AVGO

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Broadcom Inc. · CIK 1730168
AVGO 리스크 변화 알림 받기
이번 보고서
2025 연차보고서
10-K · 기간 말 2025. 11. 2. · 제출 2025. 12. 18.
비교 기준
2024 연차보고서
10-K · 기간 말 2024. 11. 3.
SEC 원문 ↗
4
새 리스크 항목
18
신규 문단
81
수정 문단
33
삭제
+6%
분량 변화
AI 한국어 요약

한 줄 요약

AI 반도체 호황 속에서 자금 여력이 부족한 AI 고객과 XPU 기반 'AI 랙·시스템' 판매·리스라는 새 사업 모델을 핵심 리스크로 새로 넣었고, 이에 따른 신용 위험과 매출총이익률 하락 가능성을 직접 경고했습니다.

주목할 변화

  • 신규AI 고객의 지불 능력과 신용 리스크반도체 산업이 AI로 "profound change"를 겪고 있으며 호황이 "may not be sustainable"하다고 밝혔습니다. 또 일부 AI 고객이 "constrained resources or capital"로 대금을 치르지 못하거나 공급사에 "novel or deferred payment models"를 요구할 수 있다고 처음 명시했습니다. 분기 실적 변동 요인에도 고객 지불 불능과 매출채권 매각(factoring) 활용 시점이 추가됐습니다.
  • 신규AI 랙·시스템 판매·리스 모델과 마진 압박고객이 XPU 기반 AI 랙을 구매하지 않고 리스하길 원하며, 회사가 이미 대체 금융을 "have offered"했다고 밝혔습니다. 이 모델은 "will likely increase our operating margin but compress or lower future gross margin"하며 "credit or customer default risks"를 키울 수 있다고 명시했습니다.
  • 강화고객이 경쟁자가 되는 위험과 맞춤형 제품 재고경쟁자 목록에 "new competitors, including our customers"가 추가됐고, 고객이 자체 개발 제품이나 경쟁사 제품으로 옮길 가능성이 여러 곳에서 강조됐습니다. 맞춤형 제품은 "custom nature" 때문에 다른 고객에게 재판매하거나 비용을 회수하기 어려울 수 있다는 문장이 새로 들어갔습니다.
  • 강화관세·무역 갈등 리스크의 범위 확대반도체 관세를 다룬 문단이 신설됐습니다. 아직 "have not had a material impact"이지만 비용 증가와 공급망 차질로 이어질 수 있다고 적었습니다. 무역 갈등 서술의 대상도 중국 중심에서 "U.S. and its trading partners"로 넓어졌고, 외국 정부의 보복 조치는 "have proposed"로 바뀌어 이미 제안된 단계임을 인정했습니다.
  • 신규데이터센터 인프라 병목고객이 최종 수요에 필요한 데이터센터의 "power or water capacity"를 과소평가할 수 있다는 위험이 추가됐습니다. 데이터센터 같은 대형 프로젝트에서는 부품 하나만 부족해도 매출에 영향이 갈 수 있다는 문장도 새로 들어갔습니다. 위탁생산업체(CM)가 수요 급증기에 "capacity constraints"를 겪은 적이 있다는 점도 명시됐습니다.
  • 강화규제 당국 조사 확대기존에는 한국 공정거래위원회 조사만 언급했지만, 이제는 "Korea, Japan and the European Union"의 조사를 모두 언급합니다. 기술 산업이 "intense media, political and regulatory scrutiny"를 받고 있다는 문장도 추가됐습니다.
  • 강화사이버보안·소프트웨어 결함의 실제 발생 인정탐지 체계의 한계가 "have led... to gaps in visibility"라고 적어, 가정형 서술을 과거에 실제로 발생한 일로 바꿨습니다. 소프트웨어 취약점과 제품 수명주기 관리 실패가 고객 불만으로 이어졌다는 점도 "have previously led to"로 인정했습니다.
  • 삭제VMware 합병 통합 리스크 항목 폐지"Failure to realize the benefits expected from the VMware Merger" 항목과 Dell 연결납세 그룹 관련 세무조사 문단이 삭제됐습니다. 그 내용은 소프트웨어 성장 리스크 항목으로 옮겨졌습니다. 해당 항목에는 이제 고객이 회사의 전략을 받아들이지 않으면 투자가 "of no or limited value"일 수 있고 주요 고객을 잃을 수 있다는 내용이 들어 있습니다.

읽는 법

리스크 서술의 중심이 'AI 수요가 지속될지'에서 'AI 고객이 대금을 치를 수 있는지, 이를 위해 회사가 어떤 금융·리스 조건을 떠안는지'로 옮겨갔습니다. 앞으로 실적을 볼 때 매출 규모뿐 아니라 매출총이익률 추이, 매출채권과 리스 관련 공시, 잉여현금흐름을 함께 확인하는 것이 이번 변경 내용을 이해하는 데 도움이 됩니다. 그 밖에 글로벌 최저한세로 2026 회계연도 실효세율이 크게 오를 것으로 예상한다는 점과, 자사주 매입 규모가 달라질 수 있다는 항목이 새로 생긴 점도 참고할 만합니다.

원문 비교
  1. 신규Risks Related to Our Business
    •We operate in a highly cyclical semiconductor industry that is undergoing profound change due to AI.
  2. 신규Risks Related to Our Business
    •A slow or the unsuccessful return on our investments in research and development, expansion of our business strategy or adoption of new business models could adversely affect us.
  3. 신규Risks Related to Our Business
    •Winning business in the semiconductor solutions industry is an unpredictable process that often requires us to incur significant expenses, evolve our business strategy or adopt a new business model, which may negatively impact our results of operations, gross margin or cash flows.
  4. 신규Risks Related to Our Business
    •Dependence on a limited number of contract manufacturers and suppliers of critical materials and components within our supply chain, and potential failure to adjust such manufacturing and supply chain to meet customer demand, may adversely affect our ability to bring products to market and our results of operations.
  5. 신규Risks Related to Our Business
    •Failure to protect the IP utilized in our business could adversely affect our business.
  6. 신규Risks Related to Owning Our Common Stock
    •The amount and frequency of our stock repurchases may fluctuate.
  7. 신규Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition and results of operations.
    While U.S. tariffs and counter-tariffs, including semiconductor-related tariffs, have not had a material impact on our financial condition or results of operations, tariffs and other macroeconomic factors could materially increase costs and disrupt our supply chain. We continuously manage product availability and costs in our supply chain to mitigate the direct and indirect impact of tariffs and other macroeconomic impacts. The ultimate impact remains uncertain and will depend on several factors outside of our control. If we are unable to effectively navigate these changes, it could have a material adverse effect on our business, operating results and stock price.
  8. 새 리스크 항목
    We operate in a highly cyclical semiconductor industry that is undergoing profound change due to AI.
  9. 새 리스크 항목
    A slow or the unsuccessful return on our investments in research and development, expansion of our business strategy or adoption of new business models could materially adversely affect our business, financial condition, cash flows and margins.
  10. 새 리스크 항목
    Winning business in the semiconductor solutions industry is an unpredictable process that is often lengthy in time and requires us to incur significant expenses, evolve our business strategy or adopt a new business model, which may negatively impact our results of operations, gross margin or cash flows.
  11. 신규Our operating results are subject to substantial quarterly and annual fluctuations.
    •the development and availability of AI data centers that could impact our ability to ship our products;
  12. 신규Our operating results are subject to substantial quarterly and annual fluctuations.
    •fluctuations in our financial metrics to execute our current or new business strategies or models;
  13. 신규Our operating results are subject to substantial quarterly and annual fluctuations.
    •the timing and extent to which we enter into and utilize factoring arrangements;
  14. 신규Our operating results are subject to substantial quarterly and annual fluctuations.
