Described below are various risks and uncertainties that may affect our business.
−Removed: The descriptions below include any material changes to and supersede the description of the risk factors affecting our business previously disclosed in "Part I, Item 1A.
−Removed: Risk Factors" of the 2024 Form 10-K and subsequent reports filed with the SEC.
If any of the risks described below actually occurs, our business, financial condition or results of operations could be materially and adversely affected.
Risk categories and certain principal risks under each category include (each described more fully below):
−Removed: – Risks related to our global operations, including global macroeconomic and market risks
−Removed: • Our business may be adversely affected by the state of the global economy, uncertainties in global financial markets, our ability, or our customers' or suppliers' ability, to access funding, and trade tariffs and trade restrictions.
−Removed: • We are subject to risks related to international sales and purchases.
−Removed: – Risks related to sales, product development and manufacturing
−Removed: • We face significant challenges managing our growth strategy.
−Removed: • Variations in our production could impact our ability to reduce costs and could cause our margins to decline and our operating results to suffer.
−Removed: • Our results of operations, financial condition and business could be harmed if we are unable to balance customer demand and capacity.
−Removed: – Risks associated with our strategic transactions
−Removed: • If we fail to evaluate and execute strategic opportunities successfully, our business may suffer.
−Removed: • We are subject to a number of risks associated with our restructuring plan, and these risks could impact our operations, financial condition and ability to realize expected cost savings.
−Removed: • We are subject to a number of risks associated with the sale of our former RF Business, and these risks could adversely impact our operations, financial condition and business.
−Removed: – Risks associated with our capital structure
−Removed: • Negotiations with our lenders may result in an in-court debt restructuring, and the contemplation of an in-court solution raises substantial doubt about our ability to continue as a going concern.
−Removed: • We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.
−Removed: – Risks associated with cybersecurity, intellectual property and litigation
−Removed: • We may be subject to confidential information theft or misuse, which could harm our business and results of operations.
−Removed: • There are limitations on our ability to protect our intellectual property.
−Removed: – Risks related to legal, regulatory, accounting, tax and compliance matters
−Removed: • We may be required to recognize a significant charge to earnings if our goodwill or other assets become impaired.
−Removed: • The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized could impact the demand for our products.
+Added: – Risks related to the Chapter 11 Cases
+Added: • Historical financial information will not be indicative of our future performance
+Added: • Impact of outstanding debt obligations
+Added: • Influence of certain former Convertible Noteholders and Renesas.
+Added: • Reduced tax attributes due to cancellation of indebtedness.
+Added: • Impaired stakeholder confidence following Chapter 11 emergence.
+Added: – Risks related to our markets and product demand
+Added: • Our dependence on a concentrated group of customers for significant revenue.
+Added: • Competition from established semiconductor companies and state-supported international players.
+Added: • Global silicon carbide market growth not developing as rapidly as anticipated.
+Added: • Our ability to introduce new products to new and established markets.
+Added: • Distributors may not expand their customer base or anticipate demand.
+Added: • Cyclical market patterns and potential downturns in our end markets.
+Added: • Global macroeconomic conditions could adversely impact our strategic direction.
+Added: • Tariffs or other trade restrictions could adversely impact our results of operations.
+Added: • Delays in product roadmap execution or misallocated research and development investments.
+Added: – Risks related to manufacturing and operational execution
+Added: • Product quality issues or failure to meet evolving quality standards.
+Added: • Our ability to achieve manufacturing cost targets and production yield goals.
+Added: • Our ability to balance customer demand with manufacturing capacity.
+Added: • Operational challenges in improving utilization at our manufacturing facilities.
+Added: • Environmental laws and regulations impacting manufacturing.
+Added: – Risks related to our overall business and operations
+Added: • Our ability to attract and retain qualified personnel in a competitive market.
+Added: • Cybersecurity threats, data breaches, and inadequate data protection controls.
+Added: • Our ability to protect our intellectual property rights.
+Added: • Delays in consolidating ERP systems that may hinder operational efficiency.
+Added: • The use or application of emerging technologies, including AI.
+Added: • Existing and potential future litigation.
+Added: • Changes in regulatory or accounting and tax positions.
+Added: • Employee attrition and loss of key personnel could harm our operations.
– General risk factors
−Removed: • We have been subject to shareholder activism and may be subject to such activism in the future.
−Removed: Risks related to our global operations, including global macroeconomic and market risks
−Removed: Our business may be adversely affected by the state of the global economy, uncertainties in global financial markets, our ability or our customers' or suppliers' ability to access funding, and possible trade tariffs and trade restrictions.
−Removed: Our operations and performance depend significantly on worldwide economic and geopolitical conditions.
−Removed: Uncertainty about global economic conditions could result in customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news, higher interest rates and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services and, accordingly, on our business, results of operations or financial condition.
−Removed: For example, current global financial markets continue to reflect uncertainty, including as a result of the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East, as well as tariff policies announced by the Trump administration and ongoing trade tensions between certain countries including the United States and China, which has impacted and could continue to impact demand for our products.
−Removed: Given these uncertainties, there could be further disruptions to the global economy, financial markets and consumer confidence.
−Removed: If economic conditions deteriorate unexpectedly, our business and results of operations could be materially and adversely affected.
−Removed: For example, our customers, including our distributors and their customers, may experience difficulty obtaining the working capital and other financing necessary to support historical or projected purchasing patterns, which could negatively affect our results of operations.
−Removed: Various global economic slowdowns could occur and potentially result in certain economies dipping into economic recessions, including in the United States.
−Removed: Additionally, increased inflation around the world, including in the United States, applies pressure to our costs.
−Removed: Economic slowdowns or recessions and inflationary pressures could have a negative impact on our business, including decreased demand, increased costs, and other challenges.
−Removed: Government actions to address economic slowdowns and increased inflation, including elevated interest rates, also could result in negative impacts to our growth.
−Removed: In April 2025, the Trump administration announced a baseline tariff of 10% on products from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits.
−Removed: While most of the proposed reciprocal tariffs were subsequently suspended for a 90-day period, the Trump administration has announced tariffs of 145% or more on Chinese imports, potentially subject to certain exceptions, prompting announcements of retaliatory tariffs by China on goods from the United States.
−Removed: General trade tensions between the United States and China continue, and any economic and political uncertainty caused by the United States tariffs imposed on goods from China, among other potential countries, and any corresponding tariffs or currency devaluations from China or such other countries in response, has negatively impacted, and may in the future negatively impact, demand and/or increase the cost for our products.
−Removed: Additionally, Russia’s invasion of Ukraine in early 2022 triggered significant sanctions from the United States and European countries.
−Removed: Resulting changes in United States trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a potential trade war.
−Removed: Furthermore, if the conflicts between Russia and Ukraine and in the Middle East continue for a prolonged period of time, or if other countries, including the United States, become involved in these conflicts, we could face significant adverse effects to our business and financial condition.
−Removed: For example, if our supply or customer arrangements are disrupted due to expanded sanctions or involvement of countries where we have operations or relationships, our business could be materially disrupted.
−Removed: Further, the use of cyberattacks could expand as part of the conflict, which could adversely affect our ability to maintain or enhance our cyber-security and data protection measures.
−Removed: Although we believe we have adequate liquidity and capital resources to fund our operations for at least the next 12 months, we expect to need additional funding to fully complete all of our intended expansion initiatives, which we may seek to obtain through, among other avenues, federal funding opportunities, equity offerings or other non-debt funding sources, and debt financings (which may involve retiring, refinancing or modifying some of our existing debt).
−Removed: If unfavorable capital market conditions exist, we may not be able to raise sufficient capital or restructure or refinance our outstanding convertible notes on favorable terms and on a timely basis, if at all, which would impact our ability to access federal funding and/or raise additional capital.
−Removed: As discussed in Note 14, "Shareholders' Equity," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we sold 27.8 million shares of common stock under the ATM Program, and if we further issue equity or convertible debt securities to raise additional funds, our existing shareholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our then-existing shareholders.
−Removed: If we incur additional debt, it may impose financial and operating covenants that could restrict the operations of our business.
−Removed: In a rising interest rate environment, debt financing would become more expensive and could have higher transactional and servicing costs.
−Removed: In addition, our existing indebtedness may limit our ability to obtain additional financing in the future.
−Removed: The potential inability to obtain adequate funding from debt or capital sources in the future could force us to self-fund strategic initiatives or even forego certain opportunities, which in turn could potentially harm our performance.
−Removed: We are subject to risks related to international sales and purchases.
−Removed: In fiscal 2024, 86% of our revenue was from outside the United States and we expect that revenue from international sales will continue to represent a significant portion of our total revenue.
−Removed: As such, a significant slowdown or instability in relevant foreign economies or lower investments in new infrastructure could have a negative impact on our sales.
−Removed: We also purchase a portion of the materials included in our products from overseas sources.
−Removed: Our international sales and purchases are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Act and the anti-boycott provisions of the United States Export Administration Act.
−Removed: The United States Government has imposed, and in the future may impose, restrictions on shipments to some of our current customers.
−Removed: Government restrictions on sales to certain foreign customers will reduce our revenue and profit related to those customers in the short term and could have a potential long-term impact.
−Removed: Our international sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S.
−Removed: Dollar and more competitive in countries with currencies that are increasing in value against the U.S.
−Removed: In addition, our international purchases can become more expensive if the U.S.
−Removed: Dollar weakens against the foreign currencies in which we are billed.
−Removed: We may in the future enter into foreign currency derivative financial instruments in an effort to manage or hedge some of our foreign exchange rate risk.
−Removed: We may not be able to engage in hedging transactions in the future, and, even if we do, foreign currency fluctuations may still have a material adverse effect on our results of operations.
−Removed: Our operations in foreign countries expose us to certain risks inherent in doing business internationally, which may adversely affect our business, results of operations or financial condition.
−Removed: We have revenue, operations and contract manufacturing arrangements in foreign countries that expose us to certain risks.
−Removed: For example, fluctuations in exchange rates may affect our revenue, expenses and results of operations as well as the value of our assets and liabilities as reflected in our financial statements.
−Removed: We are also subject to other types of risks of doing business internationally, including the following:
−Removed: • protection of intellectual property and trade secrets;
−Removed: • tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost-effective and timely manner, or changes in applicable tariffs or custom rules, such as tariffs announced by the Trump administration and retaliatory tariffs implemented by other countries in response and the additional customs duties incurred in fiscal 2024 related to our former Lighting Products business unit;
−Removed: • the burden of complying with and changes in United States or international taxation policies;
−Removed: • timing and availability of export licenses;
−Removed: • rising labor costs;
−Removed: • disruptions in or inadequate infrastructure of the countries where we operate;
−Removed: • the impact of public health epidemics on employees and the global economy;
−Removed: • difficulties in collecting accounts receivable;
−Removed: • difficulties in staffing and managing international operations;
−Removed: • the burden of complying with foreign and international laws and treaties.
−Removed: For example, the Trump administration has announced an aggressive policy for implementing tariffs, including a baseline tariff of 10% on products from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits.
−Removed: While most of the proposed reciprocal tariffs were subsequently suspended for a 90-day period, the United States has imposed significant tariffs on Chinese-made goods and President Trump announced that he will impose additional significant tariffs on goods from China, among other potential tariffs against U.S.
−Removed: trading partners such as Mexico and Canada.
−Removed: The tariffs imposed on Chinese goods, among other potential countries and any corresponding tariffs from China or such other countries in response has, and may in the future, negatively impact demand and/or increase the costs for our products.
−Removed: The volatility and unpredictability of international trade policies and conditions in the current political and international economic environment add further complexity to our operations, making it challenging to forecast and plan effectively.
−Removed: Government incentives may include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to us due to our foreign operations.
−Removed: Any of these incentives could be reduced or eliminated by governmental authorities at any time or as a result of our inability to maintain minimum operations necessary to earn the incentives.
−Removed: Any reduction or elimination of incentives provided for our operations could adversely affect our business and results of operations.
−Removed: These same governments also may provide increased incentives to or require production processes that favor local companies, which could further negatively impact our business and results of operations.
−Removed: Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors, including those which may result under the Trump administration, if any, may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices.
−Removed: Abrupt political change, terrorist activity and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse effect on our business and results of operations.
−Removed: Risks related to sales, product development and manufacturing
−Removed: We face significant challenges managing our growth strategy.
−Removed: Our potential for growth depends significantly on the adoption of our products within the markets we serve and for other applications, and our ability to affect this rate of adoption.
−Removed: In order to manage our growth and business strategy effectively relative to the uncertain pace of adoption, we must continue to:
−Removed: • complete comprehensive due diligence, negotiate and finalize award documentation for federal funding opportunities;
−Removed: • access capital markets to fund our growth initiatives and to satisfy expected terms of potential federal funding opportunities;
−Removed: • complete a restructuring or other transaction to address our outstanding indebtedness;
−Removed: • maintain, expand, construct and purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, including specifically the expansion of our silicon carbide capacity with the ramping of our state-of-the-art, automated 200mm capable silicon carbide device fabrication facility in New York and the construction of a new materials manufacturing facility in Siler City, North Carolina;
−Removed: • receive the expected benefits from the refundable AMIC under Section 48D of the Internal Revenue Code;
−Removed: • meet our production capacity and delivery commitments to our customers, including those customers who provide us with capacity reservation deposits or similar payments;
−Removed: • manage an increasingly complex supply chain and meeting purchase commitments under take-or-pay arrangements with certain suppliers that has the ability to supply an increasing number of raw materials, subsystems and finished products with the required specifications and quality, and deliver on time to our manufacturing facilities, our third-party manufacturing facilities, our logistics operations, or our customers;
−Removed: • expand the skills and capabilities of our current management team;
−Removed: • add experienced senior level managers and executives;
−Removed: • attract and retain qualified employees;
−Removed: • expand the capability of our information systems to support a more complex business, such as our ongoing implementation of a new company-wide enterprise resource planning (ERP) system;
−Removed: • be successful in securing design-ins across our end markets, including automotive applications;
−Removed: • realize our expected local, state and federal government incentives, including capital investment reimbursements, property tax reimbursements and sales tax exemptions from state, county and local governments;
−Removed: • safeguard confidential information and protect our intellectual property;
−Removed: • manage organizational complexity and communication;
−Removed: • execute, maintain and adjust the operational and financial controls that support our business.
−Removed: While we intend to continue to focus on managing our costs and expenses, we expect to invest to support our growth and may have additional unexpected costs.
−Removed: Such investments take time to become fully operational, and we may not be able to expand quickly enough to exploit targeted market opportunities.
−Removed: In connection with our efforts to cost-effectively manage our growth, we have increasingly relied on contractors for production capacity, logistics support and certain administrative functions including hosting of certain information technology software applications.
−Removed: If our contract manufacturers (including those at which we maintain captive lines) or other service providers do not perform effectively, we may not be able to achieve the expected cost savings and may incur additional costs to correct errors or fulfill customer demand.
