마이크로칩(MCHP) 2026 연차보고서 리스크 변화

이번 보고서

2026 연차보고서

10-K · 기간 말 2026. 3. 31. · 제출 2026. 5. 21.

비교 기준

2025 연차보고서

10-K · 기간 말 2025. 3. 31.

SEC 원문 ↗

새 리스크 항목

신규 문단

수정 문단

삭제

+7%

분량 변화

AI 한국어 요약

한 줄 요약

중동 분쟁에 따른 헬륨·브롬 등 핵심 소재 공급 차질, AI 관련 수요·규제·보안 리스크, 중국의 반덤핑 조사와 보복 법규를 새로 독립 리스크로 다뤘습니다. 반면 미국 세무 분쟁 일부는 합의로 정리됐습니다.

주목할 변화

신규중동 분쟁발 소재·연료·물류 리스크이란 관련 군사 긴장을 계기로 독립 리스크 항목이 새로 생겼습니다. 웨이퍼 공정에 필요한 헬륨(카타르가 세계 생산의 3분의 1 이상)과 브롬(이스라엘·요르단이 약 3분의 2) 공급 차질, 연료비 상승, 운송 지연을 구체적으로 적었습니다. "recent Iranian drone strikes halted operations at major helium facilities"라는 표현과 함께, 일부 고객 계약상 "penalties" 가능성도 언급했습니다.
신규AI 전반에 걸친 종합 리스크흩어져 있던 AI 관련 문구를 하나의 큰 항목으로 묶고 범위를 넓혔습니다.
수요 측면: "Demand for AI-related products is subject to concentration and investment-cycle risk"라며 AI 투자 둔화가 실적에 미칠 위험을 새로 명시했습니다.
그 밖에 EU AI Act 등 규제, AI를 활용한 사이버 공격, AI 인재 경쟁, AI 산출물의 지식재산권 불확실성도 함께 다룹니다.
강화중국의 반덤핑 조사·보복 법규중국 상무부가 2025년 9월 13일 미국산 아날로그 반도체에 대한 반덤핑 조사를 개시했습니다. 현재 중단된 상태지만 재개될 수 있으며, 재개 시 "additional tariffs are likely to be imposed"라고 적었습니다(회사는 조사 대상이 아니었다고 밝힘). 또 2026년 4월 13일 중국 국무원이 발표한 외국법 역외 적용 대응 규정 때문에, 미국 법을 준수하는 것만으로도 중국에서 민사책임을 질 수 있다는 위험을 추가했습니다.
강화공급망·희토류·관세 리스크 재구성공급 관련 리스크를 새로 정리하면서 사례를 보강했습니다.
메모리 업체들이 첨단 제품으로 전환하면서 회사가 쓰는 메모리 부품이 부족해지거나 비싸질 수 있다고 봤습니다.
2025년 넥스페리아(Nexperia) 사태로 고객사가 부품 부족을 겪으면 회사 제품 수요도 줄 수 있다고 했습니다.
중국의 희토류·자석 수출 규제가 확대됐고, 실제로 일부 자동차 업체가 "temporarily suspend operations"한 전례를 들었습니다.
반도체 관세는 Section 232 조사가 끝나면 "an increase in tariffs on semiconductors is expected"라고 적었습니다.
반대로 IEEPA 관세 위헌 판결에 따른 환급 가능성은 유리한 요인으로 언급했지만, 시기와 금액은 예측할 수 없다고 했습니다.
강화수출통제 해석 리스크와 유통망 차질 사례수출통제가 "subject to discretionary interpretation"이라며, 규제 해석이 바뀌면 출하나 매출 인식이 지연될 수 있다고 추가했습니다. 실제 사례로 2025년 10월 대형 유통사 Arrow 일부 자회사가 Entity List(미국 거래제한 명단)에 올라 9일간 출하가 막혔던 일을 들었습니다. 이 건은 "no material impact"였다고 밝혔습니다. 이 밖에 50% 소유 계열사 규제(현재 2026년 11월 10일까지 유예), 중국·러시아 연계 차량 커넥티비티 부품 규제도 추가됐습니다.
신규장기 생산능력 계약과 첨단 공정 전환 리스크외부 파운드리 등과 맺은 장기 계약 때문에, 계약 크레딧을 쓰려고 당장 필요 없는 물량도 살 수 있다고 밝혔습니다. 그 결과 "excess inventory and inventory reserve charges"가 생길 수 있다고 적었습니다. 또 첫 3nm 제품인 "PCIe Gen 6 Switch"를 원하는 물량만큼 생산할 수 있는지를 새 위험으로 명시했습니다. 첨단 공정 수요가 몰리면서 외주 업체의 생산능력이 빠듯해지고 있다는 점도 언급했습니다.
강화배당·자사주 매입 축소 가능성 명시현금흐름이 부족할 경우 "reduce or suspend dividends, share repurchases"할 수 있다는 문구를 새로 넣었습니다. 여러 분기 동안 차입으로 배당 일부를 충당해 왔다는 사실도 다시 적었습니다. 자사주 매입 결정 요인에는 "leverage ratios"(부채 비율)와 우선주 배당이 추가됐습니다.
완화세무 분쟁 일부 해소2025년 9월 미국 국세청(IRS)과 2007~2015 회계연도분에 합의했습니다. 최대 9,200만 달러 규모였던 독일 세무당국 과세 관련 문단도 삭제됐습니다. 다만 말레이시아 분쟁은 그대로 남아 있으며, 최대 MYR 19억(약 4억 8,020만 달러)으로 표기됐습니다.

읽는 법

이번 개정은 리스크의 무게중심이 지정학과 공급망 쪽으로 옮겨갔음을 보여줍니다. 수요 둔화보다 중동 분쟁, 중국의 보복 조치, 수출통제처럼 회사가 통제하기 어려운 외부 요인을 구체적인 사례와 수치로 서술했습니다. AI는 기회로만 다루지 않고 수요 집중과 투자 사이클에 따른 리스크로도 명시했습니다. 3nm 신제품 양산 역량과 장기 공급계약에 따른 재고 부담, 배당 축소 가능성 문구는 앞으로 실적 발표에서 재고 수준, 차입 추이, 배당 재원을 확인할 때 참고할 만한 대목입니다.

