ITEM 1A. RISK FACTORS.
You should carefully consider the risks described below in addition to the other information contained in this report before making an investment decision with respect to any of our securities. Our business, financial condition or results of operations could be materially and adversely impacted by any of these risks. The risks and uncertainties described below are not the only ones we face. Additional risks not currently known to us, or other factors not perceived by us to present material risks to our business at this time, may impair our business operations, financial condition, or results of operations.
Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, financial condition or results of operations.
• The consummation of the Mergers is contingent upon the satisfaction of a number of conditions that may be outside of our or Skyworks’ control and that we and Skyworks may be unable to satisfy, or which may delay the consummation of the Mergers or result in the imposition of conditions that could reduce the anticipated benefits from the Mergers or cause the parties to abandon the Mergers.
• Efforts to complete the Mergers could disrupt our relationships with third parties and employees, divert management’s attention, interrupt new product introductions, or result in negative publicity or legal proceedings, any of which could negatively impact our operating results and ongoing business.
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• Failure to realize the anticipated benefits of the Mergers, delay in realizing those benefits, or significant challenges in integrating the Company with Skyworks could have an adverse effect on the price of Skyworks common stock that Company stockholders will own following the completion of the Mergers.
• Because our stockholders have adopted the Merger Agreement, the Merger Agreement will not permit us to pursue alternative transactions to the Mergers.
• Our operating results fluctuate and are substantially dependent on developing new products and achieving design wins as our customers' requirements can change rapidly and product life cycles can be short.
• We depend on several large customers for a substantial portion of our revenue and the loss of a large customer or loss of share at one or more of these customers could have a material adverse effect on our business, financial condition and results of operations.
• We face risks of a loss of revenue if contracts with the U.S. government or defense and aerospace contractors are canceled or delayed or if defense spending is reduced.
• We depend heavily on third parties.
• We face risks related to sales through distributors.
• We face risks associated with the operation of our manufacturing facilities, and if we experience poor manufacturing yields, our operating results may suffer.
• We are subject to inventory risks and costs because we purchase materials and build our products based on forecasts provided by customers before receiving purchase orders for the products.
• We sell certain of our products based on reference designs of chipset suppliers, and our inability to effectively manage or maintain relationships with these companies may have an adverse effect on our business.
• Fluctuating demand could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance.
• Our acquisitions and other strategic investments could fail to achieve our financial or strategic objectives, disrupt our ongoing business and adversely impact our results of operations.
• We may be unable to effectively execute restructuring initiatives, which could result in total costs that are greater than expected and cause us not to achieve the expected long-term operational benefits.
• We must attract, retain, and motivate key employees in order to compete, and our failure to do so could harm our business and our results of operations.
• Changes in the favorable tax status of our non-U.S. subsidiaries would have an adverse impact on our operating results.
• We are subject to risks from international sales and operations.
• Changes in government trade policies, including the imposition of tariffs and export restrictions, have limited and could continue to limit our ability to sell or provide our products to certain customers.
• We may not be able to generate sufficient cash to service all of our debt or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us.
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• We rely on our IP portfolio and may not be able to successfully protect against the use of our IP by third parties, and we may be subject to claims of infringement of third-party IP rights.
• Security breaches and other disruptions to our IT systems, or other misappropriation of proprietary information, could expose us to liability or disrupt our ability to operate critical business functions, which would cause our business and reputation to suffer.
For a more complete discussion of the material risks facing our business, see below.
Risk Factors Relating to our Proposed Transaction with Skyworks
The consummation of the Mergers is contingent upon the satisfaction of a number of conditions that may be outside of our or Skyworks’ control and that we and Skyworks may be unable to satisfy, or which may delay the consummation of the Mergers or result in the imposition of conditions that could reduce the anticipated benefits from the Mergers or cause the parties to abandon the Mergers.
Consummation of the Mergers is contingent upon the satisfaction of a number of conditions, some of which are beyond our and Skyworks’ control, including, among others:
• the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), as amended, and the approval of the Mergers under certain other antitrust and foreign investment regimes; and
• the absence of any order or injunction issued by a governmental body or any applicable law enjoining, restraining, preventing or prohibiting or making illegal the consummation of the Mergers.
Our and Skyworks’ obligation to complete the Mergers is also subject to certain additional conditions, including:
• compliance in all material respects with each of our and Skyworks’ obligations under the Merger Agreement;
• the accuracy of our and Skyworks’ representations and warranties, subject to certain standards set forth in the Merger Agreement; and
• the absence of a continuing material adverse effect with respect to each of the Company and Skyworks.
These conditions to the closing of the Mergers may not be fulfilled in a timely manner or at all, and, accordingly, the Mergers may not be completed. In addition, each of the Company and Skyworks may terminate the Merger Agreement under certain specified circumstances, including but not limited to, (1) if the Mergers are not completed by April 27, 2027, which date may be extended to July 27, 2027 and to October 27, 2027, in each case under certain circumstances; (2) if any specified governmental authority has issued a final non-appealable order or injunction prohibiting the Mergers; or (3) if the other party materially breaches its covenants, or breaches its representations and warranties, in the Merger Agreement such that the applicable conditions to closing would not be satisfied, subject in certain cases to the right of the breaching party to cure the breach. The Company and Skyworks may also terminate the Merger Agreement by mutual written consent.
Upon termination of the Merger Agreement, each of the Company and Skyworks, under specified circumstances, may be required to pay the other party a termination fee of $298.7 million. Additionally, Skyworks, under specified circumstances, including termination following an injunction arising in connection with certain antitrust or foreign investment laws, or failure to receive certain required regulatory approvals of specified governmental authorities by the Outside Date (as defined in the Merger Agreement), will be required to pay the Company a termination fee of $100.0 million.
As a condition to granting the required clearance under the HSR Act, the Federal Trade Commission may impose limitations or costs, require divestitures or place restrictions on the conduct of the combined company after the closing of the Mergers; provided, however, that Skyworks and its subsidiaries will not be required to: (a) sell, assign, transfer, divest, restructure, hold separate or otherwise dispose of any assets, business or portion of business of the
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Company or Skyworks, other than the sale, assignment, transfer, divestiture, restructuring, holding separate or other disposal of any product line or product lines that, individually or in the aggregate, represent less than $100.0 million in annual revenue; or (b) take, or cause to be taken, the imposition of any restriction, requirement or behavioral or commercial limitation on the operation of the business or portion of the business of the Company, Skyworks or the combined company or any other action, that, individually or in the aggregate, would be material to the combined company.
If the Mergers are not completed, or if there are significant delays in completing the Mergers, the trading prices of our common stock and our future business and financial results could be negatively affected, and we may be subject to several risks, including the following:
• negative reactions from the financial markets, including declines in the prices of our common stock due to the fact that current prices may reflect a market assumption that the Mergers will be completed;
• having to pay certain significant costs relating to the effort to complete the Mergers; and
• the attention of our management will have been diverted to the effort to complete the Mergers rather than our own operations and pursuit of other opportunities that could have been beneficial to us.
Efforts to complete the Mergers could disrupt our relationships with third parties and employees, divert management’s attention, or result in negative publicity or legal proceedings, any of which could negatively impact our operating results and ongoing business.
We have expended, and will continue to expend, significant management time and resources in an effort to complete the Mergers, which may have a negative impact on our ongoing business and operations. Uncertainty regarding the outcome of the Mergers and our future could disrupt our business relationships with our existing and potential customers, suppliers, service providers and other business partners, who may be more cautious in their arrangements with us or attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than the Company. Our employees may have concerns with respect to the Mergers, and uncertainty regarding the outcome of the Mergers could also adversely affect our ability to recruit and retain key personnel and other employees. The pendency of the Mergers may also lead to litigation against us and our directors and officers. Such litigation would be distracting to management and, may, in the future, require us to incur significant costs. Such litigation could result in the Mergers being and/or by a court of competent jurisdiction, which could prevent the Mergers from being completed. The occurrence of any of these events individually or in combination could have a material and effect on our business, financial condition and results of operations.
Failure to realize the anticipated benefits of the Mergers, delay in realizing those benefits, or significant challenges in integrating the Company with Skyworks could have an adverse effect on the price of Skyworks common stock that Company stockholders will own following the completion of the Mergers.