−Removed: Depending on the function involved, such errors may also lead to business disruption, processing inefficiencies, the loss of or damage to intellectual property through security breach, or an impact on employee morale.
−Removed: Our operations may also be negatively impacted if any of these contract manufacturers or other service providers do not have the financial capability to meet our growing needs.
−Removed: There are also inherent execution risks in starting up a new factory or expanding production capacity, whether one of our own factories or that of our contract manufacturers, as well as risks to moving production to different contract manufacturers, that could increase costs and reduce our operating results.
−Removed: In the fourth quarter of fiscal 2022, we opened the Mohawk Valley Fab to complement the materials factory expansion underway at our United States campus headquarters in Durham, North Carolina and the Mohawk Valley Fab began revenue production in late fiscal 2023.
−Removed: We also commenced work on our new materials manufacturing facility in Siler City, North Carolina in the first quarter of fiscal 2023.
−Removed: The establishment and operation of a new manufacturing facility or expansion of an existing facility involves significant risks and challenges, some of which we have experienced and may experience in the future, including, but not limited to, the following:
−Removed: • design and construction delays and cost overruns;
−Removed: • issues in installing and qualifying new equipment and ramping production;
−Removed: • poor production process yields and reduced quality control;
−Removed: • insufficient personnel with requisite expertise and experience to operate an automated silicon carbide device fabrication facility and a materials manufacturing facility.
−Removed: If we receive government incentives through federal funding opportunities, or through state and local grants, the restrictions and operational requirements that are associated with such grants would add complexity to our operations and increase our costs.
−Removed: For example, we have signed a non-binding preliminary memorandum of terms (PMT) with the Department of Commerce relating to proposed funding under the CHIPS Act to support expansion of our new facilities in North Carolina and New York.
−Removed: The terms for awards of funding under the PMT are preliminary and are subject to a comprehensive due diligence process and continued negotiations.
−Removed: There is uncertainty whether any grant approved by the recently established US Investment Accelerator office within the Department of Commerce will be on the same or similar terms as the PMT.
−Removed: There can be no assurance that we will conclude grant negotiations or receive the full amount of federal funding set forth in the PMT, if at all.
−Removed: Our failure to conclude definitive agreements for any reason or to meet operational or financial milestones required to receive final awards could make it more difficult to maintain our liquidity requirements and could create a negative perception or reputational concern with respect to us and our business.
−Removed: In addition, there is uncertainty regarding the impact of the Trump administration's policies with respect to the semiconductor industry and government funding, tax credits and tariffs.
−Removed: Any of the above factors could have a material adverse effect on our business, results of operations or financial condition.
−Removed: We are also increasingly dependent on information technology to enable us to improve the effectiveness of our operations and to maintain financial accuracy and efficiency.
−Removed: Allocation and effective management of the resources necessary to successfully implement, integrate, train personnel and sustain our information technology platforms will remain critical to ensuring that we are not subject to transaction errors, processing inefficiencies, loss of customers or suppliers, business disruptions or loss of or damage to intellectual property through a security breach in the near term.
−Removed: Additionally, we face these same risks if we fail to allocate and effectively manage the resources necessary to build, implement, upgrade, integrate and sustain appropriate technology infrastructure over the longer term.
−Removed: Our results of operations, financial condition and business could be harmed if we are unable to balance customer demand and capacity.
−Removed: As customer demand for our products changes, we must be able to adjust our production capacity to meet demand.
−Removed: We are continually taking steps to address our manufacturing capacity needs for our products.
−Removed: Currently, we are focusing on increasing production capacity that utilizes 200mm substrates.
−Removed: If we are not able to increase our production capacity at our targeted rate, if there are unforeseen costs associated with increasing our capacity levels, or if we are unable to obtain advanced semiconductor manufacturing equipment in a timely manner, we may not be able to achieve our financial targets.
−Removed: We may be unable to build or qualify new capacity on a timely basis to meet customer demand and customers may fulfill their orders with one of our competitors instead.
−Removed: In addition, as we introduce new products and change product generations, we must balance the production and inventory of prior generation products with the production and inventory of new generation products, whether manufactured by us or our contract manufacturers, to maintain a product mix that will satisfy customer demand and mitigate the risk of incurring cost write-downs on the previous generation products, related raw materials and tooling.
−Removed: Significant or prolonged shortages or delivery delays of our products to our customers could delay their manufacturing and negatively impact our relationships with these customers, including triggering the potential payment of penalties on certain agreements.
−Removed: Due to the proportionately high fixed cost nature of our business (such as facility costs), if demand does not materialize at the rate forecasted, we may not be able to scale back our manufacturing expenses or overhead costs quickly enough to correspond to the lower than expected demand.
−Removed: This could result in lower margins and adversely impact our business and results of operations.
−Removed: Additionally, if product demand decreases or if we fail to forecast demand decreases or changes accurately, we may experience a mismatch between current product demand and manufactured product mix, adversely impacting our results, including due to higher costs resulting from lower factory utilization, causing higher fixed costs per unit produced.
−Removed: For example, in fiscal 2024 and the first three quarters of fiscal 2025, we and other semiconductor companies experienced and have continued to experience softer demand for our products than expected.
−Removed: In response, we adjusted our production mix in our North Carolina fab to manufacture power products for automotive applications, which have higher unit costs in this fab.
−Removed: Changes in product demand from our customers' forecasts may also cause variability in our supply costs if significant adjustments are needed to our forecasted or committed procurement and supply plans.
−Removed: Further, we may be required to recognize impairments on our long-lived assets or recognize excess inventory write-off charges, or excess capacity charges, which would have a negative impact on our results of operations.
−Removed: With the opening of the Mohawk Valley Fab, we have experienced and will continue to experience increased pressure on margins during the period when production begins but before the facility is at full utilization, and in the initial periods we expect these underutilization costs will continue to be substantial as we ramp up the facility.
−Removed: Additionally, our large upfront investment in the facility, or any other new facility, to increase capacity does not guarantee we will need the capacity and we may experience lower than expected capacity once the facility is in production, which could result in further margin pressures.
−Removed: In addition, our efforts to improve quoted delivery lead-time performance may result in corresponding reductions in order backlog.
−Removed: A decline in backlog levels could result in more variability and less predictability in our quarter-to-quarter revenue and operating results.
−Removed: Variations in our production could impact our ability to reduce costs and could cause our margins to decline and our operating results to suffer.
−Removed: All of our products are manufactured using technologies that are highly complex.
−Removed: The number of usable items, or yield, from our production processes may fluctuate as a result of many factors, including but not limited to the following:
−Removed: • variability in our process repeatability and control;
−Removed: • contamination of the manufacturing environment;
−Removed: • equipment failure, power outages, fires, flooding, information or other system failures or variations in the manufacturing process, such as the equipment incident we experienced in our Durham Fab in late fiscal 2024;
−Removed: • lack of consistency and adequate quality and quantity of piece parts, other raw materials and other bill of materials items;
−Removed: • inventory shrinkage or human errors;
−Removed: • defects in production processes (including system assembly) either within our facilities or at our suppliers;
−Removed: • any transitions or changes in our production process, planned or unplanned.
−Removed: In the past, we have experienced difficulties in achieving acceptable yields on certain products, which has adversely affected our operating results.
−Removed: We may experience similar problems in the future, and we cannot predict when they may occur or their severity.
−Removed: In some instances, we may offer products for future delivery at prices based on planned yield improvements or increased cost efficiencies from other production advances.
−Removed: Failure to achieve these planned improvements or advances could have a significant impact on our margins and operating results.
−Removed: In addition, our ability to convert volume manufacturing to larger diameter substrates is an important factor in providing a more cost-effective manufacturing process.
−Removed: We continue to prepare for production using 200mm substrates and if we are unable to make this transition in a timely or cost-effective manner, our results could be negatively impacted.
−Removed: Our operating results are substantially dependent on the acceptance of new products.
−Removed: Our future success may depend on our ability to deliver new, higher performing and/or lower cost solutions for existing and new markets and for customers to accept those solutions.
−Removed: The development of new products is a highly complex process, and we have in some instances experienced delays in completing the development, introduction and qualification of new products which has impacted our results in the past.
−Removed: Our research and development efforts are aimed at solving increasingly complex problems, and we do not expect that all our projects will be successful.
−Removed: The successful development, introduction and acceptance of new products depend on a number of factors, including the following:
−Removed: • qualification and acceptance of our new product and systems designs, specifically entering into automotive applications which require even more stringent levels of qualification and standards;
−Removed: • our customers' ability to develop competitive products incorporating our products;
−Removed: • market acceptance of our products and our customers’ products;
−Removed: • our ability to effectively transfer increasingly complex products and technology from development to manufacturing, including the transition to 200mm substrates;
−Removed: • our ability to introduce new products in a timely and cost-effective manner;
−Removed: • achievement of technology breakthroughs required to make commercially viable products;
−Removed: • our ability to convert customer design-ins to sales of significant volume, and, if customer design-in activity does result in such sales, when such sales will ultimately occur and what the amount of such sales will be;
−Removed: • the accuracy of our predictions for market requirements;
−Removed: • our ability to predict, influence and/or react to evolving standards;
−Removed: • acceptance of new technology in certain markets;
−Removed: • our ability to protect intellectual property developed in new products;
−Removed: • the availability of qualified research and development personnel;
−Removed: • our timely completion of product designs and development;
−Removed: • our ability to develop repeatable processes to manufacture new products in sufficient quantities, with the desired specifications and at competitive costs;
−Removed: • our ability to secure volume purchase orders related to new products.
−Removed: If any of these or other similar factors becomes problematic, we may not be able to deliver and introduce new products in a timely or cost-effective manner.
−Removed: We face risks relating to our suppliers, including that we rely on a number of key sole source and limited source suppliers, are subject to high price volatility on certain commodity inputs, including as a result of tariffs, variations in parts quality, and raw material consistency and availability, and rely on independent shipping companies for delivery of our products.
−Removed: We depend on a number of sole source and limited source suppliers for certain raw materials, components, services and equipment used in manufacturing our products, including key materials and equipment used in critical stages of our manufacturing processes.
−Removed: Although alternative sources generally exist for these items, qualification of many of these alternative sources could take up to six months or longer.
−Removed: Where possible, we attempt to identify and qualify alternative sources for our sole and limited source suppliers.
−Removed: We generally purchase these sole or limited source items with purchase orders, and we have limited guaranteed supply arrangements with such suppliers, including take-or-pay arrangements and capacity reserve deposit agreements.
−Removed: Some of our sources can have variations in attributes and availability which can affect our ability to produce products in sufficient volume or quality.
−Removed: We do not control the time and resources that these suppliers devote to our business, and we cannot be sure that these suppliers will perform their obligations to us.
−Removed: Additionally, general shortages in the marketplace of certain raw materials or key components may adversely impact our business.
−Removed: In the past, we have experienced decreases in our production yields when suppliers have varied from previously agreed upon specifications or made other modifications we did not specify, which impacted our cost of revenue.
−Removed: Additionally, the inability of our suppliers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours.
−Removed: This risk may increase from unpredictable and unstable changes in economic conditions, including recession, inflation, or other changes, which may negatively affect key suppliers or a significant number of our other suppliers.
−Removed: Any delay in product delivery or other interruption or variation in supply from these suppliers could prevent us from meeting commercial demand for our products.
−Removed: If we were to lose key suppliers, if our key suppliers were unable to support our demand for any reason or if we were unable to identify and qualify alternative suppliers, our manufacturing operations could be interrupted or hampered significantly.
−Removed: We rely on arrangements with independent shipping companies for the delivery of our products from vendors and to customers both in the United States and abroad.
−Removed: The failure or inability of these shipping companies to deliver products or the unavailability of shipping or port services, even temporarily, could have a material adverse effect on our business.
−Removed: We may also be adversely affected by an increase in freight surcharges due to rising fuel costs, oil costs and added security.
−Removed: In our fabrication process, we consume a number of precious metals and other commodities, which are subject to high price volatility and the potential impacts of increased inflation.
−Removed: Our operating margins could be significantly affected if we are not able to pass along price increases to our customers.
−Removed: In addition, production could be disrupted by the unavailability of the resources used in production such as water, silicon, electricity and gases.
−Removed: Future environmental regulations could restrict supply or increase the cost of certain of those materials.
−Removed: We operate in industries that are subject to significant fluctuation in supply and demand and ultimately pricing, which affects our revenue and profitability.
−Removed: The industries we serve are in different stages of adoption and are characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards and fluctuations in product supply and demand.
−Removed: The semiconductor industry is characterized by rapid technological change, high capital expenditures, short product life cycles and continuous advancements in process technologies and manufacturing facilities.
−Removed: As the markets for our products mature, additional fluctuations may result from variability and consolidations within the industry’s customer base.
−Removed: These fluctuations have been characterized by lower product demand, production overcapacity, higher inventory levels and aggressive pricing actions by our competitors.
−Removed: These fluctuations have also been characterized by higher demand for key components and equipment used in, or in the manufacture of, our products resulting in longer lead times, supply delays and production disruptions.
−Removed: We have experienced these conditions in our business and may experience such conditions in the future, which could have a material negative impact on our business, results of operations or financial condition.
−Removed: In addition, as we diversify our product offerings and as pricing differences in the average selling prices among our product lines widen, a change in the mix of sales among our product lines may increase volatility in our revenue and gross margin from period to period.
−Removed: If we are unable to effectively develop, manage and expand our sales channels for our products, our operating results may suffer.
−Removed: We sell a portion of our products to distributors, including a distributor that represented more than 10% of our revenue in fiscal 2024.
−Removed: We rely on distributors to develop and expand their customer base as well as to anticipate demand from their customers.
−Removed: If they are not successful, our growth and profitability may be adversely impacted.
−Removed: Distributors must balance the need to have enough products in stock in order to meet their customers’ demand against their internal target inventory levels and the risk of potential inventory obsolescence.
−Removed: The risks of inventory obsolescence are especially relevant to technological products.
−Removed: The distributors’ internal target inventory levels vary depending on market cycles and a number of factors within each distributor over which we have very little, if any, control.
−Removed: Distributors also have the ability to shift business to different manufacturers within their product portfolio based on a number of factors, including new product availability and performance.
−Removed: Similarly, we have the ability to add, consolidate, or remove distributors.
−Removed: We typically recognize revenue on products sold to distributors when an item is shipped and title passes to the distributor (sell-in method).
−Removed: Certain distributors have limited rights to return inventory under stock rotation programs and have limited price adjustment rights for which we make estimates.
−Removed: We evaluate inventory levels in the distribution channel, current economic trends and other related factors in order to account for these factors in our judgments and estimates.
−Removed: As inventory levels and product return trends change or we make changes to our distributor roster, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be adversely impacted.