원문 비교

신규Risks Related to Our Business, Operations, and Industry
•impact of supplier disruptions affecting the availability and cost of raw materials, components, or equipment;
신규Risks Related to Our Business, Operations, and Industry
•impact of restrictions, export controls, or other limitations on critical materials sourced from concentrated suppliers reducing sales;
신규Risks Related to Our Business, Operations, and Industry
•impact of geopolitical instability in the Middle East on the availability of critical semiconductor materials, fuel costs, and our ability to meet customer demand;
신규Risks Related to Our Business, Operations, and Industry
•ability to introduce new products on a timely basis, including in response to market changes driven by AI and other factors, or by changing our product design and manufacturing to more advanced technology nodes;
신규Risks Related to Cybersecurity, Products, Privacy, Intellectual Property, and Litigation
•impact of evolving risks related to artificial intelligence, cybersecurity and data privacy across our products, operations, regulatory compliance, intellectual property, talent, and transactions;
신규Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•our ability to introduce new products that will achieve broad market acceptance at favorable prices and margins;
신규Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•our ability to successfully transition to more advanced process technologies to reduce manufacturing costs or introduce more advanced products, and the ability to produce these products at desired volumes, such as our first 3nm PCIe Gen 6 Switch;
새 리스크 항목
Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
신규Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
Any interruption in the supply of raw materials, components, or equipment - or reduced supplier support for key manufacturing tools - could adversely affect our ability to produce products in the required volumes or on expected timelines. Supply availability may be further limited as global semiconductor demand increases, suppliers shift production toward higher cost or more complex products, or as a result of supply chain disruptions, transit delays, or political instability. For example, as memory manufacturers transition to more advanced products, availability of the memory components we use may become constrained, have longer lead times, or become more expensive. Consolidation among suppliers may reduce supply alternatives or alter our commercial relationships. In addition, reduced labor availability or public health concerns may further impact the supply chain.
신규Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
Any of these factors could increase our manufacturing costs, impair our sourcing flexibility, delay our production schedules, and adversely affect our operating results. Additionally, our sales may be adversely impacted if tariffs or government trade actions restrict access to needed supplies.
신규Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
Tariffs, trade restrictions, and evolving global trade policies pose risks to our supply chain, cost structure, and customer demand. Beginning in 2018 and continuing through 2026, the U.S. imposed additional tariffs on various imports, and several countries have imposed retaliatory tariffs on goods originating from the U.S. Although semiconductors currently remain exempt from certain U.S. tariffs under the ongoing Section 232 investigation, many inputs used in semiconductor manufacturing - including chemicals, metals, and equipment - remain subject to country specific tariffs or may become subject to new duties. The tariff landscape remains uncertain and may change with limited notice.
신규Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
New or increased tariffs imposed on raw materials, components, equipment, or other inputs used in our production processes could increase our manufacturing costs. We may also incur incremental costs associated with supply chain adjustments undertaken to mitigate the effects of trade restrictions or tariffs. While we attempt to reduce cost burdens and secure alternative supply arrangements, we may experience higher operating costs, reduced sourcing flexibility, or lower demand for our products if customers face higher input costs or trade related disruptions.
신규Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
Tariffs and trade restrictions also affect our customers. If customers face reduced availability of labor, materials, or components, whether due to trade restrictions, supplier disruptions, escalating shipping constraints, or public health issues, they may reduce or suspend production of their own products, leading to decreased demand for our products. For example, in 2025, government actions involving Nexperia (including export control measures and interventions affecting its operations and cross-border shipments) resulted in restricted availability of certain mature-node semiconductors (such as discrete devices and standard logic) that are widely used by automotive and consumer electronics manufacturers. As a result, some of our customers may experience shortages of these components which may reduce their production volumes and, in turn, reduce demand for our products. Any such customer side disruptions may negatively affect our revenue and operating results.
신규Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs collected pursuant to the International Emergency Economic Powers Act (IEEPA) were unconstitutional. On April 20, 2026, the U.S. Customs and Border Protection (CBP) began processing refunds through its Consolidated Administration and Processing of Entries (CAPE) portal. Although Microchip was the importer of record for products that were subject to tariffs imposed under IEEPA and should be entitled to a refund, the timing and the amount of any such recovery is not yet clear. As such, this could have a favorable impact on our financial position, operations, or cash flows, but we cannot predict the timing, likelihood, or amount of any refunds or other recoveries we may realize.
새 리스크 항목
We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.
신규We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.
Certain materials used in semiconductor manufacturing, including rare earth elements, minerals, and metals, are available from a limited number of countries. Geopolitical tensions, trade disputes, economic conditions, transit disruptions, public health concerns, or regulatory actions may affect the availability or cost of these materials. Although we do not purchase significant amounts of materials, components or equipment from Russia, Belarus, or Ukraine, the broader semiconductor industry relies on raw materials sourced from these regions - such as neon, palladium, cesium, rubidium, and nickel. Current U.S. restrictions on imports of certain metals of Russian origin highlight the risk that geopolitical events or sanctions may limit access to critical materials. If we or our suppliers cannot obtain necessary inputs at commercially reasonable prices or in adequate quantities, our ability to manufacture products - or customer demand for such products - may be adversely affected.
신규We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.
Any such impacts on our customers’ production levels may reduce demand for our products and adversely affect our operating results.
새 리스크 항목
Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
신규Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
Geopolitical instability and conflicts in the Middle East, including military activity and escalating tensions involving Iran, create significant uncertainty for global markets, including energy and materials markets, and could adversely impact our operations and financial results. The region is a major source of global oil production and a critical transit point for maritime shipping routes. Hostilities, infrastructure damage, sanctions, or blockages of key shipping lanes could disrupt oil production and distribution, reducing the availability of fuel or increasing fuel prices. Recent armed conflicts have already forced key state sponsored fuel production facilities in the region offline, contributing to global fuel price volatility.
신규Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
In addition to fuel‑related risks, current conflict in the Middle East is disrupting supplies of critical semiconductor materials - including helium and bromine, both essential for wafer fabrication processes. For example, Qatar accounts for more than one‑third of the world’s helium production, and recent Iranian drone strikes halted operations at major helium facilities. Additionally, bromine supplies are also at risk, as approximately two‑thirds of the global production originates from Israel and Jordan, and disruptions in the region could affect semiconductor etching, detection, and circuit‑formation processes.
신규Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
Our operations rely heavily on global logistics networks - including ocean freight, air freight, and long‑haul trucking - that depend on stable and cost‑effective fuel supplies. Significant increases in fuel costs, reductions in carrier capacity, or extended transit times could materially increase our transportation and distribution expenses. Shipping carriers may impose fuel surcharges, reroute vessels, reduce service frequency, or experience delays, each of which could impair our ability to obtain raw materials or deliver finished products to customers on expected timelines.
신규Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
Because many of our semiconductor products support time‑critical applications in the automotive, industrial, communications, aerospace and defense, and consumer sectors, delays in obtaining critical materials or increases in logistics costs could negatively impact customer relationships and customers’ production schedules or purchasing decisions, reduce demand, and result in penalties under certain customer agreements. Prolonged or severe disruption - whether due to fuel shortages, materials constraints, logistics delays, or increased energy costs, or reduced customer demand - could adversely affect our ability to meet customer commitments and could materially harm our business, financial condition, and results of operations.
신규Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
•product introductions by our competitors or by us in response to actions taken by our competitors;
신규Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
•the rate at which the markets that we serve redesign and change their own products, including in response to market changes caused by developing technologies such as AI and other market forces;
신규Our success depends on our ability to introduce new products on a timely basis.
•understanding and predicting changes in the market segments that we serve, including changes driven by AI;
신규Our success depends on our ability to introduce new products on a timely basis.
•timely completion and introduction of new product designs, and the ability to produce these products at desired volumes, including those developed on more advanced technology nodes such as our first 3nm PCIe Gen 6 Switch;
신규Our success depends on our ability to introduce new products on a timely basis.
•the level of competition for our new products and how the features and prices of our new products compare with competing products;
새 리스크 항목
We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
Market dynamics and our product strategy are increasingly influenced by AI. Our ability to design, develop and timely introduce competitive products and processes - including those implementing new technologies such as AI, or complying with new governmental restrictions regarding implementation of new technologies - may be affected by how quickly we and our customers adapt to market changes driven by AI, and by the rate at which the markets we serve redesign and change their own products in response to AI and other market forces. Failure to respond timely could impair our competitive position, reduce design wins and sales, and negatively affect our margins.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
Demand for AI-related products is subject to concentration and investment-cycle risk, and any slowdown or shift in AI spending could reduce demand for our products, pressure margins, and adversely affect our operating results.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
AI also amplifies cybersecurity threats. As AI and machine learning evolve, they may lead to the development of dramatically more effective security tools, and cyber‑attackers may leverage these tools to enhance attack methods, identify novel security vulnerabilities, develop malicious code, sophisticated phishing attempts, and convincing deep fakes that manipulate our content or the voices or images of our leaders. Threats may also be introduced by our employees', our customers’, or our partners’ use of AI tools, including where AI‑generated source code incorporated into products or systems introduces malicious code or security vulnerabilities. We may be unaware of an incident, its magnitude or its effects until significant harm is done.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
Our products and intellectual property may face heightened security, safety and reliability risks when used in AI‑enabled applications, including in the cloud, IoT, automotive and other emerging use cases. Security vulnerabilities in our products, industry‑standard specifications, or licensed intellectual property may be exploited, and we or our customers may not promptly detect or fully assess the impact of such vulnerabilities. These risks could result in reduced demand, adverse publicity, remediation costs, customer claims, litigation or regulatory scrutiny.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
AI‑related laws, regulations and national and regional governmental policies are rapidly evolving and inconsistent across jurisdictions. New and existing frameworks in the United States, the European Union and China - including the EU AI Act’s risk‑based approach - may impose additional compliance, transparency, conformity assessment, monitoring or usage‑restriction obligations on AI‑enabled products. Conflicting regulatory requirements across jurisdictions increase compliance complexity and costs, and failure or perceived failure to comply could result in fines, penalties, investigations, restrictions on product offerings, reputational harm, or lost sales or talent.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
We also face AI‑related risks in acquisitions and strategic relationships, including regulatory violations or cybersecurity risks arising from an acquired company’s or partner’s use of AI. In addition, competition for talent with AI expertise has intensified, and our ability to attract, retain and train personnel with appropriate AI skills and literacy is critical to our innovation and product roadmap.
신규We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
Uncertainty in intellectual property law relating to works created using AI technology may result in changing or inconsistent IP protections, which could adversely affect our ability to protect or commercialize innovations developed with AI. Collectively, these AI‑related risks could lead to operational disruption, increased costs, reputational harm, loss of market share, reduced revenue and margins, and adverse impacts on our financial condition and stock price.
신규Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
Export controls, sanctions, and trade restrictions are increasingly complex and subject to discretionary interpretation by regulatory authorities, with requirements that may change through guidance, enforcement, or licensing decisions. Even where we believe authorizations apply, differing or changing regulatory interpretations could disrupt shipments, delay revenue recognition, require product or customer changes, and adversely affect our operating results.
신규Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
On August 1, 2025, the U.S. administration implemented additional changes to its tariff policy, including the suspension of the de minimis exemption, expiration of the 10% baseline tariff, implementation of revised reciprocal tariffs tailored to each trading partner, and the imposition of tariffs on particular goods (e.g., copper). Although semiconductors remain exempt from most of the recent tariff actions, an increase in tariffs on semiconductors is expected to be imposed once the Section 232 investigation into the impact on U.S. national security by imports of semiconductors, semiconductor manufacturing equipment and their derivative products is concluded. Semiconductors may also be subject to tariffs resulting from ongoing trade negotiations. Although the U.S. Supreme Court ruled that IEEPA-based tariffs are unconstitutional, we cannot predict the timing, likelihood, or amount of any refunds or other recoveries.
수정Risks Related to Cybersecurity, Products, Privacy, Intellectual Property, and Litigation
•risks related to internal use of artificial intelligence (AI);
수정Risks Related to Cybersecurity, Products, Privacy, Intellectual Property, and Litigation
•risks related to compliance with laws and regulations regarding privacy, data protection, ~~cybersecurity,~~ AI, cybersecurity (including U.S. Department of War requirements), and handling of government-regulated data (e.g., controlled unclassified information, classified data, export-controlled data);
수정Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•general economic, industry, public health or political conditions in the U.S. or internationally, including uncertain economic conditions in U.S., China and Europe, changes in ~~tariffs,~~ geopolitical conditions, interest rates, persistent ~~inflation~~ inflation, tariffs or instability in the banking sector;
수정Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•trade restrictions and increase in tariffs, including those on business in China, or focused on specific ~~companies;~~ companies or types of products;
수정Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•disruptions in our business, our supply chain or our customers' businesses due to ~~public health concerns (including viral outbreaks and pandemics),~~ cybersecurity incidents, terrorist activity, armed conflict, war (including military conflict in the Middle East and Russia's invasion of Ukraine), worldwide oil prices and supply, transportation interruption, public health concerns (including viral outbreaks and pandemics), fires, natural disasters or disruptions in the transportation system;
수정Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•our ability to ~~continue to~~ increase or decrease our factory capacity as needed to respond to changes in customer demand;
수정Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•unauthorized ~~copying~~ counterfeiting of our products resulting in pricing pressure and loss of sales;
수정Our operating results may be adversely impacted by the inability of our key suppliers to provide us with necessary raw materials, components, or equipment.