We and Skyworks have operated and, until the completion of the Mergers, will continue to operate, independently. The success of the Mergers, including anticipated benefits and cost synergies, will depend, in part, on our and Skyworks’ ability to successfully integrate our respective operations in a manner that results in various benefits and that does not materially disrupt existing business and strategic relationships or result in a loss of customers. The process of integrating operations could result in a loss of key personnel or cause an interruption of, or loss of momentum in, the activities of one or more of the combined company’s businesses. Inconsistencies in standards, controls, procedures and policies could adversely affect the combined company. Any delays or difficulties encountered in connection with the Mergers and the integration of the Company and Skyworks’ operations could have an adverse effect on the business, financial condition, operating results and prospects of the combined company. If the Company and Skyworks experience in the integration process, including those listed above, we may not fully realize the anticipated benefits of the Mergers in a timely manner or at all, and the price of Skyworks common stock to be issued to Company stockholders in the Mergers could be affected.
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Because our stockholders have adopted the Merger Agreement, the Merger Agreement will not permit us to pursue alternative transactions to the Mergers.
The Merger Agreement contains provisions that make it more difficult for us to be acquired by, or enter into certain combination transactions with, a third party. The Merger Agreement contains customary “no-shop” provisions, including provisions that restrict our ability to, among other things, solicit alternative acquisition proposals from, furnish information to, and participate in discussions or negotiations with, third parties regarding any alternative acquisition proposals. However, because our stockholders have adopted the Merger Agreement, we are no longer permitted to terminate the Merger Agreement to accept a Superior Proposal.
Our stockholders will have a reduced ownership and voting interest after the transaction and will exercise less influence over management.
After the completion of the transaction, our stockholders will own a smaller percentage of the combined company than they now own of the Company. Immediately upon completion of the transaction, we anticipate that Company stockholders and Skyworks stockholders will each hold approximately 37% and 63%, respectively, of the shares of the combined company’s common stock then issued and outstanding. Consequently, our stockholders, as a group, will each have reduced ownership and voting power in the combined company compared to their ownership and voting power in the Company.
Because the stock-based consideration to be received by our stockholders in connection with the Mergers will include a fixed number of shares of Skyworks common stock in exchange for each share of Company common stock, and the market price of Skyworks common stock has fluctuated and will continue to fluctuate, our stockholders cannot be sure of the value of the stock-based consideration they will receive in the Mergers. Furthermore, with respect to the fairness of the merger consideration from a financial point of view, the fairness opinion received by the Company’s board of directors from our financial advisor in connection with the signing of the Merger Agreement speaks only as of the date of the Merger Agreement and not as of any other date.
Under the Merger Agreement, at the effective time of the Mergers, each share of Company common stock (other than each share of Company common stock held in treasury or held or owned by the Company or Skyworks or any of their wholly-owned subsidiaries immediately prior to the effective time of the Mergers) issued and outstanding immediately prior to the effective time of the Mergers will be cancelled and converted into the right to receive (a) 0.960 fully paid and non-assessable shares of Skyworks common stock and (b) $32.50 in cash, without interest. The value of the stock-based consideration our stockholders will receive in the Mergers will therefore fluctuate with the market price of Skyworks common stock. The implied value of the merger consideration to our stockholders has fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate until the date the Mergers are completed, which could occur a considerable amount of time after the date hereof.
Skyworks’ common stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Skyworks’ and our respective businesses, operations and prospects, risks inherent in the respective businesses, changes in market assessments of the likelihood that the Mergers will be completed and/or the value that may be generated by the Mergers and changes with respect to expectations regarding the timing of the Mergers and regulatory considerations. Many of these factors are beyond both our and Skyworks’ control. You are urged to obtain current market quotations for both the Company and Skyworks common stock traded on the Nasdaq Stock Market LLC (trading symbols “QRVO” and “SWKS,” respectively).
Furthermore, the Company’s board of directors has received from our financial advisor a written opinion that, as of the date of such opinion and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by our financial advisor in preparing its opinion, the Merger Consideration (as defined in the Merger Agreement) to be paid to the holders of Company common stock (other than as set forth therein) pursuant to the Merger Agreement is fair, from a financial point of view, to such holders. Changes in the operations and prospects of the Company or Skyworks, general market and economic conditions and other factors that may be beyond the control of the Company or Skyworks, and on which our financial advisor’s opinion was based, may significantly alter the value of the Company or Skyworks or the prices of the shares of Company common stock or Skyworks common stock by the time the Mergers are completed. The opinion does not speak as of the time the Mergers will be completed or as of any date other than the date of such opinion. Because the Company does not currently anticipate asking its financial advisor to provide an updated
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fairness opinion, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the Mergers are completed.
If the Mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), the U.S. holders of the Company's common stock may be required to pay additional U.S. federal income taxes.
The Company intends for the Mergers, taken together, to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes, and the Company intends to report the Mergers consistent with such qualification. However, it is not a condition to the Company's obligation to consummate the Mergers that the Mergers, taken together, qualify as a “reorganization” or that the Company receive an opinion from counsel to that effect, and it is possible that the Mergers, taken together, may not so qualify.
The Company has not sought and will not seek any ruling from the U.S. Internal Revenue Service regarding any matters relating to the Mergers and, as a result, there can be no assurance that the U.S. Internal Revenue Service would not assert that the Mergers, taken together, do not qualify as a “reorganization,” or that a court would not sustain such a position. If the U.S. Internal Revenue Service or a court were to determine that the Mergers, taken together, do not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, U.S. holders of the Company's common stock may be required to pay additional U.S. federal income taxes.
Risks Related to Our Business and Industry
Our operating results fluctuate on a quarterly and annual basis.
Our revenue, earnings, margins and other operating results have fluctuated significantly in the past and may fluctuate significantly in the future . Historically, worldwide semiconductor industry sales have tracked the impacts of financial crises, subsequent recoveries and persistent economic uncertainty. Global economic slowdowns could potentially result in certain economies dipping into economic recessions, including the U.S. If demand for our products fluctuates as a result of economic conditions or for other reasons, our revenue and profitability could be impacted. Our future operating results will depend on many factors, including the following:
• business and macroeconomic changes, including trade restrictions and tariffs, foreign governments subsidizing local suppliers, recession or slowing growth in the semiconductor industry and the overall global economy;
• political and/or civil unrest, acts of war or other military actions, including any resulting sanctions or other restrictive actions;
• inflationary pressures, which vary across jurisdictions in which we do business, resulting in increased costs or reduced demand for our products due to increased prices of those products;
• changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, unemployment levels, energy or other commodity prices as well as changes in existing and expected rates of inflation;
• fluctuations in demand for our customers’ products;
• our ability to forecast our customers’ demand for our products accurately;
• the ability of third-party foundries and other third-party suppliers to manufacture, assemble and test our products and otherwise deliver on their commitments to us in a timely and cost-effective manner;
• our customers’ and distributors’ ability to manage the inventory that they hold and to accurately forecast their demand for our products;
• delays in the widespread deployment and commercialization of new technologies;
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• our ability to achieve cost savings and improve yields and margins on our new and existing products;
• our ability to successfully integrate into our business and realize the expected benefits of acquisitions and strategic investments;
• our ability to disaggregate and divest elements of our business and realize the expected benefits of doing so; and
• our ability to align production capacity to customer demand, which may lead to underutilization of our capacity in periods of lower demand or the lack of capacity in periods of excess demand.
Our operating results have been, and our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results or forecasts are below the expectations of stock market analysts or our investors, our stock price may decline.
Our operating results are substantially dependent on developing new products and achieving design wins while our customers' requirements can change rapidly and product life cycles can be short.
Our largest markets are characterized by the frequent introduction of new products in response to evolving product requirements. Our largest customers typically refresh some or all of their product portfolios by releasing new models each year. In some cases, product designs we pursue represent either opportunities to substantially increase our revenue by winning a new design or a risk of a substantial decrease in revenue by losing a product on which we are the incumbent.
Our success depends on our ability to develop and introduce new products in a timely and cost-effective manner and secure production orders from our customers. The development of new products is a highly complex process, and we have experienced delays in completing the development and introduction of new products at times. Our successful product development depends on a number of factors, including the following:
• our ability to predict market requirements and define and design new products that address those requirements;
• our ability to design products that meet our customers’ cost, size, quality and performance requirements;
• our ability to introduce new products that are competitive and can be manufactured at lower costs or that command higher prices based on superior performance;
• acceptance of our new product designs;
• the availability of qualified product design engineers;
• our timely completion of product designs and ramp up of new products according to our customers’ needs with acceptable manufacturing yields; and
• market acceptance of our customers’ products and the duration of the life cycle of such products.