−Removed: We depend on a limited number of customers, including distributors, for a substantial portion of our revenue, and the loss of, or a significant reduction in purchases by, one or more of these customers could adversely affect our operating results.
−Removed: We receive a significant amount of our revenue from a limited number of customers and distributors, two of which individually represented more than 10% of our consolidated revenue in fiscal 2024.
−Removed: Many of our customer orders are made on a purchase order basis, which does not generally require any long-term customer commitments.
+Added: • Our reincorporation from North Carolina to Delaware.
+Added: • Our stock price has experienced and may continue to experience volatility.
+Added: • Disruptions from extreme weather events and natural disasters.
+Added: • The impact of pandemic outbreaks on our operations and supply chain.
+Added: Table of Conten ts
+Added: • Changes in governmental policies and incentives.
+Added: • Supply chain disruptions adversely impacting our global supply dependencies.
+Added: • Reliance on local utilities and infrastructure at our manufacturing facilities
+Added: Risks Related to the Chapter 11 Cases
+Added: As a result of the Chapter 11 Cases, our historical financial information will not be indicative of our future performance, and we may not realize all of the intended benefits of the Chapter 11 Cases.
+Added: Following our emergence from the Chapter 11 Cases, our capital structure was significantly altered.
+Added: As a result of the Chapter 11 Cases, our historical financial performance is likely not indicative of our future financial performance.
+Added: In addition, the amounts reported in subsequent consolidated financial statements may materially change relative to our historical consolidated financial statements.
+Added: We are expected to adopt fresh start accounting, and accordingly, our assets and liabilities will be recorded at fair value as of the emergence date, which differs materially from the recorded values of assets and liabilities on our historical consolidated balance sheets.
+Added: Our financial results after the application of fresh start accounting may be different from historical trends.
+Added: Furthermore, we may not realize any or all of the intended benefits of the Chapter 11 Cases, the benefits may not be on the terms or in the manner we expect, and the costs incurred may exceed the intended benefits.
+Added: The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation and we cannot assure you that having been subject to bankruptcy proceedings will not adversely affect our operations in the future.
+Added: Additionally, other risks we face, as described in this Quarterly Report, may be exacerbated by the impacts of our emergence from bankruptcy.
+Added: We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.
+Added: As of September 30, 2025, our indebtedness consisted of $535 million aggregate principal amount of our New 2L Renesas Convertible Notes and our New 2L Non-Renesas Convertible Notes, $296.4 million aggregate principal amount of our New 2L Non-Convertible Notes and $1,259.2 million aggregate principal amount of our New Senior Secured Notes.
+Added: The level of our outstanding debt may adversely affect our operating results and financial condition by, among other things:
+Added: • increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;
+Added: • requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures, or research and development;
+Added: • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
+Added: • placing us at a competitive disadvantage compared to our peers that may have less indebtedness than we have by limiting our ability to borrow additional funds needed to operate and grow our business.
+Added: Our ability to pay interest and repay the principal for or to refinance any outstanding indebtedness under the New 2L Renesas Convertible Notes, New 2L Non-Renesas Convertible Notes, the new 2L Non-Convertible Notes and the New Senior Secured Notes is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and/or raise additional capital, which is subject to economic, financial, competitive and other factors beyond our control.
+Added: There can be no assurance that we will be able to manage any of these risks successfully.
+Added: The New Senior Secured Notes Indenture includes a liquidity maintenance financial covenant requiring us to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the collateral agent for the New Senior Secured Notes has been granted a perfected first lien security interest of at least $350 million as of the last day of any calendar month.
+Added: In addition, the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture, in each case, contain certain restrictions that limit our ability to, among other things:
+Added: incur additional indebtedness, dispose of assets, pay dividends on or redeem or repurchase shares of our New Common Stock or other securities, create liens on assets, make investments and acquisitions or engage in mergers or consolidations, and engage in certain transactions with non-subsidiary guarantors and affiliates.
+Added: The New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture also require us to make an offer to repurchase (i) the New Senior Secured Notes, or if the New Senior Secured Notes are redeemed in full, the New 2L Non-Convertible Notes or the New 2L Convertible Notes, with 100% of the net cash proceeds of certain non-ordinary course asset sales and casualty events, subject to the ability to reinvest the proceeds of
+Added: Table of Conten ts
+Added: certain casualty events (subject to certain limitations), (ii) in the case of the New Senior Secured Notes, with 100% of the proceeds of certain Department of Energy sponsored financings and in specified amounts upon the receipt of certain extraordinary proceeds and (iii) in the case of the New Senior Secured Notes, the New 2L Non-Convertible Notes, the New 2L Renesas Convertible Notes and the New 2L Non-Renesas Convertible Notes, in full upon a change of control.
+Added: The restrictions imposed by the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture could limit our ability to plan for or react to changing business conditions or could otherwise restrict our business activities and plans (including impairing our ability to obtain other financing).
+Added: Our ability to comply with the covenants and restrictions imposed by the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture is subject to various risks and uncertainties beyond our control.
+Added: Failure to comply with any of the restrictions and covenants in the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture or future financing arrangements could result in a default under those arrangements and under other arrangements containing cross-default provisions.
+Added: A default would permit holders of the New Senior Secured Notes, the New 2L Non-Convertible Notes, the New 2L Renesas Convertible Notes or the New 2L Non-Renesas Convertible Notes, as applicable, to accelerate the maturity of the debt under these arrangements and to foreclose upon any collateral securing the debt.
+Added: Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under our New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture.
+Added: Additionally, we are exposed to market value fluctuations and inherent interest rate risk related to our investment portfolio.
+Added: We have historically invested portions of our available cash in fixed interest rate securities such as high-grade corporate debt, commercial paper, municipal bonds, certificates of deposit, government securities and other fixed interest rate investments.
+Added: The primary objective of our cash investment policy is preservation of principal.
+Added: However, these investments are generally not Federal Deposit Insurance Corporation insured and may lose value and/or become illiquid regardless of their credit rating.
+Added: From time to time, we have also made investments in public and private companies that engage in complementary businesses, which investments are subject to fluctuations in market value.
+Added: Any fluctuations in the value of our investment portfolio could further impact our ability to address outstanding debt obligations and continue operations.
+Added: Certain former Convertible Noteholders and Renesas may significantly influence matters submitted to stockholders.
+Added: Certain former holders of Convertible Notes acquired, and Renesas (subject to regulatory approvals) will acquire significant ownership interests in our common stock pursuant to the Plan.
+Added: These stockholders may control outcomes of actions requiring stockholder approval, including director elections, without other stockholders' approval.
+Added: This concentration could:
+Added: facilitate or hinder negotiated changes of control;
+Added: allow for the appointment of board majorities, influencing management and strategy;
+Added: affect corporate governance, business strategies, and capital allocation;
+Added: impact stock liquidity, trading price, and volatility;
+Added: create conflicts if major holders' interests diverge from other stockholders;
+Added: and either attract or deter potential acquirers.
+Added: We are required to reduce tax attributes due to cancellation of indebtedness income.
+Added: Generally, any discharge of our debt obligations for an amount less than the debt’s adjusted issue price will give rise to cancellation of debt ("COD") income.
+Added: Under Section 108 of the Internal Revenue Code of 1986, as amended (the "Code"), a taxpayer is required to exclude COD from gross income if the debtor is under the jurisdiction of a court in a case under Chapter 11 of the Bankruptcy Code and the discharge of debt occurs pursuant to that proceeding.
+Added: As a consequence of such an exclusion, a taxpayer generally must reduce certain of its tax attributes by the amount of COD income that it excluded from gross income.
+Added: federal income tax attributes subject to reduction generally include (i) NOLs and NOL carryforwards;
+Added: (ii) general business credit carryovers;
+Added: (iii) capital loss carryovers;
+Added: (iv) tax basis in assets;
+Added: and (v) foreign tax credit carryovers.
+Added: As a result of the implementation of the Plan, we will realize a substantial amount of COD income for U.S.
+Added: federal income tax purposes and our tax attributes will be subject to the foregoing attribute reduction rules.
+Added: While the ultimate effect of the attribute reduction is uncertain because, among other things, it will depend on the amount of COD income we realize, loss of these tax attributes may have an adverse effect on our future cash flow.
+Added: Impaired stakeholder confidence and weakened relationships following Chapter 11 emergence may adversely affect our business.
+Added: Our emergence from Chapter 11 bankruptcy proceedings on September 29, 2025 may continue to adversely affect our business, operations, and stakeholder relationships.
+Added: Customer and vendor confidence may remain impaired, potentially causing:
+Added: reduced orders or order cancellations;
+Added: unfavorable contract terms or reluctance by third parties to enter new agreements on acceptable terms or at all;
+Added: competitive disadvantages as customers shift business to competitors perceived as more stable;
+Added: and ongoing reputational harm in our markets.
+Added: Table of Conten ts
+Added: Additionally, investors and capital markets may require demonstrated operational and financial recovery before fully restoring confidence, potentially limiting our access to capital on favorable terms or affecting the trading price of our common stock until sustained performance improvements are evidenced.
+Added: Risks Related to Our Markets and Product Demand
+Added: Our dependence on a concentrated customer base creates revenue vulnerability.
+Added: We receive significant revenue from a limited number of customers and distributors, with two individually representing more than 10% of consolidated revenue in fiscal 2025.
+Added: Many customer orders are made on a purchase order basis without long-term commitments.
Therefore, these customers may alter their purchasing behavior with little or no notice to us for various reasons, including developing, or, in the case of our distributors, their customers developing, their own product solutions;
1 unchanged sentence
incorrectly forecasting end market demand for their products;
+Added: altering their purchasing practices as a result of our emergence from Chapter 11 and the implementation of the Plan;
or experiencing a reduction in their market share in the markets for which they purchase our products.
−Removed: If our customers alter their purchasing behavior, if our customers’ purchasing behavior does not match our expectations or if we encounter any problems collecting amounts due from them, our financial condition and results of operations could be negatively impacted.
−Removed: The markets in which we operate are highly competitive and have evolving technical requirements.
+Added: If our customers alter their purchasing behavior, if our customers’ purchasing behavior does not match our expectations, or if we encounter any problems collecting amounts due from them, our business, financial condition, and results of operations could be negatively impacted.
+Added: Furthermore, we continue to expand into new markets and new market segments.
+Added: Many of our existing customers who purchase our silicon carbide substrate materials develop and manufacture devices, die and components using those wafers that are offered in the same power market.
+Added: As a result, some of our current customers perceive us as a competitor in these market segments.
+Added: In response, our customers may reduce or discontinue their orders for our substrate materials.
+Added: This reduction in or discontinuation of orders could occur faster than our sales growth in these new markets, which could adversely affect our business, financial condition, and results of operations.
+Added: Competition from established semiconductor companies and state-supported international players threatens our market position .
The markets for our products are highly competitive.
−Removed: In the semiconductor market, we compete with companies that have greater market share, name recognition, distribution and sales channels, and/or technical resources than we do.
+Added: In the semiconductor market, we compete with companies that have greater market share, name recognition, distribution, government subsidies and sales channels, and/or technical resources than we do, as well as state-supported international players who may have access to significant resources.
Competitors continue to offer new products with aggressive pricing, additional features and improved performance.
Aggressive pricing actions by our competitors in our businesses could reduce margins if we are not able to reduce costs at an equal or greater rate than the sales price decline.
+Added: Competitors may form strategic alliances with key customers, leading to further pricing pressure and reduced market share.
+Added: Our inability to recover substantial development, engineering, and manufacturing costs—particularly significant given our current underutilization costs at the Mohawk Valley and Siler City facilities--softening demand and continued price pressure in certain applications could compound these challenges.
As competition increases, we need to continue to develop new products that meet or exceed the needs of our customers.
2 unchanged sentences
This could lead to lower prices for our products, reduced demand for our products and a corresponding reduction in our ability to recover development, engineering and manufacturing costs.
−Removed: Any of these developments could have an adverse effect on our business, results of operations or financial condition.
−Removed: Our revenue is highly dependent on our customers’ ability to produce, market and sell more integrated products.
−Removed: Our revenue depends on getting our products designed into a larger number of our customers’ products and in turn, our customers’ ability to produce, market and sell their products.
−Removed: For example, we have current and prospective customers that create, or plan to create, power products or systems using our substrates, die, components or modules.
−Removed: Even if our customers are able to develop and produce products or systems that incorporate our substrates, die, components or modules, there can be no assurance that our customers will be successful in marketing and selling these products or systems in the marketplace.
−Removed: Our results may be negatively impacted if customers do not maintain their favorable perception of our brands and products.
−Removed: Maintaining and continually enhancing the value of our brands is critical to the success of our business.
−Removed: Brand value is based in large part on customer perceptions.
−Removed: Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products.
−Removed: Brand value could diminish significantly due to a number of factors, including adverse publicity about our products (whether valid or not), a failure to maintain the quality of our products (whether perceived or real), the failure of our products to deliver consistently positive consumer experiences, the products becoming unavailable to consumers or consumer perception that we have acted in an irresponsible manner.
−Removed: Similarly, customers and other third parties may be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed.
−Removed: Accordingly, to build, maintain and grow our business, we must establish and maintain confidence among customers, suppliers, the investment community and other parties with respect to our liquidity and long-term business prospects.
−Removed: Damage to our brand, reputation or loss of customer confidence in our brand or products could result in decreased demand for our products and have a negative impact on our business, results of operations or financial condition.
−Removed: If our products fail to perform or fail to meet customer requirements or expectations, we could incur significant additional costs, including costs associated with the recall of those items.
−Removed: The manufacture of our products involves highly complex processes.
−Removed: Our customers specify quality, performance and reliability standards that we must meet.
−Removed: If our products do not meet these standards, we may be required to replace or rework the products.
+Added: Any of these developments could adversely affect our business, financial condition, and results of operations.
+Added: Our growth depends on the adoption of our products, which is impacted by trends in the global silicon carbide market and customer behavior in response to those trends.
+Added: Our growth depends significantly on adoption of our products within served markets and our ability to influence adoption rates.
+Added: The semiconductor industry is characterized by rapid technological change, high capital expenditures, short product life cycles, and continuous process technology advancements.
+Added: Markets we serve are in different adoption stages and characterized by constant change, rapid obsolescence, price erosion, evolving standards, and supply-demand fluctuations.
+Added: As markets mature, additional fluctuations may result from customer base variability and consolidations, characterized by lower product demand, production overcapacity, higher inventory levels, aggressive competitor pricing, longer lead times for key components, supply delays, and production disruptions.
+Added: We have experienced and may continue experiencing these conditions, which could adversely affect our business, financial condition, and results of operations.
+Added: The recent repeal of EV tax credits in the U.S.
+Added: could impact demand for our technology.
+Added: Our ability to develop and introduce new products that are adopted by customers, in new and established markets, will impact our ability to successfully grow our business.