Our manufacturing operations require a continuous supply of raw and processed ~~materials~~ materials, components, and production equipment that must meet ~~exacting~~ stringent performance and quality standards. We Although we generally ~~have~~ maintain multiple sources for these ~~supplies, but there may be~~ items, only a limited number of suppliers may be capable of meeting our ~~standards.~~ technical requirements. From time to time, we have experienced supply shortages, extended lead times, supplier announcements that certain orders could not be fulfilled, or the discontinuation of updates or parts for certain equipment. For example, in fiscal 2023 and fiscal 2022, we experienced cost increases from certain suppliers for materials used in our production processes; although conditions stabilized in fiscal 2024 and fiscal 2025, similar cost pressures may recur.
수정We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.
China is a predominant producer of many rare earth materials essential to the global electronics industry. In ~~April~~ 2025, China imposed and later expanded export restrictions and licensing requirements on certain rare earth ~~minerals.~~ elements and related magnets. Although some restrictions were subsequently suspended for certain U.S. end‑users, future restrictions or renewed implementation could constrain global supply. If China further restricts exports or pressures other countries to do so, our suppliers may face shortages, longer lead times, or increased costs. Limited access to these materials could impair our ability to manufacture certain products, increase our production costs, or reduce our competitiveness relative to manufacturers with alternative supply sources. These constraints may also affect downstream customers; for example, export controls on rare earth magnets have previously led certain automotive manufacturers to temporarily suspend operations.
수정We are dependent on wafer foundries and other contractors, as are our SuperFlash and other licensees.
We rely on outside wafer foundries for a significant portion of our wafer fabrication needs. Specifically, during fiscal ~~2025~~ 2026 and fiscal ~~2024,~~ 2025, approximately ~~64%~~ 65% and 64%, respectively, of our net sales came from products that were produced at outside wafer foundries. We also use several contractors for a portion of the assembly and testing of our products. Specifically, during fiscal 2026, approximately 33% of our assembly requirements and 31% of our test requirements were performed by third-party contractors compared to approximately 33% of our assembly requirements and 33% of our test requirements during fiscal 2025. We have long-term commitment contracts with certain of our third-party suppliers to help ensure that we receive capacity from them to manufacture wafers and assemble and test our products. We may decide to still purchase products or services under these contracts even though we currently may not need all of them in order to take advantage of contract credits. This could result in excess inventory and inventory reserve charges that may negatively affect our gross margin and results of operations. ~~In the event that~~ Additionally, if we have a need ~~to increase~~ for greater manufacturing, assembly or test capacity ~~allocation from our wafer fabrication, assembly and test subcontractors~~ in the ~~future~~ future, or greater capacity for certain types of products, there can be no assurance that we will be able to secure the necessary allocation of capacity from our wafer foundries and other ~~contractors,~~ contractors with the process technologies that we need, or that such capacity will be available on acceptable terms. As our manufacturing subcontractors move to more advanced process technologies over time, we may find that they do not invest in some of the trailing edge process technologies on which a large portion of our products are manufactured. As more companies focus on building leading edge products, our manufacturing subcontractors are becoming capacity constrained in their ability to manufacture such products. ~~If this occurs, it~~ These events may limit the amounts of net sales that we can achieve or require us to make significant investments to be able to manufacture these products in our own facilities or at other foundries and assembly and testing ~~contractors.~~ contractors, but we believe that we will be able to obtain sufficient capacity from our manufacturing subcontractors.
수정Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, resellers or suppliers.
We regularly review the financial viability and performance of our licensees, customers, ~~distributors~~ distributors, resellers and suppliers. Any downturn in global or regional economic ~~conditions,~~ conditions as a result of ~~tariffs,~~ geopolitical conditions, broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, ~~the enactment of broad sanctions or tariffs by the U.S. or other countries,~~ public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. The financial decline of a large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales. Also, these parties may not comply with their contractual commitments, or may interpret them differently than we do, which could lead to termination of their performance with little or no notice to us, which could limit our ability to mitigate our exposure. If one of our counterparties becomes insolvent, files for bankruptcy, has business leverage, or favorable contractual terms, then our ability to recover any losses suffered as a result of that counterparty's cessation of performance may be limited by their liquidity, the applicable laws, or their willingness to negotiate a resolution. In the event of such default or cessation of performance, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.
수정We are highly dependent on foreign sales, suppliers, and operations, which exposes us to foreign political and economic risks.
Sales to foreign customers account for a substantial portion of our net sales. During fiscal ~~2024,~~ 2026, approximately 75% of our net sales were made to foreign customers, including 18% in ~~China, 12%~~ China and 15% in ~~Taiwan and 10% in Germany.~~ Taiwan. During fiscal 2025, approximately 75% of our net sales were made to foreign customers, including 17% in China and 16% in Taiwan.
수정We are highly dependent on foreign sales, suppliers, and operations, which exposes us to foreign political and economic risks.
Having a strong position in the Chinese market is a key component of our global growth strategy. Although our sales in the Chinese market have been strong in the past, competition in China is intense. In Throughout fiscal ~~2024~~ 2024, fiscal 2025 and in fiscal ~~2025, economic weakness~~ 2026, changes in the Chinese market adversely impacted our sales volumes in China. As discussed above, the trade relationship between the U.S. and China remains challenging and could ~~worsen in 2025,~~ worsen, economic conditions in China remain uncertain, and we are unable to predict whether such uncertainty will continue or worsen in future periods. ~~The~~ Any increase in tariffs on semiconductors and raw materials that have the U.S. as their country of origin could lower demand for our products in China and other countries. For example, on September 13, 2025, China's Ministry of Commerce initiated an antidumping investigation of imports into China of analog semiconductors originating in the United States. While we were not a subject of this investigation and the Chinese government is expected to suspend these investigations pursuant to the latest trade deal with the U.S., the Chinese government may resume this investigation at its election. If this takes place, additional tariffs are likely to be imposed as a result of this investigation and could have an adverse impact on our revenue. Also, on April 13, 2026, China's State Council released a regulation intended to be a retaliatory measure to combat the extraterritorial application of foreign laws pertaining to trade controls, sanctions, and similar measures. This regulation may expose us to potential civil liability, administrative measures, and other remedial actions if the Chinese government determines that we caused harm by complying with certain foreign laws. This could have a material adverse effect on our business, results of operations or financial ~~condition.~~ conditions.
수정We are highly dependent on foreign sales, suppliers, and operations, which exposes us to foreign political and economic risks.
Further, increasing investment in the semiconductor industry by the Chinese government and various state-owned of or affiliated entities are intended to advance China's stated national policy objectives. The Chinese government may restrict us from participating in the China market, or may prevent us from competing effectively with Chinese companies. Weakening of foreign markets, especially in China, has resulted in lower demand for our products, which has adversely impacted our revenue in ~~recent quarters~~ the past and, if such conditions continue, it too could have a material adverse effect on our business, results of operations or financial conditions.
수정We are highly dependent on foreign sales, suppliers, and operations, which exposes us to foreign political and economic risks.
We purchase a substantial portion of our raw materials and equipment from foreign suppliers. Please see the risks related to access to raw materials, components, or equipment on page 16. In addition, we own product assembly and testing facilities, and finished goods warehouses near Bangkok, Thailand, which has experienced periods of political instability and severe flooding in the past. There can be no assurance that any future flooding or political instability in Thailand would not have a material adverse impact on our operations. We have a test facility in Calamba, the Philippines, and specialized test and assembly facilities for our aerospace and defense products in Germany, France, Ireland, the United Kingdom, the Philippines, Thailand, and the United States. We use foundries and other foreign contractors for a significant portion of our assembly and testing and wafer fabrication requirements.
수정We depend on orders that are received and shipped in the same quarter and have limited visibility to product shipments other than orders placed under certain LTSAs.
We depend on orders that are received and shipped in the same quarter and have limited visibility to product shipments other than orders placed under ~~our~~ certain LTSAs.
수정We depend on orders that are received and shipped in the same quarter and have limited visibility to product shipments other than orders placed under certain LTSAs.
Starting in the first quarter of calendar 2022, we began entering into LTSAs, which offer our customers the ability to receive prioritized capacity. LTSAs are not a guarantee of supply; however, they were designed to provide the highest priority for those orders which were under this program, and the capacity priority was on a first-come, first-served basis until the available capacity was booked. ~~Additionally,~~ This program and increases in customer order levels outside of this program ~~has~~ resulted in some customers holding excess inventory of our products and thus decreased their need to place new orders, including turns orders, in ~~recent periods.~~ fiscal 2023 and fiscal 2024. We Because we built inventories in response to customer demand, ~~and~~ the cancellation or deferral of product orders ~~has~~ resulted in excess inventory, which ~~has~~ then resulted in write-downs of inventory and an adverse effect on our gross margins in ~~recent periods.~~ fiscal 2025 and fiscal 2026.
수정Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
The semiconductor industry is intensely competitive and faces price erosion and rapid technological change. We compete with major domestic and international semiconductor companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution and other resources than we do. In addition, some governments, such as China, may provide, or have provided and may continue to provide, significant assistance financial or otherwise, to some of our competitors, or to new entrants, and may intervene in support of national industries and/or competitors, including ~~to try~~ trying to disrupt the U.S. semiconductor industry. The semiconductor industry has experienced significant consolidation ~~in recent years~~ which has resulted in several of our competitors becoming much larger in terms of revenue, product offerings and scale. We may be unable to compete successfully in the future, which could harm our business. Our ability to compete successfully depends on a number of factors, including, but not limited to:
수정Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
•our success in designing and manufacturing new products including those implementing new ~~technologies~~ technologies, including AI, or complying with new governmental restrictions regarding implementation of new technologies;
수정Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
We have experienced, and may experience in the future, ~~modest~~ pricing declines in certain of our proprietary product lines, primarily due to competitive conditions. In the past, we have moderated average selling price declines in many of our proprietary product lines by introducing new products with more features and higher ~~prices.~~ prices and we were able to pass cost increases on to our customers in the form of higher price for our products. However, we may not be able to do so in the future. We have experienced in the past, and may experience in the future, competitive pricing pressures on our ~~memory and non-proprietary products in our analog product line.~~ products. However, in the future, we may be unable to maintain average selling prices due to an oversupply of product in the market or increased pricing pressure, including as a result of tariffs being applied to the products we sell or purchase, or actions taken by foreign governments such as China to favor companies located in their own country through tariffs or other actions, which could adversely impact our operating results.
수정Our success depends on our ability to introduce new products on a timely basis.
Because our products are complex, we have experienced delays from time to time in completing new product development. New products may not receive or maintain substantial market acceptance. We may be unable to timely design, develop and introduce competitive products, or produce them at desired volumes, which could adversely impact our future operating results.
수정Our operating results are impacted by seasonality and wide fluctuations of supply and demand in the industry.
The semiconductor industry is characterized by seasonality and wide fluctuations of supply and demand. Historically, since a significant portion of our revenue is from international sales and consumer markets, our business generates stronger revenues in the first half of our fiscal year and comparatively weaker revenues in the second half of our fiscal year. However, broad fluctuations in our business, changes in semiconductor industry and global economic conditions have had and can have a more significant impact on our results than seasonality. In periods when broad fluctuations, changes in business conditions or acquisitions occur, it is difficult to assess the impact of seasonality on our business. The semiconductor industry has had significant economic downturns (including in ~~recent periods),~~ fiscal 2024 and fiscal 2025), characterized by diminished product ~~demand~~ demand, production over-capacity and ~~production over-capacity.~~ high inventory levels. We have sought to reduce our exposure to this industry cyclicality by selling proprietary products, that cannot be quickly replaced, to a geographically diverse customer base across a broad range of market segments. However, we have experienced substantial period-to-period fluctuations in operating results and expect, in the future, to experience period-to-period fluctuations in operating results due to general industry or economic conditions. In this regard, many of our customers felt the effects of slowing economic activity and increasing business ~~uncertainty~~ uncertainty, and customer requests to push-out or cancel backlog increased in the fourth quarter of fiscal ~~2023 and~~ 2023, in fiscal 2024 and in most of fiscal 2025, which adversely impacted our ~~revenue in recent periods.~~ revenue. Consistent with the slowing macroeconomic ~~environment,~~ environment during such periods, and the ~~growth in our inventory,~~ related inventory growth, we ~~have~~ paused our factory expansion actions at Fab 4 and Fab 5 and reduced our planned capital investments through fiscal ~~2026.~~ 2027. We are unable to predict the ~~duration~~ timing or ~~continued~~ impact of ~~the current or~~ any future slowdown on our business.
수정Our business is dependent on distributors to service our end customers.
Sales to distributors accounted for approximately 47% of our net sales in fiscal 2026 and approximately 45% of our net sales in fiscal 2025. With the exception of certain orders placed under our LTSAs, we do not have long-term purchase agreements with our distributors, and we and our distributors may each terminate our relationship with little or no advance notice.
수정Our business is dependent on distributors to service our end customers.
Future adverse conditions in the U.S. or global ~~economies and~~ economies, labor ~~markets~~ markets, or credit ~~markets due to~~ markets, whether resulting from tariffs or other ~~factors~~ factors, could materially impact distributor operations. Any deterioration in the financial condition, or disruption in the operations of our distributors, or disruption of our ability to conduct business with our distributors would likely adversely impact the flow of our products to our end customers and adversely impact our results of operation. For example, on October 8, 2025, certain subsidiaries of Arrow Electronics (Arrow) were placed on the U.S. Department of Commerce Entity List. As a result, we could not ship or transfer products or other items that are governed by the U.S. Export Administration regulations (EAR) to those entities until they were removed from the Entity List. Nine days later, the U.S. Department of Commerce authorized Arrow and its subsidiaries to continue with certain transactions and indicated that Arrow and its subsidiaries would be removed from the Entity List. We worked to minimize disruptions in our supply chain during this period. There was no material impact to Microchip or its customers as a result of this interruption in shipments to certain subsidiaries of Arrow. In addition, during an industry or economic downturn (including in recent periods), there may be an oversupply and decrease in demand for our products, which could reduce our net sales in a given period, increase order push-outs, increase inventory returns, and cause us to carry elevated levels of inventory. For example, in the fourth quarter of fiscal 2023, in fiscal 2024 and in fiscal 2025, we accommodated requests by end customers to push-out certain distributor orders to help them manage inventory levels and, in some cases, to help other end customers that are experiencing supply shortages. As a result of the foregoing, we ~~have~~ incurred charges in connection with obsolete or excess inventory, or we may not fully recover our costs, which would reduce our gross margins. Violations of the Foreign Corrupt Practices Act, export controls and sanction laws, or similar laws, by our distributors could have a material adverse impact on our business.