We may not be able to design and introduce new products in a timely or cost-efficient manner, and our new products may fail to meet market or customer requirements. Most major product design opportunities that we pursue involve multiple competitors, and we could lose a new product design opportunity to a competitor that offers a lower cost or equal or superior performance. If we are unsuccessful in achieving design wins, our revenue and operating results will be adversely affected. Even when a design win is achieved, our success is not assured. Design wins may require significant expenditures by us before realizing revenue six to nine months or more later. Many customers seek a second source for all major components in their devices, which can significantly reduce the revenue obtained from a design . In many cases, the average selling prices of our products over the products’ lives, and we must yield , cost reductions and other productivity in order to maintain
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profitability. The actual value of a design win to us will ultimately depend on the commercial success of our customers’ products.
We depend on several large customers for a substantial portion of our revenue and the loss of a large customer or loss of share at one or more of these customers could have a material adverse effect on our business, financial condition and results of operations.
A substantial portion of our revenue comes from several large customers. Our future operating results will be affected by both the success of our largest customers and our success in diversifying our products and customer base. Collectively, our two largest end customers accounted for an aggregate of approximately 59%, 57% and 58% of our revenue for fiscal years 2026, 2025 and 2024, respectively. If demand for their products increases, they may increase the purchases of our products and our results may be favorably impacted, while if demand for their products decreases, they may reduce their purchases or stop purchasing our products and our operating results will suffer. Even if we achieve a design win, our customers can delay or cancel the release of a new device for any reason. Most of our customers can cease incorporating our products into their devices with little notice to us and with little or no penalty. The loss of a large customer or of share at a large customer, to add new customers to replace revenue, a shift in consumer demand to refurbished or secondhand devices, or a in consumers' rates of replacement of smartphones or other devices, could have a material effect on our business, financial condition and results of operations.
We face risks of a loss of revenue if contracts with the U.S. government or defense and aerospace contractors are canceled or delayed or if defense spending is reduced.
We receive a portion of our revenue from the U.S. government and from prime contractors on U.S. government-sponsored programs, principally for defense and aerospace applications. These programs are subject to delays or cancellation. Further, spending on defense and aerospace programs can vary significantly depending on funding from the U.S. government. We believe our government and defense and aerospace business has been negatively affected in the past by external factors such as sequestration and political pressure to reduce federal defense spending. Reductions in defense and aerospace funding or the loss of a significant defense and aerospace program or contract could have a material adverse effect on our operating results.
We depend heavily on third parties.
We purchase numerous component parts, substrates and silicon-based products from external suppliers. We also utilize third parties for numerous services, including die processing, wafer bumping, assembly, test and tape and reel. Our recent efforts to consolidate our manufacturing footprint, including the divestitures of assembly and test operations in both China and Costa Rica, as well as the sale of our North Carolina fabrication facility, have increased our reliance on third parties.
The use of external suppliers involves a number of risks, including the possibility of material disruptions in the supply of key components and the lack of control over delivery schedules, capacity constraints, manufacturing yields, product quality and cost increases. Furthermore, supply chain disruptions and labor market constraints have created heightened risk that external suppliers may be unable to meet their obligations to us. If we experience any significant difficulty in obtaining the materials or services used in the conduct of our business, these supply challenges may result in loss of share at our customers or limit our ability to fully satisfy customer demand.
As the semiconductor industry may experience supply constraints for certain items, from time to time, we enter into certain supply agreements to address short-term and long-term supply requirements. However, we may not be able to secure supply agreements to support customer demand. If we are unable to secure supply agreements or even with supply agreements, we are still subject to risks that a supplier will prioritize other customers' capacity demands or be unable to meet its supply commitments, achieve anticipated manufacturing yields, produce wafers or other components on a timely basis, or provide additional capacity beyond its commitments sufficient to meet our supply needs. If so, we may experience delays in product launches or supply shortages for certain products, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships. In addition, if a supplier experiences financial difficulties or goes into
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bankruptcy, it could be difficult or impossible, or may require substantial time and expense, for us to recover any or all of our fees and deposits made as part of any supply agreement.
Although our key suppliers commit to us to be compliant with applicable ISO 9001 and/or IATF 16949 quality standards, we have experienced quality and reliability issues with suppliers in the past. Quality or reliability issues in our supply chain could negatively affect our products, our reputation and our results of operations.
We face risks related to sales through distributors.
We sell a significant portion of our products through third-party distributors. We depend on these distributors to help us create end customer demand, provide technical support and other value-added services to customers, fill customer orders and stock our products. We may rely on one or more key distributors for a product, and a material change in our relationship with one or more of these distributors or their failure to perform as expected could reduce our revenue. Our ability to add or replace distributors for some of our products may be limited because our end customers may be hesitant to accept the addition or replacement of a distributor due to advantages in the incumbent distributors’ technical support and favorable business terms related to payments, discounts and stocking of acceptable inventory levels. Using third parties for distribution exposes us to many risks, including competitive pressure, concentration, credit risk and compliance risks. Other third parties may use one of our distributors to sell products that compete with our products, and we may need to incentivize the distributors to focus on the sale of our products. Our distributors may face financial difficulties, including bankruptcy, which could harm our collection of accounts receivable and financial results. of the Foreign Practices Act or similar laws by our distributors or other third-party intermediaries could have a material impact on our business. to manage risks related to our use of distributors may reduce sales, increase expenses and our competitive position.
We face risks associated with the operation of our manufacturing facilities.
We operate wafer fabrication facilities in Oregon and Texas. We use several international and domestic assembly suppliers, as well as internal assembly facilities in Germany and the U.S., to assemble and test our products. We currently have our own test and tape and reel facilities located in the U.S., and we also utilize contract suppliers and partners in Asia. During fiscal 2026, we completed the sale of our North Carolina fabrication facility and are operating under a short-term supply agreement with the buyer until we complete the transfer of SAW filter production to our Texas facility.
A number of factors related to our facilities will affect our business and financial results, including the following:
• our ability to adjust production capacity in a timely fashion, including the migration of production amongst our various factories, in response to changes in demand for our products;
• the significant fixed costs of operating the facilities;
• factory utilization rates;
• our ability to qualify our facilities for new products and new technologies in a timely manner;
• the availability of raw materials, the impact of the volatility of commodity pricing and tariffs imposed on raw materials, including substrates, gold, platinum and high-purity source materials such as gallium, aluminum, arsenic, indium, silicon, phosphorous and palladium;
• our manufacturing cycle times;
• our manufacturing yields;
• the political, regulatory and economic risks associated with our international manufacturing operations;
• potential violations by our employees or third-party agents of international or U.S. laws relevant to foreign operations;
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• our ability to hire, train and manage qualified production personnel;
• our compliance with applicable environmental and other laws and regulations, as well as our ability to satisfy our customers' environmental initiatives for their supply chains; and
• our ability to avoid prolonged periods of down-time in our facilities for any reason.
Business disruptions could harm our business, lead to a decline in revenue and increase our costs.
Our worldwide operations and business could be, and in some cases have been, disrupted by natural disasters, industrial accidents, cybersecurity incidents, telecommunications failures, power or water shortages, extreme weather conditions, public health issues (including pandemics), terrorist attacks, political and/or civil unrest, acts of war or other military actions, political or regulatory issues and other man-made disasters or catastrophic events. Global climate change could result in certain natural disasters, such as drought, wildfires, storms and flooding, occurring more frequently or with greater intensity. We carry commercial property damage and business interruption insurance against various risks, with limits we deem adequate, for reimbursement for to our fixed assets and resulting of our operations. However, the occurrence of any of these business could our business and result in significant , a in revenue and an increase in our costs and expenses. Any from these events could require substantial expenditures and recovery time to fully resume operations and could also have a material effect on our operations and financial results to the extent that are or exceed insurance recoveries, and to the extent that such impact our relationships with our customers. Furthermore, even if our own operations are unaffected or recover quickly, if our customers or suppliers cannot timely resume their own operations due to a business , natural or event, customers may reduce or their orders and suppliers may manufacturing and delivery of our products, which may affect our results of operations.
If we experience poor manufacturing yields, our operating results may suffer.