    •the timing and extent of delivery of and payment for our semiconductor and semiconductor-based solutions, including AI racks or systems based on our XPUs;
  15. 신규Our operating results are subject to substantial quarterly and annual fluctuations.
    •the inability of our customers to pay for our products or services due to their constrained resources or capital;
  16. 신규We have pursued, and may in the future pursue, mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations.
    •market volatility impacting our ability or the cost to fund acquisitions or investments;
  17. 새 리스크 항목
    The amount and frequency of our stock repurchases may fluctuate.
  18. 신규The amount and frequency of our stock repurchases may fluctuate.
    The amount, timing and execution of our stock repurchase program may fluctuate based on our priorities for the use of cash for other purposes. These purposes include operational spending, capital spending, acquisitions, repayment of debt and returning cash to our stockholders as dividend payments. Changes in cash flows, tax laws and our stock price could also impact our stock repurchase program. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase program may be suspended or terminated at any time.
  19. 수정Risks Related to Our Business
    •A significant reduction in demand or loss of one or more of our significant customers may adversely affect our business. us.
  20. 수정Risks Related to Our Business
    •Cyber security •Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT information technology (“IT”) systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
  21. 수정Risks Related to Our Business
    •A prolonged disruption of our or our customers’ or suppliers’ manufacturing facilities, research and development facilities, warehouses facilities or other significant operations could have a material adverse effect on us.
  22. 수정Risks Related to Our Business
    •Failure of our software products portfolio to manage and secure IT infrastructures and environments and our use of open source software in certain software and services could have a material adverse effect on our business.
  23. 수정Risks Related to Our Business
    •The growth of our software business depends on demand for our data center virtualization portfolio, as well as customer acceptance of our newer products software, services and services. business strategy.
  24. 수정Risks Related to Our Business
    •Incompatibility of our software products portfolio with operating environments, platforms, or third-party products may adversely affect demand for our products software and services.
  25. 수정Risks Related to Our Business
    •Failure to effectively manage our products software solutions and services lifecycles could harm our business.
  26. 수정Risks Related to Our Business
    •Environmental, social and governance •Corporate responsibility matters may adversely affect our relationships with customers and investors. investors and increase compliance costs.
  27. 수정Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
    A general slowdown in weakening of the global economy globally or in a particular region or industry, uncertainty and volatility in financial markets, efforts of governments to stimulate or stabilize the economy or to achieve specific policy objectives such as onshoring of semiconductor manufacturing and other unfavorable changes in economic conditions, such as inflation, higher interest rates, tightening of the credit markets, recession or slowing growth, or as well as an increase in trade tensions and related tariffs with U.S. trading partners partners, could negatively impact our business, financial condition condition, cash flows and liquidity. Adverse global economic conditions have from time to time caused or exacerbated significant slowdowns in the industries and markets in which we operate, which have adversely affected our business and results of operations. Macroeconomic weakness and uncertainty may also make it more difficult to accurately forecast operating results, and market volatility stemming from current macroeconomic events may materially impact our cash flow and our ability to raise or refinance debt at favorable rates. An escalation of trade tensions between the U.S. and China has resulted its trading partners may continue to result in trade restrictions, restrictions and increased protectionism and increased tariffs on both ends that harm our ability to participate in Chinese some markets or compete effectively with Chinese companies. effectively.
  28. 수정Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
    Sustained uncertainty about, or worsening of, current global economic conditions conditions, further tariffs and further escalation escalations of trade tensions between the U.S. and its trading partners, especially China, increased geopolitical volatility, and the decoupling of the U.S. and China economies, global economies could result in a global economic slowdown and long-term changes to global trade. Such events may also (i) cause our customers and consumers end-users to reduce, delay or forgo technology spending, (ii) result in customers sourcing products from other suppliers not subject to such restrictions or tariffs, tariffs or to develop these products themselves, (iii) lead to the insolvency or consolidation of key suppliers and customers, and (iv) intensify pricing pressures. Any or all of these factors could negatively affect demand for our products and our business, financial condition and results of operations.
  29. 수정Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to maintain compliance with applicable regulations could adversely affect our business.
    Our business is subject to various domestic and international laws and other legal requirements, including anti-competition antitrust and import/export regulations, such as the U.S. Export Administration Regulations, and applicable executive orders. These laws, regulations regulations, orders, tariffs, federal policies and orders other governmental actions are complex, may continue to evolve and change frequently and with limited notice, notice and generally become more stringent over time. We may be required to incur significant expenses to comply with these legal requirements or respond to any governmental actions. In addition, if our suppliers or customers fail or choose not to comply with these regulations, legal requirements or governmental actions, we may be required to suspend sales purchasing from such suppliers or selling to these such customers, which could damage our reputation and negatively have a material adverse impact on our results of operations. The U.S. government may continue continues to add companies to its restricted entity list and/or technologies to its list of prohibited exports to specific countries, countries and impose other restrictions or requirements, which have had and may in the future have an adverse effect on our revenue revenue, supply chain and our ability to manufacture or sell our products. These restrictive governmental actions and any similar measures that may be imposed on U.S. companies by other governments, especially in light of ongoing trade tensions with China, U.S. trading partners, will likely limit or prevent us from doing business with certain of our customers or suppliers and harm our ability to compete effectively or otherwise negatively affect our ability to sell our products. Furthermore, foreign government authorities have proposed and/or may take retaliatory actions, impose conditions for the supply of products or require the license or other transfer of IP, which could have a material adverse effect on our business. Uncertainty due to such evolving policies or actions also may disrupt our supply chain and if we are unable to effectively mitigate any adverse impacts from such measures, this could adversely affect our business, financial condition and results of operations.
  30. 수정Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to maintain compliance with applicable regulations could adversely affect our business.
    Our products and operations are also subject to regulation by U.S. and non-U.S. regulatory agencies, such as the U.S. Federal Trade Commission. We have previously been, and may in the future be, involved or required to participate in regulatory investigations or inquiries, such as inquiries from regulatory authorities in Korea, Japan and the ongoing investigation by the Korean Fair Trade Commission European Union into certain of our contracting and business practices, which have previously and may in the future evolve into legal or other administrative proceedings. The technology industry is subject to intense media, political and regulatory scrutiny, which can increase our exposure to government investigations, regulations, legal actions and penalties. Involvement in regulatory investigations or inquiries can be costly, lengthy, complex and time consuming, time-consuming, diverting the attention and energies of our management and technical personnel. If any pending or future governmental investigations result in an unfavorable resolution, we could be required to cease the manufacture and sale of the subject products or technology, pay fines or disgorge profits or other payments, and/or cease certain conduct and/or modify our contracting or business practices, which could have a material adverse effect on our business, financial condition and results of operations.
  31. 수정Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition and results of operations.
    •changes in political, regulatory, legal or economic conditions, geopolitical turmoil (including China-Taiwan relations), including terrorism, war or political or military coups, state-sponsored or politically motivated cyber-attacks, or civil disturbances disturbances, or political instability (foreign and domestic);
  32. 수정Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition and results of operations.
    •restrictive or retaliatory governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments, data privacy regulations, climate change regulations and sustainability-related regulations, trade protection measures, including increasing protectionism, protectionism and economic nationalism, import/export restrictions (including with regards to advanced technologies), import/export duties and quotas, trade sanctions sanctions, and customs duties and tariffs, all of which have increased and may further increase;
  33. 수정Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition and results of operations.
    •potential inability to localize software products; our software;
  34. 수정Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition and results of operations.
    A significant legal risk associated with conducting business internationally is compliance with the various and differing laws and regulations of the many countries in which we do business. Although our policies and procedures prohibit us, our employees and our agents from engaging in unethical business practices and are designed to satisfy regulatory requirements, there can be no assurance that all of these measures will be effective in preventing violations or claims of violations. Any such violation or perceived violation could have a material adverse effect on our business.
  35. 수정We operate in a highly cyclical semiconductor industry that is undergoing profound change due to AI.