수정Sales into governmental projects, and compliance with associated regulations, could have a material adverse effect on our results of operations.
A significant portion of our sales are from or are derived from government agencies or customers who sell to U.S. or foreign government agencies. Such sales are subject to federal contracting regulations as well as uncertainties regarding governmental spending levels, spending priorities, regulatory and policy changes. Future sales into U.S. or foreign government projects are subject to uncertain government appropriations and national defense policies and priorities, including the budgetary process, changes in the timing and spending priorities, the impact of any past or future government shutdowns, contract terminations or renegotiations, future sequestrations, changes in regulations that we must comply with to be eligible to accept new contracts, such as the U.S. Department of War's Cybersecurity Maturity Model Certification (CMMC) program requirements, or the impact of pandemics. Additionally, a section in the U.S. National Defense Authorization Act of for Fiscal Year 2023 (the ~~NDAA 2023),~~ FY2023 NDAA), signed into law on December 23, 2022, with provisions that go into effect in December 2027, prohibits U.S. government agencies from buying semiconductor products or services manufactured by SMIC, YMTC, CXMT and any other entity that the Secretary of Defense or the Secretary of Commerce determine is owned, controlled, or connected to the government of a foreign country of concern (Prohibited Companies). Some of our products are manufactured at SMIC, and some of our suppliers buy products manufactured at YMTC. If we are unable to alternately source or manufacture certain of our products, or discontinue use of products from Prohibited Companies, if any, when Section 5949 of the FY2023 NDAA ~~2023 goes~~ go into effect in December 2027, this could adversely impact our sales to U.S. government agencies and their prime customers. Although such actions have not yet had a material adverse impact on our business, there can be no assurance as to the future costs or implications of such actions. Sales into government projects are also subject to uncertainties related to monetary, regulatory, and tax and trade policies implemented by current or future ~~administrations or by the U.S. Congress.~~ administrations.
수정Sales into governmental projects, and compliance with associated regulations, could have a material adverse effect on our results of operations.
Delays, reductions in or terminations of government contracts or subcontracts, including those caused by any ~~past~~ past, current, or future shutdown of the U.S. federal ~~government,~~ or foreign governments, could materially and adversely affect our operating results. During any future government shutdown, we may experience delays, reductions in or terminations of government purchases, contracts or subcontracts, which could materially and adversely affect our operating results. While we generally function as a subcontractor in ~~these type of~~ government transactions, further changes in U.S. or foreign government procurement regulations and practices, particularly surrounding initiatives to reduce costs or increase compliance obligations (such as the ~~Cybersecurity Maturity Model Certification),~~ CMMC in the U.S.), may adversely impact the contracting environment, our ability to enter into or renew contracts, our ability to hire and retain employees, and our operating results.
수정Sales into governmental projects, and compliance with associated regulations, could have a material adverse effect on our results of operations.
The U.S. government and its contractors may terminate their contracts with us at any time. Uncertainty in government spending and termination of contracts for government related projects could have a material adverse impact on the revenue from our ~~government related~~ government-related business. Our contracts with U.S. governmental agencies or prime customers require us to comply with the contract terms, and governmental regulations, particularly for our facilities, systems and personnel that service such customers and related to handling of government-regulated data. To be awarded new ~~contracts,~~ contracts after November 10, 2025 for the U.S. government, we may be required to meet ~~certain levels of the Cybersecurity Maturity Model Certifications~~ a CMMC level that we may not meet, or may choose not to meet. Over time, more government contracts may require higher Cybersecurity Maturity Model requirements and if we do not meet them, we will become ineligible for certain contracts. We are also required to have facility security clearances to perform classified contracts and to build and sell classified products for U.S. governmental agencies. 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. We must also comply with regulations regarding the handling of controlled unclassified information and export-controlled data, as well as U.S. Department of War cybersecurity requirements (such as those under the Federal Acquisition Regulations (FAR) and Defense Acquisition Regulations (DFARS)). Complying with these regulations, including audit requirements, requires that we devote significant resources to such matters in terms of training, personnel, information technology and facilities. The increased cost of compliance may adversely affect our operating results. ~~Any~~ In certain circumstances, failure to comply with these ~~requirements and~~ requirements, the terms of government contracts, or with other applicable regulations may result in fines and penalties, or loss of current or future business including our ability to continue as a supplier to U.S. governmental agencies and its contractors ~~and may materially and adversely affect our operating results.~~ for a period of time. Any such suspension or debarment or other sanction may materially and adversely affect our operating results or reputation.
수정From time to time we receive grants from governments, agencies and research organizations, or enter into tax arrangements. If we are unable to comply with the terms of those grants or arrangements, we may not be able to receive or recognize benefits or we may be required to repay benefits, recognize related charges, or could be required to implement certain limitations on our business, which would adversely affect our operating results and financial position.
From time to time, we have received, and may in the future receive, economic incentive grants, tax benefits, and allowances from national, state and local governments, agencies and research organizations targeted at increasing employment, production or investment at specific locations. Tax arrangements and subsidy grant agreements typically contain economic incentive, headcount, capital and research and development expenditures and other covenants that must be met to receive and retain benefits, and these programs can be subjected to periodic review by the relevant governments. ~~The CHIPS Act and its~~ Regulations associated ~~regulations, for example,~~ with government grants may contain certain restrictions on grant recipient technology licensing activities and the expansion of certain facilities. Compliance with these restrictions could add complexity to our operations and increase our costs. In addition, noncompliance with the conditions of the grants or arrangements could result in our forfeiture of all or a portion of any future amounts to be received, as well as the repayment of all or a portion of amounts received to date. We may be unable to obtain future incentives to continue to fund a portion of our capital expenditures and operating costs, without which our cost structure would be adversely impacted. Further, any decrease in amounts received could have a material adverse effect on our business, results of operations, or financial condition.
수정We may not fully realize the anticipated benefits of our completed or future acquisitions or divestitures.
We have acquired, and expect in the future to acquire, additional businesses that we believe will complement or augment our existing businesses. Integration of our acquisitions is complex and may be costly and time consuming and include unanticipated issues, expenses and liabilities. We may not successfully or profitably integrate, operate, maintain and manage any newly acquired operations or employees. We may not be able to maintain uniform standards, procedures and policies. We may not realize the expected synergies and cost savings from the integration. There may be increased risk due to integrating financial reporting and internal control systems. It may be difficult to develop, manufacture and market the products of a newly acquired company, or grow the business at the rate we anticipate. There may be increased risk associated with the activities of the acquired company such as regulatory violations related to their use of AI in their operations, technology development or product offerings or ~~cyber security~~ cybersecurity or data governance risks. Following an acquisition, we may not achieve the revenue or net income levels that justify the acquisition. We may suffer loss of key employees, customers and strategic partners of acquired companies and it may be difficult to implement our corporate culture at acquired companies. We have been and may in the future be subject to claims from terminated employees, stockholders of Microchip or the acquired companies and other third parties related to the transaction. In particular, in connection with certain of our ~~Microsemi and Atmel~~ prior acquisitions, we became involved with third-party claims, litigation, governmental investigations and disputes related to such businesses and transactions. Acquisitions may also result in charges (such as acquisition-related expenses, write-offs, restructuring charges, or future impairment of goodwill), contingent liabilities, adverse tax consequences, additional share-based compensation expense and other charges that adversely affect our operating results. We may fund future acquisitions of new businesses or strategic alliances by utilizing cash, borrowings under our Revolving Credit Facility, issuing Commercial Paper, raising debt, issuing shares of our common stock, or other mechanisms.
수정We may not fully realize the anticipated benefits of our completed or future acquisitions or divestitures.
Further, if when we ~~decide to~~ divest assets or a business, it may be difficult to find or complete divestiture opportunities or alternative exit strategies, which may include site closures, timely or on acceptable terms. These circumstances could delay the achievement of our strategic objectives or cause us to incur additional expenses with respect to the desired divestiture, or the price or terms of the divestiture may be less favorable than we had anticipated. Even following a divestiture or other exit strategy, we may have certain continuing obligations to former employees, customers, vendors, landlords or other third parties. We may also have continuing liabilities related to former employees, assets or businesses. Such obligations and liabilities may have a material adverse impact on our results of operations and financial condition.
수정As a result of our acquisition activity our goodwill and intangible assets increased significantly and we may in the future incur impairments to goodwill or intangible assets.
When we acquire a business, a substantial portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill is determined by the excess of the purchase price over the net identifiable assets acquired. As of March 31, ~~2025,~~ 2026, we had goodwill of ~~$6.68~~ $6.70 billion and net intangible assets of ~~$2.39~~ $2.03 billion. We review our indefinite-lived intangible assets, including goodwill, for impairment annually in the fourth fiscal quarter or whenever events or changes in circumstances indicate that the carrying amount of those assets is more likely than not impaired. Factors that may be considered in assessing whether goodwill or intangible assets may be impaired include a decline in our stock price or market capitalization, reduced estimates of future cash flows and slower growth rates in our industry. Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on experience and to rely heavily on projections of future operating performance. Because we operate in highly competitive environments, projections of our future operating results and cash flows may vary significantly from our actual results. Through March 31, ~~2025,~~ 2026, we have never recorded a goodwill impairment charge. There were no material intangible asset impairment charges in fiscal ~~2025.~~ 2026. If in future periods, we determine that our goodwill or intangible assets are impaired, we will be required to write down these assets which would have a negative effect on our consolidated financial statements.
수정We must attract and retain qualified personnel to be successful, and competition for qualified personnel has intensified.
Our business relies on ~~the~~ our ability to attract and retain ~~skilled~~ qualified employees across various functions, including management, technical, marketing, sales, research and development, manufacturing, and operations. Competition for qualified personnel has intensified for a variety of reasons, including the high demand for employees in rapidly developing fields such as AI, the increase in work-from-home arrangements and increases in minimum wages and wage inflation in our industry. Our failure to attract and retain hardware and software engineers, as well as sales and marketing personnel, could delay product development and introduction, thereby adversely affecting our net sales. We depend on a direct labor force at our manufacturing facilities, and any inability to maintain this workforce could adversely affect our operations. This could lead to delays in production and shipments, hinder our ability to meet customer demand, and ultimately adversely impact our business, financial condition, and operational results. As the use and integration of AI becomes more prevalent, there is an anticipated shift in the skills required within the workforce, making AI literacy increasingly important for our employees. These competitive pressures and the resulting wage inflation may increase our labor costs and adversely impact our operational results.
수정We must attract and retain qualified personnel to be successful, and competition for qualified personnel has intensified.
In the fourth quarter of fiscal 2025, we implemented a global reduction of our work force, which we completed in the first quarter of fiscal 2026. That reduction in force may have negatively affected employee morale and could diminish our attractiveness as an employer. If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, it could impair our ability to compete effectively.
수정We continue to be the target of attacks on our IT systems. Interruptions in and unauthorized access to our IT systems, security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process including data belonging to us, or our customers, suppliers, contractors or employees, could adversely affect our business.
We rely on the uninterrupted operation of complex IT systems and networks to operate our business. Any improper handling of confidential data, or significant disruption to our systems or networks, including, but not limited to, any that may relate to new system implementations, computer viruses, security breaches or incidents, cyber-attacks, ransom-style attacks, theft or tampering, inadvertent error, facility issues, natural disasters, terrorism, war, telecommunication failures or energy blackouts, security breaches or incidents in our customers’ or third-party providers’ networks, in third-party products we use, or in cloud-based services provided to, by, or enabled by us, or any data we or our service providers maintain or otherwise process, including but not limited to, data belonging to us or our customers, suppliers, contractors or employees, or any perception any of the foregoing has occurred, could have a material adverse impact on our business, operations, supply chain, sales and operating results, result in regulatory inquiries, investigations or other proceedings against us, result in claims, demands and litigation against us, or damage our reputation. Such improper handling of confidential data, or system or network disruption, or any cyber-attack or other means of effectuating a security breach or incident, could result in ~~loss~~ loss, unavailability or ~~unavailability~~ compromise of all or a portion of our systems and business operations, and a loss, unavailability, an unauthorized release of, or other unauthorized use or processing of, personal data, or our suppliers’ or our customers’ intellectual property or confidential, proprietary or sensitive information. Any such matter, or any perception that it has occurred, could harm our business or competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages, and may result in lower revenue, lower margins, regulatory investigations, inquiries or other proceedings, enforcement actions, remediation obligations, claims for damages, litigation, and fines, penalties, damages, other liabilities, and other sanctions.
수정We continue to be the target of attacks on our IT systems. Interruptions in and unauthorized access to our IT systems, security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process including data belonging to us, or our customers, suppliers, contractors or employees, could adversely affect our business.
In recent years, we have regularly implemented improvements to our protective measures that have included, but have not been limited to, implementation of the following: firewalls, endpoint intrusion detection and response software, regular ~~patches,~~ vulnerability scanning and risk-based remediation, automated patching, log monitors, AI-assisted event correlation tools, network segmentation, routine backups with offsite retention of storage media, system audits, dual factor identification, data ~~partitioning,~~ partitioning and encryption, privileged account segregation and monitoring, routine password modifications, and an enhanced information security program including training classes and phishing exercises for employees and contractors with system access, along with tabletop exercises conducted by information security personnel. However, our system improvements have not been fully effective in preventing attacks on our IT systems and data, including breaches of our security measures, and there can be no assurance that any future system improvements will be effective in preventing cyber-attacks or disruptions, a ransom-style attack, or limiting the damage from any cyber-attacks or disruptions. Our ability to recover from ransomware and other ransom-style attacks may be limited if our backups have been affected by the attack, or if restoring data from backups is delayed or not feasible. Our system improvements have resulted in increased costs to us and we may be required to dedicate additional expenditures and resources to making system improvements and otherwise addressing cybersecurity matters in the future, whether in response to any disruption, interruption, breach, incident or otherwise. Further, any future improvements, attacks or disruptions could result in additional costs related to rebuilding our internal systems, defending litigation, complaints or other claims, providing notices to regulatory agencies or other third parties, responding to regulatory inquiries, actions or other proceedings, or paying damages, fines or penalties. Such attacks or disruptions could have a material adverse impact on our business, operations and financial results. Furthermore, our efforts to comply with evolving laws and regulations related to cybersecurity, such as SEC rules requiring disclosure of a material cybersecurity incident, may be costly and any actual or alleged failure to comply could result in investigations, proceedings, investor lawsuits and reputational damage.