Our products have unique designs and are fabricated using multiple process technologies that are highly complex. In many cases, our products are assembled in customized packages. Many of our products consist of multiple components in a single module and feature enhanced levels of integration and complexity. Our customers insist that our products be designed to meet their exact specifications for quality, performance and reliability. Our manufacturing yield is a combination of yields across the entire supply chain, including wafer fabrication, assembly and test yields. Defects in a single component in an assembled module product can impact the yield for the entire module, which means the adverse economic impacts of an individual defect can be multiplied many times over if we fail to discover the defect before the module is assembled. Due to the complexity of our products, we periodically experience difficulties in achieving acceptable yields and other quality issues, particularly with respect to new products. Furthermore, as our customers test our products once assembled into their products, we may be exposed to additional quality issues and costs.
The number of usable products that result from our production process can fluctuate as a result of many factors, including:
• design errors;
• defects in photomasks (which are used to print circuits on a wafer);
• minute impurities and variations in materials used;
• contamination of the manufacturing environment;
• equipment failure or variations in manufacturing processes;
• losses arising from human error; and
• defects in substrates and packaging.
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We constantly seek to improve our manufacturing yields. Typically, for a given level of sales, when our yields improve our gross margins improve, and when our yields decrease, our unit costs are higher, our margins are lower and our operating results are adversely affected. Costs of product defects and deviations from required specifications can include the following:
• writing off inventory;
• scrapping products that cannot be reworked;
• accepting returns of products that have been shipped;
• providing product replacements at no charge;
• reimbursement of direct and indirect costs incurred by our customers in recalling or reworking their products due to defects in our products;
• travel and personnel costs to investigate potential product quality issues and to identify or confirm the failure mechanism or root cause of product defects; and
• defending against litigation.
These costs could be significant and could impact our results of operations. Our reputation with customers also could be damaged as a result of product defects and quality issues, and product demand could be reduced, which could harm our business and financial results.
We are subject to inventory risks and costs because we purchase materials and build our products based on forecasts provided by customers before receiving purchase orders for the products.
In order to ensure availability of our products for some of our largest end customers, we purchase materials and start manufacturing certain products in advance of receiving purchase orders based on forecasts provided by these customers. These forecasts, however, do not represent binding purchase commitments and we do not recognize sales for these products until they are shipped to, or consumed by, the customer. As a result, we incur significant inventory and manufacturing costs in advance of anticipated sales. In addition, a divestment of individual manufacturing locations or the transfer of a production line from one internal facility to another internal or third-party facility may lead to supply chain disruptions while qualifying a new manufacturing site. In anticipation of such disruptions, we may establish buffer inventory to accommodate our customers’ anticipated demand, which may not materialize. Because demand for our products may not materialize, or may be lower than expected, purchasing materials and manufacturing based on forecasts subjects us to heightened risks of higher inventory carrying costs, increased obsolescence, and higher operating costs. These inventory risks are exacerbated when our customers purchase indirectly through contract manufacturers or hold component inventory levels greater than their consumption rate because this reduces our visibility regarding the customers’ accumulated levels of inventory.
From time to time, we enter into capacity reservation agreements with certain suppliers which require minimum purchase commitments. If the purchase commitments exceed our forecasted demand, we may incur charges based on actual or estimated purchase shortfalls. Future circumstances may warrant us to enter into similar agreements, and to the extent management's estimates of anticipated future demand are incorrect, we may incur charges which would have a negative impact on our gross margin and other operating results.
We sell certain of our products based on reference designs of chipset suppliers, and our inability to effectively manage or maintain our relationships with these companies may have an adverse effect on our business.
Chipset suppliers are typically large companies that provide system reference designs for OEMs and ODMs that include the chipset supplier's baseband and other complementary products. A chipset supplier may own or control IP that gives it a strong market position for its baseband products for certain air interface standards, which provides it with significant influence and control over sales of RF products for these standards. Chipset suppliers historically relied on us and our competitors to provide RF products to their customers as part of the overall system design, and we competed with other RF companies to have our products included in the chipset supplier's system reference
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design. This market dynamic has evolved as chipset suppliers have worked to develop more fully integrated solutions that include their own RF technologies and components.
Chipset suppliers may be in a different business from ours or we may be their customer or direct competitor. Accordingly, we must balance our interest in obtaining new business with competitive and other factors. Because chipset suppliers control the overall system reference design, if they offer competitive RF technologies or their own RF solutions as a part of their reference design and exclude our products from the design, we are at a distinct competitive disadvantage with OEMs and ODMs that are seeking a turn-key design solution, even if our products offer superior performance. This requires us to work more closely with OEMs and ODMs to secure the design of our products in their handsets and other devices, however, there can be no assurance that we will be successful in securing the design of our products in OEM and ODM devices.
Our relationships with chipset suppliers are complex, and the inability to effectively manage or maintain these relationships could have an adverse effect on our business, financial condition and results of operations.
We operate in a very competitive industry and must continue to innovate.
We compete with companies primarily engaged in the business of designing, manufacturing and selling RF solutions, as well as suppliers of discrete ICs and modules. In addition to our direct competitors, some of our largest end customers and leading platform partners also compete with us to some extent by designing and manufacturing their own products. Increased competition from any source could adversely affect our operating results through lower prices for our products, reduced demand for our products, losses of existing design slots with key customers and a corresponding reduction in our ability to recover development, engineering and manufacturing costs. For example, due to lower profitability from increased competition, our decision in fiscal 2025 to reduce our exposure in the mass-market Android business to focus on more profitable revenue streams has impacted, and we expect will continue to impact, our revenue.
Many of our existing and potential competitors have entrenched market positions, historical affiliations with OEMs, considerable internal manufacturing capacity, established IP rights and substantial technological capabilities. In addition, the increasing use of machine learning and AI to meet evolving industry requirements comes with inherent risks, including timely adoption and incorporation of these technologies into our business strategy to stay competitive. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively. The semiconductor industry has experienced increased industry consolidation over the last several years, a trend we expect to continue. Many of our existing and potential competitors may have greater financial, technical, manufacturing or marketing resources than we do. We cannot be sure that we will be able to compete successfully with our competitors.
Fluctuating demand could cause us to underutilize our manufacturing facilities and have a material adverse effect on our financial performance.
It is difficult to predict future demand for our products and to estimate future requirements for production capacity in order to avoid periods of overcapacity. Fluctuations in the growth rate of industry capacity relative to the growth rate in demand for our products also can lead to overcapacity and contribute to cyclicality in the semiconductor market.
Capacity expansion projects have long lead times and require capital commitments based on forecasted product trends and demand well in advance of production orders from customers. In recent years, we have made significant capital investments to expand our premium filter capacity to address forecasted future demand patterns. In certain cases, these capacity additions exceeded the near-term demand requirements, leading to overcapacity situations and underutilization of our manufacturing facilities.
As many of our manufacturing costs are fixed, these costs cannot be reduced in proportion to the reduced revenue experienced during periods of underutilization. Global macroeconomic conditions could create weakness in demand, which may result in elevated inventory levels at our customers, underutilization of our manufacturing facilities and higher inventory costs, which adversely affects our gross margin and other operating results. If demand for our products experiences a prolonged decrease, we may be required to close or idle facilities and write down our long-lived assets or shorten the useful lives of underutilized assets and accelerate depreciation, which
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would increase our expenses. To the extent management's estimates of anticipated future demand or production capacity are incorrect, our manufacturing facilities may be underutilized, which could have a material adverse effect on our financial performance.
Unfavorable changes in interest rates, pricing of certain precious metals, utility rates and foreign currency exchange rates may adversely affect our financial condition, liquidity and results of operations.
We may utilize hedging strategies from time to time to mitigate the impact due to underlying exposures such as interest rates, precious metal prices, utility rates, or currency exchange rates. However, the impact from these underlying exposures cannot always be predicted or hedged, and there can be no assurance that our hedging strategies will be effective in minimizing risk.
Our acquisitions and other strategic investments could fail to achieve our financial or strategic objectives, disrupt our ongoing business and adversely impact our results of operations.