+Added: Our future success depends on our ability to deliver new, higher-performing and/or lower-cost solutions for existing and new markets and customer acceptance of those solutions.
+Added: We have experienced delays in completing development, introduction, and qualification of new products.
+Added: Our research and development efforts address increasingly complex problems, and not all projects will succeed.
+Added: Table of Conten ts
+Added: semiconductor industry is characterized by rapid technological change, and our ability to compete effectively depends on our continued innovation in silicon carbide technology and our capacity to anticipate and respond to evolving customer requirements across automotive, industrial, energy, and emerging AI and data center applications.
+Added: Successful development, introduction, and acceptance of our products depend on multiple critical factors.
+Added: These include qualification and acceptance of new product and system designs, especially for automotive applications requiring stringent reliability and safety standards.
+Added: We must also rely on our customers' ability to develop competitive products incorporating our solutions, as well as market acceptance of both our products and our customers' end products.
+Added: The effective transfer of complex products from development to manufacturing presents significant challenges, including the transition to 200mm substrates, which requires substantial capital investment and process refinement.
+Added: Additional factors necessary for successful development include timely and cost-effective product introduction, achieving technology breakthroughs necessary for commercially viable products, and converting design-ins to significant volume sales over multi-year qualification cycles.
+Added: Our ability to succeed also requires accurate prediction of market requirements, the capability to predict, influence, and react to evolving industry standards, and acceptance of new technology in certain markets where silicon carbide solutions compete with established silicon-based alternatives.
+Added: We must maintain robust intellectual property protection, ensure availability of qualified research and development personnel in a competitive labor market, complete designs and development activities on schedule, and develop repeatable processes for manufacturing new products in sufficient quantities with desired specifications at competitive costs.
+Added: If any of these factors become problematic, we may not deliver and introduce new products in a timely or cost-effective manner.
+Added: Our continued focus on accelerating the transition to 200mm substrate production is critical to achieving manufacturing scale and cost competitiveness.
+Added: Any inability to balance production capacity with customer demands or continue this transition in a timely and cost-effective manner would negatively impact our competitive position, business, financial condition, and results of operations.
+Added: Distributors may not expand their customer base or effectively anticipate demand.
+Added: We sell a portion of our products through distributors, including one that represented over 10% of fiscal 2025 revenue.
+Added: We depend on distributors to expand their customer base and anticipate demand.
+Added: Their success directly impacts our growth and profitability.
+Added: Distributors must balance adequate inventory against obsolescence risk—particularly relevant for technology products—based on market cycles and internal factors largely outside our control.
+Added: Both we and our distributors may be required to shift business relationships based on product availability, performance, and strategic priorities.
+Added: We typically recognize revenue on products sold to distributors when an item is shipped and title passes to the distributor.
+Added: Certain distributors have limited rights to return inventory under stock rotation programs and have limited price adjustment rights for which we make estimates.
+Added: We evaluate inventory levels in the distribution channel, current economic trends and other related factors in order to account for these factors in our judgments and estimates.
+Added: As inventory levels and product return trends change or we make changes to our distributor roster, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be adversely impacted.
+Added: Cyclical market patterns and potential downturns in our end markets could impact demand, which could cause volatility in our revenue and profitability.
+Added: Industries we serve experience significant supply-demand and pricing fluctuations affecting our revenue and profitability.
+Added: The semiconductor industry's rapid technological change, high capital expenditures, short product life cycles, and continuous advancements create volatility.
+Added: Market maturity brings variability from customer base changes and consolidations, characterized by low demand, overcapacity, higher inventories, and aggressive pricing.
+Added: We have experienced and may continue experiencing these conditions, which could adversely impact our business, financial condition, and results of operations.
+Added: Global macroeconomic conditions could adversely impact our strategic direction.
+Added: In fiscal 2025, 82% of our revenue was from outside the United States and we expect that revenue from international sales will continue to represent a significant portion of our total revenue.
+Added: As such, a significant slowdown or instability in relevant foreign economies or lower investments in new infrastructure could have a negative impact on our sales.
+Added: We also purchase a portion of the materials included in our products from overseas sources.
+Added: Moreover, our operations and performance depend significantly on worldwide economic and geopolitical conditions.
+Added: Uncertainty about global economic conditions could cause customers to postpone purchases, which could, in turn, have a material negative impact on the demand of our products.
+Added: Economic slowdowns or recessions and inflationary pressures could decrease demand, increase costs, and create other challenges.
+Added: Government actions addressing economic slowdowns and inflation, including elevated interest rates, could negatively impact our growth.
+Added: Our international sales and purchases are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Act and the anti-boycott provisions of the United States Export Administration Act.
+Added: The United States Government has
+Added: Table of Conten ts
+Added: imposed, and in the future may impose, restrictions on shipments to some of our current customers.
+Added: Government restrictions on sales to certain foreign customers will reduce our revenue and profit related to those customers in the short term and could have a potential long-term impact.
+Added: Our international sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S.
+Added: Dollar and more competitive in countries with currencies that are increasing in value against the U.S.
+Added: In addition, our international purchases can become more expensive if the U.S.
+Added: Dollar weakens against the foreign currencies in which we are billed.
+Added: We may in the future enter into foreign currency derivative financial instruments in an effort to manage or hedge some of our foreign exchange rate risk.
+Added: We may not be able to engage in hedging transactions in the future, and, even if we do, foreign currency fluctuations may still have a material impact on our results of operations.
+Added: Tariffs or other trade restrictions or taxes have had in the past, and could have in the future, an adverse impact on our business, results of operations and financial condition.
+Added: The United States has implemented new tariffs and significant increases and changes to existing tariffs, including on goods from China, and has proposed further changes and new tariffs.
+Added: In response to such tariffs announced by the United States, other countries have imposed or are considering imposing new or increased tariffs on certain imports from the United States.
+Added: Trade tensions between the United States and China are expected to continue.
+Added: tariffs on goods from China and other countries, and corresponding retaliatory tariffs, have negatively impacted and may continue negatively impacting demand and/or increasing costs for our products.
+Added: We face uncertainty interpreting new tariffs and their applicability regarding customs valuation, product classification, and country-of-origin determinations.
+Added: Although we and vendors seek to comply with applicable customs laws, application of rules regarding new tariffs can be subject to varying interpretations or future reinterpretations.
+Added: Customs and Border Protection or other authorities could disagree with valuation, rules of origin, or classification methods applied to certain products, resulting in retroactive assessment of additional duties with interest, penalties, or other enforcement actions without ability to mitigate penalties, adversely affect our business, results of operations and financial condition.
+Added: Delays in product roadmap execution or misallocated research and development investments could impair competitiveness.
+Added: Our ability to maintain technology leadership in silicon carbide materials and power devices while continually producing more efficient, lower-cost products is critical to success in an increasingly competitive market.
+Added: Our strategic focus on accelerating the transition to 200mm substrate production requires sustained research and development investment and precise resource allocation.
+Added: If we misallocate research and development resources, fail to achieve planned cost efficiencies, or experience delays in our technology roadmap execution, we may lose competitive positioning.
+Added: In some instances, we plan product offerings based on planned yield improvements or increased cost efficiencies from production advances;
+Added: failure to achieve these improvements could significantly affect our business, results of operations and financial condition.
+Added: Risks Related to Manufacturing and Operational Execution
+Added: Product quality issues or failure to meet evolving quality standards could increase costs and damage customer relationships.
+Added: All of our products are manufactured using highly complex silicon carbide technologies.
+Added: The number of usable items, or yield, from our production processes may fluctuate as a result of numerous factors.
+Added: These include variability in our process repeatability and control, contamination of the manufacturing environment, equipment failures, power outages, or other system disruptions.
+Added: Yield fluctuations may also result from lack of consistency and adequate quality and quantity of piece parts, raw materials, and bill of materials items, as well as inventory shrinkage or human errors.
+Added: Additionally, defects in production processes within our facilities or at suppliers and subcontractors, and transitions or changes in production processes (whether planned or unplanned), can impact yields.
+Added: We have experienced difficulties in achieving acceptable yields on certain products in the past, which has adversely affected our operating results, and we may experience similar problems in the future.
+Added: Our ability to convert volume manufacturing to larger diameter substrates, particularly the transition to 200mm production, is an important factor in providing more cost-effective manufacturing processes.
+Added: Our customers specify stringent quality, performance, and reliability standards that we must meet, particularly for automotive applications which require zero defect quality processes, functionally safe design architecture, and high reliability standards.
+Added: If our products do not meet these standards, we may be required to replace or rework them at significant cost.
In some cases, our products may contain undetected defects or flaws that only become evident after shipment and installation.
−Removed: Even if our products meet standard specifications, our customers may attempt to use our products in applications for which they were not designed or in products that were not designed or manufactured properly, resulting in product failures and creating customer satisfaction issues.
+Added: Even if our products meet standard specifications, customers may attempt to use our products in applications for which they were not designed or in products that were not designed or manufactured properly, resulting in product failures and creating customer satisfaction issues.
We have experienced product quality, performance, or reliability problems from time to time, and defects or failures may occur in the future.
−Removed: If failures or defects occur, they could result in significant losses or product recalls.
−Removed: A significant product recall could also result in adverse publicity, damage to our reputation and a loss of customer confidence in our products.
−Removed: We also may be the target of product liability lawsuits against us if the use of our products at issue is determined to have caused injury or contained a substantial product hazard.
+Added: Product quality issues could result in significant financial and reputational consequences.
+Added: A significant product recall could result in adverse publicity, damage to our reputation, and loss of customer confidence in our products—particularly critical as we work to
+Added: Table of Conten ts
+Added: rebuild stakeholder trust following our Chapter 11 emergence.
+Added: High defect rates and failure to meet evolving industry quality standards may damage customer relationships, impact customer acquisition and retention, and create significant reputational risk that could impair our competitive position.
We provide standard warranty periods of 90 days on our products, with longer periods under a limited number of customer contracts.
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Increased warranty claims could result in significant losses due to a rise in warranty expense and costs associated with customer support.
−Removed: As a result of our continued expansion into new markets, we may compete with existing customers who may reduce their orders.
−Removed: We continue to expand into new markets and new market segments.
−Removed: Many of our existing customers who purchase our silicon carbide substrate materials develop and manufacture devices, die and components using those wafers that are offered in the same power market.
−Removed: As a result, some of our current customers perceive us as a competitor in these market segments.
−Removed: In response, our customers may reduce or discontinue their orders for our substrate materials.
−Removed: This reduction in or discontinuation of orders could occur faster than our sales growth in these new markets, which could adversely affect our business, results of operations or financial condition.
−Removed: Risks associated with our strategic transactions
−Removed: If we fail to evaluate and execute strategic opportunities successfully, our business may suffer.
−Removed: From time to time, including the present, we evaluate strategic opportunities available to us for product, technology or business transactions, such as business acquisitions, investments or capacity expansions, joint ventures, divestitures, or spin-offs.
−Removed: If we choose to enter into such strategic transactions, we face certain risks including:
−Removed: • the inability to realize the expected benefits, both from a timing and amount perspective, from our ongoing and planned capacity expansions, including the construction of a new materials manufacturing facility in Siler City, North Carolina;
−Removed: • the failure of an acquired business, investee or joint venture to meet our performance and financial expectations;
−Removed: • identification of additional liabilities relating to an acquired business;
−Removed: • loss of customers due to perceived conflicts or competition with such customers or due to regulatory actions taken by governmental agencies;
−Removed: • that we are not able to enter into acceptable contractual arrangements in connection with the transaction;
−Removed: • difficulty integrating an acquired business's operations, personnel and financial and operating systems into our current business;
−Removed: • that we are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders if we experience wide fluctuations in supply and demand;
−Removed: • diversion of management's attention;
−Removed: • difficulty separating the operations, personnel and financial and operating systems of a spin-off or divestiture from our current business;
−Removed: • the possibility we are unable to complete the transaction and expend substantial resources without achieving the desired benefit;
−Removed: • the inability to obtain required regulatory agency approvals;
−Removed: • reliance on a transaction counterparty for transition services for an extended period of time, which may result in additional expenses and delay the integration of the acquired business and realization of the desired benefit of the transaction;
−Removed: • uncertainty of the financial markets or circumstances that cause conditions that are less favorable and/or different than expected;
−Removed: • expenses incurred to complete a transaction may be significantly higher than anticipated.
−Removed: We may not be able to adequately address these risks or any other problems that arise from our prior or future acquisitions, investments, joint ventures, divestitures or spin-offs.
−Removed: Any failure to successfully evaluate strategic opportunities and address risks or other problems that arise related to any such business transaction could adversely affect our business, results of operations or financial condition.
−Removed: We are subject to a number of risks associated with our restructuring plan, and these risks could impact our operations, financial condition and ability to realize expected cost savings.
−Removed: In the first quarter of fiscal 2025, we began implementing a restructuring plan to reduce costs, increase our operational efficiency and align our manufacturing capacity with our customers' demand.
−Removed: This plan may result in business disruptions, including impacts to our customer relationships, unfavorable publicity and reputational harm, and loss of productivity from our employees.
−Removed: The expected costs and charges of our restructuring plan may be greater than we have forecasted, and the estimated cost savings may be lower than we have forecasted.
−Removed: We may not be able to implement our restructuring program as planned, and we may need to take additional measures and incur additional costs to fulfill the objectives of our restructuring.
−Removed: If we experience any of these adverse consequences, our restructuring plan may not achieve or sustain the intended benefits and could adversely affect our business, results of operations or financial condition.
−Removed: We are subject to a number of risks associated with our former RF Business, and these risks could adversely impact our operations, financial condition and business.
−Removed: On December 2, 2023, we completed the sale of the RF Business to MACOM Technology Solutions Holdings, Inc.
−Removed: (MACOM) pursuant to the Asset Purchase Agreement dated August 22, 2023 (the RF Purchase Agreement).
−Removed: We are subject to a number of risks associated with this transaction, including risks associated with:
−Removed: • issues, delays or complications in completing required transition activities to allow the RF Business to operate under MACOM, including incurring unanticipated costs to complete such activities;
−Removed: • the diversion of our management's attention away from the operation of the business we retained;
−Removed: • the restrictions on and obligations with respect to our business set forth in the RF master supply agreement and the transition services agreement, in each case between us and MACOM;
−Removed: • the need to provide transition services in connection with the transaction;
−Removed: • any required payments of indemnification obligations under the RF Purchase Agreement for retained liabilities and breaches of representations, warranties or covenants;
−Removed: • our failure to realize the full purchase price anticipated under the RF Purchase Agreement, including due to fluctuations in the market price of MACOM’s common stock before we are able to sell the shares received as partial consideration for the RF Business (the MACOM Shares) following MACOM's assumption of control of our 100mm GaN wafer fabrication facility in Research Triangle Park, North Carolina, approximately two years following the closing of the transaction (the RTP Fab Transfer) and/or the forfeiture of one-quarter of the MACOM Shares in the event that the RTP Fab Transfer is not completed within four years following the closing of the transaction.