수정We continue to be the target of attacks on our IT systems. Interruptions in and unauthorized access to our IT systems, security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process including data belonging to us, or our customers, suppliers, contractors or employees, could adversely affect our business.
Third-party service providers, such as wafer foundries, assembly and test contractors, distributors, credit card processors, SaaS platforms, and other vendors have access to portions of our and our customers' ~~data.~~ data or software. These service providers also face significant cybersecurity threats, and they may be subject to cyber-attacks, disruptions, and interruptions to their networks and systems, and otherwise may suffer from security breaches and incidents. Any such breach or incident, including any involving misappropriation, loss or other unauthorized processing of data or software maintained or otherwise processed by our third-party service providers, or any perception any of these has occurred, could negatively impact our business, operations and financial results, as well as our relationship with our customers.
수정We continue to be the target of attacks on our IT systems. Interruptions in and unauthorized access to our IT systems, security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process including data belonging to us, or our customers, suppliers, contractors or employees, could adversely affect our business.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our cybersecurity practices or measures. We do not have insurance coverage ~~specially~~ specifically for cybersecurity matters. ~~Insurance~~ Other types of insurance coverage that we do have may not be adequate or sufficient to protect us from or to mitigate liabilities arising out of our cybersecurity practices or measures or otherwise relating to any cybersecurity breach or incident, and we cannot be sure that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
수정We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.
Our internal and partner use of AI tools presents further risks. Employees, consultants or partners may use AI tools in a manner posing risks to proprietary, confidential or regulated information and to intellectual property rights. ~~Use~~ The use of AI tools may result in allegations or claims ~~against us related~~ relating to violation of ~~third-party intellectual property~~ third‑party IP rights, unauthorized access to or use or processing of ~~proprietary~~ proprietary, confidential or personal information, failure to comply with ~~open-source~~ open‑source software requirements, ~~and failure to comply with actual~~ or ~~asserted~~ other legal or ~~other~~ contractual obligations. AI tools may also generate unreliable, inaccurate, inferential, unexplainable or biased outputs that could lead to errors in decision‑making, product development or other business activities.
수정We face risks related to security vulnerabilities in our products.
Our products, or IP that we purchase or license from third parties for use in our products, as well as industry-standard specifications that we implement in our products, may be subject to security vulnerabilities. ~~And, while~~ While some of our products contain encryption or security algorithms to protect third-party content or user-generated data stored on our products, and we receive and process alerts regarding potential security vulnerabilities in our products through our public facing Product Security Incident Response Team, these products could still be hacked or the encryption schemes could be compromised, breached, or circumvented by motivated and sophisticated ~~attackers.~~ attackers, including attackers using powerful new AI-driven technologies. Our products are being used in application areas that create new or increased cybersecurity, privacy or safety risks including applications that gather and process data, such as the cloud or ~~Internet of Things,~~ IoT, automotive applications, and ~~automotive applications.~~ applications that use AI. We, our customers, and the users of our products may not promptly learn of or have the ability to fully assess the magnitude or effects of a vulnerability, including the extent, if any, to which a vulnerability has been exploited. Additionally, new information can develop that may impact our assessment of a security vulnerability, including information learned as we develop and deploy mitigations, or become aware of additional variants or evaluate the competitiveness of products. The increasing use of our products in interconnected, autonomous, safety‑critical, defense‑related, and AI‑enabled systems may expose security vulnerabilities beyond traditional software exploits, including firmware, embedded functionality, or interactions with third‑party systems, which may only become apparent after large‑scale deployment.
수정We face risks to our business and proprietary confidential information due to use of AI.
We limit our employees’ use of ~~third-party and open-source~~ AI tools, such as ChatGPT, in accordance with our internal guidelines and procedures. However, the internal governance of the use of these technologies can be challenging, and our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses additional risks relating to the protection of data, including the potential exposure of our proprietary confidential or other controlled information to unauthorized recipients and the misuse of our or third-party intellectual property. Use of AI tools may result in claims related to violation of privacy or third-party intellectual property rights, unauthorized access to or use of proprietary information, or government regulated data (e.g., controlled unclassified information, ITAR, export-controlled data), and noncompliance with actual or asserted legal, contractual, or other obligations (including open source requirements). AI tools may also produce ~~inaccurate responses~~ unreliable, inaccurate, inferential, unexplainable or biased outputs that could lead to errors in our decision-making, product development or other business activities, which could have a negative impact on our business, operating results and financial condition. Our ability to mitigate these risks will depend on our continued effective maintaining, training, monitoring and enforcement of appropriate guidelines and procedures governing the use of AI tools, and the results of any such use, by us or our partners.
수정Issues relating to the use of our technologies, including AI, may result in reputational or financial harm and liability.
~~Concerns relating to~~ Differing opinions and regulations regarding what constitutes the responsible use of technologies, including ~~new and~~ evolving technologies such as AI, in our internal operations, products and services may result in reputational or financial harm and liability and may cause us to incur costs to resolve such issues. If we enable or offer solutions that draw controversy due to their perceived or actual ~~impact on society,~~ societal impact, such as AI solutions ~~that have~~ with unintended consequences, ~~infringe copyright~~ or ~~rights of publicity, or are controversial because of their impact on~~ those that raise concerns related to human rights, privacy, employment or other ~~social, economic~~ social or political issues, or if we are unable to ~~develop~~ maintain effective internal ~~policies and frameworks relating to~~ mechanisms for the responsible ~~development~~ development, deployment, and use of technologies, including AI enabling products, we may experience brand or reputational harm, competitive harm or legal liability. AI introduces new legal, social and ethical issues, risks and challenges that may slow adoption of AI-enabled products and services, reduce market acceptance, delay commercialization, alter customer purchasing behavior, or adversely affect our business model, competitive position and operating results.
수정Our failure to comply with federal, state, or international laws and regulations regarding privacy, data protection and handling, and cybersecurity may materially adversely affect our business, results of operations and financial condition.
We are subject to numerous laws and regulations in the U.S. and internationally regarding privacy, data protection and handling, and cybersecurity, such as the European Union’s (EU) General Data Protection Regulation (GDPR), the U.K. equivalent to the GDPR, and the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), ~~and~~ the EU Cyber Resilience Act and Cybersecurity ~~Act.~~ Act, and the CMMC program. The scope of ~~these~~ such laws and regulations is rapidly evolving, subject to differing interpretations, and may be inconsistent among jurisdictions. Some of these laws create a broad definition of regulated, protected or personal information, establish data privacy rights, impose risk assessment, certification and/or data breach notification requirements, and potentially limit contractual opportunities or create ~~potentially~~ severe statutory damages or other remedial frameworks and private rights of action for certain data breaches. Some of the laws and regulations also place restrictions on our ability to collect, store, use, transmit and process personal information and other data across our business. For example, the GDPR restricts the ability of companies to transfer personal data from the European Economic Area (EEA) to the U.S. and other countries. Some of these laws mandate data-handling and cybersecurity requirements, conformity assessments and incident reporting such as the ~~Cybersecurity Maturity Model.~~ CMMC program. Over time, failure to comply with CMMC requirements required by the U.S. Department of War and its prime customers may make us ineligible for government contracts. ~~Further, such~~ Such laws and regulations have resulted and will continue to result in significantly greater compliance burdens and costs for companies such as us that have employees, customers, and operations in the EEA or make sales into government-related projects.
수정Our failure to comply with federal, state, or international laws and regulations regarding privacy, data protection and handling, and cybersecurity may materially adversely affect our business, results of operations and financial condition.
In the U.S., federal, state, and local governments have enacted numerous laws and regulations relating to privacy, data protection and handling, and cybersecurity. For example, California has enacted the CCPA, which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CPRA, which became operative January 1, 2023, expands the CCPA’s requirements, including applying to personal information of business representatives and employees and establishing a new regulatory agency to implement and enforce the law. Additionally, numerous other states have proposed or enacted laws addressing privacy and security, many of which impose obligations similar to those of the CCPA. The U.S. federal government also has rules, regulations and laws regarding handling of government-regulated data (e.g., controlled unclassified information, classified data, ~~export controlled~~ and export-controlled data) and ~~is contemplating~~ continues to contemplate federal privacy legislation. The CCPA, and other evolving legislation relating to privacy, data protection, and information security may impact our business activities and require us to modify our policies and practices.
수정Our failure to comply with federal, state, or international laws and regulations regarding privacy, data protection and handling, and cybersecurity may materially adversely affect our business, results of operations and financial condition.
While we ~~plan to~~ continue to undertake efforts to conform to current legal and regulatory obligations and to account for relevant best practices, such efforts may be unsuccessful or result in significant costs. We may also experience reluctance, or refusal by European or multi-national customers to continue to provide us with personal data due to the potential risk exposure of personal data transfers and the current data protection obligations imposed on them by applicable data protection laws or by certain data protection authorities. These and any other laws relating to privacy or data protection and handling and their interpretations continue to develop and their uncertainty and inconsistency may increase the cost of compliance, cause compliance challenges, restrict our ability to offer products in certain locations in the same way that we have been, and potentially adversely affect certain third-party service providers. Further, any actual or alleged failure by us or our service providers to comply with laws, regulations, or other actual or asserted obligations relating to privacy, data protection and handling, or cybersecurity may subject us to claims, demands, and litigation, sanctions or fines by regulators, and other damages and liabilities. Any of the foregoing may harm our reputation and market position and otherwise could adversely affect our business, financial condition and results of operations.
수정We are exposed to various risks related to legal proceedings, investigations or claims.
We are currently, and in the future may be, involved in legal proceedings, investigations or claims regarding intellectual property rights, product defects, breach of contracts, tax matters, export controls and sanctions, and other matters. As is typical in the semiconductor industry, we receive notifications from third parties from time to time who believe that we owe them indemnification or other obligations related to claims made against us, our direct or indirect customers, or our licensees. These legal proceedings and claims, even if meritless, have in the past and could in the future result in unexpected and substantial costs to us. If we are unable to resolve or settle a matter, obtain necessary licenses on reasonable terms, reengineer products or processes to avoid infringement, provide a cost-effective remedy, or successfully prosecute or defend our position, we could incur uninsured liability in any of them, be required to take a charge to operations, be enjoined from selling a material portion of our products or using certain processes, suffer a reduction or elimination in the value of our inventories, incur reputational damage, and our business, financial condition or results of operations could be harmed.
수정We are exposed to various risks related to legal proceedings, investigations or claims.
Because the systems into which our products are integrated have a higher cost of goods than the products we sell, the expenses and damages we are asked to pay may be significantly higher than the revenue and profits we received. While we exclude consequential damages in our standard terms and conditions, certain of our contracts ~~may~~ do not exclude such liabilities. Further, our ability to avoid such liabilities may be limited by law. We have liability insurance which covers certain damages arising out of product defects, but we do not expect that insurance will fully protect against such claims. Payments we may make in connection with these customer claims may adversely affect the results of our operations.
수정Our contractual relationships with our customers expose us to risks and liabilities.
We do not typically enter into long-term contracts with our non-distributor customers, and therefore we cannot be certain about future order levels from our customers. Further, except for a few LTSAs that are still in place, the customer contracts that we enter into generally do not require any specified level of purchases and allow customers to cancel orders or terminate the contract with limited restrictions. Under our LTSAs, customers may cancel orders in the event of price increases. While we had approximately ~~109,000~~ 101,000 customers, and our ten largest direct customers accounted for approximately ~~12%~~ 11% of our total revenue in fiscal ~~2025,~~ 2026, and ~~four~~ two of our top ten direct customers are contract manufacturers that perform manufacturing services for many customers, cancellation of customer contracts could have an adverse impact on our revenue and profits. For example, due to uncertainty related to the COVID-19 pandemic, we experienced an increase in order cancellations and requests to reschedule deliveries to future dates in the first quarter of fiscal 2021. Also, many of our customers felt the effects of slowing economic activity and increasing business uncertainty, and customer requests to push-out or cancel backlog and our accommodation of their requests increased in the fourth quarter of fiscal 2023 and continued in throughout fiscal 2024 and ~~the first half of~~ fiscal 2025.
수정Failure to adequately protect our intellectual property could result in competitive harm, lost revenue or market opportunities.
Certain of our ~~software, as well as that of our customers, may be~~ software is derived from ~~“open source”~~ "open source" software that is generally made available to the public by its authors. Certain of the software of our suppliers and customers may also be derived from open source software. Open source software licenses impose certain obligations on us in the event we were to distribute derivative works of the open source software. These obligations may require us to make source code for the derivative works available to the public and/or license such derivative works under a particular type of license, rather than the forms of license we customarily use to protect our intellectual property. While we believe we have complied with our obligations under the various applicable licenses for open source software, in the event that the copyright holder of any open source software were to legally establish that we had not complied with the terms of a license for a particular work, we could be required to release the source code of that work to the public and/or stop distribution of that work if the license is terminated which could adversely impact our business and results of operations.
수정Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