    The semiconductor industry is highly cyclical and is characterized by subject to rapid price erosion, wide fluctuations in product supply and demand, constant and rapid technological change, evolving technical standards, standards and evolving markets such as AI, frequent new product introductions, and short product life cycles. applications. The semiconductor industry is undergoing profound change due to the adoption and proliferation of AI and has experienced a significant upturn, which may not be sustainable. The growth of AI is creating pressure on the semiconductor industry to timely design, manufacture and deliver semiconductor products and solutions to meet customer demand for computing power and AI infrastructure. Some of these AI customers may have constrained resources or capital and may be unable to pay for their required AI infrastructure and/or seek alternative financings or novel or deferred payment models from their vendors and suppliers. If our AI customers substantially reduce their expansion plans, cancel, reduce or delay their orders, are unable to generate the profit required to offset their spending or are otherwise unable to meet their obligations and we cannot offset the downturn in their business, it could have a material adverse effect on our business, operating results, financial condition and stock price.
  36. 수정A significant reduction in demand from certain customers or loss of one or more of our significant customers may adversely affect our business.
    The majority of our sales have historically come from a small number of customers and a A significant reduction in demand from certain customers or loss of one or more of our significant customers may adversely affect our business.
  37. 수정A significant reduction in demand from certain customers or loss of one or more of our significant customers may adversely affect our business.
    We have historically depended on a small number of end customers, OEMs, their respective contract manufacturers (“CMs”) and certain distributors for a majority of our business and revenue. For fiscal year 2024, 2025, sales to distributors accounted for 48% of our net revenue. We believe aggregate sales, through all channels, to our top five end customers accounted for approximately 40% of our net revenue for fiscal year 2024. 2025. This customer concentration increases the risk of quarterly fluctuations in our operating results and our sensitivity to any material adverse developments experienced by these customers. In addition, some customers may reduce the amount of products or decline to purchase from us due to reduced capital expenditure spending, lack of access to sufficient capital, downturn in their business, purchases from our competitors or their internal development of the products.
  38. 수정A significant reduction in demand from certain customers or loss of one or more of our significant customers may adversely affect our business.
    Even when When our semiconductor customers agree to purchase specific quantities of products or source an agreed portion of their product needs from us, such arrangements often include pricing schedules or methodologies that apply regardless of the volume of products purchased, and those customers from time to time may not or do not purchase the amount of product we expect. Moreover, our top customers, including our AI customers, may make and have made greater demands on us with regards to pricing and contractual terms, such as seeking to lease AI racks or systems based on our XPUs instead of purchasing, as well as alternative financings for such leases or other novel or deferred payment models. As a result, we may not generate the amount of revenue or free cash flow or achieve the level of profitability that we or investors expect under such arrangements. arrangements, and/or such arrangements may increase our exposure to credit or customer default risks. The loss of, or any substantial reduction in sales to, any of our top customers, including our hyperscale customers, customers for our custom AI accelerators or XPUs or AI racks or systems based on our XPUs, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
  39. 수정A slow or the unsuccessful return on our investments in research and development, expansion of our business strategy or adoption of new business models could materially adversely affect our business, financial condition, cash flows and margins.
    The industries in which we compete are characterized by rapid technological change, new technological trends developments such as AI and cloud computing, changes in customer requirements, frequent new product introductions and enhancements, short product cycles, evolving industry standards standards, and new delivery methods. In addition, to compete successfully in the semiconductor industry, we must continue to develop and respond to technological advancements and requirements, such as low-power consumption, higher bandwidth and increase in large compute clusters, and we have, from time to time, evolved our business strategy and adopted new business models to address the number needs and challenges of clusters. our customers. Failure to successfully develop increasingly advanced technologies, including our custom AI accelerators or XPUs, network switches and other AI-related products, or execute on new strategies or models such as the sale or leasing of AI racks or systems based on our XPUs could impair our competitive position. In order to remain competitive, we have made, and expect to continue to make, significant investments in research and development. development, expand our business strategy or adopt new business models. If we fail to timely develop new and enhanced products and technologies, if we focus on technologies that do not become widely adopted, or if new competitive technologies that we do not support become widely accepted, or if we are unable to successfully execute on new business strategies or models such as the sale or leasing of AI racks or systems based on our XPUs, demand for our products and solutions such as our custom AI accelerators or XPUs and XPUs, network switches or other AI-related products may be reduced. Slow or unsuccessful investments in our research and development efforts or expansion or modification of our business strategies and models and incurring significant expenses for these actions, would have a negative impact on our business, financial condition and margins.
  40. 수정Winning business in the semiconductor solutions industry is an unpredictable process that is often lengthy in time and requires us to incur significant expenses, evolve our business strategy or adopt a new business model, which may negatively impact our results of operations, gross margin or cash flows.
    Our semiconductor business is dependent on us winning competitive bid selection processes, known as “design wins.” These selection processes are typically often lengthy in time and can require us to dedicate significant development expenditures and scarce engineering resources in pursuit of a single customer opportunity. Failure to obtain a particular design win may prevent us from obtaining design wins in subsequent generations of a particular product. This can result in lost revenue and can weaken our position in future selection processes.
  41. 수정Winning business in the semiconductor solutions industry is an unpredictable process that is often lengthy in time and requires us to incur significant expenses, evolve our business strategy or adopt a new business model, which may negatively impact our results of operations, gross margin or cash flows.
    Winning a product design does not guarantee sales to a customer. Customers could accelerate, delay or cancel plans, use their own products, purchase products from our competitors, fail to qualify our products, reduce or discontinue use of our products products, or fail to successfully market and sell their products, which could reduce demand for our products and cause us to hold a material amount of excess inventory, materially adversely affecting our business, financial condition and results of operations. In addition, we may also be unable to materially recoup our costs or resell our products to other customers due to the custom nature of certain products.
  42. 수정Winning business in the semiconductor solutions industry is an unpredictable process that is often lengthy in time and requires us to incur significant expenses, evolve our business strategy or adopt a new business model, which may negatively impact our results of operations, gross margin or cash flows.
    In addition, the The timing of design wins is unpredictable and implementing production for a major design win or multiple design wins at the same time, such as our design wins for our custom AI accelerators or XPUs XPUs, network switches and other AI-related products, may strain our resources and those of our CMs. Some of our customers who have selected us may also have constrained resources or capital but require immediate availability of our custom XPUs. In such event, we may dedicate significant additional resources or execute on new business strategies or models such as the sale or leasing of AI racks or systems based on our XPUs to our customers with alternative financings or novel or deferred payment models, which could result in additional costs, expenses, credit or customer default risks, reduced gross margin and cash flows.
  43. 수정Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to market, damage our reputation and adversely affect our results of operations.
    We depend on our CMs to allocate sufficient manufacturing capacity and critical components to meet our needs, to produce products of acceptable quality at acceptable yields, yields and prices, and to deliver those products to us on a timely basis. We do not generally have long-term capacity commitments with our CMs and substantially all of our manufacturing services are on a purchase order basis with no minimum quantities. Further, our CMs may fail to timely develop or successfully implement new, advanced manufacturing processes, including transitions to smaller geometry process technologies. From time to time, our CMs may also cease to, or become unable to, manufacture a component for us. us, and have had capacity constraints in times of unprecedented demand.
  44. 수정Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to market, damage our reputation and adversely affect our results of operations.
    During fiscal year 2025, approximately 95% of the wafers manufactured by our CMs were produced by TSMC. We believe our wafer requirements represent a meaningful portion of TSMC’s total production capacity. However, TSMC also fabricates wafers for other companies, including some of our competitors, and could choose or be required to materially prioritize capacity for other customers or reduce or eliminate deliveries to us on short notice. In addition, TSMC has, has raised, and may in the future, raise future raise, their prices to us. manufacture our wafers.
  45. 수정Failure to adjust our manufacturing and supply chain to meet customer demand could adversely affect our results of operations.