As part of our business strategy, we expect to continue to review potential acquisitions and strategic investments. These opportunities can enhance our current product offerings, augment our market coverage or enhance our technical capabilities, or otherwise offer growth or margin improvement opportunities. In the event of future acquisitions of businesses, products or technologies, we could issue equity securities that would dilute our current stockholders’ ownership, incur substantial debt or other financial obligations or assume contingent liabilities. Such actions could harm our results of operations or the price of our common stock. Acquisitions and strategic investments also entail numerous other risks that could adversely affect our business, results of operations and financial condition, including:
• failure to complete a transaction in a timely manner, if at all, due to our inability to obtain required government or other approvals, IP disputes or other litigation, difficulty in obtaining financing on terms acceptable to us, or other unforeseen factors;
• controls, processes and procedures of an acquired business may not adequately ensure compliance with laws and regulations, and we may fail to identify compliance issues or liabilities;
• unanticipated costs, capital expenditures or working capital requirements;
• transaction-related charges and amortization of acquired technology and other intangibles;
• the potential loss of key employees from a company we acquire or in which we invest;
• diversion of management’s attention from our business;
• disruption of our ongoing operations;
• dis-synergies or other harm to existing business relationships with suppliers and customers;
• losses or impairment of investments from unsuccessful R&D by companies in which we invest;
• impairment of acquired intangible assets, goodwill or other assets as a result of changing business conditions or technological advancements;
• slower than expected market adoption or attach rates for any of our new technologies; and
• unrealized expected synergies, resulting in a failure to achieve the economic benefits of a transaction.
A failure to achieve the expected benefits of an acquisition may adversely affect our operating results, and the carrying amount of certain assets, including goodwill and intangible assets, may not be recoverable. We have recorded, and may in the future be required to record significant charges in our consolidated financial statements
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during the period in which any impairments are determined, negatively affecting our financial position and results of operations.
Moreover, our resources are limited and our decision to pursue a transaction has opportunity costs; accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our financial or strategic objectives. Any of these risks could have a material adverse effect on our business, results of operations, financial condition, or cash flows, particularly in the case of a large acquisition.
We may be unable to effectively execute restructuring initiatives, which could result in total costs that are greater than expected and cause us not to achieve the expected long-term operational benefits.
We have from time to time implemented restructuring initiatives in the past and may continue to implement initiatives in the future that are aimed at reducing operating costs, streamlining our manufacturing footprint, and exiting certain product lines and businesses to focus on opportunities that align with our long-term strategy and profitability objectives. Because restructuring activities may involve changes to many aspects of our business, including but not limited to the location of our production facilities and personnel and the potential exit from certain product lines and businesses, our ability to successfully implement restructuring actions depends on a number of factors that we may not be able to predict. Risks associated with these actions include unexpected transition costs, disruption of our existing operations and productivity, diversion of management's attention, employee attrition beyond any planned changes in personnel and the to replace the of revenue associated with a business. In addition, European Works Councils and other governing bodies representing our foreign employees, may require us to incur additional, compensation expenses associated with activities. The to and timely realize the anticipated benefits of these actions could have a material effect on our , financial condition or results of operations. In addition, even if we fully execute and implement these actions, there may be other and consequences that could materially impact our and business, including employee , to our competitive position or to effectively scale our business in response to shifting demand. To the extent that we do not the or other anticipated benefits of initiatives, our results of operations may be materially affected.
We must attract, retain, and motivate key employees in order to compete, and our failure to do so could harm our business and our results of operations.
We must hire and retain qualified employees, continue to develop leaders for key business units and functions, expand our presence in international locations, adapt to cultural norms of foreign locations and train and motivate our employee base in order to compete effectively. Labor is further subject to external factors that are beyond our control, including our industry's highly competitive market for skilled workers and leaders, cost inflation and workforce participation rates. Our future operating results and success depend on retaining and recruiting key R&D and technical personnel, as well as sales and marketing and administrative support. We do not have employment agreements with the vast majority of our employees. We must also continue to attract qualified personnel. The competition for qualified personnel is intense, and the number of people with experience, particularly in design engineering, software engineering, integrated circuit and filter design, and technical marketing and support, is limited. In addition, existing or new immigration laws, policies or regulations in the U.S. may limit the pool of available talent. Difficulties obtaining visas and other restrictions on international travel could make it more onerous to effectively manage our international operations, operate as a global company or service our international customer base. Changes in the interpretation and application of employment-related laws to our workforce practices may also result in increased operating costs and less flexibility in how we meet our changing workforce needs. Further, any transition from flexible work arrangements to more on-site work requirements may result in higher employee and make it more for us to compete in the job market. We cannot be sure that we will be to attract and retain skilled personnel in the future, which could our business and our results of operations.
We are subject to warranty claims, product recalls and product liability.
From time to time, we may be subject to warranty or product liability claims that could lead to significant expense. We may also be exposed to such claims as a result of any acquisition we may undertake in the future. Although we maintain reserves for reasonably estimable liabilities and purchase product liability insurance, we may elect to self-
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insure with respect to certain matters, and our reserves may be inadequate to cover the uninsured portion of such claims.
Product liability insurance is subject to significant deductibles, and such insurance may be unavailable or inadequate to protect against all claims. If one of our customers recalls a product containing one of our devices, we may incur significant costs and expenses, including replacement costs, direct and indirect product recall-related costs, diversion of technical and other resources and reputational harm. Our customer contracts typically contain warranty and indemnification provisions, and in certain cases may also contain liquidated damages provisions relating to product quality issues. The potential liabilities associated with such provisions are significant, and in some cases, including in agreements with some of our largest end customers, are potentially unlimited. Any such liabilities may greatly exceed any revenue we receive from sale of the relevant products. Costs, payments or damages incurred or paid by us in connection with warranty and product liability and product could materially and affect our financial condition and results of operations.
Changes in our effective tax rate may adversely impact our results of operations and cash flow.
We are subject to taxation in the U.S. and numerous foreign jurisdictions. Our effective tax rate is subject to fluctuations and impacted by a number of factors, including the following:
• changes in our overall profitability and the amount of profit determined to be earned and taxed in jurisdictions with differing statutory tax rates;
• changes in our operating structure, strategy and investment decisions;
• the resolution of issues arising from tax audits with various tax authorities, including those described in Note 13 of the Notes to Consolidated Financial Statements;
• changes in the valuation of either our gross deferred tax assets or gross deferred tax liabilities;
• adjustments to income taxes upon finalization of various tax returns;
• changes in expenses not deductible for tax purposes;
• changes in available tax credits; and
• changes in tax laws, domestic and foreign, or the interpretation of such tax laws and changes in generally accepted accounting principles.
Any significant increase in our future effective tax rates could reduce net income and cash flow for future periods.
The enactment of international or domestic tax legislation, or changes in regulatory guidance, may adversely impact our results of operations and cash flow.
We are subject to taxation in the U.S. and numerous foreign jurisdictions worldwide. To the extent that tax laws and regulations in these various regions change, it could adversely impact our tax expense and liability.
Corporate tax reform, base-erosion efforts and increased tax transparency continue to be high priorities in many tax jurisdictions in which we have business operations. In August 2022, the U.S. enacted the Inflation Reduction Act ("IRA"), establishing a new book minimum tax of 15% on consolidated adjusted GAAP pre-tax earnings for corporations with average income in excess of $1 billion. In July 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”), which permanently extends several tax provisions originally introduced under the 2017 Tax Cuts and Jobs Act and also repeals, modifies and introduces various other tax measures with varying effective dates. Certain OBBBA provisions became effective and were reflected in our fiscal 2026 results, while others will become effective in future periods. Due to the complex nature of these changes in U.S. tax law and their corresponding calculations and estimates, as well as the continued changes in legal interpretations and guidance issued under these laws, our final tax liability may differ from our initial income tax provisions.
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In addition, other countries in which we operate have implemented legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development’s (the "OECD") Base Erosion and Profit Shifting recommendations and action plan, which aim to standardize and modernize global corporate tax policy, including changes to cross-border taxation, transfer pricing documentation rules, nexus-based tax incentive practices, allocating greater taxing rights to countries where customers are located and establishing a minimum tax of 15% on global income (commonly referred to as the OECD's global minimum tax regime or "Pillar Two"). Our effective tax rate in fiscal 2026 was materially impacted by Pillar Two. In January 2026, the OECD released additional Pillar Two guidance introducing a “side-by-side” system. Upon adoption by local legislatures, this system becomes effective for years beginning on or after January 1, 2026 and will exclude U.S. headquartered companies and their subsidiaries from certain aspects of minimum taxation. However, to the extent enacted, the “side-by-side” system does not exempt our foreign subsidiaries from domestic minimum tax requirements. As more countries enact law or provide guidance related to these global minimum tax rules, our effective tax rate and cash tax payments could be impacted.
Future legislative changes, interpretations and guidance, and changes in prior tax rulings and decisions by tax authorities regarding treatments and positions of corporate income taxes resulting from these initiatives, could increase complexity and tax uncertainty, increase our effective tax rate and result in taxes we previously paid being subject to change, which may adversely impact our financial position and results of operations.