A significant portion of our sales involve export and import activities. Our U.S.-manufactured products or products based on U.S. technology or U.S. software, or products incorporating U.S. content may be subject to laws and regulations administrated by various agencies including those under the U.S. Departments of State, Commerce, and Treasury, that govern international trade, including but not limited to the Foreign Corrupt Practices Act, Export Administration Regulations (EAR), International Traffic in Arms Regulations, economic embargoes and tariffs or other trade sanctions against certain countries and parties. Licenses or license exceptions are often required for the shipment of our products to certain ~~countries.~~ countries as well as for releases of our technology and software to foreign nationals. Our inability to timely obtain a license, for any reason, ~~including~~ not limited to a delay in license processing due to a federal government shutdown, or changes in government policies of approval or denial of licenses, could cause a delay in scheduled shipments which could have a material adverse impact on our revenue within the quarter of a shutdown, and in following quarters depending on the extent that license processing is delayed. Further, determination by a government that we have failed to comply with trade regulations or anti-bribery regulations can result in penalties which may include denial of export privileges, fines, penalties, and seizure of products, or loss of reputation, any of which could have a material adverse effect on our business, sales and earnings. A change in laws and regulations could restrict our ability to transfer product to previously permitted countries, customers, distributors or others. For example, in October 2022, the U.S. Department of Commerce ~~Department~~ published a regulation that imposed restrictions on activities in or involving China, Hong Kong, and Macau related to advanced computing integrated circuits (ICs), advanced-node ICs, computers and other commodities that contain such ICs, certain semiconductor manufacturing items, and supercomputers. The regulation also expanded controls on transactions involving semiconductor manufacturing and semiconductor equipment manufacturing end-uses. Further, this regulation and others expanded the scope of foreign-produced items subject to license requirements under U.S. ~~law and added 28 entities located in China to the U.S. Commerce Department Entity List.~~ law.
수정Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
In November 2023, the U.S. Department of Commerce ~~Department~~ added restrictions and export license requirements to end uses and product categories previously described in the October 2022 regulation. To date, the U.S. Department of Commerce ~~Department~~ has issued a number of regulations that further restrict transactions involving semiconductors and related products. In addition, the U.S. Departments of Commerce, State, and Treasury have been adding parties to the restricted parties lists, and imposing prohibitions and export licensing requirements on transactions with them and entities that are 50% or more owned by them. The BIS has temporarily suspended its 50% Affiliates Rule, until November 10, 2026. The result of these additional restrictions and the change in the U.S. administration in 2025 is that there has been a slow-down in the processing of export license applications by the U.S. Government and an increased burden on us to conduct additional due diligence imposed by the regulations, as well as by sanctions imposed on Russia for invading Ukraine. At this time, there has not been a material impact on our ability to obtain necessary licenses for exportation. A previous example occurred in fiscal 2020, when the U.S. Department of Commerce ~~Department~~ effectively banned U.S. companies from selling products or transferring technology to certain Chinese companies, including Huawei and their related companies worldwide. In fiscal 2020, the U.S. Federal Acquisition Regulation prohibited U.S. governmental agencies from buying equipment incorporating covered telecommunications equipment, as a substantial component or critical technology, where the technology came from certain Chinese companies. In July 2020, this was expanded to prohibit U.S. governmental agencies from entering into a contract with any company that uses covered telecommunications equipment whether or not the Chinese technology is related to the procurement. Since then, similar restrictions have been imposed under the National Defense and Authorization Act when the supply chain includes certain Chinese entities. The EAR also effectively prohibits sales of items for a "military end use," to a "military end-user," or for a "military intelligence" end-user, or end-use to certain countries, such as Belarus, Burma, Cambodia, Cuba, China, Iran, North Korea, Russia, Syria and Venezuela. The U.S. Department of Commerce also currently imposes restrictions on importation and sale of certain Vehicle Connectivity System (VCS) hardware and covered software designed, developed, manufactured, or supplied by persons with a nexus to China, Hong Kong, Macau, or Russia. Any of the foregoing changes to the regulatory requirements could adversely impact our operational costs due to the administrative impacts of complying with these regulations and may limit those with whom we conduct business. Any one or more of these sanctions, future sanctions, a change in laws or regulations, or a prohibition on shipment of our products or transfer of our technology to significant customers could have a material adverse effect on our business, financial condition and results of operations.
수정Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
The U.S. and other countries have levied tariffs and taxes on certain goods, implemented trade restrictions, and introduced national security protection policies. Trade tensions between the U.S. and China, have continued to escalate from 2018 to present, and include the U.S. increasing tariffs on Chinese origin goods and China increasing tariffs on U.S. origin goods. Additionally, the U.S. has imposed a baseline 10% tariff on almost all imported goods globally. We ~~previously took~~ continue to take steps to mitigate the costs of these tariffs on our business by adjusting our operations and supply ~~chain,~~ chain but may be unable to completely mitigate the costs of ~~additional~~ such tariffs, including those imposed in ~~March and April of 2025.~~ recent years or in the future.
수정Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
Increased tariffs on our customers' products could adversely impact their sales, and increased tariffs on our products in comparison to those of our competitors could each result in lower demand for our products. Further, governments may impose restrictions on the sale to certain customers of our products, or any applications containing our products. For example, the Chinese government has announced restrictions relating to sales of certain raw materials and to sales of products containing certain products made by Micron, and they may direct companies within China to purchase Chinese-made products. The Chinese government may also re-initiate the suspended antidumping investigation into imports of analog chips originating in the United States and aggressively enforce the new regulation intended to combat the extraterritorial application of foreign trade controls, sanctions and other measures, which would likely have an adverse impact on our revenue if additional tariffs are imposed by the Chinese government on products subject to the investigation. Similar restrictions on our products or the products of our customers or suppliers could negatively impact our business and financial results. It is also possible that evolving U.S. export controls may encourage our non-U.S. ~~governments~~ customers to ~~request that our customers~~ purchase from companies not subject to U.S. export controls, thereby harming our business, market position, and financial results. Excessive export controls increase the risk of investing in U.S. advanced semiconductor products, because by the time a new product is ready for market, it may be subject to new unilateral export controls restricting its sale. At the same time, such controls may increase investment in foreign competitors, which would be less likely to be restricted by U.S. controls.
수정The outcome of future examinations of our income tax returns and existing tax disputes could have an adverse effect on our results of operations.
We are subject to examination of our U.S. and certain foreign income tax returns for fiscal 2007 and later. We regularly assess the likelihood of adverse outcomes of these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from current or future examinations. There can be no assurance that the final determination of any of these or any future examinations will not have an a material adverse effect on our effective tax rates, financial position and results of operations.
수정The outcome of future examinations of our income tax returns and existing tax disputes could have an adverse effect on our results of operations.
In September 2021, we received a Statutory Notice of Deficiency (2007 to 2012 Notice) from the United States Internal Revenue Service (IRS) for fiscal 2007 through fiscal 2012. The disputed amounts largely relate to transfer pricing matters. In December 2021, we filed a petition in the U.S. Tax Court challenging the 2007 to 2012 Notice. In September 2023, we received a Revenue Agent Report (RAR) from the IRS for fiscal 2013 and fiscal 2016. In October 2023, we received a Statutory Notice of Deficiency (2014 to 2015 Notice) from the IRS for fiscal 2014 and fiscal 2015. The disputed amounts for fiscal 2013 to fiscal 2016 largely relate to transfer pricing matters. In December 2023, we filed a petition in the U.S. Tax Court challenging the 2014 to 2015 Notice. In September 2025, we reached a settlement with the IRS for fiscal 2007 to fiscal 2015.
수정The outcome of future examinations of our income tax returns and existing tax disputes could have an adverse effect on our results of operations.
In May 2023, we received a proposed income adjustment from the Malaysian Inland Revenue Board (IRB) for fiscal 2020. In December 2023, we received a Notice of Assessment from the IRB asserting the same proposed income adjustment. In March 2025, we entered into a Consent Judgment before the High Court, agreeing that the dispute will be heard before the Special Commissioners of Income Tax (SCIT). It was also agreed that the payment on the taxes assessed is stayed and the IRB will pause all enforcement and proceedings against the collection of the taxes assessed until the appeal before the SCIT is concluded. If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to ~~$410.0 million.~~ MYR 1.9 billion (approximately $480.2 million based on the exchange rate as of March 31, 2026). The disputed amounts largely relate to the characterization of certain assets. The timing of adjudicating this matter is uncertain but could occur in the next 12 18 months. The ultimate outcome of disputes of this nature is uncertain, and if the ~~IRS, IRB, and GTA~~ IRB were to prevail on ~~their~~ its assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
수정Exposure to greater than anticipated income tax liabilities, changes in tax rates, laws and regulations, changes in the interpretation of tax laws and regulations, or unfavorable assessments from tax audits and examinations could affect our effective tax rates, financial condition and results of operations.
Exposure to greater than anticipated income tax liabilities, changes in tax ~~rules~~ rates, laws and regulations, changes in the interpretation of tax ~~rules~~ laws and regulations, or unfavorable assessments from tax audits and examinations could affect our effective tax rates, financial condition and results of operations.
수정Exposure to greater than anticipated income tax liabilities, changes in tax rates, laws and regulations, changes in the interpretation of tax laws and regulations, or unfavorable assessments from tax audits and examinations could affect our effective tax rates, financial condition and results of operations.
Our income tax expense is computed based on tax rates at the time of the respective financial period. Our future effective tax rates, financial condition and results from operations could be unfavorably affected by several factors. These include changes in tax rates, tax laws, and tax regulations and how those laws are interpreted in jurisdictions where our income is earned. This also applies to jurisdictions that align with the Organisation for Economic Co-operation and Development’s Base Erosion Profit Shifting recommendations. Other risks include changes to the valuation of our deferred tax assets and changes in where we earn our income geographically. We may also face challenges from tax authorities to our tax positions and intercompany transfer pricing agreements. Additional risks include not meeting performance obligations with respect to tax incentive agreements, changes in foreign currency exchange rates, and adverse resolution of audits and examinations of previously filed tax returns.
수정Our business, financial condition and operating results may be adversely impacted by policies implemented globally by the current or future administrations.
The U.S. and certain other global jurisdictions in which we operate, have taken and have threatened to take significant legislative and policy changes in areas including but not limited to tariffs, taxes and trade, labor, and the environment. If implemented, these changes could increase our effective tax rate, decrease our revenue and increase our selling, general, administrative and/or manufacturing costs, which could have a material adverse effect on our business, results of operations or financial conditions. Changes in tariffs, tax policy, trade regulations or other matters, and any uncertainty surrounding the scope or timing of such changes, could negatively impact the stock market, and reduce the trading price of our stock or otherwise impact our business. For example, in February 2022, the U.S. began implementing widescale sanctions against Russia due to Russia's invasion of Ukraine. Sanctions against Belarus and certain Ukrainian regions were later implemented. Because the actions by Russia against Ukraine are in conflict with our Guiding Values, we chose to cease shipments into Russia and Belarus, and we will continue to comply with applicable U.S. sanctions ~~regarding~~ imposed on Russia, Belarus, and Russia-controlled areas of Ukraine. While sales of our products into these regions, and to customers that sell into these regions, have been negatively impacted, at this time, we have not experienced a material adverse impact on our revenue. Retaliatory acts by Russia in response to the sanctions could include cyber-attacks, sanctions, or other actions that could disrupt the U.S. economy. As a result of the foregoing risks or similar risks, the imposition of sanctions could have a material adverse effect on our business, results of operations or financial condition.
수정Our business, financial condition and operating results may be adversely impacted by policies implemented globally by the current or future administrations.
New technology trends, such as ~~AI and~~ cyber resiliency and security ~~requirements,~~ requirements and the rapid adoption of AI, require us us, and our customers and suppliers, to keep pace with evolving regulations and industry standards. In the U.S., the EU, and China, there are various current and proposed regulatory frameworks relating to cybersecurity, AI development, and the deployment of automation and AI in products, services and operations, including the EU AI Act, China’s generative AI regulations, and various current or proposed U.S. federal and state AI and/or cybersecurity legislative or governance frameworks, executive orders, rules, regulations and laws. The EU AI Act, which has a phased implementation schedule, imposes requirements on AI systems based on their risk classification, and may require conformity assessments, registration, and ongoing monitoring for certain AI systems. We expect that the legal and regulatory environment relating to emerging technologies such as AI will continue to develop and impact ~~both~~ us and our ~~customers.~~ customers and supply chain.
수정We are subject to stringent environmental, climate change and other regulations, which may force us to incur significant expenses and impact our operations.
Our failure to comply, or the failure of entities that we have acquired over time to have complied, with regulations could result in significant fines, litigation or administrative actions by regulators or others, liability for clean-up, criminal and civil liabilities, import/export restrictions, reduction or suspension of production, cessation of operations or future liabilities. Restrictions on emissions could result in significant costs such as the need for additional equipment, higher energy costs, carbon taxes, and emission cap and trade programs, and could also result in reduction or suspension of production, or even cessation of operations. Such regulations have required us in the past, and could require us in the future, to incur significant expenses to comply with such regulations. Our failure to control the use of, or adequately restrict the discharge of, hazardous substances could not only impact the health of our employees, customers and communities in which we operate, but could also impact our ability to operate. Such failure could also restrict our ability to ship certain products to certain countries, require us to modify our products, shipping materials or logistics, or require us to incur other significant costs and expenses. Environmental laws continue to expand with a focus on reducing or eliminating hazardous substances in electronic products and shipping materials. Future environmental regulations could require us to close or reduce production at certain facilities, reengineer certain of our existing products and may prevent us or make it more expensive for us to manufacture, sell and ship our products. Regulations restricting greenhouse gas emissions could cause us to incur significant additional costs of compliance due to the need for changes in manufacturing methods or installation of abatement equipment, expanded data collection, analysis, and certification. Because we have contractual obligations to certain customers to assess the impact that manufacturing process changes may have on the products that we provide to such customers, we have to take a measured approach when implementing changes to our facilities, manufacturing processes, and manufacturing inputs. If we are unable to implement the necessary abatement plan, we may be required to ramp down our existing operations significantly or risk noncompliance with ~~the rule.~~ regulations.
수정We are subject to stringent environmental, climate change and other regulations, which may force us to incur significant expenses and impact our operations.