    We make significant decisions, including determining the levels of business that we will seek and accept, evolving our business strategy or adopting new business models such as the sale or leasing of AI racks or systems based on our XPUs, production schedules, levels of reliance on contract manufacturing CMs and outsourcing, internal fabrication utilization and other resource requirements, based on customer requirements or estimates thereof, which may not be accurate. accurate and could result in reallocation of resources. Many factors could impact our estimates of customers’ demands, including changes in product development cycles, competing technologies and product releases, new or unexpected end-user products, products or applications, such as demand for AI-related products, products and solutions, and changes in business and economic conditions. Our customers may also underestimate the data center or related power or water capacity needed to address end-user demand, which may impact our ability to timely satisfy their requirements. In addition, where our products are part of larger infrastructure projects like data centers, any supply constraints or availability issues with respect to any one component may impact our revenue or our results of operations. The Creating Helpful Incentives to Produce Semiconductors for America Act could also result in an increase in supply leading to excess inventory and a decrease in average selling prices. If we are unable to timely respond to changes in customer demand, demand or execute on new business strategies or models, this could damage our customer relationships, harm our reputation, prevent us from taking advantage of opportunities and adversely impact our business, financial condition and results of operations.
  46. 수정We purchase a significant amount of the materials, including components, used in our products from a limited number of suppliers.
    Our manufacturing processes and those of our CMs rely on many materials, including silicon, GaAs gallium arsenide and InP indium phosphide (“InP”) wafers, copper lead frames, precious and rare earth metals, mold compound, ceramic packages and various chemicals and gases. During fiscal year 2024, 2025, we purchased approximately two-thirds of our manufacturing materials from five materials suppliers, some of which are single source suppliers. The lead time needed to identify and qualify a new supplier is typically lengthy and there is often no readily available alternative source. We do not generally have long-term contracts with our materials suppliers and substantially all of our purchases are on a purchase order basis. Suppliers have previously, and may in the future, extend lead times, limit supplies, place products on allocation or increase prices, any of which could disrupt supply or increase demand in the industry. Additionally, the supply of these materials may be negatively has been, from time to time, impacted by increased trade tensions between the U.S. and its trading partners, particularly China. China, and the uncertainty due to evolving trade restrictions. Any such supply constraints could result in loss of revenue opportunities and adversely impact our business, financial condition and results of operations.
  47. 수정Our business would be adversely affected by the departure of existing members of our senior management team.
    Our success depends, in large part, on the continued contributions of our senior management team, and, in particular particular, the services of Hock E. Tan, our President and Chief Executive Officer. Effective succession planning is also important for our long-term success. Failure to ensure effective transfers of knowledge and smooth transitions involving senior management could hinder our strategic planning and execution. None of our senior management is bound by written employment contracts. In addition, we do not currently maintain key person life insurance covering our senior management. The loss of any of our senior management could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.
  48. 수정Our gross margin is dependent on a number of factors, including our product mix, adoption of a new business model, price erosion, level of capacity utilization and commodity prices.
    Our gross margin is dependent on a number of factors, including our product mix, adoption of a new business model, price erosion, acquisitions we may make, level of capacity utilization and commodity prices.
  49. 수정Our gross margin is dependent on a number of factors, including our product mix, adoption of a new business model, price erosion, level of capacity utilization and commodity prices.
    Our gross margin is highly dependent on our product mix, as well as the timing and amount of our revenue from our semiconductor solutions, software licensing and other products or solutions. In addition, increased competition and the existence of product alternatives, more complex engineering requirements, lower demand, shifts in spending priorities, constrained resources or capital of our customers, unfavorable changes in economic conditions, industry oversupply or reductions in our technological lead compared to our competitors, and other factors have in the past and may in the future lead to further price erosion, lower revenue and lower gross margin. The gross margin for our semiconductor solutions has typically been lower than our infrastructure software solutions. The sale or leasing of AI racks or systems based on our XPUs will likely increase our operating margin but compress or lower future gross margin, which would adversely impact our stock price.
  50. 수정Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
    Cyber security Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
  51. 수정Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
    Our business depends on a wide variety of complex IT systems and services, including cloud-based and other critical corporate services relating to, among other things, product research and development, financial reporting, product orders and fulfillment, HR, benefit plan administration, IT network management, and electronic communication and collaboration services. These systems and services are both internally managed and outsourced, and in many cases we rely upon third-party data centers. Any failure of these internal or third-party systems and services to operate effectively could disrupt our operations and could have a material adverse effect on our business, financial condition and results of operations. Our operations are dependent upon our ability to protect our IT infrastructure against damage from business continuity events that could have a significant disruptive effect. Although these systems are designed to protect and secure our customers’, suppliers’ and employees’ confidential information, as well as our own proprietary information, we are, out of necessity, dependent on our vendors and third-party data centers to adequately address cybersecurity threats to their own systems. systems and infrastructure, and timely deploy necessary mitigations. In addition, software products we use and technologies produced by us have occasionally had in the past and may have in the future, vulnerabilities that, if left unmitigated, could reduce the overall level of security of the systems on which the software is installed.
  52. 수정Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
    Cyber-attacks are increasing in number and sophistication, are well-financed, in some cases supported by state actors, and are designed to not only attack, but also to evade detection. Since the techniques used to obtain unauthorized access to systems, or to otherwise sabotage them, change frequently and are often not recognized until launched against a target, we have in the past been, and may be in the future be, unable to anticipate these techniques or to implement adequate preventative measures. The emergence and maturation of AI capabilities may also lead to new and/or more sophisticated methods of attack, including fraud that relies upon “deep fake” impersonation technology or other forms of generative automation that may scale up the efficiency or effectiveness of cyber threat activity.
  53. 수정Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
    In addition, certain aspects of effective cybersecurity are dependent upon our employees, contractors and other trusted partners reliably safeguarding secrets (e.g., application credentials) and adhering to our security policies and access control mechanisms. We have in the past experienced, and expect in the future to experience, security incidents arising from a failure to properly handle such secrets or adhere to such policies and, although no such events have had a material adverse effect on our business, there can be no assurance that an insider threat will not result in a material cyber incident. Our logging, alerting and cyber incident detection mechanisms have technical limitations that, in some instances, have led, and may in the future lead, to gaps in visibility into events occurring on systems targeted by threat actors or other unauthorized activities, and have not and may not always capture or surface information sufficient to timely detect and take responsive action to insider or external threats.
  54. 수정Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
    U.S. and non-U.S. regulators, as well as customers and service providers, have also increased their focus on cybersecurity vulnerabilities and risks. Compliance with laws, regulations, and contractual provisions concerning privacy, cybersecurity, secure technology development, data governance, data protection, confidentiality and IP could result in significant expense, and any failure to comply could result in proceedings against us by regulatory authorities or other third parties and may also increase our overall compliance burden. See also “Failure of our software products portfolio to manage and security secure IT infrastructures and environments could have a material adverse effect on our business.”
  55. 수정A prolonged disruption of our or our customers’ or suppliers’ facilities or other significant operations could have a material adverse effect on our business, financial condition and results of operations.
    A prolonged disruption of our or our customers’ or suppliers’ manufacturing facilities, research and development facilities, warehouses facilities or other significant operations could have a material adverse effect on our business, financial condition and results of operations.
  56. 수정A prolonged disruption of our or our customers’ or suppliers’ facilities or other significant operations could have a material adverse effect on our business, financial condition and results of operations.
    Although we operate a primarily outsourced manufacturing business model, we also rely on our own manufacturing facilities, in particular in Fort Collins, Colorado, Singapore, and Breinigsville, Pennsylvania. Our Fort Collins and Breinigsville facilities are the sole sources for the FBAR components filters used in many of our wireless devices and for the InP-based wafers used in our fibre optics products, respectively. Many of our facilities, and those of our CMs and suppliers, are concentrated in the same geographic regions of California and the Pacific Rim, which have above average seismic activity seismic, wildfire, and severe weather activity, and increases the risk of natural disasters impacting multiple suppliers. In addition, a significant majority of our research and development personnel are located in the Czech Republic, U.S. and India, Israel, and the U.S., and our primary warehouse is in Malaysia.
