and may become involved in litigation with customers, suppliers, competitors, government or regulatory agencies, shareholders, employees, or other parties.

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

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• uncertainty regarding the condition and prospects of the domestic and foreign economies,

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

• the volatility of the financial markets,

• instability in global credit and financial markets,

• 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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• domestic and international political conditions,

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

• domestic and international tax, fiscal, and trade policy decisions, and

• our ability to successfully identify, acquire, and integrate acquisition candidates.

• domestic and international tax, fiscal, and trade policy decisions,

• our ability to successfully identify, acquire, and integrate acquisition candidates, and

• the extent of the impact of global health events.

Public stock markets have experienced price and trading volume volatility.

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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.

UNRESOLVED STAFF COMMENTS.

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