~~In addition, the~~ The number and complexity of laws and customer requirements focused on the energy efficiency of electronic products, the recycling of electronic products, the reduction of chemicals used in and to manufacture electronic products, and the reduction in the amount of packing materials and the increase in the required recycling of packing materials have expanded significantly. It may be difficult for us to timely comply with these laws and we may have insufficient quantities of compliant products to meet customers' needs, thereby adversely impacting our sales and profitability. We may have to write off inventory if we hold unsaleable inventory as a result of changes to regulations. We expect these risks to continue. These requirements may increase our own costs, as well as those passed on to us by our supply chain.
수정Customer demands and regulations related to conflict-free minerals and other substances incorporated into or used to manufacture our products may force us to incur additional expenses.
Customer demands and regulations related to conflict-free minerals and other substances incorporated into or used to manufacture our products may force us to incur additional expenses.
수정Customer demands and regulations related to conflict-free minerals and other substances incorporated into or used to manufacture our products may force us to incur additional expenses.
In addition to concerns over ~~“conflict”~~ "conflict" minerals mined from the Democratic Republic of Congo, our customers may require that other minerals and substances used within our supply ~~chain~~ chain, manufacturing processes, or contained in our products be evaluated and reported on. An increase in reporting obligations will increase associated operating costs. This could have negative effects on our overall operating profits.
수정Failure to meet ESG expectations, standards or disclosure requirements or achieve our corporate responsibility goals, could adversely affect our business, results of operations, financial condition, or stock price.
In recent years, there has been an increased focus on corporate responsibility matters, including greenhouse gas emissions and climate-related risks, renewable energy, water stewardship, waste management, data privacy, cybersecurity, trade controls, ~~diversity, equality and inclusion,~~ responsible sourcing and supply chain, use of products for illegal or unethical purposes, human rights, and social responsibility. We are committed to corporate responsibility and actively manage these issues in accordance with applicable law and including through our guiding values and our internal policies. As an example, since we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus. However, we have been made aware that there are entities in Russia that indirectly obtained our products after March 2022 despite the preventative measures we took and continue to take. Though we continue to improve our processes and procedures to prevent the unauthorized flow of our products, our actions have not been fully successful. We operate in an extensive, ever-changing global supply chain, an expectation of complete traceability of standard semiconductor products to every end use and prevention of product misuse and diversion is unachievable. Thus, despite our efforts, our products may be used for illegal or objectionable applications and third parties may engage in conduct that we do not support or condone.
수정Failure to meet ESG expectations, standards or disclosure requirements or achieve our corporate responsibility goals, could adversely affect our business, results of operations, financial condition, or stock price.
~~Also, we~~ We have publicly announced environmental goals including those related to greenhouse gas emissions reduction, achieving net zero carbon emissions and renewable energy usage, ~~which~~ however, we may refine or ~~expand further~~ modify such goals in the future. These goals reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. These goals could expose us to heightened scrutiny and financial, legal, reputational, operational, compliance, and other risks, including lost customer opportunities, which could negatively impact us. Further, any failure to set or achieve corporate responsibility initiatives that meet our stakeholders' evolving expectations could also negatively impact us.
수정Failure to meet ESG expectations, standards or disclosure requirements or achieve our corporate responsibility goals, could adversely affect our business, results of operations, financial condition, or stock price.
In addition, we are or expect to become subject to various new or proposed climate-related and other sustainability laws and regulations, including, for example, the state of California's new climate change disclosure ~~requirements,~~ requirements and the EU's ~~new~~ Corporate Sustainability Reporting ~~Directive and climate-change disclosure requirements from the SEC.~~ Directive. Compliance with such laws and regulations, as well as the overall increased focus and scrutiny from ~~the SEC and other~~ certain regulators, investors, customers, vendors, employees, and other stakeholders concerning ESG and climate matters, could impose additional costs on us and expose us to new risks, including resulting in changes to our current ESG goals.
수정Failure to meet ESG expectations, standards or disclosure requirements or achieve our corporate responsibility goals, could adversely affect our business, results of operations, financial condition, or stock price.
•reputational harm, including damage to our relationship with customers, ~~supplies,~~ suppliers, investors, governments, or other stakeholders;
수정Failure to meet ESG expectations, standards or disclosure requirements or achieve our corporate responsibility goals, could adversely affect our business, results of operations, financial condition, or stock price.
~~•we~~ •some customers may ~~lose customers who~~ choose not to do business with us, or we may choose to discontinue or restrict business with certain customers due to our policies;
수정The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors.
•global economic and financial uncertainty due to changes in ~~tariffs,~~ geopolitical conditions or military conflicts, interest rates, persistent inflation, instability in the banking sector, ~~war or other conflicts,~~ tariffs, public health concerns or other factors;
수정The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors.
•our ability to realize the expected benefits of our completed or future acquisitions; and
수정The future trading price of our common stock could be subject to wide fluctuations in response to a variety of factors.
•announcements of restructurings, reductions in force, departure of key employees, and/or consolidations of ~~operations; and~~ operations.
수정The amount and timing of our share repurchases may fluctuate in response to a variety of factors.
The amount, timing, and execution of repurchases of shares of our common stock may fluctuate based on the share price of our common stock, general business and market conditions, tax regulations impacting share repurchases and other factors including our operating results, level of cash flow, leverage ratios, capital expenditures and dividend ~~payments.~~ payments on our common stock and preferred stock. Although our Board of Directors has authorized share repurchases of up to $4.00 billion, of which $1.56 billion is still available, the authorization does not obligate us to acquire any particular amount of shares. We cannot guarantee that our share repurchase authorization will be fully consummated or that it will enhance long-term stockholder value. The repurchase authorization may be suspended or discontinued at any time at our discretion and may affect the trading price of our common stock and increase volatility. We did not repurchase any shares in ~~the March 2025 quarter.~~ fiscal 2026.
수정Our financial condition and results of operations could be adversely impacted if we do not effectively manage or refinance our current or future debt.
As of March 31, ~~2025,~~ 2026, the principal amount of our outstanding indebtedness was ~~$5.66~~ $5.54 billion. At March 31, ~~2025,~~ 2026, we had no outstanding borrowings under our Revolving Credit ~~Facility~~ Facility, which provides ~~up to~~ $2.25 billion of revolving loan commitments that terminate in ~~2030~~ 2030, and ~~$175.0~~ $349.0 million in outstanding principal amount of under our Commercial ~~Paper.~~ Paper program. At As of March 31, ~~2025,~~ 2026, we had ~~$4.20~~ $3.00 billion in aggregate principal amount of Senior Notes and ~~$1.29~~ $2.19 billion in aggregate principal of Convertible Debt outstanding. We intend to finance the repayment of our fixed rate debt maturing within the next 12 months using new fixed rate debt, new notes or convertible debt or by using available borrowings under our Revolving Credit Facility, our Commercial Paper program or other instruments. Changes in interest rates will have a more significant impact on our interest expense if we refinance our fixed rate debt with variable rate debt. There can be no assurance that we will be able to refinance our current or future debt on reasonable terms, if at all.
수정Servicing our debt requires a significant amount of cash, we may not have sufficient cash to fund payments and adverse changes in our credit ratings could increase our borrowing costs and adversely affect our ability to access the debt markets.
Our ability to make scheduled payments of principal, interest, or to refinance our indebtedness, including our outstanding Senior Notes, Convertible Debt, and Commercial Paper, depends on our future performance, which is subject to economic, competitive and other factors. Our business may not continue to generate sufficient cash flow to service our debt and to fund capital expenditures, dividend payments, share repurchases or acquisitions. If we are unable to generate such cash flow, due to financial, contractual, regulatory, or other reasons, we may be required to reduce or suspend dividends, share repurchases, or undertake alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on onerous or highly dilutive terms. ~~Recently,~~ In several recent quarters, we have used borrowings to finance a portion of our quarterly dividend payments and we may continue to do so in future periods. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. Our Senior Notes and Commercial Paper are rated by certain major credit rating agencies. These credit ratings impact our cost of borrowing and our ability to access the capital markets and are based on our financial performance and financial metrics including debt levels. While we have maintained our investment grade rating, in March 2025 we were ~~recently~~ downgraded by one rating agency and there is no assurance that we will maintain our current credit ratings. A downgrade of our credit rating by a major credit rating agency could result in increased borrowing costs and could adversely affect our ability to access the debt markets to refinance our existing debt or finance future debt. Our maintenance of substantial levels of debt could adversely affect our ability to take advantage of opportunities and could adversely affect our financial condition and results of operations.
수정Conversion of our Convertible Debt, Series A Preferred Stock or Depositary Shares, or the payment of dividends on Series A Preferred Stock in shares of common stock, will dilute the ownership interest of our existing stockholders.
The conversion of some or all of our shares of Series A Preferred Stock or Depositary Shares, the payment of dividends on our Series A Preferred Stock in the form of common stock or the conversion of our outstanding Convertible Debt will dilute the ownership interest of our existing stockholders to the extent we deliver common stock upon conversion of such debt. Following our irrevocable settlement election made on April 1, ~~2022,~~ 2022 with respect to the 2017 Senior Convertible Debt, upon conversion, we are required to satisfy our conversion obligation with respect to such converted Convertible Debt by delivering cash equal to the principal amount of such converted Convertible Debt and cash and shares of common stock or any combination, at our option, with respect to any conversion value in excess thereof (i.e., the conversion spread). There would be no adjustment to the numerator in the net income per common share computation for the cash settled portion of the Convertible Debt as that portion of the debt instrument will always be settled in cash. The conversion spread will be included in the denominator for the computation of diluted net income per common share. Any sales in the public market of any common stock issuable upon conversion of our Convertible Debt, Series A Preferred Stock or Depositary Shares or the payment of dividends on our Series A Preferred Stock in the form of common stock could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Debt, Series A Preferred Stock or Depositary Shares may encourage short selling by market participants because the conversion of the Convertible Debt, Series A Preferred Stock or Depositary Shares, as applicable, could be used to satisfy short positions, or anticipated conversion of the Convertible Debt, Series A Preferred Stock or Depositary Shares into shares of our common stock could depress the price of our common stock.
수정The Convertible Debt, Series A Preferred Stock or Depositary Shares may adversely affect the market price of our common stock.
The market price of our common stock is likely to be influenced by ~~the~~ our Convertible Debt, Series A Preferred Stock or Depositary Shares. The market price of our common stock could become more volatile and could be depressed by: (1) investors’ anticipation of the potential resale in the market of a substantial number of additional shares of common stock received upon conversion of the Convertible Debt, Series A Preferred Stock or Depositary Shares; (2) possible sales of our common stock by investors who view the Series A Preferred Stock or Depositary Shares as a more attractive means of equity participation in us than owning shares of common stock; and (3) hedging or arbitrage trading activity that we expect to develop involving the Series A Preferred Stock or Depositary Shares and our common stock.
삭제Risks Related to Our Business, Operations, and Industry
•impact of price increases, increased tariffs, raw material availability or other factors affecting our suppliers;
삭제Risks Related to Our Business, Operations, and Industry
•ability to introduce new products on a timely basis;
삭제Our operating results are impacted by global economic conditions and may fluctuate in the future due to a number of factors that could reduce our net sales and profitability.
•our ability to successfully transition to more advanced process technologies to reduce manufacturing costs;
삭제된 항목
We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
문장 삭제We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
We have experienced supply shortages from time to time in the past, and on occasion our suppliers have told us they need more time to fill our orders, that they cannot fill certain orders, that they will no longer support certain equipment with updates or parts, or that they are increasing prices. In particular, in fiscal 2023 and in fiscal 2022, we experienced increased prices at certain suppliers for certain materials required for production purposes. However, in fiscal 2024 and fiscal 2025, the pricing environment stabilized compared to the two prior fiscal years. An interruption of any materials or equipment sources, or the lack of supplier support for a particular piece of equipment, could harm our business. The supplies necessary for our business could become more difficult to obtain as worldwide use of semiconductors increases, or due to supply chain disruptions, transit disruptions, trade restrictions or political instability. Additionally, consolidation in our supply chain due to mergers and acquisitions may reduce the number of suppliers or change our relationships with them. Also, the reduced availability of necessary labor, the application of sanctions, trade restrictions or tariffs by the U.S. or other countries or the impact of public health concerns, may adversely impact the industry supply chain. The U.S. has imposed additional tariffs on imports, and certain countries have imposed retaliatory tariffs on imports that have the U.S. as their country of origin. For example, in March and April 2025, the U.S imposed tariffs on imports from China and other countries and foreign governments imposed tariffs on imports from the U.S. It is unclear what tariffs will apply to semiconductors during this time of change.
삭제We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
Additional tariffs imposed on components, raw materials, or equipment may increase our costs and have an adverse impact on our operating results in future periods. We may also incur increases in manufacturing costs in mitigating the impact of tariffs on our operations. We will attempt to mitigate the impact of those tariffs on our business but may experience an increase in operating costs, impaired sourcing flexibility, and reduced demand for our products, resulting in reduced revenue.
삭제We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
Our customers may also be adversely affected by the tariffs and other issues described above. The labor, supplies and equipment necessary for their businesses could become more difficult to obtain for various reasons not limited to business interruptions of suppliers, reduced availability of labor, transit disruptions, consolidation in their supply chain, or sanctions, trade restrictions or tariffs or the impact of public health concerns that impair sourcing flexibility or increase costs. If our customers are not able to produce their products, then their need for our products will decrease. Such interruptions of our customers’ businesses could harm our business.
문장 삭제We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
We do not, nor have we historically, purchased significant amounts of equipment from Russia, Belarus, or Ukraine. However, the semiconductor industry, and purchasers of semiconductors, use raw materials that are sourced from these regions, such as neon, palladium, cesium, rubidium, and nickel. If we, or our direct or indirect customers, are unable to obtain the requisite raw materials or components needed to manufacture products, our ability to manufacture products, or demand for our products, may be adversely impacted. While there has been an adverse impact on the world’s palladium, neon, cesium, and rubidium supply chains, at this time, our supply chains have been able to meet our needs. While sales of our products into Russia, Belarus and Ukraine and to customers that sell into these countries, have been negatively impacted by the Russian invasion of Ukraine, at this time, we have not experienced a material impact on our business, results of operations or financial conditions. Further, because we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus.
문장 삭제We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
Additionally, certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals. Trade disputes, geopolitical tensions, economic circumstances, transit disruptions, political conditions, or public health issues, may limit our ability to obtain materials or equipment. Although rare earth and other materials are generally available from multiple suppliers, China is the predominant producer of certain of these materials. If China were to further restrict or stop exporting these materials or pressure other countries to do so, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost. Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China or other countries.