Changes in the favorable tax status of our non-U.S. subsidiaries would have an adverse impact on our operating results.
Some of our foreign subsidiaries operate under tax holiday arrangements and other preferential tax regimes that reduce our overall tax expense. These incentives are subject to various ongoing conditions and periodic governmental review. In their efforts to respond to budget deficits and evolving global tax regimes, governments around the world continue to review the design of, and policies on, tax holidays and similar incentives. Future changes in our tax holiday status could adversely impact our effective tax rate and net income in future periods.
The benefit of these tax incentive programs may also be reduced by the implementation of minimum tax regimes, including Pillar Two, which have been adopted in many countries in which we operate. In Singapore, certain top‑up tax regimes became effective in fiscal 2026 and have had a dilutive effect on the financial benefits derived from our tax incentive arrangements.
We are subject to risks associated with social, environmental, health and safety regulations, including those related to climate change.
We are subject to a broad array of U.S. and foreign social, environmental, health and safety laws and regulations. Environmental laws and regulations include those related to the use, transportation, storage, handling, emission, discharge and recycling or disposal of hazardous materials used in our manufacturing, assembly and testing processes. Additional laws and regulations include those related to human rights and supply chain due diligence. Such laws and regulations, as well as the associated frameworks for reporting, vary greatly by jurisdiction in which we do business and are continually evolving. Our failure to comply with any of these existing or future laws or regulations could result in:
• regulatory penalties and fines;
• legal liabilities, including financial responsibility for remedial measures if our properties are contaminated;
• expenses to secure required permits and governmental approvals;
• reputational damage;
• suspension or curtailment of our manufacturing, assembly and test processes; and
• increased costs to acquire pollution abatement or remediation equipment or to modify our equipment, facilities or manufacturing processes to bring them into compliance with applicable laws and regulations.
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Existing and future laws and regulations could also impact our product designs and limit or restrict the materials or components that are included in our products. In addition, many of our largest end customers require companies within their supply chain to comply with corporate social responsibility policies that exceed applicable legal requirements, and often include employment, human rights, health, safety, and environmental initiatives. Further, certain jurisdictions may require companies to disclose environmental and social policies, practices and metrics, on topics such as climate change, carbon emissions, water usage, waste management and human capital. Compliance with these policies increases our operating expenses, and non-compliance can adversely affect customer relationships and harm our business and the price of our common stock.
Regulations in the U.S. currently require that we determine whether certain materials used in our products, referred to as conflict minerals, originated in the Democratic Republic of the Congo or adjoining countries, or were from recycled or scrap sources. We may face challenges with government regulators and our customers and suppliers if we are unable to sufficiently make any required determination that the metals used in our products are conflict-free.
New climate change laws and regulations could require us to change our manufacturing processes or procure substitute raw materials that may cost more or be more difficult to procure. In addition, new restrictions on emissions of carbon dioxide or other greenhouse gases could result in increased costs for us and our suppliers. Finally, there is legislation globally which could require us to align programs to the expectations of investors, customers or other stakeholders and disclose an increasing amount of information and data to illustrate our position and progress. If we do not adapt our strategy or execution quickly enough to meet the evolving expectations of our investors, customers and regulators, or if our environmental or social metrics are incomplete or inaccurate, our business, financial condition, results of operations, brand and reputation could be adversely affected.
Risks Related to Our International Sales and Operations
We are subject to risks from international sales and operations.
We operate globally with sales offices and R&D activities as well as manufacturing, assembly and test facilities in multiple countries, and some of our business activities are concentrated in Asia. As a result, we are subject to regulatory, geopolitical and other risks associated with doing business outside the U.S., including:
• global and local economic, social and political conditions and uncertainty;
• currency controls and currency exchange rate fluctuations;
• inflation, as well as changes in existing and expected rates of inflation, which vary across the jurisdictions in which we do business;
• formal or informal imposition of export, import or doing-business regulations, including trade sanctions, tariffs and other related restrictions;
• labor market conditions and workers’ rights affecting our manufacturing operations or those of our customers or suppliers;
• disruptions in capital and securities and commodities trading markets;
• occurrences of geopolitical crises such as terrorist activity, armed conflict, civil or military unrest or political instability, or global hostilities such as the war in Ukraine and the ongoing conflicts in the Middle East, may disrupt manufacturing, assembly, logistics, security and communications and result in reduced demand for our products;
• compliance with laws and regulations that differ among jurisdictions, including those covering taxes, IP ownership and infringement, imports and exports, anti-corruption and anti-bribery, antitrust and competition, cybersecurity, data privacy, and social, environment, health, and safety;
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• markets for 5G or future technology infrastructure not developing in the manner or in the time periods we anticipate, including as a result of unfavorable developments with evolving laws and regulations worldwide; and
• pandemics and similar major health concerns, which could adversely affect our business and our customer order patterns.
Sales to customers located outside the U.S. accounted for approximately 37% of our revenue in fiscal 2026, of which approximately 13% was attributable to sales to customers located in China. We expect revenue from international sales will continue to be a significant part of our total revenue. Any weakness in the Chinese economy, heightened tensions between the U.S. and China, China and Taiwan, or other countries, could result in a decrease in demand for consumer products that contain our products, which could materially and adversely affect our business. The imposition by the U.S. of tariffs on goods imported from China, countermeasures imposed by China in response, U.S. export restrictions on sales of products to China and other government actions that restrict or otherwise adversely affect our ability to sell our products to customers in China may have a material adverse impact on our business, including our ability to sell products and to manufacture or source components and materials.
As a global company, our results are affected by movements in currency exchange rates. Our exposure may increase or decrease over time as our foreign business levels fluctuate in the countries where we have operations, and these changes could have a material impact on our financial results. The functional currency for most of our international operations is the U.S. dollar. We have foreign operations in Asia and Europe. Our international revenue is primarily denominated in U.S. dollars. Operating expenses and certain working capital items related to our foreign-based operations are, in some instances, denominated in the local foreign currencies and therefore are affected by changes in the U.S. dollar exchange rate in relation to foreign currencies, such as the Euro, Renminbi and Singapore Dollar. If the U.S. dollar weakens compared to these and other currencies, our operating expenses for foreign operations will be higher when remeasured back into U.S. dollars.
Economic regulation in China could adversely impact our business and results of operations.
For many years, the Chinese economy has experienced periods of rapid growth and wide fluctuations in the rate of inflation. In response to these factors, the Chinese government has, from time to time, adopted measures to regulate growth and contain inflation, including currency controls and measures designed to restrict credit, control prices or set currency exchange rates. Such actions in the future, as well as other changes in Chinese laws and regulations, including actions in furtherance of China’s stated policy of reducing its dependence on foreign semiconductor manufacturers, could increase the cost of doing business in China, strengthen China-based competitors, decrease the demand for our products in China and reduce the supply of critical materials for our products, which could have a material adverse effect on our business and results of operations.
Changes in government trade policies, including the imposition of tariffs and export restrictions, have limited and could continue to limit our ability to sell or provide our products and other items to certain customers and suppliers, which may materially adversely affect our sales and results of operations.
Export restrictions and sanctions imposed by the U.S., China, United Kingdom, EU, and other jurisdictions are complex and have intensified in recent years. Unless rescinded or exemptions apply, tariffs and any escalations in the global trade war could significantly harm our business, financial condition and results of operations.
The U.S. and foreign governments have taken and may continue to take administrative, legislative or regulatory action that could materially interfere with our ability to export, reexport, import and transfer products and other items to certain countries, particularly China. For example, the imposition of tariffs has resulted in higher duties owed on certain products that are imported from China to the U.S., and countermeasures from China could result in increased costs for our products, which may, in turn lead to decreased demand for our products, and has the potential to adversely impact our business and operations.
Furthermore, we have experienced and may continue to experience restrictions on our ability to export, reexport, and transfer our products and other items to certain foreign customers and suppliers where governmental policy prohibits such activity or export licenses are required. The U.S. government has imposed export restrictions that effectively banned American companies from exporting, reexporting, and transferring products to certain of our customers, and
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imposed significant restrictions on the ability to obtain export licenses for our products. Such restrictions could have a continuing negative impact on our future revenue and results of operations. In addition, our customers or suppliers affected by U.S. government sanctions or threats of sanctions may respond by developing their own solutions to replace our products or by adopting our foreign competitors' solutions and products.