  57. 수정A prolonged disruption of our or our customers’ or suppliers’ facilities or other significant operations could have a material adverse effect on our business, financial condition and results of operations.
    A prolonged disruption at or shut-down of one or more of our manufacturing or other facilities or warehouses or those of our CMs CMs, suppliers or suppliers, customers, including data centers, due to natural- or man-made disasters or other events outside of our control, such as climate change, severe weather events, water or power shortages, political unrest, military conflicts, geopolitical turmoil, trade tensions, government orders, labor shortages, medical epidemics, economic instability, equipment failure or for any other reason, would limit our capacity to meet customer demands and delay new product development until a replacement facility and equipment, if necessary, were found. found, and could destroy our hardware products, inventory or equipment. To date, such events have not had a material adverse effect on our business. However, such an event could disrupt our operations, forgo revenue opportunities, potentially lose market share, result in us being unable to timely satisfy customer demand, expose us to claims by our customers, result in significant expense to repair or replace our affected facilities, products or equipment, and, in some instances, could significantly curtail our research and development efforts in a particular product area or target market, any of which could materially and adversely affect our business. This disruption could also prevent our customers from resuming their own manufacturing or providing services, including through their AI data centers, following such an event, they may cancel or scale back their orders from us and this may in turn adversely affect our results of operations. Such We may not have any or sufficient insurance coverage to recoup the losses and such events could also result in increased fixed costs relative to the revenue we generate and adversely affect our results of operations.
  58. 수정We are subject to risks associated with our distributors and other channel partners, including product inventory levels and product sell-through.
    Our dependence on channel partners has increased following the VMware Merger. acquisition of VMware. Failure to maintain good relationships with our distributors and channel partners could materially adversely impact our business. In addition, we sell our semiconductor products through an increasingly limited number of distributors, which exposes us to additional customer concentration and related credit risks.
  59. 수정Failure of our software portfolio to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
    Failure of our software products portfolio to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
  60. 수정Failure of our software portfolio to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
    Certain aspects of our software products portfolio are intended to manage and secure IT infrastructures and environments, and as a result, we expect these products to be ongoing targets of cyber-attacks. Open source code or other third-party software used in these products could also be targeted and may make our products software vulnerable to additional security risks not posed by purely proprietary products. software. Our products are software portfolio is complex and, when deployed, has contained in the past and may contain in the future errors, defects or security vulnerabilities, some of which may not be discovered were undiscovered before the product has been software was released, installed and used by customers. The complexity and breadth of our technical and production environments, which involve globally dispersed development and engineering teams, increases the risk that errors, defects or vulnerabilities will be introduced and may delay our ability to detect, mitigate or remediate such incidents.
  61. 수정Failure of our software portfolio to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
    In the past, elements of our proprietary source code have been exposed in an unauthorized manner. It is possible that such exposure of source code could reveal unknown security vulnerabilities in our products software that could be exploited by malicious actors. Our products are software is also subject to known and unknown security vulnerabilities vulnerabilities, including those resulting from integration with third-party products or services.
  62. 수정Failure of our software portfolio to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
    Although we continually seek to improve our countermeasures to prevent such incidents, we may be unable to anticipate every scenario and it is possible that and, as a result, certain cyber threats or vulnerabilities will have in the past been and may in the future be undetected or unmitigated in time to prevent an attack harm to us or an accidental incident on us and our customers. Additionally, efforts by malicious cyber actors or others could cause interruptions, delays or cessation of our product licensing, software delivery, or modification of our software, which could cause us to lose existing or potential customers.
  63. 수정Failure of our software portfolio to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
    A successful cyber-attack cyber-attack, or false reports thereof, involving our products software could cause customers and potential customers to believe our services are software is ineffective or unreliable and result in, among other things, the loss of customers, unfavorable publicity, damage to our reputation, difficulty in marketing our products, software, and allegations by our customers that we have not performed our contractual obligations, and could give rise to significant costs, including costs related to developing solutions or indemnification obligations under our agreements. Any such event could adversely impact our revenue and results of operations. See also “Cyber security “Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.”
  64. 수정The growth of our software business depends on demand for our data center virtualization portfolio, as well as customer acceptance of our software, services and business strategy.
    The growth of our software business depends on demand for our data center virtualization products, portfolio, as well as customer acceptance of our products, software, services and business strategy.
  65. 수정The growth of our software business depends on demand for our data center virtualization portfolio, as well as customer acceptance of our software, services and business strategy.
    Many of our software products solutions and services are based on data center virtualization and related hybrid-cloud technologies used to manage distributed computing architectures, which form the foundation for hybrid-cloud private and hybrid cloud computing. Enabling businesses to modernize applications and efficiently implement their hybrid-cloud private and hybrid cloud services presents new and difficult technological, operational and compliance challenges. If businesses build new or shift existing compute workloads off-premises to public cloud providers, this could limit the market for on-premises deployments of our data center virtualization products. portfolio. Current and future customers may not accept our perpetual licensing model or perceive benefits associated with adopting our hybrid-cloud and enterprise-grade private and hybrid cloud platform or our simplified product portfolios. portfolios, including new version releases. If demand demand, adoption and continued usage of our software is significantly less than anticipated or we fail to realize the expected returns on our business strategy, the investments we have made to implement our strategy may be of no or limited value, we may lose significant customers and our business, financial condition, results of operations and cash flows may be adversely affected.
  66. 수정If our software does not remain compatible with ever-changing operating environments, platforms, or third-party products, demand for our software and services could decrease, which could materially adversely affect our business.
    If our software products do does not remain compatible with ever-changing operating environments, platforms, or third-party products, demand for our products software and services could decrease, which could materially adversely affect our business.
  67. 수정If our software does not remain compatible with ever-changing operating environments, platforms, or third-party products, demand for our software and services could decrease, which could materially adversely affect our business.
    We may be required to make substantial modification of modifications to our products software to maintain compatibility with operating systems, systems software and computer hardware used by our customers or to provide our customers with desired features or capabilities. We must also continually address the challenges of dynamic and accelerating market trends and competitive developments, such as the emergence of advanced persistent threats in the security space, to compete effectively. There can be no assurance that we will be able to adapt our products software in response to these developments.
  68. 수정If our software does not remain compatible with ever-changing operating environments, platforms, or third-party products, demand for our software and services could decrease, which could materially adversely affect our business.
    Further, our software solutions interact with a variety of software and hardware developed by third parties, as well as cloud providers. If we lose access to third-party code and specifications for the development of code or cloud providers fail to support our products software or otherwise limit the functionality, compatibility or certification of our products software or otherwise impose unfavorable terms and conditions, this could negatively impact our ability to develop compatible software. This could result in higher research and development costs for the enhancement and modification of our existing products software or development of new products. software solutions. Any additional restrictions could materially adversely affect our business, financial condition and operating results and cash flow.
  69. 수정Failure to enter into software license agreements on a satisfactory basis could materially adversely affect our business.
    Many of our existing software customers have multi-year enterprise software license agreements, some of which involve substantial aggregate fee amounts. These customers often do not have a contractual obligation to purchase additional solutions and often may have termination for convenience clauses without payment of a substantive penalty. the right to terminate. The failure or inability to renew customer agreements of similar scope, on terms that are commercially attractive to us, could materially adversely affect our business, financial condition and condition, operating results and cash flow, or software license agreements without termination for convenience clauses could cause our operating results to fluctuate. flow. In addition, software license agreements under which customers do not have the right to terminate could cause variations in revenue recognized in each period and our operating results fluctuate from time to time.
  70. 수정Our use of open source software in certain software and services could materially adversely affect our business, financial condition, operating results and cash flow.