−Removed: As a result of these risks, we may be unable to realize the anticipated benefits of the transaction, including the total amount of cash we expect to realize.
−Removed: Our failure to realize the anticipated benefits of the transaction would adversely impact our operations, financial condition and business and could limit our ability to pursue additional strategic transactions.
−Removed: We are subject to risks associated with the sale of our former Lighting Products and LED Products business units, and these risks could adversely impact our financial condition.
−Removed: On May 13, 2019, we closed the sale of our former Lighting Products business unit to IDEAL Industries, Inc.
−Removed: (IDEAL) and on March 1, 2021, we completed the sale of our former LED Products business unit (the LED Business) to SMART Global Holdings, Inc.
−Removed: We are subject to risks associated with these transactions, including risks associated with any required payments of indemnification obligations under the Purchase Agreement with IDEAL and the Asset Purchase Agreement with SGH for retained liabilities and breaches of representations, warranties or covenants.
−Removed: As a result, we may be unable to realize the anticipated benefits of these transactions.
−Removed: Our failure to realize the anticipated benefits of these transactions would adversely impact our financial condition and could limit our ability to pursue additional strategic transactions.
−Removed: Risks associated with our capital structure
−Removed: Negotiations with our lenders may result in an in-court debt restructuring, and the contemplation of an in-court solution raises substantial doubt about our ability to continue as a going concern.
−Removed: As of March 30, 2025, we had approximately $6.5 billion of debt obligations, as further discussed in Note 9 "Long-term Debt" in our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
−Removed: Considering the significant amount of our outstanding indebtedness and related debt service expense, we have engaged external advisors to assist with the evaluation of a number of strategic alternatives, including a potential out-of-court or in-court capital restructuring.
−Removed: These alternatives include, but are not limited to, restructuring, refinancing or amending our existing debt, seeking new financing or pursuing asset sales to bolster liquidity.
−Removed: We have actively engaged in discussions and negotiations with certain holders of our indebtedness regarding the terms of a potential restructuring with a goal of not impacting our customers, vendors and employees in the ordinary course of business.
−Removed: These discussions and negotiations are ongoing and the terms of any potential restructuring have not been agreed upon by the parties.
−Removed: Notwithstanding our efforts, there can be no assurance that we will reach an agreement on acceptable terms and conditions with respect to a restructuring or other transaction in a timely manner or at all.
−Removed: Any restructuring or other transaction will likely be subject to a number of conditions, many of which will be outside of our control, including market and economic conditions and the agreement of the various holders of our indebtedness.
−Removed: Furthermore, any restructuring or other transaction.
−Removed: to which we may agree, may be conditioned on a requirement that the transaction be implemented through an in-court solution.
−Removed: There can be no assurance that we will pursue such a transaction or successfully complete a restructuring or other transaction.
−Removed: In addition, while we can make no assurances on what the terms of a restructuring or other transaction would be or what, if anything, our existing debt and equity holders would receive in any restructuring or other transaction and the value of our debt and equity following the consummation of any restructuring or other transaction, any restructuring or other transaction is expected to be costly, would likely be substantially dilutive to our existing shareholders and would likely limit our ability to utilize our net operating loss carry forwards (and/or other nonrefundable tax attributes).
−Removed: While we consider these strategic alternatives, we retain sufficient liquidity, with approximately $1,329.6 million of unrestricted cash and cash equivalents and short-term investments on our unaudited consolidated balance sheet as of March 30, 2025, compared to scheduled debt repayments and debt service costs of $575 million and $322 million, respectively, over the next 12 months.
−Removed: We also plan to submit for approximately $600 million in cash tax refunds related to the amounts eligible for reimbursement under the AMIC over the next 12 months.
−Removed: We expect that our current operating forecast over the next 12 months will allow us to maintain operations and meet our obligations to customers, vendors and employees in the ordinary course of business.
−Removed: However, due to our ongoing consideration of an in-court restructuring that would result in an event of default during the implementation of that potential solution, management has concluded that there is substantial doubt about our ability to continue as a going concern as of the issuance date of the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
−Removed: The reaction of investors to our potential inability to continue as a going concern could have a material adverse effect on the market price of our common stock.
−Removed: This could, among other things, adversely impact our ability to use our equity for strategic, financing or other purposes.
−Removed: Additionally, the perception that we may not be able to continue as a going concern may cause existing or prospective customers, vendors and other counterparties to choose not to conduct business with us due to concerns about our ability to meet our contractual obligations and continue operating our business without interruption.
−Removed: In addition, any in-court solution would subject us to risks and uncertainties that could have a material adverse effect on our business, financial condition, results of operations and liquidity, including, but not limited to, by causing increased difficulty obtaining and maintaining commercial relationships on competitive terms with customers, vendors and other counterparties;
−Removed: increased difficulty retaining and motivating employees, as well as attracting new employees;
−Removed: diversion of management’s time and attention to dealing with the in-court solution and restructuring activities rather than focusing exclusively on business operations;
−Removed: incurrence of substantial costs, fees and other expenses associated with any in-court solution;
−Removed: and loss of ability to obtain sufficient financing sources for operations or to fund any restructuring plan and meet future obligations.
−Removed: We may also become subject to risks and uncertainties caused by the actions of holders of our indebtedness and other third parties who have interests that may be inconsistent with our plans.
−Removed: Furthermore, in any in-court solution, there are risks of delay with the confirmation of the restructuring plan and there are risks of objections from certain stakeholders that could further delay the process and potentially cause an in-court solution to be rejected by the court.
−Removed: Any material delay in the confirmation of an in-court solution would not only add substantial expense and uncertainty to the process, but could materially adversely affect our operations and there is no assurance that any in-court solution will be consummated.
−Removed: In addition, the New York Stock Exchange may take action to delist our common stock in connection with an in-court solution.
−Removed: Any action by the New York Stock Exchange to delist, or the delisting of, our common stock could, among other things, reduce the liquidity of our common stock, detrimentally affect the market price of our common stock, reduce the number of investors willing to hold or acquire our common stock, and impair our ability to incentivize key personnel through equity-based compensation or to use our equity for strategic, financing or other purposes.
−Removed: We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.
−Removed: As of March 30, 2025, our indebtedness consisted of $575.0 million aggregate principal amount of our 2026 Notes, $750.0 million aggregate principal amount of our 0.25% convertible senior notes due February 15, 2028 (the 2028 Notes), $1,750.0 million aggregate principal amount of our 1.875% convertible senior notes due December 1, 2029 (the 2029 Notes, and together with the 2026 Notes and the 2028 Notes, the Outstanding Convertible Notes) and $1,513.5 million aggregate principal amount of 2030 Senior Notes and an aggregate principal amount of $2,062.0 million of deposits under the CRD Agreement with Renesas America.
−Removed: As discussed in Note 9, "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, on October 15, 2024, we entered into the 2030 Senior Notes Indenture which amends certain terms and conditions of the 2030 Senior Notes and permits us to issue and sell $750.0 million of additional notes, subject to the fulfillment of certain conditions.
−Removed: On October 22, 2024, we issued an additional $250.0 million of 2030 Senior Notes.
−Removed: The level of our outstanding debt may adversely affect our operating results and financial condition by, among other things:
−Removed: • increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;
−Removed: • requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures, or research and development;
−Removed: • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
−Removed: • placing us at a competitive disadvantage compared to our peers that may have less indebtedness than we have by limiting our ability to borrow additional funds needed to operate and grow our business;
−Removed: • increasing our interest expense if interest rates increase.
−Removed: Our ability to pay interest and repay the principal for or to refinance any outstanding indebtedness under the Outstanding Convertible Notes, the 2030 Senior Notes and the CRD Agreement is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and/or raise additional capital, which is subject to economic, financial, competitive and other factors beyond our control.
−Removed: There can be no assurance that we will be able to manage any of these risks successfully and we may be unable to refinance our outstanding indebtedness on terms satisfactory to us, or at all.
−Removed: Such financing and other potential financings could result in substantial dilution to shareholders, and could result in the reduction in the trading price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business.
−Removed: The 2030 Senior Notes Indenture includes a liquidity maintenance financial covenant requiring us to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the trustee and collateral agent for the 2030 Senior Notes has been granted a perfected first lien security interest of at least $630 million as of the last day of any calendar month ending on or prior to March 31, 2025 and (b) $750 million as of April 1, 2025 and as of the last day of any calendar month ending thereafter, which amount will be reduced over time upon the fulfillment of certain conditions.
−Removed: In addition, the 2030 Senior Notes Indenture contains certain restrictions that could limit our ability to, among other things:
−Removed: incur additional indebtedness, dispose of assets, create liens on assets, make acquisitions or engage in mergers or consolidations, and engage in certain transactions with our subsidiaries and affiliates.
−Removed: The 2030 Senior Notes Indenture also requires us to make an offer to repurchase the 2030 Senior Notes with 100% of the net cash proceeds of certain non-ordinary course asset sales and casualty events, subject to the ability to reinvest the proceeds of such casualty events and asset sales (subject to certain limitations), or upon a change of control.
−Removed: The Indentures governing the Outstanding Convertible Notes (the Convertible Notes Indentures) require us to repurchase the Outstanding Convertible Notes upon certain fundamental changes relating to our common stock, and also prohibit our consolidation, merger, or sale of all or substantially all of our assets except with or to a successor entity assuming our obligations under the Indentures.
−Removed: The CRD Agreement contains certain restrictions on our ability to incur debt and liens, consummate non-arm’s-length transactions with affiliates, consummate mergers and consolidations whereby obligations under the CRD Agreement are not assumed, and change the nature of our business.
−Removed: The restrictions imposed by the 2030 Senior Notes Indenture, the Convertible Notes Indentures, and the CRD Agreement could limit our ability to plan for or react to changing business conditions, or could otherwise restrict our business activities and plans.
−Removed: Our ability to comply with the provisions of the 2030 Senior Notes Indenture, the Convertible Notes Indentures, and the CRD Agreement may also be affected by events beyond our control and if any of these restrictions or terms is breached, it could lead to an event of default under the 2030 Senior Notes, the Outstanding Convertible Notes, and the CRD Agreement.
−Removed: A default, if not cured or waived, may permit acceleration of our indebtedness.
−Removed: In addition, our lenders could terminate their commitments to make further loans under the 2030 Senior Notes Indenture or the CRD Agreement.
−Removed: If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds to pay the accelerated indebtedness or that we will have the ability to refinance accelerated indebtedness on terms favorable to us or at all.
−Removed: The capped call transactions may not prevent dilution of our common stock upon conversion of the 2028 Notes or the 2029 Notes.
−Removed: In connection with the pricing of the 2028 Notes and the 2029 Notes, we entered into privately negotiated capped call transactions with the option counterparties.
−Removed: The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2028 Notes and 2029 Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of the converted 2028 Notes and 2029 Notes, as the case may be, upon conversion of the 2028 Notes and 2029 Notes.
−Removed: If, however, the market price per share of our common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions ($212.04 for the 2028 Notes and $202.538 for the 2029 Notes), there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.
−Removed: Risks associated with cybersecurity, intellectual property and litigation
−Removed: We may be subject to confidential information theft or misuse, which could harm our business and results of operations.
−Removed: We face attempts by others to gain unauthorized access to our information technology systems on which we maintain proprietary and other confidential information and such attempts may increase in terms of frequency and severity in light of the sanctions imposed on Russia in response to its invasion of Ukraine.
−Removed: Our security measures may be breached as the result of industrial or other espionage actions of outside parties, employees, employee error, malfeasance or otherwise, and as a result, an unauthorized party may obtain access to our systems.
−Removed: The risk of a security breach or disruption, particularly through cyber-attacks, ransomware, or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as cyber-attacks have become more prevalent and harder to detect and fight against.
−Removed: Additionally, outside parties may attempt to access our confidential information through other means, for example by fraudulently inducing our employees to disclose confidential information.
−Removed: We actively seek to prevent, detect and investigate any unauthorized access, which sometimes occurs and is usually not recognized until after it has occurred.
−Removed: We might be unaware of any such access or unable to determine its magnitude and effects.
−Removed: We are also at risk of security breaches and disruptions occurring at third parties that we work with, including our customers and suppliers.
−Removed: To date, we do not believe that such unauthorized access to these systems has caused us any material damage.
−Removed: In addition, these threats are constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing adequate preventative measures.
−Removed: The theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position, result in a loss of confidence in the adequacy of our threat mitigation and detection processes and procedures, cause us to incur significant costs to remedy the damage caused by the incident, divert management's attention and other resources, and reduce the value of our investment in research and development.
−Removed: In addition, the increased prevalence of employees working from home may exacerbate the aforementioned cybersecurity risks.
+Added: Our ability to achieve manufacturing cost targets and production yield goals is critical to profitability.
+Added: Our ongoing transition to 200mm substrate production is essential to achieving competitive cost structures and improved economies of scale, and delays or difficulties in this transition could adversely affect our ability to compete on price and maintain profitability.
+Added: Our financial performance depends on achieving anticipated manufacturing efficiencies and cost reductions in our silicon carbide operations.
+Added: Production output can be adversely affected by factors such as operational disruptions, supply chain inconsistencies, workforce execution, and modifications to production methods.
+Added: We have experienced difficulties meeting output targets in the past, negatively impacting financial results, and similar challenges may arise in the future.
+Added: If we fail to realize these projected enhancements, whether from improved output rates, reduced per-unit costs, or successful scaling of operations, our profit margins, financial condition, and results of operations could be significantly impaired.
+Added: Our ability to balance customer demand with manufacturing capacity affects our financial performance.
+Added: As customer demand changes, we must adjust production capacity to meet demand.
+Added: We are continually addressing manufacturing capacity needs, currently focusing on accelerating transition from 150mm to 200mm substrates.
+Added: However, if we cannot increase production capacity at our targeted rate, if unforeseen costs arise, or if we cannot obtain advanced semiconductor manufacturing equipment timely, we may not achieve financial targets.
+Added: We may be unable to build or qualify new capacity timely to meet customer demand, causing customers to fulfill orders with competitors.
+Added: As we introduce new products and change product generations, we must balance production and inventory of prior generation products with new generation products to maintain a product mix that both aligns to customer demand and mitigates inventory write-down risks.
+Added: Significant or prolonged shortages or delivery delays could delay customer manufacturing, negatively impact relationships, and potentially trigger penalty payments under certain agreements.
+Added: Due to proportionately high fixed costs (such as facility costs), if demand does not materialize at forecasted rates, we may not scale back manufacturing expenses or overhead costs quickly enough to correspond to lower demand, resulting in lower margins and adversely impacting our business, financial condition, and results of operations.
+Added: If product demand decreases or if we fail to forecast demand accurately, we may experience mismatches between current product demand and manufactured product mix, adversely impacting results through higher costs from lower factory utilization and higher fixed costs per unit produced.