We cannot predict what further actions may ultimately be taken with respect to tariffs, which have increased under the current U.S. administration, along with the potential for new export restrictions or other trade measures between the U.S. and other countries, what products or entities may be subject to such actions, or what reciprocation may be taken by other countries in response to these U.S. actions. However, the tariffs imposed by the U.S. are increasing the cost of importing foreign sourced components and equipment to our U.S. facilities to build the products that we manufacture in the U.S. China’s reciprocal tariffs, and any other reciprocal tariffs that may be imposed or reinstated by other countries, may harm demand for our products from customers in those regions, or may cause our customers in those regions to push out or cancel previously placed purchase orders. The loss of foreign customers or suppliers or the imposition of restrictions on our ability to sell or transfer products to such customers or suppliers as a result of tariffs, export restrictions or other U.S. regulatory actions could materially adversely affect our sales, business and results of operations. Countermeasures by other countries, including China's rare earth export restrictions, in reaction to increasing such U.S. government actions may impact our operations and future revenue as the compliance and sourcing landscape becomes more .
Risks Related to Our Indebtedness
We may not be able to generate sufficient cash to service all of our debt or to fund capital expenditures and may be forced to take other actions to satisfy our debt obligations and financing requirements, which may not be successful or on terms favorable to us.
Our ability to make scheduled payments on or to refinance our debt obligations and to fund working capital, planned capital expenditures and expansion efforts and any strategic alliances or acquisitions we may make in the future depends on our ability to generate cash in the future and on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot be sure that we will maintain a level of cash flows from operating activities sufficient to permit us to pay our debt. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may face liquidity issues and be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our debt. These alternative measures may not be successful and may not permit us to meet our scheduled debt service and other obligations. Additionally, the indentures governing our senior notes limit the use of the proceeds from any disposition; as a result, we may not be allowed under these documents to use proceeds from such dispositions to satisfy our debt service obligations. Further, we may need to refinance all or a portion of our debt at or before maturity, and we cannot be sure that we will be to refinance any of our debt on commercially reasonable terms or at all.
The agreements and instruments governing our debt impose restrictions that may limit our operating and financial flexibility.
The credit agreement governing our revolving facility and the indentures governing our senior notes contain a number of significant restrictions and covenants that limit our ability to:
• incur additional debt;
• pay dividends, make other distributions or repurchase or redeem our capital stock;
• prepay, redeem or repurchase certain debt;
• make loans and investments;
• sell, transfer or otherwise dispose of assets;
• incur or permit to exist certain liens;
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• enter into certain types of transactions with affiliates;
• enter into agreements restricting our subsidiaries’ ability to pay dividends; and
• consolidate, amalgamate, merge or sell all or substantially all of our assets.
These covenants could have the effect of limiting our flexibility in planning for or reacting to changes in our business and the markets in which we compete. In addition, our credit agreement requires us to comply with a financial maintenance covenant. Operating results below current levels or other adverse factors, including a significant increase in interest rates, could result in our being unable to comply with the financial covenant contained in our revolving facility. If we violate covenants under our credit agreement and are unable to obtain a waiver from our lenders, our debt under our revolving facility would be in default and could be accelerated by our lenders. Because of cross-default provisions in the agreements and instruments governing our debt, a default under one agreement or instrument could result in a default under, and the acceleration of, our other debt. If our debt is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us. If our debt is in for any reason, our business, financial condition and results of operations could be materially and affected. In addition, complying with these covenants may also cause us to take actions that are not to holders of the notes and may make it more for us to execute our business strategy and compete companies that are not subject to such restrictions.
Risks Related to Intellectual Property, Cybersecurity, Information Technology and Data Privacy
We rely on our intellectual property portfolio and may not be able to successfully protect against the use of our intellectual property by third parties.
We rely on a combination of patents, copyrights, trademarks, trade secret laws, confidentiality procedures and licensing arrangements to protect our IP rights. We cannot be certain that patents will be issued from any of our pending applications or that patents will be issued in all countries where our products can be sold. Further, we cannot be certain that any claims of patents issued from pending applications will be of sufficient scope or strength to provide meaningful protection against our competitors. Our competitors may also be able to design around our patents.
We rely on trade secrets, technical know-how and other unpatented proprietary information relating to our product development and manufacturing activities to provide us with competitive advantages. We protect this information by entering into confidentiality and invention assignment agreements with our employees, consultants, strategic partners and other third parties. These agreements may be insufficient or may be breached, and we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our proprietary information or otherwise developed IP for us. We also design our computer systems and networks and implement various procedures to restrict unauthorized access to, or dissemination of, our proprietary information.
The laws of some countries in which our products are developed, manufactured or sold may not protect our products or IP rights to the same extent as U.S. laws. This increases the possibility of misappropriation or infringement of our technology and products in those jurisdictions. Although we intend to vigorously defend our IP rights, we may not be able to prevent misappropriation of our technology. Additionally, our competitors may be able to independently develop non-infringing technologies that are substantially equivalent or superior to ours.
The use of AI and machine learning applications by our employees may also increase the risk of unintended or inadvertent disclosure of proprietary or sensitive information.
We are currently engaged in legal actions to enforce or defend our IP rights and may engage in future actions as the need arises. Our efforts to enforce our IP rights in this manner may be met with defenses and claims attacking the validity and enforceability of our IP rights. Generally, IP litigation is both expensive and unpredictable. Our involvement in IP litigation could divert the attention of our management and technical personnel and have a material, adverse effect on our business.
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We may be subject to claims of infringement of third-party intellectual property rights.
Our operating results may be adversely affected if third parties were to assert claims that our products infringed their patent or other IP rights. Such assertions could lead to expensive and unpredictable litigation, diverting the attention of management and technical personnel. An unsuccessful result in any such litigation could have adverse effects on our business, which may include injunctions, exclusion orders and payments to third parties.
In addition, if one of our customers or another supplier to one of our customers were found to be infringing on third-party IP rights, such a finding could adversely affect the demand for our products. Our customer contracts and IP license agreements may include obligations to indemnify our customers and licensees against certain claims of IP infringement. If claims of IP infringement are brought against such customers or licensees with respect to the IP rights, products or services that we provide to them, we may be required to defend such customers or licensees and/or pay costs these parties may incur related to such claims. An unfavorable resolution of such disputes and litigation could adversely affect our business, financial condition, and operating results.
Security breaches, failed system upgrades or regular maintenance and other disruptions to our IT systems, or other misappropriation of proprietary information could expose us to liability or disrupt our ability to operate critical business functions, which would cause our business and reputation to suffer.
We face internal and external data security threats. Current, departing or former employees or third parties could attempt to improperly use or access our computer systems and networks to copy, obtain or misappropriate our proprietary information or otherwise interrupt our business.
We are also subject to significant system or network disruptions from numerous causes, including computer viruses and other cyber-attacks, facility access issues, new system implementations and energy blackouts. Geopolitical tensions or conflicts, such as the war in Ukraine, the ongoing conflicts in the Middle East and the tensions between China and Taiwan, may create a heightened risk of cybersecurity incidents.
We have, from time to time, experienced, and may in the future experience, threats to and breaches of our data and systems. Security breaches, computer malware, phishing, ransomware, spoofing and other cyber-attacks have become more prevalent and sophisticated in recent years. Because the techniques used by computer hackers and others to access or sabotage networks constantly evolve and generally are not recognized until launched against a target, we may be unable to anticipate, detect, or counter all of these techniques or identify all security vulnerabilities. Evolving AI capabilities could be used in new and significantly more sophisticated ways to identify vulnerabilities, craft targeted social engineering and fraud attempts, generate malicious code and launch phishing attempts or other cyber-attacks. As a result, our and our customers’ proprietary information may be misappropriated, and the impact of any future cannot be predicted. Any could our competitive position, result in a of customer confidence in the adequacy of our mitigation and detection processes and procedures, cause us to incur significant costs to remedy the caused by the and management and other resources. We routinely implement to our network security safeguards, and we are devoting increasing resources to the security of our IT systems. We cannot, however, that such system will be sufficient to prevent or limit the from any future cyber-attack or network .