    Our use of open source software in certain products software and services could materially adversely affect our business, financial condition, operating results and cash flow.
  71. 수정Our use of open source software in certain software and services could materially adversely affect our business, financial condition, operating results and cash flow.
    Many of our products software solutions and services incorporate open source software, the use of which may subject us to certain conditions, including the obligation to offer such products software for no cost or to make the proprietary source code of those products such software publicly available. Open source licenses are generally “as-is” and do not provide warranties, support or assurance of title or controls on origin, which may expose us to potential liability if the software fails to work or has security vulnerabilities.
  72. 수정Our sales to government customers subject us to uncertainties and governmental regulations, which could have a material adverse effect on our business.
    Our contracts signed with the U.S. federal, state and local government and non-U.S. government agencies are generally subject to annual fiscal funding approval and may be renegotiated or terminated at the discretion of the government. Termination, renegotiation or the lack of funding approval for a contract could adversely affect our sales, revenue and reputation. If personnel critical to our performance of these contracts are unable to obtain or maintain their security clearances, we may be unable to perform these contracts or compete for other projects of this nature, which could adversely affect our results of operations. Additionally, our government contracts and our arrangements with channel partners who may sell directly to government customers are generally subject to requirements that may generally not be present in commercial contracts and/or may be complex, as well as audits and investigations. Failure to meet contractual requirements could result in various civil and criminal actions and penalties, and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with the government, which could materially adversely affect our business, financial condition, operating results and cash flow.
  73. 수정Failure to effectively manage our software solutions and services lifecycles could harm our business.
    Failure to effectively manage our products software solutions and services lifecycles could harm our business.
  74. 수정Failure to effectively manage our software solutions and services lifecycles could harm our business.
    As part of the natural lifecycle of our products software solutions and services, customers are informed when products the software or services will be reaching their end of life or end of availability and will no longer be supported or receive updates and security patches. If these products software solutions or services remain subject to a service contract, the customer may transition to alternative products software or services. Failure to effectively manage our products software and services lifecycles could and communications thereof have previously led to, and may in the future lead to to, customer dissatisfaction and potential contractual liabilities, which could materially adversely affect our business and operating results.
  75. 수정Competition in our industries could prevent us from growing our revenue.
    The industries in which we operate are highly competitive and characterized by rapid technological changes, evolving industry standards, changes in customer requirements, often aggressive pricing practices and, in some cases, new delivery methods. We expect competition in these industries to continue to increase as existing competitors improve or expand their product offerings or as new competitors competitors, including our customers, enter our markets. To remain competitive, we seek to evolve our business strategy or adopt new business models from time to time, such as the sale or leasing of AI racks or systems based on our XPUs, that require significant financial resources, which could have a material adverse effect on our results of operations. Moreover, we may offer and have offered alternative financings or other novel or deferred payment models for the leasing of AI racks or systems based on our XPUs to effectively complete, which could have a material adverse effect on our revenue, free cash flow and gross margin and expose us to credit or customer default risks.
  76. 수정Competition in our industries could prevent us from growing our revenue.
    Some of our competitors have longer operating histories, greater name recognition or presence in key markets, a larger installed customer base, larger technical staff, a more comprehensive IP portfolio or better patent protection, more established relationships with vendors or suppliers, or greater manufacturing, distribution, financial, research and development, technical and marketing resources than us. We face competition from companies that receive financial and other support from their home country government, customers who develop competing products, public cloud providers, numerous smaller companies that specialize in specific aspects of the highly fragmented software industry, open source authors who provide software and IP for free, and competitors who offer their products through try-and-buy or freemium models. In addition, the trend toward consolidation is also changing the competitive landscape. We expect this trend to continue, which may result in combined competitors having greater resources than us. we do.
  77. 수정Our operating results are subject to substantial quarterly and annual fluctuations.
    •the timing of launches by our customers of new products in which our products are included and changes in end-user demand for our customers’ products; products or services;
  78. 수정We have pursued, and may in the future pursue, mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations.
    Our growth strategy includes acquiring or investing in businesses that offer complementary products, services and technologies, or enhancing our market coverage coverage, business strategy or technological capabilities. Any acquisitions we may undertake, including the VMware Merger, acquisition of VMware, and their integration involve risks and uncertainties, which could impede the execution of our business strategy, such as:
  79. 수정We have pursued, and may in the future pursue, mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations.
    •U.S. and non-U.S. regulatory approval may take longer than anticipated, not be forthcoming or contain burdensome conditions; conditions, including due to U.S.-international relationships and other geopolitical events;
  80. 수정We have pursued, and may in the future pursue, mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations.
    •the potential for deficiencies in internal controls of the acquired business, as well as implementing our own management information systems, operating systems and internal controls for the acquired operations; business;
  81. 수정We may be involved in legal proceedings, including IP, securities litigation, and employee-related claims, which could, among other things, divert efforts of management and result in significant expense and loss of our IP rights.
    •license technology from the third party third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all;
  82. 수정We utilize a significant amount of IP in our business. Failure to protect the IP utilized in our business could adversely affect our business.
    We utilize a significant amount of IP in our business. Failure to protect the IP utilized in our business could adversely affect our business.
  83. 수정We are subject to warranty claims, product recalls and product liability.
    From time to time, we may be subject to warranty or product liability claims that may lead to significant expense. Our customer contracts typically contain warranty and indemnification provisions, and in certain cases may also contain liquidated damages provisions. The potential liabilities associated with such provisions are significant, and in some cases, including in agreements with some of our largest customers, are potentially unlimited. Any such liabilities may greatly exceed any revenue we receive from the relevant products. Costs, payments or damages incurred or paid by us in connection with warranty and product liability claims and product recalls could materially adversely affect our financial condition and results of operations. We may also be exposed to such claims as a result of any acquisition we may undertake in the future. Although we maintain reserves self-insured retentions for reasonably estimable liabilities and purchase product liability insurance, liabilities, our reserves may be inadequate to cover the uninsured portion of such claims.
  84. 수정The complexity of our products could result in unforeseen delays or expense or undetected defects or bugs, which could adversely affect the market acceptance of new products, damage our reputation with current or prospective customers, and materially and adversely affect our operating costs.
    Highly complex products, such as those we offer, have in the past contained, and may contain in the future contain, defects and bugs when they are first introduced or as new versions, software documentation or enhancements are released, or their release may be delayed due to unforeseen difficulties during product development. If any of our products or third-party components used in our products, contain defects or bugs, or have reliability, quality or compatibility problems, we may not be able to successfully design workarounds. Furthermore, if any of these problems are not discovered until after we have commenced commercial production or deployment, we may be required to incur additional development costs and product recall, repair or replacement costs. Significant technical challenges also arise with our software products portfolio because our customers are managing more complex, larger cloud infrastructures for more complex computing environments, license and deploy our products portfolio across a variety of computer platforms and integrate them with a number of third-party software applications applications, databases and databases. environments. As a result, if there is system-wide failure or an actual or perceived breach of information integrity, security or availability occurs in one of our end-user customer’s system, it can be difficult to determine which product is at fault and we could ultimately be harmed by the failure of another supplier’s product. Consequently, our reputation may be damaged and damaged, customers may be reluctant to buy our products products, and we may have to invest significant capital and other resources, which could materially and adversely affect our ability to retain existing customers and or attract new customers. As a result, our financial results could be materially adversely affected.
  85. 수정We collect, use, store, or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments, and our actual or perceived failure to comply with such laws and commitments could harm our business.