+Added: Changes in product demand from customer forecasts may cause variability in supply costs if significant adjustments are needed to forecasted or committed procurement and supply plans.
+Added: We may be required to recognize impairments on long-lived assets or excess inventory write-off charges, negatively impacting results of operations.
+Added: With the opening of the Mohawk Valley and Siler City facilities, we will continue to experience increased pressure on margins during periods when production begins up to the point our facilities reach full utilization.
+Added: Initially, we expect this underutilization cost will be substantial as we ramp facilities.
+Added: Additionally, large upfront investments in facilities to increase capacity do not guarantee we'll need the capacity, and we may experience lower than expected demand once facilities are in production, resulting in further margin pressures.
+Added: Our efforts to improve quoted delivery lead-time performance may result in corresponding reductions in order backlog.
+Added: Declining backlog levels could result in more variability and less predictability in quarter-to-quarter revenue and operating results.
+Added: Operational challenges in improving utilization at our key manufacturing facilities may impact margins and results of operations.
+Added: Our margins are negatively impacted by challenges in managing utilization in our facilities.
+Added: Establishing and operating new manufacturing facilities or expanding existing facilities involves significant risks and challenges, some of which we have experienced and may experience in the future, including poor production process yields and quality control challenges;
+Added: insufficient personnel with requisite expertise and experience to operate automated silicon carbide device fabrication and materials manufacturing facilities;
+Added: and issues installing new equipment and ramping production.
+Added: In addition, as we bring new or expanded facilities online, we incur underutilization costs, which reflect the cost of operating the facility during the period when production begins but before the facility is at full utilization and have a negative impact on our margins.
+Added: Failure to comply with applicable environmental laws and regulations could harm our business and results of operations.
+Added: The manufacturing, assembly, and testing of our products require the use of hazardous materials subject to environmental, health, and safety laws and regulations.
+Added: Our failure to comply with applicable laws could result in regulatory penalties, fines, legal liabilities,
+Added: Table of Conten ts
+Added: forfeiture of tax benefits, suspension of production, alteration of our processes, and curtailment of operations or sales.
+Added: Failure to manage the use, transportation, storage, or disposal of hazardous materials could subject us to significant costs or future liabilities.
+Added: Existing and future environmental laws and regulations could require us to acquire pollution abatement equipment, modify product designs, or incur other expenses.
+Added: New materials we evaluate may be subject to regulations that restrict their use in our processes or products, harming our business by increasing expenses or requiring process alterations.
+Added: New climate change laws and regulations could require us to change manufacturing processes or procure substitute materials that cost more or are more difficult to obtain.
+Added: Various jurisdictions have implemented or could implement restrictions on emissions, water use, energy management, and waste management, which may increase expenses and adversely affect results.
+Added: Additionally, SEC rules under the Dodd-Frank Act impose annual disclosure and reporting requirements for companies using "conflict" minerals from the Democratic Republic of Congo and adjoining countries.
+Added: We may face challenges with regulators, customers, and suppliers if unable to verify that metals used in our products are conflict-free.
+Added: Risks Related to Our Overall Business and Operations
+Added: Our ability to attract and retain qualified personnel in a competitive market is critical to our success.
+Added: Hiring and retaining qualified personnel is critical to our business, and competition for experienced employees in our industry is intense.
+Added: As a global company, this issue extends beyond the United States to our other locations in Europe and Asia.
+Added: There is substantial competition for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult to recruit and retain qualified employees.
+Added: If we are unable to staff sufficient and adequate personnel at our facilities, including as a result of attrition beyond the intended 2025 Restructuring Plan or adverse impacts on our ability to recruit and hire qualified personnel in the future as a result of the Chapter 11 Cases, we may experience lower revenue or increased manufacturing costs, adversely affecting our business, financial condition, and results of operations.
+Added: To help attract, motivate, and retain key employees, we use benefits such as stock-based compensation awards.
+Added: If the value of such awards does not appreciate, as measured by our common stock price performance, or if our stock-based compensation otherwise ceases to be viewed as valuable, our ability to attract, retain, and motivate employees could be weakened, affecting our business, financial condition, and results of operations.
+Added: Cybersecurity threats, data breaches, and inadequate data protection controls could harm our business.
+Added: We face attempts by others to gain unauthorized access to our information technology systems on which we maintain proprietary and other confidential information, and such attempts may increase in frequency and severity.
+Added: Our security measures may be breached as the result of industrial or other espionage actions of outside parties, employees, malfeasance, or otherwise, resulting in unauthorized parties obtaining access to our systems.
+Added: The risk of security breaches or disruptions, particularly through cyber-attacks, ransomware, or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as cyber-attacks have become more prevalent and harder to detect and fight.
+Added: Additionally, outside parties may attempt to access our confidential information through other means, for example by fraudulently inducing employees to disclose confidential information.
+Added: We actively seek to prevent, detect, and investigate unauthorized access, which sometimes occurs and is usually not recognized until after it has occurred.
+Added: We might be unaware of such access or unable to determine its magnitude and effects.
+Added: We are also at risk of security breaches and disruptions occurring at third parties we work with, including customers and suppliers.
+Added: To date, we do not believe unauthorized access to these systems has caused material damage.
+Added: These threats are constantly evolving, increasing the difficulty of successfully defending against them or implementing adequate preventative measures.
+Added: Theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such incidents could adversely affect our competitive position, result in loss of confidence in the adequacy of our threat mitigation and detection processes and procedures, cause us to incur significant costs to remedy damage, divert management's attention and other resources, and reduce the value of our investment in research and development.
+Added: The increased prevalence of employees working remotely may exacerbate these cybersecurity risks.
Our business could be subject to significant disruption and we could suffer monetary or other losses.
−Removed: Our disclosure controls and procedures address cybersecurity and include elements intended to ensure that there is an analysis of potential disclosure obligations arising from security breaches.
−Removed: In addition, we are subject to data privacy, protection and security laws and regulations, including the European General Data Protection Act (GDPR) that governs personal information of European persons.
−Removed: We also maintain compliance programs to address the potential applicability of restrictions against trading while in possession of material, nonpublic information generally and in connection with a cyber-security breach.
−Removed: However, a breakdown in existing controls and procedures around our cyber-security environment may prevent us from detecting, reporting or responding to cyber incidents in a timely manner and could have a material adverse effect on our financial position and value of our stock.
−Removed: There are limitations on our ability to protect our intellectual property.
+Added: Our disclosure controls and procedures address cybersecurity and include elements intended to ensure analysis of potential disclosure obligations arising from security breaches.
+Added: We are subject to data privacy, protection, and security laws and regulations, including the European General Data Protection Regulation (GDPR) governing personal information of European persons.
+Added: We maintain compliance programs to address potential applicability of restrictions against trading while in possession of material, nonpublic information generally and in connection with cybersecurity breaches.
+Added: However, a breakdown in existing controls and procedures around our cybersecurity environment may prevent us from detecting, reporting, or responding to cyber incidents timely and could adversely affect the trading price of our common stock as well as our overall business, financial condition, results of operations.
+Added: Our ability to protect our intellectual property rights is subject to limitations.
Our intellectual property position is based in part on patents owned by us and patents licensed to us.
−Removed: We intend to continue to file patent applications in the future, where appropriate, and to pursue such applications with United States and certain foreign patent authorities.
−Removed: Our existing patents are subject to expiration and re-examination and we cannot be sure that additional patents will be issued on any new applications around the covered technology or that our existing or future patents will not be successfully contested by third parties.
−Removed: Also, because issuance of a valid patent does not prevent other companies from using alternative, non-infringing technology, we cannot be sure that any of our patents, or patents issued to others and licensed to us, will provide significant commercial protection, especially as new competitors enter the market.
−Removed: We periodically discover products that are counterfeit reproductions of our products or that otherwise infringe on our intellectual property rights.
−Removed: The actions we take to establish and protect trademarks, patents and other intellectual property rights may not be adequate to prevent imitation of our products by others, and therefore, may adversely affect our sales and our brand and result in the shift of customer preference away from our products.
−Removed: Further, the actions we take to establish and protect trademarks, patents and other intellectual property rights could result in significant legal expense and divert the efforts of our technical personnel and management, even if the litigation or other action results in a determination favorable to us.
−Removed: We also rely on trade secrets and other non-patented proprietary information relating to our product development and manufacturing activities.
−Removed: We try to protect this information through appropriate efforts to maintain its secrecy, including requiring employees and third parties to sign confidentiality agreements.
−Removed: We cannot be sure that these efforts will be successful or that the confidentiality agreements will not be breached.
−Removed: We also cannot be sure that we would have adequate remedies for any breach of such agreements or other misappropriation of our trade secrets, or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by others.
−Removed: Litigation could adversely affect our operating results and financial condition.
−Removed: We are often involved in litigation, primarily patent litigation, such as our patent dispute with The Trustees of Purdue University that was settled during the third quarter of fiscal 2025, and we and certain current and former executive officers were named as defendants in multiple securities class action lawsuits regarding past public disclosures, each as discussed further in Note 5, "Commitments and Contingencies," in our unaudited financial statements in Part I, Item 1 of this Quarterly Report.
−Removed: Defending against existing and potential litigation will likely require significant attention and resources and, regardless of the outcome, result in significant legal expenses, which could adversely affect our results unless covered by insurance or recovered from third parties.
−Removed: If our defenses are ultimately unsuccessful or if we are unable to achieve a favorable resolution, we could be liable for damage awards that could materially affect our results of operations and financial condition.
−Removed: Where necessary, we may initiate litigation to enforce our patent or other intellectual property rights, which could adversely impact our relationship with certain customers.
−Removed: Any such litigation may require us to spend a substantial amount of time and money and could distract management from our day-to-day operations.
−Removed: Moreover, there is no assurance that we will be successful in any such litigation.
−Removed: Our business may be impaired by claims that we, or our customers, infringe the intellectual property rights of others.
+Added: We intend to continue filing patent applications where appropriate and pursuing such applications with U.S.
+Added: and certain foreign patent authorities.
+Added: Our existing patents are subject to expiration and re-examination, and we cannot be sure additional patents will be issued on new applications
+Added: Table of Conten ts
+Added: around covered technology or that existing or future patents won't be successfully contested by third parties.
+Added: Because issuance of a valid patent doesn't prevent other companies from using alternative, non-infringing technology, we cannot be sure any of our patents, or patents licensed to us, will provide significant commercial protection, especially as new competitors enter the market.
+Added: We periodically discover products that are counterfeit reproductions of our products or otherwise infringe on our intellectual property rights.
+Added: Actions we take to establish and protect trademarks, patents, and other intellectual property rights may not be adequate to prevent imitation of our products by others, potentially adversely affecting sales and our brand, resulting in customer preference shifts away from our products.
+Added: Further, actions we take to establish and protect trademarks, patents, and other intellectual property rights could result in significant legal expense and divert efforts of technical personnel and management, even if litigation or other action results in determinations favorable to us.
+Added: We also rely on trade secrets and other non-patented proprietary information relating to product development and manufacturing activities.
+Added: We try to protect this information through appropriate efforts to maintain secrecy, including requiring employees and third parties to sign confidentiality agreements.
+Added: We cannot be sure these efforts will be successful or that confidentiality agreements won't be breached.
+Added: We cannot be sure we would have adequate remedies for any breach of such agreements or other misappropriation of trade secrets, or that our trade secrets and proprietary know-how won't otherwise become known or be independently discovered by others.
+Added: Vigorous protection and pursuit of intellectual property rights characterize our industry, resulting in significant and often protracted and expensive litigation.
+Added: Litigation to determine validity of patents or claims by third parties of infringement of patents or other intellectual property rights could result in significant legal expense and divert efforts of technical personnel and management, even if litigation results in determinations favorable to us.
+Added: In the event of adverse results in such litigation, we could be required to pay substantial damages;
+Added: indemnify customers;
+Added: stop the manufacture, use, and sale of products found to be infringing;
+Added: incur asset impairment charges;
+Added: discontinue the use of processes found to be infringing;
+Added: expend significant resources to develop non-infringing products or processes;
+Added: or obtain licenses to use third-party technology.
+Added: There can be no assurance third parties will not attempt to assert infringement claims against us or our customers with respect to our products.
+Added: Our customers may face infringement claims directed to their products that incorporate our products, and adverse results could impair customer demand for our products.
+Added: We have promised certain customers we will indemnify them if they are sued by our competitors for infringement claims associated with products we supply.
+Added: Under these indemnification obligations, we may be responsible for future payments to resolve infringement claims against them.
+Added: From time to time, we receive correspondence asserting our products or processes are or may be infringing patents or other intellectual property rights of others.
+Added: If we believe such assertions may have merit, or in other appropriate circumstances, we may take steps to seek to obtain licenses or avoid litigation.
+Added: We cannot predict whether licenses will be available;
+Added: whether we would find terms of any license offered acceptable;
+Added: or whether we would be able to develop alternative solutions.
+Added: Failure to obtain necessary licenses or develop alternative solutions could cause us to incur substantial liabilities and costs and potentially force manufacturing of the affected products to be suspended.
+Added: Delays in consolidating enterprise resource planning ("ERP") systems may hinder operational efficiency.
+Added: We are increasingly dependent on information technology to enable effective operations and maintain financial accuracy and efficiency.
+Added: Allocation and effective management of resources necessary to successfully implement, integrate, train personnel, and sustain our information technology platforms, including our ongoing implementation of a singular company-wide ERP system, will remain critical to reducing the risk of transaction errors, processing inefficiencies, business disruptions, or loss of or damage to intellectual property through security breaches.
+Added: We face these same risks if we fail to allocate and effectively manage resources necessary to build, implement, upgrade, integrate, and sustain appropriate technology infrastructure over the longer term.
+Added: Risks relating to the use or application of emerging technologies, including AI, could result in harm.
+Added: Concerns relating to the responsible use of new and evolving technologies, such as AI, in our and our suppliers’ and customers' products and services may result in reputational and financial harm and legal liability.
+Added: We and our suppliers and customers are increasingly building AI capabilities into products and internal processes.
+Added: AI poses emerging ethical and regulatory issues and presents risks and challenges that could affect its adoption, and therefore our business.
+Added: If we or our suppliers or customers enable or offer solutions that draw controversy due to their perceived or actual impact on society, such as AI solutions that have unintended consequences or are controversial, we may experience reputational harm, competitive harm, or legal liability.
+Added: Further, if models underlying AI we use are:
+Added: incorrectly designed or implemented;
+Added: trained on or reliant on incomplete, flawed, inadequate, inaccurate, biased, or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or data providers haven't implemented sufficient legal compliance measures;
+Added: used without sufficient oversight and governance to ensure responsible use;
+Added: and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats, or material performance issues, any of which may not be easily detectable, our performance and reputation, as well as our customers' reputations, could suffer or we could incur liability resulting from violation of laws or contracts to which we are a party or civil claims.