문장 삭제We are dependent on wafer foundries and other contractors, as are our SuperFlash and other licensees.
Specifically, during fiscal 2025, approximately 33% of our assembly requirements and 33% of our test requirements were performed by third-party contractors compared to approximately 41% of our assembly requirements and 29% of our test requirements during fiscal 2024. Due to the amount of inventory of our products that we are holding, we have recently taken actions to decrease our capacity allocation from our wafer fabrication, assembly and test subcontractors.
삭제We are dependent on wafer foundries and other contractors, as are our SuperFlash and other licensees.
In August 2022, the U.S. government passed the CHIPS Act to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry. We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and applied for other incentives provided by the legislation; however, we have not concluded negotiations with the U.S. Department of Commerce and there can be no assurance that we will pursue or receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position. If we conclude our CHIPS Act negotiations and receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs.
문장 삭제We are highly dependent on foreign sales, suppliers, and operations, which exposes us to foreign political and economic risks.
Although our sales in the Chinese market were very strong in calendar 2021, competition in China is intense, and China's economic growth slowed in calendar 2022 and through the first half of calendar 2023.
문장 삭제We are highly dependent on foreign sales, suppliers, and operations, which exposes us to foreign political and economic risks.
We have a test facility in Calamba, Philippines.
문장 삭제We depend on orders that are received and shipped in the same quarter and have limited visibility to product shipments other than orders placed under our LTSAs.
We believe our customers increased their order levels in previous periods of tight supply to help ensure they had sufficient inventory of our products to meet their needs, and then they were unable to sell their products at their forecasted levels which reduced our level of turns orders.
문장 삭제We depend on orders that are received and shipped in the same quarter and have limited visibility to product shipments other than orders placed under our LTSAs.
However, in the event that we decide to not accommodate a request to push out orders and customers under this program still attempt to cancel or reschedule orders, or refuse shipment, we may be unable to recover damages from customers that default under this program.
삭제Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
•the rate at which the markets that we serve redesign and change their own products;
삭제Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
•product introductions by our competitors;
문장 삭제Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.
In fiscal 2023 and fiscal 2022, we experienced cost increases which we were able to pass on to our customers.
문장 삭제Our operating results will suffer if we ineffectively utilize our manufacturing capacity or fail to maintain manufacturing yields.
Additionally, as we are moving production between factories, we may experience lower than anticipated yields during this transition.
문장 삭제Our business is dependent on distributors to service our end customers.
Sales to distributors accounted for approximately 45% of our net sales in fiscal 2025 and approximately 47% of our net sales in fiscal 2024.
문장 삭제Our business is dependent on distributors to service our end customers.
For example, in the fourth quarter of fiscal 2023, in fiscal 2024 and in fiscal 2025, we have accommodated requests by customers to push-out certain orders to help them manage inventory levels and, in some cases, to help other customers that are experiencing supply shortages.
삭제Our success depends on our ability to introduce new products on a timely basis.
•timely completion and introduction of new product designs;
문장 삭제Business interruptions to our operations or those of our key vendors, licensees or customers could harm our business.
Additionally, operations at our customers and licensees may be disrupted for a number of reasons. In April and May 2020, we received a greater number of order cancellations and requests by our customers to reschedule deliveries to future dates. Some customers requested order cancellations within our firm order window and claimed applicability of force majeure clauses due to the impact of COVID-19.
문장 삭제Sales into governmental projects, and compliance with associated regulations, could have a material adverse effect on our results of operations.
For example, in fiscal 2022, as a result of the COVID-19 pandemic, we experienced suspensions and stop work orders for some of our subcontracts.
문장 삭제Sales into governmental projects, and compliance with associated regulations, could have a material adverse effect on our results of operations.
If, in the future, the U.S. government fails to complete its annual budget process, provide for a continuing resolution to fund government operations or increase the federal debt limit, another federal government shutdown may occur, during which we may experience further delays, reductions in or terminations of government contracts or subcontracts, which could materially and adversely affect our operating results.
문장 삭제Sales into governmental projects, and compliance with associated regulations, could have a material adverse effect on our results of operations.
These clearances are subject to the requirements and regulations including the National Industrial Security Program Operating Manual that governs the protection of classified information released or disclosed in connection with the performance of classified government contracts. We must also comply with regulations regarding the handling of controlled unclassified information and export-controlled data.
문장 삭제We may not fully realize the anticipated benefits of our completed or future acquisitions or divestitures.
In May 2018, we acquired Microsemi, which was our largest and most complex acquisition ever. To fund our acquisition of Microsemi, we used a significant portion of our cash balances and incurred approximately $8.10 billion of additional debt.
문장 삭제As a result of our acquisition activity our goodwill and intangible assets increased significantly and we may in the future incur impairments to goodwill or intangible assets.
In connection with the completion of our acquisition of Microsemi in May 2018, our goodwill and intangible assets increased significantly.
삭제We must attract and retain qualified personnel to be successful, and competition for qualified personnel has intensified.
We must attract and retain qualified personnel to be successful, and competition for qualified personnel and available labor may intensify for a variety of reasons, including the increase in work-from-home arrangements, the wage inflation in our industry, and the demand for employees with expertise in developing fields such as AI.
문장 삭제We must attract and retain qualified personnel to be successful, and competition for qualified personnel has intensified.
Competition for personnel with AI expertise may be intense and costly.
문장 삭제We must attract and retain qualified personnel to be successful, and competition for qualified personnel has intensified.
In the fourth quarter of fiscal 2025, we began a global reduction of our work force that could negatively affect employee morale, and diminish our attractiveness as an employer.
문장 삭제We continue to be the target of attacks on our IT systems. Interruptions in and unauthorized access to our IT systems, security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process including data belonging to us, or our customers, suppliers, contractors or employees, could adversely affect our business.
Also, as AI continues to evolve, cyber-attackers could use AI to develop malicious code, sophisticated phishing attempts, and convincing deep fakes. A deep fake is a manipulation of our content or the voices or images of our leaders to maliciously publish false messages that appear to be authentic. Such messages may harm our reputation, which may in turn have an adverse impact on our revenue and profits, and reduce the trading price of our stock. A threat could also be introduced by our or our customers and business partners use of AI tools. The output of these tools may include threats such as introducing malicious code when AI generated source code is incorporated into products or systems. Were any future attacks to be successful, or through the unintentional introduction of security vulnerability due to AI usage, we may be unaware of the incident, its magnitude, or its effects until significant harm is done. More generally, we may face significant delays in identifying, remediating, and otherwise responding to any interruption, disruption, security breach or incident.
문장 삭제We continue to be the target of attacks on our IT systems. Interruptions in and unauthorized access to our IT systems, security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process including data belonging to us, or our customers, suppliers, contractors or employees, could adversely affect our business.
As a result of the material weakness in our internal controls resulting from the IT systems compromise that we experienced in fiscal 2019, we have taken remediation actions and implemented additional controls and we are continuing to take actions to attempt to address evolving threats.
문장 삭제Issues relating to the responsible use of our technologies, including AI, may result in reputational or financial harm and liability.
AI poses emerging legal, social, and ethical issues and presents risks and challenges that could affect its adoption, and therefore our business. Complying with regulations from different jurisdictions related to AI could increase our cost of doing business, may change the way that we operate in certain jurisdictions, or may impede our ability to use AI in our internal operations or offer certain products and services in certain jurisdictions if we are unable to comply with regulations. Compliance with existing and proposed government regulation of AI, including in jurisdictions such as the EU, may also increase the cost of related research and development, and create additional reporting and/or transparency requirements. New and updated AI regulations could impose onerous obligations that may disadvantage us and require us to change our business practices, which may negatively impact our financial results.
삭제Failure to adequately protect our intellectual property could result in competitive harm, lost revenue or market opportunities.
Governments and courts are considering new issues in intellectual property law with respect to works created by AI technology, which could result in changing and inconsistent intellectual property rights in development processes, procedures and technologies we create with AI technology, which could have a material adverse effect on our business.
문장 삭제Regulatory authorities in jurisdictions into or from which we ship our products or import supplies could issue new export controls or trade sanctions, levy fines, restrict or delay our ability to export products or import supplies, or increase costs associated with the manufacture or transfer of products.
Although these tariff increases did not result in a material adverse impact on our operating costs in fiscal 2019 or fiscal 2020, they did reduce demand for our products during fiscal 2019 and fiscal 2020.
문장 삭제The outcome of future examinations of our income tax returns and existing tax disputes could have an adverse effect on our results of operations.
In
문장 삭제The outcome of future examinations of our income tax returns and existing tax disputes could have an adverse effect on our results of operations.
The timing of adjudicating this matter is uncertain but could occur in the next 12 months.
문장 삭제The outcome of future examinations of our income tax returns and existing tax disputes could have an adverse effect on our results of operations.
In January 2025, we received several assessments from the German Tax Authorities (GTA) regarding the German extraterritorial taxation of royalty payments between nonresidents (referred to as offshore receipts in respect of intangible property or ORIP) and intellectual property transfers by nonresidents (referred to as extraterritorial capital gains taxation or ETT). If the assessment is upheld, it could result in income taxes and penalties up to $92.0 million.
문장 삭제Exposure to greater than anticipated income tax liabilities, changes in tax rules and regulations, changes in the interpretation of tax rules and regulations, or unfavorable assessments from tax audits could affect our effective tax rates, financial condition and results of operations.
Our future effective tax rates, financial condition and results from operations could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, by changes in the tax rules and regulations, including those that align with the Organisation for Economic Co-operation and Development’s Base Erosion Profit Shifting recommendations, or the interpretation of tax rules and regulations in the jurisdictions in which we do business by changes in the valuation of our deferred tax assets, changes in the geographic mix of our earnings among jurisdictions, challenges by tax authorities to our tax positions and intercompany transfer pricing arrangements, failure to meet performance obligations with respect to tax incentive agreements, fluctuations in foreign currency exchange rates, adverse resolution of audits and examinations of previously filed tax returns.
문장 삭제Our business, financial condition and operating results may be adversely impacted by policies implemented globally by the current or future administrations.
In the U.S., the EU, and China, there are various current and proposed regulatory frameworks relating to the use of AI in products and services. These changes could impact our internal use and development of AI, and could increase the cost of doing business, and create compliance risks and potential liability, all of which may have a material adverse effect on our financial condition and results of operations.
문장 삭제We are subject to stringent environmental, climate change and other regulations, which may force us to incur significant expenses and impact our operations.
For example, in Colorado, Regulation 27 requires companies operating in Colorado to significantly reduce greenhouse gas emissions in a short timeframe. The magnitude of the penalties that may be imposed for non-compliance is not currently known but could include significant monetary penalties and orders to reduce or cease production.
삭제We are subject to stringent environmental, climate change and other regulations, which may force us to incur significant expenses and impact our operations.
In March 2022, the SEC proposed a rule entitled Enhancement and Standardization of Climate-Related Disclosures for Investors which it then adopted March 6, 2024. However, on April 4, 2024, the SEC announced that it was delaying the implementation of the rule pending challenge in the U.S. Eighth Circuit Court. While the rule is not yet implemented, if it were to be implemented in its current form, we would incur significant additional costs of compliance due to the need for expanded data collection, analysis, and certification.
문장 삭제Our financial condition and results of operations could be adversely impacted if we do not effectively manage or refinance our current or future debt.
With respect to such balance of Senior Notes, our 4.250% 2025 Notes in the principal amount of $1.20 billion matures on September 1, 2025, and we intend to finance the repayment of such notes using available borrowings under our Revolving Credit Facility or our Commercial Paper program. Since interest rates have increased since we issued our 4.250% 2025 Notes, we expect our interest expense will increase if we refinance such notes using our Revolving Credit Facility or our Commercial Paper Program or other instruments. Also, if we refinance such fixed rate notes with variable rate debt, changes in interest rates will have a more significant impact on our interest expense in future periods.
사소Risks Related to Our Business, Operations, and Industry
•dependence on orders received and shipped in the same quarter, limited visibility to product shipments other than those shipped through our certain LTSAs;
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Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, resellers or suppliers.
사소Our operating results will suffer if we ineffectively utilize our manufacturing capacity or fail to maintain manufacturing yields.
Integrated circuit manufacturing processes are complex and sensitive to many factors, including contaminants in the manufacturing environment or materials used, the performance of our personnel and equipment, and other quality issues. As is typical in the industry, we have from time to time experienced lower than anticipated manufacturing yields. Our operating results will suffer if we are unable to maintain yields at or above approximately the current levels. This could include delays in the recognition of revenue, loss of revenue, and penalties for failure to meet shipment deadlines. Our operating results are adversely affected when we operate below normal capacity. In fiscal ~~2025~~ 2026 and in fiscal ~~2024,~~ 2025, we operated at below normal capacity levels resulting in unabsorbed capacity charges of ~~$173.0~~ $200.8 million and ~~$40.7~~ $173.0 million, respectively.
사소Business interruptions to our operations or those of our key vendors, licensees or customers could harm our business.
Also, Thailand has experienced periods of severe flooding in recent years. While our facilities in Thailand have continued to operate normally, there can be no assurance that future flooding in Thailand would not have a material adverse impact on our operations. If operations at any of our facilities, or our subcontractors' facilities are interrupted, we may not be able to timely shift production to other facilities, and we may need to spend significant amounts to repair or replace our facilities and equipment. Business interruptions would likely cause delays in shipments of products to our customers, and alternate sources for production may be unavailable on acceptable terms. This could result in reduced revenues, cancellation of orders, or loss of customers. Although we maintain business interruption insurance, such insurance will likely not compensate us for any losses or damages, and business interruptions could significantly harm our business. For more information on adverse climate change see our risk "Sustained adverse climate change poses risks that could harm our results of operations" on page ~~36.~~ 38.
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Issues relating to the ~~responsible~~ use of our technologies, including AI, may result in reputational or financial harm and liability.