    We collect, use and store (collectively referred to as “process” in this paragraph) a high volume, variety and velocity of certain personal information in connection with the operation of our business. This creates various levels of privacy risks across different parts of our business, depending on the type of personal information, the jurisdiction in question and the purpose of their processing. The personal information we process is subject to an increasing number of federal, state, local, and foreign laws and regulations regarding privacy and data security, as well as contractual commitments. Privacy legislation and other data protection regulations, enforcement and policy activity in this area are expanding rapidly in many jurisdictions and creating a complex regulatory compliance environment. Sectoral legislation, certification requirements and technical standards applying to certain categories of our customers, such as those in the financial services or public sector, have exacerbated this trend. The cost of complying with and implementing these privacy-related and data governance measures could increase depending on any additional burdensome security, business processes, or business record or data localization requirements. Concerns Additionally, concerns about government interference, sovereignty interference and digital sovereignty, as well as expanding privacy, cybersecurity and data governance legislation legislation, particularly in cloud computing and AI, could adversely affect our customers and customers, our products and services, particularly in cloud computing, AI services and our own data management practices. The theft, loss or misuse of personal data collected, used, stored or transferred by us to run our business could result in significantly increased business and security costs or costs related to defending legal claims. Any inadvertent failure or perceived failure by us to comply with privacy, data governance or cybersecurity obligations may result in governmental enforcement actions, litigation, substantial fines and damages, and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
  86. 수정Corporate responsibility matters may adversely affect our relationships with customers and investors and increase compliance costs.
    Environmental, social and governance (“ESG”) Corporate responsibility matters may adversely affect our relationships with customers and investors and increase compliance costs.
  87. 수정Corporate responsibility matters may adversely affect our relationships with customers and investors and increase compliance costs.
    Various jurisdictions, investors, customers and other stakeholders continue to focus on corporate responsibility matters. A number of our customers have adopted, or may adopt, procurement policies that include ESG corporate responsibility provisions or requirements that their suppliers should comply with, or they may seek to include such provisions or requirements in their procurement terms and conditions. An increasing number of Some investors are also requiring asking companies to publicly disclose ESG-related corporate responsibility-related policies, practices and metrics.
  88. 수정Corporate responsibility matters may adversely affect our relationships with customers and investors and increase compliance costs.
    In addition, various jurisdictions have adopted, or are developing, complex and lengthy ESG-related corporate responsibility-related laws or regulations that may be difficult to comply with and will increase our direct compliance costs, as well as indirect costs passed on to us from our customers and suppliers. If we fail to materially comply with or meet the evolving legal and regulatory requirements or expectations of our various stakeholders, we may be subject to enforcement actions, required to pay fines, face decreased customer demand or lose investors, which could harm our reputation, revenue and results of operations. Our actual or perceived failure to achieve our publicly disclosed ESG-related corporate responsibility initiatives could negatively impact our reputation, subject us to litigation or enforcement actions, or otherwise harm our business.
  89. 수정Corporate responsibility matters may adversely affect our relationships with customers and investors and increase compliance costs.
    This Various adopted or proposed regulations and customer requirements could also adversely affect the sourcing, availability and pricing of minerals and materials used in or for the manufacture of semiconductor devices, including our products. As a result, we may face difficulties in satisfying our customers’ demands, which may harm our sales revenue and operating results. results of operations.
  90. 수정Risks Related to Our Taxes
    Risks Relating Related to Our Taxes
  91. 수정Our income taxes and overall cash tax costs are affected by a number of factors that could have a material, adverse effect on our financial results.
    Our global income is subject to tax in the U.S. In addition, many countries are implementing anti-base-erosion legislation and guidance aimed at standardizing and modernizing global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules, and nexus-based tax incentive practices. Many countries have implemented or are in the process of implementing a global minimum tax, which may we expect to materially increase our effective tax rate and cash tax costs. costs for our fiscal year ending November 1, 2026. Substantial changes in domestic or international corporate tax policies, regulations or guidance, including the recently enacted One Big Beautiful Bill Act, as well as enforcement activities or legislative investigations and inquiries may materially adversely affect our business and impact our provision for income taxes, net income, cash flow and our results of operations generally.
  92. 수정If our tax incentives or tax holiday arrangements change or cease to be in effect or applicable, our corporate income taxes could significantly increase.
    Our operations benefit from the various tax incentives extended to us in various jurisdictions to encourage investment or employment. Each tax incentive and tax holiday is subject to our compliance with various conditions and may, in some instances, be amended or terminated prior to their scheduled termination date by the relevant governmental authority. If we cannot, or elect not to, comply with the conditions related to our tax incentive or tax holiday, we could be required to refund previously realized material tax benefits. If such tax incentive or tax holiday is modified or terminated prior to its expiration absent a new incentive applying, we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and adversely affect our cash flows. In addition, we may be required, or elect, to modify our operational structure and tax strategy in order to keep an incentive, which could result in a decrease in the benefits of the incentive. Adoption of global minimum tax provisions in a country in which we have an existing tax incentive could have a material adverse impact on our the tax incentives. benefits of the incentive. Our tax incentives and tax holiday, before taking into consideration U.S. foreign tax credits, decreased the provision for income taxes by approximately $2,261 $2,709 million in the aggregate and increased diluted net income per share by $0.47 $0.56 for fiscal year 2024. 2025.
  93. 수정Risks Related to Our Indebtedness
    Risks Relating Related to Our Indebtedness
  94. 수정Our substantial indebtedness could adversely affect our financial health and our ability to execute our business strategy.
    From time to time, we require significant expenditures to support our growth and respond to business challenges. As of November 3, 2024, 2, 2025, the aggregate indebtedness was $69,847 $67,120 million. Our substantial indebtedness and the instruments governing our indebtedness could have important consequences including:
  95. 수정Our substantial indebtedness could adversely affect our financial health and our ability to execute our business strategy.
    We receive debt ratings from the major credit rating agencies in the U.S., and any downgrade in our credit rating or the ratings of our indebtedness, or adverse conditions in the debt capital markets, could materially adversely affect our business, financial condition and results of operations. In addition, the current market volatility may adversely impact our ability to manage our debt, including through borrowing at favorable interest rates or due to reduced cash flows.
  96. 수정Risks Related to Owning Our Common Stock
    Risks Relating Related to Owning Our Common Stock
  97. 수정Our stock price has been, and may in the future be, volatile and your investment could lose value.
    •anticipated or actual demand for products used in AI-related products, solutions, including ASICs such as custom AI accelerators or XPUs;
  98. 수정Our stock price has been, and may in the future be, volatile and your investment could lose value.
    •unsubstantiated news reports or other inaccurate publicity regarding us or our business; business, or that of our significant customers;
  99. 수정Our stock price has been, and may in the future be, volatile and your investment could lose value.
    These fluctuations are often unrelated or disproportionate to our operating performance. Broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes changes, market corrections or currency fluctuations, may negatively impact the market price of our common stock. You may not realize any return on your investment in us and may lose some or all of your investment. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. In addition, we have been, and in the future we may be, subject to lawsuits stemming from our acquisitions. Securities litigation against us, including the lawsuits related to such acquisitions, could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
  100. 삭제Risks Related to Our Business
    •Failure to realize the benefits expected from the VMware Merger could adversely affect our business and the value of our common stock.
  101. 삭제Risks Related to Our Business
    •We operate in the highly cyclical semiconductor industry.
  102. 삭제Risks Related to Our Business
    •We make investments in research and development and the slow or unsuccessful return of our investments in research and development could adversely affect us.
  103. 삭제Risks Related to Our Business
    •Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which we may ultimately generate no revenue.
  104. 삭제Risks Related to Our Business
    •Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to market.
  105. 삭제Risks Related to Our Business
    •We purchase a significant amount of the materials used in our products from a limited number of suppliers.
  106. 삭제Risks Related to Our Business
    •Failure to adjust our manufacturing and supply chain to accurately meet customer demand could adversely affect our results of operations.
  107. 삭제Risks Related to Our Business
    •Our use of open source software in certain products and services could materially adversely affect our business, financial condition and results of operations.
  108. 삭제Risks Related to Our Business
    •If we are unable to protect the significant amount of IP we utilize in our business, our business could be adversely affected.