+Added: Table of Conten ts
+Added: We use AI licensed from third parties, and our ability to continue using such third-party AI at the scale we need may be dependent on access to specific third-party software and infrastructure.
+Added: We cannot control availability or pricing of such third-party AI, especially in highly competitive environments, and we may be unable to negotiate favorable economic terms with applicable providers.
+Added: If any such third-party AI becomes incompatible with our technology and programs or unavailable for use, or if providers of such models unfavorably change terms on which their AI are offered or terminate their relationship with us, our business may be harmed.
+Added: Further, to the extent any third-party AI is used as a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause loss of confidence in us, or result in legal claims or proceedings, for which we may be unable to recover damages from affected providers.
+Added: While we restrict use of third-party and open-source AI tools, such as ChatGPT and Microsoft CoPilot, internal governance of adoption of these technologies can be challenging, and our employees, consultants, and partners may use these tools on an unauthorized basis, posing additional risks relating to data protection, including potential exposure of our proprietary confidential information to unauthorized recipients and misuse of our or third-party intellectual property.
+Added: Use of AI tools may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information, and failure to comply with open-source software requirements.
+Added: AI tools may also produce inaccurate responses that could lead to errors in our decision-making, product development, or other business activities, negatively impacting our business, financial condition, and results of operations.
+Added: Our ability to mitigate these risks will depend on our continued effective maintaining, training, monitoring, and enforcement of appropriate policies and procedures governing use of AI tools and results of any such use, by us or our partners.
+Added: Moreover, the regulatory framework for AI is rapidly evolving as many federal, state, and foreign government bodies and agencies have introduced or are considering additional laws and regulations.
+Added: Additionally, existing laws and regulations may be interpreted in ways affecting operation of our AI.
+Added: As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or market perception of their requirements may have on our business and may not always be able to anticipate how to respond to these laws or regulations.
+Added: It is possible that further new laws and regulations will be adopted in the United States and in other non-U.S.
+Added: jurisdictions, or that existing laws and regulations, including competition and antitrust as well as scope of practice laws, may be interpreted in ways that would limit our ability to use AI for our business, or require us to change the way we use AI in a manner that negatively affects our business and results of operations.
+Added: There are limitations on our ability to protect our intellectual property.
Vigorous protection and pursuit of intellectual property rights characterize our industry.
8 unchanged sentences
or obtain a license to use third party technology.
+Added: Where necessary, we may initiate litigation to enforce our patent or other intellectual property rights or to enforce restrictive covenants to prevent damage to or loss of our intellectual property, which could adversely impact our relationship with certain customers.
+Added: Any such litigation may require us to spend a substantial amount of time and money and could distract management from our day-to-day operations.
+Added: Moreover, there is no assurance that we will be successful in any such litigation.
There can be no assurance that third parties will not attempt to assert infringement claims against us, or our customers, with respect to our products.
−Removed: In addition, our customers may face infringement claims directed to the customer’s products that incorporate our products, and an adverse result could impair the customer’s demand for our products.
+Added: In addition, our customers may face infringement claims directed to that customer’s products that incorporate our products, and an adverse result could impair the customer’s demand for our products.
We have also promised certain of our customers that we will indemnify them in the event they are sued by our competitors for infringement claims directed to the products we supply.
1 unchanged sentence
From time to time, we receive correspondence asserting that our products or processes are or may be infringing patents or other intellectual property rights of others.
−Removed: If we believe the assertions may have merit or in other appropriate circumstances, we may take steps to seek to obtain a license or to avoid the infringement.
+Added: If we believe the assertions may have merit or in other appropriate circumstances, we may take steps to seek to obtain a license or to avoid litigation.
We cannot predict, however, whether a license will be available;
2 unchanged sentences
Failure to obtain a necessary license or develop an alternative solution could cause us to incur substantial liabilities and costs and to suspend the manufacture of affected products.
−Removed: Risks related to legal, regulatory, accounting, tax and compliance matters
−Removed: We and certain of our current and former executive officers have been named as defendants in a securities class action lawsuit.
−Removed: This lawsuit may require significant management time and attention and result in significant legal expenses, which could materially adversely affect our results and financial condition.
−Removed: On November 15, 2024, we and certain current and former executive officers were named as defendants in a securities class action lawsuit filed in the United States District Court for the Northern District of New York.
−Removed: The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder.
−Removed: Additional lawsuits have been filed by shareholders regarding these same matters.
−Removed: Such claims and any resulting litigation or additional allegations could subject us to liability.
−Removed: Even if we prevail, such litigation could be time consuming and costly to defend, and could result in the diversion of our time and attention, which could materially and adversely affect our business, our reputation, results of operations and financial condition.
−Removed: We may be required to recognize a significant charge to earnings if our goodwill or other assets become impaired.
−Removed: Goodwill and other assets are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
−Removed: Factors that may indicate that the carrying value of our goodwill may not be recoverable include a significant decline in our stock price and market capitalization and slower growth rates in our industry.
−Removed: For other assets such as finite-lived intangible assets and fixed assets, we assess the recoverability of the asset balance when indicators of potential impairment are present.
−Removed: For example, during fiscal 2025, we recorded impairment charges related to abandoned assets of $155.2 million in connection with our 2025 Restructuring Plan, and in the first quarter of fiscal 2024, we recorded an impairment to assets held for sale associated with the then-pending RF Business Divestiture of $144.6 million.
−Removed: The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our goodwill or other assets could adversely impact our results of operations.
−Removed: The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized could impact the demand for our products.
−Removed: The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized or integrated may impact the demand for our products.
−Removed: For example, efforts to change, eliminate or reduce industry or regulatory standards could negatively impact our business.
−Removed: These constraints may be eliminated or delayed by legislative action, which could have a negative impact on demand for our products.
−Removed: Our ability and the ability of our competitors to meet evolving government and/or industry requirements could impact competitive dynamics in the market.
−Removed: Changes in our effective tax rate or the ability to obtain future tax credits may affect our results and financial condition.
−Removed: Our future effective tax rates and our ability to obtain future tax credits may affect our results and financial condition due to a number of factors, including:
−Removed: • the jurisdiction in which profits are determined to be earned and taxed;
−Removed: • potential changes in tax laws or alterations in the interpretation of such tax laws and changes in generally accepted accounting principles, for example expiration or interpretations of the significant changes to the United States tax law included within the Tax Cuts and Jobs Act of 2017 (the TCJA);
−Removed: • changes or recapture of available tax credits, including our eligibility for or the receipt of the expected benefits from refundable investment tax credits obtained under the AMIC;
−Removed: • the implementation of international tax and profit shifting rules in countries in which we operate, as recommended by the Organization for Economic Co-operation and Development’s Base Erosion, including the establishment of a minimum tax of 15% on global income;
−Removed: • the resolution of issues arising from tax audits with various authorities;
−Removed: • changes in the valuation of our deferred tax assets and liabilities;
−Removed: • adjustments to estimated taxes upon finalization of various tax returns;
−Removed: • increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions;
−Removed: • the recognition and measurement of uncertain tax positions;
−Removed: • variations in realized tax deductions for certain stock-based compensation awards (such as restricted stock) from those originally anticipated;
−Removed: • the repatriation of non-United States earnings for which we have not previously provided for taxes or any changes in legislation that may result in these earnings being taxed, regardless of our decision regarding repatriation of funds.
−Removed: For example, the TCJA included a one-time tax on deemed repatriated earnings of non-United States subsidiaries.
−Removed: Any significant increase or decrease in our future effective tax rates could impact net (loss) income for future periods.
−Removed: In addition, the determination of our income tax provision requires complex estimations, significant judgments and significant knowledge and experience concerning the applicable tax laws.
−Removed: To the extent our income tax liability materially differs from our income tax provisions due to factors, including the above, which were not anticipated at the time we estimated our tax provision, our net (loss) income or cash flows could be affected.
−Removed: Failure to comply with applicable environmental laws and regulations worldwide could harm our business and results of operations.
−Removed: The manufacturing, assembling and testing of our products require the use of hazardous materials that are subject to a broad array of environmental, health and safety laws and regulations.
−Removed: Our failure to comply with any of these applicable laws or regulations could result in regulatory penalties, fines, legal liabilities and the forfeiture of certain tax benefits;
−Removed: suspension of production;
−Removed: alteration of our fabrication, assembly and test processes;
−Removed: and curtailment of our operations or sales.
−Removed: In addition, our failure to manage the use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials could subject us to significant costs or future liabilities.
−Removed: Existing and future environmental laws and regulations could also require us to acquire pollution abatement or remediation equipment, modify our product designs or incur other expenses, such as permit costs, associated with such laws and regulations.
−Removed: Many new materials that we are evaluating for use in our operations may be subject to regulation under existing or future environmental laws and regulations that may restrict our use of one or more of such materials in our manufacturing, assembly and test processes or products.
−Removed: Any of these restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our manufacturing processes.
−Removed: New climate change laws and regulations could require us to change our manufacturing processes or procure substitute raw materials that may cost more or be more difficult to procure.
−Removed: Various jurisdictions in which we do business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, regulations on energy management and waste management, and other climate change-based rules and regulations, which may increase our expenses and adversely affect our operating results.
−Removed: We expect increased worldwide regulatory activity relating to climate change in the future.
−Removed: Future compliance with these laws and regulations may adversely affect our business and results of operations.
−Removed: Our results could vary as a result of the methods, estimates and judgments that we use in applying our accounting policies, including changes in the accounting standards to be applied.
−Removed: The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results (see “Critical Accounting Estimates” in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our 2024 Form 10-K).
−Removed: Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments.
−Removed: Changes in those methods, estimates and judgments could significantly affect our results of operations or financial condition.
−Removed: Regulations related to conflict-free minerals may force us to incur additional expenses.
−Removed: Rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act impose annual disclosure and reporting requirements for those companies who may use “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in their products.
−Removed: We may face challenges with government regulators, our customers and our suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free.
−Removed: Our most recent disclosure regarding our due diligence was filed on May 31, 2024 for calendar year 2023.
+Added: Litigation could adversely affect our operating results and financial conditions.
+Added: We are often involved in litigation, primarily patent litigation, and we and certain former executive officers and directors were named as defendants in multiple securities class action lawsuits regarding past public disclosures, each as discussed further in Note 5,
+Added: Table of Conten ts
+Added: "Commitments and Contingencies," in our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
+Added: Defending against existing and potential litigation will likely require significant attention and resources and, regardless of the outcome, result in significant legal expenses, which could adversely affect our results unless covered by insurance or recovered from third parties.
+Added: If our defenses are ultimately unsuccessful or if we are unable to achieve a favorable resolution, we could be liable for damage awards that could adversely affect our results of operations and financial condition.
+Added: Additionally, there is a risk of future litigation resulting from the Chapter 11 Cases.
+Added: It is possible that certain parties will commence litigation with respect to the treatment of their claims and interests under the Plan.
+Added: It is not possible to predict what, if any, future litigation the reorganized company may become involved in, nor the final resolution of such litigation.
+Added: Defending against existing and potential litigation will likely require significant attention and resources and, regardless of the outcome, result in significant legal expenses, which could adversely affect our results unless covered by insurance or recovered from third parties.
+Added: If our defenses are ultimately unsuccessful or if we are unable to achieve a favorable resolution, we could be liable for damage awards that could adversely affect our results of operations and financial condition.
+Added: Changes in regulatory and tax positions may affect our financial condition and results of operations.
+Added: Our future effective tax rates and ability to obtain tax credits may significantly affect our financial condition due to numerous factors, including:
+Added: changes in or recapture of available tax credits, including eligibility for federal funding benefits;
+Added: limitations on utilizing federal and state net operating loss ("NOL") carryforwards following ownership changes under Section 382 of the Internal Revenue Code (the "Code");
+Added: changes in tax laws or their interpretation;
+Added: changes in valuation of deferred tax assets and liabilities;
+Added: jurisdictional profit allocation;
+Added: implementation of international tax rules, including the OECD's 15% minimum global tax;
+Added: resolution of tax audits;
+Added: adjustments upon tax return finalization;
+Added: non-deductible expenses, including Chapter 11 charges;
+Added: recognition of uncertain tax positions;
+Added: variations in stock-based compensation deductions;
+Added: and repatriation of foreign earnings.
+Added: In July 2025, the "One Big Beautiful Bill Act" (the "OBBBA") was enacted, making multiple changes to federal income tax laws that may affect our tax rates and liability.
+Added: Various OBBBA provisions remain unclear pending administrative guidance, which could adversely affect our financial condition, cash flows, and results of operations.
+Added: Any significant changes in our effective tax rates could impact net income for future periods.
+Added: Additionally, determining our income tax provision requires complex estimations and judgments, and material differences between actual tax liability and provisions could significantly affect our net income or cash flows.
+Added: We have substantial NOL carryforwards that may be limited annually under Section 382 of the Code.
+Added: An "ownership change" (generally defined as greater than 50-percentage-point cumulative changes in equity ownership of certain stockholders over a rolling three-year period) may limit our ability to utilize NOL carryforwards and other tax attributes to offset future taxable income.
+Added: Such limitations could adversely affect our cash flows and overall financial condition.
+Added: Changes in government or industry policies, standards, or regulations relating to our products, or the products in which they are integrated, may impact demand.
+Added: Efforts to change, eliminate, or reduce regulatory standards could negatively impact our business.
+Added: Legislative actions, such as elimination of electric vehicle tax credits under the OBBBA, could reduce demand for our products.
+Added: Our ability and our competitors' ability to meet evolving requirements could adversely impact competitive dynamics and our market position.
+Added: Employee attrition and loss of key personnel due to organizational changes may harm our operations.
+Added: The significant management time and effort required to address our Chapter 11 Cases and refocus on business operations, along with managing our new capital structure and its consequences, has diverted and may continue to divert attention from day-to-day operations, This diversion, combined with organizational uncertainty, may impair employee confidence and cause increased employee attrition beyond intended reductions, decreased morale, loss of institutional knowledge and expertise, and difficulty attracting, motivating, and retaining qualified management and key personnel, as employees may be more easily attracted to other employment opportunities.
+Added: Loss of key personnel, particularly senior management and experienced engineers, could impair our ability to execute strategy and implement operational initiatives, adversely affecting our business, financial condition, and results of operations.
+Added: The competitive market for qualified personnel, especially experienced engineers and technical staff, intensifies these challenges.
General Risk Factors
−Removed: Our business could be negatively impacted by shareholder activism.
−Removed: We have been subject to shareholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management's and our board's attention and resources from our business.
−Removed: For example, on April 22, 2024, JANA Partners LLC delivered a letter to our board of directors calling for a comprehensive review of strategic alternatives.
−Removed: Responding to actions by activist shareholders, such as potential nominations of candidates for election to our board of directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business and divert the attention of management and employees.