F urthermore, we rely on products and services provided by third-party suppliers, which may include open-source code, to operate certain critical business systems, including without limitation, cloud-based infrastructure, encryption and authentication technology, employee email and other functions, which exposes us to supply chain attacks or other business disruptions. Certain products that we use contain firmware that incorporates or is derived from open-source software that generally is made publicly available by its developers or other third parties. Risks related to the use of open-source software include, but are not limited to, the introduction of cybersecurity vulnerabilities into our products or development platforms which may increase the likelihood of a data breach or a cyberattack, our noncompliance with applicable licensing terms which may subject us to legal claims and costly and time-consuming litigation, potential requirements to publicly the source code of certain of our derivative works, firmware or software under terms authorizing further modification and redistribution and/or license certain of our derivative works, firmware or software under licensing conditions or at no cost, potential restrictions on our ability to market the firmware associated with our products, the potential requirement to re-engineer our products to avoid or of open-source license terms which may
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require significant R&D resources and may not be completed successfully on a timely basis, or at all, and enhanced governmental or other third-party scrutiny of our products. The terms of many open-source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products. Further, the use of open-source software may entail greater risks than the use of third-party commercial software, as open-source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which licensors are not typically required to maintain and update, and licensors can change the license terms on which they offer updated versions of the open-source software without notice. To the extent that our products depend on the successful operation of the open-source software we use, any undetected errors or in such open-source software could the functionality of our products, cause in product development, result in a of our products, and our reputation.
We cannot guarantee that third parties and infrastructure in our supply chain or our partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our IT systems, including our products and services, or the third-party IT systems that support our services. Our ability to identify all security vulnerabilities and monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. In addition, if one of our third-party suppliers suffers a security breach, our response may be l imited or more difficult because we may not have direct access to their systems, logs and other information related to the security breach.
If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and results of operations. Furthermore, the costs related to cyber-attacks or other security threats or computer systems disruptions typically would not be fully insured or indemnified by others. Our efforts to comply with evolving laws and regulations related to cybersecurity incidents may be costly, and any failure to comply could result in , proceedings, lawsuits and reputational . Occurrence of any of the events described above could also result in of competitive derived from our R&D efforts or our IP. Moreover, these events may result in the early of our products, product development , or of the attention of management and key IT and other resources, or otherwise affect our operations and reputation.
We may be subject to theft, loss, or misuse of personal data by or about our employees, customers or other third parties, which could increase our expenses, damage our reputation, or result in legal or regulatory proceedings.
In the ordinary course of our business, we have access to sensitive, confidential or personal data or information regarding our employees and others that is subject to privacy and security laws and regulations, as well as our own policies and standards. The theft, loss, or misuse of personal data collected, used, stored, or transferred by us to run our business, or by our third-party service providers, including business process software applications providers and other vendors that have access to sensitive data, could result in damage to our reputation, disruption of our business activities, significantly increased business and security costs, costs related to defending legal claims or legal liability, governmental investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions).
Any failure to comply with evolving data privacy and cybersecurity laws and regulations may adversely impact our business and financial results.
Global legislation, enforcement and policy activity in the area of data privacy and cybersecurity are rapidly expanding and creating a complex regulatory compliance environment. We are required to comply with these stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as related contractual obligations. Ensuring compliance with such requirements may increase operating costs, impact our data processing practices and policies and the development of new products or services, and reduce operational efficiency, any of which could adversely affect our business and operations.
For example, at the U.S. federal level, we are subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data privacy and cybersecurity). Moreover, the U.S. Congress has recently considered, and is expected to continue
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to consider, various proposals for more comprehensive data privacy and cybersecurity legislation. At the state level, we are subject to laws and regulations such as the California Consumer Privacy Act (as amended by the California Privacy Rights Act, collectively, the “CCPA”). Numerous other states have also enacted, or are in the process of enacting or considering, comprehensive state-level data privacy and cybersecurity laws, rules, and regulations that share similarities with the CCPA. Moreover, laws in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach.
At the international level, we are subject to the General Data Protection Regulation (the "GDPR") and its equivalent in the United Kingdom (the “U.K. GDPR”), which require companies to comply with rules regarding the handling of personal data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. While the GDPR and the U.K. GDPR remain substantially similar for the time being, the government of the United Kingdom has adopted reforms to its data privacy and cybersecurity legal framework in its Data Use and Access Act 2025, which became law on June 19, 2025 (phasing in between June 2025 and June 2026) and will introduce significant changes from the GDPR. This may lead to additional compliance costs and could increase overall risk exposure as businesses may no longer be able to take a unified approach across the European Economic Area and the U.K. Failure to meet GDPR or the U.K. GDPR requirements could result in penalties of up to EUR 20 million (or GBP 17.5 million under the U.K. GDPR) or four percent (4%) of annual worldwide revenue, whichever is greater. China has also implemented laws and regulations requiring companies' IT security environment to meet certain standards and may require unique certifications.
Moreover, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and cybersecurity. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so.
In addition, the interpretation and application of consumer and data protection laws in the U.S., Europe and elsewhere are often uncertain and fluid and may be interpreted and applied in a manner that is inconsistent with our data practices. Complying with these changing laws has caused, and could continue to cause, us to incur substantial costs, which could have an adverse effect on our business and results of operations. Further, failure or perceived failure by us or any third parties with which we do business to comply with existing or new rules may result in significant penalties or orders to stop the alleged non-compliant activity. Finally, even our inadvertent failure to comply with federal, state, or international privacy-related or data protection laws and regulations could result in audits, regulatory inquiries or proceedings against us by governmental entities or others.
Risks Related to Owning our Common Stock
Our certificate of incorporation and bylaws and the General Corporation Law of the State of Delaware may discourage takeovers and business combinations that our stockholders might consider to be in their best interests.
Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying, deterring, preventing or rendering more difficult, a change in control of Qorvo that our stockholders might consider to be in their best interests. These provisions include:
• granting to the board of directors' sole power to set the number of directors and fill any vacancy on the board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;
• the ability of the board of directors to designate and issue one or more series of preferred stock without stockholder approval, the terms of which may be determined at the sole discretion of the board of directors;
• establishment of advance notice requirements for stockholder proposals and nominations for election to the board of directors at stockholder meetings; and
• the inability of stockholders to act by written consent.
In addition, the General Corporation Law of the State of Delaware contains provisions that regulate "business combinations" between corporations and interested stockholders who own 15% or more of the corporation’s voting
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stock, except under certain circumstances. These provisions could also discourage potential acquisition proposals and delay or prevent a change in control.
These provisions may prevent our stockholders from receiving the benefit of any premium to the market price of our common stock offered by a bidder in a takeover context and may also make it more difficult for a third party to replace directors on our board of directors. Further, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.
Our business could be negatively impacted by stockholder activism.
In recent years, stockholder activists have become involved in numerous public companies. For example, a representative of Starboard Value L.P. was nominated and elected to our board of directors at the Company’s Annual Meeting of Stockholders in August 2025. Stockholder activists frequently propose to involve themselves in the strategic direction and operations of companies, including companies’ efforts regarding governance standards, capital allocation and portfolio review. Responding to actions by activist stockholders, such as requests for special meetings, nominations of candidates for election to our board of directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business, cause us to incur substantial costs and divert the attention of management and employees. In addition, any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers and make it more difficult to attract and retain qualified personnel and business partners, any of which could negatively impact our business. Stockholder activism could result in substantial costs. In addition, actions of activist stockholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business.
The price of our common stock has recently been and may in the future be volatile.
The price of our common stock, which is traded on the Nasdaq Global Select Market, has been and may continue to be volatile and subject to wide fluctuations. In addition, the trading volume of our common stock may fluctuate and cause significant price variations to occur. Some of the factors that could cause fluctuations in the stock price or trading volume of our common stock include:
• general market and economic and political conditions, including market conditions in the semiconductor industry;
• actual or expected variations in quarterly operating results;
• pandemics and similar major health concerns;
• differences between actual operating results and those expected by management, investors and analysts;
• changes in recommendations by securities analysts, social media or press;
• operations and stock performance of competitors and major customers;
• accounting charges, including charges relating to the impairment of goodwill or intangible assets and restructuring;
• significant acquisitions, strategic alliances, capital commitments, or new products announced by us or by our competitors;
• differences, whether actual or perceived, between our corporate social responsibility practices and disclosure and investor expectations;
• sales of our common stock, including sales by our directors and officers or significant investors;
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• repurchases of our common stock;
• recruitment or departure of key personnel; and
• loss of key customers.
We cannot assure that the price of our common stock will not fluctuate or decline significantly in the future. In addition, the stock market in general can experience considerable price and volume fluctuations that are unrelated to our performance.