  109. 문장 삭제Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
    Macroeconomic weakness and uncertainty also make it more difficult for us to accurately forecast operating results, and may make it more difficult to raise or refinance debt.
  110. 문장 삭제Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to maintain compliance with applicable regulations could adversely affect our business.
    We may be required to incur significant expense to comply with, or to remedy violations of, these regulations.
  111. 문장 삭제Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to maintain compliance with applicable regulations could adversely affect our business.
    Growing public concern over concentration of economic power in corporations is leading to increased anti-competition legislation, regulation, administrative rule making and enforcement activity.
  112. 문장 삭제Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition and results of operations.
    Although our policies prohibit us, our employees and our agents from engaging in unethical business practices, there can be no assurance that all of our employees, distributors or other agents will refrain from acting in violation of our related anti-corruption or other policies and procedures.
  113. 삭제된 항목
    Failure to realize the benefits expected from the VMware Merger could adversely affect our business and the value of our common stock.
  114. 삭제Failure to realize the benefits expected from the VMware Merger could adversely affect our business and the value of our common stock.
    As part of our integration of the VMware business, we are focusing on VMware’s core business of creating private cloud environments on-premises among large enterprises globally and divesting non-core assets. If VMware customers do not accept our business strategy, including our transition from a perpetual to a subscription licensing model and our simplified product portfolio, the investments we have made or may make to implement our strategy may be of no or limited value, we may lose significant customers, our financial results may be adversely affected and our stock price may suffer.
  115. 삭제Failure to realize the benefits expected from the VMware Merger could adversely affect our business and the value of our common stock.
    Although we expect significant benefits to result from the VMware Merger, if we do not successfully manage the challenges inherent in integrating an acquired business, we may not realize these benefits, and our revenue, expenses, operating results, financial condition and stock price could be materially adversely affected. Achieving these benefits will depend, in part, on our ability to integrate VMware's business successfully and efficiently and VMware customers accepting our business strategy, including our transition from a perpetual to a subscription licensing model and our simplified product portfolio. The successful integration of the VMware business has required, and will continue to require, significant management attention, and may divert the attention of management from other business and operational issues.
  116. 문장 삭제Cyber security threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
    Our logging, alerting and cyber incident detection mechanisms may not cover every system potentially targeted by threat actors, may not have the capability to detect certain types of unauthorized activities, and may not capture and surface information sufficient to enable us to timely detect and take responsive action to insider or external threats.
  117. 문장 삭제The majority of our sales have historically come from a small number of customers and a reduction in demand or loss of one or more of our significant customers may adversely affect our business.
    Our semiconductor customers are not generally required to purchase specific quantities of products. Moreover, our top customers’ purchasing power has, in some cases, given them the ability to make greater demands on us with regard to pricing and contractual terms in general. Some customers may even reduce the amount of products or decline to purchase due to their internal development of the products.
  118. 삭제된 항목
    We operate in the highly cyclical semiconductor industry.
  119. 문장 삭제We operate in the highly cyclical semiconductor industry.
    From time to time, these factors, together with changes in general economic conditions, cause significant upturns and downturns in the industry and in our business. The market for AI-related products has resulted in a significant upturn in certain segments of the industry resulting in record revenue, which may not be sustainable. Previously the industry experienced a significant upturn due to a supply imbalance that resulted in record profitability and increases in average selling prices, which was followed by a down-cycle resulting in diminished demand for end-user products, high inventory levels and periods of inventory adjustment, and elimination of expedite fees. Historically, such down-cycles have also been characterized by under-utilization of manufacturing capacity, changes in revenue mix and accelerated erosion of average selling prices, which can lead to reduced profitability and a decline in our stock price. We expect our business to continue to be subject to cyclical downturns even when overall economic conditions are relatively stable. If we cannot offset industry or market downturns, our net revenue may decline and our financial condition and results of operations may suffer.
  120. 삭제된 항목
    We make investments in research and development and the slow or unsuccessful return of our investments could materially adversely affect our business, financial condition and results of operations.
  121. 문장 삭제We make investments in research and development and the slow or unsuccessful return of our investments could materially adversely affect our business, financial condition and results of operations.
    Failure to successfully develop increasingly advanced technologies, including ASICs such as custom AI accelerators or XPUs and other AI-related products, could impair our competitive position. Increased investments in research and development, or slow or unsuccessful research and development efforts, would have a negative impact on our financial results.
  122. 삭제된 항목
    Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which we may ultimately generate no revenue.
  123. 문장 삭제Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which we may ultimately generate no revenue.
    In such event, we may be forced to dedicate significant additional resources such as product engineering and incur additional costs and expenses, which we expect to continue for our AI-related products. These risks are exacerbated by the fact that many of our products, such as our AI-related products, are dependent on our continued success in the development and quality of our products and product engineering.
  124. 문장 삭제Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to market, damage our reputation and adversely affect our results of operations.
    TSMC, one of our CMs, manufactured approximately 95% of the wafers manufactured by our CMs during fiscal year 2024.
  125. 문장 삭제Our gross margin is dependent on a number of factors, including our product mix, price erosion, acquisitions we may make, level of capacity utilization and commodity prices.
    Our gross margin is highly dependent on product mix, which is susceptible to seasonal and other fluctuations in our markets. A shift in sales mix away from our higher margin products, as well as the timing and amount of our software licensing and non-product revenue, could adversely affect our future gross margin percentages. Conversely, periods of robust demand that create a supply imbalance can lead to higher gross margins that may not be sustainable over the longer term.
  126. 문장 삭제We utilize a significant amount of IP in our business. If we are unable or fail to protect our IP, our business could be adversely affected.
    If we are unable or fail to protect our IP, our business could be adversely affected.
  127. 문장 삭제We are subject to warranty claims, product recalls and product liability.
    Product liability insurance is subject to significant deductibles and there is no guarantee that such insurance will be available or adequate to protect against all such claims, or we may elect to self-insure with respect to certain matters.
  128. 문장 삭제Environmental, social and governance (“ESG”) matters may adversely affect our relationships with customers and investors and increase compliance costs.
    There is an increasing focus from lawmakers, regulators, investors, customers, employees and other stakeholders concerning ESG matters, including environment, climate, water, diversity and inclusion, human rights and governance transparency. Further, there is an increasing number of state-level anti-ESG initiatives in the United States that may conflict with other regulatory requirements or our various stakeholders’ expectations.
  129. 문장 삭제Environmental, social and governance (“ESG”) matters may adversely affect our relationships with customers and investors and increase compliance costs.
    In addition, an increasing number of OEMs are seeking to source products that do not contain conflict minerals.
  130. 문장 삭제Our income taxes and overall cash tax costs are affected by a number of factors that could have a material, adverse effect on our financial results.
    As a result of U.S. tax reforms, our global income is subject to tax in the U.S. and we expect an increase in our effective tax rate and our cash tax costs. For example, Singapore recently adopted the global minimum tax, which will be effective for our fiscal year 2026.
  131. 삭제Our income taxes and overall cash tax costs are affected by a number of factors that could have a material, adverse effect on our financial results.
    As a result of the VMware Merger, we are subject to tax audits in various jurisdictions for the Dell Technologies, Inc. (“Dell”) consolidated group, of which VMware was a member beginning in Dell’s fiscal year 2017 until November 2021. While VMware is no longer a member of the Dell consolidated group, it is still subject to audit for the periods in which it was member of the Dell consolidated group. While we believe VMware’s positions are reasonable, the final determination of tax audits could be materially different from our income tax provisions and accruals. Further, pursuant to a tax agreement between VMware and Dell, in the event VMware becomes subject to audits as a member of Dell’s consolidated group, Dell has authority to control the audit and represent Dell and our interests, which could limit our ability to affect the outcome of such audits.
  132. 삭제Our substantial indebtedness could adversely affect our financial health and our ability to execute our business strategy.
    •exposing us to interest rate risk as our 2023 Term Loans bear floating interest rates;