−Removed: In addition, any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers and make it more difficult to attract and retain qualified personnel and business partners, any of which could negatively impact our business.
−Removed: Shareholder activism could result in substantial costs.
−Removed: In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business.
−Removed: Catastrophic events and disaster recovery may disrupt business continuity.
−Removed: A disruption or failure of our systems or operations in the event of a natural disaster or severe weather event, including, but not limited to, earthquakes, wildfires, droughts, flooding, tornadoes, hurricanes or tsunamis, health pandemic, such as an influenza outbreak within our workforce, or man-made catastrophic event could cause delays in completing sales, continuing production or performing other critical functions of our business, particularly if a catastrophic event were to occur at our primary manufacturing locations or our subcontractors' locations.
−Removed: Global climate change could result in certain natural disasters occurring more frequently or with greater intensity.
−Removed: Any of these events could severely affect our ability to conduct normal business operations and, as a result, our operating results could be adversely affected.
−Removed: There may also be secondary impacts that are unforeseeable as well, such as impacts to our customers, which could cause delays in new orders, delays in completing sales or even order cancellations.
−Removed: In order to compete, we must attract, motivate and retain key employees, and our failure to do so could harm our results of operations.
−Removed: Hiring and retaining qualified personnel is critical to our business, and competition for experienced employees in our industry can be intense.
−Removed: As a global company, this issue is not limited to the United States, but includes our other locations where we do business such as Europe and Asia.
−Removed: For example, there is substantial competition for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult for us to recruit and retain qualified employees.
−Removed: If we are unable to staff sufficient and adequate personnel at our facilities, we may experience lower revenue or increased manufacturing costs, which would adversely affect our results of operations.
−Removed: To help attract, motivate and retain key employees, we use benefits such as stock-based compensation awards.
−Removed: If the value of such awards does not appreciate, as measured by the performance of the price of our common stock or if our stock-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate employees could be weakened, which could harm our business and results of operations.
+Added: Our reincorporation from North Carolina to Delaware could expose us to additional risks.
+Added: Our reincorporation subjects us to Delaware corporate law, which differs from North Carolina law in ways affecting our and our stockholders' rights and obligations.
+Added: The reincorporation could:
+Added: subject us to different or more stringent governance and disclosure requirements;
+Added: result in litigation or disputes with stockholders, creditors, regulators, or other parties;
+Added: and divert resources and attention from core operations.
+Added: We cannot assure that anticipated reincorporation benefits will be achieved, and if benefits do not meet investor or analyst expectations, our stock price may decline.
+Added: Table of Conten ts
+Added: Our certificate of incorporation and bylaws provide that:
+Added: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for:
+Added: (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim for, or based on, a breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, agents, or stockholders to us or our stockholders including, without limitation, a claim alleging the aiding and abetting of such a breach of fiduciary duty, (C) any action asserting a claim against us or any of our current or former directors, officers, employees, agents, or stockholders arising pursuant to any provision of the General Corporation Law of the State of Delaware (“DGCL”), our certificate of incorporation or bylaws, or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (D) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine;
+Added: (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, and the rules and regulations promulgated thereunder, although there is uncertainty as to whether a court would enforce this provision;
+Added: (iii) any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and consented to these provisions;
+Added: and (iv) failure to enforce the foregoing provisions would cause us irreparable harm, and we will be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions.
+Added: Nothing in our certificate of incorporation or bylaws precludes stockholders that assert claims solely under the Exchange Act from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.
+Added: The choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our current or former directors, officers, other employees, agents, or stockholders, which may discourage such claims against us or any of our current or former directors, officers, other employees, agents, or stockholders and result in increased costs for investors to bring such a claim.
+Added: We believe these provisions may benefit us by providing increased consistency in the application of the DGCL and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums, and protection against the burdens of multi-forum litigation.
+Added: If a court were to find the choice of forum provision contained in our certificate of incorporation or our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, results of operations and financial condition.
Our stock price has experienced and may continue to experience volatility.
Historically, our common stock has experienced substantial price volatility, particularly as a result of significant fluctuations in our revenue, earnings and margins over the past few years, and variations between our actual financial results and the published expectations of analysts.
−Removed: For example, the closing price per share of our common stock on the New York Stock Exchange ranged from a low of $2.59 to a high of $29.90 during the twelve months ended March 30, 2025.
+Added: For example, the closing price per share of our common stock on the New York Stock Exchange ranged from a low of $0.40 to a high of $16.21 during the twelve months ended September 28, 2025.
If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.
+Added: Moreover, changes in the public float or trading volume of our common stock may affect our stock price.
+Added: For example, on September 29, 2025, we emerged from the Chapter 11 Cases.
+Added: In connection with our emergence from Chapter 11 and pursuant to the Plan, the number of shares of common stock outstanding decreased significantly as part of the reorganization, which has impacted, and may in the future impact our stock price, and may result in additional stock price volatility.
Speculation and opinions in the press or investment community about our strategic position, financial condition, results of operations or significant transactions have caused, and may continue to cause changes in our stock price.
−Removed: In addition, competition in some of the markets we address such as electric vehicles or the industrial and energy markets, the ramp up of our business, and the effect of tariffs on our business, may have a dramatic effect on our stock price.
−Removed: Additionally, actions taken by the option counterparties in the capped call transactions entered into in connection with the 2028 Notes and the 2029 Notes may affect our stock price, including the potential modifications of their hedge positions by entering into or unwinding various derivatives with respect to our common stock.
−Removed: We are exposed to fluctuations in the market value of our investment portfolio and in interest rates, and therefore, impairment of our investments or lower investment income could harm our earnings.
−Removed: We are exposed to market value fluctuations and inherent interest rate risk related to our investment portfolio.
−Removed: We have historically invested portions of our available cash in fixed interest rate securities such as high-grade corporate debt, commercial paper, municipal bonds, certificates of deposit, government securities and other fixed interest rate investments.
−Removed: The primary objective of our cash investment policy is preservation of principal.
−Removed: However, these investments are generally not Federal Deposit Insurance Corporation insured and may lose value and/or become illiquid regardless of their credit rating.
−Removed: In addition, we currently hold the MACOM Shares that we acquired in connection with the RF Business Divestiture.
−Removed: These shares are subject to risks inherent in the business of that company and to trends affecting the equity markets as a whole.
−Removed: As discussed further in Note 2, "Discontinued Operations," in our unaudited financial statements in Part I, Item 1 of this Quarterly Report, the shares are also subject to restrictions on transfer prior to the RTP Fab Transfer and one quarter of the shares are subject to the risk of forfeiture in the event that the RTP Fab Transfer is not completed within four years following the closing of the transaction.
−Removed: Should the value of these shares decline, the related write-down in value could have a material adverse effect on our financial condition and results of operations.
−Removed: From time to time, we have also made investments in public and private companies that engage in complementary businesses.
−Removed: We may be subject to volatility and uncertainty in customer demand, supply chains, worldwide economies and financial markets resulting from the outbreak of infectious disease or similar public health threat.
−Removed: We have significant manufacturing operations in the United States and contract manufacturing operations in Asia, which may be affected by the outbreak of infectious diseases or other similar public health threats and the measures to try to contain it.
+Added: In the past, we have been subject to shareholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management's and our board's attention and resources from our business.
+Added: In addition, competition or trends in some of the markets we address such as electric vehicles or the industrial and energy markets, the ramp up of our business, and the effect of tariffs on our business, may have a dramatic effect on our stock price.
+Added: Disruptions from extreme weather events and natural disasters could impair our operations.
+Added: A disruption or failure of our systems or operations in the event of a natural disaster or severe weather event, including, but not limited to, earthquakes, wildfires, droughts, flooding, tornadoes, hurricanes, or tsunamis, could cause delays in completing sales, continuing production, or performing other critical functions of our business, particularly if a catastrophic event were to occur at our primary manufacturing locations or our subcontractors' locations.
+Added: Global climate change could result in certain natural disasters occurring more frequently or with greater intensity.
+Added: Any of these events could severely affect our business, financial condition, and results of operations.
+Added: There may also be secondary impacts that are unforeseeable, such as impacts to our customers, which could cause delays in new orders, delays in completing sales, or even order cancellations.
+Added: Production could be disrupted by unavailability of resources used in production such as water, silicon, electricity, and gases.
+Added: Future environmental regulations could restrict supply or increase the cost of certain of those materials.
+Added: Table of Conten ts
+Added: The impact of pandemic outbreaks on our operations and supply chain could disrupt our business.
+Added: We have significant manufacturing operations in the United States and contract manufacturing operations in Asia, which may be affected by outbreak of infectious diseases or other similar public health threats and measures to try to contain them.
For example, during the COVID-19 pandemic, we experienced some limited disruptions in our supply chain and may experience similar disruptions in the future in the event of a pandemic.
−Removed: Restrictions on access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures in connection with future outbreaks of infectious diseases or similar public health events could limit our ability to meet customer demand, lead to increased costs and have a material adverse effect on our financial condition and results of operations.
−Removed: Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the state courts of North Carolina will be the sole and exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees or agents.
−Removed: Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for all litigation relating to our internal affairs, including without limitation (i) any derivative action or proceeding brought on behalf of Wolfspeed, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Wolfspeed to Wolfspeed or our shareholders, (iii) any action asserting a claim arising pursuant to any provision of the North Carolina Business Corporation Act (the NCBCA), and our amended and restated articles of incorporation, or our amended and restated bylaws, (iv) any action to interpret, apply, enforce, or determine the validity of our amended and restated articles of incorporation, or our amended and restated bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine, shall be the state courts of North Carolina, or if such courts lack jurisdiction, a federal court located within the State of North Carolina, in all cases subject to the courts having personal jurisdiction over the indispensable parties named as defendants.
−Removed: Any such action filed in a North Carolina state court shall be designated by the party filing the action as a mandatory complex business case.
−Removed: In any such action where the NCBCA specifies the division or county wherein the action must be brought, the action shall be brought in such division or county.
−Removed: Our amended and restated bylaws also provide that, notwithstanding the foregoing, (x) the provisions described above will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and (y) unless we consent in writing to the selection of an alternative forum, the federal district courts shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action against Wolfspeed or any director, officer, employee, or agent of Wolfspeed and arising under the Securities Act.
−Removed: If a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
−Removed: Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds
−Removed: Not applicable.
−Removed: Defaults Upon Senior Securities
−Removed: Not applicable.
−Removed: Mine Safety Disclosures
−Removed: Not applicable.
+Added: Restrictions on access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transportation, port closures, and increased border controls or closures in connection with future outbreaks of infectious diseases or similar public health events could limit our ability to meet customer demand, lead to increased costs, and have a material impact on our business, financial condition, and results of operations.
+Added: Changes in governmental policies and incentives could harm our business.
+Added: Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors may have a material adverse effect on our business in the future or may require us to exit a particular market or significantly modify our current business practices.
+Added: Abrupt political change, terrorist activity, and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse impact on our business, financial condition, and results of operations.
+Added: Government incentives may include tax rebates, reduced tax rates, favorable lending policies, and other measures, some or all of which may be available to us due to our foreign operations.
+Added: If we receive government incentives through federal funding opportunities or through state and local grants, restrictions and operational requirements associated with such grants could add complexity to operations and increase costs.
+Added: Any of these incentives could be reduced or eliminated by government authorities at any time or as a result of our inability to maintain minimum operations necessary to earn the incentives.
+Added: Any reduction or elimination of incentives provided for our operations could adversely affect our business, financial conditions, and results of operations.
+Added: These same governments may also provide increased incentives to, or require production processes that favor, local companies, which could further negatively impact our business, financial condition, and results of operations.
+Added: Supply chain disruptions due to our global supply dependencies could harm our results.
+Added: We depend on a number of sole source and limited source suppliers for certain raw materials, components, services, and equipment used in manufacturing our products, including key materials and equipment used in critical stages of our manufacturing processes.
+Added: Although alternative sources generally exist for these items, qualification of many of these alternative sources could take up to six months or longer.
+Added: Where possible, we attempt to identify and qualify alternative sources for our sole and limited source suppliers.
+Added: We generally purchase these sole or limited source items with purchase orders, and we have limited guaranteed supply arrangements with such suppliers, including take-or-pay arrangements and capacity reserve deposit agreements.
+Added: Some of our sources can have variations in attributes and availability which can affect our ability to produce products in sufficient volume or quality.
+Added: We do not control the time and resources that these suppliers devote to our business, and we cannot be sure that these suppliers will perform their obligations to us.
+Added: Additionally, general shortages in the marketplace of certain raw materials or key components may adversely impact our business.
+Added: In the past, we have experienced decreases in our production yields when suppliers have varied from previously agreed upon specifications or made other modifications we didn't specify, which impacted our cost of revenue.
+Added: Additionally, inability of our suppliers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours.
+Added: This risk may increase from unpredictable and unstable changes in economic conditions, including recession, inflation, or other changes, which may negatively affect key suppliers or a significant number of our other suppliers.
+Added: Any delay in product delivery or other interruption or variation in supply from these suppliers could prevent us from meeting commercial demand for our products.
+Added: If we were to lose key suppliers, if our key suppliers were unable to support our demand for any reason, or if we were unable to identify and qualify alternative suppliers, our manufacturing operations could be interrupted or hampered significantly.
+Added: We rely on arrangements with independent shipping companies for delivery of our products from vendors and to customers both in the United States and abroad.
+Added: Failure or inability of these shipping companies to deliver products or unavailability of shipping or port services, even temporarily, could adversely affect our business.
+Added: We may also be adversely affected by an increase in freight surcharges due to rising fuel costs, oil costs, and added security.
+Added: In our fabrication process, we consume a number of precious metals and other commodities, which are subject to high price volatility and potential impacts of increased inflation.
+Added: Our operating margins could be significantly affected if we are not able to pass along price increases or surcharges to our customers.
+Added: In addition, production could be disrupted by unavailability of resources used in production such as water, silicon, electricity, and gases.
+Added: Future environmental regulations could restrict supply or increase the cost of certain of those materials.
+Added: Reliance on local utilities and infrastructure at our manufacturing facilities creates operational vulnerabilities.
+Added: Table of Conten ts
+Added: Our manufacturing operations depend on reliable access to local utilities and infrastructure, including electricity, water, natural gas, and telecommunications services.
+Added: Any disruption, failure, or inadequacy of these utilities or infrastructure could significantly impair our ability to manufacture products and meet customer commitments.
+Added: We have entered into long-term electricity supply agreements that require us to meet certain volume and spend requirements.
+Added: Failure to meet these requirements or disruptions in electricity supply could result in additional costs or production interruptions.
+Added: Additionally, disruptions in, or inadequate infrastructure of, countries where we operate, including transportation networks, could affect our ability to receive raw materials and ship finished products, adversely affecting our business, financial condition, and results of operations.
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.